EPA-600/5-74-026
July 1974
Socioeconomic Environmental Studies Series
conomic Disincentives For Pollution
Control: Legal, Political and
Administrative Dimensions
O
Office of Research and Development
U.S. Environmental Protection Agency
Washington, D.C. 20460
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EPA-600/5-7^-026
July 1974
ECONOMIC DISINCENTIVES FOR POLLUTION CONTROL:
LEGAL, POLITICAL AND ADMINISTRATIVE DIMENSIONS
By
William A. Irwin
Richard A. Liroff
Contract No. 68-01-2203
Program Element 1DA315
Roap/Task 2^ACN-0^
Project Officer
John A. Jaksch, Ph.D.
Resources Analysis Staff
Washington Environmental Research Center
Office of Research and Development
U.S. Environmental Protection Agency
Washington, D.C. 20460
Prepared for
OFFICE OF RESEARCH AND DEVELOPMENT
U.S. ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
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ABSTRACT
This report defines an economic disincentive as a monetary charge
levied by government on conduct which is not illegal but which does
impose social costs, for the principal purpose of discouraging the
conduct. Disincentives are distinguished from other legal mechanisms
which may have incidental economic disincentive effects, e.g., fines,
user charges, and license fees. The constitutionality of federal
or state imposition of disincentives is examined and the authority
of the U.S. Environmental Protection Agency and the states to uti-
lize disincentives under selected federal environmental statutes
is analyzed. The legality of some disincentives adopted by states
is discussed. The charges imposed by several European countries
are described and distinguished from disincentives. The history
of some previous proposals for federal disincentives is reviewed
and suggestions for additional disincentives which might be feasible
are offered.
This report is submitted in partial fulfillment of Contract No.
68-01-2203 by the Environmental Law Institute under the sponsor-
ship of the Environmental Protection Agency. Work was completed
in July 1974.
ii
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CONTENTS
Abstract
Contents
Acknowledgements
Sections
I. Conclusions and Recommendation 1
Conclusions 1
Recommendation 5
II. A Definition of Disincentive 6
III. Vermont Pollution Charges and Michigan Surveillance
Fees: Mythical Disincentives 15
Introduction 15
Pollution Charges in Vermont 15
Surveillance Fees in Michigan 29
IV. Legal Feasibility of Utilizing Disincentives as
Supplements to Federal Environmental Laws 38
Constitutionality of Disincentives 39
Introduction 39
Federal Power to Adopt Disincentives 39
Power to Regulate Commerce 39
Power to Lay and Collect Taxes, Duties, Imposts
and Excises 47
Limitations on Potential Federal Disincentives
Programs 50
Fifth Amendment: Self-Incrimination 51
Fourth Amendment: Administrative Searches 52
Separation of Powers: Delegation of Legislative
Power 55
State Power to Adopt Disincentives 57
Limitations on State Powers 57
Authority for Disincentives Under Federal Environmental
Laws 61
Introduction 61
Federal Water Pollution Control Act 61
Legislative History 61
The Proxmire amendment 62
The Heinz amendment 65
Evaluation of Congress* preclusory intent 66
Statutory Provisions 68
Hazardous substances 68
Toxic pollutants 69
General provisions 70
Extent of Pre-emption 71
Conclusion 72
The Clean Air Act 72
Statutory Provisions 72
Hazardous air pollutants 72
Implementation plans 73
iii
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Page
General provisions 74
Extent of Pre-emption 74
Conclusion 75
Federal Insecticide, Fungicide and Rodenticide Act 75
Statutory Provisions 76
Registration 76
General provisions 77
Experimental use permits 77
Extent of Pre-emption 77
Conclusion 77
Marine Protection, Research and Sanctuaries Act
of 1972 78
Statutory Provisions 78
Conclusion 79
Solid Waste Disposal Act 79
The Noise Control Act of 1972 80
Statutory Provisions 80
Extent of Pre-emption 82
Conclusion 83
Reorganization Plan No. 3 84
V, State and Local Disincentive Initiatives 85
Introduction 85
Bottle Laws 85
Oregon 85
Legality of the Law 86
Effect of the Law on Litter, Prices 87
Vermont 88
Legality of the Law 90
Effects of the Law 90
City of New York Nicotine and Tar Tax 92
Legality of the Law 93
Effects of the Law 96
City of New York Tax on Plastic Containers 98
Vermont Land Gains Tax 104
Legality of the Law 105
Effects of the Law 109
VI. Charges in Other Industrialized Nations 111
Introduction HI
German Democratic Republic HI
Hungary
Czechoslovakia 11J
France
The Netherlands
Federal Republic of Germany 116
VII. Economic Disincentives: Political and Administrative
Dimensions
Introduction
iv
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The Role of Economic Disincentives in Environmental
Regulation: Principal Conceptual Issues 118
Regulatory Systems 119
Effluent and Other Pollution Charges 120
Politics of Disincentives 126
Sulfur Emission Taxes 126
Initial Administration Proposal 128
1972 Administration Proposal 128
1973 Administration Proposal 131
Coalition to Tax Pollution Proposal 131
Congressional Response 132
Conceptual Problems 132
Geographic scope and level of fee 132
Demand for low sulfur fuel 133
Microeconomic impact 134
Present Status of S02 Abatement 135
Tax on Lead Additives 136
Administration Proposal 136
Opposition to the Proposal 137
EPA Regulatory Actions 138
Parking Surcharges 139
EPA Action 139
Congressional Response 144
Administrative Feasibility of Disincentives Under
Federal Environmental Laws 145
Feasibility of Applying Disincentives to Water
