16110GNT0272
DEVELOPMENT OF A STATE
EFFLUENT CHARGE SYSTEM
by
Vermont Department of Water Resources
Agency of Environmental Conservation
State Office Building
Montpelier, Vermont 05602
for the
OFFICE OF RESEARCH AND MONITORING
ENVIRONMENTAL PROTECTION AGENCY
Project #16110 GNT
February 1972
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EPA Review Notice
This report has been reviewed by the Environmental
Protection Agency and approved for publication.
Approval does not signify that the contents necessarily
reflect the views and policies of the Environmental
Protection Agency, nor does mention of trade names or
commercial products constitute endorsement or recommenda-
tion for use.
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ABSTRACT
Following passage of legislation authorizing the levying of pollution
charges against certain waste dischargers, the State of Vermont's
Department of Water Resources began consideration of procedures and
regulations to implement the law. The Office of Research and
Monitoring, formerly the Water Quality Office, seeing in the Vermont
situation opportunities for the first real practical test of effluent
charges in the United States, recommended a thorough analysis
supported by its demonstration grant program.
The objectives sought were first, to select, develop and implement a
pollution charge structure and system under provisions of No. 252 of
the Vermont Acts of 1969 and, second, to demonstrate to the Office of
Research and Monitoring the problems, limitations, and potentialities
of the Vermont system or variations thereof.
The Vermont permit and fee system has been developed and is presently
being implemented. Various methods of fee calculation are discussed
and the reasons for selection of one (annualized cost of treatment)
are set forth. The issues of incentive effect on dischargers, relation
of dischargers to instream economic damages, equity, constitutionality,
economic efficiency, technical and administrative feasibility and in-
come potential are discussed in the context of Vermont law and admin-
istrative procedures.
This report was submitted in fulfillment of Project Number 16110 GNT
and Contract under the partial sponsorship of the Office of Research
and Monitoring, Environmental Protection Agency.
iii
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CONTENTS
SECTION
I
II
III
IV
Conclusions
Recommendations
Introduction
A General Review and Assessment of Effluent
Charge Methods
V A Method, Structure and Schedule for Vermont
VI Administrative Procedures
VII Promulgation of a Charge Schedule
VIII Acknowledgment
IX References
X Glossary
XI Appendices
PAGE
1
3
5
9
43
67
105
109
111
113
115
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FIGURES
FIGURE
NUMBER PAGE
1 Charge Schedule with Maximum Incentive 61
VI
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SECTION I
CONCLUSIONS
1. The effluent charge and permit system for the State of Vermont is
now at the crucial stage of initial implementation and enforcement.
Although legislative and procedural changes will still be made, a
sound and realistic foundation has been laid for an effective
statewide water quality program.
2. To date, the Vermont statute has attracted the attention of prac-
tically all of the states, several foreign countries and many law
schools. While many valuable lessons have already been learned,
the experience ahead in the administering of this program will be
even more valuable to Vermont and to others.
3. A sound defensible basis for status descrimination as between those
who will be granted a discharge permit and those who must apply for
a temporary pollution permit has or can be established for prac-
tically all of the discharge situations that are expected to occur.
However, certain special cases may be encountered.
4. The permit program is well underway and, while it imposes a severe
workload now, it can be handled by straightforward clerical and
administrative procedures once the special start-up circumstances
are completed.
5. The application of the effluent fee system to municipalities has
occasioned more public comment and misunderstanding than any
other aspect of this project; experience to date suggests that a
significant educational effort may be required to gain public
understanding of this feature.
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SECTION II
RECOMMENDATIONS
The project described in this report is the first part of a two-part
program. The first part—System Development and Interim Consulting
during Implementation—was designed to provide support for the develop-
ment of the procedures, rules, regulations and analyses necessary to
implement Section 912e of No. 252 of the Acts of 1969, Adjourned
Session. The consulting services of Arthur D. Little, Inc., were en-
gaged to provide staff support to the Department. Their work is
reported in Sections III through VI herein, together with appendices,
and contains their several detailed findings and recommendations on
development of the effluent permit-charge system.
The second part of this project—System Evaluation—is designed to
provide information on the practical experiences encountered during
the startup and early operation of the effluent permit-charge system.
This will be a critical period, and the lessons learned will be of
great value to others. This second part should be supported by the
Environmental Protection Agency partly because of the staff support
that would be provided for the State of Vermont program, but more sig-
nificantly so that the hard-won lessons of the practical experience
gained can be made available to other states and interested federal
agencies on a timely basis.
Based upon the results of the first phases of the Demonstration Grant
reported upon herein, it is the summary recommendation of the Department
of Water Resources, State of Vermont, that the Environmental Protection
Agency continue its support of this significant project into the systems
evaluation phase. It is believed that this continued support will
produce the results originally sought by the Environmental Protection
Agency, i.e. a sound appraisal of practical applications of the effluent
charge concept for policy and program considerations by other states
and the federal government. Without this evaluation, it cannot be
demonstrated conclusively whether or not the concept can in fact be
carried into practice, or whether certain modifications seem desirable
in the light of experience in its implementation.
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SECTION III
INTRODUCTION
BACKGROUND
In the decade of the 1960s, increasing worldwide attention was directed
toward the problem of water pollution. As the problem intensified, a
variety of technical, administrative and institutional measures—all
within the broad label of water-quality management—were applied toward
its solution.
Chief among these measures, in the United States, were (i) federal and
state planning and construction grants in aid of funding water treat-
ment plants by local governments to reduce discharged wastes; (ii) im-
proved techniques in wastewater processing and control equipment to
reduce discharged wastes, applications of which by industry were
variously induced by tax credits for such expenditures; and, less ex-
tensively, (iii) federal water-storage programs to augment streamflow,
hence increase the capacity of streams to assimilate or dilute dis-
charged wastes. The basic philosophy has been that responsibility for
acceptable water quality rests primarily at the local community level,
subject to meeting standards of stream quality set by States and approved
by the federal government.
Despite these measures, the quality of water in many of this country's
rivers and lakes has not been improved and in some has deteriorated.
The General Accounting Office reported to the U.S. Congress in November
1969, that after 12 years under grant programs for construction of more
than 9,400 projects costing about $5.4 billion, benefits have not been
as great as they could have been because of continued discharge of un-
treated or inadequately treated wastes into waterways.
The war on water pollution was waged pretty much on legal-administrative
and fiscal-financial territory. The legal-administrative device of
stream standards often had to recognize the realities of prior "bene-
ficial" uses of streams as natural waste-disposal systems. The fiscal-
financial device of grants, while a strong financial incentive, was
inadequately supplied in amount, time and location relative to need and
its effectiveness was eroded by inflation. At the same time, little
attention was directed to economic incentives in water-quality manage-
ment and to the measurement and wise use of the economically valuable
waste-assimilative capacity of watercourses.
Early in the 1960s, research began on the conceptual design and
rationale for an effluent fee or charge system. Stated in simplest form,
such a pollution or effluent charge would be levied against a waste dis-
charger on some basis to take into account both his direct on-site
treatment costs and those indirect costs variously called off-site,
downstream, external, social, or damage costs which do in fact result
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from degraded stream quality. The discharger would then have an
economic incentive to correct his practices or adjust his processes
and avoid the charge. Applied in its purist form, the system would
also allow a town or industry to pay the fee and continue to dis-
charge as before—the popularly-expressed "right to pollute" feature.
If this were the discharger's choice, it would reflect his own economic
judgment and decisions, not those of the "state," about the measures
that could be taken by the firm to correct pollution. Generally
speaking, the fee mechanism would tend to allocate a scarce resource—
water—among competing users in the economically "best" way, or with
state stream quality standards to be met (which presumably reflect all
desired water uses), it would achieve such standards at lowest total
cost to industry, towns, fishermen, boaters, or anyone else who uses
the water.
For the past several years, both interest in and action on economic
incentives, and particularly effluent charges, as one element of
regional water-quality management, have been increasingly evident.
Associations in the Ruhr Valley of Germany have long applied a variant
of them. In principle, they are not unlike sewer service charges
applied locally in this country. In 1966, Czechoslovakia imposed such
a system nationally among river authorities, and France did the same
in 1968. Canada adopted similar legislation in 1970. The U.S. Congress
requested a report on this subject which was made in 1968 by the Federal
Water Quality Administration. Concurrently, the President's Council
of Economic Advisers had effluent charges under study and a demonstra-
tion test was recommended. Research on their application in the
Delaware River Basin was also conducted, and more recently national
legislation relating to an effluent charge system was introduced in
the U.S. Senate.
Vermont was the pace-setting State in this country when it passed
Public Act No. 252 of 1969 (adjourned session) authorizing the levy of
pollution charges intended as an economic incentive to waste dis-
chargers not complying with State water-quality standards. Following
passage, the State of Vermont's Department of Water Resources began
consideration of procedures and regulations to implement the law.
The Environmental Protection Agency, seeing In the Vermont situation
opportunities for the first real practical test of effluent charges in
the United States, and with significant implications for national and
other State policy, recommended a thorough and in-depth analysis
supported by its demonstration grant program. It seeks by means of
this project a thorough development of the method in Vermont as a guide
for policy elsewhere and under other circumstances. It therefore felt
an immediate interest to participate in Vermont's implementation efforts.
THE ROLE OF CONSULTANTS
Arthur D. Little, Inc., was selected as the consultant organization to
provide support to Vermont's Department of Water Resources in developing
and implementing the system of pollution charges enacted by the State
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Legislature. ADL's proposed supporting services were approved by the
Department of Water Resources, included in its demonstration grant
application to the Environmental Protection Agency, formerly FWQA, and
approved by that agency in August 1970.
In the broadest terms, the objectives sought were twofold in nature:
1. To select, develop and evaluate the effectiveness of
a pollution charge structure and system which will be
implemented under provisions of No. 252 of the State
of Vermont Acts of 1969 (Adjourned Session), such
system to encompass regulatory and administrative ele-
ments to render it operational.
2. To demonstrate to the Environmental Protection Agency,
through interpretation and analysis of all work per-
formed in meeting objective No. 1, the problems,
limitations, and potentialities of the Vermont system
or variations thereof, as instrumental in policy formu-
lation and application elsewhere.
The role of the Arthur D. Little, Inc., consultants was divided into
three performance phases: (i) System Development—from August 20, 1970
to December 1, 1970; (ii) Interim Consultation—from December 1, 1970
to June 20, 1971; (iii) System Evaluation—for one year, when the
system becomes operational. The first phase is completed, and the
consultants' role has been to develop such procedures, rules, regula-
tions, and analyses as necessary to implement Section 912e of No. 252
of the Acts of 1969, Adjourned Session.
More specifically, consulting work in close cooperation with the
Department of Water Resources during Phase I centered on five major
tasks:
1. To develop alternative rational bases for a pollution charge
structure which will reflect the provisions of Section 912e, the
relation between wastes discharged and receiving water impact, and
an economic incentive to reduce the discharge of pollutants. In
this process, charge concepts or systems were considered which were
based upon (i) charges related to annualized costs of treatment re-
quired to meet approved surface water classifications, (ii) a uniform
charge to all dischargers, (iii) a uniform charge weighted by stream
classification factors, (iv) a charge based upon stream damages to
users resulting from the discharge, (v) a charge based upon dilution
factors, and (vi) combinations of the above charge bases. Features
of these systems, except the stream-damage basis, appear in the
French, German and Czech systems, in sewer service charges, and in
Delaware River Basin research studies. The concept of charges based
directly on stream damage-costs has not been applied.
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2. To identify for each rationale developed the relevant data—
economic, discharge and hydrologic—necessary to implement the method.
In this process, the adequacy and validity of data available to the
Department prior to November 1, 1970 was related to the input data
required for each charge method relevant to the Vermont situation.
3. To assess each relevant alternative in terms of the criteria of
economic efficiency, equity, relation of charges to instream economic
damages, incentive effects, administrative and technical feasibility,
and income potential relative to State funding requirements.
4. Following selection by the Department of a charge method, based
upon work on tasks 1, 2, and 3 above, to design an information system
capable of permit status determination, accounting and billing, com-
pliance tests, revenue forecasting, and potential changes in permit
class and compliance needs. Also, responsibilities for measurement
of discharge characteristics, operating requirements, and start-up
procedures were considered. An issue of central importance was the
basis for permit status determination. Section 911a provides for the
granting or denial of a discharge permit dependent upon whether dis-
charges on and after July 1, 1971 will or will not degrade receiving
water quality below stream standards. An unsuccessful applicant must
apply for a temporary pollution permit, and if this is granted he
must pay a charge for the limited time necessary to comply with
standards. Discharge permit holders will not be required to pay an
effluent charge.
5. Following a report to the Department on task 4 above, to assist the
Department in developing regulations; formulas, schedule of charges,
procedures and supporting documents. Here, the three most immediately
important considerations were: charge structures within the selected
method, permit application forms, and regulations to be published as a
forerunner to public hearings.
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SECTION IV
A GENERAL REVIEW AND ASSESSMENT OF
EFFLUENT CHARGE METHODS
INTRODUCTION
The search for solutions to new or apparently new problems has an
uncanny tendency to disguise classic and perhaps always unresolved
dilemmas behind a variety of near look-alike proposals. The design of
methods for water quality management is by no means an exception.
Numerous proposals have suggested that some sort of effluent charge
scheme provides the best hope for effective pollution control. Atten-
tion has focused—as it does in this report—on an evaluation of
alternative effluent charge methods. But before commencing that
evaluation and by way of organizing it, it is useful to look briefly
behind the effluent charge proposals and to ask what organizational
"model" would be employed to make social (as distinguished from
individual) decisions about the burdens and benefits of pollution
control.
The National Research Council of the National Academy of Sciences has
suggested that there are two basic "models" for decision making and
its organization with regard to water quality management. One model—
the optimizing model—emphasizes a search for regional, least-cost
solutions through systems optimizing techniques. The other—formalist
model—relies more on familiar tools of legislative procedure, admin-
istrative regulation and legal concepts and is particularly sensitive
to impact on income redistribution and administratively adjudicated
standards. These two models are not necessarily incompatible and are
frequently found working together where the optimizing model may be
used to solve certain aspects of a problem while the formalist model
is applied to other aspects. The National Research Council concludes,
however, that neither model alone can be expected both to produce
economic rationality and satisfy legal and political conceptions of
justice.
The conclusions and the polar nature of the two models merit bearing
in mind in the subsequent discussion. While all the alternative
effluent charge methods are designed to aid water quality management,
each places a different relative reliance on the two decision-making
organizational models. One effluent charge alternative—the downstream
damage method or so-called "pure" effluent fee system—places complete
reliance on the optimizing model for all or most aspects of water
quality management. By contrary example, the dilution-factor and the
cost-of-treatment methods rely largely or exclusively on the formalist
model and serve directly only special pollution control purposes.
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The balance of Section IV is divided into four parts: The next following
discusses the four basic tasks or purposes of water quality management.
It is hoped that it, in combination with this introduction, provides a
kind of taxonomy of effluent charge methods. The second analyzes the
various criteria by which specific effluent charge methods are evaluated.
The third describes effluent charge methods and their variations and
evaluates each in the light of the criteria discussed in the previous
section. The information requirements associated with each charge method
are discussed last.
EFFLUENT CHARGE RATIONALES
Introduction - The Rationales in General
One must bear in mind that different effluent charge methods originated
in different contexts of water quality management. Different purposes
were to be served—albeit all related to water pollution control—in
the original development of various effluent charge schemes. In other
words, "water quality management" subsumes a number of objectives to be
accomplished. One must consider the objectives envisioned by the pro-
ponents of each method as well as the specific applicability of the
method to the situation in Vermont.
What are the alternative purposes—objectives, rationales—to be served
by an effluent charge system in the management of water quality? There
are four, more or less severable, depending upon the technique(s)
selected for their accomplishment, but each must be attended to. They
are:
1. To determine what the desirable (or optimal) levels of
water quality should be;
2. To achieve or implement the pre-established desirable
levels of water quality;
3. To establish a schedule of "user" charges that will
cover the costs of a predetermined set of public water
quality improvement;
4. To motivate (quite apart from the system of court
ordered or enforced injunctions) compliance with pre-
scribed waste disposal behavior.
Theoretically, at least, each of the effluent charge methods to be
examined is a candidate for the solution of any, or all, of the
separate purposes of water quality management. A closer investiga-
tion reveals, however, that each method is more logically suited to
certain water quality management purposes and less appropriate to
others. Not surprisingly the methods are usually most appropriate
to the management purposes that gave rise to their development in
the first place.
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Determining Desirable Levels of Water Quality:
Improving water quality will restrict the uses of water by the polluter
in a direct way. His and society's interests in the use of the water-
course as a waste disposal medium will be affected if and when higher
water quality standards are imposed. This, however, is only one way in
which quality objectives will limit water use. A variety of instream
measures (e.g., flow augmentation) may also be needed to
reach the goals. These measures may limit the use of waterways for
other purposes (e.g., power production) and thus reduce benefits to
non-polluters and polluters alike.
Since the impact of the quality program will be felt by all, and since
it will vary according to the quality standard set, standards-setting
amounts to an allocation of conflicting uses of natural waterways among
competing parties.
Long before any systematic public approach was considered, the Common
Law was called on to devise an allocating technique on a piecemeal
basis. In Vermont for example, the courts have prohibited very few
uses of the State's watercourses as unlawful per se. Thus, water may
be used for domestic purposes, for recreation, for power, for ponding
and for waste assimilation, dilution and transportation, subject, of
course, to certain restrictions. The most important of these restric-
tions is that the use must be "reasonable" in the light of the competing
actual uses. What constitutes a "reasonable use" can change over time
with changing circumstances. "Reasonable use" is a question of fact
but for guidance the Vermont Supreme Court has stated:
"...the reasonableness of such use must determine the right
and this must depend upon the extent of detriment to the
riparian proprietors below....An extent or kind of deposit,
which might be of no account in some streams, might
seriously affect the usefulness of others. Within reason-
able limits, those who have a common interest in the use of
air and running water, must submit to small inconveniences
to afford a disproportionate advantage to others."2
and later:
"Such damages as are incident to and necessarily result
from a proper use of the water must be borne; but the
manufacturer has no right to do an act that in its conse-
quences is injurious to others because it is a matter of
convenience or economy for him to do it."3
Thus it seems that the Common Law in Vermont has devised a kind of crude
"balancing of conveniences" doctrine in which the damage to downstream
users is compared in some vague way and on a case-by-case basis with the
water's value for waste assimilative and transport uses to the upstream
discharger.
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It is in trying to determine a before-the-fact, systematic plan for the
allocation of water uses—and thus desirable levels of water quality—
that an effluent charge system becomes relevant as a possible public
management technique. Here public policy might dictate that the
marginal value of all uses of water (both waste assimilative and non-
assimilative uses) be made equivalent so that no shift in uses would
result in a net gain to social welfare. This is the context in which
proposals for effluent charges based on downstream damage have arisen.^
Without discussing the merits and disadvantages of such an effluent
charge method here, two observations need to be made.
First, in order to fulfill the management purpose of determining opti-
mal levels of water quality, an effluent charge scheme based on
downstream damage must apply to all dischargers for all quantities of
discharge and not just to otherwise-established permissible levels of
discharge or to otherwise-determined dischargers who are degrading
water quality below already established standards. Secondly, other
effluent charge systems, such as those based on uniform charges or
uniform charges weighted by stream classification, either ignore the
relationship between competing uses or beg the question and are,
therefore, inappropriate to the rationale of determining desirable
levels of water quality.
This first-listed management purpose can of course be served by regu-
latory techniques other than an effluent charge system. A "formalist"
solution is in fact effected by Federal Requirements for stream
classification and adopted in Vermont by means of joint action among
the Water Resources Board Hearings, local Advisory Council delibera-
tions, and the Department's promulgation of water use classes and
quality standards. The net result of these direct regulatory measures
is to set aside a certain portion of the State's waterways for waste
assimilative and transport use and the balance for all other uses.
Implementing Pre-established Levels of Water Quality:
If the portion of the State's waterways to be used for waste assimila-
tive and transport purposes (as distinct from, say, recreational
purposes) is determined by direct regulatory measures, the problem
then arises of allocating that portion among the competing applicants
for such use. (This allocation is accomplished by the "pure" effluent
fee system through marginal trade-offs among all parties.) Again,
many techniques are available. Effluent standards may be determined
and expressed in terms of the amount of waste loadings. Treatment
standards may be established such that all dischargers must employ
secondary treatment facilities. Effluent standards may also be ex-
pressed in terms of level of treatment required, so that each dis-
charger must remove a specified equal (or unequal) portion of his
respective waste load before discharging to the water body.
Various effluent charge methods are also available as techniques for
the implementation ^f pre-established levels of water quality. Most
notable are those considered in the Delaware River Studies, i.e., the
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single-effluent charge (SECH), uniformly applied, and the zone-effluent
charge (ZECH), uniformly applied by river zones, but variable within
the river system. These two charge systems can be evaluated in terms
of specified criteria for this water quality management purpose, but
that is not the point here. The point here is simply to note that these
charge systems are appropriate to this purpose, given a predetermined
standard, whereas an effluent charge system based on downstream damages
or on costs of treatment is logically unsuited for this purpose.
A downstream-damage related system would allocate more (or less) water
for waste disposal uses than available under the established stream
standard unless that standard happened to equate the marginal values
of disposal uses with nondisposal uses of water. If, for reasons of
income distribution or other public policy, standards were established
which categorically restricted or controlled industrial activity
without regard to the relative costs involved in the damage and the
costs of alternative disposal methods, then an effluent charge system
based on downstream damages instituted for the purpose of implementing
stream standards would almost certainly be inefficient.
Funding Public Water Quality Improvement Measures:
This is a problem which may be encountered at several levels of water
quality management. Municipal sewage treatment facilities often accept
a variety of industrial wastes. Regional treatment facilities, stream-
flow augmentation schemes and in-stream mechanical reaeration programs
all involve costs that may be covered by users or beneficiaries. Fre-
quently decisions to employ these measures are made independently of
the scheme for allocating the costs. This appears to be the case with
the Ruhr area Genossenscnaften, where water quality improvement measures
of optimal or sub-optimal extent are adopted and the costs are dis-
tributed among members by charges based on dilution factors or popula-
tion equivalents. Other effluent charge methods are possible for this
purpose, but those weighted by stream classification, for example, would
appear to be irrelevant.
Motivating Compliance with Effluent Standards or Allowable
Effluent Levels:
If it is determined that water quality levels should be implemented by
means of allowable effluent levels—hence, in effect, effluent
standards to the individual permittees, as is the case in Vermont under
a system of discharge permits, then the search for enforcement tech-
niques also leads to the possible use of a schedule of effluent charges.
Moreover, this is the case whether penalties are being sought for dis-
chargers holding neither kind of permit (outright violators of the
effluent standards) or whether an economic incentive is sought for
holders of temporary pollution permits. Of course, the water quality
management agency has access to the courts for enforcement of its
orders, but such enforcement is not automatic and requires the initia-
tive of the regulatory agency. In certain cases injunctive relief may
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be politically or simply practically impossible to execute. In
McCormick v. Russel (172 Pa. 506), for example, it was stated that
the State might require a municipality to supply water of a set
quality or cease collecting charges therefore and could require it
to be diligent in seeking a new supply of pure water. However, the
State could not require the company to relocate its plant or seek a
new supply, to reach which would involve an expense greater than its
entire capital stock. One can easily hypothesize a similar situation
where an offending municipal sewage treatment plant cannot be shut
down.
Clearly, not all effluent charge methods may be appropriate to pro-
viding an adequate incentive to compliance. A uniform charge
system may well be ineffective for some who find it cheaper to pay
the charge than comply with the effluent standards simply because
treatment facilities cannot be immediately obtained and installed,
aside from economic factors.
Similarly, an effluent charge system based solely on downstream
damages may bear little direct relation to the purpose of motivating
compliance with effluent standards. If the damage caused is less than
treatment costs, the discharger will find it to his advantage to pay
the fee and continue discharging. Only an effluent charge system which
is somehow related to cost of treatment will reliably serve the purpose
of providing an economic incentive to compliance.
To summarize this section, the evaluation of various effluent charge
methods must take into consideration the particular water quality
management purpose that is intended to be served. An examination of
different charge methods reveals four separate purposes of water quality
management. Each system is directly appropriate to at least one of
these purposes but largely irrelevant to some of the. others. The four
purposes in abbreviated form are (1) determining stream standards, (2)
implementing stream standards, (3) allocating project costs, and (4)
motivating compliance with effluent standards.
CRITERIA FOR EVALUATING EFFLUENT CHARGE METHODS
Efficiency
In the idealized and conceptualized formulation of economic theory, an
efficient allocation of resources is that distribution and use of
resources which provides the greatest output of satisfaction. No
additional output can be gained through a reallocation of resources,
nor can the same output be realized thorugh a smaller input of resources
by reorganization. The relationship of costs at the point of efficiency
will be such that all marginal costs (both waste reduction and treatment
and value-of-damage costs) are equal. If marginal costs with respect
to the unit of product were unequal, the individual with a lower
marginal cost could produce one more unit, the higher marginal cost
producer could produce one less, production would be unchanged, but
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total costs would be less through the reorganization of the use of
resources. In the real world, of course, things are not all this
ideal, and one must recognize such things as lack of complete know-
ledge, lack of complete rational behavior, "chunky" and "sunk" invest-
ments and interdependencies of pollutants (upstream and downstream) in
receiving waters.
In the case of water quality management, there is wide variety of
means of establishing and implementing standards. Different polluters
can treat their discharges to varying levels of waste removal. To
implement a stream standard most efficiently means to do so at least
total cost. The least-cost means is presumably the most desirable
since the resources saved can be used for other projects—schools,
parks, or additional water pollution control facilities. If there is
an efficient distribution of treatment levels, the marginal cost of
waste treatment will be equal for all dischargers. Thus, those whose
costs are lowest will remove the largest proportion of wastes from
their discharges and those with the highest costs of treatment will do
the least treatment.
The conditions of efficiency will be established by the determination
of how much treatment is carried out by each discharger. Looked at
from the other direction, the manner by which the usable assimilative
and waste transport capacity is distributed to the individual dis-
chargers will determine how efficiently the stream standards are
achieved. Unless the condition of balanced marginal cost of treatment
for each discharger is met, the allocation of resources will be in-
efficient. The possibility of achieving stream standards for a lower
total cost will remain until marginal costs for each discharger are
equal. Appendix C offers a more detailed discussion.
Relation of Charges to Instream Economic Damages:
Closely related to the general concept of economic efficiency is the
fact that the presence of pollution in water causes damages on account
of additional costs of treatment for withdrawal uses and from the
reduction of the value of clean water uses in the stream. The value
of most recreational uses is reduced by the presence of pollution, and
if the pollution is sufficiently heavy, certain uses are foregone
entirely.
Ideally, damages could be used to determine the proper levels of stream
waste loadings, since the clean water uses have some value associated
with them and that value declines with increasing levels of pollution.
There is also a cost associated with the control of pollution, the
greater the waste removal, the higher the cost. Thus, there is an
efficient mix of the use of water between clean water uses and waste
transport uses. That optimal mix will be at the point where the
marginal damage of an additional unit of pollution is equal to the
marginal cost of removing the additional unit of pollution. The ability
to determine the extent of waste loads desired on the basis of damage,
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and indirectly to determine effluent charges by this approach, rests on
the ability to establish the marginal damage per unit of pollution, or
alternatively, the marginal value of reduction per unit of pollution.
The setting of such value might be a "market" process between dis-
chargers and beneficiaries of clean water. For more on this point, see
Appendix C.
For some clean water uses, this quantification is fairly simple. Where
water use requires a certain level of purity outside the stream (such
as drinking water), the damage can be equated to cost of treatment of
intake water necessary to achieve that purity. Investigations have
shown these costs to be small, and substantially less than the cost of
effluent treatment required to maintain the stream at the appropriate
purity.
Other uses such as recreation, however, are very difficult to value.
Some work has been done on establishing the worth of a swimmer-day, a
fishing-day, etc., but there is substantial argument on what should
be included and most of the literature is about how to do it, not
actually calculating the value. There is no universal value since each
recreation spot is intrinsically different. Although the concept of
valuing these uses is theoretically pleasant, it is operationally ex-
tremely difficult. Not only does one have to calculate the value of a
recreation-day, but the marginal loss of recreation-days per unit of
additional pollutant as well, along with the causal relationship between
the pollution out-fall and the location of the recreation area. As
pollution increases, fewer people will use the stream and the value to
those who continue to use it will decrease and each of these elements
must be valued.
Stream quality standards are closely related to downstream damages and
imply a precise relation between the uses permitted in waters of that
standard and the cost of treatment necessary to meet that standard. If
it is worthwhile for society to treat wastes so that specific activities
can take place in the water, then it may be assumed that those activi-
ties are worth at least what it will cost to reach the quality standard.
Moreover, the marginal value of an activity which could take place in
cleaner-than-standard water will be less than the marginal cost of the
additional treatment required to achieve the improvement in stream
quality.
Thus, stream quality standards can be taken as a proxy for downstream
damages. These standards in the typical case are administratively set.
The alternative market mechanism for determining the level of stream
quality to be maintained requires information and market institutions
which do not exist.
Equity:
The criterion of equity can be easily stated in the abstract. It is to
treat like persons equally and to differentiate among those persons who
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are relevantly different. The operative words, of course, are "like"
and "relevantly different." We find the standards developed for
meeting the constitutional requirements of "due process" and "equal
protection" a very good approach to the problem of defining equity.
Accordingly we have examined these considerations in some detail in
Section V where we assess administrative alternatives of the cost-of-
treatment charge method.
There are, however, other less formal ways of looking at equity. For
example, one might wish to consider the overall income distribution
of society. Judgments on how equally income ought to be distributed
are, of course, spread wide and subject to much disagreement. But,
in any event, the general income distribution of society is not going
to be effectively altered by means of water pollution control, and
we consider this approach to equity a bit wide of the mark.
Another way of viewing equity in the context of water quality manage-
ment is to ask whether an effluent charge system would result in any
impairment of existing "rights" or "privileges" (be they "de facto,"
"de jure," "vested," "unvested," merely "regulated" or subject to some
"taking") without some form of compensation.
Common Law precedent established that all water users have a right to
"reasonable use" of the water and that waste transport is one of these
uses. "Unreasonable use" should perhaps require a payment to com-
pensate individuals who are damaged or have lost a use of the water.
Thus, charges for pollution could be used to pay those damaged. The
damages should be only those which occur over and above the damages
resulting from "reasonable use." In order to provide for equity the
pollution charge must be paid to the damaged parties or used to im-
prove the quality of water to the level of reasonable use.
The setting of stream quality standards by the State may be considered
a legislative establishment of limits on the reasonable use of streams
for waste transport purposes. The stream quality standards also es-
tablish the reasonableness of other water uses. Thus, the fee charged
to individual dischargers who are judged to degrade the stream below
standards might be used to pay those who are not able to use the
stream because of the added pollution.
There is another group of individuals among whom it may be desirable to
assure equity. Some dischargers are already treating their wastes,
and they are bearing extra costs of operation because of that addi-
tional expense. There is a period of transition during the institution
of a water pollution control law where some dischargers are ordered to
construct facilities. Those who are constructing facilities are still
facing lower costs of operation. But if they are charged a fee during
the construction period, their costs can be raised so that the ad-
vantages of not having installed pollution control facilities earlier
can be removed. There is no need to transfer the fee to treaters, since
the fee has raised non-treaters' costs to the after-treatment level.
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Here, there is no impairment of "rights" but rather an adjustment of
costs to remove the reward for not having acted in a desirable fashion
before the law was passed.
Incentive Effects on Dischargers:
Pollution control, with or without grants or special tax incentives,
is not directly profitable to the discharger. To provide an incen-
tive, the fee must exceed the cost to him of compliance with a
standard. Thus, the incentive effect of a fee on dischargers will be
dependent on the relation of the fee to his cost of treating the
waste. If the fee is higher than the cost of treatment, then the dis-
charger will benefit by building and operating the treatment facility,
since he can save the difference between the fee and the cost of
treatment.
The fee can also be used to determine which dischargers treat their
wastes. If the state knows what the costs of treatment are for the
desired levels of treatment, then the fee can be set to provide for
incentives to treat to that level. The fee should be equal to the
marginal cost of removing the last unit of waste required to meet the
desired standard. This assumes that marginal costs are rising at the
desired point. In this case no discharger is permitted to use any of
the waste transport capacity of the waters free, and any existing
common law "right" to that use of the water will have been affected.
The period of construction can be shortened with the use of a fee. A
fee which provides an incentive to install a prescribed level of
treatment will remove much of the interest in delaying actions, for
the fee will make it in the interest of the discharger to clean up
his discharges, since by doing so total costs can be reduced.
Administrative and Technical Feasibility:
The administrative and technical feasibility of any charge method will
depend largely on the requirements of the associated information sys-
tem. The term "information system" as used here represents the
collection, storage and analysis of all data required for the manage-
ment of a real-world system, where "management" includes such tasks as
decision making and administration of various plans of action.
The actual administration of any pollution charge method should pre-
sent no major problems provided that an adequate supporting information
system can be established. Therefore, the feasibility criteria must
be applied primarily to the design of the information system. Two
general criteria are involved: (1) credibility—can a system be de-
signed which provides information at the level of detail, precision and
accuracy which is implicitly required by the effluent charge method
and (2) practicality—can the system be implemented on schedule and
maintained and operated within specified budgetary constraints?
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It is no easy matter to assess the information systems required for
each effluent charge method with respect to these criteria. The ex-
tent to which information must be credible, i.e., to reflect the real-
world system, may be of only secondary interest if people are willing
to accept the "rules of the game" as established by a particular
method. The practicality criteria is also subject to variation since
the information system can be implemented over a period of years, and
the administrative costs can be reduced by assigning data collection
and reporting responsibilities to the dischargers.
As a result of this variability, the administrative and technical
feasibility for any of the effluent charge methods can be viewed from
two extremes. One is to assume that any method can be made technically
and administratively feasible through the use of simplifying assump-
tions, cost sharing, and gradual implementation of an associated in-
formation system over time. The other is to design a specific
information system and plan of implementation for each charge method,
and then to determine whether the system so defined appears feasible
under specified constraints which apply to the problem at hand.
For the purpose of this study a compromise approach is best. The
general information requirements of each charge method can be established
for the purpose of evaluation. If these requirements appear to be the
limiting constraints in the selection of a particular method, they can
be reviewed in more detail to determine whether the method should be
rejected or whether the requirements can be relaxed or modified.
Income Potential:
The amount of income generated by effluent fees (as distinct from ad-
ministrative fees) will depend basically on the rate per unit and the
number of units. The charge levied may be for the total under some
systems, or only the pollution which is discharged above the quota
assigned to the discharger. In Vermont's case, the effluent fee is
only to be charged to temporary permit holders. Once such parties
meet the standards for a discharge permit, the income from these
charges will dry up.
DESCRIPTION AND EVALUATION OF ALTERNATIVE EFFLUENT
CHARGE METHODS
This section describes and evaluates six alternative effluent charge
methods. It should be recalled that an effluent charge system is but
one of several techniques for water quality management—others, of
course include stream and effluent standards, treatment order systems,
effluent permit systems, tax incentives, public grants, regional
treatment and improvement facilities, etc. It is not the purpose here
to compare the relative effectiveness of non-charge water quality
management techniques with various effluent charge schemes; rather it
is intended to examine in detail the alternative effluent charge
methods themselves. For an excellent review along these lines, see
V. Prakash and R. H. Morgan.^
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Some of these alternative methods would of necessity be used in com-
bination with various noncharge water quality incentives. Others
would rely only marginally if at all on such incentives. By and large,
the less a method relies on noncharge techniques the more it uses an
optimizing model for decision-making regarding the burdens and benefits
of pollution control. Conversely, the more a method presupposes that
related water quality management tasks will be undertaken by noncharge
techniques the greater the reliance on a formalist model for decision-
making. The formalist model can, of course, result in decisions which
reflect economic efficiency as well as other considerations.
The figure below relates the six effluent charge methods considered to
the four major tasks of water quality management. A solid line indi-
cates that a method is primarily related to the designated management
task. A dotted line indicates an indirect or secondary relationship,
and a blank signifies that a noncharge method would be employed for
the designated task. The alternative methods might have been de-
nominated by their most prominent place of origin, for example, the
"Ruhr" method or the "Czech" system, but we have preferred to de-
nominate them by their descriptive characteristics indicating where
similar methods may have actually been put into practice.
WATER QUALITY MANAGEMENT PURPOSE
Charge
Methods
1. Downstream
Damage
2. Uniform
Charge
3. Uniform
Charge
(weighted)
4. Based Upon
Dilution
Factors
Determine
Desirable
Levels of
Water Quality
Implementing
Stream
Standards
Funding
Water
Project
Costs
Motivating
Compliance
with Effluent
Standards
5. Annualized
Cost of
Treatment
6. Based Upon
Stream
Quality De-
gradation
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S!?FiL8e Based Upon Stream Damages
Characteristics:
In determining the fee to be paid by each polluter, an estimate is
made of the magnitude of damages in monetary terms imposed by the
effluent upon all downstream parties. The computation may be based on
actual downstream damages to users of polluted water or on inferred
damages to the State, which may place a surrogate damage evaluation as
a function of each polluter's contribution to stream quality degrada-
tion.
Purposes:
The rationale here is that a polluter should pay a fee in proportion
to the off-site damage cost directly or indirectly attributable to his
waste as it proceeds downstream.
One of the purposes associated with a damage system is to approach the
economic ideal of equating marginal costs and marginal benefits of
using a waterway's assimilative capacity to achieve an optimal level
of water use allocation. An underlying assumption herein is that the
impairment of all water uses, including conservation uses, have a
measurable economic valuation which may be compared with the cost of
treating wastes associated with various levels of impairment.
In addition, this method is intended to allocate assimilative use
among dischargers as well as to allocate a stream's use as between
waste assimilative uses and non-assimilative uses. That is, no
additional mechanism is required to implement the levels of water
quality established by the charges since this will occur automatically.
The revenues raised by this charge method need not be paid over to
downstream users in order to accomplish the objectives of establishing
and implementing stream standards. If the revenues derived are re-
tained by the State, they can, of course, be used to fund public water
quality improvement projects.
Precedent:
In 1957 the staff of the Ohio River Valley Water Sanitation Commission
(ORSANCO) reported on a proposed fee system based on instream damages.
Owing to the highly industrialized nature of the region and the common
use of water for boiler feed, cooling, or processing, damages in the
proposed system could conveniently be related to river salinity. The
stream damage proposal was one of two considered by the ORSANCO staff.
The other dealt with a uniform cutback of saline loads at a time of
low flow. The report recommended the cutback method. The entire study
is considered largely hypothetical. It is of interest only in that
stream damages were considered an appropriate alternative basis for
effluent fees.
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Considerations and Issues:
Of all systems considered, this is perhaps the most difficult one to
operate. Even assuming that stream damage—pollutant relationships
were documented, it would still be difficult to distribute the cost of
damages to the various upstream contributors. Hard as this task is,
the major problem resides in deriving and defending the basis for
relating damages to stream pollutants.
With certain exceptions, stream damage in economic terms is not a
continuous function of steadily introduced pollutants. Generally,
some pollutants may be held to cause no damage until a threshold
concentration is exceeded, at which point a damage event is said to
occur (e.g., fish acquire unacceptable toxic levels in their tissues
and are no longer safe to eat). Others may be absolutely forbidden
and still others (e.g., silt) may cause damage proportionate to their
amount. Many important classes of damages cannot be readily related
to continuous steady state behavior of polluters because of time
effects in hydrology and the time required to reach the watercourse.
Some damage events related to stream contamination are continuous and
may be related in a straightforward manner to steady state polluter
behavior. One of these is the relation between chloride content and
the consequent industrial cost of treating water for boiler feed
operations. Other examples of a direct, continuous relationship
between polluter behavior and damages (or cost of avoiding more
serious damages) are less common. Even in this case, however, it is
difficult to estimate damages. For example, Kneese and Bower report:
"...industrial costs turn out to be surprisingly insensitive to intake
water quality within comparatively wide ranges—especially in regard
to aspects of quality that are usually influenced by prior uses and
discharge of effluents....The situation is surprisingly similar for
municipal water supplies."
Preliminary Assessment:
A charge based on stream damages could provide for a "Pareto Optimal"
allocation of resources between waste disposal and all other possible
uses of those resources, if the charge per unit of waste were equal to
the marginal cost of damages caused by an additional unit of waste.
This charge would cause the removal of all wastes which cost less to
treat than the damage caused. Each discharger will treat to the point
at which his marginal cost of treatment is equal to the fee. Thus,
the condition of equal marginal costs holds, the level of water
quality would be achieved efficiently and the residual discharge of
waste would cost the dischargers an amount equal to the damages caused.
The charges based on downstream damage will provide a means to establish
equity between the dischargers and the damaged. The cost of operation
for the discharger will include the damages caused; complete equity
could be achieved by using the fee to pay the damaged parties for their
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losses. The fee will also achieve partial equity between the dis-
chargers who are treating and those who are not. Since the dischargers
who do not treat face a fee which is lower than their cost of treatment
(the fee is lower or they would be induced to treat), they will not
face costs as high as if they were forced to treat. However, for the
period of transition while future treaters are constructing facilities,
there will be a shift of income to the dischargers who are already
treating. Since the downstream damage fee is greater than the cost of
treatment for those who will be treating, there will be a shift of
income to existing treaters during the transition period.
Downstream damages will provide incentives to treat for those whose
treatment costs are lower than the charge. The level of quality will
be the result of the magnitude of downstream damages.
The income potential from a fee based on downstream damage could be
substantial. The revenue would be continuous since a fee is being
charged for the use of the water and not just during the period of
transition.
Charges based on downstream damages would be very difficult to admin-
ister. The difficulties of actually measuring those damages are
immense. Each reach has to be considered separately, many of the
clean water uses are social goods for which a market mechanism cannot
be developed to price damages. Standards may be considered a proxy
for downstream damages but no monetary values are established for
those damages in the process of setting standards, so there is no
basis for establishing a fee.
Uniform Charge to All Polluters
Characteristics:
Polluters are charged a uniform rate for each of the effluent waste
constituents to which a charge is applied. The agency establishes a
uniform charge per unit weight of pollutant. The most common com-
ponents of the total pollutant vector to which charges are applied
are the pounds of BOD and tons of suspended solids. Uniform fee rates
may also be applied to total dissolved solids, heat loading in Btu's,
bacterial counts, or to virtually any other quantifiable component
of the total effluent vector.
Purposes:
There are two major purposes for this system of effluent charges.
The overriding one is to provide a direct economic incentive to imple-
ment otherwise established stream standards. In addition, monies can
be raised to fund public water quality improvement projects. Also,
some motivation can be provided to comply with established effluent
standards when other regulatory mechanisms are to be used in conjunction
with the effluent fee. In view of the fact that marginal treatment
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costs normally decrease with scale (i.e., volume of effluent), a
supporting rationale for the uniform system would be that it en-
courages most rapid compliance from those whose contributions to
stream pollution is greatest.
Precedent:
A simulation study of the Delaware River included a single effluent
charge based on BOD as a possible means of achieving a given level of
minimum dissolved oxygen.6 The annual cost to the system was $12.0
million compared with $20.0 million under a uniform treatment standard,
suggesting that a uniform charge method is likely to prove more
economic than a uniform treatment approach for the same or similar
river quality objective.
Other systems in actual use are based upon a single computation
related to actual quantities of pollutant discharged. These systems
distribute charges to pay for treatment costs at existing public
sewage treatment plants in North America (see Appendix F). The
charges in these cases are properly sewage treatment fees, rather than
effluent fees, and hence are not strictly comparable.
The Seine-Normandy system is a uniform charge weighted by zone, and
will be discussed in the next section.
Considerations and Issues:
A single fee system seems simple and fair. Viewed as an incentive to
modify the behavior of all polluters, the single fee must cover the
worst case, i.e., the highest cost of treatment experienced by any
polluter. A fee high enough to assure that all polluters would gain
by investing in treatment as quickly as possible may prove to be a
serious economic burden to many polluters and may consequently result
in undesirable economic side effects (i.e., small industries that are
marginally profitable may be forced out of business). A fee low enough
to preclude serious economic failure for all parties may not provide
an adequate incentive to some polluters. Therefore, one is likely to
establish an initial fee and adjust it in the future as may appear
appropriate.
It may be possible to initiate the system on a uniform charge formula
basis out of a desire to take advantage of its simplicity because of
the brief time available, but with a view to evolving a more refined
basis in the future. Provisions may be made for fee reduction in the
case of demonstrated inability to pay provided that some arrangements
can be made for planning of treatment, as in the Seine-Normandy case
(Appendix F). This approach, however, places an additional burden on
the administrative resources of the agency since the consideration of
various applications for relief may require a time commitment that
may be more advantageously applied to supervising regional plan
development.
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The regulating agency may offer alternative methods for estimating
the basis for the charge, that is, a quantitative estimate of the total
amount of each pollutional component to which a charge will be applied.
The Seine-Normandy Agency, for example, has developed a set of stan-
dardized tables which contain estimates of unit discharge of several
pollutional components per level of industrial production activity, or
per unit population served by an outfall. The standard table auto-
matically becomes the basis for fee computation, unless the polluter
elects at his own expense to conduct an effluent sampling program under
a set of strict procedural directives spelled out by the agency and
under agency supervision.
Preliminary Assessment:
A uniform charge per unit of waste will tend to induce dischargers to
treat to the point where their marginal cost of waste removal is equal
to or greater than the unit charge. If each discharger faces equal
marginal treatment costs, one of the conditions for efficient allocation
of the waste transport capacity will be met. The other condition con-
cerns how and where the stream standards are met or exceeded. A
uniform statewide fee would have to cause over-treatment in some places
in order to meet the least favorable conditions.
Since the uniform fee is not specific to any one discharger, one cannot
relate it to either actual treatment costs or downstream damages. The
uniformity of the fee means that a fee tied to downstream damages for
one part of the river or state will not necessarily meet downstream
damages elsewhere. In most cases, the fee will overstate those damages.
The incentive effects depend on the relation of the fee to the costs of
treatment for the individual dischargers. The uniform fee may provide
incentives by being greater than the cost of treatment in some areas
but not in others. The levels of quality resulting from the uniform
charge will vary. If the charges are set to clean up the most difficult
reach, i.e., the reach with the highest treatment costs, many other
reaches will exceed their standard.
The uniform fee can provide partial equity between the sufferers of
downstream damages and dischargers who cause the damage. If the fee is
set on the basis of a generalized damage, equity will be achieved in
that reach of river where the charge is equated to downstream damage.
In other reaches, the uniform fee may not meet downstream damages and
thus, will continue the shift of income from the damaged to the dis-
charger. Any fee will shift income from dischargers as compared with
the situation before the imposition of the fee. If the fee is greater
than downstream damages, the income redistribution will be greater than
necessary. However, unless the fees collected are paid to the damaged
parties, the redistribution is not really taking place. The benefits
derived by dischargers from pollution will be taken away from the dis-
chargers.
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As among dischargers, a uniform fee will result in equity in the sense
that they all pay the same rate per unit of discharge. The total pay-
ments to the State will, of course, vary depending on their own
individual cost-of-treatment functions and quantities of raw waste
generated.
If the uniform fee is based on a generalized cost of treatment, equity
can be established between those who are treating and those who are
not. To the extent that the fee does not equal the cost of treatment,
the shift of income will be to existing treaters if the fee is greater
than the cost of treatment, and the shift will be incomplete if the fee
is less.
Administrative simplicity of a uniform charge makes it appealing. Once
the fee is set the only information required is the amount of waste
discharged. However, if the fee is based on downstream damages, the
uncertainty as to their magnitude will tend to make the system suspect
and vulnerable. A fee based on cost of treatment would be more defensible
as there is a good deal of data on the unit cost of removing various
wastes. In order to achieve acceptable water quality, some resetting of
the fee may be required as experience is gained with the responses of
dischargers.
Looking ahead, the uniform fee could, in effect, be a device to "rent"
waste assimilative capacity; the fee would be a source of revenue to
the State. The fee would be designed to control the amount of wastes
in the water. Thus, if the fee were very high, revenues might be very
small since virtually every discharger would be induced to clean up his
wastes; a fee designed to maximize revenues would not necessarily re-
sult in very clean water
Uniform Charge Weighted by Stream Classification or Zone
Characteristics:
The general characteristics of this system are identical to those for
a uniform charge system, except that the charge may be varied depending
upon the classification of the receiving waters.
Purposes:
All purposes discussed under the strict uniform charge apply here as
well. In addition, a stream-classified uniform charge method could
influence regional demographic and industrial growth in a manner con-
sistent with water quality objectives. A differential fee could be a
factor in determining the location of new housing and industry and
could encourage or discourage development along streams of higher
classification. A differential fee may recognize that society is
willing to pay different costs to achieve differing levels of stream
quality. It may also account for the different effects that similar
26
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effluents have when applied at different locations. Properly used, it
could come closer to making the level of treatment fit local conditions
than would a single state-wide charge.
Precedent:
The Seine-Normandy system in France is a uniform fee system weighted
by zone. It was not clear from the source available (See Appendix F)
what the basis was for zone differentiation. Presumably river classi-
fication was a factor, but other considerations may have entered.
The Seine-Normandy system uses a standard estimating table to compute
effluent quantities, with the option available to the polluter of
submitting at his expense a basis derived from actual sampling of his
effluent. Provisions are made for procuring tax relief when economic
hardship can be demonstrated.
This alternative corresponds to the ZECH system of the Delaware River
study discussed previously. In that study it is interesting to note
that the ZECH system was second best to the LC system by a relatively
small margin, as compared with a uniform treatment or unweighted
effluent fee applied uniformly.
Considerations and Issues:
In addition to the considerations and issues that surround any charge
system, one must settle how receiving waters are to be classified, and
establish the rate for each classification.
Stream classifications have been establsihed in the State of Vermont
and in principle could be a basis for fee rate differentiation. There
would be some inefficiency or dislocation because the same effluent
applied at two points in the river network could have very different
impacts upon receiving water quality; in one case, degrading the stream
to below standard conditions, in the other case, not doing so. Two
conditions determine this difference, one hydraulic-hydrologic, the
other "developmental." The first concerns the interaction of natural
or regulated river flow, and the movement of sediments, including the
dynamics of erosion and deposition. This is particularly important
in lakes and reservoirs where solids high in organic constituents
create bottom sludge, which poses serious nuisance problems. Even
with treatment, nutrients contained in sewage can induce growth of
algae in lakes, ponds and reservoirs.
One might wish to modify a simple stream classification scheme to take
account of the different effects of similar effluents. The simplest
approach would be to create the following classifications within each
major class: lakes, streams that flow into lakes less than "x" miles
from the point of effluent discharge, streams that flow into lakes more
than "x" miles from the point of effluent discharge. The "x" mile
specification may vary throughout the system according to the agency's
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best judgment regarding the degree to which lakes must be protected,
taking into account a variety of physical and economic considerations
as appropriate in each case.
The developmental aspect depends upon the degree of interdependence
among polluters who discharge effluents in the same local water reach.
A given polluter may not degrade the stream below an established
standard when he is the sole discharger, but his incremental contri-
bution to the stream, when others are already degrading it to the
standard, will result in substandard quality. To the extent that
development is not reflected in the selected standard, one could use
the ratio of total effluent to streamflow to determine a subclassifi-
cation for uniform fee by zone. Clearly there are a great number of
possible subclassifications. While using a lot of them could permit
a flexible and perhaps efficient system, the more there are the more
difficult will be their administration.
Pre1iminary Assessment:
The assessment of the uniform fee holds when that fee is weighted by
stream classifications. The flexibility introduced by considering
stream classification allows the fee to be directed toward meeting
specific local quality standards.
However, the costs to reach a specific level of water quality in one
reach may be quite different in another, so that if the fee is set
to achieve B standard water in one reach, that fee may be only high
enough to reach C or D water in another reach, even though B water is
desired. Thus, as with the unweighted uniform fee, the fees may re-
quire some tuning from time to time to achieve the specific levels of
water quality desired.
Charge Based Upon Dilution Factors or Population Equivalents
Characteristics:
A dilution factor or population equivalent index is based upon the
sum of several pollutional components. Such an index provides a
common comparative basis for measuring total pollutional contribution
from many different sources. A schedule of unit rates (or a constant
rate) applied to the loading index (dilution factor times effluent
quantity) yields the appropriate fee. A more detailed description is
supplied in Appendix E.
Purpose:
Except for the fact that charges are based upon a composite factor
rather than a single item (e.g., BOD), this method resembles a uniform
charge method (unweighted or weighted by stream classification).
Hence the preceding discussion pertaining to those alternatives may
apply here as well. Whereas the uniform charge alternative bases
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charges upon the measured or estimated quantities of individual
pollutants, the dilution factor method bases charges upon an index
derived from the concentrations of several residual pollutants.
A dilution factor or population equivalent system may achieve two
major purposes. It may distribute the cost of regional sewage
treatment and may also aid in implementing stream standards. For
example, dilution factor may be based on the amount of dilution water
needed to reduce concentrations of contaminants to levels that pre-
clude downstream damages, especially where aquatic life must be
considered.
Precedent:
A dilution factor basis is used by the Emscher and Lippe River
Associations in the Ruhr Valley of West Germany. Consideration of
all elements in the dilution formula is based on standard laboratory
tests upon all effluent sources in the system. A related system
based upon population equivalents is used by the Ruhr Association in
the same valley.
The fact that some of the Ruhr effluent fee determinations are based
upon dilution factors or population equivalents is only of secondary
interest. The major significance of the Ruhr experience relates to
institutional arrangements and the very concept of the effluent fee
principle, rather than to any particular formula or technical innova-
tion for final computation of fees. The former would be the governing
considerations in any study of the Ruhr, under any of the systems of
effluent fee determination discussed herein. Within the context of
this section, in which a dilution factor system is presented in the
context of the other fee computation methods, interest in the German
precedent is limited to the technical feasibility of reducing all
wastes, toxic as well as non-toxic, to a uniform index basis for fee
determination.
The major rationale in the German cases is the desire to distribute
the total cost of operating regional water quality projects to pollu-
ters, in proportion to their contribution to total system costs. The
selection of the particular schemes or formulas may not strictly
represent true cost sharing, although for practical purposes, the
derived formulas and procedures were considered an adequate approxi-
mation as well as a practical incentive mechanism for polluters to
reduce their loadings.
A kind of precedent or analogy is found in sewer service charges to
towns and industries, applied in the United States and Canada for
years. Many of these charge systems are based upon dilution formulas
or population equivalents. On a small scale, these systems are
analogous to the Ruhr experience in that the major rationale is to
finance the cost of operating the treatment demanded. Reference is
made to Appendix F for a description of North American sewer charges
experience.
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Considerations and Issues:
Kneese and Bower' point out: "From the point of view of strict
economic theory there is an objection to the charge procedures
described above [i.e., the Ruhr systems]—they violate the principle
of marginal cost pricing...Methods that are less than theoretically
ideal may be optimal in practice, since an important element in
determining the best method for actual use is the actual cost of
making marginal refinements....The methods used by the Genossenschaften
recognize that the effluent charge is a price which provides an in-
centive to economize the use of scarce resources—in this case, the
waste assimilative capacity of the stream and the inputs to the
collectively provided water quality management system."
Thus it would appear that the fact of pricing effluents (whether the
purpose is to raise funds for treatment or other regional management
action, or to provide an incentive for abatement) is the dominant
issue. The use of a dilution formula or a population equivalent
basis is merely a technical option to charge per unit index value of
effluent as against per unit pound of BOD or other constituents. It
would appear that the dilution type of index is most appropriate when
the assimilative capacity is defined in terms of nonimpairment of fish
life as a major water use. Dilution factors derived from fish kill
laboratory tests upon all effluents, as in the Ruhr, may be used to
best advantage in determining each polluter's contribution to the
threshold at which the aquatic life in question would be impaired.
Preliminary Assessment:
Charges based on dilution factors are a variant of the uniform fee,
which can provide considerable flexibility.
The unit charge can be based on a number of factors: the total cost
of treatment required to reach the desired level of quality; the total
downstream damages caused by pollutants generated in the reach; or, as
the name implies, the cost of providing the necessary dilution water
to render the pollutant load tolerable.
The total number of units to which the fee is applied can be set for
each specific reach. Each discharger within a reach will face the
same unit charge and will thus treat to the point of equal marginal
cost. Thus, one criterion for efficiency is met.
The evaluation of the uniform charge method in terms of the other
criteria applies as well to the dilution factor method. However, the
dilution factor system places substantially greater administrative
responsibility on the state agency, since it is necessary for it to
assign the dilution factors. That assignment would require con-
siderable information, but it does take reasonable account of the
actual waste carrying capacity of the receiving waters.
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Annualized Cost of Treatment
Characteristics:
For a given effluent, a given treatment results in a specific annual
cost for each discharger. Therefore, given the degree of treatment
desired, one may compute a fee (greater than the discharger's annual
treatment cost) which will provide an incentive to meet the desired
treatment objective.
The degree of treatment can be set by various means, some of which
are enumerated below:
1. Require a uniform treatment or uniform levels of
waste reduction such that surface water of standard
quality can be obtained.
2. Require uniform treatment or uniform levels of
waste reduction for all effluents within a given
zone, where the specification for each zone would
depend upon stream classification, degree of pre-
sent and projected demographic and industrial
development, and local conditions such as the
ability to modify streamflows through storage
regulation.
3. Require individual levels of waste reduction for
each effluent consistent with an optimal allocation
of the receiving water's assimilative capacity.
Generally, this implies the specification of an
effluent standard in terms of a minimum quality
requirement.
Purposes:
The purpose here is to motivate compliance with a stipulated effluent
standard or level of waste effluent treatment. Administrative
alternatives within the method specify whether the cost of treatment
will be computed on an individualized basis or based on groups of
dischargers. A "cost of treatment" program helps the planner to see
what standards cost. Even though benefits are hard to quantify, a
good knowledge of real costs may aid in assessing the values
associated with levels of surface water quality. In addition, of
course, revenues generated can be used to fund public water improvement
projects.
Precedent:
The Czechoslovak system, enacted in 1966, establishes a "basic
indemnity charge" based on each discharger's annualized cost of treat-
ment. (See Appendix E for description.) The manner in which the
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required level of treatment in each case is determined is not specified
in the Act itself. Apparently, there is some other administrative
formula used by the Czech River Board to determine required degree of
treatment. The Czech law provides for an optional determination of the
fee from an engineer's estimate as against a standard table. In
addition to the basic charge, the system provides a surcharge tax
based upon an assessment of the degree to which the net effluent dis-
charged will degrade the river quality.
Considerations and Issues:
Having determined the degree of treatment to be required in each case,
the annualized cost of treatment must be determined. The cost of
treatment will be related to the nature of the treatment process re-
quired, as well as to the degree of waste reduction required. In the
case of industrial effluents, treatment processes may be as variable as
the production processes that generate the wastes.
From an operational standpoint, an agency would appear to have two
alternative approaches to cost estimating.
1. Base costs on an engineering design of the treatment
process proposed for each effluent.
2. Base costs upon standard tables relating factors
such as population served, level of particular
industrial product output, etc., to standardize
treatment costs under specific degrees of treatment.
These tables are generally derived on a statistical
basis taking into account a variety of technical
considerations relating waste product and waste
process discrimination. The cost of treatment de-
rived in this case is a statistical quantity with
an associated probability that a randomly selected
effluent will have a given cost of treatment. For
example, if mean costs are used as the standard basis,
an individual estimate for a typical polluter has a
50% probability of being exceeded when the plant is
actually built. For a discussion of planning for
treatment under uncertain costs, see K. L. Shah and
G. W. Reed. 8
Since the purpose of an effluent fee considered here is to provide an
economic incentive to treat or otherwise ameliorate a waste discharge
condition, a first step in the direction of treatment is an engin-
eering design of a treatment process. If the agency is not equipped
to provide the necessary engineering design in each case, the fee may
be used to encourage the polluter to invest, as a first step, into
producing a detailed engineering report and design, which would include
a properly documented estimate of the annualized cost involved.
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A logical approach that suggests itself, therefore, would be to
initially allow the polluter an optional basis for treatment cost
computation. Should he elect to have the agency compute his fee
using the standardized table approach, the agency may encourage him
to proceed with engineering design by assigning a fee with a high
probability of exceeding actual treatment costs.
If the regulation agency maintains the power to alter degree of
treatment required as conditions in the State change, the system
would appear perfectly appropriate for the longer term, with the
understanding that the State will not act "unreasonably." For
example, a discharger who may have been required to invest in pri-
mary treatment in 1965, or a township with a combined sewer system
that met prior regulations, should not be required to abandon the
facility in order to comply with changing regulations. Rather, the
system should view compliance to changing standards in an incre-
mental manner. A reasonable requirement may specify that the
engineering design, for the level of treatment currently required
must include provisions for future plant construction sufficiently
large to accommodate future expansion as the volume treated grows,
and as more stringent treatment requirements may be anticipated in
the future.
Preliminary Assessment:
The charge method based on annualized cost of treatment is meant to
motivate dischargers toward meeting administratively determined
effluent levels or standards. The fee is designed to encourage com-
pliance and thus, does not directly address the issue of efficiency.
Efficiency may or may not have been considered in the establishment
of effluent standards, but in any event these standards represent an
allocation of the stream's waste assimilative and transport capacity
to the individual dischargers.
Downstream damages are not directly reflected in the annualized cost
of treatment charge. The setting of a stream quality standard reflects
an estimate of downstream damages, but may not state them explicitly.
In the ideal case, a charge set to motivate dischargers to meet
effluent standards should be less than the downstream damages or it
would be inappropriate to do the treatment. The inexactness of cal-
culation makes it hard to compare downstream damages with fees based
on treatment costs.
Equity can be established between the dischargers who are presently
treating wastes and those who are not. A charge based on treatment
costs will force nontreaters to bear the costs of treatment during
the construction period. To the extent a charge is greater than the
cost of treatment, there will be a shift of income (through lower
relative costs) to the dischargers who are already treating.
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Charge Based Upon Stream Quality Degradation
Characteristics:
The charge method characterized here is modeled on the method used in
Czechslovakia. Classification is difficult because the Czech method
combines elements from some of the charge methods discussed above and
further combinations might be imagined. The special feature of the
Czech system, however, is that it incorporates the relationship between
a discharger's effluent and the stream flow at his location in the com-
putation of the charge. Thus, the relative deterioration in stream
quality attributable to each discharger is factored into the effluent
charge.
In the Czech system, a discharger's loading of suspended solids and
biochemical oxygen demand is divided by the streamflow to give the
"calculated stream deterioration" caused by him. This calculated
deterioration is then set over an otherwise-determined standard "unit
of deterioration" to give a fraction expressed as an index. The
fraction is then applied to the discharger's annualized cost of treat-
ment to determine a surtax which he must pay in addition to his
annualized cost of treatment. The two charges together constitute the
discharger's effluent fee.
Purposes:
The fundamental purpose of this charge method as employed in Czecho-
slovakia is to motivate those dischargers who are not treating their
wastes or who are doing so insufficiently to speedily comply with
effluent and/or treatment standards and to employ short-run measures
to abate their discharges in the interim. Revenues derived from this
charge method may, of course, also be used to fund public or regional
water improvement projects. It is also possible that a charge based
upon degree of stream degradation could be structured to implement
stream standards if an adequate water quality model were available and
if the "basic unit of deterioration" were appropriately calibrated.
Precedent:
As indicated above, the Czech system instituted in 1966 provides the
model for a charge based upon stream quality degradation. The Czech
system is discussed in greater detail in Appendix E. It should be
apparent here, however, that the "surtax rate," representing the degree
of stream deterioration attributable to a discharger, need not
necessarily be applied to a discharger's annualized cost of treatment.
It could, for example, be applied to an otherwise uniform charge or to
a charge based on population equivalents or on a dilution factor. A
uniform charge weighted by stream classification or zone somewhat
resembles a charge weighted by degree of stream deterioration. The
latter, however, may reflect relative impact on a common resource much
more precisely and individually.
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It is also worth noting that a charge method which takes some account
of degree of stream deterioration reflects in a crude way downstream
damage caused by the discharger. We say "crude" because degree of
stream deterioration does not measure damages on a monetary basis and
because equal degrees of stream deterioration at two different loca-
tions will not in all likelihood represent the same amounts of damage
to downstream users of the surface water.
Considerations and Issues:
A stream quality degradation method places a larger burden upon the
administrating agency than any other except a stream damage system.
To determine each polluter's share in the degrading of stream quality,
a water quality model is required to combine data on the location and
loading of each polluter with the stream hydrology and to estimate the
proportionate contributions from each polluter.
A reasonable water-quality model is not outside the state of the art,
as evidenced by recent technical literature, but it would take time to
develop and validate such a model. A good model will come with time
but there are problems. One recent paper^ finds that correlating model
calculations with river quality measurements may pose formidable
difficulty in identifying all sources of actual pollution for inclusion
in the model. Recorded sources of effluent discharge were shown to
account for 25%-40% (in one case as little as 7%) of the BOD loading,
which, according to the model, was required to explain the observed
dissolved oxygen levels in the rivers.
Preliminary Assessment:
Since the basis for the charge under this system is the stream quality
loss imposed by each effluent, it is closely related to the dilution
factor method. One possible measure of the "cost" of stream quality
loss is the cost of its mitigation or repair; since dilution is one way
to restore quality, its cost can be a reasonable estimate for the "cost"
of the loss in stream quality. The greater the degradation caused by a
particular effluent, the greater the amount of dilution water required
to restore the stream to the desired level of quality.
Since the stream quality degradation charge may provide for a uniform
rate wherever streamflow is identical, so as to meet a specific stream
quality standard, it may offer local efficiency or optimality. The
administrative problem is to determine the extent of quality degrada-
tion rather than the dilution factors. The difficulties and range of
possibilities in constructing waste-loading accounts for rivers and
lakes has been covered above.
The preceding assessments of the dilution factor and uniform charge
methods in terms of equity, incentive effect and income potential apply
with substantial equivalence here. Equity can be approached as between
dischargers and sufferers of downstream damage, as well as among
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dischargers responsible for similar degrees of stream quality degrada-
tion. As between dischargers who are already treating and those who
are not, the relationship of the fee to individual costs of treatment
will determine the extent of any relative shifts of income.
The incentive effects will again depend on the relation of the fee to
individual discharger's costs of treatment—some will treat their
wastes while others will find it to their advantage to pay the fee and
continue polluting. A charge based on stream quality degradation could
be a constant source of revenue if applicable to all discharges and
used to implement stream standards. Here again one either assumes
satisfaction with the resulting water quality, which will tend to de-
cline over time, or arranges to adjust the basis for the charge
accordingly.
DATA REQUIREMENTS FOR VARIOUS EFFLUENT CHARGE METHODS
The charge methods examined in previous sections remain to be considered
generally in the light of requirements that each may impose upon an in-
formation system to support operations and administration. The basic
data needs of any charge method will be extensive when one recognizes
the variety of contaminating constituents of effluents, the number of
discharges, their location and variable frequencies and hydrologic con-
ditions to be encountered. Subsequently in Section VI these several
requirements are examined in more detail. Here, we offer a preliminary
assessment in terms of the six methods under consideration.
Charge Based on Downstream Damages
The charge under this method will be some function of the dollar damages
imposed by an effluent on all downstream parties. It may be based on
actual damages or inferred damages. If the charge is based on actual
damages, operation of the information system will have to include de-
tailed monitoring of each discharger's effluent load vector, streamflow
and stream quality values, and all nondisposal uses and their associated
cost/benefit functions—assuming such uses, including conservation, have
measurable economic values over a requisite range of physical conditions.
These data must be stored in historic data files and at the end of
regular intervals, say each month or year, they must be analyzed using
a two-part calculation. The first summarizes the costs and benefits
actually incurred by all downstream water users during the interval as
a result of actual conditions. The second calculation must modify the
actual stream quality vector by subtracting the loading due to excess
or' damaging pollutants contributed by each discharger, i.e., the
difference between his actual load and that which he would discharge if
his treatment measures were such as to preclude downstream damages.
This modified streamflow must then be applied to downstream users' cost
and benefit functions to derive a second set of costs and benefits.
The difference between the two calculations becomes the base from which
to calculate effluent charges. This approach, using actual damages,
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requires a massive collection of historic data (i.e. , observed during
the year) as well as some very complex methods of analysis. The in-
formation system can be operated only by employing fully automated
techniques.
An alternate approach is to estimate the value of damages by a similar
two-part calculation, but using average values for waste discharges,
streamflow and downstream uses. This approach eliminates the sub-
stantial demand for field data, but only after sufficient initial data
have been gathered to establsih average values. The analytic require-
ments remain essentially the same.
The scope of the information system depends also on the number of
quality parameters considered. The most common is BOD/DO, which re-
quires that the analytic routines have the capability for modeling the
assimilative capacity of the stream. This capability in turn requires
data on reaeration and deoxygenation coefficients for each stream
reach, as well as data to reflect benthic actions, natural organic
loadings, and, of course, the BOD loading from all dischargers regard-
less of the damaging or non-damaging nature of their effluents. Non-
degrading pollutants seem to involve a much less complicated analytic
procedure, but this is not necessarily the case. The effect of
nutrients on the eutrophication of lakes and ponds is an example.
It seems clear that a method of charges based on downstream damages is
presently infeasible to implement because of the substantial demands
placed on design and operation of an information system. While it is
technically feasible to develop a suitable system, its functioning
would require fully automated techniques supported by extensive data
banks. The time needed to make such a system operational must be a
major factor to consider in the selection of this charge method.
Uniform Charge to All Polluters
Under this method, it is first necessary to establish a charge rate for
each waste constituent, i.e., dollars per pound of BOD or per unit of
heat expressed in Btu's or other units of measure. The total charge
then becomes the sum of the products of each constituent waste load and
its applicable rate. The term "uniform charge" stems from the fact
that the rate schedule would be uniformly applied to all dischargers,
or to all those on whom a charge is to be levied within the area of
jurisdiction.
The uniform charge method places two demands on the information system,
first for establishing the rate schedule, second for administering the
charge system. All potential dischargers must be listed and the waste
load discharged by each expressed in terms of each polluting constituent
and the time variation of its discharge. The next step depends on the
primary purpose of objective associated with the establishment of the
charge. If the purpose is to raise revenues, the total amount of such
revenues needed will have to be established, and then the rate structure
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can be set so as to yield the desired amount. If the purpose is to
serve as an incentive for the early completion of necessary treatment,
it becomes necessary to obtain the annual cost of treatment for each
discharger and then set a charge rate which will equal or exceed the
treatment costs for any polluter. If the purpose is to reflect the
amount of downstream quality degradation or damages, it is necessary
to obtain physical stream data and water use data and to develop some
appropriate analytic routine for setting the rate structure.
Once the rate structure had been established, it is a simple task to
calculate the individual charges and administer the operation of the
plan, since the essential data will already have been collected for
the purpose of establishing the rate structure. The major demand on
the information system occurs therefore during the implementation
phase of the uniform charge method, and this fact is often overlooked
when this method is considered. The apparent simplicity of using a
uniform charge method is primarily associated with the ease with
which the charge structure can be explained to the public, and
individual polluters can readily calculate the charges which they
would expect to face.
A variation on the above approach involves the use of a flexible rate
structure initially set on the basis of judgment and then readjusted
periodically on the basis of the observed changes which actually occur
in resulting system water quality. In essence, one increases the
charges until the desired levels of stream quality are achieved. This
approach is not appropriate to short-term situations in which compliance
with stream standards is sought within a limited time period. The
concept often arises during the general consideration of charge methods
since it relates to the behavioral response of individuals to an in-
duced "market" condition. If the method were adopted, the damands on
the information system would be felt less initially than during the
operational and surveillance period.
The flexible charge rate approach may be used in conjunction with charge
methods other than one based on a uniform charge to all polluters, but
it is perhaps most applicable to this method because of the difficulty
of selecting appropriate uniform rates to accomplish the overall manage-
ment objectives.
Uniform Charge Weighted by Stream Class Or Zone
This charge method makes the same demands on the information system
that the previous method does and, in addition, requires that separate
charge rate schedules be established for each stream class or zone.
Since streams in almost all states are in fact classified by segments
or reaches—and in many, quite short reaches—this task represents an
added requirement under this charge method. It is, of course, necessary
to obtain data indicating the stream classification where each dis-
charge occurs, but this presents no serious problem.
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Charge Based on Dilution Factors or Population Equivalents
The charge method here resembles the two previous methods except that
it is based on a composite factor for the polluting constituents in
the applications currently in practice. The information system require-
ments for all three methods can be compared by use of the following
equations:
(a) Uniform charge:
CHARGE(I) = SUM [RATE(P) x LOAD (P,I)]
P = 1,N
(b) Uniform charge by stream class or zone:
CHARGE(I) = SUM [RATE(P,Z) x LOAD (P,I)]
P = 1,N
(c) Dilution factors or population equivalents:
CHARGE(I) = RATE * FUNCTION [LOAD (P,I)]
P = 1,N
The subscripts for the variables are shown in parenthesis and are
represented as follows:
I - individual dischargers
P - polluting constituents
N - the total number of constituents
Z - stream classes or zones
The function in the dilution factor method can be established in
various ways, but the intent is to combine the effects of various
polluting constituents in order to develop a common pollution index.
The rate, although shown as a constant, can be a schedule which varies
as a function of the pollutant, thus: RATE(P), or as a function of
the stream class or zone, thus: RATE(Z).
The information system requires knowledge of the volume of discharge
and the concentration of pollutants for each discharger in order to
determine the loads. With this knowledge, an appropriate rate struc-
ture can be established as a function of the primary purpose, i.e.,
revenue, incentive to install treatment facilities or adjust processes
or affect on-stream quality or damages. Additional information may be
required depending on the purpose involved. The information require-
ments for the administration of the system are minimal once the rates
have been established, since most of the data will already have been
collected for that purpose.
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Annualized Cost of Treatment Charge
The charge under this method is based on the annual cost of maintenance
and operation plus the amortized value of capital expenditures.
Methods for estimating annualized treatment costs are presented in
Appendix F.
The information system requirements for this method seem at first less
demanding than for some of the other methods, since no downstream
quality analysis or rate schedules appear to be involved. However, the
treatment costs which must be determined are those for facilities which
the polluter must install in order to come into compliance with some
pre-established standard. In order to determine such costs, a pre-
liminary design is required, and for this purpose information about the
nature of waste discharge and receiving water characteristics and
classifications are necessary. Thus, the annualized cost of treatment
method does not necessarily reduce the total information requirements,
although some of the responsibility may be shifted to dischargers'
design engineers.
As with other methods, there is an opportunity to reduce data and
analytic requirements by the use of simplifying assumptions or approaches.
One approach of this kind uses standard curves showing average treatment
costs for municipalities and industries as a function of plant size;
this approach fails to account for costs which vary for each installa-
tion, such as municipal sewer system costs and land and damage costs.
Charge Based on Stream Quality Degradation
Here the charge is determined as a function of the stream quality loss
imposed by each effluent. The information system requirements are
somewhat similar to those for the downstream-damage method except that
data on downstream reach classifications and standards must be sub-
stituted for the types and amounts of water use, the associated cost/
benefit functions, and the functions relating use to water.
This charge method requires considerably less data than for other
methods, but the analytic requirements remain much the same. The only
way the effect of an individual discharger's waste load on all down-
stream reaches can be determined is with the use of a detailed water-
quality model. The model must first be operated with the discharger's
load included, and then without it. The change in the stream quality
is then determined and serves as a basis for determining the charge.
There are several variations of this method which can serve to simplify
the analytic requirements. (For example, the number of pollution con-
stituents considered in the analysis may be limited to BOD, SS, and
Btu's; the degree of deterioration measured may be limited to wastes
directly discharged rather than for all downstream reaches.) A further
simplification assumes that water quality in streams before wastes are
added is fixed, e.g., at the average values established by standards
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for the reach. This essentially eliminates the need for a water-
quality model since each waste load is in effect added to "standard"
quality water. Only stream classification and flow rate at the point
of discharge must be known, and the analytic requirements consist
primarily of making simple dilution computations.
Summarizing, it is evident that any of the six effluent charge methods
that we have examined and assessed will impose substantial information
and analytic requirements. These will vary by the complexity of
physical characteristics to be encountered, each associated with demo-
graphic, economic and hydrologic uncertainty. The evaluation is
further complicated because of the range of structural variations
possible within each method. These can range from very accurate
structures which provide a high level of technical credibility and
equity, but which have high administrative costs and implementation
time, to very simple structures which would yield very different re-
sults. Thus while data considerations are not overriding in a choice
among most methods, their implications must be recognized in the final
selection process.
NOTE ON THE LEGISLATIVE BACKGROUND IN VERMONT
The 1969 Act, No. 252, which gave rise to this study of effluent charge
systems, was by no means an initial attempt at water pollution control
in the State of Vermont. In fact, it was an amendment, albeit very
significant, of an existing Water Pollution Control Statute.
The first major legislative attack against water pollution on a
systematic state-wide basis occurred in 1943. In that year the General
Assembly enacted No. 109 of the Acts of 1943 entitled, "An Act Pro-
viding Means to Control Pollution of Streams and Water" [V.S.(1947)
§6304 et seq.], and declared its policy to be:
"...to preserve and improve the purity of the waters for
the protection of public health, animal and aquatic life
and for the use of industry, agriculture, and recreation."
This Act prohibited any source of pollution not existing before June 1,
1943, but expressly exempted from this prohibition (i) those engaged
in the manufacture of war materials, (ii) the fertilization of fields
and crops, (iii) all municipalities and individuals using the waters
for sewage disposal, and (iv) mill and mnaufacturing enterprises
operating before the passage of the Act. Clearly, the prohibitions
were not intended to apply to very many dischargers. Moreover any
orders issued by the then Water Conservation Board were constrained to
consider the costs involved in the light of benefits to be derived.
In 1949 the General Assembly approved and enacted the New England
Interstate Water Pollution Control Compact and amended certain sections
of the 1943 statute [Acts of 1949, No. 148]. These amendments adopted
the State's first classification of waters in the A, B, C, and D
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categories and made provision for further classification by the Water
Conservation Board. In addition, requirements were established for
petitions and authorizations from the Board for any increase in the
sources of pollution after the date of enactment, and municipalities
were required to file maps and plans of their sewage collection and
disposal facilities.
The Water Pollution Control Act was again amended slightly in 1951
[Acts of 1951, No. 131] and 1953 [Acts of 1953, No. 188], in the first
year to authorize the Board to take action against parties who de-
graded waters below the established standards, and in the second to
appropriate money to carry out the terms of the Act over a two-year
period. The classification categories were redefined in 1961 and
1967 [Notes 10 V.S.A., Chap. 33 (1959)].
In 1964 a major amendment was enacted which gave power to the Board to
enter on private lands for the purpose of water pollution inspection,
to examine records and to require records to be maintained and sub-
mitted to the Board which pertain to disposal systems and related water
quality projects [Acts of 1964, No. 37 (Sp.Sess.), 10 V.S.A. §579].
The 1964 Act stated its purpose as follows:
"It is the purpose of this Act to amend the Vermont statute
annotated pertaining to water resources by further classi-
fying the waters of Vermont to protect, maintain and improve
the quality and quantity of the waters of Vermont for water
supplies, the propagation of wildlife, fish and aquatic
life, aesthetic value and for domestic, agricultural, in-
dustrial, commercial, recreational and other legitimate
uses; to provide that no waste be discharged into the waters
of the state without first being treated to such degree or
to protect all legitimate beneficial values and uses of such
waters; to provide for the prevention, abatement and control
of new or existing practices harmful to water quality; and
to clarify and expand the duties of the Vermont Water
Resources Board so as to make these objectives more sus-
ceptible of accomplishment."
Presumably this statement of legislative intent is as valid today as
when set forth in 1964.
The 1969 Amendments which became largely effective on April 4, 1970,
constitute a major revision of the 1943 statute as theretofore
amended. They provide for discharge reports, discharge permits,
temporary pollution permits, the revocation of previously issued per-
mits on July 1, 1971, enforcement powers and increased penalties for
noncompliance. In addition, of course, the 1969 law contained §912(e)
providing for effluent charges applicable to temporary pollution
permit holders.
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SECTION V
A METHOD, STRUCTURE AND SCHEDULE FOR VERMONT
INTRODUCTION
Preference for an Annual!zed Cost-of-Treatment Charge Method in Vermont
In the review and assessment contained in Section IV of this Report,
consideration of alternative charge methods was made in the general
context of water quality management. As indicated there, an effluent
charge system is but one of several techniques available for the
management of water quality. Since some charge methods are limited in
purpose and necessarily imply use in combination with noncharge tech-
niques, those various relationships were described. The remaining two
sections of this Report focus on the selection of a charge method,
structure and schedule and supporting administrative procedures suitable
for implementing Vermont's combined permit-fee approach to water quality
management.
A charge method based on dischargers' annualized costs of treatment is
most appropriate to the pattern of water quality management (including
both charge and non-charge techniques) chosen by the Legislature of the
State of Vermont and incorporated in Title 10, V.S.A., as amended. The
most significant features of the Vermont pattern of water quality
management are:
• The determination of desirable levels of water Duality by
legislative and administrative deliberation through the
establishment of categories of water uses, classification
of streams and lakes by water use and determination of
water quality characteristics required for each category
of use. (§§ 902-907)
• The implementation of stream standards via a universal
permit system designed and administered by the Department
of Water Resources which specifies for each discharger
permissible and impermissible levels of waste loading
such that when all dischargers comply with the terms of
their respective discharge permits, the quality of
receiving waters will not be degraded below established
standards. (§ 909, 910a, 911a)
• Special authorization via "temporary pollution permits"
of discharges of certain wastes which may reduce the
quality of receiving waters below established standards.
Such authorization can be granted only under special
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circumstances and in the public interest of providing
time during which the degrading effects of such dis-
charges can be abated. (§ 912a(a)-(d))
• The fixing of "pollution charges" to be paid by holders
of temporary pollution permits for their temporarily
authorized discharges which, as the statute states,
"represent an expropriation of a valuable public
natural resource for private or limited use." Such
pollution charges are to be imposed for the principal
purpose "of providing the economic incentive for tem-
porary permit holders to reduce the volume and de-
grading quality of their discharges during the limited
period when such discharges are authorized." (§ 912a(e))
The first three features set forth above clearly envision noncharge
techniques for their effectuation. The fourth expressly calls for a
special purpose effluent charge system—temporary in nature, limited
in scope and applicable only to dischargers who do not qualify for a
discharge permit but who can qualify for a temporary pollution permit.
In recommending a charge method most suitable to Vermont and reflect-
ing the statutory purpose, we feel the economic incentive of the charge
must operate in two dimensions. First, the time period for which a
discharger is eligible to receive a temporary pollution permit should
be limited as much as reasonably possible. Since this period depends
in part on the time necessary "to research, plan, construct, install
and operate acceptable abatement facilities," uncooperative dis-
chargers may have ample opportunity to be less than vigorous in pro-
viding proper treatment for their wastes. That is, as long as it is
cheaper to delay, exaggerate the time needed for meeting effluent
standards, and petition for renewals of temporary permits than to pro-
vide proper treatment, there will be a strong economic advantage to do
so. Thus, we feel it important to remove this economic incentive to
delay and to establsih equity as between those who have already quali-
fied themselves for discharge permits and those who have not. Only
an annual effluent charge equal to dischargers' annualized costs of
providing acceptable treatment will serve this purpose.
The second dimension of the economic incentive called for in the
statutory purpose concerns temporary measures (short of constructing
and operating the required facilities) which reduce the volume and
degrading quality of discharges during the limited period for which
a temporary permit is valid. Such temporary measures include process
and product changes, lagooning, simple housekeeping practices, and
others. To encourage this type of activity, we feel the effluent
charge should be some multiple of annualized cost of treatment, giving
room for charge reductions which reward temporary reductions in dis-
charge of wastes without impairing the incentive to avoid delaying
the construction ard operation of required treatment facilities.
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Our recommendation of the annualized cost-of-treatment method is guided
by one other statutory consideration in addition to the pattern of
water quality management and the special pollution charge purpose dis-
cussed above. Section 921(e)(2) of 10 V.S.A. indicates the factors the
Board may incorporate in fixing pollution charges. That section
states:
(2) How established: A pollution charge is the price to be
paid per unit of waste discharged into waters of the
state. The charge may vary among different types or
classes of wastes to account for variations in the
degrading effects of various wastes. The charges may
also vary to account for variations in the water quality
standards of different classes and the hydrologic con-
ditions of different receiving waters. In establishing
the charges the board shall attempt to approximate in
economic terms the damage done to other users of the
waters, both private users and the general public,
caused by the degrading effect of various types of
waste in varying volumes and frequencies of discharge
upon water qualities of the different classes of waters.
In determining relative degrading effect the board may
employ any scientific or technical criteria or param-
eters such as biochemical oxygen demand and suspended
solids and may express the unit charge in terms of such
standards of measurement.
The "price per unit of waste discharged" provision of this subsection
is little more than a definition of a pollution charge. Subsequent
provisions of this subsection make it clear that the price per unit
need not—and in all likelihood should not—be uniform. In essence,
a price per unit of waste is a mathematical convention since an
effluent charge, regardless of the method selected for its computation,
will always yield a per unit rate when divided by the number of units
of waste to which the charge is applicable.
The number of units of waste to which a charge is applicable is
determined in Vermont through the administrative process of reviewing
applications for discharge and temporary pollution permits. That is,
the permissible and impermissible levels of waste loading designated
by the Department will take into account different types and classes
of wastes as well as different classes and hydrologic conditions of
receiving waters.
Finally, the annualized cost-of-treatment method does approximate as
closely as possible under current constraints, the damage caused in
economic terms to other users of the waters by the degrading effects
of those wastes subject to an effluent charge. That this is the case
can be appreciated by examining the process of stream classification
and standard setting.
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When stream classifications and standards are adopted by the Board and
ratified by the Legislature, very significant judgments are made about
the relative value and cost of different water uses. If these judg-
ments are rational as one must assume they are, then for each stream
segment water quality standards are set where the marginal value of
non-waste disposal uses equals the marginal value of waste disposal
uses. A stream's value for waste disposal is, of course, measured by
the abatement and treatment costs necessitated when standards prohibit
the use of the stream for that purpose. Thus, a stream standard re-
flects the judgment that water of lower or higher quality will not
optimize the total value of the uses of a waterway among competing
users. Waste discharges which degrade receiving water quality below
established standards—i.e., those discharges for which a charge must
be paid in Vermont—cause damage to other users of receiving waters
equal to or greater than the costs of their abatement to dischargers
in the judgment of the Board and Legislature. In this way a pollution
charge based on annualized cost of treatment will approximate the
damage caused in economic terms to other users. The charge will equal
or be slightly less than, but never exceed, the value of such damages
as implied in the stream standards.
The remaining sections of Section V discuss the considerations relevant
to selection of a charge structure and schedule within the cost-of-
treatment method. It should be noted here that the cost-of-treatment
method was selected for implementation by the Vermont Department of
Water Resources.
SELECTION OF A CHARGE STRUCTURE
Within the charge method based on dischargers' costs of treatment, a
number of what we have called "structural" variations or alternatives
are open to Vermont's administering agencies in computing a schedule
of charges. For example, costs of treatment may be calculated for each
discharger on an individual basis, or dischargers may be grouped by
size and type of economic activity and average costs of treatment
determined for each group. More generalized bases for cost-of-treatment
computations are also possible. All dischargers may be categorized as
either municipal or industrial and average costs of treatment determined
for each category. Ultimately, a single average cost of treatment may
be determined for each pollutional constituent, in which case the
charge becomes a uniform cost-of-treatment charge. It is also possible
to vary these alternatives further by including a factor which reflects
the degree of stream degradation occasioned by dischargers.
Assessment of Structural Variations
The purpose of this section is to assess structural alternatives and to
provide a basis for Department selection among them. We have applied
the same assessment criteria here as we used in evaluating alternative
charge methods. In addition, we have assessed the structural variations
against the standard constitutional tests for proper exercise of the
State's police powers.
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Constitutionality
(1) Introduction. It is important to examine the "equal protection"
and "due process" aspects of various structural alternatives within
the cost-of-treatment charge method where such alternatives are em-
ployed under the State's police power for the purpose of motivating
compliance with prescribed waste effluent standards. Some of the
broader legal considerations regarding Vermont water law as developed
by Common Law Precedent and the constitutionality of effluent charges
employed for other purposes related to water pollution control are
contained in Appendices A and B. The discussion here is directed to
specific effluent charge structures considered suitable for the par-
ticular purpose envisioned by Section 912(e) of 10 V.S.A.
An additional introductory comment is in order. The constitutionality
considerations set forth here are patterned largely on Lyman's study
for the University of Wisconsin Water Resources Center j*-0 however, there
are some very significant differences. First, Lyman examined only
effluent charge structures based on downstream damage and on cost-of-
treatment and did so generally. That is, he did not investigate in
any detail the dimensions along which either effluent charge might be
established. Second, his analysis assumed a very general public
policy purpose—"pollution abatement and control, or in other words,
the reduction and control of downstream damage" and did not consider
the more refined and narrower water quality management purpose intended
by the Vermont Statute. Third, even within the context of Lyman's
analysis, his conclusion that an effluent charge system based on costs
of treatment would be unconstitutional has been vigorously contested
(and rightly so, we believe) by Peter Davis, General Attorney for the
U.S. Department of Agriculture at the Wisconsin Water Resources Center.
Thus, Davis points out in commenting on the conclusion Lyman reached:
"The basis for that assertion is his interpretation of
effluent charge systems based on treatment costs. He pre-
sumes that waste dischargers would be assessed charges on
units of raw waste produced, although the amount those
same dischargers introduced to the watercourse per unit
volume of raw waste produced may vary greatly as a result
of treatment.
"Of course if that were the way an effluent charge system
were set up, his conclusion would probably be correct.
But all effluent charge systems based on treatment costs
proposed to date are grounded upon units of waste loadings
introduced into the watercourse, or upon units of raw waste
produced coupled with reimbursement or credit for treatment
costs. In either of those situations, there would be no
unequal treatment of dischargers in equivalent situations."
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(2) Constitutionally Valid Exercise of the Police Power. The basis
of a constitutional challenge to an effluent charge system starts
from the Common Law proposition that riparians (and in some cases,
especially in Vermont, non-riparians as well) have the right to a
"reasonable use" of the State's surface water courses. The exact
delineation of these rights is highly technical but unimportant
here. The key point is that "reasonable" use comprehends not only
domestic, recreational, industrial and agricultural uses but also
the right to reasonable use for waste assimilative and transport
capacity. Such a "right" constitutes a kind of "private property"
of which a discharger might be deprived by requiring him to pay a
charge before discharging waste in any amount. A discharger would
then claim that the effluent charge amounted to a deprivation of
private property without due process of law, without equal protection
of the law, and without just compensation in violation of the 5th and
14th Amendments to the U.S. Constitution.
For the purposes of this section, assume that the issue of whether
an effluent charge system relevant to the implementation of §912(e)
constitutes a "taking for a public purpose" is resolved in the State's
favor, either because the "right to reasonable use" does not extend
so far as to include discharges which would degrade the quality of
the State's waterways below the standards established by the Board's
classifications or because any interference or infringement with
property "rights" constitutes in this circumstance a regulation
rather than a taking. Also, assume that the status discrimin-
ation between those eligible for discharge permits and those not
eligible is accomplished in a constitutionally valid manner.
There remains, of course, the issue of whether a schedule of effluent
charges, applicable to those not holding discharge permits or to
quantities of effluent not covered by a discharge permit and imposed
for the purpose of motivating compliance with established effluent
standards, is a valid exercise of the police power. The valid
exercise of such power must meet three tests: (i) there must be a
proper legislative purpose, (ii) the regulations must bear a reasonable
relation to that purpose; and (iii) the regulations must be neither
arbitrary nor discriminatory. The standard for each of these tests is
discussed in turn below.
(i) A "proper legislative purpose" has been defined by the
U.S. Supreme Court to include protection of "...the
safety, health, peace, good order and morale of the
community"12 and the values represented may be
"...spiritual as well as physical, aesthetic as well
as monetary. It is within the power of the legisla-
ture to determine that the community should be beautiful
as well as healthy, spacious as well as clean, well-
balanced as well as carefully patrolled."13 There is
little doubt that such a broadly drawn standard could be
met in Vermont by a cost-of-treatment effluent charge
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(either adjusted or unadjusted for the impact on water
quality degradation) applicable to those who would de-
grade water quality below the established standards.
Water pollution control is unquestionably a matter of
health, safety and welfare. Motivating compliance
with standards that serve those purposes is merely in-
cidental thereto.
Section 912(e) sets forth the principal purpose as
providing an economic incentive to reduce the volume
and degrading quality of discharges and thereby
raising the quality of waters in the State. There
is no reasonable doubt, taken together with other
provisions of Title 10, Chap. 33 V.S.A., that any
of the cost-of-treatment based effluent structures
would satisfy the "proper legislative purpose" test.
(ii) The "regulations-must-bear-a-reasonable-relation-to-
that-purpose" test requires that the means selected
in the light of any facts known or reasonably assumed
must bear a real and substantial relation to the
object sought to be attained.-^ Clearly, many particu-
lar effluent charge systems might be debatable on this
point. For example, an effluent charge system based
solely on downstream damage costs might not provide
much incentive for abatement. However, an effluent
charge based on cost of treatment is uniquely suited
for this purpose. Indeed, one of the strongest
rationales of a cost-of-treatment-based effluent
charge is that only when a discharger is faced with a
charge equal to or higher than his cost of waste
treatment will he not be inclined to stall or other-
wise delay taking appropriate steps to eliminate waste
discharges in excess of his allotted effluent standard.
Clearly, the individualized cost-of-treatment effluent
charge method is the most certain of the administra-
tive alternatives to accomplish the intended purpose.
As the cost-of-treatment computations become more
generalized or standardized by groups of economic
activity, the probability that some one discharger
may have higher treatment costs than the average of
his group increases, and the reasonableness of the
relationship of the charge to the intended purpose
becomes slightly attenuated. A uniform charge may in
some circumstances be far short, and in others con-
siderably in excess, of what is necessary to motivate
compliance with the individual effluent standards.
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The constitutionality criterion at issue here, however,
does not depend on the actual success of the regula-
tions in achieving the desired objectives but rather
depends on the "reasonableness" of the regulations.
Thus, any adjustment for stream quality deterioration
superimposed on a cost of treatment computation (as in
the Czech system) which increases the applicable
schedule of fees would not materially alter this
analysis. Any downward adjustments, however, could
impair incentive effects.
Moreover, the presumption of legislative reasonableness
lies with the State. Therefore, any party challenging
the constitutionality of an effluent charge system on
this point would have the burden of establishing "un-
reasonableness. "15 in most cases, this is a very diffi-
cult presumption to overcome, and one would think that
most cost-of-treatment charge methods would be con-
stitutionally secure in this regard.
(iii) For the "regulation-is-neither-arbitrary-nor-
discriminatory" test, as nearly as we can establish
"non-arbitrary" means nothing separate or distinct from
reasonable and non-discriminatory. Therefore, we pro-
ceed to the non-discriminatory test. Whether an
effluent charge system is discriminatory is at the very
heart of the due process of law and of the equal pro-
tection of law guarantees of the 5th and 14th Amendments.
Necessarily, charge methods based on cost of treatment
will establish different charges for different classes
of persons. The crux of the matter is that the classi-
fications so occasioned must be reasonable in light of
the purpose to be served, and all parties within a class
must be treated alike. By and large, proper classifi-
cation is primarily a legislative function and not a
judicial one, but the courts do and will take a hard
look at the classifications established. In this re-
gard, the precise purpose to be served by the "pollution
control" system becomes very important. This point
will be discussed in greater detail subsequently.
Five judicially established standards for proper classi-
fication are widely accepted as operative.1°
"(1) All classifications must be based upon substantial
distinctions which make one class really different
from another.
"(2) The classifications adopted must be germane to the
purpose of the law.
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"(3) The classification must not be based on existing
circumstances only (i.e., it must not be so con-
stituted as to preclude addition to the numbers
included within a class).
"(4) To whatever class a law may apply, it must apply
equally to each member thereof.
"(5) The characteristics of each class should be so
far different from those of other classes as to
reasonably suggest at least the propriety, having
regard to the public good, of substantially
different legislation."
A few examples may illustrate the arguments that might be advanced. Of
course, waste dischargers would be subject to regulation, whereas other
members of the public would not. This distinction is reasonable because
dischargers are actually the real cause of pollution, whereas the
general public is not. However, not even all waste dischargers are
regulated. For example, farmers whose waste consists of runoff from
fields and feed-lots are not regulated. Nonetheless, those dischargers
who are affected by the charge represent the class wherein the need for
regulation is the clearest.
More difficult is the distinction between those dischargers who receive
a discharge permit and pay no charge and those who receive a temporary
pollution permit and must pay a charge. Here the exact basis for granting
or denying discharge permits must be an integral part of the effluent
charge system. One can easily hypothesize two polluters discharging
equal quantities and qualities of waste into waters classified with the
same minimum quality standards, but where—because of accident of loca-
tion, hydrology or the presence of other users of the waters—one
polluter's discharge would reduce the quality of water below the estab-
lished minimum whereas the other polluter's discharge would not have
this effect. Whether this classification is discriminatory is difficult
to assess. The precise purpose becomes crucial. In the present ex-
ample, the economic incentive to reduce pollution is not the same.
Moreover, similar rates are not being charged each discharger for a
similar unit of waste that causes a similar amount of injury (if that be
the proper test).
To take another example, actual assessments and rates of assessment
might differ from waste discharger to waste discharger upon the same
body of water in different locations, or upon different bodies of water
or depending upon the time of year and prevailing hydrologic conditions.
Such differences in charges might be justified by different amounts of
downstream damage caused but not by differences of incentive effect.
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If effluent charges are computed upon the basis of individual dis-
charger's cost of waste reduction and treatment, the system would
reflect such variables as the financial status of a waste discharger,
the value of his land and capital improvements, the cost and tech-
nology of his production process, and the age of his production plant.
It has been suggested!?that such a system would be dependent upon
rather arbitrary considerations, would not be germane to the "re-
duction and control of downstream damage" and would be found to be
discriminatory and therefore unconstitutional. However, such a
system would be most germane to providing an incentive to comply with
effluent standards, where that is the purpose, in isolation from
other considerations.
Each of the structural alternatives for computing charges based on
cost of treatment would establish classes of dischargers in accordance
with considerations germane to creating an incentive to compliance
with established effluent standards. These classifications would not
be so constituted as to preclude additions to the numbers included
within a class. Even in the case of an individualized cost-of-
treatment calculation where the size of the class may be very small,
all dischargers with the same waste reduction and treatment opportuni-
ties would be equally treated by the effluent fee regulations.
Insofar as the cost-of-treatment computations were numerically de-
tailed and tailored to apply to more specific groups of economic
activity, the classifications would appear to be based on "substantial
distinctions" which generally differentiate between relevantly dif-
ferent groups of polluters.
(3) Summary. It seems that all of the variations which structure
effluent charges on a cost-of-treatment method, including those that
adjust upward for degree of water quality degradation, would meet the
constitutionality requirements of due process and equal protection
when employed for the purpose of motivating compliance with established
effluent standards. The alternatives which create classes on the
basis of specific economic activity or individually would probably
satisfy these requirements most unambiguously. A uniform cost-of-
treatment charge or charges based on general economic activity would be
more crudely germane to the legislative purpose intended but, given
the presumption in favor of legislative reasonableness, would also meet
the usual tests of constitutionality for a valid exercise of the police
power.
Equity:
As the basis for the charge shifts from the specific individualized
cost of treatment to a generalized average, equity becomes more a
tenuous matter. Under the individualized cost-of-treatment method,
equity is established between those who are treating and those who are
preparing to treat, as evidenced by construction, but not operating
treatment facilities. Since the costs that non-treaters face while
building could be made equal to the costs they will face after com-
pletion of the facilities, equity between treaters and non-treaters
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could be made complete. However, as the charge basis shifts toward
the generalized uniform treatment cost, the chances that equity will
not be established between treaters and non-treaters increases.
Average treatment costs determined as a function of the type of
activity and expressed by 2-digit SIC code would come closer to a
specific discharger's actual cost than would a broad average cost
table. There would still be a wide variation in treatment costs
within the same industry, however, and more and more detail would be
needed to work up a generally applicable cost formula. While the
efficacy of the charge in establishing equity among dischargers will
be raised by individualizing treatment costs, the administrative burden
imposed by the establishment of accurate costs will tend to limit the
degree to which perfect equity can be established.
Pollution permit holders facing different costs of treatment will pay
different rates, measured in dollars per unit of discharge, if the
"individualized" or "specific-activity" charge structures are chosen.
If the charge schedule is based on general activity, a different
charge per unit of waste will be established for municipalities than
for industrial dischargers. Such differences in costs, nonetheless,
will continue to confront different dischargers after acceptable treat-
ment has been implemented and charges are no longer levied. A very
superficial equity could, of course, be achieved by a uniform charge
rate, but it is not usually considered inequitable when firms face
different costs for factors such as labor, financing and energy,
because of differences of location, credit standing, technical pro-
cess, labor supply, and other "facts of life." Similarly, differences
in the cost or surrogate costs of proper waste disposal would not
appear to create any undue inequity among dischargers.
Insofar as sufferers of downstream damage will not receive the charges
paid because of effluent which degrades receiving waters below standard,
there will be an uncompensated shift of wealth away from these down-
stream users. Such users do, however, retain their common law remedies
under §919 of 10 V.S.A. if the requisite elements of a private nuisance
action can be established. If the effluent charges are used for water
quality improvement projects, this shift of wealth will be partially
mitigated.
It is difficult to assess with any precision the equity implications
of adjusting the effluent charge structure to reflect the extent of
stream deterioration caused. Any adjustment which reduced the charges
below the costs of treatment would seriously impair the incentive
effects of such charges. Therefore, it is reasonable to assume that
such adjustment, if made at all, would be to increase the charges. In
this connection, it should be remembered that the establishment of a
water quality standard implies that the extent of downstream damage
exceeds the value of assimilative use when waters are degraded below
the standard. Thus, some upward adjustment would tend to create
greater equity as between pollution permit holders and sufferers of
downstream damage. (See Appendix C for a discussion of this point.)
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It is in trying to assess the considerations of equity as among non-
treating dischargers that the real difficulties arise. For example,
it is not immediately obvious whether a discharger who degrades class
D waters is causing greater or less damage than one who degrades
class A waters. Even if damages can be measured by an agreed-upon
dollar figure, consider two pollution permit dischargers, "A" and "B"
in the same reach of a river. A has cost-of-treatment X and causes
damages D; B has cost of treatment Y and causes damages 2D. If each
is granted a temporary pollution permit for the purpose of allowing
sufficient time to implement treatment, and A is charged X and B is
charged Y (without adjustment) so that each will be sufficiently
motivated to begin construction of the necessary waste reduction and
treatment facilities, it can be argued that charging B more than Y
for his effluent is unnecessarily penalizing, given the purposes of
temporary pollution permits. An opposite view can also be taken. The
point here is that it is virtually impossible to assess the equity of
such a situation short of additional judgmental values regarding the
notion of equity.
Economic Efficiency:
As developed in previous sections more thoroughly, the broad viewpoint
of economic efficiency in the "pure" or "ideal" effluent charge sys-
tem, as part of more comprehensive water-quality management programs,
holds that on-site or off-site costs will be balanced at the margin
of trade-off, i.e., by "internalizing" the latter within a regional or
river-basin area or areas. Such areas might ultimately be designated
within any jurisdictional boundaries. The effluent charge is a method
designed to achieve a least-cost or optimal-benefit solution.
Since off-site (instream) costs cannot presently be quantified, we
must look to a narrower efficiency viewpoint and criterion. For imme-
diate purposes of an initial charge structure, it takes the form of
efficiency in the context of the individual discharger, whether the
firm, the industry or the municipality. This will depend upon charge
structure classifications within the cost-of-treatment method and upon
status discrimination.
Given the need for status discrimination in the permit-plus-charge
system and its partial participation by dischargers, no measure of
relative efficiency is apparent among the optional charge structures
within the basic method of alternative treatment costs. Since the
temporary pollution permit holder will be responding to what in effect
is an effluent standard, his response will be more or less internally
efficient depending upon measures open to him to adjust to this
standard. Responses may well include product or process changes, as
well as treatment.
Incentives:
The efficacy of the charge in providing incentives to speed up the
construction of treatment facilities does depend on whether the
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cost-of-treatment calculation is based on individualized costs or
generalized costs. With individualized costs, the incentive can be
tailored to each individual discharger, while the more generalized
the basis becomes, the more likely it is that an individual dis-
charger's cost of actual treatment may be different from the charge.
Where dischargers' costs of actual treatment are higher than the
charge, the only incentive to treatment will be the threat of loss
of a temporary pollution permit. The charge may be considered an
extra burden, but in this circumstance, will not provide by itself
an incentive to construct and operate the requisite waste reduction
and treatment facilities.
Adminis tration:
In terms of administration, the more general the charge, the easier
the system will be to administer. If the State has to assess only a
single general charge per unit of pollution to be removed, that is
much less difficult to do than to calculate the cost for each in-
dividual discharger. It is possible to shift some of the burden of
estimating costs onto the dischargers since, as they will eventually
have to accept a price on the construction contract for the plant,
they are in a position to know the costs they face. However, dis-
chargers will be at different stages of planning and construction and
their estimates of costs will be of variable reliability.
It is possible to merge these approaches to a cost-of-treatment charge
structure. If a discharger has no notion of what his cost will be,
the State can set a cost on the basis of a suitable generalized
measure of activity. The cost should be set somewhat higher than the
expected treatment cost. The State can then recalculate the charge
on the basis of approved treatment facilities for which precise plans
are available. Costs can be recalculated again when the contract is
let. This recalculation of the charge at various stages in the pro-
cess of planning and construction will provide an incentive to proceed
rapidly with the installation and operation of proper treatment
facilities. It will also provide an expending information base re-
garding actual costs of treatment.
Any charge schedule which adjusts for some measure of downstream
damage costs complicates immensely the administrative and technical
task. The difficulties of calculating such measurements are discussed in
Section IV and that discussion is applicable here.
Income Potential:
Income potential is likely to be highest for the most generalized cost-
of-treatment basis, since charges in that case must be set high enough
to provide an incentive for all dischargers, i.e., they are determined
by the worst case. As such, charges will clearly be higher for most
dischargers than their individual alternative costs. In any case,
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income will be derived from charges for only a limited period as
existing non-treating dischargers construct treatment plants, or
otherwise adjust to charges. Presumably, new potential dischargers
will build treatment facilities as part of their total operations and
will be able to qualify for a discharge permit at the time operations
are started. In any event, the income potential of an effluent
charge under the present design of the Vermont Statute will be small
in the long run as dischargers comply with stream and effluent
standards.
We attempted to approximate potential revenues in advance of any
status discrimination by means of a cursory examination of initial
discharge reports. These were so lacking in data as to provide no
clues as to future temporary pollution permit holders. No useful
figures could be derived, and cannot be until the status of per-
mittees is resolved.
Relation to Downstream Damages:
Cost of treatment is not directly related to downstream damage, except
insofar as stream standards reflect an implicit judgment of the
relative marginal values of disposal and non-disposal uses of water-
ways. Damages could be introduced to the charge structure by multi-
plying the cost-of-treatment charge by some factor to reflect downstream
damage. This factor may be useful, since there is some uncertainty
in the estimates of individual costs and increasing uncertainty as
the cost calculations become more generalized. The damage factor would
intensify the incentive to get required treatment plants built. This
intensification can be accomplished by increasing the charge based on
the types of downstream activities which take place or could take place.
Thus, in a reach of water where there is a great deal of recreational
development or potential, the charge might be multiplied by a factor
which accounts for differences in stream use. This factor is similar
to considering downstream damages but without the necessity to value
them precisely. The factor can be applied to any of the structural
alternatives of the annualized cost of treatment method.
Technical Feasibility:
In order to assess the technical feasibility of administering any of
the various charge structures under the cost of treatment method,
it is necessary to define each structure in detail, determine its data,
information and analytic requirements, and then compare these require-
ments with the means available to the Department for meeting them
within specified time, budgetary and manpower constraints.
If the charge structure is based on the generalized approach, it is
necessary to establish a set of charge tables or curves, one for each
classification to be employed. These classifications may reflect the
type of waste-generating activity, e.g., municipality, industry by
type, individual residence, and others. One must determine average
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annual costs as a function of the size of activity. This type of
information is available to some extent—for treatment plant costs of
municipalities (excluding sewer system costs which vary considerably),
for certain types of industries, and for individual residences. There
are, however, several types of industries for which no treatment cost
functions are available, either because such data have not been com-
piled or because treatment costs are not directly related to a pro-
duction index.
A charge structure based on each discharger's individual cost of
treatment tends to avoid the technical problems associated with the
development of a variety of generalized cost curves. Not all appli-
cants for a temporary pollution permit will be able to obtain detailed
plans for treatment facilities with the few months available, of
course, and for these individuals it will be necessary either to
develop cost curves from experience elsewhere or to estimate the cost
of treatment using engineering judgment.
The critical factor will be the number of applicants of various types
for whom treatment costs must be estimated. If there are only a few
such applicants, as for example in a specialized industry, it may be
easier to consider them on an individual basis. Alternatively, if
there are a large number, it may be preferable to develop a general
cost-of-treatment function from available records elsewhere. (See
Appendix F for a more detailed consideration of this question.)
Pep ar tmen tal Sele c t ion
The several charge methods and their structural variations were care-
fully considered in consultation with the ADL project staff team pro-
ceeding to the consideration of a supporting information system. An
approach to charge structure development was adopted that is quite
highly individualized to each discharger's cost situation, rather than
generalized by size or type of activity. The following statement
summarizes the Department's preference for a charge structure. It
formed the working basis for the more detailed examination of charge
schedules and supporting administrative procedures presented in sub-
sequent sections of this Report.
"Within the basic charge method of annualized treatment
costs, charge rates and schedules shall be related as
nearly as possible to individualized cost data, net of
grant support and tax adjustments, as determined appro-
priate by the Department for the size and type of dis-
charge under consideration and the status of plans if any
to reduce discharges. Individual charges are subject to
modification upon a valid appeal supported by engineering
data acceptable to the Department."
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APPROACHES TO A CHARGE SCHEDULE
General Incentive Effects
Section 912a(e) states that
"...the imposition of pollution charges shall have the
principal purpose of providing the economic incentive
for temporary pollution permit holders to reduce the
volume and degrading quality of their discharges during
the limited period when such discharges are authorized."
(Emphasis added.)
To achieve this immediate, short-term incentive, the charge schedule
would seem to require including some provision for reduction of the
charge levied against a discharger in response to his reduction in
effluent discharge, whenever such effluent reduction occurs during
the temporary permit period. The pollution charge system can also
incorporate other possible incentives, such as the long-term incen-
tive for rapid completion of permanent pollution abatement facilities
or procedures, and the short-term incentive to take the next step
toward a permanent solution. In setting up the rate schedule for the
pollution charge system, some potential conflicts between short-term
and long-term incentives become apparent. These conflicts and trade-
offs inherent in resolving them are discussed in subsequent parts of
this section.
Before discussing incentives in detail, the potential disincentives
of the pollution charge system should be considered. Levying a charge
against a municipality or an industrial firm may cause some adverse
reaction. First, care must be taken in explaining the system and in
setting rate schedules to avoid damaging the good relations which exist
between the State agencies on the one hand and individual municipal-
ities and industrial firms on the other.
In addition, imposition of the charge may work a real financial hard-
ship on the discharger, to the point where an industrial firm may
choose to close its doors or restrict its operations. Such actions
may, of course, be economically damaging to the State. In this
regard, it must be noted, however, that imposition of a pollution
charge based on cost of treatment cannot be blamed for such occur-
rences. The charge amounts basically to an early application or
incurrence of the actual cost of treatment which is deemed necessary
by the State to achieve and maintain desirable water quality. It is,
therefore, not the charge itself, but the State's overall program for
clean water, which imposes the additional economic burden on the
State's industries and municipalities. If the charge system were
abandoned and the overall pollution abatement objectives maintained,
the problem would only be delayed.
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It is assumed that the State has carefully evaluated the impact of its
water quality program on the economy of the State; also that the State
officials responsible for implementation of the program are well aware
of the necessity to explain and interpret the several aspects of its
programs to all those who will be variously affected by them.
Short-Term and Long-Term Incentives
In balancing long- and short-term incentives within the pollution
charge schedule, industries and municipalities must be considered
separately. Municipalities have a stable waste load which allows few
opportunities for immediate abatement by temporary or housekeeping
measures; some industries, however, have considerable flexibility in
the short term and can reduce their pollutional loading quickly by
changes in improved housekeeping procedures, processing methods, or
product mix. Furthermore, construction of waste treatment facilities
by a municipality requires several interactions with the State, avail-
ability of State funds, and voting of the program funding requirements
by local citizens. In contrast, industries have fewer apparent
impediments to implementation of permanent abatement procedures;
relatively few men are involved in the decision to proceed, little
interaction with the State is required, and the availability of
capital funds depends primarily if not solely on internal conditions.
Bases for adjusting effluent charges and charge schedules are dis-
cussed in the following paragraphs, along with the overall incentive
effects occasioned by such adjustments.
Municipalities:
It may be desirable to adjust the pollution charge levied against
municipalities during the preparatory period when waste treatment
facilities are being considered and planned, in order to reflect and
encourage any progress made by the municipality toward meeting the
requirements of the temporary pollution permit. For example, the
charge could be progressively reduced as the following steps toward
compliance are taken.
• Approval of preliminary treatment plant plans
• Approval of final plans
• Voting of bond issue
• Securing ownership of site
• Beginning of construction
How might a variable schedule affect the overall incentive character of
the pollution charge? There are two aspects of incentive that must be
balanced. First, in any given year, the pollution charge plus any
59
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out-of-pocket costs to the municipality must be as high or higher than
the estimated annualized cost of treatment in order to provide genuine
economic incentive for the municipality to proceed. If the charge
plus these costs is less than the annualized cost of treatment, even
by a little, the economically efficient discharger will choose the
lesser cost and delay his abatement program. In this case, the eco-
nomic incentive effect of the pollution charge is lost, and any charge
levied against the discharger is, in reality, a fine. While these
statements are indisputable on theoretical grounds, in practice any
charge will add some psychological incentive to those arising from
public pressure to abate as well as the severe penalties in the law
for not meeting the requirements of the temporary pollution permit in
any event.
Second, reduction of the pollution charge as each step of the abate-
ment program is completed does offer the municipality an immediate
incentive to go the next step. The degree of incentive to take the
next step is related to the degree of charge schedule reduction to be
realized. A reduction of less than 10 percent for each step would
perhaps not be considered significant by the temporary permit holder.
Can both of these aspects of economic incentive be maintained in the
pollution charge schedule? We believe that they can be, but only if
the initial charge is set high enough. Figure 1 shows, for illustra-
tive purposes only, how the charge might be structured to maintain
both incentive aspects. It is assumed that the municipality has no
engineering plans at the time the temporary pollution permit is granted,
and that the pollution charge in the first period is set by the
Department. When preliminary plans are approved, the first specific
estimate of treatment cost becomes available and the pollution charge
is based on that estimate. In order to provide incentive for the
preparation of preliminary engineering plans, the charge in period 1
must be higher than that which will result from the cost estimate in
the preliminary plans. Just how much above the Department's best cost
estimate the first-period charge should be set depends on the incen-
tives which are to be operative during subsequent periods.
The charge in period 2, based on the preliminary engineering plans,
would be set in this illustrative instance 40% above the estimated
final cost in our example, in order to allow for later charge reduc-
tions without dropping the pollution charge below the final annualized
cost of treatment. As successive steps in the abatement program are
taken, the charge is reduced by 10% at each step. It is assumed for
the moment that State aid is available when required, an assumption
which is recognized is dependent upon many external factors. The
successive steps toward compliance shown in Figure 1 need not take
place in the order shown, nor for that matter need there be as many
step reductions as are shown in the example. For example, the site
may be owned by the municipality from the outset, and credit for com-
pleting this step should be given immediately.
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When the plant goes into operation, the charge is equal to the
annualized cost of treatment. Discontinuation of the charge at this
time just balances the addition of the actual cost of treatment,
causing no net change in the financial demand on the municipality.
Moreover, program-related, out-of-pocket costs associated with site
acquisition and construction could be credited against the charge in
periods 5 and 6 to keep the total annual program cost at the level
shown.
This schedule maintains both incentive aspects: reduction of the
charge as each step is taken, and less total cost to the municipality
when facilities are completed and in operation. The major drawback
to this schedule is that the initial charge must be set purposely high
(in our example at least 40% above the preliminary plan estimate if a
10% step reduction is to be offered) in order to keep the charge from
falling below the cost of treatment as the program proceeds. Will
this high initial charge be acceptable to the municipalities and to
the Department? This question can only be resolved by administration
determination.
In the above example, it was assumed that the cost estimates contained
in the preliminary and final plans are equal to each other and to the
cost based on the final construction contract. The likelihood of in-
flation must be recognized. If the estimated cost increases by more
than 10% from step to step, the increase in the estimate offsets the
reduction allowed by completing the steps, and that portion of the
incentive will not be realized. This condition can be guarded against
by increasing the percentage charge reduction at each step, but this
would result in an even higher initial charge. The increase may be
due either to inaccuracies in the preliminary estimate or to inflation.
Abatement costs are subject to strong inflationary pressures and ad-
justment of charges to compensate for inflation over the temporary
permit period is a subject with which we could best deal in Phase II of
this demonstration project.
The initial charge can be reduced by lowering the entire charge
schedule shown in Figure 1. However, if this is done, the pollution
charge in period 5 or 6 will fall below the final annualized cost of
treatment and the economic incentive to proceed will be lost. One
might then query whether the momentum of the program can be counted
on to carry through this period. Alternatively, the initial charge
can be lowered by reducing the step increment below 10%. But then the
percentage reduction may be too low to serve as a significant incen-
tive.
Another possible condition calling for charge adjustment occurs when
the State is unable to make timely financial aid available to keep
the program moving. Where the municipality has proceeded as far as it
can and is kept from further progress by lack of State aid, the levying
of an incentive pollution charge seems punitive and inappropriate to
the interest and intent of the legislation. In such cases, it would
seem appropriate to suspend the charge until such time as State aid
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is made available. State-wide pre-financing in advance of Federal grant
assistance may avoid this eventuality.
Industry:
The initial pollution charge levied against an industrial firm can be
based upon the estimated cost of the treatment facilities or other
procedures required to reduce the discharge to an acceptable level.
The estimated cost will come from engineering plans submitted by the
firm, or in the absence of such plans, from a Department estimate. The
same kinds of charge reductions applicable to municipalities, discussed
above, could be applied to industrial programs as well. The incentive
effect of such reductions may be less in the case of industry, and the
administration more difficult, since there are fewer discrete and
clearly sequential steps in consummation of an industrial program. For
example, it is not unusual in industry for construction to begin before
final plans are completed. In addition, the decisions to be made and
steps to be taken are internal to the firm and proceed directly once
the single management decision to proceed is made. Documentation of
stepwise accomplishment may prove artificial and the small anticipated
reductions in the charge, while welcome, will probably prove to be no
real incentive.
The more relevant short-term incentive is that which rewards immediate
reduction in pollution loading through temporary measures. This type
of incentive is particularly applicable to industrial dischargers who
have some immediate control over their discharges through changes in
processing, housekeeping procedures and product mix. To provide this
incentive, the charge schedule must allow for reduction in the charge
for demonstrated reduction in discharge during the period in which the
temporary pollution permit is valid.
The variability of industrial practice, together with the flexibility
of an industrial firm in reducing the discharge by several means, com-
plicates the problem of setting the initial charge and adjusting it to
reflect reduced discharges during the temporary permit period. The
following schedule of events shows a possible situation which might
arise and possible procedures for dealing with them.
1. Discharger is denied a discharge permit and files for a
temporary permit specifying his discharge and proposed
treatment facilities or procedures.
2. In evaluating the application, the Department decides
what portion of the discharge relates to a temporary
pollution permit and what portion, if any, is sufficiently
degrading and due to bad practice to require correction
prior to July 1, 1971.
3. The Department grants a temporary pollution permit for
a portion of the discharge related thereto, approves
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the proposed treatment facilities or procedures, and
sets the charge based on the associated annualized
cost of treatment.
4. During the first year of the temporary permit period,
the discharger asserts to the Department that he will
make certain immediate changes to reduce the discharge.
These might include:
(a) Building and operating a holding tank to smooth
out the discharge over a 24-hour period and re-
duce the maximum discharge.
(b) Recycling of a process stream which has the net
effect of reducing the BOD discharge by 10%.
(c) Eliminating a product from the product line,
with a net reductior in BOD discharge by 10%.
5. The Department must first establish whether the change
is temporary or permanent.
(a) If the change is permanent, acceptable to the
Department and not part of the program specified
in the permit, the Department should alter the
terms of the permit (specification of action and
charge) to reflect the changes in the permanent
abatement program required to produce the allow-
able effluent. If the change is permanent,
acceptable to the Department and part of the
program specified in the permit, credit should
be given against the charge reflecting the re-
computed annual cost of operation associated
with the change.
(b) If the change is temporary (i.e., an interim
measure which will be discontinued when the
originally planned program is completed), the
Department could reduce the charge to reflect
the reduced discharge. How to reduce the
charge while maintaining the overall incentive
requires some discussion.
The fact that a firm proposes a temporary change to reduce the discharge,
rather than making the change permanent, indicates that the proposed
change is uneconomical in the long term. Such a temporary change will
not be undertaken unless the immediate saving on the pollution charge
balances the cost of the change. In general, the Department will not
be able to estimate the cost to the firm (which may involve broader
aspects of company economics), so that any charge reduction must be
made on some other basis. The firm will then decide whether to proceed.
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The simplest basis for charge reduction is pollution loading. Suppose
that the present discharge is 1100 Ib BOD per day and the allowable
discharge is 100 Ib BOD per day. The firm proposes a temporary change
which will reduce the present loading to 1000 Ib per day. The reduc-
tion in loading is 10% of the difference between the present and
allowable loadings and the charge could be reduced by 10%. If the cost
of the change to the firm is less than 10%, the firm will implement the
temporary change.
Depending on the nature of the incentive factor built into the initial
charge, the result of this charge reduction could be to remove the
economic incentive to proceed further. The adjusted charge plus internal
cost of the temporary change may be less than the cost of treatment
under the originally planned program and without the temporary change,
and also less than the total cost if the temporary change were made
permanent and a new abatement program designed and implemented. Thus,
the short-term incentive to abate pollution by temporary means may
destroy the incentive to abate pollution in the long term. This poten-
tial problem is similar to that discussed in connection with munici-
palities. The solution is the same. By building a high incentive
into the initial charge (for example, by making it 40% above estimated
annual cost of treatment), the Department maintains a flexibility to
reward and encourage short-term progress without destroying the economic
incentive to put the long-term abatemeent program into operation.
Th basic questions to be answered by the Department are also the
same:
1. Is the long-term incentive nature of the pollution
charge sufficiently important that the sum of charge
plus out-of-pocket costs must always be greater than
or equal to the annualized cost of long-term treat-
ment?
2. If so, does the Department choose to defend a high
initial charge in order to hold out incentives for
short-term improvement?
Departmental Selection
At this writing, the suggested approaches to charge schedules that would
attempt to reflect both short-term and long-term economic incentives
remain to be acted upon by the Department. A tentative draft of regu-
lations for publication in advance of public hearings was developed
cooperatively between ADL Project Staff and Departmental staff. That
part of the regulatons dealing with a charge schedule did not reflect
the approach which would provide a short-term incentive. That is, the
Departmental preference is for the annualized cost-of-treatment charge
without a multiplier that would enable temporary pollution permit holders
to receive a reduction in charge as a result of concrete steps taken
to come into compliance.
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SECTION VI
ADMINISTRATIVE PROCEDURES
This section of the Final Report covers the efforts undertaken to
make operational a pollution charge method, structure, and schedule
that are to date only a legislative mandate.
Earlier parts of this Report examined a number of basic rationales for
effluent charges in water-quality management programs and their asso-
ciated charge methods and structures. An annualized cost-of-treatment
charge method emerged from this examination as the most appropriate
for initial application, in the light of present circumstances and con-
sistent with Section 912e, No. 252 of the 1969 Vermont Acts. Within
this basic method, a range of choice as to classification—by location,
type and size of discharger and by kind of effluent—of dischargers
subject to pollution charges was presented for consideration.
The Department selected the annualized cost-of-treatment charge method
for development and initial implementation. Further, the Department
adopted an approach to charge structure development that is largely
individualized to each discharger's cost situation, rather than gen-
eralized by size or type of activity.
A pollution charge system requires informational and procedural support
for its effective administration. Incorporating as the Vermont statute
does both a permit and charge system, the first applicable to all dis-
chargers and the second only to some, particular executive importance
surrounds the operational characteristics and procedures of permit
eligibility or "status" determinations. Under what conditions and
circumstances is either a discharge permit or a temporary pollution
permit to be granted or denied? All dischargers of wastes into the
State's waters as of July 1, 1971, must apply for a permit. It is of
central importance to the success of the law that a reasonable, equitable
and effective determination be made. Much of Section VI concerns the
basis of discharge permit determination.
Specifically, it was decided that the design of an information system
should have the following characteristics:
1. Capability for permit status determination.
2. Accounting and billing to dischargers operating under
pollution permits.
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3. Compliance tests of discharges relative to approved
stream standards.
4. Short term (5 to 7 years) revenue forecasting.
5. Procedures to anticipate changes in permit
class.
6. Procedures to anticipate changes in compliance
tests.
Additionally, discharge measurement responsibilities, manpower,
staffing and budget requirements, and start-up procedures for
initiating the system were analyzed.
First of all, the substance of permit status determination, as distinct
from the mechanics, seems of sufficient importance under the circum-
stances presently faced to warrant special discussion in an initial
"Approaches" section. Until these determinations are actually made,
the precise administrative procedures that will emerge as parts of
the supporting system for operations will remain somewhat conjectural.
The remaining sections are organized in large measure around the
essentially mechanical design of an initial information system to
support the dual permit-charge system. Clearly, the supporting infor-
mation system will be refined and extended as experience is gained in
operation. The initial plan was to computerize as much of the in-
formation system as possible. Subsequent activities revealed that
manual procedures would suffice—thus, the manual concept of design,
but with opportunities pointed out for simple automation where appro-
priate. The Application for Permit required of all dischargers is
itself an essential element of the information system.
APPROACHES TO PERMIT STATUS DETERMINATION
General
The Vermont approach is a combined permit-charge system. The key
provision of the Vermont Statute on which earlier sections of this
Report centers is Section 912e, dealing with a form of effluent fee
designated as a "pollution charge." The key provision on which this
section centers is Section 911a(c), dealing with the denial or
issuance of discharge permits. It reads as follows:
"If the department finds that the proposed discharge will
reduce the quality of the receiving waters below the
classification established for them, it will deny the
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application and refuse to issue a permit. If the depart-
ment finds that the proposed discharge will not reduce
the quality of the receiving waters below the classifi-
cation established for them, it shall issue a discharge
permit."
It is a matter of primary concern that the act of permit status deter-
mination—eligibility or ineligibility—be just and defensible. At
the same time, a reasonably precise determination of whether dis-
charges will reduce water quality below established classifications
cannot be made in many instances on a before-the-fact, measured-
violation basis without the use of a somewhat refined computer model
of the instream water-quality dynamics of receiving waters at the
downstream of points of discharge. The question is: In the absence
of, or pending the development of, such a test instrument, what is the
best alternative procedure?
One approach that has often been discussed is that of basing the
eligibility decision on whether "secondary municipal treatment or
its industrial equivalent" is to be operational by July 1, 1971.
There are several shortcomings to this approach, despite its appeal
from the viewpoint of simplicity. Discussions with Allen Kneese
and Blair Bower strongly reinforce the view that this so-called
"treatment standard" approach has serious imperfections. They cite
as a major weakness the high variability in design and operating
efficiencies and practices with "secondary" facilities, which renders
the amounts of residual effluent loadings in streams very uncertain
and often meaningless.
What then are the remaining choices—between a seemingly unacceptable
treatment or facilities standard and a clearly unattainable (in the
short run) model-based test instrument? Clearly, Vermont has estab-
lished a system of stream standards. In addition, the State Legisla-
ture has provided for the creation of effluent standards as the means
to implement stream standa ," . It would seem necessary, therefore,
in those doubtful cases or •' itus determination, to set an allowable
effluent loading that (a) ates reasonably to the stream standard
and (b) is supported by an operating practices" standard. This
approach is developed in the following subsections.
The Statutory Context
The Vermont Water Pollution Control law, chiefly 10 V.S.A. , Chap. 33,
provides for a universal permit system as the means to implement the
various levels of water quality designated by the adopted stream
standards (watercourse classifications and corresponding water-quality
characteristics). Under the Vermont statute, the responsibility
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resides with the Department of Water Resources to establish the basis
for permit status determination. Such a basis must be at once reason-
able, equitable and effective. The first two of these criteria are
constitutional; the third is statutory, articulated by the above-quoted
§911a(c).
Neither Title 10 nor the "Water Use Classes, Standards of Quality, and
Technical Guidelines" adopted pursuant thereto specifies what consti-
tutes a finding that a proposed discharge will reduce the quality of
receiving water below its classification. Since the stream standards
are set in different terms with regard to different pollution consti-
tuents, they suggest a variety of bases on which such findings might
be made. For example, permissible levels of dissolved oxygen and
coliform bacteria are stated in technically measurable terms. Thus,
permissible discharges related to these constituents may be based on
direct measurement of in-stream impact or on predicted assimilative
capacity, given standard assumptions about stream hydrology. Of course,
in both cases it becomes necessary to take into account not only what
is occurring at an individual outfall but also the point-source waste
loading from other discharges into the same watercourse, and perhaps
non-point source or "background" loadings as well.
With regard to other pollution constituents, such as color and turbidity,
stream standards are specified in terms of what may result from
"appropriately treated effluents" or "none in such concentrations that
would impair any usages specifically assigned to the Class." These
standards suggest (but do not require) that the process of finding that
a proposed discharge will not reduce the quality of receiving water
below its classification might be based on either a treatment standard
or an effluent reduction requirement. The point to be underscored here
is that the statute has left the translation from stream standards into
permissible effluent loadings to the discretion of the Department. The
purpose of this section is to discuss the substantive considerations
relevant to the selection of a method for permit status determination.
Such a method must effectively achieve the desirable levels of water
quality prescribed by the stream standards, and it must also satisfy
requirements of reasonableness and equity.
Alternative Approaches
Given the need to review discharge permit applications before July 1,
1971, and the information requirements pertaining to the review process,
three alternative approaches to permit status determination merit
analysis.
Direct Testing Against Stream Standards:
Under this approach, the expected net discharge of each applicant, after
whatever treatment or other abatement process may be employed, is ex-
amined. The expected discharge is first examined for any constituents
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which, by virtue of the stream standard, must be absolutely excluded
from any effluent entering the stream reach in question. It is then
determined whether any allowable contaminants are present in such
quantity as to degrade the stream below the specified standards. This
determination requires both streamflow and discharge characteristics
in sufficient detail by time and space dimensions to produce a valid
and conclusive test. (It might be argued that any contaminant degrades
the quality below standard at the immediate point of entry into the
stream, hence is grounds for permit denial; but the constitutional
criterion of reasonableness comes into play under this strict interpre-
tation of quality degradation.)
In the absence of a water-quality model which can account for point-
source and cumulative effects of several neighboring discharges, a
hydrologic standard might be employed and made sufficiently severe to
provide a reasonable, if approximate, individual test. In general, a
greater concentration of dischargers on a given reach would require a
correspondingly more severe low-flow hydrologic test condition in
order to assure that the cumulative load would not degrade the stream
below standard quality at some less severe low-flow condition. For
example, the classification standard may require that the stream not
be degraded below a specified level more than seven consecutive days
in ten years, considering the cumulative impact of all dischargers.
Where dischargers are concentrated on a reach, however, an individual
stream impact test might apply a five-day, twenty year low-flow test.
In the absence of a rigorous stream-quality model, the appropriate
individual test condition will be largely dependent upon the technical
judgment of the Department.
The major advantage of the direct-test-against-stream-standard approach
which applies a hydrologic standard test condition is that it pro-
vides a clearly demonstrable, uniformly applied measurement for status
determination. It does, however, lack technical precision for the
long-term and is only considered as a useful alternative approach to
meeting immediate requirements.
Uniform Effluent Reduction Requirement:
As in the previous approach, the net (after treatment or other process)
effluent must first be examined for constituents that are mandatorily
subjected to 100% reduction. Again, it must be determined whether any
of the allowable pollutants are present in such quantities as to de-
grade the stream below standards. Under an effluent reduction approach,
this latter determination may have an indirect basis. For example, the
Department may establish a minimum percentage of BOD, suspended solids
or other constituent solids that must be removed from any gross or raw
effluent generated, which percentage according to the Department's
judgment is likely to assure that the classified standard will be met.
The percentage removal required may be uniform throughout the State or
tailored to reflect differences in stream classification, geographic
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location and density of industrial and urban development. In all
individual cases, the percentage normally removed by any existing
process (as of July 1, 1971) would be compared with the required per-
centage removal for each constituent. This would serve to establish
a clear quantitative test for status discrimination purposes. As in
the previous approach, and again in the absence of a rigorous stream-
quality model, the determination of the appropriate percentage cutback
to meet the standard will have to be made approximately and will be
largely dependent upon the technical judgment of the Department.
An important consideration under this alternative is the precise
definition of the gross effluent—not the net effluent—to which the
cutback test is applied. This consideration applied to all dischargers,
but there is a special problem with some. For example, major reduc-
tions in waste loadings from certain industrial processes may be
accomplished quite simply, efficiently and at low cost (tree bark
"tailings" have been cited as an example), and may in fact result in
the salvaging of valuable materials as well. In such cases, the
Department might require that all "reasonable" non-treatment abatement
opportunities be realized as a matter of expected practice prior to
any treatment, and that the percentage reduction be applied to dis-
chargers after such practices have been carried out. To make and
document such "reasonable" determinations requires detailed technical
familiarity with the on-site performance of each industrial discharger
whose present processes or practices fail to employ these initial
abatement measures. In view of the Department's expressed familiarity
with the relatively few such dischargers and their operations, this
aspect of the uniform effluent reduction approach would not appear
unmanageable.
Treatment Process Requirement:
For all waters of the State or for individual reaches of surface water,
the Department may find that uniform application of a particular treat-
ment process is desirable as a means of achieving designated stream
standards. For example, the provision of secondary treatment or its
industrial equivalent may become the qualifying factor for a discharge
permit. Such an "appropriate" treatment process should include both
proper design and satisfactory operating practices. In the absence of
a water-quality model and as in the other approaches, the presumption
is that the judgment of the Department as to the nature of treatment
required would be reasonable.
An element of flexibility might be introduced with this approach which
is best illustrated by an example. If a discharger were subject to a
secondary treatment process requirement, implying a predicted gross-
loading cutback of about 85%, but the actual plant efficiency or
operating practices achieved only 80% removal, the Department might
consider a variety of factors prior to denying a discharge permit.
These may include an on-site inspection of the plant to determine that
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it is properly operated, inspection of design documents to ascertain
that it was properly designed, consideration of the age of the plant,
and projection of future raw effluent quantity that must be processed.
Having determined that the discharger has indeed shown good faith, and
has made very reasonable technical effort to provide adequate treat-
ment, the Department may find it inequitable to deny a permit for the
sole reason that a predicted efficiency relating to a required treat-
ment standard was not quite met. Even in the case of new plants, the
operating efficiency may differ from design efficiency. The Depart-
ment may feel it appropriate to specify the nature of treatment for a
reach, considering variations in efficiency, and then merely require
that the design and operation of the facility be of demonstrably
technical competence.
Of the approaches sketched here, there may be some tendency to assume
that the second and third are very similar in that a given treatment
process may be expected to result in a predictable percent of effluent
reduction. Such an assumption is not valid, first because similar
treatment facilities will not in fact always be operated with similar
efficiency. Second, even if operating practice requirements are made
part of a treatment process standard, similar facilities operated by
standard practice will not necessarily give similar results under
different conditions of climate, raw waste characteristics, equipment
age, and other factors. Third, a discharge permit stated in terms of
percentage reduction imposes a very different set of responsibilities
on dischargers than does a permit subject to facilities and practices
standards. Finally, even assuming that a given treatment process
would always result in a given percentage reduction of gross loading,
comparable reductions may be accomplished by means other than some
standard treatment process.
Assessment of the Approaches
It must be emphasized again that in the absence of a water-quality model,
none of the approaches provides a completely rigorous basis for
determining whether the "proposed discharge will reduce the quality of
the receiving waters below the classification established for them."
If such a test instrument were available, a test of status discrimin-
ation would most likely be related to the "direct testing against
stream standard" approach, possibly in combination with a "uniform
reduction requirement" that could vary depending upon the activity
class to which a discharge is assigned.
Each approach must rely upon the professional judgment of the Depart-
ment and each does provide a basis for initial status discrimination.
Furthermore, while the Department's judgment under each alternative
may err, it is possible to assure that the error will be conserva-
tive on the side of higher water quality than is actually required.
It is now appropriate to assess the three approaches in terms of
reasonableness, equity, efficiency, and risk of failing to achieve
water-quality standards.
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Legal Considerations:
There are two major legal considerations which affect the choice of
procedure for status discrimination: (i) the basis on which any particu-
lar discharge permit is granted or denied must be reasonably related to
the purpose of implementing the stream standards in the reach to which
the application pertains; (ii) a comparison of the bases on which dis-
charge permits are granted or denied must display equal treatment under
substantially similar conditions as among the applicants. These con-
siderations are discussed in turn below.
Relation of Discrimination Basis to Implementing Stream Standards:
The approach which provides for direct testing against the stream
standard offers the best opportunity for satisfying the "reasonably-
related" requirement. A water-quality model which accounts for the
point-source and cumulative effects of neighboring dischargers and for
the biodegradation process in a waterway will allow the Department to
demonstrate the impact of any proposed discharge on the receiving
waters. Permits can be granted in accordance with this impact and the
purpose of the discrimination satisfactorily accomplished. Such a
model will incorporate the legislatively ratified, acceptable level of
risk implicit in the hydrologic standard—e.g., low seven-day average
flow with a frequency of once in ten years. Without such a model, it
is necessary to adjust administratively the assumed low-flow condition
to assure that the cumulative load in heavily concentrated reaches does
not impair the stream below standard quality at the acceptable level of
risk, and some estimating technique will be needed to relate the severe
low-flow test condition to the extent and concentration of discharges
in the reach.
A uniform effluent reduction approach provides a somewhat more attenu-
ated relationship to the implementation of stream standards in the
applicant's reach. If the percentage removal required is set so that
the heaviest residual volume loading permitted does not degrade the
stream below standard and other dischargers are required to achieve the
same percentage removal, the basis for discrimination will be generally
related to implementing stream standards on a state-wide basis but not
very specifically related to stream standards in the reaches where some
dischargers are located. As suggested earlier, the percentage removal
required may be tailored to reflect differences in stream classifica-
tion, geographic location, and density of industrial and urban develop-
ment. As these distinctions are made with greater refinement, the
uniform character of this approach begins to fade. At some point the
removal requirements may become individualized. When a water-quality
model becomes available, account can also be taken of differences in
costs of treatment so as to promote system-wide economic efficiency.
In any event, this approach will probably satisfy the legal require-
ment of reasonableness where the presumption runs in the State's favor.
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Where the approach is based upon the provision of a uniform treatment
process, the relationship of this requirement to the implementation of
stream standards is more difficult to demonstrate. Unless the treat-
ment process required is exceedingly flexible and variable—in which
case the requirement is not uniform—there will be many circumstances
in which the required process will simply not result in the water
quality called for by the stream standards. In some cases, a dis-
charger may be obliged to construct and operate treatment facilities
which are not really needed to achieve or maintain the stream standards
at his outfall or in his reach of a river. Such "over-treatment" may
occur if a given discharger can abate waste discharges by means of
process or product changes more effectively than by treatment. "Over-
treatment" may also occur if the total loading on one river is very
different from that on another. In either case, it may be difficult
to establish the reasonableness of the required treatment process in
terms of achieving specified stream standards.
In other cases, a uniform-treatment process requirement may fail to
obtain stream water of standard quality. This event is most likely to
occur with industrial dischargers because secondary treatment, even
with proper operating practices, may have absolutely no effect on
certain kinds of residuals such as heat, dissolved solids or turbidity.
Moreover, while it is easy to speak of "secondary treatment or its
industrial equivalent," it is more difficult to determine what that
means. First, there may be a number of different "industrial equiva-
lents" appropriate in different circumstances but no one "uniform" with
another. Secondly, "equivalent" presumes assessment against a common
denominator or measure. If this measure is percent reduction of
some gross loading, it would seem more appropriate to state this ex-
plicitly as the basis for status discrimination and allow dischargers
to achieve it by whatever means they can devise, subject to Department
approval.
Whenever a treatment-process requirement results in stream quality con-
siderably at variance from the standard, it will be difficult to
demonstrate its reasonableness in the light of the standards. Attempts
to adjust the required process to accommodate the circumstances of
individual dischargers may undermine the only apparent advantage of
this approach—i.e., the superficial equity implicit in a uniform re-
quirement.
Equal Treatment Among Applicants:
Whatever the approach, one may expect those who feel injured by it to
compare the volume loadings allowed recipients of discharge permits
with the volume loadings disallowed themselves and other unsuccessful
applicants. Let us assume that such a comparison shows six dischargers
identified as 1, 2, 3,...6 on a stretch of the same river which has
the same classification along its entire length. Discharger "1" is
located furthermost upstream, discharger "6" furthermost downstream,
and dischargers "2" to "5" sequentially between "1" and "6." Each has
indicated his proposed loading in his application, the percentage
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reduction proposed, and the type of treatment he will employ. These
factors are summarized below:
Treatment Total % Residual
Discharger Type Process Reduction Loading
1 Municipal A 20 100
2 Industrial A 50 100
3 Municipal B 50 50
4 Industrial A 80 50
5 Industrial B 80 20
6 Municipal C 80 90
The treatment
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has not received a permit simply because the procedure is biased in
favor of upstream dischargers where effluent concentrations are lower
relative to stream characteristics. Discharger "6" would make a
similar complaint and add that he has installed the most sophisiticated
and expensive treatment facilities as well.
If permits are granted on the basis of a required uniform treatment
process, the results may be displayed thus:
Type of Treatment ^^
% Reduction ABC
20 u-ioo x x
2 3
so .._ . J Y
U-100 U-50
80 4 5 6
U-50 U-20 S-90
Here discharger "5" will complain that he reduces his waste to the
same extent as "6" and would introduce a smaller absolute volume as
well but is prejudiced against merely because he chooses to accomplish
this result through process changes and dropping certain products from
his line rather than constructing "appropriate" treatment facilities
"C." Discharger "3" complains among other things that at his location
he could introduce 50 units of waste without impairing the quality of
the receiving waters below their classification and presents hydrologic
data to prove it.
If discharge permits are granted on the basis of a uniform effluent
reduction requirement (80%), the results may be arranged as follows:
Type of Treatment
% Reduction AB
20 —u-ioo x
SO
U-100 U-50
so -. -- __
S-50 S-20 S-90
Here discharger "3" complains that he has a more elaborate treatment
facility than does "4" and proposes no greater residual waste loading.
Discharger "1" objects because the receiving waters at his location can
easily handle his proposed discharge without impairing the standards.
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At first glance one might conclude that, no matter how status dis-
crimination is determined, unsuccessful applicants will always find
grounds for complaint and allege unequal treatment under the law. This
may be true, but some differences are more easily explained than others
in terms of the purposes to be served. For example, the largest
industrial discharger cannot reasonably be limited to an allowable
loading no larger than the smallest discharger. If he is, he may in-
crease the number of outfalls and apply for several discharge permits.
Furthermore, upstream dischargers cannot reasonably claim superior
right to discharge wastes into the State's watercourses merely by
virtue of their location and irrespective of the needs of downstream
users.
There is, however, considerable equity in requiring all dischargers
to abate their residual loadings to the same measurable degree.
uniform-treatment process requirement cannot be expected to result
in the same percentag effluent reduction for all dischargers. And
if the treatment process requirements are modified in individual
cases to account for varying circumstances so that parity in effluent
reduction results, then it would be much more straightforward to
grant permits ou this basis to begin with.
Efficiency:
None of the approaches to status discrimination has a built-in
mechanism that encourages system-wide economic efficiency. Quite the
contrary, under each of the approaches, the Department might find it-
self requiring measures which result in total treatment costs far
exceeding the least-cost solution to obtaining the desired levels of
water quality. For example, some dischargers may be able to achieve
100% removal more cheaply than others can achieve 50% removal. If
all are required to remove 80% of their generated wastes, the stream
standards will not necessarily be obtained at least total cost to the
system.
With regard to the costs to individual dischargers, a uniform treat-
ment process approach (treatment standard) is likely to entail greater
expenditures than an approach expressed in terms of allowable loadings
(effluent standard) or percent reduction. This is true because treat-
ment is only one—and perhaps not the least costly—method to achieve
a specified level of waste abatement. Industrial dischargers especially
may confront a variety of abatement alternatives, the least costly of
which may involve recycling, salvaging, process and product changes,
and only minor treatment. Insofar as the Department might undertake
to temper the inefficient effects of a rigid treatment standard by
allowing abatement by means other than treatment, it will be employing,
in effect, an unstated reduction or effluent standard. For example,
Section 912a(c)(2) refers to Department approval of waste "abatement
or alternative waste disposal" plans as a condition for maintaining a
temporary discharge permit. Since the burden of preparing such plans
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resides with the discharger, one may expect that industrial establish-
ments will seek to minimize the cost associated with approved plans.
Thus, in exercising its approval function, the Department has the
opportunity to encourage economically efficient responses on the part
of individual dischargers, provided complying with a fixed treatment
process standard is not compulsory.
The Risk of Degrading Stream Quality Below Standard:
The foregoing discussion has generally assumed that dissatisfaction
with the selected approach to permit status determination will be ad-
vanced by aggrieved dischargers. It is possible that non-discharging
water users may allege that the status determination approach is
failing to achieve the levels of water quality required by the stream
standards even though all dischargers are complying with the terms of
their permits. Such failure might occur simply because the Department
had misjudged the effluent loadings that streams can support without
degradation, or because the demand for the assimilative use of streams
has increased such that when older effluent standards are applied to
larger volumes of generated waste, they no longer adequately implement
the stream standards. Whatever the cause, such failure will compel
the Department to change the basis on which discharge permits are
being granted or denied. Moreover, many dischargers who might have
undertaken investments in reliance on what they thought the Department
would or had approved, may object to such changes, asserting their own
good-faith compliance and arguing that the Department is estopped, at
least in the short run, by virtue of plans and procedures approved by
it.
The problem here is not one of vested rights but rather of reasonable
expectations. Section 919 of Act No. 252 makes it clear that a permit
granted is not to be construed as a vested right and is ^'subject to
continuing regulations and control by the state." Nonetheless, the
alternative approaches to permit status determination do not generate
the same expectations. If permits are granted or denied on the basis
of a treatment standard (uniform treatment process required), there
will be a tendency for permit holders to feel their obligation extends
only to complying with such standards including operating practice
standards. These permit holders may well expect the State to accept
whatever degree of effluent reduction and whatever impact on stream
quality results from their compliance.
By contrast, if permits are granted on the basis of percentage effluent
reduction, permittees will understand their primary obligation is to
achieve this level of reduction regardless of any process and practice
requirements the Department may have appended to the permit. Even in
this case a permit holder performing the required waste reduction may
feel that the State should be prepared to accept whatever impact on
stream quality results.
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It is only where the State bases a permit grant on direct testing of
stream quality that permit holders clearly understand that their
obligation does not stop with either an approved treatment process or
an approved level of reduction. Here too there are circumstances
which a permittee might reasonably claim are beyond the ambit of his
responsibility—the water-quality model inaccurate, the assumed
hydrology in error, the presence of other dischargers violating the
terms of their permits, for example.
In the last analysis the Department must guarantee that stream quality
is maintained to standard; in doing so it should place unambiguously
on dischargers responsibility for those steps in water-quality manage-
ment over which they have direct control. Given the data limitations
with which the Department must operate initially, it would seem more
appropriate to demand specified levels of effluent reduction than to
expect compliance only with treatment process and practice standards.
With this substantive evaluation of alternative approaches to permit
status determination, let us now turn to the mechanics of the infor-
mation system needed to support both status determination and the
pollution charge system, including review of existing discharge reports
as background for our recommended information system.
INITIAL INFORMATION SYSTEM DESIGN
Most of the thinking about system design has been directed toward a
computerized operation. Even though initial considerations of time
and simplicity suggest that a manual approach should be taken for the
first system, procedures should be selected now with an eye toward
eventual mechanization. To this end, forms have been designed for
adaptation to computer processing and the early steps which might be
taken selectively to automate parts of the initial manual system have
been considered.
There are three good reasons for eventual computerization of the permit-
charge system: (i) to fit a future water-quality model, (ii) to pro-
vide accessible data for supplementary analysis; (iii) to reduce
administrative and operating costs. Of these reasons, the first is the
most compelling for the long run. The value of a computerized water-
quality model for planning, surveillance and assessment is generally
recognized, and it is expected that such a model will be required for
application in Vermont and other states as other water-quality manage-
ment programs are made operational.
The second point will become more significant as the progress of the
Vermont experience is monitored. Much useful new data can come out
of this project and hopefully that can be made easily available to all
of the agencies that plan to follow the State's progress. The State
and the Environmental Protection Agency should be in a better position
to define these supplementary analyses as the demonstration proceeds.
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The third point (administrative cost) is fairly minor now because actual
data are limited and applicants are few in number. In the future,
however, the computer will become a powerful tool for data management
and analysis. It seems apparent that the Department can operate with a
manual system at the start. If circumstances change and the Department
has to deal with many more individual units and changing situations,
then it may be well to consider mechanization of much of the work load.
The possibility of developing an automated information system at some
future date should not be ruled out, therefore, and it is expected that
such systems will become essential for the proper management of larger
aspects of State water quality management programs. In particular, the
increasing Federal requirements for information in conjunction with such
programs as grants for construction of treatment works point out the
need for automated information storage and retrieval systems. Also, in
view of the wider interests of the Office of Research and Monitoring in
this demonstration project, it is wise to consider opportunities for
limited, simple automation where it seems particularly appropriate for
the immediate situation. While the present volume of discharge reports
does not require automation, the Department may have to consider un-
incorporated or unsewered areas, and it may wish to keep many more
individual records in the future. If so, a simple computerized system
can be produced to handle the greater volume of record-keeping.
The design of any information system must first establish the purposes
to be served and identify other related uses and systems which may re-
reveal opportunities for merging systems or avoiding redundancies.
For the case at hand, the purposes have already been discussed and
need no elaboration here. As to other systems, there are essentially
only two—the several manual compilations of data maintained by the
Department and the USGS-EPA computerized streamflow and water-quality
file systems. The latter must be ruled out as not appropriate for
present direct use by the Department, although it must certainly be
kept in mind for subsequent linkage with this and other elements of
the information system.
The manual approach is therefore seen as an in-house collection of data
to be organized, updated, filed and used by the Department's staff in
the immediate future. The data can be broadly classified into those
relating to the stream System and those relating to the waste discharger
systems. Data pertaining to the stream system, such as low flow volumes
and stream classifications, are presently available in the Department's
files. Data defining the waste discharger systems will be obtained from
the permit application forms.
Several criteria or guidelines were used in the design of the informa-
tion system. Foremost was the need for simplicity to assure a workable
system at an early date. In the case of the permit application forms,
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it meant that precision and completeness of data were sometimes sacri-
ficed in the interest of developing a reasonable format which would not
overwhelm the "average" applicant. It must be assumed that additional
information can be requested from the limited number of applicants
whose waste generating and treatment systems are so complex as to raise
doubts or uncertainties about initially reported information.
While the criterion of simplicity served to place an upper constraint
on the level of detail of the data sought, another criterion served
as a guide for the lower level constraint. The data base must be
adequate to support decisions made by the Department relative to status
discrimination and to the calculation of temporary pollution charges,
particularly in the event that decisions are appealed for adjudication
by the Board or the courts.
In view of the opposing nature of these two criteria, it is evident that
the information system must evolve as a compromise—a simple inexpensive
system which yet carries the necessary detail to insure reasonable
compliance with the basic statute. Our tendency while making decisions
within the "grey" area has been to favor the simpler choice in the
interest of first developing a reasonably complete basic set of data
which can later be expanded as experience is gained. We were of course
influenced in this regard by recognition of the inherent limitations
imposed by the manual approach to deal with large amounts of data
quickly and uniformly.
Evaluation of Intent to Discharge Reports
Section 910a of 10 V.S.A. requires that
"Any person who is discharging treated or untreated waste
into waters of the state on a regular, intermittent, or
continuous basis prior to the effective date of this
section and intends to continue such discharges on and
after July 1, 1971 shall file a written report of such
discharges with the department by September 1, 1970."
These reports of Intent to Discharge, together with data available in
Department files, were analyzed for adequacy in supporting various needs
of the charge method. Several factors suggested that data contained in
the reports of Intent to Discharge should be coded and punched on cards
for computer analysis for the following reasons: (i) existing computer
services were available from Vermont's Department of Administration; (
(ii) it was anticipated that a computer simulation model could be
utilized for status discrimination analysis; (iii) it was expected that
the information system, particularly the accounting and billing operations,
would be handled by automated methods; (iv) data available from the
reports of Intent to Discharge could serve as a basic foundation for
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the information system, with additions to be obtained from subsequently
required permit application from all dischargers; and (v) ultimate
linkage to the federal STORE! system was anticipated.
A total of 321 reports of Intent to Discharge were examined and their
data entered on punch cards. The data covered all items on the report
form as well as supplementary marginal data entered by Department of
Water Resources staff. The purpose of including supplementary data
on reports of Intent to Discharge was to provide as broad an informa-
tion base as possible. Data recorded were:
a. name and address of person filing report;
b. location of waste discharging activity (using
Vermont town-county code);
c. type and level of activity, including SIC code;
d. daily volume of discharge and estimated daily,
weekly, and monthly variation;
e. coded description of treatment facility elements,
including type of receiving media (i.e., stream,
lake, swamp, groundwater);
f. name of stream or lake receiving the waste discharge;
g. coded trace of river-basins and sub-basins downstream
of the discharge;
h. data on stream classification at point of discharge;
i. values of water quality parameters from tests (if
available), including suspended and total dissolved
solids, turbidity, BOD, pH and temperature.
Two basic programs were written for initial testing and analysis
purposes. The COBAL language was used and the runs were made on an
IBM 360/40 computer. The first program was designed to print the
input data for each discharger using a common format and table look-
up files (i.e., the county and town would be entered using code
numbers, but the printout would be in alphabetic format). This printout
also included the serial number assigned to each report, date the
report was prepared, and any pertinent comments.
The second program was designed for general-purpose sorts and summaries
up to third-level discrimination. Two test runs were made, one sorting
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by county, town and SIC code, and the other sorting by minor river
basin, sub-basin and SIC code.
The Department has decided that it would be premature and perhaps
unnecessary to utilize a mechanized and automated system for the im-
mediate future, in view of the limited time available and the expec-
tation that the number of permit applications would be limited to less
than 400. Nevertheless, the coding work done for the reports of
Intent to Discharge has proved useful in evaluating the reports and
for later designing a permit application form. In fact, coding of any
data for computer input is one way of becoming familiar with the data,
since one is forced into a rigorously disciplined consideration of
data categorization and representation. The question of extending the
permit system to some 4,000-5,000 individual dwellings and small, un-
sewered commercial establishments was not resolved. The desirability
of mechanizing this aspect of the permit-charge system is clear.
The lessons learned from the coding were associated more with the atti-
tudes and abilities of the persons reporting than with the numerical
values entered, since the latter were often incomplete or difficult
to interpret or adjust to a common format. Specifically:
a. Questions should be explicitly phrased to elicit "yes"
or "no" to multiple-choice answers wherever possible.
Rhetorical answers of any length are likely to create
doubts about interpretation and subsequent action on
applications for permits.
b. The SIC code alone can be misleading for categorizing
waste characteristics. For example, the wastes from
a creamery differ from those of a cheese factory yet
they would share the same SIC code under the present
structure of this coding system.
c. Some persons used separate forms for separate discharges,
others combined independent discharges (i.e., process
water and cooling water) on the same form. This led to
some confusion since single serial numbers were assigned
to each form.
d. The distinction between "existing" and "proposed" waste
volumes and/or treatment facilities was not always made.
e. Essentially no discharger had an accurate idea of the
low-flow volume of the stream into which his wastes
were discharged.
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f. Many forms seemed to have been completed by persons who
would not be expected to have technical knowledge of
waste volumes or type of treatment facilities, although
they may have signed the reports only in their official
capacity. This occurrence suggested that it may be
useful to include a line in permit application forms
for the name of the person(s) who furnish technical
data.
g. In one case a municipality submitted a blanket report
for all unknown individual discharges. In other cases,
municipal reports included storm runoff from combined
or storm sewers. This inconsistency led to confusion;
for example, a report may have indicated that only 90%
of the wastes were treated, but it was uncertain
whether this meant that the remaining 10% was due to
storm runoff being bypassed or to incomplete sewer
collection services. It might also have meant that the
sewer treatment plant was inoperative for 10% of the time,
due either to maintenance problems or to a trickling
filter, frozen part of the year.
h. Discharges were often reported entering swamps, private
land or ditches, with some doubts on the part of the
discharger whether these constituted "waters of the
State," or where such flows entered the waters of the
State.
i. There was a distinct time variation in the volume of
discharge. Industries, for example, might only dis-
charge five days per week during the day shift; resorts,
only during the winter and/or summer; schools would
have little or no summer discharge; silt lagoons would
only overflow during the spring; gravel washing opera-
tions would be shut down during the winter. Neverthe-
less, the usual volumetric report was simply an average
number of gallons per day.
j. In more than one instance, the form was blank except
for the name, address, and signature of the reporter.
This may have represented a protest but it points out
the need for strong statements on the importance of
filing subsequent permit applications. It also
suggests the need for coorindation between federal,
state and local environmental authorities seeking dis-
charge data for purposes of developing a common form
and reporting frequency.
In addition to these items, the coding operation raised the question of
how to indicate the exact location of each discharge on the stream and
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lake network. The apparent answer is to use the federal STORET system,
wherein the exact tributary number and river mile can be coded or the
latitude and longitude used for lake discharges. Unfortunately, the
basic map coding has not been completed for the State of Vermont and
probably will not be for a year or two at the earliest.
As a substitute, the FWQA river basin coding was expanded from the second
to about the fifth level tributary on the basis of streams shown and
named on the Department's general map dated March 13, 1970. This pro-
vided a fairly precise sub-basin location (e.g., the Jail Branch in
Barre), but not an exact river mile within the last level sub-basin.
Looking ahead to a water-quality model, it was planned that each dis-
charger within the smallest sub-basin would be assigned a point location
code number that would discriminate with respect to his stream location
relative to other dischargers.
An entirely separate information component which did not fall within
the purview of the reports of Intent to Discharge relates to data
needed to calculate the temporary pollution charge. These data will be
considered in the next section.
In summary, the early reports of Intent to Discharge provided extremely
sketchy information on waste discharge and streamflow characteristics,
but at the same time a good introduction to the magnitude and nature
of the problem. Also, this organizing,and evaluating work provided
a good foundation for the application of relatively simple automation
techniques that would assist subsequent administration of the permit-
charge system.
Permit Application Form and Related Schedules
A proposed permit application form including related schedules and in-
structions is included "*n Appendix D. It is a key element of the
initial information system—perhaps the single most important one under
the manual concept. The form suggested consists of a basic application
page which must be completed for each waste discharging activity con-
ducted by the applicant. An "activity" here is defined as a municipality,
a single industrial site, a public institution, or a single residence or
commercial building. If the applicant has several dispersed activities,
e.g., factories, resorts, restaurants, it is our assumption that he
would have to submit separate applications for each activity.
On the basic form the applicant is asked to list each separate, inde-
pendent waste discharge system associated with the referenced activity.
Provision is made for listing six such separate discharges. An inde-
pendent waste discharge system is defined as one in which raw wastes
are collected, treated (or are capable of being treated if no facilities
presently exist) and discharged (directly or indirectly) into the waters
of the State. Examples of independent discharge systems for munici-
palities would be unconnected sewer collection systems leading to
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separate treatment plants, or discharging into streams at separate
locations if no treatment plants exist. For industries, independent
discharge systems may exist to handle sanitary wastes, process water,
and cooling water separately.
The applicant must complete a separate Schedule for each independent
discharge system listed on the basic application page. Of necessity,
he would have at least one system. There are three types of Schedules
available—Schedule A is for use only by municipalities having sewer
collection systems, Schedule B for industrial, large institutional
and resort dischargers, and Schedule C for residential and commercial
discharges from individual buildings and consisting primarily of sani-
tary wastes.
Each Schedule is in turn divided into two parts. The first part seeks
data on the volume and type of waste, the frequency and manner of dis-
charge and the treatment processes. It is thus responsive to §911a of
Title 10 V.S.A. in that it provides the waste discharge system data
essential for granting or denying a discharge permit, and a space is
provided at the end of part one for the Department to record its deci-
sion in this regard.
The second part of the Schedule relates to §912a of Title 10 V.S.A. and
seeks data pertinent to an application for a temporary pollution permit
and its associated pollution charge. The applicant may complete the
second part of each Schedule at the same time that he completes the
first part, and he is encouraged to do so if he believes he cannot
qualify for a discharge permit. He must in any event complete part one
since only therein are questions regarding the physical parameters which
apply to the wastes. The second part is added as an administrative
convenience in order to avoid one mailing for the discharge permit
application and another for the temporary pollution permit application.
The division of the application permit into a basic activity reporting
page with separate two-part Schedules for each independent discharge
system has many practical advantages for the Department in addition to
providing the least complicated form for applicants. Specifically:
a. Permits will be granted or denied and pollution charges
determined on the basis of each separate Schedule submitted rather than
on the basic application (activity reporting) form alone. Thus, an
industry may receive a discharge permit for its sanitary system and a
temporary pollution permit for its cooling water system. Similarly, a
municipality may receive a discharge permit for residual effluents
from a treatment plant, but not for raw discharges from a remote sewage
collecting line that outfalls directly to State waters.
b. By the municipal, industrial and residential-commercial
separation, the Schedules can be simplified since they will be oriented
toward classes of dischargers with perhaps distinctly different infor-
mation to report. Thus, for municipalities or individual buildings
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(Schedules A and C) the volume, frequency and nature of the raw waste
load can be inferred or derived from data on population served,
whereas for industry (Schedule B) these data must be submitted in con-
siderably more detail. Similar distinctions apply to reporting the
waste-generation process, pre-treatment activities, and treatment
facilities. Since many municipalities will have engineering plans or
reports on file with the Department, it will only be necessary to make
reference to such plans. Industries, on the other hand, will be
obliged to submit detailed data.
c. The small discharger, whether he be an individual householder,
inn, restaurant or municipal building, need only complete a Schedule
commensurate with his level of activity and opportunity for treatment.
The data he will be asked to submit are limited in detail, adequate for
the Department's needs, and not likely to create undue citizen annoyance.
The application forms, Schedules and instructions are largely self-
explanatory and will not be discussed in detail here; they include
accompanying "General Information and Instructions," also presented in
Appendix D. Some specific comments on the design follow, including
items which should be considered before a final decision to print is
taken.
a. Application Fees: The format of the schedule for application
or "review" fee payments—not to be confused with pollution charge pay-
ments—given in the instructions is tentative. Amounts can only be
determined on the basis of administrative decisions. The use of variable
amounts as a function of the type of Schedule involved and for the pro-
cessing of part one (discharge permit) as separate from part two (tem-
porary pollution permit) would seem to be as far as one could go in
establishing an equitable and administratively feasible schedule. This
does not distinguish between levels of activity involved, i.e., a large
municipality or industry would pay the same amount as a small one.
However, the review time involved can be expected to relate to many
factors other than simply the volume of discharge, and since the appli-
cant is expected to enclose the review fee with the application, it is
not advisable to establish a complex administrative fee schedule.
b. Stream Data: The entire set of data relating to the stream
at the point of discharge is assumed to be a responsibility of the
Department. The applicant need only indicate the discharge location.
While data would of course be entered after the application is received,
the Schedule page containing the stream data block should be included in
the material furnished to the applicant. Such inclusion assures him
that streamflow data will become a part of his application record but
that he is not responsible for obtaining it.
c. Volume, Frequency, and Pollutants for Schedule B - Industrial:
Table B-l is to be completed by entering the total volume of discharge
for each approximate eight-hour period, while Table B-2 is to have the
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maximum concentrations of pollutants associated with the volumes. It
may be preferable to request both sets of data in directly comparable
form, i.e., average rates of flow for Table B-l, or total pollution
loadings for Table B-2. However, while total volume can reasonably be
determined and covers industries with highly variable discharges, and
while concentration rates can be based on past tests, pollution loads
are less likely to be known. Values to be reported in Tables B-l and
B-2 are those after treatment (if any). No space is provided for
similar pre-treatment values, but it is expected that such data will
be included in the description of the flow system (Item B-4).
d. Institutional and Resort Wastes: These are to be reported
using Schedule B, but if essentially limited to sanitary wastes,
applicants may omit completing Tables B-l and B-2 by using option A
of Item B-5. Here is another way in which the form has been designed
for maximum convenience to the applicant.
e. Temporary Pollution Charge for Industry: The rate calculation
will depend on whether the industry's Federal corporation tax includes
a surcharge (i.e., profits above or below $25,000). These data must be
obtained in a discreet manner, and the form of the question (part two,
Schedule B) should be carefully considered.
f. Municipal Options: A rather complex situation may arise with
respect to municipal applications, and the forms, Schedules and instruc-
tions have been designed to permit flexibility in this regard. The
problem can best be illustrated by using examples of increasing com-
plexity:
(1) No sewage collection system exists - Assuming also that no
Board or Commissioners have convened to take action on a
future system, the municipality here will not use Schedule A.
Each individual discharger will be responsible for filing
his own application and Schedule C. Discharges from a
municipal building will require a permit application from
the municipality, but also using a Schedule C.
(2) A municipal sewage collection system exists with no extra-
ordinary users existing or proposed - The municipality will
apply using Schedule A. The Schedule does ask for general
information about dischargers located within the boundaries
of the municipal corporation who do not use the collection
system; however, it will be the responsibility of such
persons to submit separate applications with a Schedule C.
(3) A municipal sewage collection system exists with extra-
ordinary existing users - These users will typically be
industries contributing a substantial volume of wastes
(say 5% or more of the total) or discharging unusual
pollutants into the municipal sewer system. The munici-
pality will submit Schedule A and describe such discharges
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in the spaces provided. This information will permit the
Department to estimate waste volumes and constituents on
the basis of population served, with adjustment for the
extraordinary system users.
(4) Same as the last two cases above, but with proposed addi-
tional users to be added to the system after July 1, 1971 -
The new users may be a group of residences along a presently
unserviced street, or an industry. Assuming that these new
users are presently discharging into waters of the State, it
will be their responsibility to apply for individual permits
pending tie-in to the municipal system. However, they will
report their proposed plan for treatment as discharging into
a proposed new or extended municipal collection system.
The forms are designed to accommodate individual filing or group filing
and thus permit the Department to select the conditions under which group
filing will be accepted.
g. Description of waste generating flow sequence including treat-
ment facilities: It will be essential to know the volume, frequency
and characteristics of the waste discharges prior to treatment in order
to evaluate the efficiency of the treatment process. The treatment pro-
cess must also be described in sufficient detail to enable an engineer
to approve the treatment process and determine whether the applicant
qualifies for a discharge permit.
In designing the application forms, a fully comprehensive set of ques-
tions regarding pre-waste treatment operations or calling for a descrip-
tion of treatment facilities was not included in Schedules A and C
and Option 1 of Schedule R., the was,te. generation can be inferred from
population served. The treatment facilities in these cases will most
probably be standard units for treating sanitary wastes and can either
be described in simple terms or by use of engineering reports or plans.
With regard to industrial waste classification with its widely diverse
waste generating and treating processes, the pertinent engineering
reports and flow charts can be submitted as attachments (Item B-4,
Schedule B), rather than a form designed to cover all possible situa-
tions.
h. Comprehensive coverage: The schedules are designed to apply to
any expected type of waste generating activity. Schedule B, while
oriented toward industrial and large institutional or resort operations,
can be used to cover a greater variety of cases. Schedule C is a short
form of Schedule B. Schedule A resembles Schedule B but includes ques-
tions concerning municipal funding and grants.
In summary, the design of the permit application forms involved com-
promises between technical completeness and simplicity. The latter
was favored since the Department may always seek additional
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information. Since the Department's staff is generally familiar with
the dischargers in the State, there should be little difficulty in
determining whether any applicant is intentionally or unintentionally
withholding any pertinent information.
Surface Water Information
The initial surface water information consists of two classifications—
physical data as represented by flow volumes and quality parameters,
and administrative data represented primarily by stream classifications.
Before considering the data elements required for each classification,
it should be noted that the surface water system can be viewed in two
contexts, the first consisting of data applicable only to the locations
on the system where discharges occur, and the second consisting of data
and functional relations which define and describe the State's entire
surface water system independently of the discharges.
Data relating to stream classifications originate in the classification
orders, or in statutes for streams not otherwise classified. Since
the classifications apply to a set of stream reaches or lakes which
cover the entire State, these data are readily adaptable for use in a
general purpose system (i.e., stream classifications, once established,
are independent of discharges although subject to periodic change).
Data defining the physical system are based on a limited number of
gaging station records of flow volumes and on an even more limited set
of sample reports of quality parameters. To apply these data to other
stream locations, whether to specific discharge points or to any point,
requires a knowledge of the way streams are used and in particular, the
way in which dams are operated.
Critically important low-flow statistics may change as a result of new
facilities, construction, changes in withdrawal rates, or changes in
operating procedures. The amount of such change depends on the nature
of the low-flow statistic involved. For example, the flow exceeded
98% of the time (based on average daily flow rates) may have the same
value as the 7-day, 10-year expected flow in one location but not
another, depending on the method of regulation. If one considers flow
rates on an hourly or instantaneous basis, the statistical values may
change again.
Quality measurements are subject to even greater change. If raw waste
generation remains constant as treatment facilities are installed, the
stream quality should improve, but if raw loads increase, the estima-
tion of future stream quality on the basis of past samples may be mis-
leading. Carrying the past into the future is usually complicated but
should be manageable. In addition, it is necessary to interpolate for
space points or locations that have not been gaged. For stream flow,
this is normally handled by use of ratio of drainage areas and cross-
correlation; but this technique is subject to errors if the flows are
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subject to regulation. Pollution loadings, unlike streamflows, cannot
be expected to vary linearly with the drainage area, particularly with
respect to biodegradable parameters. Although some broad estimates
can be made, an accurate portrayal must await a detailed model.
Problems relating to the establishment and use of a surface water in-
formation system are, of course, more numerous and complex than indi-
cated above, and the Department's staff is well aware of the scope and
detail involved. However, without further elaboration, we list these
conclusions:
a. The surface water information system, however it evolves,
will have to provide reasonable estimates of future con-
ditions, since permits will apply to future and not to
present conditions.
b. To accomplish this, the systems must deal with time and
space and be able to project the future as well as to
fill in for missing points in space.
c. The system could emerge in one of two forms—a general-
purpose system using a computer for data storage,
retrieval and transformation, or a simple special-purpose
system using manual methods.
The manual approach is the only one which can be accommodated under
limited time and least-cost constraints. However, in adopting this
approach it should be realized that a good deal of professional judg-
ment will be required in making estimates. The manual surface water
information system will contain only data items now available to the
Department. There is, in fact, no time to augment this data base prior
to the time when it will have to be used for permit discrimination and
treatment facility evaluation. As each application is considered, sur-
face water data will have to be retrieved and evaluated by the Depart-
ment.
There is little point to building an elaborate cross reference or in-
terpolation system to support the manually kept files of streamflow
data. In keeping with the desire for simplicity, we suggest that
streamflow files be kept in geographic location order.
Use of the System
The key parts of the information system are the permit application
forms and surface water records. In the process of using the system a
third class of information will evolve which can be defined as that
containing the Department's decisions, accounting and billing informa-
tion, and reporting information (e.g., revenue forecasts). These
derived results are described below.
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Granting of Permits:
Upon receiving an application, the date and serial number should be
entered on the basic application form and all Schedules. The number
of Schedules and the amount of fee payment enclosed should also be
noted on the basic form. A file folder, identified by serial number
should then be established to store all papers relating to that
application. The application review check should be listed on a
daily receipts form and transmitted, with all others, to the Depart-
ment of Administration. Finally, the name of the applicant should be
entered on a Departmental "permit status log" using separate line
entries for each Schedule. All of this work can be accomplished by a
secretary or file clerk.
The Department log of permit status will also serve for generating
reports. Each line will represent a submitted Schedule and will have
several columns in which the results of various decisions, actions,
key data, and dates can be entered. Whether the log is kept on single
large accounting sheets or in sets of books is a matter of personal
preference.
The next processing operation will require an engineer to examine the
application and appended Schedules to determine whether sufficient
data have been provided. If few additional data are needed, they can
be requested by telephone and, if furnished, can be entered on the
form with a note to this effect. If a significant amount of new data
is required, it should be requested in writing. These actions and
pertinent dates should be entered on the status log; if the original
data are sufficient, this fact should also be noted.
The next step will require someone to plot the discharge location on
a map. The block on the Schedule containing the stream data can also
be completed, using tentative estimates of future flow rates.
On the basis of data thus far assembled, it should be possible to
reach a decision to either grant or deny a discharge permit. The
decision should be noted in the appropriate block on the Schedule
form and on the status log. If the reasons for the decision are not
evident, an explanatory finding sheet can be added to the file.
If a discharge permit is granted, all that remains is for said permit
to be transmitted to the applicant. A copy of the application form
can be attached to and considered a part of the permit. The expiration
date must, of course, be included. If a discharge permit is denied,
the applicant should be notified by letter with his attention called to
his appeal rights and to his option to apply for a temporary pollution
permit as explained in the general instruction sheet. If he wishes to
apply for the temporary pollution permit, he should complete the items
in the second part of the Schedule (if he has not already done so), and
he should submit an additional application review fee.
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The applicant has other choices than appealing or applying for a
temporary pollution permit. He may also amend and resubmit his appli-
cation or he may "quit," that is, go out of business or attempt to
discharge without a permit. He can apply these options at almost any
time in the overall procedures, and in the event that he is denied a
temporary pollution permit after all appeals, these are his only
choices.
The amendment option has received little attention but could become a
much used course of action for Schedule B and C dischargers. This
could be particularly true during the period prior to July 1, 1971,
since the applicant need only describe the treatment facilities which
tie expects to have operational on that date. As long as he can act
quickly, he would logically try to qualify for the discharge permit.
If he failed on the first submittal, an amended application for a
discharge permit may be his optimal strategy.
The processing of applications for temporary pollution permits should
proceed in the same manner as the processing of discharge permit
applications. The status log should have additional columns for the
estimated completion dates of various phases of treatment facility
construction, to serve forecasting purposes, and a column in which to
indicate the expiration date of the temporary permit.
Accounting and Billing:
The entire accounting process is quite simple and the Department has
indicated that it is equipped to operate it initially on a manual
basis. The status log sheet serves as a journal and the application
files as a ledger, thus providing an easily established and low-cost
manual system which should suffice if the number of permits is about
400 and need renewal only on an annual basis. As experience is gained
during the first year's trial period, it will be possible to modify
and expand the accounting system and possibly to adapt it for simple
automation.
Billing will only be required after a decision has been made to grant
a temporary pollution permit. Before the permit is granted, the
applicant should be notified and a bill sent to cover the pollution
charge.
PRELIMINARY NOTE ON COMPUTERIZED MODELING FOR SUBSEQUENT
STATUS DETERMINATION AND OTHER OPERATIONAL PURPOSES
Status determination and other operational functions can be made tech-
nically more precise when better data and analytic capability become
available from the information system. This can best be explained by
considering how the task might be approached under no time or budgetary
constraints.
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The logical analytical tool would be a mathematical simulation program
for modeling the surface flows in a river basin, including their
quality components. The stream network would be divided into a set of
reaches, with a new reach starting at any point at which there is a
significant change of state in the real-world system, for example at
stream confluences, dams, waterfalls, at each waste discharge point,
and wherever the stream classification changes. The next step would
be to develop hydrologic routines to represent the flow volumes and
their natural quality components added to each reach, and routing
equations to accumulate and transmit these values downstream. The
nature of these routines would depend on the time interval selected
(i.e., one hour, one day, one month), but such routines could be
developed with some use of simplifying assumptions regarding the DO and
heat parameters. The hydrologic input could be stochastic for a
dynamic analysis or it could be fixed at some low-flow value for a
steady-state analysis, such as the average 7-day, 10-year flows. We
assume that the model would represent a steady-state condition.
The computer program would operate by starting at the uppermost reach
(headwaters), with the computations proceeding downstream and picking
up tributary streams as appropriate. Whenever the computations
reached a point of waste discharge, its volume and load would be added
to the stream values by assuming that complete mixing occurred. The
resulting stream quality for non-degradable pollutants could then be
compared to the standards applicable to the reach. If the stream
quality prior to the discharge were above standard and that after dis-
charge below standard, the effluent evidently causes degradation, and
a message to this effect could be printed out.
The degradable pollutants, principally BOD and heat, require additional
routines to account for the assimilative capacity of the stream.
Unless there were several sources of heat discharge in close proximity,
it could be assumed that stream temperature returned to ambient prior
to each new discharge. In this case the heat load could be evaluated
by assuming complete mixing at the point of discharge and comparing the
resulting river temperature to the standards. No heat load would be
carried downstream. In the event of several heat discharges in close
proximity, the reach or reaches involved would have to be evaluated
separately.
The effect of BOD discharge could be modeled under several assumptions.
One would be to calculate the DO profile downstream of the discharge
point using two load conditions, the first being the stream loading
before the discharge was added, the second after the discharge was
added. The DO values would then be compared to the reach standards to
determine whether the discharge was responsible for degradation. The
program would make this determination on a purely mathematical basis
and print out the names of the dischargers whose effluent resulted in
stream degradation.
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The simulation analysis would be run several times to develop a complete
set of information. The first run, for example, could use the existing
effluent load from each discharger, whether treated or untreated. The
results would represent stream quality occurring under low-flow condi-
tions. But this may result in some downstream dischargers being flagged
as polluters because of the load from upstream polluters. To adjust
for this, a second run would be made in which the program would "halt"
whenever a discharge which caused stream degradation was discovered.
Now input cards would then be added to reflect the waste load which
would occur after acceptable treatment facilities had been installed.
The program would then resume the calculations, moving downstream but
carrying only the after-treatment loadings. Thus, each new discharge
would be examined under the assumption that all upstream dischargers
had been adequately treated.
Similar runs could be made using subroutines which simulated the
treatment process for each waste generator. In this case the input data
would be the raw waste volume and concentration and values to describe
the treatment process. The subroutine would then determine the treated
effluent load for use as input to the stream model. Additional sub-
routines could be developed to calculate the raw waste loads, using
population or industrial production values as input.
It would be technically possible to develop such a program along the
lines described, but not before decisions are needed for the administra-
tion of the law. Furthermore, the present stream classification
criteria are not as specific as would be necessary for a mathematical
model. For example, the polluting loads caused by natural sources are
not applicable to the criteria, but they would have to be included for
the purpose of calibrating the model. This would require use of dual
stream-quality vectors in the program and dual printout, one representing
the physical system as it truly exists and the other representing the
system under the influence of point source discharger loads only.
The criteria are also vague in that the maximum allowable concentrations
of several pollutants are expressed in performance terms, e.g., "none
in such concentrations that would impair any usages specifically
assigned to this class," or "that may result only from appropriately
treated effluents provided it does not cause a violation of the classi-
fication of contiguous waters," where "appropriate" is defined as
"secondary with disinfection or the industrial equivalent unless a
lesser degree does not degrade the stream classification."
Presently, therefore, the information system requirements are primarily
related to data describing the waste load. These can be obtained from
treatment plant design documents, or if no treatment exists, from popu-
lation data or test results. Other data required are stream classifi-
cations, which are presently available, and low-flow volumes. The latter
can be estimated by the ratio of drainage area method, based on existing
gaging stations for which low-flow statistics are available from U.S.
Geological Survey analyses.
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SUPPORTING ADMINISTRATIVE PROCEDURES
Responsibility for Effluent and Stream Related Data
Starting up and operating the effluent charge system basically requires
two kinds of data: (i) effluent data, which describe the volume and
pollutional loading characteristics of the effluent emanating from each
discharger, and (ii) stream data, which includes both hydrologic and
stream quality data. As evident in the suggested application for per-
mit forms, the individual discharger should be made responsible for
reporting the characteristics of his waste discharge. The parameters
to be reported on the permit application, including the time variability
of the discharge, have been described in Appendix D. In addition, each
discharger should be required to report to the State whenever his dis-
charge exceeds that initially reported. Surveillance should be main-
tained by the State through regular on-site spot checks of effluent
quality and treatment practice.
Stream-related data, including both flow and quality data, should be
the responsibility of the State. These are of basic importance
initially and to the future overall water quality program of the State,
and individual dischargers cannot reasonably be expected to maintain
the required data-gathering process. Large amounts of flow data are
already availble to the State. Addition of further measurement sta-
tions, both for flow and quality, must be planned to serve the State's
overall needs.
A host of additional supporting administrative functions are of im-
mediate or near-term importance to effective operation of the system.
Surveillance and monitoring of all discharge activities will require
organizing because of the implications for permit status changes and
compliance with initial status determinations and discharger response.
Only the most preliminary estimates of budget requirements and revenue
forecasting are possible in advance of resolving the separation of
dischargers between discharge permit holders and temporary pollution
permit holders.
Compliance Test Procedures:
Compliance tests will consist of field inspections of waste-producing
activities and treatment facilities, and the taking of effluent samples.
In the case of municipal treatment plants, field data can be compared
to expected values indicated by the approved engineering plans and
specifications. This procedure should also apply to industrial facili-
ties for which plans have been submitted and approved. In addition,
flow volumes and waste concentrations as reported by the applicant in
Tables B-l and B-2 can be used as comparison criteria. Since the appli-
cant is asked to indicate maximum flow volumes and waste concentrations,
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and since the Department's decision regarding permit status will have
been based on these values, test volumes or concentrations in excess
of these values immediately signify non-compliance.
Compliance testing related to temporary pollution permits will vary
according to the terms of the permit. In the case of discharges re-
ported on Schedules A and C, little will probably be accomplished by
way of interim treatment, and the principal objective of the compliance
inspection should be to assure that the discharger is progressing on
schedule to install treatment facilities. Progress of industrial dis-
chargers should also be examined, whether for plant construction or
research. In addition, interim treatment measures should be examined,
samples taken, and any records which the discharger is required to
maintain should be reviewed.
Summary reports of compliance tests can be prepared and added to the
permit file by Departmental staff engineers who are assigned to this
function. The date of the test and indication of the results can be
entered on the status log sheet. This again represents an extremely
simple administrative procedure, but it should be adequate for the
initial period.
Forecasting of Revenues:
Revenues will come from two sources, the application fees and the
temporary pollution charges. The former are mainly associated with
initial review and start-up and will be less significant thereafter.
Temporary pollution charges can be expected to generate the greatest
revenue during the first year, after which such revenues will decrease
as temporary pollution permittees come into compliance and qualify for
discharge permits.
Revenues can be estimated from the status log sheet. For each
temporary pollution permit the dates will be recorded when certain
phases of abatement are scheduled, and also the total amount of ex-
penditures made by the permittee. A separate calculation can then be
made for each year of a five or more year projection period, using the
original temporary pollution charge amount as a base and giving what-
ever credit is selected for interim progress. The sum of these amounts,
together with the sum of the renewal charges, will represent revenue
forecasts.
This simple manual technique requires the use of judgment when con-
sidering each discharge. As long as the total number of temporary
pollution permittees is small and the staff member assigned to the work
is generally familiar with the overall situation, the method should
prove satisfactory. Some new dischargers can be expected to appear
each year, and they will be included in the calculations as they submit
applications. It does not seem advisable to attempt to anticipate such
new dischargers at the present time. As a preliminary budget estimate,
roughly one half, or 200, applicants may come under the status of
temporary pollution permittees.
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The individualized nature of the approach to charge structure and
schedules is not readily amenable to automated forecasting but some
techniques can be developed to produce a reasonable range of pro-
jections. Revenues will vary also according to administrative
decisions on effecting short-term, as distinct from long-term incen-
tives, as discussed in Part Two of this report.
Changes in Permit Classification:
All permits will be reviewed annually. During the initial phase
(i.e., the first year), the review of renewal dates for discharge
permits may be staggered to spread the load of reviewing permits by
setting the expiration date of all applications having a serial num-
ber ending in "1" for January, etc., thus skipping two months of
the year. Note, however, that the temporary pollution permit has a
limited life which is to be.set by the Department after due consider-
ation of each case.
If at any time it is found that a discharge covered by a discharge
permit is not in compliance and immediate remedial action is not or
cannot be accomplished, the permit should be revoked and the discharger
required to apply for a temporary pollution permit. The associated
charge should first be calculated as an annual rate, but the bill
should be based on a monthly rate and retroactive to the time the
violation was discovered.
In the case of temporary pollution permit holders who have completed
a major segment of their corrective program, a similar calculation will
be involved. The procedure should allow the discharger to submit an
amended application when the action has been completed. This appli-
cation can then be processed in the normal manner, but the new permit
(if granted) will contain a statement voiding the old permit. The
Department may decide to grant retroactive credit for such steps as
have been taken, or it may decide to change charges only as new appli-
cations are filed, processed and approved.
Changes in Compliance Testing:
During the operation of the program, changes will occur in the overall
management of the State's water quality program which will affect the
compliance testing process and needs. Some of these changes will be
due to factors external to conditions which existed when the discharger
prepared his initial application and the permit was issued. For ex-
ample, new federal regulations or forms may be developed (e.g., recent
changes to Title 18, Section 601, or FWQA test form 120), or the stream
standards may be revised to include new parameters. Either of these
situations may require that a stricter or more detailed compliance
test be conducted, or that the discharger install more monitoring
equipment or increase the frequency or sampling.
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The manual information system can be readily modified to accommodate
these as well as other changes, but certain precepts must be con-
sidered. First, the annual period recommended for permit duration
would seem to be a sufficiently short time so that no administrative
changes need be made except under extraordinary circumstances. Thus,
once the applicant and the Department have come to a meeting of the
minds as expressed in the permit, the conditions stipulated, including
any compliance testing on the part of the applicant, should remain
fixed for the duration of the permit.
If, however, it is expected that compliance testing needs will change
rapidly with respect to increasing detail, complexity or frequency
(and hence become more costly), it may be preferable to have all
permits expire on the same day rather than on distributed months as
previously suggested. While peaking in the administrative work load
will occur, greater equity for dischargers will result since they will
all confront increased requirements at the same time. It will also be
easier to develop automated surveillance programs if new testing
criteria are applied to all dischargers at the same 'date. These
several administrative considerations will warrant close, continuing
examination and a flexibility of responsive actions by the Department
before and during the first year of operations of the permit-charge
system. The consultants' services will prove useful during the con-
sultative phase and Phase II for these purposes.
Staffing and Budget Requirements and^^ Time S^chedules
A distinction is made in this section between schedules to be
followed and the Department's requirements for staff and budget during
the start-up period, discussed as "Start-up Period," and the annual
requirements for operating and maintaining the system after start-up,
discussed as "System Operation." These estimates are quite pre-
liminary and represent minimum basic staff requirements only under the
present circumstances of uncertainty concerning decisions on charge
schedules and status eligibility of permit applicants.
Start-up Period:
The effluent charge system will be made ready for operation during the
period from January 1 thorugh June 30, 1971. In order that the appli-
cations for permits can be given proper consideration, the following
schedule of events is proposed:
Jan. 1, 1971 Begin hearings, Publicize application require-
ments following completion of hearings.
Feb. 1 Send out application forms to prospective
applicants
Mar. 1 Discharge permit applications due. Collect
application fees. File, cross index, and
process applications.
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Mar. 15 Notify applicants of decisions. Specify appli-
cation procedures for temporary permit.
April 15 Temporary permit applications due. Collect
application fees. File, cross index, and process
applications.
May 15 Notify applicants and publish intent to grant
temporary permits. Receive written objections.
Compute fees.
June 15 Review permit conditions and revise as required.
Formally issue temporary permits.
For the purpose of estimating staff and budget requirements during
this period, assume that approximately 400 major dischargers will
file for permits. On the basis of the September 1970 Intent to Dis-
charge reports, estimate that about one half of the applicants
will receive discharge permits and the other half temporary permits.
Most of the effort will be centered in the Department's offices, with
field visits to some temporary permit holders likely. (Department
personnel have estimated that perhaps 20 doubtful cases may require
field visits.) The minimum requirements are estimated as follows:
1. Mailing of application forms to 400 applicants. 100 hours
of clerical time at $3.50 per hour. - $350.
2. Processing of 400 applications; filing, handling of en-
closed fee, "yes-no" decision on granting of discharge
permit. About 200 hours of clerical time at $3.50 per
hour - $700; 100 hours of professional time at $8 per
hour - $800. Total $1,500.
3. For the 200 applicants not granted discharge permits,
specification of allowable effluent loading (e.g., pounds
BOD per day, etc.) and specification of type of treatment
desired. About 100 hours of professional time at $8 per
hour - $800.
4. Notification of all 400 applicants as to decision. About
100 hours of clerical time at $3.50 per hour - $350.
5. Processing of 200 applications for temporary permit; filing
and handling of fee; review of proposed plans and dis-
cussion with those dischargers whose plans are unacceptable.
About 50 hours of clerical time at $3.50 per hour - $175;
about 400 hours of professional time at $8 per hour (in-
cluding visits to approximately 200 dischargers) - $3,200.
Total - $3,375.
6. Notification of applicants as to intended action; publica-
tion of intended action; receiving and review of written
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objections; review of permit conditions. About 200 hours
of professional time at $8 per hour - $1,600; about 100
hours of clerical time at $3.50 per hour - $350.
Total $1,950.
7. Computation of individual fees; formal granting of tempo-
rary permits. About 100 hours of professional time at
$8 per hour - $800; 50 clerical hours at $3.50 per hour
- $175. Total $975.
Requirements for these seven phases plus a contingency estimate are sum-
marized below.
Man Hours Cost
Phase Clerical Professional Clerical Professional Total
1 100 - $ 350 $ - $ 350
2 200 100 700 800 1,500
3-100 - 800 800
4 100 - 350 - 350
5 50 400 175 3,200 3,375
6 100 200 350 1,600 1,950
7 50 100 175 800 975
Totals 600 900 $ 2,100 $ 7,200 $ 9,300
Contingency (25% of estimate) 2,325
$11,625
The most concentrated initial effort will be required in Phases 2S 3
and 4 and later in Phases 5 and 6. According to the suggested schedule
given above, Phases 2, 3 and 4 must be accomplished within two weeks
(March 1 to March 15). Assuming 40 man hours per man week, 300/80 or
almost 4 full-time clerical people will be needed and 200/80 or about
2% full-time professional people. Phases 5 and 6 must be accomplished
within one month (April 15 to May 15), so that the requirements in this
period are for 150/160 or one full-time clerical person and 600/160 or
nearly four full-time professional people.
The staffing and budget estimates do not include any allowance for super-
visory personnel under the assumption that their time would be charged
to general operating accounts. Also, it was assumed that the review of
plans for treatment plants submitted by municipalities would be charged
as part of the cost of administering the construction grants programs.
If these supervisory and review costs were to be charged to the permit
account, the staffing and budget estimates would have to be increased
considerably from the values given.
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System Operation:
Regular operation of the system will require both office and field work.
Office work will be made up mainly of billing, receiving and handling
payments, and updating permits and adjusting fees in individual cases.
On a yearly basis, the requirements are estimated to be:
Billing; receiving and handling payments on a
quarterly basis - 200 clerical hours at $3.50
per hour $ 700
Updating permits and adjusting fees - 50 clerical
hours at $3.50 - $175; 100 professional hours at
$8 - $800 975
Total Office Cost $ 1,675
Field work will consist mainly of spot checking dischargers' performance.
Holders of regular discharge permits and temporary permits should be
checked at irregular intervals. Effluent samples should be taken and
the operation of abatement facilities inspected. Assuming that 800
inspections must be made per year, and that each inspection team can
make two inspections per day, 400 team-days are required. This corres-
ponds to two teams on the road all year around. (Alternatively one
team might be used year around, with added teams put into the field
during the summer months.) Assuming that each inspection team is com-
posed of one professional engineer and one helper, the estimated cost
per team is:
Salaries and benefits $ 24,000
Expenses 8,000
Equipment and supplies 4,000
$ 36,000 per year
The annual cost of field surveillance with two equivalent full-time
teams is $72,000. This may not be a net additional cost, since other
existing field surveillance activities may suffice to cover at least
part of the charge system activity.
The total annual cost of maintaining the effluent charge system is
therefore approximately $74,000. A contingency of 25 percent should
again be applied, raising the budgeted estimate to $92,500, all as
qualified by the inherent uncertainties associated with the number of
discharges over which surveillance will be required.
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SECTION VII
PROMULGATION OF A CHARGE SCHEDULE
Section 912a(e) of the Vermont Water Pollution Control statute provides
that "by January 1, 1971, the Board shall fix and establish reasonable
and just pollution charge rates for computing the amounts to be paid by
temporary pollution permit holders...." To accommodate these provisions
and to satisfy requirements for public notice and hearing prior to pro-
mulgation of a set of rules and regulations, an initial draft was pre-
pared in late November, 1970, hoping to obtain full Department and Board
approval in time for public hearing before the end of 1970. As it
turned out, greater time was required than anticipated to coordinate
the various views of the Department and the Board. In addition, a legis-
latively prescribed administrative reorganization occurred in early
1971 which created a new Agency for Environmental Conservation and
transferred the Department of Water Resources along with several others
to the new Agency. These changes further complicated the task of pre-
paring a set of proposed rules and regulations suitable for publication
and public hearing.
The initial (November) draft rules and regulation regarding the computa-
tion of pollution charges followed closely the recommendations of the
consultants. Charges were based on the annualized cost of treatment to
the discharger (i.e., federal and state subsidies were excluded to de-
rive out-of-pocket cost) of constructing and operating the pollution
abatement facilities required to modify the characteristics of his wastes
to meet water quality standards. Charges were set equal to annualized
out-of-pocket costs in the belief that such charges would retain the
incentive to build the needed facilities without delay and that the
incentive for short-term reductions in waste loadings could be provided
by allowing adjustment in the charge rate to account for expenditures
actually incurred and to account for alteration in the nature of the
abatement facilities required as occasioned by product or process changes
undertaken by the discharger.
Subsequent deliberations of the Agency and the Board concerning the
charge schedule centered on the desirability of charging temporary pol-
lution permit holders who comply with the terms of their permits the full
annualized cost of treatment. There appeared to be no objection to
charging the full rate to temporary permittees who failed to comply with
construction timetables and other provisions of their permits, but it
was felt that those complying with temporary pollution permits should
pay less. Consequently, the Board approved on March 11, 1971 a set of
proposed charges based on out-of-pocket cost of treatment but providing
for rebates where there is compliance with the terms of a temporary
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pollution permit. In the case of domestic wastes, the Board's rules
assumed an average cost for municipal plants of the size range common
in Vermont and placed the charge on a per unit basis at $0.06-1/2 per
pound of BOD discharged plus $0.04-3/4 per pound of suspended solids
discharged plus $0.02-1/2 per 1000 gallons of liquids requiring dis-
infection discharged. In deriving these figures it was also assumed
that federal and state grants-in-aid would be applicable to the extent
of 85% toward the capital cost of approved treatment facilities.
In the case of non-domestic wastes, the Board's rules set the charges
equal to the individual discharger's annualized cost of constructing
and operating "the abatement facilities necessary to modify the
characteristics of such water such that when these facilities are
placed in operation the permittee will qualify for a discharge permit."
The discharger's annual cost will be taken equal to the annual cost
developed in the engineering design of the facilities to be installed,
if the discharger has prepared such a design and the facilities are
acceptable to the Agency. In the absence of definite and documented
cost estimates relevent to the proposed facilities of the individual
discharger, the Agency will estimate the cost, based on published
generalized waste treatment costs relevant to that industry or activity.
Since no federal or state grants-in-aid are available to these dis-
chargers , provision was made for reduced payment in the amount of 15%
of annualized capital cost plus delivery of a demand note for the a
balance of the annualized capital cost and full payment of operating
costs so as "to place such payments on a parity with those made by a
permittee whose charges are computed on a unit basis."
In addition, the Board's proposed rules provided for rebates as set
forth below:
RULE 14; Pollution Charges, Rebate and Forfeiture
a) The Department shall rebate to a temporary pollution permit
holder two-thirds of the pollution charge payments actually
collected in accord with RULE 13 at such time as the permittee
qualifies for and receives from the Department a discharge permit
provided the permittee has made all required payments and has
qualified for and received a discharge permit prior to or on
the date required by the schedule set forth in his temporary
pollution permit. It shall also cancel and return all demand
notes held at that time.
b) Should a temporary pollution permit holder fail to qualify
and receive a discharge permit in accord with the schedule con-
tained in his temporary pollution permit he forfeits the right
to the rebate provided in the preceding paragraph, (a), of this
Rule of any portion of the pollution charge payments made or
owed. At such time as he does qualify and receive a discharge
permit all demand notes held shall be cancelled and returned.
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c) The reduction or elimination of any discharge of wastes that
results from abandonment or curtailment of any operation contrary
to the terms of his temporary pollution permit shall cause the
permittee to forfeit his rights to a rebate of any portion of
his pollution charge payments made or owed and the Department
shall present all demand notes held for payment unless the Board
decides otherwise upon appeal under RULE 17.
The effect of the Board's rebate provisions was to set the effluent
charges to temporary permit holders who comply with the terms of their
permits equal to 5% of the annualized capital costs plus 1/2 of the
operating costs of providing the required abatement measures.
Public hearing was held on the Board's proposed rules April 21, 1971.
A large share of would-be interest at this hearing had been diverted by
an amendment to the pollution control statute passed the evening of
April 20, during the last session of the 1971 legislature. This amend-
ment created an exemption from the charge assessment until July 1, 1972
for all temporary pollution permittees who established construction
schedules and provided for financing thereof by July 1, 1972. Permit-
tees who fail to meet these conditions will be assessed charges as of
July 1, 1971.
The day following public hearing, the Commissioner of Water Resources
requested on behalf of the Board the Attorney General's opinion regard-
ing the meaning of the 1971 amendment and two other issues related to
the intent of Public Act No. 252 of 1969. In a formal reply rendered
May 10, the Attorney General's Office opined that there was no authority
in the statute to create the rebate provisions contained in the Board's
proposed rules and that the statute required the non-domestic charges
as well as the charges for domestic wastes to be expressed on a per unit
basis.
Shortly after receipt of the above opinion, the Board requested the
Governor to designate two persons—one from the Agency for Environmental
Conservation and one from the Attorney General's Office—to prepare a
new draft of proposed rules for establishing charges for consideration
by the Board. These designations have been made and new proposed rules
are in the drafting process.
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SECTION VIII
ACKNOWLEDGMENT
This project was directed by Mr. William Albert. Assistance in %
this effort by many individuals in and out of government has been
substantial. We acknowledge the help of the Attorney General's
office and in particular John Hansen, as well as the staff of the
Department of Water Resources, Agency of Environmental Conservation,
State of Vermont, who have contributed background information and
basic data on the many aspects of the task. We are grateful for
the guidance provided by Edwin Johnson of the Environmental Protec-
tion Agency.
The Office of Research and Monitoring, formerly the Water Quality
Office, through demonstration grant assistance, is contributing to
implementation of the Vermont statute. In its role as consultant,
on a very challenging assignment, Arthur D. Little, Inc., has en-
deavored to respond to both "clients," the one directly and immedi-
ately and the other indirectly and for longer range purposes. The
contributions of Arthur D. Little, Inc. staff participants—John M.
Wilkinson (Project Director), James Murphy, Robert Bohlig, David
Hellstrom, Michael Mohr, Frederic March and Rufus Perkins—deserve
special mention.
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SECTION IX
REFERENCES
1. Committee on Pollution Report to Federal Council for Science and
Technology, Waste Management and Control, Publication #1400,
Washington, D.C., 1966, at p. 203.
2. Snow v. Parsons. 28 Vt. 459 (1866).
3. Canfield v. Andrew, 54 Vt. 1 (1882).
4. Kneese and Bower, Managing Water Quality: Economics, Technology,
Institutions, 1968 (John Hopkins Press).
5. Prakash, V. and Morgan, Jr., R.H., Economic Incentives and Water
Quality Management Programs," prepared by Water Resources Center,
University of Wisconsin, for Department of Natural Resources,
State of Wisconsin, Research Report #41 (1969).
6. Johnson, E.L., A Study in the Economics of Water Resource Manage-
ment , WRR Vol. 3, No. 2.
7. Kneese and Bower, Managing Water Quailty, pp. 251-252.
8. Shah, K.L. and Reed, G.W., JWPCF (42) NO. 5, p. 776-793, May 1970.
9. Whipple, Jr., W., BOD Mass Balance and Water Quality Standards, in
Water Resources Research, Vol. 6, No. 3, June 1970.
10. Lyman, Silus R., The Constitutionalityof Effluent Charges, Tech-
nical Report OWRR A-022, Wisconsin, May 1969.
11. Davis, Peter N., Five Legal Studies on Water Quality Management in
Wisconsin, Unpublished Paper, 1970, p, 179.
12. Crowley v. Christensen, 137 U.S. 86,89 (1890).
13. Berman v. Parker, 348 U.S. 26,32,33 (L954).
14. Nebbia v. New York, 291 U.S. 502,525 (1933); Goldbla11 vs. Hempstead,
369 U.S. 590 (1962).
15. Bibb v. Navajo FreightLines, 359 U.S. 520,529 (1959). See also
State v. Quattropani, 99 Vt. 360 (1925); State v. Morse, 84 Vt.
387 (1911); and Purity Extract and T. Co. v. Lynch, 226 U.S. 192,
33 Sup. Ct. 44.
Ill
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16. State v. City of Milwaukee, 33 Wis. 2d624, 633; 148 N.W.2d21, 25,
26 (1967) 11 Am. Jur., Constit. Law s. 128; 37 Am. Jur., Municip.
Corp. s.101; See also Hardwick v. Wooleat:, 98 Vt. 343, and State
v. Clement National Bank, 84 Vt. 167.
17. Lyman, Silas R., "The Constitutionality of Effluent Charges,"
University of Wisconsin, Water Resources Center, Technical Report
OWRR A-022-Wis. (May 1969 p. 49-52).
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SECTION X
GLOSSARY
Board - The Water Resources Board of the State of Vermont, an
appointed body responsible for establishing stream
quality standards within certain limits set by the
legislature, establishing a schedule of pollution
charges, and hearing certain appeals from action of
the Department.
Department - The Water Resources Department of the State of Vermont,
an administrative unit within the State Agency for
Environmental Conservation responsible for adminis-
tering the Water Pollution Control statute and other
matters related to the State's water resources.
Agency - The Agency for Environmental Conservation of the State
of Vermont, the administrative unit superior to the
Department and responsible for all aspects of environ-
mental conservation.
Consultant - Arthur D. Little, Inc., Cambridge, Massachusetts
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SECTION XI
APPENDICES
PAGE
A. Vermont Water Law as Developed by Precedent 117
B. Constitutionality Considerations of Effluent Charge
Systems 125
C. Some Thoughts on the Economics of Pollution Fees Related
to the Vermont Situation 135
Figure 1: Classic Demand Curve Analysis 137
Figure 2: Classic Demand Curve Analysis 138
D. Application Form, Schedules and Instructions 143
E. Examples of Actual Application of Effluent Fee or Sewer
Charges Systems 167
F. Estimation of Treatment Costs 177
Figure 1
Table 1
Table 2
Table 3
Figure 2
Figure 3
Table 4
Table 5
Capital Cost of Secondary Plants 180
Annual Operating Costs 181
Annual Operating Costs as a Percentage of
Capital Costs 182
Annual Cost of Capital Recovery and Interest 182
Overall Treatment Cost 183
Cost of Treatment and Industrial Charges 184
Industrial Waste Charges 186
Coefficient on Capital Cost Portion of Net
Annualized Cost of Treatment 191
G. Selected Citations on Optimal Resource Allocation in
River Quality Management 193
H. Title 10, Vermont Statutes Annotated 197
I. Summary of Water Quality Standards 209
Table 1 : Classification Summaries Relevant to Vermont 214
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APPENDIX A
VERMONT WATER LAW AS DEVELOPED BY PRECEDENT
INTRODUCTION
The following is a sampler of Vermont water law cases which illustrate
the Common Law case-by-case development of a scheme for allocating
competing uses of Vermont's waterways. As indicated elsewhere the new
provisions of Vermont's 1969 Water Pollution Control statute are not
meant to "impair or abridge the right of riparian or littoral owners
or others to sue for damages or injunctions or exercise any other
common law or statutory remedy to abate and receiver damages for water
pollution." While it is thus clear that the rights of "downstream"
users are not to be reduced, it is not clear whether the operation of
the law may affect such rights by way of enhancement. Conversely, may
the statute impair the Common Law rights of dischargers to reasonable
use of the water's assimilative and transport capacity? The statute
is strangely—or significantly—mute on this point. Nonetheless one
can easily hypothesize a situation in which action of the Water
Resources Board or Department would appear to impair a discharger's
common law right to reasonable use. What is the shape or legal
quality of such a right? The cases below give some guidance.
An additional comment is necessary to relate the present section to
our effort in Vermont. Historically there was only one basic mechanism
for allocating the various uses of watercourse as among competing
riparians. This mechanism was the Common Law which decided only one
dispute at a time and, by and large, assigned and protected rights as
among riparians but did not determine rights as between riparians and
any state administrative agency. The 1969 Vermont Water Pollution Act
superimposed a new mechanism for allocating water uses via stream
classification, Department discharge and pollution permits, effluent
fees and Board orders. Please note that the Common Law mechanism has
not been replaced but merely supplemented by direct, state administra-
tive and quasi-judicial regulation on behalf of the people at large as
well as riparians.
Inevitably conflicts will arise in which a defendant-discharger in a
private nuisance action will raise one of two defenses: (1) the ad-
ministrative agency has exclusive jurisdiction and the defendant is
discharging in compliance with an administrative order and, therefore,
there is no private Common Law cause of action or (2) the administra-
tive agency has primary jurisdiction and the plaintiff's legal action
is premature because he has not exhausted his administrative remedies.
The statute anticipates this possibility and clearly states that plain-
tiffs have not lost any of their legal remedies.
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There is another circumstance, however, in which a conflict may arise
between the Common Law mechanism and the administrative regulatory mech-
anism. Here a plaintiff may claim that while an upstream discharger is
making a "reasonable use" of a waterway as that term was understood in
past Common Law cases, the discharger is now violating an administrative
order which creates new grounds for legal relief on behalf of plaintiff.
In this situation the court of law has three choices: (1) the court
can agree that violation of an administrative order gives injured ri-
parians a new cause for legal remedy in a private nuisance suit; or
(2) the court can claim that administrative orders do not create any
new remedies for aggrieved riparians in private actions or; (3) the
court can assert that the very concept of what constitutes a "reasonable
use" has been affected by administrative reclassifications and orders so
that while no new remedies as such are created, a heretofore "reasonable
use" has become unreasonable in the light of changed circumstances.
The results in (1) and (3) are the same despite the different legal
theory employed. We make no conjecture as to what the Vermont Supreme
Court might do in such a case. If injunctive relief were granted, pri-
vate actions might compel compliance with administrative orders where
administrative enforcement was not forthcoming or simply slow.
In large measure these concerns are beyond the scope of our immediate
task except insofar as Water Resources Board and Department activity
will be informed by the traditional approaches and insofar as some re-
luctance may be encountered to any effluent fee system which is radically
at variance with the Common Law's loose "balancing of conveniences"
technique unless clear reason is articulated for such variance.
BRIEFS OF CASES
Case #1 Martin v. Bigelow, II Aikens 184 (Vermont 1827)
Motion for new trial granted in an action in trespass where defendant
sawmill owner and prior water user entered on plaintiff's land and re-
moved his recently constructed upstream mill dam. The Court rejects
common law doctrine that a prior-appropriating actual user has an
action for any diversion of water to his injury as inapplicable in
Vermont (statute adopting Common Law gives it power to say how far it
is applicable). Instead where upstream user is not diverting from the
channel and is not wantonly wasting, mere prior occupancy does not give
the downstream user the right to prevent upstream user from using some
water in a prudent way. [Six years after this case the English Courts
accepted the riparian doctrine in favor of that of prior appropriation.]
[The question of prescriptive rights after 15 years was deliberately
left open.]
Case #2 Snow v. Parsons, 28 Vt. 459 (1956)
Action for damages by downstream saw mill owner against upstream latter-
constructed tannery caused by obstruction of plaintiff's water wheel by
the tanning-bark discharged by defendant's tannery and allowed to float
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down one and one-half miles to plaintiff's mill. Judgment for the
plaintiff on referee's report was reversed and the case remanded for
trial on the facts offered regarding the necessity for tanners to dis-
pose of tanning bark and its customariness.
The court observed that riparians have the right to use waters for
manufacturing purposes including disposal, but "the reasonableness of
such use must determine the right, and this must depend upon the extent
of detriment to the riparian proprietors below... An extent or kind of
deposit, which might be of no account in some streams, might seriously
affect the usefulness of others. Within reasonable limits, those who
have a common interest in the use of air and running water, must submit
to small inconveniences to afford a disproportionate advantage to
others. It seems to us that this question of the reasonableness of the
use of a stream, when it is not settled by custom, and is in its nature
doubtful, should always be regarded as one of fact, to be determined by
the tribunal trying the facts." (emphasis added)
Case #3 Jacob v. Allard, 42 Vt. 303 (1969)
Bill in equity by downstream starch mill owner against upstream shingle
mill owner for discharging shingle sawdust which renders the water im-
pure and unfit for making starch, claiming this was done with an intent
to injure plaintiff. The decree for plaintiff was reversed because no
evidence of malice in case and the use was a reasonable one, the plain-
tiff being able to avoid the nuisance by means of small expense of his
own for purification equipment.
Case #4 Canfield v. Andrew, 54 Vt. 1 (1882)
Suit to enjoin an upstream defendant from diverting water, ponding and
disposing of sawdust in a river which fouled plaintiff's dam and mill
works.
Held the diverting and ponding were reasonable and therefore injunction
denied; regarding the disposal, the court said "one may use one's own
property so as not to injure that of another." Moreover, "Such damages
as are incident to, and necessarily result from, a proper use of the
water must be borne; but the manufacturer has no right to do an act
that in its consequences is injurous to others because it is a matter
of convenience or economy for him to do it. [One may query whether the
reasoning here is altogether consistent with Snow v. Parsons.]
Case #5 Laurie v. Silsby 76 Vt. 240 (1903)
Suit for injunction by downstream riparian and his non-riparian grantees
against upstream riparian who built a trout pond with result that flow
of water was reduced and the quality degraded. Grantees-plaintiff had
built an aquaduct over plaintiff-riparian's land to pipe water for farms
at his license forty years ago.
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Court holds plaintiffs have no prescriptive rights against defendant
(although the "long-continued enjoyment" had been sufficiently long)
because such presumption of grant arises only when the person against
whom the right is claimed could have lawfully interrupted or prevented
the exercise of the subject of the supposed grant, which defendant
could not have done here because the plaintiff's taking of the water
did not infringe their rights (no harm done).
Held: plaintiff-grantees have standing although non-riparians because
such riparian rights to use are grantable or assignable.
Court states that the legal quality of correlative riparian rights is
that each proprietor "must use his own right so as not to deprive the
others of an equal enjoyment of their same rights." Thus reasonable
use is the only limit set on exercise of these rights and it becomes
a question of fact whether use made by a riparian owner for his own
purpose OR for sale to others for non-riparian purpose is a reasonable
use.
Here plaintiff's use is deemed as a matter of law reasonable against
defendant because the use was lawful and beneficial and occasioned no
harm. However, defendant's use does damage plaintiff and therefore as
a matter of law cannot be deemed a reasonable use and therefore is a
question of fact for the master. Reversed and case remanded.
Case #6 Board of Health v. Village of St. Johnsbury 83 Vt. 276 (1909)
Bill in chancery to enforce an order prohibiting the furnishing and the
use of the village water supply for domestic purposes "till such time"
due to pollution. Judgment enforcing the order was granted and re-
versed on appeal because the statute giving the court permission to
enforce orders does not make such orders final and conclusive so as to
deprive parties affected of a right to a hearing before the court.
Issue raised by defendant was that Board could not effectually enforce
the order, i.e., it could stop village from pumping water into its
mains but could not distinguish use for laundry and flushing purposes
and domestic use, the former being expressly permitted. In a related
but non-Vermont context (McCormick v. Russel, 172 Pa. 506) it was
stated that the State might require a municipality to supply water of
a set quality or cease collecting charges therefore and could require
it to be diligent in seeking a new supply of pure water, but the State
could not require the company to relocate its plant or seek a new
supply, to reach which would involve an expense greater than its entire
capital stock.
Case #7 State v. Morse 84 Vt. 387 (1911)
Conviction of bathing in Montpelier's water supply (Berlin Pond) in
violation of order promulgated to protect water until Montpelier could
construct purification facility. No actual notice was received but
notice through posting as required by statute was given.
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On appeal the conviction was sustained and execution ordered, the Court
pointing out that where the statute makes provision for giving notice
and this is complied with, no actual notice to the defendant is re-
quired to make the order binding. In discussing the proper exercise of
the police power the Court observed:
"That a riparian owner has a right to the reasonable use of
the water of such a pond, we agree, that this ordinarily
carries the right to bathe and swim therein we agree; that
this right is a property right, we agree.... Can it be said
that it is always and under all circumstances a reasonable
use of such waters to bathe therein? Reasonable use varies
with circumstances. It depends among other things upon what
use is made of the water by the lower owners, whose equal
rights must be respected." p. 192
Case #8 State v. Quattropani, 99 Vt. 360 (1925)
Conviction and fine for boating on "beatable" waters [Constitution
Chap. II § 63] in violation of Board of Health ordinance against same.
Waters were Berlin Pond—source of water supply for city of Montpelier.
Execution ordered. While no actual damage was done order was reason-
able because it is sufficient if it was reasonable to apprehend that
boating and incidents thereof may result in contamination of the water.
Case #9 Vermont Woolens Corporation v. Wackerman, 122 Vt. 219
167A2d533 (1960)
This is an appeal from a stream classification order which included
general instructions about the level of treatment that would be ex-
pected of various categories of dischargers in order to maintain the
established stream quality. The appellant was a long-time discharger
of dyes and other wastes into the waters on which he was riparian and
claimed that the reclassification order was unconstitutional in that
he could not comply with the new stream quality with his existing
treatment facilities and that building equipment such as would meet
the standards was economically impossible and, therefore, the order
deprived him of his property without compensation. The Court de-
clared that this appeal was premature insofar as there was no specific
adjudication involving the appellant on which the Court could exercise
its powers of review. Thus the Board would first have to bring a
charge against Vermont Woolens Corporation or petition for Court en-
forcement of an order before an appeal would be timely.
Nonetheless, the Vermont Supreme Court took the opportunity presented
by this appeal to express its views on the general subject and these
are worth summarizing.
1. Pollution abatement carried out in futherance of (a) public
health and (b) for the protection of fish and game are
appropriate areas for the exercise of the police power.
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2. All contracts etc. and rights possessed and property
held are subject to the proper exercise of this police
power and must submit to its valid regulation and
restriction.
3. Riparian rights do constitute property but they do not
become by prescription invulnerable to regulation.
"Without the consent of the Legislature, the interests
of the State in all its waters cannot be defeated by
long user, for prescription cannot be allowed to over-
come public welfare."
4. "Burdensome cost is a factor to be considered in
weighing the reasonableness of legislation and orders
made under it when testing them for constitutionality.
However, when legislation...is supported by strongly
favored public policy considerations, [they] will not
be struck down as unreasonable solely because a
financial hardship is necessarily worked on a particu-
lar individual, even to the point of being destructive
of his business." Citing Anchor Hocking v. Barber,
118 Vt. 206, 215, 105A261 271.
SUMMARY OF CASE-DEVELOPED GUIDELINES
Several general guidelines emerge from an examination of these cases:
1. The right to a watercourse's assimilative and transport
capacity for waste disposal is a recognized property
right and one of a bundle of such rights in water a
riparian may possess.
2. This use, like other uses of the water, is subject to
the limitation that it must be "reasonable."
3. A waste disposal use is "reasonable" as a matter of law
if it is otherwise lawful and results in no injury to
downstream riparians.
4. "Reasonable use" for any legitimate riparian purpose de-
pends upon the circumstances of stream flow, time of
year, other correlative uses actually being made, but
does not depend on any priority of time in which a use
was begun.
5. A use determined to be "reasonable" at one time may sub-
sequently become "unreasonable" due to changed circum-
stances such as additional users located on a river.
6. Prescriptive rights in the use of water are by and large
not recognized in Vermont.
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7. What constitutes a "reasonable" use is, in the last
analysis, a question of fact for the trial court. In
determining this fact the following types of evidence
are relevant and should be considered: (1) the injury
suffered by a downstream plaintiff-user caused by the
discharge; (2) the expense and inconvenience to the
downstream user of avoiding the pollution; (3) the ex-
pense and inconvenience to the discharger of eliminating
or otherwise reducing the offending discharge. It
appears from Snow v. Parsons that in "balancing" these
considerations one user may have "to submit to small
inconvenience to afford a disproportionate advantage to
others"; and from Canfield v. Andrew that a manufac-
turing discharger has no right to pollute to the injury
of others merely because it is "a matter of convenience
and economy for him to do it."
8. In enforcing orders designed to protect the health and
welfare in water pollution matters, the court will look
to the practicality of enforcing the particular order
at issue. Thus, if a municipal sewage treatment plant
were degrading the quality of waters into which it dis-
charged below the established standard and in violation
of its temporary pollution permit, the courts might re-
fuse to enforce a Department of Water Resources Order to
cease all operations and all discharges until compliance
with the temporary permit. In such a case even though
the order was duly issued in all respects, a bill to
enforce the order might be denied solely because the
court could see no practical way to actually achieve the
enforcement of such an order (people will continue to
pull the chains in their water closets). An order to
cease collecting customers' sewer charges until such
time as compliance is had, however, could be enforced
under threat of contempt of court proceedings against
appropriate municipal officials and a bill for enforce-
ment of such an order would be granted.
These considerations are rather illustrative of the day-
to-day problems of enforcing a pollution control
statute—even one with "teeth" in it—and highlight the
need for a self-enforcing incentive mechanism such as an
effluent fee system.
9. Any prescriptive rights to the disposal use of water
which may have been acquired by long enjoyment are not
invulnerable to change through regulation.
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APPENDIX B
CONSTITUTIONALITY CONSIDERATIONS OF EFFLUENT CHARGE SYSTEMS
The basis of a constitutional challenge to an effluent charge system starts
from the common law proposition that riparians (and in some cases—especially
in Vermont—nonriparians as well) have the right to a "reasonable" use of the
state's surface watercourses. The exact delineation of these rights is
highly technical but unimportant here. The key point is that "reasonable"
use comprehends not only domestic, recreational, industrial and agricultural
uses but also the right to reasonable use for waste assimilative and trans-
port capacity. Such a "right" constitutes a kind of "private property" of
which a discharger might be deprived by requiring him to pay first a charge
before discharging waste in any amount. A discharger would then claim that
the effluent charge amounted to a deprivation of private property without
due process of law, without equal protection of the law and without just
compensation in violation of the 5th and 14th Amendments to the U.S.
Constitution.
Of course many property "rights" are subject to regulation, taxation and
even "taking" by Government. The essence of the constitutional challenge
is that the rights infringed were not affected in a proper way whichever
power of government is relied on to justify the infringement.
Any particular effluent charge system which we examine Cor devise) and
analyze for possible adoption by the Vermont Department of Water Resources
must be capable of withstanding attacks of unconstitutionality by affected
parties in Vermont. The relevant constitutionality criteria are outlined
below in the context of Vermont law.
VALID EXERCISE OF THE POLICE POWER
An effluent charge system can be viewed—and is so viewed in Vermont—as an
exercise of the state's police power wherein regulations are established
for the "public good." The legal or valid exercise of such power must meet
three tests: (1) there must be a proper legislative purpose; (ii) the
regulations must bear a reasonable relation to that purpose; and (iii) the
regulations must be neither arbitrary nor discriminatory. The standard for
each of these tests is discussed in turn below.
(i) A proper legislative purpose—"Proper legislative purpose"
has been defined by the U.S. Supreme Court to include
protection of "...the safety, health, peace, good order
and morale of the community"! and the values represented
may be "...spiritual as well as physical, aesthetic as well
as monetary. It is within the power of the legislature to
determine that the community should be beautiful as well as
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healthy, spacious as well as clean, well-balanced as well as
carefully patrolled. There is little doubt that such a
broadly drawn standard could be met by nearly any particular
effluent charge system likely to be considered by the Depart-
ment. Section 912(e)(1) of Public Act No. 252 of 1969 sets
forth the principal purpose as providing an economic incentive
to reduce the volume and degrading quality of discharges and
thereby raising the quality of waters in the state. Taken
together with other provisions of Title 10, Chap. 33, V.S.A.
the effluent charge system and the pollution control law
might serve a somewhat differently articulated purpose but
there is no reasonable doubt that the "proper-legislative-
purpose" test would be satisfied.
Cii) Regulations bear a reasonable relation to that purpose—The
standard here is that the means selected in the light of any
facts known or reasonably assumed bear a real and substantial
relation to the object sought to be attained.3 Clearly many
particular effluent charge systems might be debatable on this
point. For example, an effluent charge system based on down-
stream damage costs might not provide much incentive for
abatement; or a system based on treatment costs might not
encourage pollution abatement to a level consistent with
optimum resource allocation, if the latter were the system's
purpose. However, the criteria is not the actual success of
the regulation in achieving the desired objective but rather
the "reasonableness" of the regulation.
Furthermore, the presumption of legislative reasonableness lies
with the state and therefore any party challenging the constitu-
tionality of an effluent charge system on this point would have
the burden of establishing "unreasonableness."^ In most cases
this is a very difficult presumption to overcome and I should
think most effluent charge systems would be constitutionally
secure in this regard.
(iii) Regulation is neither arbitrary nor disciminatory. As nearly
as I can establish "not arbitrary" means nothing separate or
distinct from reasonable and nondiscriminatory and therefore
I proceed to a discussion of the nondiscriminatory test.
Whether an effluent charge system is discriminatory is at the
very heart of the due process of law and of the equal protection
of law guarantees of the 5th and 14th Amendments. Necessarily
an effluent charge system will establish different treatment
for different classes of persons. The crux of the matter is
that the classifications so occasioned must be reasonable in
light of the purpose to be served and all within a class must
be treated alike. By and large proper classification is
primarily a legislative function and not a judicial one, but
the courts do and will take a hard look at the classifications
established. In this regard the precise purpose to be served
by the "pollution control" system becomes very important.
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Five judicially established standards for proper classification
are widely accepted as operative.5
"(1) All classifications must be based upon substantial distinc-
tions which make one class really different from another.
"(2) The classifications adopted must be germane to the purpose
of the law.
"(3) The classification must not be based on existing circumstances
only (i.e., it must not be so constituted as to preclude
addition to the numbers included within a class).
"(4) To whatever class a law may apply, it must apply equally to
each member thereof.
"(5) The characteristics of each class should be so far different
from those of other classes as to reasonably suggest at
least the propriety, having regard to the public good
substantially different legislation,"
A few examples may illustrate the arguments that might be advanced. Of
course waste dischargers would be regulated whereas other members of the public
would not. This distinction is reasonable because dischargers are actually the
real cause of pollution whereas the general public is not. However, not even
all waste dischargers are regulated. For example, farmers whose waste con-
sists of run off from fields and feed-lots are not regulated; nonetheless
those dischargers who are affected by the charge represent the class wherein
the need for regulation is the clearest. More difficult is the distinction
between those dischargers who receive a discharge permit and pay no charge
and those who receive a temporary permit and must pay a charge. Here the
exact basis for granting or denying discharge permits must be an integral
part of the effluent charge system. One can easily hypothesize two polluters
discharging equal quantities and qualities of waste into waters carrying
the same minimum quality standards where the downstream damage costs are
the same (however measured) but where—because of accident of location,
hydrology or the presence of other users of the waters—one polluter's
discharge would reduce the quality of water below the established minimum
whereas the other polluter's discharge would not have this same effect.
Whether this classification is discriminatory is difficult to assess. The
precise purpose becomes crucial. The economic incentive to reduce pollution
is not the same. Moreover, similar rates are not being charged each dis-
charter for a similar unit of waste that causes a similar amount of injury
(if that be the proper test).
To take another example, actual assessments and rates of assessment might
differ from waste discharger to waste discharger upon the same body of
water in different locations, or upon different bodies of water or depending
upon the time of year or other hydrological conditions. Such differences
might be justified by different amounts of downstream damage caused but not
by differences of incentive effect.
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If effluent charges were computed upon the basis of individual waste
discharger's cost of waste reduction and treatment, the system would
reflect such variables as the financial status of a waste discharger,
the value of his land and capital improvements, the cost and technology
of his production process, and the age of his production plant. It has
been suggested that such a system would be dependent on rather arbitrary
considerations, would not be germane to the reduction and control of
downstream damage and would be found to be discriminatory and therefore
unconstitutional," However, such a system might be very germane to
providing an incentive for pollution abatement if that be taken to be
the purpose in isolation from other considerations. Again one must
query what it means for all persons "in the same class" to be treated
alike. Short of knowing considerable detail about how such an effluent
charge system might be devised, one can do little more than raise the
questions.
USE OF THE STATE'S POWER OF EMINENT DOMAIN
Quite apart from the considerations outlined above regarding the validity
of the exercise of the state's police power, a discharger might argue
that the interference with private property interests inherent in an
effluent charge system is so extensive that it constitutes a taking of
private property under the state's power of eminent domain rather than
an exercise of the police power. If so, the taking would be without just
compensation and therefore a violation of the 5th and 14th Amendments.
The Supreme Court itself has stated that "There is no set formula to
determine where regulation ends and taking begins."'' The line seems to
be drawn somewhere in the grey area between a regulation which merely
deprives property of its "most beneficial use," which does not render it
unconstitutional, and regulation which occasions a "substantial deprivation
of all the rights of ownership," which does render it unconstitutional.°
Some state courts have said that the test depends upon whether the
collective benefit derived from the regulation outweighs the specific
restraint imposed by the regulation.9 If this were the test in Vermont
and an effluent charge necessary to induce behavior which meets water
quality standards exceeds downstream damage costs, it is arguable that the
charge exceeds the limits of regulation and constitutes an unconstitutional
taking without compensation. This test has not been applied in Vermont so
far and there is, at least, dictum in a fairly recent Vermont decision to
the effect that in water pollution regulation the Supreme Court of that
state will be most reluctant to find an unconstitutional taking:
When supported by strongly favored policy considerations,
legislation and orders will not be struck down as unreasonable
solely because a financial hardship is necessarily worked on
a particular individual, even to the point of being destructive
of his business.10
The Vermont Woolen case is perhaps a slender reed on which to rest one's
confidence since the actual holding in that case was that a constitutional
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appeal from a mere classification order including general instructions about
pollution abatement was premature and would not be decided short of some
actual adjudication involving the appellant. Nonetheless the language is
helpful.
One more point with regard to the "taking vs. regulation" issue discussed
here should be mentioned. There can be no question of a taking unless
there is in fact some private property involved and the "right to pollute"
or to the waste assimilative and transport capacity of waters may not be
considered separate property but only one use a riparian may enjoy. If
so, any effluent charge system would be invulnerable to constitutional
challenge on this point. If there is some "right to pollute" in Vermont,
it is at most only a right to "reasonable" pollution.il £n this case
"reasonable" may become synonymous with not degrading waters below the
established standards and effluent fees for discharges in excess of this
would be clearly permissible. However, prorationed effluent charges
applicable to all dischargers—including "reasonable" users of the
assimilative capacity—could conceivably constitute a "taking" sufficient
to raise the issue of an unconstitutional taking without compensation. If
so the discussion in the earlier part of this section would apply.
THE STATE'S TAX POWER
It is possible that dischargers could claim that the imposition of the
effluent charge is not really a police power regulation but in fact a tax
imposed by the state; and, moreover, as a tax it is invalid because
repugnant to the equal protection clause of the Federal Constitution or to
State provisions for equality and uniformity in taxation. Here, in drawing
the line between an exercise of the police power and of the tax power—as
was the case above in distinguishing between an exercise of the police
power and of the power of eminent domain—one must look to judicial
construction. The general rule is that if regulation (rather than the
raising of revenues) is the primary purpose of the effluent charge
system then the fact that revenue is incidentally obtained does not make
the imposition a tax so long as the funds are not paid into the state's
treasury as general revenue.^^ It is clear that the sections of Public
Act No. 252 regarding effluent charges were carefully drafted to avoid
being considered a tax. The primary purpose was spelled out to be an
incentive system and the revenues obtained are kept separate from the
general treasury.
Another widely-followed differentiating characteristic between regulations
and taxes concerns the amount of revenue collected which it is said should
not exceed the necessary costs of regulation and licensing.13 This would
appear to put a considerable constraint on the level at which effluent
fees might be set while retaining the status of a police power regulation.
There are, however, two major exceptions to this limit on the fees that
may be charged under the police power. (1) The computation of fees may be
made not only on the basis of the expenses of regulation, inspection and
police control, but also on the basis of "the costs of all incidental
consequences that the public may suffer in consequence of the activities
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licensed."1^ Thus effluent charge revenues could be used to finance
regional abatement measures, (.2) Fees may be set high enough to effect
a reasonable restriction or restraint on a practical prohibition of those
businesses or activities that are deemed injurious, hurtful or dangerous
to the public or businesses that the state under its police power could
prohibit absolutely.15
Thus, it is highly probable that any level and schedule of fees established
under a Vermont effluent charge system would retain its status as a police
power regulation and would not be declared a state tax- If the imposition
of certain effluent charges were determined to constitute a tax, then the
effluent charges would have to meet the equal protection requirements set
forth above in the discussion on the standards for proper classification.
In addition to the Federal equal protection clause, state constitutional
or statutory provisions require equality and uniformity in taxation,16
These requirements, however, do not apply to all state taxes and usually
specifically exempt excise taxes or taxes on privileges, occupation and
"activities carried on amid the social economic and industrial environment
under the protection of the state."17
UNLAWFUL TAX ON A PROTECTED USE OF THE NAVIGABLE WATERS
OF THE STATE
If an effluent charge is found to be a tax rather than an exercise of the
police power, an additional problem is raised beyond those discussed in
the last chapter—is some special use of the navigable waters otherwise
protected as free by the state constitution or state enabling act, being
impaired by the tax?
Under authority of the Federal Commerce Clause many state enabling acts
contain provisions protecting the free use of navigable waters as common
highways. Presumably such protection extends to interstate and international
commerce and transportation and not to other uses of the waters. Some state
constitutions protect other uses such as for fishing in Vermont and various
public beneficial uses for recreation as in Wisconsin. Presumably waste
disposal is not included in these protected uses as incidents to them.
If so, however, the tax might still be valid under the exception for tolls
placed as compensation for the use of state constructed improvements on a
navigable waterway or under the exception for incidents of navigation that
may be interfered with by the legislature when sound public policy demands
it.
Thus if an effluent charge were determined to be a tax, one would argue
either that it was a toll for state improvements or a valid excise tax
upon the privilege of disposing waste into the state's waters,
CONSTITUTIONAL ISSUES OF ONLY MARGINAL INTEREST TO THE DESIGN
OF AN EFFLUENT CHARGE SYSTEM
There are a number of constitutional issues which need not concern our
evaluation of effluent charge systems but which are sketched here for
completeness.
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1. Unlawful Delegation
A party objecting to the establishment of an effluent charge system scheme
might always claim that placing the administrative and design responsibility
for an effluent charge system into the hands of a public agency amounts
to an excessive and therefore unlawful delegation of both legislative and
judicial power. The tests usually applied to determine the proper limits
on the delegation of legislative power are: (i) the statute must delineate
the policy to be served; (ii) the statute must designate the public agency
to administer it; and (iii) the boundaries of the delegated authority must
be delineated by general standards or guidelines, but specific formulas
need not be given where variable conditions constitute the essence of the
program.
The test applied to the proper delegation of judicial powers is that the
judicial powers actually delegated must be incidental to the agency's
function, but in any event may not include the power to decide legal rights
between private parties.
2. Denial of Downstream User's Rights to Recover Damages and to Enjoin
Injurious Activities in Violation of Due Process
Corresponding to dischargers* alleged "right" to reasonable use of waters
for waste disposal is downstream users' right to the use of water of
reasonable quantity and quality. Thus a downstream riparian could claim
that a permit and effluent charge system which allowed upstream users to
unreasonably degrade the quality of water he receives would deny him his
right to damages and to enjoin such injurious activity—constituting a
deprivation of property without just compensation and in violation of the
due process and equal protection clauses.
Section 919 of Vermont Public Act No. 252 of 1969 carefully preserves these
rights to compensatory and injunctive relief. Thus the Water Resources
Board does not have primary and exclusive jurisdiction which might cut
off existing Common Law remedies. These remedies continue in force along-
side the discharge and pollution permit requirements., If a court were to
grant an injunction in a private nuisance suit against a permit holder,
the implication would clearly be that the Department of Water Resources
and/or the Water Resources Board had exceeded its limits of authority to
establish effluent charges and grant permits. Similar limits on the
effluent charge system are already placed in other jurisdictions by
statutes which may prohibit the discharge of raw sewage or the discharge
of such quantity and quality of waste as to materially reduce the receiving
body's quality below the minimum standard. In Vermont, it seems, that a
downstream user is still protected against a judicially determined "Unreason-
able" waste-disposal use of the waters even by a valid temporary pollution
permit holder. It remains, of course, to be seen to what extent the Vermont
Courts will in practice defer to the judgment of the Department and the
Board.
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3. A State's Navigational Servitude
Even if an effluent charge failed to pass a constitutional challenge as a
valid exercise of police power or as a lawful tax measure, the State might
rely on its navigational servitude over the state's waters and argue that
the effluent charge is designed to protect and aid navigation and that all
riparian rights are subject to this servitude. Such a defense would
probably not be valid in Vermont because the legislation does not state
that the effluent charge system is supposed to be in aid of navigation.
4. The Public Trust Doctrine
Aside from the various powers already discussed under which the state might
impose an effluent charge, it has been asserted that the general public has
an interest in the navigable waters of the state that is superior to any
right of any individual so that when acting for the general public,
statutory regulations may be enacted without incurring liability for
compensation for private rights affected.18 This same notion is sometimes
expressed by the idea that "the state holds the navigable waters in trust
for the people."19 The essence of the trust doctrine is to assure that
the regulation of riparian rights for the public benefit and without
compensation is clearly an exercise of the police power for a proper
legislative purpose and valid (provided the requirements of reasonableness
and equal protection in setting classifications are met) and therefore
does not result in a taking of private property for which compensation
need be paid under the 14th Amendment.
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APPENDIX B
REFERENCES
1. Crowley v. Christensen, 137U.S.86.89Q-890) .
2. Berman v. Parker. 348U.S.26,32,33(1954).
3. Nebbia v. New York. 291U.S.502,525(1933); Goldblatt v. Hempstead.
369U.S.590,5960.962).
4. Bibb v. Navajo Freight Lines. 359U.S.520 .529(1959) .
5. State v. City of Milwaukee. 33 Wis. 2d624,633; 148 N.W.2d21,25,26(1967);
11 Am. Jur., Constit. Law § 128; 27 Am. Jur., Munlcip. Corp. § 101.
6. Silas R. Lyman, "The Constitutionality of Effluent Charges" Univ. of
Wise. Water Resources Center, Technical Report OWRR A-022-Wis.
(May, 1969p.49-52).
7. Goldblatt v. Hempstead. 369U.S.590(1962).
8. McKee v. City of Akron. 199 N.E.2d592(1964).
9. Iowa Natural Resources Council v, VanZee. 158N.W,2dlll(1968), accord.
Shirley v. New Hampshire Water Pollution Commission. 100N.H.294,300,
124 A2dl89,194(1956).
10. Vermont Woolen Corp. v. Wackerman. 122Vt.219,228,167 A.2d533(1960),
citing Anchor Hocking v. Barber. 118VT.206.
11. State v. Morse. 84VT.387,392,80A. 189.
12. 4 T.M. Cooley, 3511, 3513(4th ed. 1924).
13. 33 Am. Jur. Licenses § 19 at 340; 15C.J.S. Constit. Law S 174 at 890;
103 A.L.R. 18 for a general listing of related state cases.
14. 4 Cooley, Taxation, § 1809 at 3552(4th ed. 1924) Ewell v. Board of
Supervisors. 234 La. 419, lOOSo. 2d221 (1958).
15. United States v. Sanchez 340 U.S. 42(1950); Tanner v. Little, 240 U.S.
369(1915).
16. W. J. Newhouse, Constitutional Uniformity and Equality in State
Taxation (1959) for a listing and discussion of each state's equal
and uniform clause.
17. Ballentine's Law Dictionary, word defined at 1018.
18. U.S. v. Hudson Water Co. (Hudson Water Co. v. McCarter), 209 U.S. 349
(1908) Colberg v. State. 62 Cal., 401, 432 P2d3 (1967).
133
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19. Trelease, Governmental Ownership and Trusteeship of Water, 45 Cal.
L. Rev. 638, (1957).
134
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APPENDIX C
SOME THOUGHTS ON THE ECONOMICS OF POLLUTION FEES
RELATED TO THE VERMONT SITUATION
Economists point out that the efficient allocation of a scarce resource
requires its use by those who will derive the most utility from it, and
that a free competitive market will achieve this result. In a free
market, each individual has the opportunity to buy any resource for the
price he is willing to pay. If a second party is willing to pay more,
then that resource is worth more to him and will be put to a higher use
by him. The conditions which must exist for the efficient allocation
of resources through the market process are extensive. Only those which
bear directly on the optimal allocation of the waste assimilative and
transport capacity of watercourses are considered here*
Presently, the waste assimilative and transport capacity of the water
resource is essentially a free good. Dischargers may use it without
payment to any party or individual. To be sure, dischargers may be
administratively prohibited from the use of some part or all of the
resource. Such is the case where effluent standards are the basic
allocational mechanism. Also administrative restriction on use has
come from litigation through the courts.
A free good is one for which the marginal value is zero , The marginal
value of the open sea for transportation is zero, for example, since
another ship can move over a bit; no one is willing to pay for more open
sea. However, the use of streams and lakes for waste disposal is not a
free good if this use precludes or reduces the value of the water for
some other use. If waste disposal requires additional expenditure for
purification, then there is an opportunity cost to use for waste disposal.
Currently, there is no market mechanism to reflect that opportunity cost.
The closest we come is in recourse to the courts for damages to other
users,
An efficient allocation of water resources might be achieved by establishing
a free market for them — for drinking, swimming, boating, fishing, and waste
disposal. In such a market, each potential user could bid to use the
stream. For example, if the stream were of more utility for waste disposal
than for swimming, then dischargers of wastes would pay the swimmers for
the lost opportunity of swimming. Conceivably, dischargers of wastes
might buy out all clean water users in order to use the water for waste
disposal, but in the perfect market, the price established would compensate
for all damage, including psychic loss. This example assumes that the
property right belongs to clean water users to sell,
135
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However, it is possible to develop the same efficient allocation of
resources by assuming property rights rest with waste dischargers. In
that case, users of clean water would bid for their use of the water by
paying the waste dischargers who could then use the money to dispose of
wastes in some other manner.
It has been contended that these two approaches are symmetrical and that
the only difference between the two is in the redistribution of income.
Symmetry rests on the assumption that the discharger cannot alter (in the
short or long run) the mix between final and waste products. In fact,
this mix can be varied, and if payment is received for wastes produced
(even if only to clean them up) there is an incentive to maximize waste
products, although there will be a limit on the amount which can be
collected from the users of clean water. If the discharger charges
enough, swimmers may build their own pools, drinking water can be trucked
in, sport fishermen could engage in other sports. The logical extreme of
the vesting of the property right completely with the discharger is the
plant which threatens to dump nitric acid into the river for no other
purpose than to collect a payment for not doing so. There is some amount
which clean water users will pay to keep the acid out. It would be a
very profitable operation, since the entrepreneur would be paid for not
using the acid; thus, the only capital required would be a pipe and a
shack with sufficient acid to make his threat credible.
The above is an extreme of a system of property rights. The courts have
given property rights to dischargers but these have been limited by the
doctrine of what is reasonable. Society has so far decided that no one
has an absolute property right to the water resource. A middle ground—
that the state has the right to the water resource—has been suggested.
The pure economic solution, then, is for all potential users to bid to
the state for the right to use the water for waste disposal, swimming,
fishing, whatever. There would be bidding among all users. Money
received by the state could be used for anything—highways, parks,
swimming pools, or water pollution control facilities—whatever results
in. the greatest return.
In the light of the above, if the state must spend money for pollution
abatement or in payments to damaged parties, then it simply becomes a
transfer agent between property owner and purchaser. If dischargers
bid successfully for the right to use the water for waste disposal, the
state has two options. It may build a treatment facility or pay the
damaged parties. Bidding would establish that clean water users had the
property right to the water which was sold by the state for them to waste
dischargers. If the clean water users successfully bid, the state may
use their money to clean up the dischargers' effluents, or subsidize
the discharger to do so himself. Thus, the discharger had the original
right to the water, since the right to it was bought from him. If the
state must spend the revenue on pollution abatement (and/or damage
payments), the party which gets the benefit of the fee is established as
the party which had the original right to the water.
136
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A fee system based on downstream damages assumes that downstream clean
water users have the basic property right to use of the stream. The
function of the state is to provide a quasi-market in a situation where
no market exists. The economist argues that the state functions to
convert an external diseconomy into an internal market calculation. A
fee system based on downstream damages can have three results, all
equally satisfactory from the point of economic efficiency* One, the
amount required by the discharger to treat his wastes will be less than
amount of the fee, so the discharger will treat. Two, the state may
decide that it can clean up the wastes in the stream by any number of
means which might not be available to the individual firm. Third, the
state can pay those damaged for their loss.
The problem in the above system is the valuation of damages suffered by
downstream users, In open-market bidding for stream use, the value will
be set at the total value to clean water users. However, bidding is for
a strange product. Some uses of clean water can vary by quantity used;
others are dependent on the quality. Drinkers of water will demand a
certain quality. Demand and supply will vary with price in the classic
manner. Thus, use is exclusive; that is, the use by one person excludes
the possibility of its use by another. However, other uses of clean
water are nonconsumptive, A swimmer or boater does not significantly
alter the product. If there is one swimmer, there is still room for
another. The first may be willing to pay a large amount, the second a
much smaller amount. The owner of the resource has the option of selling
the resource many times at different prices to different users.
With a product which is consumed, total revenue generated will be the
single price times the quantity, the area bounded by ABCE, in Figure 1,
the classic demand curve analysis.
Price
Quantity
Figure 1
137
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If the product can be sold several times without being used up, it is
possible to derive revenue from the total area under the demand curve
EDDl (Figure 2 ).
Figure 2
The skillful seller of the resource could charge each individual a
separate price equal to the total utility to that individual. However,
he would probably only get away with it once. When people learn that he
is willing to sell for less than they paid, they will reduce the amount
they will pay. The normal functioning of the market would reduce the
price to just above zero very quickly because the marginal cost would be
zero to provide for additional users r
Bidding can be conceived of as taking place for various levels of water
quality. If quality is low, the demand curve will simply shift down.
Individuals who would pay a little for pure water won't pay anything for
dirtier water; individuals who who pay more will pay less. Still the
marginal cost to provide for an additional user of the good water of a
given purity is zero. Thus, the commodity which we attempt to value is
such that the market mechanism, working freely with owners attempting to
maximize revenues will not necessarily produce any return to them. The
problem is that the product, once established, has zero marginal cost.
Thus, the state must do more than simply function as a market; it must
determine individual preferences which would not be revealed in a market
situation.
The state can assign downstream damages in several ways. They can be
taken as the cost of correcting the condition by means other than treating
effluent. This approach is basically to determine the cost of providing
clean water or alternative services some other way. Thus, the cost to
produce drinking water would be the cost of purifying the polluted stream
intake or of transporting clean water. Recreation damage could be calcu-
lated through the costs required to produce an alternate water-oriented
recreation opportunity, such as an artificial lake. Damages so derived
may be more or less than the actual consumer value placed on the availability
of clean water in natural streams or lakes.
138
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The state can also attempt to value the recreational experience in terms
of dollars per swimmer-day, boater-day, etc. Then, the number of these
activity-days foregone per unit of production must be estimated. There
are problems in determining the value of each day and the slope of the
demand curve per unit of pollution. A good deal has been written on the
valuation of the recreation experience but none is satisfactory for
operationally deriving that value.
The state can also decide politically that certain water quality conditions
are to be maintained. These standards become proxies for downstream
damages along each specific reach of stream and lake. Standards say that
the activity permitted is worth more than the cost of cleaning up the
stream to meet those standards. They also say that the marginal value of
the additional activities permitted by slightly cleaner water are worth
less than the cost of bringing the water to that higher quality. The
setting of standards is a political process but much of the process of
setting downstream damages is also political and perhaps it is most
appropriate to be direct. Once standards are established, it is possible
to translate them into appropriate concentrations of pollutants, from
which it is possible to calculate the total waste capacity of the stream
reach or lake. This capacity is the amount of waste in physical terms
which can be assimilated and/or transported, consistent with the desired
downstream activities.
The problem is: who gets the capacity to assimilate or transport waste?
The optimal solution is for the State to sell the right to use the waste
capacity. By so doing, it will be used by the individual discharger to
whom it is worth the most. The product is limited, and if one party is
using all of it, there is no more capacity for others. The supply is
fixed—i.e., the supply curve is vertical, no change of price will result
in any more or less being supplied. The demand oirve will be determined
by costs evolved with disposing of wastes by some means other than the
river. The establishment whose wastes are cheapest to treat or dispose of
by some other means will be the first to turn to nonriver means. It is
possible, and likely, that no discharger will completely clean up his
wastes but will clean up to the point where the marginal cost of cleaning
up the next unit is greater than the market price for a unit of stream
discharge capacity.
Sale of waste capacity can be extended to many types of pollutants—BOD,
dissolved solids, etc. One establishment may bid only for BOD capacity,
another may bid for all. The market would provide an efficient allocation
of capacity among those seeking to use it.
If there is insufficient activity along the river to generate enough waste
to bring the river below standard, then the price bid will be zero since
there is over-supply. This is because the supply curve for waste carrying
capacity is based on standards which are step functions.
The bidding system would be fine if, historically we had started out with
it before any waste-generating activity came on the scene. However, the
problem is complicated by the fact that the establishments which can't buy
139
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the waste capacity of the stream cannot stop using it immediately. A
transition must be made. Establishments which opt for other means of
waste disposal need time to put those means into effect. If every
discharger had no treatment facilities, an equitable solution in the
transition period would be to sell the capacity starting in some period
in the future to provide time to adjust production or install treatment
facilities. In actuality, some establishments have operational treatment
facilities. Those who have delayed should not benefit over treaters.
Thus, in transition, there needs to be some sort of tax or fine to
prevent an undesired redistribution of income from individuals currently
treating to those not treating.
A fine can be assessed in a number of ways. Establishments will know how
much it will cost them to treat, so distribution could be adjusted by
charging a fee based on their individual cost of treatment. Each could
be charged the market price, which will be greater than their cost of
treatment and will represent a punitive fine; each could be charged a fee
based on the damages caused by the pollution levels greater than permitted
by standards; or there could be a simple flat punitive fine.
It would appear th"t under the present Vermont law, the option of open
bidding for discharge permits is not available. The Department must decide
which discharges qualify as not lowering the quality below the standard.
Without bidding, an efficient result can be arrived at by constructing
cost-of-treatment functions for all establishments and driving the
individual discharges which would result from the linear programming
solution constrained to least cost. In fact, this would be a restatement
of the classic diet problem.
Another manner for distributing the usable stream capacity would be to
apportion it among existing dischargers on the basis of their present
production of pretreatment wastes. Thus, if each establishment produces
waste discharge (D^) and the waste capacity of the water is C, then C
would be distributed to each individual establishment by the ratio:
Di
n
y1 D.
or each establishment's usable capacity (Ui) would be
n
C \ ' D
i
1=1
140
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This solution might be allocating waste capacity to establishments whose
marginal cost of waste treatment is less than somebody else's. If so,
the solution is not Pareto Optimal since the party whose marginal treatment
cost is higher would be willing to buy some capacity from the party whose
marginal cost is lower, and the party whose marginal cost is lower would
be willing to sell.
Other means of distributing the waste-carrying capacity would be to give
it to upstream users first or to the users who arrived first historically.
It is reasonable to expect that either of these schemes would not stand
up in court, neither of them are economically efficient, and it is hard
to see merit in them other than attempting to define the marginal user.
Whatever administrative means is used to allocate waste-carrying capacity
of the stream, there is still the problem of moving through the transition
period to the point that wastes over and above waste-carrying capacity
are treated. The options are the same as described briefly above. Since
it is the period of transition which is the crux of the matter in Vermont,
we must now deal with the issue more fully.
The one thing which is not at issue in the transition period is the alloca-
tion of resources. This problem is solved in the distribution of the
waste-carrying capacity to the individual establishments. The one central
economic effect of the fee is to prevent a redistribution of income from
existing treaters to polluters. This redistribution would occur without
the fee because existing treaters will bear the cost of treatment
(annualized capital and operating costs) during the period of transition,
while establishments building plants will bear lower costs due to smaller
capital investment and no operating costs.
The fee could be used to duplicate the post-transition costs for each
establishment, based on annualized cost of treatment for each less
annualized costs of facilities in place or partially constructed. The
establishments would already be paying annualized costs on the portion
of facilities installed, thus the fee should be based on the unconstructed
remainder plus operating costs. If the fee is greater than that, there
will be a redistribution from polluters to existing treaters since the
polluters costs will be higher than if they had treatment facilities
already operating. It would be possible to prorate the fee on some simple
proportion of the closeness to completion of the facility under construc-
tion. If the means of reducing pollution loadings is internal plant
housecleaning, then the fee should be based on the costs of necessary
alterations.
The above fee system would make the individual establishment's costs
equal during the transition period and after. Since the costs would be
equal, there would be no economic incentive to put remedies into effect;
the establishment would be ambivalent and see no advantage in getting its
pollution control scheme into operation before the deadline established
by the State, For the fee to provide an incentive effect, it must be
higher than the "equalizing" fee, so as to produce an incentive to have
pollution control schemes operating quickly. (Only if the fee were
141
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arbitrarily continued to the end of the transition period, even if an
establishment put its treatment facility into operation before the end
of the period, would there be an incentive to dalay.)
The dischargers are not the only parties who are affected in terms of
incoming redistribution during the transition period. In the period
after transition, downstream water users will not have to suffer the
damages of pollution. Thus, there could be a fee based on downstream
damages which could be paid to the sufferers of the damage. This would
permit the total distribution picture of society to shift immediately
to the post transition state, except to the extent that the fee on
polluters is greater than their ultimate cost of treatment.
There are great difficulties in determining damages and particularly in
determining the damaged individuals. The damaged individuals will be
those who are not using the water. If the state advertised that it is
going to pay damaged individuals, they may come from many miles around.
142
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APPENDIX D
APPLICATION FORM, SCHEDULES AND GENERAL INSTRUCTIONS
143
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Serial No.
STATE OF VERMONT Schedule No.
DEPARTMENT OF WATER RESOURCES
Date:
APPLICATION FOR PERMIT TO DISCHARGE WAST2S INTO THE WATERS
OF THE STATE AFTER JULY 1, 1971
Instruction: Submit a single copy of this application and appropriate schedule(s)
together with application fee payment to the Department of Water Resources, State
Office Building, Montpelier, Vermont. See detailed instructions attached. Do not
write in boxes. Please type or print clearly.
1. Name
2. Mailing address
3. Telephone number Date submitted
4. Legal person of applicant (see instructions)
The above named person hereby applies for a permit to discharge wastes,
directly or indirectly, into the waters of the State of Vermont on or after July 1,
1971, as described in this application and its attached schedules.
5. Name of activity (e.g., municipality, plant, individual dwelling) from which
discharge will occur:
6. Location of activity: Town County
7. Enter below, on separate lines, a brief description of each independent dis-
charge which will result from the activity described in item 5.
(1)
(2)
(3)
(4)
(5)
(6)
For each of the discharges entered in item 7, attach a separate schedule describing
the discharge. See instructions for type of schedule applicable for each discharge.
IMPORTANT: Each independent discharge will be considered separately for permit
eligibility and separate permits will be required for each discharge.
8. Name of Authorized Representative
(type or print) (title) (signature)
NOTE: The department may revoke any permit issued by it pursuant to this applica-
tion if it finds that the permit holder submitted false or inaccurate information
in his application (10 VSA, I 913a). ,
144 >
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STATE OF VERMONT Serial No.
DEPARTMENT OF WATER RESOURCES
Schedule No.
Application for Permit to Discharge Wastes
SCHEDULE A - Municipal Discharges, page A-l
PART I
A-l Name:
A-2 Enter number and name of discharge to which this schedule applies as listed
in line Item 7 of application form:
A-3 Description of corporate or other boundaries to which this schedule applies:
A-4 Estimated total population within above boundaries (as of July 1, 1971):
A-5 Approximate percentage of above population to be served by discharge system
reported in this schedule:
A-6 If answer to A-5 above is less than 100%, indicate disposition of wastes
from remaining population:
A-7 Will waste discharge for which this schedule applies include other than
domestic components? Yes No
A-8 If yes, indicate approximate percent breakdown:
Residential Commercial Industrial Other
A-9 List name and type of activity of all users of the system (if any) whose
individual volume of discharge is expected to be greater than 5% of the
total system volume, or whose waste in any amount will significantly affect
the composition of the total waste load:
(1)
(2)
(3)
(attach extra sheet if needed)
A-10 Indicate type of system which will be used to collect the wastes reported in
this schedule:
(1) Separate sanitary sewer
(2) Combined sanitary-storm sewer
(3) Other (describe) ___
145
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STATE OF VERMONT Serial No._
DEPARTMENT OF WATER RESOURCES
Schedule No,
Application for Permit to Discharge Wastes
SCHEDULE A - Municipal Discharges, page A-2 Date:
A-ll What will be the approximate daily volume of wastes collected by the system
(gallons per day)
(If unknown, so state. Do not include storm water discharge.)
A-12 What general type of treatment will the wastes receive as of and after
July 1, 1971:
(1) None (2) Primary (3) Secondary
(4) Other (describe)
A-13 Will treatment include chlorination prior to discharge? Yes No
A-14 Have engineering reports describing the above treatment facility been filed
with the Department of Water Resources? (This applies only to such treat-
ment facilities as presently exist and/or can be expected to be in operation
as of July 1, 1971.) Yes No
If yes, enter date of filing
If no, but reports are available, attach a copy of such reports. See
instructions for necessary information to be included with the reports.
A-15 Will treatment facilities expected to be in operation on July 1, 1971 be
operated and maintained on a 24-hour basis, 365 days per year (except for
unforseeable events)? Yes No
If not, indicate periods of less than full-time operation
A-16 Enter information about person(s) who will be responsible for the operation
and maintenance of the treatment facility:
(a) Name(s)
(b) Certified as treatment plant operator(s)? Yes No
A-17 Point at which discharge will enter waters of state:
(1) Name of stream or lake (from USGS sheet, or if unnamed, indicate nearest
named stream)
(2) Indicate distance or other specific reference from fixed landmark
146
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STATE OF VERMONT Serial No._
DEPARTMENT OF WATER RESOURCES
Schedule No.
Application for Permit to Discharge Wastes
SCHEDULE A - Municipal Discharges, page A-3 Date:
(for Department use only)
Minor Basin: Sub-basin:
3rd Level Basin: 4th Level Basin: 5th Level Basin:
USGS Sheet Name: Lat. Long.
Classification: Intrastate Interstate
Drainage Area (sq.mi.): River Mile:
Stream Gage Reference: Average Annual Flow (cfs)
Low Flow: Basis:
Department action with respect to application for discharge permit (10 VSA,
Section 911a).
Additional Information:
Action: (granted ) (denied )
Notification: by: date:
PART II
The remaining part of this schedule applies only to applications for temporary
pollution permits. Dollar values must be included as a basis for pollution
charge calculations.
A-18 Have actions been taken which could lead to new or modified treatment
facilities which would become operational after July 1, 1971? Yes No
A-19 Actions completed to date regarding future waste treatment:
(1) Type of facility (check one): New Plant Modifications
(2) Preliminary engineering report:
a. Date received
b. Date approved by Department of Water Resources
c. Cost of engineering report:
Funded by Applicant $ by grants $
d. Estimated project costs:
Total cost, collection system $
Total cost, treatment system $
Annual cost, maint. & oper. $
147
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STATE OF VERMONT Serial No._
DEPARTMENT OF WATER RESOURCES
Schedule No,
Application for Permit to Discharge Wastes
SCHEDULE A - Municipal Discharges, page A-4 Date:
(3) Final engineering report:
a. Date received
b. Date approved by Department of Water Resources
c. Cost of engineering report:
Funded by Applicant $ by grants $
d. Estimated project costs:
Total cost, collection system $
Total cost, treatment system $
Annual cost, maint. & oper. $
(4) Capital funding approved to date and available for use (local contribu-
tions only; do not include any State or Federal grants):
a. Amount attributed to municipality $
b. Amount attributed to industrial
users of joint system $
c. How funded (check one): Appropriated Bond Issue
Bond Maturity (years) (Interest Rate)
(5) Expenditures to date:
a. Professional services (legal, financial,
or engineering not reported above) $
b. Land and easements $
c. Damages and relocations $
d. Debt interest $
e. Construction $
f. Other $
Department action with respect to application for temporary pollution permit
(10 VSA, § 912a).
Additional Information
Action: (granted ) (denied )
Notification: by: date:
148
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STATE OF VERMONT Serial No.
DEPARTMENT OF WATER RESOURCES
Schedule No.
Application for Permit to Discharge Wastes
SCHEDULE B - Industrial and Institutional Discharges, page B-l ate'
PART I
B-l Name:
B-2 Enter number and name of discharge to which this schedule applies as listed
in line Item 7 of application form:
B-3 Indicate the type of activity or activities which will generate the wastes
relating to this schedule. Check appropriate entries below, or describe in
space provided. See also general information sheet.
(1) Meat processing; packing
(2) Dairy products; fluid milk
(3) Dairy products; butter, cheese
(4) Paper and pulp manufacture
(5) Lumber and woodworking activities
(6) Textile manufacturing
(7) Cut stone and stone products
(8) Stone quarrying
(9) Sand and gravel processing
(10) Machine tool operations
(11) Chemical manufacturing
(12) Motels
(13) Resorts
(14) Public Institutions
(15) Other (describe)
B-4 Describe the flow sequence for the system applicable to this schedule, in-
cluding treatment facilities, if any, which will be in operation on July 1,
1971. Attach any applicable plans or drawings. See general information
sheet for further instructions. Attach extra pages if needed.
B-5 Indicate the maximum volume and frequency of wastes which will occur after
treatment (if any), and which will enter the waters of the State. Use
either Option A or Option B below:
Option A: You may use this option only if the nature of the waste dis-
charge is limited to sanitary sewage wastes from resorts, motels, or
Institutions.
(1) Average number of persons served per day
(2) [f operating on a seasonal basis, from to
149
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Schedule No.
Date:
STATE OF VERMONT Serial No.
DEPARTMENT OF WATER RESOURCES
Application for Permit to Discharge Wastes
SCHEDULE B - Industrial and Institutional Discharges, page B-2
Option B: Complete Tables B-l and B-2 below.
Table B-l
Enter maximum volumes of water in gallons to be discharged during indicated
perids. If essentially the same for all months, check here and com-
plete first line only.
Month
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Weekdays
Day
Evening
Night
Weekends
Day
Evening
Night
Comments relative to Table B-l (if any)
B-6 Table B-2
State the maximum concentrations of pollutants as itemized below which
will be contained in the wastes discharged into the waters of the State
(i.e., after treatment, if any). Complete all lines - if no pollutant
of the type described is added, enter "none added"; if the pollutant is
present but the amount is unknown or uncertain, enter "present" and
describe the circumstances relating to its presence, including amounts.
Use separate sheets as necessary.
mg/1
mg/1
BOD (5 day)
COD
Suspended solids
Settleable or floating solids
Oil or grease
Color
Turbidity
Materials affecting taste or odor
mg/1
mg/1
mg/1
(yes or no)
mg/1
(yes or no)
150
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STATE OF VERMONT Serial No._
DEPARTMENT OF WATER RESOURCES Schedule No.
Application for Permit to Discharge Wastes Date:
SCHEDULE B - Industrial and Institutional Discharges, page B-3
pH range (low to high) to
Temperature of discharge water F
Temperature of stream after discharge F
Total dissolved solids mg/1
Chemicals: (itemize)
mg/1
Chlorine (residual after treatment) mg/1
B-7 Will treatment facilities expected to be in operation on July 1, 1971, be
operated and maintained at all times that waste discharges occur? Yes No
If not, indicate periods of less than full-time operation
B-8 Enter information about person(s) who will be responsible for the operation
and maintenance of the treatment facility:
(a) Name(s)
(b) Certified as treatment plant operator(s)? Yes No
B-9 Point at which discharge will enter waters of State:
(1) Name of stream or lake (from USGS sheet, or if unnamed, indicate
nearest named stream)
(2) Indicate distance or other specific reference from fixed landmark.
(for Department use only)
Minor Basin: Sub-basin:
3rd Level Basin: 4th Level Basin: 5th Level Basin:
USGS Sheet Name: Lat. Long.
Classification: Intrastate Interstate
Drainage Area (sq. mi.): River Mile:
Stream Gage Reference: Average Annual Flow (cfs)
Low Flow: Basis:
151
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STATE OF VERMONT
DEPARTMENT OF WATER RESOURCES
Application for Permit to Discharge Wastes
SCHEDULE B - Industrial and Institutional Discharges, page B-4
Serial No.
Schedule No.
Date:
Department action with respect to application for discharge permit (10 VSA,
Section 911a).
Additional Information:
Action: (granted )
Notification: by:
(denied
date:
PART II
The remaining part of this schedule applies only to applications for temporary
pollution permits. Dollar values must be included as a basis for pollution
charge calculation.
B-10 Have any steps been taken which could lead to the installation of new
treatment facilities and/or modifications to existing facilities, and
which would become operational after July 1, 1971? Yes No
B-ll If yes, indicate the expected status of such actions as of July 1, 1971 by
completing the following as applicable:
Action
Research on methods
Preliminary engineering plans
Final engineering plans
Construction
Start-up operations
Others
Date Started
Date Completed or Target
(1) Have any plans for the above proposed facilities been submitted to the
Department of Water Resources for approval? Yes No
If yes, indicate date
(2) If action is limited to methods of treatment, describe treatment.
B-12 Have any steps been taken which may result in the wastes herein described
being discharged into a municipal system after July 1, 1971? Yes No
If yes, give details
B-13 Indicate below the total capital and annual operating costs for the exist-
ing (as of July 1, 1971) waste treatment facility (if any) and the additional
capital and operating costs for the proposed facilities.
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STATE OF VERMONT Serial No._
DEPARTMENT OF WATER RESOURCES
Schedule No.
Application for Permit to Discharge Wastes
SCHEDULE B - Industrial and Institutional Discharges, page B-5
(1) Cost for facilities operating as of July 1, 1971:
a. Total capital cost $
B. Average annual equipment replacements $
c. Average annual cost for supplies $
d. Average annual cost for labor $
TOTAL $
(2) Cost for proposed facilities:
a. Total capital cost $_
b. Average annual equipment replacements $
c. Average annual cost for supplies $
d. Average annual cost for labor $_
TOTAL
Department action with respect to application for temporary pollution permit
(10 VSA, § 912a).
Additional Information
Action: (granted ) (denied
Notification: by: date:
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STATE OF VERMONT Serial No.
DEPARTMENT OF WATER RESOURCES
Schedule No.
Application for Permit to Discharge Wastes
SCHEDULE C - Domestic and Commercial Discharges, page C-l Date:
NOTE: Use this schedule only if the waste is domestic in origin,
consists of a single discharge, and does not exceed 1000
gallons per day.
PART I
C-l Name:
C-2 Enter sequence number and name of discharge to which this schedule applies as
listed in line Item 7 of application form:
C-3 Number of persons served:
C-4 Year-around use (check) or period of use
C-5 Indicate type of waste treatment to be in use on and after July 1, 1971:
(1) No treatment (direct discharge)
(2) Cess pool with overflow
(3) Septic tank with overflow
(4) Other (describe)
C-6 Approximately what percent of the raw waste volume (before treatment, if any)
discharges to surface waters (after treatment, if any):
C-7 Point at which discharge will enter waters of state:
(1) Name of stream or lake; if unnamed, indicate nearest named stream:
(2) Indicate distance from or other specific reference to fixed landmark:
(for Department use only)
Minor Basin: Sub-basin:
3rd Level Basin: 4th Level Basin: 5th Level Basin:
USGS Sheet Name: Lat. Long.
Classification: Intrastate Interstate
Drainage Area (sq. mi.): River Mile:
Stream Gage Reference: Average Annual Flow (cfs)
Low Flow: Basis:
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STATE OF VERMONT Serial No.
DEPARTMENT OF WATER RESOURCES Schedule No.
Application for Permit to Discharge Wastes Date:
SCHEDULE C- Domestic and Commercial Discharges, page C-2
Department action with respect to application for discharge permit (10 VSA,
Section 911a).
Additional information:
Action:
(granted ) (denied )
Notification: by: date:
PART II
The remaining part of this schedule applies only to applications for temporary
pollution permits. See instructions before completing.
C-8 Have any actions been taken which would lead to the installation of new or
modified treatment facilities to treat the reported discharge alone (i.e.,
not a tie-in to a sewage collection system), and which would become opera-
tional after July 1, 1971? Yes No If yes, explain and give size
of facility (i.e., gallon capacity of septic tank, size of leaching field, etc.)
C-9 Have any actions been taken which could lead to the collection of the waste
discharge reported herein in a sewage collection system, whether operated by
a municipal or a private corporation, and which would become operational after
July 1, 1971? Yes No If yes, explain and give name of corporation.
Department action with respect to application for temporary pollution permit
(10 VSA, § 912a).
Additional information:
Action: (granted )
(denied )
Notification: by:
date:
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STATE OF VERMONT
DEPARTMENT OF WATER RESOURCES
GENERAL INFORMATION AND INSTRUCTIONS
FOR SUBMITTING APPLICATION FOR PERMIT TO DISCHARGE WASTES
INTO THE WATERS OF THE STATE AFTER JULY 1, 1971
1. Statutory References
The Vermont General Assembly has made substantial revisions to the
state water pollution control statutes. The changes are contained in
Act No. 252 of the Acts of 1969 (Adjourned Session) which amends 10
V.S.A. Chapter 33, Subchapter 1. The amendments, most of which took
effect on April A, 1970, regulate or prohibit certain discharges which
previously were permissible and impose certain specific responsibilities
upon all persons discharging treated or untreated wastes into waters
of the state.
Among its provisions, the act requires that on or after July 1, 1971,
no person shall discharge any waste, substance or material (treated or
untreated) into the waters of the state without first obtaining a permit
for such discharge from the Department of Water Resources. (See 10 V.S.A.
§ 909(b). Two types of permits are provided for in the statute: (1) Dis-
charge Permit; authorizes discharge of wastes which will not reduce
the quality of the receiving waters below their established classifica-
tion; (2) Temporary Pollution Permit: authorizes discharge of wastes
which will reduce the quality of the receiving waters below their es-
tablished classification in certain cases for a limited period of time
necessary to design, construct and place into operation a treatment
facility or alternate waste disposal system subject to payment of assessed
pollution charges. (See 10 V.S.A. §§ 911a, 912a.) In addition applicants
are required to pay a fee to defray the expense of reviewing and evaluat-
ing an application. (See 10 V.S.A. § 911a, 1 912a).
All permits previously issued by the Water Resources Board will
be revoked on July 1, 1971. Any person discharging waste substances
or materials into the waters of the State after July 1, 1971, without a
discharge permit or temporary pollution permit,will be subject to the
enforcement provisions of the statute (see V.S.A. §1 917a, 918).
Pertinent sections of Chapter 33, Subsection 1 are:
I 901. DEFINITIONS
Whenever used or referred to in this chapter, unless a different
meaning clearly appears from the context:
(1) "Board" means the Vermont Water Resources Board;
(2) "Department" means the Department of Water Resources;
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(3) "Discharge" means the placing, depositing or emission of
any wastes, directly or indirectly, into the waters of
the state;
(4) "Person" means any individual, partnership, public or
private corporation, municipality, institution or agency
of the state, and includes any officer or governing or
managing body of a partnership, association, firm or
corporation;
(5) "Public Interest" means that which shall be for the
greatest benefit to the people of the state as deter-
mined by the standards set forth in subsection (3)
of section 903 of this title;
(6) "Waste" means effluent, sewage or any substance or material,
liquid, gaseous, solid or radioactive, including heated
liquids, whether or not harmful or deleterious to waters;
(7) "Waters" shall include all rivers, streams, creeks,
brooks, reservoirs, ponds, lakes, springs and all
bodies of surface waters, artificial or natural, which
are contained within, flow through or border upon the
state or any portion thereof.
§ 909. PROHIBITIONS
(a) No person, without written authorization of the board,
shall discharge into the waters of the state any waste
which by itself or in combination with the wastes of
other sources reduces the quality of the receiving waters
below the classification established for them. This
subsection shall not prohibit the proper application for
fertilizer to fields and crops. On July 1, 1979, this
subsection shall expire and deemed repealed.
(b) On and after July 1, 1971, no person shall discharge any
waste, substance or material into waters of the state
without first obtaining a permit for such discharge
from the department. This subsection shall not prohibit
the proper application of fertilizer to fields and
crops.
§ 911a. DISCHARGE PERMITS
(a) Any person intending to discharge waste into the waters
of the state on and after July 1, 1971, shall make
application to the department for a discharge permit.
Application shall bs made on a form prescribed by the
department and shall contain such information as the
department may therein require. An applicant shall
pay to the department at the time of submitting his
application such amount as the board shall by rule deter-
mine reasonable to defray the expense of reviewing and
evaluating an application.
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(b) The department shall consider each application and shall
grant or deny the requested permit within sixty days from
the date of receipt of the application. The department
may require the applicant to submit any additional infor-
mation which it considers necessary and may refuse to grant
a permit until such time as the information is furnished
and evaluated.
(c) If the department finds that the proposed discharge will
reduce the quality of the receiving waters below the classi-
fication established for them, it shall deny the applica-
tion and refuse to issue a permit. If the department finds
that the proposed discharge will not reduce the quality of
the receiving waters below the classification established
for them, it shall issue a discharge permit.
(d) A discharge permit shall:
(1) specify the manner, nature, volume and frequency
of the discharge permitted;
(2) require proper operation and maintenance of any
pollution abatement facility necessary in the
treatment or processing of the waste by qualified
personnel in accordance with standards estab-
lished by the board;
(3) contain such additional conditions, requirements
and restrictions as the department deems necessary
to preserve and protect the quality of the re-
ceiving waters; and
(A) be valid for the period of time specified therein.
(e) A discharge permit may be renewed from time to time upon
application to the department. No renewal permit shall be
issued if the department finds that the proposed discharge
will reduce the quality of the receiving waters below the
classification established for them.
§ 912a. TEMPORARY POLLUTION PERMITS
(a) A person who does not qualify for or has been denied a waste
discharge permit under section 911a of this title may apply
to the department for a temporary pollution permit. Applica-
tion shall be made on a form prescribed by the department and
shall contain such information as the department may therein
require. Such person shall pay to the department at the time
of submitting the application such amount as the board shall
by rule determine reasonable to defray the expense of re-
viewing and evaluating each application. The department
may require such person to submit any additional information
it considers necessary for proper evaluation.
(b) Using whatever means it deems proper, the department shall give
notice to the people resident in the drainage area of the
receiving waters for the proposed discharge of the time in
which they may present written objections to the proposed
discharge.
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(c) After consideration of the application, any additional infor-
mation furnished and all written objections submitted, the
department shall grant or deny a temporary pollution permit.
No such permit shall be granted by the department unless it
affirmatively finds:
(1) the proposed discharge does not qualify for a
discharge permit;
(2) the applicant is constructing, installing or
placing into operation or has submitted plans
and reasonable schedules for the construction,
installation or operation of an approved pollu-
tion abatement facility or alternate waste dis-
posal system, or that the applicant has a waste
for which no feasible and acceptable method
of treatment or disposal is known or recognized
but he is making a bona fide effort through
research and other means to discover and imple-
ment such a method;
(3) the applicant needs permission to pollute the
waters of the state for a period of time after
July 1, 1971 necessary to complete research,
planning, construction, installation or the
operation of an approved and acceptable pollu-
tion abatement facility or alternate waste
disposal system;
(4) there is no present, reasonable, alternative
means of disposing of the waste other than by
discharging it into waters of the state;
(5) the denial of a temporary pollution permit would
work an extreme hardship upon the applicant;
(6) the granting of a temporary pollution permit
will result in some public benefit;
(7) the discharge will not be unreasonably destructive
to the quality of the receiving waters.
§ 917a. ENFORCEMENT
Notwithstanding any other provision or procedure set forth in this
subchapter if the board finds that any person has discharged or is discharging
any waste in violation of this subchapter or that any person has failed
to comply with any provision of any order or permit issued in accordance
with this subchapter, it may bring suit in equity in the Washington county
court of chancery or in any county where the discharge or non-compliance
has occurred to enjoin such discharge and obtain compliance. Such suit
shall be brought by the attorney general in the name of the state. The
court of chancery may issue a temporary injunction or order in any such
proceedings and may exercise all the plenary powers available to such court
in addition to the power to:
(1) enjoin future discharges;
(2) order the design construction, installation or operation
of pollution abatement facilities or alternate waste
disposal systems;
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(3) order the removal of all wastes discharged and the res-
toration of water quality;
(4) fix and order compensation for any public property
destroyed, damaged or injured, and;
(5) assess and award punitive damages.
§ 918. PENALTY
Any person who violates any provision of this subchapter or who
fails, neglects or refuses to obey or comply with any order or the terms
of any permit issued in accordance with this subchapter, shall be fined
not more than $10,000 or be imprisoned not more than five years, or both.
Each violation shall be a separate and distinct offense and, in the case
of a continuing violation, each day's continuance thereof shall be deemed
a separate and distinct offense.
Single vs. Multiple Discharges
In the event that a discharger has more than one waste effluent
stream or point discharging from the same activity, a separate permit
will be required for each such discharge. The discharger may submit
a single application form for the activity involved, but must include
separate schedules describing each waste effluent discharge. Examples
of single activities include municipalities, resorts, and Industrial
plants, provided that the resort or plant is at a single location.
If a company owns more than one resort or plant at separate locations,
each is a separate activity. An individual residence or commercial or
public building which have only sanitary wastes, are not connected to
a municipal sewerage system, and discharge wastes into the waters of
the State, are other examples of single activities.
Types of independent effluent streams which may be associated
with a single activity will vary with type of activity. For example,
a municipality may have separate collection systems leading to separate
treatment facilities. An industrial plant may discharge sanitary wastes,
process water and cooling water separately.
The purpose of reporting each independent effluent discharge separately
is that waste materials associated with each can be quite different, thus
requiring different types of treatment facilities. The resultant effluents
must therefore be considered independently to determine whether they
cause the receiving waters to be degraded below their classifications,
and if so to determine the appropriate treatment and the amount of th e
pollution fee in the event a temporary pollution permit is granted.
Application Procedure
The department must first consider whether each discharge is
eligible for a discharge permit. If a discharge permit is denied, the
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applicant will be so informed and may then request a temporary pollution
permit. Before the department acts on the latter, it must obtain certain
additional information including any plans and schedules for the construc-
tion, installation and operation of an approved pollution abatement
facility or alternate waste disposal method. It must also give notice to
the people resident in the drainage area of the receiving waters for the
proposed discharge of the time in which they may present written objec-
tions to the proposed discharge. To minimize delay to those dischargers
who will operate under a temporary pollution permit, schedules attached
to the application form contain two parts. The first part must be
completed for either permit, while the second part need only be com-
pleted for consideration for a temporary pollution permit.
If the applicant believes he cannot qualify for a discharge permit,
he should complete both parts of the Schedule appropriate to his activity.
Completing the second part will in no way affect his possible qualifica-
tion for a discharge permit. In any event he will be notified by the
department of its decision relative to the granting of a discharge per-
mit, at which time, if a discharge permit is denied, he may request the
department to process his application for a temporary pollution permit.
Schedules
The application form consists of a basic section for identifying
applicant, type of activity, and independent effluent streams or points
for which separate Schedules are to be attached. Three types of Schedules
are available; Schedule A for municipal discharges, and Schedule B for
industrial, resort and institutional discharges, and Schedule C for wastes
from a single discharge and not exceeding 1000 gallons per day.
Application Fee Payments
The board has adopted the following application fees, payment of
which must accompany the application:
(Pending Board Action)
Appeal Rights
Any person or party in interest aggrieved by an act or decision
of the department pursuant to Title 10, V.S.A., Chapter 33, Subchapter 1,
may appeal such act or decision to the water resources board within thirty
days from the date thereof (I 914a). An appeal filed pursuant to this
section shall not stay the effectiveness of any act or decision of the
department pending determination by the board.
Any person or party in interest aggrieved by any order or decision
of the board pursuant to this subchapter may appeal such order to de-
cision within thirty days from the date thereof to the court of chancery
of any county in which the receiving waters are located (§ 915). An
appeal filed pursuant to this section shall not stay the effectiveness of
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any order or decision of the board pending determination by the court
unless the court so orders.
Assistance
Persons having questions regarding the application may write or
call the Department of Water Resources, Montpelier, Vermont, for
further clarification.
Detailed Instructions for Completing Application and Schedule Forms
NOTE: Answer questions on the basis of the waste discharge which
will take place on and after July 1, 1971; not on the basis of present
discharges.
BASIC APPLICATION
Lines 1, 2, 3, 6 and 8. Self-explanatory
Line 4. Legal person of Applicant, select from the following:
individual, partnership, public corporation, private
corporation, municipality, institution of the state,
agency of the state, Federal agency; or describe if not listed
herein.
Line 5 Name of activity. If a muncipality, enter "municipality."
For others, enter the name of the plant, mill, resort, building,
operation, etc., to which the application applies.
Line 7 Independent Discharge Systems.
Enter a brief description which will serve to identify and
distinguish each system. For municipalities, typical de-
scriptions may be "Main Street treatment plant, " "Oak Street
intercepter sewer outfall." For industrial plants, typical
descriptions may be "sanitary waste system," "combined wastes
system," "process wastes," "cooling water," etc. At least one
system must, of necessity, be listed for each application.
Include any systems which are solely for the purpose of col-
lecting and discharging storm runoff as well as combined sani-
tary-storm water systems. For individual residences or build-
ings give street address.
Special case for municipalities - if all or part of the corporate entity
is not served, by a municipal sewage collection system and the
dischargers who are not served discharge wastes into the surface
waters of the State (e.g., individual outfalls into a stream), the
municipality may file a collective permit application on behalf
of all such dischargers, but in doing so it must accept responsi-
bility for all related fee payments. If this manner of filing is
elected, complete line 7 as follows:
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(a) Make a separate entry for each treatment plant which will
serve a portion of the municipality, if any.
(b) Make a separate entry for the collective application, using
a description such as "collective report for individual
discharges." This may include business buildings and commer-
cial establishments normally to be included in a waste collec-
tion system, but not major industries.
(c) If there are major industries whose wastes are proposed to
be included in a future municipal waste disposal system, and
with whom agreements have been reached regarding such future
collection, they may be included in the municipal permit
application by making a separate entry in line 7. This action
will shift the responsibility for obtaining and holding a per-
mit from the industry to the municipality. If this option is
elected by the municipality, include copies of documents
attesting to the agreement.
NOTE: Under this special case, a separate schedule must be completed
for each entry in line 7. Use Schedule A for municipal discharges, and
Schedule B for industrial and institutional discharges. If future events
result in changes or expected changes to the information reported herein
the application or any of the schedules, such changes must be reported
immediately to the Department of Water Resources and amended forms sub-
mitted.
SCHEDULE A - Municipal Discharges
PART I
Line A-l Name (same as Line 1, Basic Application)
Line A-2 Discharge to which schedule applies. Enter sequence number
and description as listed in line 7, Basic Application.
Line A-3 If the entire corporate entity is served by a sewage collec-
tion and disposal system, enter "entire (city) of ."
If the line entry pertains to only a portion of the munici-
pality, name the streets served or include a map showing the
areas served.
Lines A-4, A-5 Self-explanatory
Line A-6 If wastes not reported on schedule are covered by another
entry in line 7, enter "see separate schedule." If remaining
wastes do not require permit action, include reason (e.g.,
their disposal is to the ground via septic tanks and leaching
fields).
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Line A-7 If wastes are collected in either a sanitary sewer system or
a combined sanitary and storm sewer and are limited to
sanitary and kitchen wastes, indicate "no." If other wastes
are involved, indicate "yes."
Line A-8 Basis should be on normal volume of discharge excluding storm
runoff.
Line A-9 Include only those users whose discharge will be included in
the municipal system as of July 1, 1971. Any major users whose
wastes are proposed to be collected in a future collection
system and for whom the municipality elects to include in
their application must be reported on a separate schedule
(see Instructions for line 7 above).
Line A-10, A-ll Self-explanatory
Line A-12 In general, no treatment means that the wastes are discharged
directly into a stream from a sewage collection system. "Primary"
treatment means that a settling tank is used to remove settleable
solids, with the remaining liquid discharged after chlorination.
"Secondary" treatment includes primary treatment but in addition
uses aeration tanks or trickling filters to provide reduction
of the organic load remaining in the liquid after solids re-
moval .
Lines A-13 to A-16 Self explanatory
Line A-17 When indicating the distance of the discharge from a fixed
landmark, whenever possible reference to the stream network,
i.e., miles or feet upstream or downstream of a bridge, dam
or confluence of two streams.
PART II
Lines A-18, A-19 These lines need only be completed if the application
id for or may be for a temporary pollution permit. Monetary
values must be included for the purposes of determining the
pollution fee and any credits against such fee. The questions
are generally self-explanatory, but if clarification is de-
sired, contact the Department of Water Resources.
SCHEDULE B - Industrial and Institutional
Line B-l Name (same as line 1, Basic Application)
Line B-2 Discharge to which schedule applies. Enter sequence number
and description as listed in line 7, Basic Application.
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Line B-3 Check type of activity or activities which generates the wastes
involved. Write in and check any activity not listed. If
wastes from several activities are collected in a common collec-
tion system prior to treatment and disposal, indicate all
such activities.
Line B-4 The Department must know the type of treatment and manner of
disposal of the treated wastes in order to determine the
applicant's eligibility for a discharge permit. The volume,
frequency and characteristics of the wastes will be covered in
lines B-5 and B-6. Use line B-4 to describe the type of
treatment facility which will be operational on and after July 1,
1971, its rated capacities, efficiencies, methods of operation,
and disposal methods. This can be done in narrative style and
augmented by sketches, plans or manufacturers' specifications.
Be sure to describe each separate component in the system and
the flow sequence connecting them. For example, if several
settling basins are used in series and/or parallel configuration,
indicate the flow through the system, the dimensions of each
basin, and the method used for removing settled matter.
Be sure to include in the description the point at which the
treated or untreated wastes enter the waters of the State.
For example, if the effluents are first discharged into a ditch
or swamp, indicate this and the point at which these drain into
a stream or lake banks as a result of ground disposal.
Line B-5 Volume and frequency of waste discharge. If you use Option A,
the Department will calculate the volume, frequency and composi-
tion of the wastes based on standard values for the activities
involved and the type of treatment reported in Line B-4. Per-
sons using Option A need not complete Table B-l nor B-2 of
line B-6.
Line B-6
If you use Option B, enter the total volume of wastes in gallons
to be discharged during each of the time periods shown in Table B-l.
If your activity is essentially constant during all months of
the year, check the space at the top of Table B-l and complete
the January line only. If the rate of discharge (i.e., gallons
per minute) varies considerably during any time period, ex-
plain in the space below Table B-l.
Enter the maximum concentrations of pollutants associated with
the discharge volumes after treatment (if any) reported in
line B-5. The rates reported in Table B-2 will be the basis
of evaluation by the Department, and if a discharge permit or
a temporary pollution permit is granted, the rates will also
be designated on the permit as the maximum allowable.
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If the heat added to the waste water is due only to the influence
of normal room temperatures and/or sanitary and domestic uses,
enter "none added" in the line "temperature of discharge water."
Under the entry "chemicals," include metal ions, fluorides,
radioactivity chlorides, nutrients, toxic material, etc.
Submit copies of laboratory tests if available.
Lines B-7, B-8 Self-explanatory
Line B-9
PART II
When indicating distance of discharge from a fixed landmark
whenever possible reference to the stream network, i.e.,
miles or feet upstream or downstream of a bridge, dam, or
confluence of two streams.
Lines B-10 to B-13 These lines need only be completed if the application
is for or may be for a temporary pollution permit. Monetary
values must be included for the purposes of determining the
pollution fee and any credits against such fee. The questions
are generally self-explanatory, but if clarification is de-
sired, contact the Department of Water Resources.
SCHEDULE C - Domestic and Commercial Discharges
PART I
Line C-l Name (same as line 1, Basic Application)
Line C-2 Discharge to which schedule applies. Enter sequence number and
description as listed in line 7, Basic Application.
Line C-3, C-4, C-5 Self-explanatory
Line C-6 If entire discharge is to the ground, as by leaching fields,
enter "none.'"
Line C-7 When indicating distance of discharge from a fixed landmark,
whenever possible reference to the stream network, i.e., miles
or feet upstream or downstream of a bridge, dam, or confluence
of two streams.
PART II
Lines C-8, C-9 These lines need only be completed if the application is
for or may be for a temporary pollution permit. The questions
are generally self-explanatory, but if clarification is de-
sired, contact the Department of Water Resources.
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APPENDIX E
EXAMPLES OF ACTUAL APPLICATION OF EFFLUENT FEE
OR SEWER CHARGE SYSTEMS
THE RUHR SYSTEMS
The literature on the Ruhr effluent fee systems is extensive, and
mainly available in German. The present description is based upon a
review of the very few English language sources.1
The Ruhr systems for water management have a long history of evolution
going back to the turn of the century. The associations that have
been formed are organized on a drainage basin district concept with
voting power distributed in accordance to each member's financial con-
tribution. Members may be local governments responsible for municipal
waste disposal, or industries. Thus, the concept of a joint regulatory
agency managed cooperatively by local government and industry has been
achieved. Membership in each of the eight major Ruhr basin agencies is
compulsory.
In managing the water quality, the Ruhr agencies provide a variety of
management services. These include construction and operation of treat-
ment facilities, regulation of river flows through reservoir control,
monitoring of the river quality, assisting in the identification of
processes other than treatment which reduce wastes discharged on an
industry-by-industry basis, and providing marketing services for
materials salvaged from wastes treated by each industry or by the
agency. In addition, the agencies regulate the distribution of water,
and to a certain extent, water related land use.
Within the context of the Ruhr basin agencies, whose function is to
completely manage water quality improvement in each region independent-
ly, as well as to manage accommodations with each of the other Ruhr
agencies, the purpose of the effluent fee system is to distribute the
costs of all activities in which the agencies engage to each of the
members on a mutually acceptable and equitable basis. Thus, each of
the eight regions has developed its own formula for cost distribution
through the leveling of some form of effluent fee.
According to G. M. Fair,^ "One general provision of the statutes that
has played a large role in successful and efficient operation is the
requirement that the costs of constructing and operating the system
are to be borne by the members responsible for them as well as by those
who benefit." While some limited information was available regarding
formulas for distributing the costs to those who pollute, no detailed
indication was obtained regarding the mechanism for cost allocation to
those who benefit, or the identification of beneficiaries.
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In developing formulas to compute the contribution of each individual
polluter, at least two of the Ruhr agencies elected procedures that
reduce a complex vector of wastes generated to a uniformly comparable
index. For example, the Emschergenossenschaf t-Lipperverband (Emsher
and Lippe River Basin Agencies) combine several measurements of waste
quantity and concentration in the effluent to a uniform dilution
factor, which then becomes the basis for fee computation. The formula
used is:
D = dilution factor
3
S = settleable solids (cm /liter)
S = permissible S
B = BOD in mg/liter after sedimentation
B = permissible BOD
P = potassium permanganate oxygen (COD) used in
mg/liter after sedimentation
P = permissible P
F = toxicity to fishlife by a special dilution method
based upon 49 hours with no observed fish damage.
Clearly, application of the above formula requires that laboratory
tests be performed routinely and periodically on all effluents to
which a charge will be leveled. In addition to the above calculation,
other factors such as heat, temperature of the effluent, and strength
of effluent are evaluated. Further technical details were not given
in the sources studied.
The Ruhrverband (Ruhr River Association) on the other hand employs a
population equivalent basis , where the population equivalent of each
effluent is determined by a standard laboratory test, in which the
number of liters of effluent that represents one population equivalent
is determined, using a special procedure developed in the Ruhrverband
laboratories for that purpose.
In both of the above methods, no actual determination is made of any
of the common or unusual chemical compounds that constitute industrial
wastes. Rather the degrading effect of all such wastes, whatever
they are, is determined using a standard procedure in which the actual
chemical composition is not determined.
168
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THE SEINE-NORMANDY BASIN FINANCIAL AGENCY
The effluent fee system was establsihed by the Board of Directors of the
Seine-Normandy Basin Financial Agency Board of Directors in a resolution
dated October 9, 1968. The purpose of the fee is to provide an economic
incentive for polluters to reduce their waste discharges through treat-
ment or other means.
Fees are computed according to a "basis," which will be described below.
A polluter may elect to have his basis computed from standard esti-
mating tables provided by the agency, or at his own expense to determine
his basis according to very specific instruction for effluent sampling
and laboratory testing.
Essentially, the system is a uniform charge weighted by geographic loca-
tion which is analogous to a river classification system.
"Basis" = quantity of pollutants in 1 normal day of maximum
discharge month minus daily amounts of same
material in the intake.
The basis has two components:
Suspended Solids (kilograms)
Oxidizable material
Oxidizable materials = COD + 2(BOD)/3 (kilograms)
The fee structure per kilogram/day of pollution added is specified by
geographic zone.
Annual Charge
Zone Per Kilogram (Francs) Dollars/Kilo $/Pound
1 22.50 4.50 2.00
2 18.50 3.60 1.64
3 15.00 3.00 1.36
4 15.00 3.00 1.36
5 7.50 1.50 0.68
The minimum basis for a tax is 30 kilogram/day. Considering that the
above charges are based upon the average day in the maximum polluting
month, and assuming that the net annual pollution loading is equal to
200 times the average load in the maximum polluting month (this will
vary with differing seasonal discharge patterns of different polluters)
the approximate net cost per pound becomes [l.02, 0.82, 0.68, 0.68,
0.34].
Two pollution classes are defined for standard estimation purposes:
1. Household - includes all towns and industries who claim
less than 5000 m^/year of intake meter.
2. All other polluters.
169
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A "[DIMENSION]" vector is defined for purposes of fee estimation by
standard table. The components of [DIMENSION] to be considered are
defined by the standard table for each class of polluter. [DIMENSION]
may contain
daily production of a produce by weight (may be raw
material processed or weight after processing)
daily volume of water utilized
- number of people employed by the establishment.
For each characteristic [DIMENSION] there is a standard amount in grams
of suspended and oxidizable materials assumed to be brought in by each
polluter, per unit of the [DIMENSION] component.
A reduction of the above computation is allowed when there is final
waste treatment. The reduction is equal to the estimated efficiency
of the treatment method with respect to suspended solids and oxidizable
materials. The efficiency allowance schedule consists of 10-15% for
primary and secondary settling of suspended solids, and 20% to 100%
for BOD reduction when purification takes place. No reduction in BOD
is allowed when settling processes alone are used.
Polluters may qualify for tax cuts under the following conditions:
r tax due T , ^ .
- L c i vj exceeds a certain amount
number employed
- current pollution level existed prior to May 1, 1968
- request contains—number of jobs, total salaries paid,
added value (salaries plus related expenses), finance
charges and gross profits prior to tax
- a memo explaining anticipated progress in waste pro-
cessing together with proposed Financial Plan.
THE CZECHOSLOVAK SYSTEM
The Czech effluent fee system was enacted by government decree on
March 12, 1966. The information outlined herein is based on a crudely
translated portion of that decree.4 Evidently, the purpose of the
system is to provide economic incentives for polluters to treat water-
borne wastes to "sufficient" levels.
There are two bases for computing pollution charges. One is a cost of
treatment, where the degree of treatment required is determined by the
"River Board" agency in a manner not precisely specified in the law.
The other basis is related to each polluter's contribution to river
quality deterioration as computed under standardized (i.e., simplified)
assumptions regarding the physical dynamics of pollution. Thus, there
170
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is a basic so-called "indemnity" charge derived from annualized cost
of treatment, upon which is imposed a "surtax" based upon contribution
to stream quality deterioration.
The basic charge may be determined from standard tables of theoretical
cost of treatment, or from actual engineering design documents pro-
vided by the polluter.
The basic indemnity is defined by:
B - Mj^ x BOD + M2 x SS
Where:
B « basic indemnity
BOD = biochemical oxygen demand
SS = suspended solids
MI = estimated per unit cost of removal of BOD
expressed in Czech crowns/kg of BOD
M2 = estimated per unit cost of removal of SS
expressed in Czech crowns/ton of SS.
At the discretion of the River Board charges may not apply when loading
does not exceed:
50 Tons BOD per year or
300 Tons SS per year
Credit for storage and controlled discharge is given.
When MI and M2 are not based upon actual engineering estimates, the
following formulas are applied:
I^ = 5 - log X
M2 - 2.75 - .25 log Y
X = tons per year of BOD
Y = tons per year of suspended solids
In addition to the basic indemnity, there is a surtax based upon the
degree of stream water quality deterioration caused by the discharger.
1 basic unit of deterioration for BOD =0.25 mg/1
1 basic unit of deterioration for SS =0.50 mg/1
171
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The calculated deterioration in stream quality caused by a discharger
is based on the load of pollutants introduced by the discharger and
the stream flow guaranteed for 355 days in an average year and is
expressed in mg/1 of BOD and SS. Thus, if D^ and T>2 represent the
calculated stream quality deterioration for BOD and SS respectively
for a given discharger, then
Pi , D2
0.25 mg/1 ana 0.50 mg/1
expresses the calculated deterioration as a fraction of a basic unit
of deterioration. This fraction is then applied to the "basic
indemnity" to obtain the surtax. Thus where T=the surtax,
T - 0.25^/1 (MrBOD) + 0.502mg/l (M2'SS>
The technical basis for computing the "basic unit of deterioration"
was not specified in the Czech decree except to indicate that it repre-
sents one twentieth of the difference between standards for water
quality in "Class IB" waters and similar standards for Class II"
waters. The decree also specifies that no single surtax will be
greater than 100% of the basic indemnity and grants authority to the
River Board to adjust the calculated surtax down to 10% of the basic
indemnity in justified cases.
Adding the basic indemnity and surtax together gives the total pollution
charge applicable to dischargers of untreated or insufficiently treated
wastes under the Czechoslovak system:
Total Charge = (1 + oj1^) Mj.BOD + (1 + 0.5g2mg/1) M2.SS
NORTH AMERICAN SEWER CHARGE SYSTEMS
There are various districts in the United States and Canada, where the
district agency operates a regional sewage treatment plant, and covers
at least a portion of the cost of treatment by leveling a charge upon
each contributor. The rationale for the charge in each case is to
collect from each discharger a sum proportional to the actual cost of
processing his wastes. Two examples of sewer charge formulas in
current usage are described below.
The Greater Winnipeg5*6 Sanitary District has adopted the following
formula:
R± = [A]Rn + [B]RC + [C]RX
172
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R. = surcharge per 1000 gallons of sewage
R = unit charge based on normal sewage treatment
n
R = unit charge based on chlorine requirements
R = unit charge based on additional treatment costs
X
A = function of suspended solids concentration and
BOD in the effluent
B = function of chlorine demand
C = function of quantity of materials requiring
special treatment.
The Allegheny County Sanitary Authority (Pennsylvania) established a
schedule of basic rates per 1000 gallons of effluent to which a factor
is applied.
F - i 4. n i s r°-75 4. 0.25 (BOD) - 300)-.
F - 1 + 0.15 L 275 + 300 J
F = Factor
SS = Suspended solids in mg/1
BOD = Biochemical oxygen demand in mg/1
To this is added a chlorine surcharge.
R = Chlorine surcharge in C/1000 gallon
P = Price per pound of chlorine
C = Chlorine demand in mg/liter.
The basic rate is determined on a volumetric basis according to the
following schedule:
Water Used Per Basic Rate
Quarter Year C/1000 Gallons
30
25
20
15
While the Winnipeg system includes the cost of special treatment that
might be required for industrial wastes, the Allegheny system as re-
ported does not. Presumably, substances that would interfere with
biological treatment process are simply prohibited.
173
(thousand gals.)
First
Next
Next
Excess Over
100
1,000
2,500
3,600
-------
Maystre and Beyer have recently published the results of an extensive
survey of sewage charges used by municipal plants receiving industrial
effluents. They report that by 1977 50% of all municipal waste treat-
ment plants will be receiving industrial effluent. Sewer charge
formulas are reported for 28 cities with a population exceeding ten
thousand, out of 221 cities sampled. Major municipalities with sewer
charge formulas include Denver, St. Louis, Cincinnati, Houston, and
Dallas. The majority of the charge systems date from 1960. The
authors report "The form, length and content of the ordinances portray
an amazing variety, some being just one page, others being encyclopedic.
Various combinations of uniform fees, dilution factors, population
equivalents, or other bases for fee determination are reported upon.
Wood8 reports extensive use of sewer charges based upon incoming
effluents in Great Britain as well. While he provides a general review
of sewer charge practice in Great Britain, no examples of formula are
stated.
174
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APPENDIX E
REFERENCES
1. Kneese and Bower, Managing Water Quality, Johns Hopkins Press,
1968; G. M. Fair, "Pollution Abatement in the Ruhr District," in
Comparisons in Resource Management, Henry Jarrett (ed.), Johns
Hopkins Press, 1961.
2. G. M. Fair, op. cit.
3. Resolution No. 68-14 of October 9, 1968 by Board of Directors -
Seine-Normandy Financial Agency, translated at Arthur D. Little.
4. Degree of the Czech Government No. 16, March 12, 1966, Concerning
Indemnities for Discharging Untreated or Insufficiently Treated
Waste Waters into Streams.
5. Kneese and Bower, Managing Water Quality, Johns Hopkins Press,
1968.
6. A. Penman, "Wastewater System for the Metropolitan Corporation of
Greater Winnipeg," Journal of the Water Pollution Control Federa-
tion, March 1967.
7. Maystre and Geyer, "Charges for Treating Industrial Wastewater in
Municipal Plants," Journal of the Water Pollution Control Federa-
tion, December 1969.
8. Richard Wood, "Wastewater and Rates and Service Charges in Great
Britain," Journal of the Water Pollution Control Federation,
December 1969.
175
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APPENDIX F
ESTIMATION OF TREATMENT COSTS
The cost of treating wastewater is made up of two parts; actual recurring
operation and maintenance for labor, chemicals and utilities, and debt
service on the capital invested in the plant. The total annual cost for
a specific case can be expressed as in Equations (la) and (Ib) below.
For municipalities, this cost is the actual net cost of treatment. For
industrial firms, the net treatment cost differs from Equations (la) and
(Ib), since some of the expenditures are deductible from taxable profits.
The actual out-of-pocket cost to the firm is discussed in Section 2D of
this Appendix.
For both municipalities and industrial firms, an effluent fee equal to
cost of treatment should be based on Equation (1), since the industrial
tax savings are automatically returned to the firm in the course of its
dealings with the Internal Revenue Service.
The total annual cost of treatment is given by:
T = ByC + C ($/year) (la)
where
3 - $ debt service cost per year/$ capital invested:
g is a function of the interest rate (I) and the period of
amortization (N) according to
„ _ (I) (1+DN
y = fraction of the capital cost borne by the treater:
y=l for industries and 0.25 < y < 1.00 for
municipalities receiving state and federal grants
C = capital cost of the treatment facility in $
C = annual operating cost in $ per year
For some purposes, it is easier to compute the cost from normalized capital
and operating cost figures expressed on a basis of per pound of BOD treated
per day. The total annual cost expression is:
177
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T = (&yCc+CQ) (8.33) V (L-Lo) ($/year) (Ib)
where 3 and y are as previously defined and
C = capital cost of treatment facility in $/lb BOD
treated per day
C = operating cost in $ per year/lb BOD treated per day
V = average wastewater flow in MGD (8,33V = million Ib per day)
L = pollutant concentration in wastewater in ppm BOD
L - effluent or residual concentration in ppm BOD.
In estimating T, we will normally know 6, y, V, L and L . We will need to
estimate C and C , or C1 and C1. °
coco
1. Treatment of Municipal Wastes
General correlations of normalized capital and operating costs for
treatment of municipal wastes are given in the literature.
A. Capital Cost (C )
Shah and Reed surveyed 563 sewage treatment plants in 1969 and analyzed
the construction cost data for several kinds of primary and secondary
treatment by multiple regression. Their equation for secondary treatment
plants is:
In C = 8.32 + 0.467 In P - 0.782 In V + 0.015 D, + 0.120 D0 (2)
C 12'
where
C = capital cost/design MGD in 1957-59 dollars
P = design population equivalents
V = average flow in MGD
D- and D~ are dummy variables where
DI = 0,D2 = 0 for standard rate trickling filter (SRTF) plants
D- = 1,D» = 0 for high rate trickling (HRTF) plants
D.^ => 0,D_ = 1 for activated sludge CAS) plants..
178
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This equation can be converted to the desired form (i.e., C = F(V,L)) by
use of the following equations:
8.33 VL
b (3)
where b =» nominal BOD load per person per day (0.17 Ib BOD per person per
dav) and
c =
= _
c c 8.33L (4)
Taking anti-logs of both sides of Eq. (2), substitution of Eqs. (3) and
(4), and multiplication by 1.38 to express cost in current dollars yields
the following cost equations :
Cc = A V~°*315 L-°'533 ($/ib BOD per day) (5)
where
A = 4707 for AS plants
4162 for SRTF plants
4239 for HRTF plants
This equation shows the economies of scale (.the negative exponent on V) and
of treating a concentrated effluent (the negative exponent on L) .
2
The 1969 Cost of Clean Hater shows comparable costs for AS plants. The
cost per capita in 1957-59 dollars is shown as a function of population
served in Figure 5, p. 62 of Volume I. Values from this figure were put
on the same basis as Eq, (5) by dividing the cost figures by 0.17 Ib BOD
per person per day and multiplying the population figures by 100 gallons
per person per day. The resulting values multiplied by 1.38 to reflect
current dollars, are shown in Figure 1.
Values resulting from Eq. (5) are also shown in Figure 1. The normal
concentration of municipal sewage was assumed to be 250 ppm, Substituting
L = 250 ppm into Eq.. (5) yields
Cc = B v~°'315 ($/lb BOD per day) (6)
B = 247.7 for AS plants
219.1 for SRTF plants
223.1 for HRTF plants
These equations are plotted in Figure 1 .
The two lines for AS plants agree within about 20%, which is within the
accuracy of the conversion factors used to put the data on a common basis.
179
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o
o
o
o
o
•
o
o
o
s
CN iH
^ ^ M-l 4-1
0)
-------
B. Operating Costs C
Michel, Pelmoter and Falange analyzed operating cost data gathered in 1500
audits over the period from 1962 to 1964. They correlated costs against
flow for each type of treatment plant using equations of the form
log C
a = b log V
(7)
Costs included are those associated with labor, utilities and chemicals.
Values associated with secondary treatment from their analysis put on a
basis of Ib BOD per day and multiplied by 1.18 to reflect current dollars
are shown in Table 1.
Similar values are given in Ref. (2), Vol. I, Figure 10, p. 88. These
values, corrected to current dollars, and the (Ib BOD per day) basis are
also listed in Table 1. The only serious discrepancy between the values
from the two sources is for SRTF plants at 0.1 MGD flow.
TABLE 1
ANNUAL OPERATING COSTS
$/lb BOD Treated per Day
(in current dollars) at Assumed Flow (MGD)
Flow (MGD)
Process
AS —
SRTF
HRTF
Ref
Ref
Ref
Ref
Ref
Ref
(3)
(2)
(31
(2)
(31
(2)
0.1
31.02
35.39
22,81
47.45
26,64
26.51
15.40
13.92
11
7.02
8.93
8.95
10
8.48
8.02
4.37
.38
.85
100
5.66
5.43
3.
3.
4.97
C. Operating Cost as a Percentage of Capital Cost
Combining the data from Figure 1 and Table 1 allows expression of the
annual operating cost as a percentage of capital cost. Table 2 lists
these percentages.
181
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TABLE 2
ANNUAL OPERATING COSTS AS
A PERCENTAGE OF CAPITAL COSTS
At Assumed Flows (MGD)
Flow (MGD) 0.1 1.0 10_ 100
Process
AS 6.1 6.1 7.1 9,8
SRTF 5.0 4.2 4.2
HRTF 5.8 4.0 3.6
D. Estimating Treatment Costs
Total treatment costs can be estimated using Eq. (lb) , Figure 1 and Table 1.
Suppose, for example, we want to estimate cost of secondary treatment by
the activated sludge process for a town of 10,000 people.
V = 10,000 people x 100 gal/person or 1 MGD
L = 250 ppm BOD
L =38 ppm BOD (85% of 250)
Values for g for durations of 20, 25 and 30 years and interest rates of
6-9% are shown in Table 3.
TABLE 3
ANNUAL COST OF CAPITAL RECOVERY AND INTEREST
6% 7% 8%
20 years 0,0873 0.0945 0.102 0.110
Duration 25 0.0783 0,0860 0.0938 0,102
30 0.0728 0..0807 0.0889 0.0975
The value of y depends on the amount of Federal and State aid for which
the project is eligible. Municipal sewage treatment facilities in Vermont
are generally eligible for Federal grants of up to 55%, The percentage
of State aid depends on the financial conditions of the municipality under
the equalization provision. For example, if Federal aid amounts to 55%
in a specific case, and State aid to 20%, the relevant value of y is
y - 1 - 0,55 - 0.20 - 0,25
Assume for our example that state and federal grants for construction
amount to 75% of the capital cost (y=0.25) and that the remaining capital
requirement is borrowed for 20 years at 8% interest. Therefore, from
182
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CO
0)
[x
u
CO
o
o
rt
-------
o
O
O
O
in
o
•
o
o
•
o
8
(1)
M
CO
in
•
o
CN
O
O
O
O
m
o
CM
•
1T/$)
m
o
•
o
J°
CM
O
•H O
O
Pn
O
H
CO
8
I
ro
fd
O
H
fn
184
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Table 3, 6 = 0.102. From Figure 1 , Cc = $250/lb BOD per day (Curve 2)
and from Table 1 , Co = $15,40/lb BOD per day. Note that the cost values
are on a basis of BOD treated rather than removed. Therefore, L0 in Eq. (lb)
must be set to zero, even though the actual effluent from the plant is 38 ppm.
Substituting these values into Eq, (lb) yields
T- [(0.102)(0.25)(250) +15.40] (8.33)(1)(250) (8)
= [6.38 + 15.40] (2083)
= $45,300/year
Figure 2 shows plots of estimated overall annual treatment costs for the
cases of no subsidy on invested capital (y=1.00) and of 75% subsidy on
invested capital (y=0.25). Capital amortization at 8% over 20 years is
assumed. The upper line in each band shows costs associated with the
activated sludge process; the lower line represents both trickling filter
processes,
E. Comparison of Treatment Cost with Industrial Sewer Charges
Maystre and Geyer^ surveyed 221 cities in 1969 to determine how many
cities imposed industrial waste charges and how these charges are determined.
Some cities charge on a "lb pollutant treated" basis, usually when some
limit on waste concentration is exceeded, and the reported per pound charges
should show the average or marginal cost of treatment.
Table 3 lists data for those cities for which the per pound charge was
reported. In the last column of Table 4 , all charges are expressed per
pound BOD to allow comparison with the estimates generated in earlier
sections of this memorandum. This was done by adding together the reported
BOD and SS charges since the concentrations in normal sewage are about
equal. In the case of Danville, 111,, the additive volume charge was
incorporated by dividing the volume charge by 2.083 lb BOD/1000 gal sewage,
and adding to the other charges.
Figure 3 shows the waste charges compared to the treatment costs estimated
earlier. The estimates were computed by dividing the values shown in
Figure 2 by the number of pounds of BOD treated per year (equal to 8.33 (V)
(250)(365). The reported waste charges are in general agreement with the
estimated treatment costs. The scatter reflects differences in operating
efficiency as well as local policy with regard to charging industry.
185
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TABLE 4
INDUSTRIAL WASTE CHARGES
Town
Denver, Col.
Danville, 111.
Grand Rapids, Mich.
St. Louis, Mo. (1 of 2)
Springfield, Mo.
Charlotte, N.C.
Hamilton, 0.
Toledo, 0.
Greensburg, Pa,
Warren, Pa.
Nashville, Tenn.
Dallas, Tex.
1960
Population
520,000
43,200
203,000
710,000
103,500
230,000
73,000
354,000
17,400
14,500
261,000
951,000
$/lb BOD
0.0147
0.0123
0.0300
0.0214
0.0090
0.0233
0.0090
0,0100
0,0400
0,0344
0.0087
0.0076
$/lbSS $71000 Gal
0,0153
0.0138
0.0200
0,0190
0.9120
—
0,0120
—
0,0400
0,0352
0,0049
0.0076
—
0.157
—
—
—
—
—
—
—
—
—
—
$/lb BOD
0.0300
0.0336
0.0500
0,0404
0.0210
0.0233
0.0210
0.0100
O.Q8QO
0,0696
0.0136
0.0152
2. Industrial Treatment — Dairies and Pulp and Paper
Generalization of treatment costs is much more difficult for treatment of
industrial wastes than for municipal wastes. The principal reason is the
wide variety of wastewaters produced by industry. In addition, the waste-
waters produced by individual plants in the same industry vary widely in
amount per unit product and concentration because of differences in process
streams.
The FWQA has embarked on a program for establishing treatment costs in the
major industries. The 1968 Cost of Clean Water report5 includes, as
Volume III-, cost of treatment surveys of ten major industry sectors.
Those sectors surveyed are:
1. Blast Furnaces & Steel Mills SIC 3312
2. Motor Vehicles and Parts
3. Paper Mills, except Building SIC 2621
4. Textile Mill Products SIC 2231, 2261, 2262
5. Petroleum Refining SIC 2911
6. Canned and Frozen Fruits & Vegetables SIC 2033, 2037
7. Leather Tanning and Finishing SIC 3111
8. Meat Products SIC 2011, 2013, 2015
9. Dairies SIC 2021, 2022, 2023, 2024, 2026
10, Plastics Materials & Resins SLC 28211-28219
186
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Because of the complexities and variability of the wastes produced, simple
correlations of treatment costs do not suffice. In most of the FWQA
surveys, each industry is categorized in two ways: older, typical and
advanced technology, and small, medium and large size. For each of the
nine resulting categories, ranges of values and mean values are given for
waste production per unit of product and the costs associated with specific
types of treatment. Within a given category, the range of reported values
may be very large (up to a factor of ten).
The FWQA surveys of the pulp and paper industry and dairies are particu-
larly relevant to Vermont. The data in these surveys could be summarized
in a form similar to Figure 1 and Table 1 to provide a basis for estimating
treatment costs from plant effluent data or from product output. An
additional parameter, describing the general characteristics of the
processing technology, would be required, making the estimation of cost
somewhat more complicated than in the municipal case.
A. Pulp and Paper
The survey of the pulp and paper industry treats the sulfate and sulfite
processes separately and lists effluent loadings for the following sub-
processes :
• wood preparation
• pulping
• pulp screening
• pulp washing
• pulp thickening
• bleaching
• paper making
BOD, pH and was.tewater quantities are listed along with suspended, dissolved
and total solids.
Capital and operating costs are listed for pretreatment, primary treatment
and secondary treatments (activated sludge and aerated lagoons) and for
sludge disposal. Finally, capital costs of "typical" integrated treatment
processes are listed.
B. Dairies
The dairy industry survey is broken down into five parts:
• creamery butter
• cheese—natural and processed
• condensed and evaporated milk
• ice cream and frozen desserts
• fluid milk (including cottage cheese)
187
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BOD loads (soap and chemicals, lost product, and by-product) are given,
together with the effect of common process alternatives on these loads.
Capital and operating costs are given as a function of plant size and
state of technology for the commonly used treatment processes of:
• ridge and furrow
• spray irrigation
• aerated lagoon
• trickling filter
• activated sludge
C. Uncertainty in the Cost Estimates
Estimates of the uncertainties in the waste loadings and treatment costs
are not given directly in either of these surveys. Based on the reported
variability of waste loadings, it is estimated that the reported general
treatment costs might differ by at least a factor of two or three from
the actual cost experienced by a specific plant.
D. Net Treatment Cost
While the gross cost of industrial wastewater treatment is given by
Equation 1, the net, out-of-product cost is less than that given by
Equation 1 due to the effects of the tax laws.
Depreciation, interest payments and operating costs are legitimate costs
of business and hence are deductible from taxable profits- In addition,
the investment tax credit effectively reduces the initial investment.
These factors, are discussed below.
Investment Tax Credit
Most corporations are allowed to deduct 7% of the cost of qualified
investments (such as waste treatment facilities) from their Federal
income tax.. Provided that the corporation has taxable profits from which
to subtract this amount, this credit effectively reduces the capital cost
by 7% and has essentially the same effect as the Federal grants made to
municipalities. Therefore, the annual cost of treatment, before the
other tax credits for depreciation, interest payments and operating costs
are factored in, can be computed from Equation (la) with y=0,93.
T' = 0(0,93)C' + C1 (9)
c o
where 6 is the capital amortization factor from Table 3.
Depreciation
Depreciation of capital equipment can be computed for tax purposes by one
of several methods: straight-line, sum of the years digits or twice
188
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straight-line declining balance. For simplicity and because different
pieces of equipment have different useful lives, we can assume a
straight-line depreciation over N years. In this case, the annual
depreciation amounts to 1/N th of the capital cost of 1/N C^. More
complex methods taking into account the actual useful life of each
piece of equipment might prove slightly more advantageous to the
corporation, but the differences are not important for our purposes.
Interest Payments
The average annual interest payment over the N year life of the
amortization is approximately equal to
2N
as a percentage of the total invested capital.
Operating Cost
The annual operating cost is given to be C1.
Total Deductible Costs
The total tax deductible costs are equal to the sum of depreciation,
interest payments and operating cost, or
ic' + c'
N c 2N c o
The tax saving due to these deductions is equal to D times the tax rate.
The effective tax rate depends on the State and Federal tax rates t and tf
respectively, according to
t - t- + (1-t ) t
f f s (11)
' fcf + fcs - Vs
The Vermont State tax on corporate income is 6%. The Federal tax rate
is 22% plus 26% surtax on all income over $25,000 per year. The incremental
Federal tax rates are therefore either 22% or 48% depending on profit level.
Substituting these values into Equation (11) gives :
t= 0.27 Profits < $25,000/year
t= 0,51 Profits > $25,000/year
Net Annualized Cost
Combination of the elements developed in previous paragraphs results in
the following expression for net annualized cost of treatment.
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C12)
Rearranging Equation (12) gives:
Tn = Cc f6C0.93) - (1 + )] + C^ (1-t) (13)
The coefficient on net annual operating Cost (C1) depends only on the tax
rate and is equal to 0.73 if the annual profit is less than $25,000 per
year and Q.49 if the annual profit is greater than $25,000 per year..
The coefficient on capital cost (C1) depends in complex fashion on
N - the number of years over which the capital is amortized
L - the interest rate
t - the incremental tax rate (either 0.27 or 0.51)
Table 5 shows values of the coefficient for several values of N, and L and
the two values of t.
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TABLE 5
COEFFICIENT ON CAPITAL COST PORTION OF
NET ANNUALIZED COST OF TREATMENT
t = 0.27 (Profit less than $25,000 per year)
Interest rate (%) 6789
Amortization Period (yr)
10 0.090 0.095 0,100 0.105
20 0.059 0.064 0.070 0.088
30 0.050 0.056 0.063 0.065
t = 0,51 (Profit greater than $25,000 per year)
Interest rate (%) 6789
Amortization Period (yr)
10 0.058 0.061 0.066 0.069
20 0.039 0,044 0.048 0,052
30 0.035 0.040 0.045 0,050
If we take as a basis a 20 year amortization at 8% interest, the net annual
cost of treatment is:
T = 0,070 C1 + 0.73 C' Profit < $25,000/year
n c o
T = 0.048 C1 + 0.49 Profit > $25,000/year
For comparison, the gross annual treatment cost for the same condition is:
T = 0.102 C1 + C1
c o
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APPENDIX F
REFERENCES
1. K. L. Shah and G. W. Reed, Journal of the Water Pollution Control
Federation Vol. 42, No. 5, May 1970, p. 776-793.
2. Cost of Clean Water 1969, Vol. I, U.S. Department of the Interior,
Jan. 10, 1969.
3. R. L. Michel, A. L. Permoter, and R. C. Palange, Journal of the
Water Pollution Control Federation, Vol. 41, No. 3, March 1969,
p. 335-354.
4. Y. Maystre and J. C. Geyer, Journal of the Water Pollution Control
Federation, Vol. 42, No. 7, July 1970, p. 1277-1291.
5. Cost of Clean Water 1969, Vol. Ill, Parts 1-10, U.S. Department of
the Interior, January 1968.
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APPENDIX G
SELECTED CITATIONS ON OPTIMAL RESOURCE ALLOCATION
IN RIVER QUALITY MANAGEMENT
1. The University of Wisconsin, Water Resources Center, "Institutional
Design for Water Quality Management: a Case Study of the Wisconsin
River Basin."
The above pertains to a current study which has been partially completed
in rough form. Information regarding the allocation model explored was
contained in a rough draft of Volume III Section J—The Economic and
Fiscal Aspects of a Regional Water Quality Management System, authored
by A.HL.J. Dorcey.
A water quality model in terms of dissolved oxygen (Streeter Phalps)
is used as a basis of a least cost of treatment model with a linear
programming approach, to meet a stream standard that has a ten percent
chance of being violated by hydrologic variations. The model assigns
to each polluter a reduction level in terms of % reduction of pounds BOD
in the effluent. From this the allowable number of pounds of BOD is
computed. The allowable number of pounds becomes the basis for the
agency to issue a "poundage order," and to compute on a standard
basis the "annual pure cost" of achieving the poundage order. The
total system cost for achieving all poundage orders is then distributed
to each polluter in proportion to his total % contribution to the BOD
load. The final step in the process is to compute transfer payments,
in which certain polluters are required to pay a fee, while others
receive subsidy payments, depending upon (1) the product of their %
order BOD of total system BOD, times the total minimum cost from the
allocation model, and (2) the present annual cost of treatment.
An important rationale for this approach in the Wisconsin study is
that a polluter who is not meeting his poundage order has the option
of buying additional treatment, or of transferring a payment to
another polluter who is not fully utilizing the poundage order
assigned to him because of "excess" treatment. Ideally this system
encourages the full use of the water resourcesc waste assimilative
capacity, while motivating treatment of wastes at those places in
the system where treatment is most economic.
2. Upton, Charles, "Optimal Taxing of Water Pollution," Water Resources
Research, Vol. 4, No. 5. A mathematical derivation is given for an
optimum allocation of the combination of cost of production, cost of
treatment, and cost of low flow augmentation, to achieve a minimum
level of dissolved oxygen. This is followed by a consideration of
whether, and under what theoretical conditions, each of three alternative
taxation systems applied to the optimal allocation, would constitute
optimal taxation systems in the sense that the tax will result in each
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firm using no more and no less than its optimal allocation Ci.e->
each, firm will select a level of treatment consistent with system
wide optimal determination of treatment) ,
3. Upton, Charles. ltA Model of Water Quality Management under
Uncertainty," Water Resources Research., Vol. 6, No, 3. The
analysis shows that there is an optimal critical low flow which
should be used as a standard in determining optimal levels of
treatment to meet a required water quality standard- As the
variance of the streamflow increases, the optimal critical value
of lowr flow is seen to decrease.
4. Hass, Jerome E. "Optimal Taxing for the Abatement of Water Pollution,"
Water Resources Research. Vol. 6, No. 2. Application of the Danzig-
Wolfe non-linear decomposition algorithm to determine the optimal
treatment configuration for meeting water quality standards and for
determining the optimal pollution taxes when the central authority
does not know treatment costs. The method is demonstrated with
application to the Miami River in Ohio.
5. Kneese and Bower, Managing Water Quality; Economics, Technology,
Institutions, p. 158. A linear programming model that minimizes the
system wide cost of attaining a required minimum dissolved oxygen
in the Delaware Estuary system.
6. Johnson, Edwin L. "A Study in the Economics of Water Quality
Management," Water Resources Research, Vol. 3, No. 2. A comparison
of several effluent charge systems in the Delaware Estuary, with a
theoretical least cost system for attainment of minimum dissolved
oxygen,
7. Revelle, Loucks and Lynn. "Linear Programming Applied to Water Quality
Management, Water Resources Research, Vol. 4, No. 1. A method of
solving for required efficiencies of treatment plants in a river
network that will assure attainment of specified dissolved oxygen
levels at least total cost,
8. Revelle, Dietrich, and Stensel, "Commentary—The Improvement of Water
Quality under a Financial Constraint," Water Resources Research,
Vol. 5, No. 2. An extension of concepts presented in a previous
paper by Revelle, Loucks, and Lynn under a constraint that the cost
for construction is limited, and that the objective is not to maxi-
mize the lowest dissolved oxygen in the river system.
9. Sobel, Matthew J. "Water Quality Improvement Programming Problems,"
Water Resources Research, Vol. 1, No. 4. Application of linear and
integer programming to maximize the ratio of benefits to costs in
a water quality improvement program.
10. Whipple, William Jr. "Economic Basis for Effluent Charges and
Subsidies," Water Resources Research, Vol. 2, No. 1. Discussion of
a system wide least net cost approach to distributing costs of
pollution between those who pollute and those who benefit from
pollution abatement.
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11. Dysart and Hines, "Development and Application of a Rational Water
Quality Planning Model," Water Resources Center, Georgia Institute
of Technology, January 1969. Application of dynamic programming to
the Chattahoochee River Basin System in which thermal discharges
are included, in a model that allocates optimal levels of the use of
the stream capacity to assimilate organic and thermal loadings. This
paper includes an extensive review of other literature on the subject.
12. Bramhill and Mill, "Alternative Methods of Improving Stream Quality:
An Economic and Policy Analysis," Water Resources Research, Vol. 2,
No. 3.. Application of a steepest ascent search algorithm, to solve
for optimal levels of treatment required to maintain a given stream
quality.
13. Liebman, Jon C. "The Optimal Allocation of Stream Dissolved Oxygen
Resources," Cornell University Water Resources Center Publication,
September 1965, and Water Resources Research-, Vol. 2, No. 3. Two
different approaches to a dynamic programming formulation of the
problem of determining the optimal level of treatment to assure a
minimum dissolved oxygen level are explored.
14. Anderson and Day, "Regional Management of Water Quality—A Systems
Approach," Journal of the Water Pollution Control Federation,
October 1968. The Miami River Basin in Ohio is taken as a case
study example, in which the cost of achieving a minimum level of
water quality as determined by a stream standard is minimized using
a linear programming model based upon the Streeter Phelps equations
for BOD. The solution is in terms of degree of treatment required.
.15. Kerri, Kenneth. "An Economic Approach to Water Quality Control,"
Journal of the Water Pollution Control Federation, December 1966.
Using a non-linear programming approach minimum cost solutions were
derived to meet specified dissolved oxygen requirements in the
Willamette River Basin south of Portland, Oregon. The Streeter
Phelps equations were used as the basis of forecasting dissolved
oxygen levels, and the total cost of treatment was minimized.
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APPENDIX H
TITLE 10, VERMONT STATUTES ANNOTATED
Chapter 33. Water Pollution Control
Subchapter 1. Water Pollution. Control
5 901. DEFINITIONS
Whenever used or referred to in this chapter, unless a different meaning
clearly appears from the context:
(1) "Board" means the Vermont water resources board;
(2) "Department" means the department of water resources;
(3) "Discharge" means the placing, depositing or emission of any
wastes, directly or indirectly, into the waters of the state;
(4) "Person" means an individual, partnership, public or private
corporation, municipality, institution or agency of the state,
and includes any officer or governing or managing body of a
partnership, association, firm or corporation;
C5) "Public interest" means that which shall be for the greatest
benefit to the people of the state as determined by the standards
set forth in subsection (3) of section 903 of this title;
(6) "Waste" means effluent, sewage or any substance or material,
liquid, gaseous, solid or radioactive, including heated liquids,
whether or not harmful or deleterious to waters;
(7) "Waters" shall include all rivers, streams, creeks, brooks,
reservoirs, ponds, lakes, springs and all bodies of surface
waters, artificial or natural, which are contained within,
flow through or border upon the state or any portion thereof—
1969, No. 252 CAdj. Sess,), § 1.
§ 902. CLASSIFICATION OF WATERS
The state of Vermont hereby adopts, for the purposes of classifying its
waters, the following classes and definitions thereof:
Class A. Suitable for public water supply with disinfection
when necessary. Character uniformly excellent.
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Class B. Suitable for bathing and recreation, irrigation and
agricultural uses; good fish- habitat; good aesthetic
value; acceptable, for public water supply with.
filtration and disinfection.
Class C. Suitable for recreational Eoating, irrigation of crops
not used for consumption without cooking; habitat
for wild life and for common food and game fishes
indigenous to the region; and such industrial uses
as are consistent with other class "C" uses.
Class D. Suitable for supporting aerobic aquatic life, for
power, navigation and certain industrial process
needs consistent with other class D uses and for
restricted zones of water to assimilate appropriately
treated wastes—Amended 1961, No. 101, 1964, No. 37
CSp. Sess..), § 3; 1967, No. 181, i 1, eff, April 17,
1967.
1967 amendment. "Class Dlt redefined.
1964 amendment. Class A: Inserted "with disinfection
when necessary."
Class D: Added sentence providing for character free
of foaming, heavy discoloration or deposits of
settleable material.
1961 amendment. Added at end of Class C; "and such
industrial uses as are consistent with, other class
'(C)1 uses."
Purposes of 1964, No. 37 CSp. Sess.). See § 901 note
of this title.
§ 903. CLASSIFICATION OF WATERS DESIGNATED, RECLASSIFICATION
(a) The waters of all lakes, ponds and reservoirs, natural or artificial,
used for public water supply and all waters flowing into such lakes,
ponds and reservoirs are hereby designated Class A waters and shall
be maintained as such unless reclassified.
(b) The remaining waters except as otherwise classified by the board
prior to the effective date of this section are hereby designated
Class B waters and shall be maintained as such unless reclassified,
(c) On its own motion, or upon petition by a municipality or by thirty
or more persons in interest alleging that it or they suffer injustice
or inequity as a result of the classification of any waters established
by the board or this section, the board shall hold a public hearing
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convenient to the waters and area concerned and shall give all
interested parties an opportunity to appear and be heard. If upon
consideration of all the evidence submitted, the board finds that the
established classification is contrary to the public interest, it
may, by order, reclassify all or any portion of such waters to a
higher or lower classification. If, pursuant to the above procedure,
the board finds that it is in the public interest to change the
classification of any pond, lake or reservoir designated as Class A
waters by subsection (a) of this section, It shall so advise and
consult with the department of health and shall provide for in its
reclassification order a reasonable and sufficient period of time
before the order becomes effective during which time, any muni-
cipalities, or persons whose water supply is affected shall construct
filtration and disinfection facilities or convert to a new source of
water supply. Any person aggrieved by an order of the board issued
pursuant to this: section may appeal as provided In section 915
of this title-.,
(d) The board shall determine what degree of water quality and classifica-
tion should be obtained and maintained for those waters not heretofore
classified by it following the procedures in sections 904-908 of
this title. Such waters shall be classified in the public interest.
(e) In determining the question of public Interest, the board shall give
due consideration to:
(1) existing and obtainable water qualities;
(2) existing and potential or anticipated water uses;
C3) natural sources of pollution;
(4) public and private pollution sources and technological means
of abating the same;
C5) need for and potential use of mixing zones;
C6) existing and potential use of waters for public water supply,
recreational, agricultural, industrial and other legitimate
purposes;
(.7) suitability of waters as habitat for fish, aquatic life and
wildlife;
08) need for and use of minimum stream flow requirements;
(9) federal requirements for classification and management of
waters;
CIO) municipal, regional and state plans; and
(11) any other factors relevant to determine the maximum beneficial
use and enjoyment of waters—No. 252 (Adj. Sess.) § 2, 1969.
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§ 904. CLASSIFICATION OF WATERS BY BOARD: AID
In classifying the waters of the state, the board is authorized to call
upon any state department or agency for any pertinent Information, other
than information of a confidential nature, which the department or agency
has or could obtain easily in the course of its work.—1969, No. 252
(Adj. Sess.), S 3.
§ 905. CLASSIFICATION HEARINGS
The board may hold such public hearings as It deems necessary, and
shall give notice thereof by publication or otherwise to municipal
officials, to organizations and to persons, individual or corporate,
having an interest in the use of the particular waters to be classified.
The board may require that any or all testimony or evidence presented
at a hearing be given under oath. Source, 1949, No. 148, 56.
§ 906. CLASSIFICATION ADVISORY COUNCIL
The board shall request the governor to appoint, from within the drainage
area of the waters under consideration for classification, three residents,
or one for each ten thousand inhabitants, whichever gives the greater
number, at least one of whom shall be a representative of Industry, and
the governor shall assign representatives, one each from the department
of health, fish and game department, forests and parks department, recrea-
tion board, development department and public service board, or a
representative from such of the departments named as shall to the
governor seem necessary, such persons to act as a consulting council
to assist the board in its determination of classification of such waters
or parts thereof. The appointed members of each council shall be paid
$15.00 per day and necessary expenses for each day necessarily spent in
performance of their duties. The time and expenses of the assigned
members of the council shall be paid by the departments or agencies which
they represent—1969, No. 252 (Adj. Sess.), § 4.
§ 907. OBJECTION BY RESIDENTS: NOTICE OF PROPOSED CLASSIFICATION
Using whatever means it deems proper, the board shall give notice of the
proposed classification to the people resident in the drainage area of
the waters concerned and shall arrange a time and place for objections
to be heard. The board shall consider objections to its proposed
classification and shall reclassify any part or all of the waters on a
sufficient showing that its proposed classification is contrary to the
public interest—1969, No. 252 CAdj. Sess.), § 5.
§ 908. MANAGEMENT OF WATERS AFTER CLASSIFICATION, ENFORCEMENT
After the classification of any waters has been determined by order of
the board, such waters shall be managed under the supervision of the
board in order to obtain and maintain the classification established within
the periods specified In the order. The board may enforce a classification
order against any person named therein and affected thereby who, with
notice of the classification proceedings and order, has failed to comply
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with such order by suit in equity brought before the chancery court of
the county wherein the affected waters are located—1969, No. 252 CAdj.
Sess.),56.
§ 909. PROHIBITIONS
(a) No person, without written authorization of the board, shall discharge
into the waters of the state any waste which by itself or in combina-
tion with the wastes of other sources reduces the quality of the
receiving wastes below the classification established for them.
This subsection shall not prohibit the proper application of
fertilizer to fields and crops. On July 1, 1971, this subsection
shall expire and be deemed repealed.
(b) On and after July 1, 1971, no person shall discharge any wastes,
substance or material into waters of the state without first
obtaining a permit for such discharge from the department. This
subsection shall not prohibit the proper application of fertilizer
to fields and crops—1969, No. 252 (Adj. Sess.) § 7.
& 910a. DISCHARGE REPORTS REQUIRED
Any person who is discharging treated or untreated waste into waters of
the state on a regular, intermittent or continuous basis prior to the
effective date of this section and intends to continue such discharges
on or after July 1, 1971, shall file a written report of such discharges
with the department by September 1, 1970, Such report shall specify
the location, nature, volume and frequency of such discharges. The
department may require such person to furnish such additional information
It deems necessary to evaluate the effect of such discharges upon the
receiving waters—1969, No. 252 (Adj. Sess.), § 10.
§. 911a. DISCHARGE PERMITS
(a) Any person intending to discharge waste into the waters of the state
on and after July 1, 1971, shall make application to the department
for a discharge permit. Application shall be made on a form
prescribed by the department and shall contain such information
as the department may therein require. An applicant shall pay to
the department at the time of submitting his application such
amount as the board shall by rule determine reasonable to defray
the expenses of reviewing and evaluating an application,
(b) The department shall consider each application and shall grant or
deny the requested permit within sixty days from the date of receipt
of the application. The department may require the applicant to
submit any additional information which it considers necessary and
may refuse to grant a permit until such time as the information is
furnished and evaluated.
(c) If the department finds that the proposed discharge will reduce the
quality of the receiving waters below the classification established
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for them, it shall deny the application and refuse to issue a permit.
If the department finds that the proposed discharge will not reduce
the quality of the receiving waters below the classification
established for them, it shall issue a discharge permit.
(d) A discharge permit shall:
(1) specify the manner, nature, volume and frequency of the
discharge permitted;
(2) require proper operation and maintenance of any pollution
abatement facility necessary in the treatment or processing
of the waste by qualified personnel in accordance with
standards established by the board;
(3) contain such additional conditions, requirements and restric-
tions as the department deems necessary to preserve and protect
the quality of the receiving waters; and
(4) be valid for the period of time specified therein.
(e) A discharge permit may be renewed from time to time upon application
to the department. No renewal permit shall be issued if the
department finds that the proposed discharge will reduce the quality
of the receiving waters below the classification established for
them—1969, No, 252, CAdj. Sess.), § 11.
§ 912a. TEMPORARY POLLUTION PERMITS
(a) A person who does not qualify or has been denied a waste discharge
permit under section 911a of this title may apply to the depart-
ment for a temporary pollution permit. Application shall be made
on a form prescribed by the department and shall contain such
information as the department may therein require. Such person
shall pay to the department at the time of submitting the application
such amount as the board shall by rule determine reasonable to defray
the expenses of reviewing and evaluating each application. The
department may require such person to submit any additional infor-
mation it considers necessary for proper evaluation.
(b) Using whatever means it deems proper, the department shall give
notice to the people resident in the drainage area of the receiving
waters for the proposed discharge of the time in which they may
present written objections to the proposed discharge,
(c) After consideration of the application, any additional information
furnished and all written objections submitted, the department
shall grant or deny a temporary pollution permit. No such permit
shall be granted by the department unless it affirmatively finds:
i
(1) the proposed discharge does not qualify for a discharge permit;
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(2) the applicant is constructing, installing or placing into
operation or has submitted plans and reasonable schedules
for the construction, installation, or operation of an
approved pollution abatement facility or alternate waste
disposal system, or that the applicant has a waste for which
no feasible and acceptable method of treatment or disposal
is known or recognized but he is making a hona fide effort
through research and other means to discover and implement
such a method.
(3) the applicant needs permission to pollute the waters of the
state for a period of time after July 1, 1971 necessary to
complete research, planning, construction, installation or
the operation of an approved and acceptable pollution abate-
ment facility or alternate waste disposal system;
(4) there is no present, reasonable, alternative means of
disposing of the waste other than by discharging it into the
waters of the state;
(5), the denial of a temporary pollution permit would work an extreme
hardship upon the applicant;
(6) the granting of a temporary pollution permit will result in
some public benefit;
(7) the discharge will not be unreasonably destructive to the
quality of the receiving waters»
(d) Any temporary pollution permit issued shall:
(1) specify the manner, nature, volume and frequency of the
discharge permitted;
(2) require the proper operation and maintenance of any interim
or temporary pollution abatement facility or system required
by the department as a condition of the permit;
(3) require the permit holder to maintain such monitoring equipment
and make and file such records and reports as the department
deems necessary to insure compliance with, the terms of the
permit and evaluate the effect of the discharge upon the
receiving waters;
(4) be valid only for the period of time necessary for the permit
holder to place into operation the facility, system or method
contemplated in his application as determined by the department;
(5J require as a condition of the permit the payment of periodic
pollution charges in accordance with pollution charge rates
established by the board pursuant to subsection (e) of this.
section; and
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(6) shall contain such other requirements, restrictions and
conditions which the department deems necessary and desirable
to protect the quality of the receiving waters and promote
the public interest.
(e) Pollution charges: By January 1, 1971, the board shall fix and
establish reasonable and just pollution charge rates for computing
the amounts to be paid by temporary pollution permit holders
pursuant to subsection (d) of this section. The board is authorized
to revise such charge rates from time to time thereafter.
(1) Purpose: Tt is expressly recognized that the authorized
discharge of certain wastes which will reduce the quality of
receiving waters below the established classification
represents an expropriation of a valuable public natural
resource for private or limited use and that such discharges
are permitted under this subchapter for economic reasons in
the public interest of providing time during which the degrading
effects, of such discharges can be abated., The imposition of
pollution charges shall have the principal purpose of providing
the economic incentive for temporary pollution permit holders
to reduce uhe volume and degrading quality of their discharges
during the limited period when such discharges are authorized,
thereby raising the quality of the waters in the state. Such
charges shall be for the further purpose of protecting the
health, welfare and safety of the general public, protecting,
preserving, and benefiting navigation upon the waters of the
state and protecting the general public interest in such
waters including recreational and aesthetic interest. The
charges are not imposed for revenue purposes and any income
received by the state under this section shall be used solely
for purposes of water quality management and pollution control.
(2) How established: A pollution charge is the price to be paid
per unit of waste discharged into waters of the state. The
charge may vary among different types or classes of wastes
to account for variations in the degrading effects of various
wastes. The charges may also vary to account for variations
in the water quality standards of different classes and the
hydrologic conditions of different receiving waters. In
establishing the charges the board shall attempt to approximate
in economic terms the damage done to other users of the waters,
both private users and the general public, caused by the degrading
effect of various types of waste in varying volumes and frequencies
of discharge upon water qualities of the different classes of
waters. In determining relative degrading effect, the hoard
may employ any scientific or technical criteria or parameters
such as biochemical oxygen demand and suspended solids and
may express the unit charge in terms of such standards of
measurement—1969, No. 252 (Adj. Sess.), § 12.
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§ 913a. REVOCATION OF PERMITS
The department may revoke any permit issued by it pursuant to this
subchapter if it finds that the permit holder submitted false or inade-
quate information in his application or has violated any requirement,
restriction or condition of the permit issued. Revocation shall be
effective upon actual notice thereof to the permit holder—1969, No. 252
(Aij. Sess.), § 13,
§ 914a. APPEALS TO BOARD
Any person or party in interest aggrieved by an act or decision of the
department pursuant to this subchapter may appeal such act or decision to
the board within thirty days from the date thereof. The board shall hold
a hearing at which all persons and parties in interest may appear and be
heard and shall issue an order affirming, reversing or modifying the act
or decision of the department within 10 days following the conclusion of
the hearing. Such order shall be binding upon the department. An appeal
filed pursuant to this section shall not stay the effectiveness of any act
or decision of the department pending determination by the board—1969, No.
252 (Adj. Sess.), 5 14.
§ 915, APPEALS TO COURT OF CHANCERY
Any person or party in interest aggrieved by any order or decision of the
board pursuant to this subchapter may appeal such order or decision within
thirty days from the date thereof to the court of chancery of any county
in which the receiving waters are located. All appeals taken pursuant to
this section shall be based solely upon the record of the proceedings before
the board. The court shall determine whether the board acted arbitrarily,
unreasonably or contrary to law and shall issue its findings and order
accordingly. An appeal filed pursuant to this section shall not stay the
effectiveness of any order or decision of the board pending determination
by the court unless the court so orders. Appeals from the decision of the
court of chancery may be taken as provided in Title 12—1969, No. 252
(Adj. Sess.), § 8.
§ 916a. ANTICIPATED DISCHARGE
If the department finds that any person is constructing, installing,
operating or maintaining any facility or condition which reasonably can
be expected to create or cause a discharge to waters in violation of this
subchapter, it may issue an order directing such person to take the necessary
steps to correct such potential source of discharge. Any person who receives
an order pursuant to this section may appeal to the board as provided in
section 9l4a of this title—1969, No. 252 (Adj. Sess.), § 15.
§. 917a. ENFORCEMENT
Notwithstanding any other provision or procedure set forth in this sub-
chapter if the board finds that any person has discharged or is
discharging any waste in violation of this subchapter or that any person
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has failed to comply with any provision of any order or permit issued in
accordance with this subchapter, it may bring suit in equity in the
Washington county court of chancery or in any county where the discharge
or noncompliance has occurred to enjoin such discharge and obtain
compliance. Such suit shall be brought by the attorney general in the
name of the state. The court of chancery may issue a temporary injunction
or order in any such- proceedings and may exercise all the plenary powers
available to such, court in addition to the power to:
(1) enjoin future discharges;
(2) order the design, construction, installation or operation
of pollution abatement facilities or alternate waste
disposal systems;
(3) order the removal of all wastes discharged and the
restoration of water quality;
(4) fix and order compensation for any public property
destroyed, damaged or injured, and
(5) assess and award punitive damages—1969, No. 252 (Adj.
Sess.) § 16.
i 918. PENALTY
Any person who violates any provision of this subchapter or who fails,
neglects or refuses to obey or comply with, any order or the terms of
any permit issued in accordance with- this subchapter, shall be fined
not more than $10,000.00 or be imprisoned not more than five years,
or both. Each- violation shall be a separate and distinct offense and,
in the case of a continuing violation, each day's continuance thereof
shall be deemed a separate and distinct offense—1969, No. 252 (Adj. Sess.)
§ 9.
§ 919. CONSTRUCTION
Nothing contained in this subchapter shall be construed to prohibit or
require a permit for the proper use of waters for customary sport and
recreational purposes such as fishing, swimming and boating if the
classification of the water permits such usage. In the event of an
irreconcilable conflict between the provisions of this subchapter and
chapter 25 of Title 3, the provisions of this subchapter shall supersede
and prevail. Nothing in this subchapter shall be construed to affect,
impair or abridge the right of riparian or littoral owners or others to
sue for damages or injunctions or exercise any other common law or
statutory remedy to abate and recover damages for water pollution. If
a permit holder is required to pay such damages by judgment or order of
a court, the amount of such damages shall be a credit against any pollution
charges due under this subchapter. Any permit granted under this sub-
chapter shall not be construed as a vested right and shall be subject to
continuing regulations and control by the state—1969, No. 252 (Adj. Sess.),
§ 17.
206
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§ 920. MUNICIPAL SEWAGE TREATMENT PLANTS
If, after public hearing, the board finds that any municipality is
discharging untreated or improperly treated sewage into waters of the
state or that conditions exist in any municipality or combination of
municipalities which cause or threaten to cause a reduction in the
quality of ground or surface waters and that such discharge or condition
can most effectively be corrected or abated by the construction and
installation of a sewage collection and treatment system, it may after
giving due regard to regional development factors order the municipality
or combination of municipalities to provide the facilities necessary to
correct or abate the discharge or condition. Such order shall include
a reasonable time schedule for action by the municipality or municipali-
ties to place such facilities into operation. This section shall not
be construed to abridge any duty or remedy created by this subchapter—1969,
No. 252 (Adj. Sess.), § 22.
RATIFICATION
(a) The water use classes and standards of quality and technical
guidelines for intrastate waters adopted by the board on
March 10, 1967 and the general policy, water use classes and
standards of quality for interstate waters adopted by the
board on May 29, 1967 are ratified. The board may amend,
revise, repeal and supplement these regulations by exercise
of its regulation-making authority in order to provide and
maintain current scientific and technical criteria by
which to distinguish and determine the classes of water
established by this subchapter.
(b) All water classification orders, as amended, issued by
the board prior to January 1, 1970 are ratified—1969, No. 252
CAdj. Sess.), § 19.
REVOCATION OF PRIOR PERMITS
(a) All discharges and pollution permits heretofore issued by
the boards are revoked effective July 1, 1971, except
permits issued following formal public hearings and in which
the board has expressly retained continuing regulatory
jurisdiction over the discharge. Such permits so issued and
the holders thereof are exempt from the application of the
first sentence of this subsection but shall be subject to all
other provisions of this act and the subchapter of which it
is a part.
(b) Nothing in subsection (a) of this section shall lessen the
authority of the board to strengthen or make more effective
final orders of permit by changes therein nor shall anything
in subsection (a) of this section exempt from revocation,
other than the revocation requirements contained in such
207
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subsection, any permits issued following formal public hearings
and in which, the, board has expressly retained continuing
regulatory jurisdiction over the discharge—1969, No. 252
(Adj. Sess.), §. 20.
EFFECTIVE DATE
Section 2 shall take effect on July 1, 1971. All other sections shall
take effect from passage—1969, No. 252 CAdj. Sess.), I 21.
Subchapter 2. Mill Refuse
§. 951. DEPOSIT OF SAWMILL WASTE IN WATERS
(a) It shall be unlawful for a person to deposit edgings, slabs, sawdust,
shavings or any other sawmill refuse in the waters of any stream, pond
reservoir, or lake in this state or on the shores or banks thereof
in such a manner as to be subject to being washed in the main stream
or body of water under normal high water conditions.
(b) A person who violates the provisions of subsection (a) shall be fined
no more than $100.00 for each offense—Amended 1963, No. 224, 1967,
No. 112.
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APPENDIX I
SUMMARY OF WATER QUALITY STANDARDS
INTRASTATE WATERS
General
A. Effluent Discharges
When an effluent is permitted to be discharged from an appropriate
waste treatment facility, as approved by the Vermont Water Resources
Board, a zone of mixing will be defined by the Board. This zone is
not to be construed as a variance in the Class of water so assigned
but only as a zone of water to allow for diffusion of the approved
effluent. Class D waters will be assigned only where a higher water
use class cannot be attained after all appropriate waste treatment
methods are utilized as provided by Vermont Statutes.
B. Appropriate Treatment
Appropriate treatment shall be defined as secondary treatment with
disinfection or its industrial waste equivalent as determined by the
Vermont Water Resources Board. Lesser degrees of treatment or control
may be permitted where it can be demonstrated definitely that attain-
ment of the specified water use class standards of quality can be
accomplished.
C. Unusual Pollutants
Water quality standards not specifically described in the descriptive
table shall be evaluated on a case-by-case basis for the Vermont Water
Resources Board. Such pollutants may include but are not limited to
radioactive substances, pesticides, herbicides or algicides.
D. Effluent Restrictions
There shall be no discharge of effluent from any sewage treatment
plant or facility into:
1. Class A waters of the State; 10 V.S.A., 903, paragraph 1.
2. Class B lakes or ponds lying within the State's boundaries;
10 V.S.A., 903, paragraph 2, and 10 V.S.A., 901 through 908.
3. Class B streams or rivers from the headwaters down to the
point where such properly treated effluent is presently
being introduced, except in cases of extreme need or
209
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reasonable necessity, in which cases, tertiary treatment
or its equivalent will be required; 10 V.S.A., 901
through 908.
E. Appropriate Disinfection
These terms shall be defined as any process that has equivalent
bactericidal effects to that achieved by chlorination with twenty
minute detention and at least 0.5 mg/1 of chlorine residual in the
effluent.
Technical
A. Hydrology
Standards shall apply to stream conditions existing during critical
minimum low flow periods. In the administration of the State's compre-
hensive water pollution control program, consideration shall be given
to providing mechanical means at dams for sustained flow where neces-
sary to eliminate the hazard of water quality degradation during periods
of interrupted streamflow.
B. Sampling
1. Dissolved Oxygen
Class B waters: 7.0 mg/1.
Class C waters: Not less than 5 mg/1 during at least 16
hours of any 24-hour period nor less than 4 mg/1 at any
time.
Class D waters: Not less than 2 mg/1 during at least 16
hours of any 24-hour period nor less than 1 mg/1 at any
time.
2. Coliform Bacteria
Class A waters: Not to exceed a median value of 100
coliform organisms per 100 ml for a minimum of five samples
collected during any 30-day period. Individual daily value
shall not exceed 500 coliform organisms.
Class B waters: Not to exceed a median value of 500
coliform organisms per 100 ml for a minimum of five samples
collected during any 30-day period. Individual daily value
shall not exceed 2500 coliform organisms.
Class C waters: All domestic sewage effluents must be dis-
infected. Other waste effluents not specifically of a
domestic origin but containing organisms that could influ-
ence public health conditions must also be disinfected when
210
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so directed by the Board. Limits on coliform organisms
shall be a median of 5000 per 100 ml for a minimum of
five samples collected during any dry weather flow
period.
Class D waters: All domestic sewage effluents must be
disinfected. Coliform counts permissible in these
waters will be that value obtained after the effluent
has received appropriate disinfection.
C. Chemi cal Cons ti tuents
Waters shall be free from chemical constituents in concentrations or
combinations which would be harmful to human, animal, or aquatic life
for the appropriate water use class. In areas where fisheries are
the governing consideration and approved limits have not been estab-
lished, bioassays shall be performed as required by the Vermont Water
Resources Board. For public drinking water supplies the limits pre-
scribed by the United States Public Health Service may be used where
not superseded by more stringent State Health Department requirements.
D. Temperature
Class C waters: Thermal pollution will be evaluated on an individual
discharge basis. Treatment of thermal discharges must be effected so
that the resulting stream temperatures follow the normal diurnal
fluctuation.
Class D waters: Thermal pollution will be evaluated on an individual
discharge basis. In no case should a maximum temperature of 90° be
reached for more than six hours of each 24-hour period. Treatment of
the thermal discharges should be effected so that the resulting stream
temperatures follow the normal diurnal fluctuation.
INTERSTATE WATERS
1. The New England Interstate Water Pollution Control Commission
acting in accordance with Article V of the Compact has reviewed
and revised the "Water Use Classes and Standards of Quality for
Interstate Waters" in order to assist the states in the admin-
istration of more effective and expeditious water pollution
control programs in the New England Compact area. The Water
Resources Board hereby ratifies the Standards of Quality as re-
vised and adopts them in principle.
2. In the classification of waters due consideration will be given
to all factors involved including public health, public enjoyment,
propagation and protection of fish and wildlife, and economic
and social development. Classifications are not intended to per-
mit indiscriminate waste disposal or to allow minimum efforts of
waste treatment under any circumstances.
211
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3. Water Quality control problems not specifically referred to in
this document shall be evaluated on a case-by-case basis by the
affected states'water pollution control agencies and departments
of health.
4. Appropriate treatment shall be defined as secondary treatment
with disinfection or its industrial waste equivalent as
determined by the signatory state regulatory agency. Lesser
degrees of treatment or control will be permitted only where it
can be demonstrated that attainment of the specified water use
class criteria of quality can be effectuated.
5. In the discharge of effluents to the receiving waters, cognizance
shall be given both in time and distance to allow for mixing of
effluent and stream. Such distances required for complete mixing
shall not affect the water usage Class adopted but shall be de-
fined and controlled by the regulatory authority.
6. Recommendations on other waste parameters will constitute a
portion of the continuing effort of the Commission in assisting
the states in solving interstate water quality problems. The
Commission reserves the right to amend or extend the following
recommendations as improved standard methods are developed or
revisions consistent with the enhancement of water quality are
justified.
NOTES
1. These Standards do not apply to conditions brought about by natural
causes.
2* Class D waters will be assigned only where a higher water use
Class cannot be attained after all appropriate water treatment
methods are utilized.
3. All sewage treatment plant effluents shall receive disinfection
before discharge to the watercourse. The degree of treatment and
disinfection shall be as required by the state pollution control
agency.
4. Any water falling below the standards of quality for a given Class
shall be considered unsatisfactory for the uses indicated for that
Class. Waters falling below the standards of quality for Class D
shall be considered to be in a nuisance condition.
5. Waters shall be free from chemical constituents in concentrations
or combinations which would be harmful to human, animal, or
aquatic life for the appropriate, most sensitive and governing
water class use. In areas where fisheries are the governing con-
siderations and approved limits have not been established,
212
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bioassays including assessment of taste and odor in edible fish
shall be performed as required by the appropriate agencies. For
public drinking water supplies the limits prescribed by the
United States Public Health Service may be used where not super-
seded by more stringent signatory state requirements.
6. Radioactivity limits to be approved by the appropriate state
agency with consideration of possible adverse effects in down-
stream waters from discharge of radioactive wastes; limits in a
particular watershed to be resolved when necessary after con-
sultation between states involved.
7. The temperature increase shall not raise the temperature of the
receiving waters above 68°F for waters supporting cold water
fisheries and 83°F for waters supporting a warm water fishery.
In no case shall the temperature of the receiving water be raised
more than 49°F.
8. Sludge deposits, floating solids, oils, grease and scum shall not
be allowed except for such small amounts that may result from the
discharge of appropriately treated sewage or industrial waste
effluents.
9. The minimum average daily flow for seven consecutive days that
can be expected to occur once in ten years shall be the minimum
flow to which the standards apply.
10. Class B and C waters shall be substantially free of pollutants
that:
a) Unduly affect the composition of bottom fauna,
b) Unduly affect the physical or chemical nature of the bottom,
c) Interfere with the propagation of fish.
11. Class A waters reserved for water supply may be subject to
restricted use by state and local regulation.
213
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i 1 Accession Number
w
2
Subject Field & Group
VI C, E
SELECTED WATER RESOURCES ABSTRACTS
INPUT TRANSACTION FORM
LJ
Organization
Vermont Department of Water Resources
Agency of Environmental Conservation
Title
Development of A State Effluent Charge System
Q 1 Authors)
Mr. William Albert
Mr. John Han sen
Mr. John M. Wilkinson
16
21
Project Designation
16110 GNT
Note
Citation
Descriptors (Starred First)
Permits, legal aspect, effluent, discharge (water),
annual costs, taxes, feasibility.
c I Identifiers (Starred First)
Permits, discharge fees, calculation.
Abstract
The objectives sought were first, to select, develop and implement a
pollution charge structure and system under provisions of No. 252 of
the Vermont Acts of 1969 and, second, to demonstrate to the Office of
Research and Monitoring the problems, limitations, and potentialities
of the Vermont system or variations thereof.
The Vermont permit and fee system has been developed and is presently
being implemented. Various methods of fee calculation are discussed
and the reasons for selection of one (annualized cost of treatment)
are set forth. The issues of incentive effect on dischargers, relation
of dischargers to instream economic damages, equity, constitutionality,
economic efficiency, technical and administrative feasibility and in-
come potential are discussed in the context of Vermont law and admin-
istrative procedures.
stractor
Paul Greenberger
Institution
Environmental Protection Agency
(R:102 (REV. JUUY 1969)
IRSIC
ftUS GOVERNMENT PRINTING OFFICE
SEND, WITH COPY OF DOCUMENT. TO: WATER RESOURCES SCIENTIFIC INFORMATION CENTER
U.S. DEPARTMENT OF THE INTERIOR
WASHINGTON, D. C. 20240
Z-484-484/160
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