Pollution 145
Legal Authority for Monitoring 146
Economic Analyses 147
Toxic Substances 147
Areawride Waste Treatment Management 148
The Role of Marketable Permit Systems 148
Feasibility of Applying Disincentives to Air
Pollution 149
State Implementation Plans 149
New Source Controls 149
Hazardous Emissions 149
Feasibility of Applying Disincentives to Use of
Pesticides 150
Feasibility of Applying Disincentives to Ocean
Dumping 151
Feasibility of Applying Disincentives to Solid
Wastes 152
Feasibility of Applying Disincentives to Noise
Emissions 154
Conclusion 155
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Appendices
Appendix A: Proposed Pollution Charge Rates
Pursuant to 10 V.S.A. 912a(e),
Submitted at the Request of and
to the Vermont Water Resources
Board, by Commissioner of Water
Resources Martin L. Johnson
and Assistant Attorney General
John D. Hansen, January 14, 1972
Summary: These draft regulations to
implement the pollution charge
provisions of Vermont^ water
pollution control statute prior
to its amendment were designed
"to provide an economic incen-
tive for temporary pollution
permit holders to reduce the
volume and degrading quality
of their discharges thereby
raising the quality of the waters
in the state." They were also
designed to establish equity
between temporary pollution
permit holders and other users
of Vermont waters. With the
exception of heated elements for
which a fixed per unit charge
was established, the draft
regulations were "impact-
oriented, that is, a relationship
is made between impact or relative
degrading effect and the charge
rates so that the more deleterious
the impact of a particular
discharge upon a particular
receiving water in relation to
other discharges and other re-
ceiving waters, the higher the
charge."
Appendix B: Rules Establishing Pollution
Charges and Restating Permit
Application Fees in Accord
With Title 10, Vermont Statutes
Annotated, Chapter 33, As
Amended, Vermont Water Resources
Board, State of Vermont, Agency
193
vi
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Summary:
Appendix C:
Summary:
of Environmental Conservation,
June 29, 1972
These rules of the Vermont
Water Resources Board of
Vermont establish pollution
charges and restate permit
application fees in accordance
with amendments to Vermont's
pollution charges provisions.
Pollution charges are established
according to unit of waste
(BOD, SS, liquids requiring
disinfection) and heated efflu-
ents. Exemptions to the charges
required by the law are specified
in the rules.
Michigan Water Resources Com-
mission, Wastewater Report Forms
and Instructions
Michigan's effluent charge forms
and instructions include an
inquiry of "General Information"
about the discharger and kind of
wastewater he discharges (i.e.
sanitary sewage comprises what
percent of all discharges?
what portion of wastewater is
hauled away? are any critical
materials discharged?).
Form II requests information
concerning the wastewater out-
fall — site of discharge,
volume of discharge, type of
wastewater, operating time,
period of year of outfall. The
third form — "Critical Materials
Report" — attempts to discern
how many outfalls discharge
how many critical materials
in what quantities. Forms IV-
A and IV-B relate to wastewater
removed from sites, and inquire
as to where it is deposited. In-
cluded are the Commission's Hat-
er ials Register and an outline
of how surveillance fees are
197
vii
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Appendix D:
Appendix E:
Summary *
calculated (with a sample) .
Oregon Mandatory Beverage
Container Deposit Law, Oregon
Revised Statutes, sections
459.810-459.890 and 459.992
215
Summary: Oregon Revised Statutes sections
459.810 through 459.992
are concerned with beverage
containers and their refund
value. A mipimtim of five
cents is established, with
bottles certified (by the
Oregon Liquor Control Com-
mission) being assessed a value of
two cents (section 459.820(1)
and (2)X Section 459.850(3)
makes illegal pull-top, twist-
off caps and other containers
with detachable openers.
Retailers must accept all empty
containers of the kind whch
they sell (section 459.30).
Covered by the law are beer and
other malt beverages, mineral
and soda waters, and carbonated
soft drinks. This law became
operative October 1, 1972.
American Can Company v. Oregon
Liquor Control Commission, No.
75567, Oregon Court of Appeals,
December 17, 1973
Following the brief summary of
the case, the Oregon Court of
Appeals decision is printed in
full. In that document Judge
Tanzer upholds the validity
and constitutionality of the
state's "bottle bill," re-
jecting each of the plaintiff's
arguments against the defen-
dants, the Oregon Liquor Con-
trol Commission. The complaint
was based on the contentions
that the law violated the Com-
merce Clause (Article 1, section
218
viii
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Appendix F:
Summary:
Appendix 6:
8, clause 3 of the Constitution).
Also cited were three provisions
of the state constitution which
were alleged to have been trans-
gressed.
Vermont Litter Levy and Man-
datory Deposit Law, Chapter 53,
Title 10, Vermont Statutes
Annotated
Vermont's "litter levy," one
kind of "bottle bill," is set
forth as chapter 53 of Title 10
of the state's annotated statutes.
Oregon's counterpart (see
Appendix D) defines "beverage"
more broadly; Vermont's term
includes beer and other malt
beverages, mineral and soda
waters, and carbonated and un-
carbonated soft drinks (sec-
tion 1521(1)). A litter levy,
assessed at the rate of 4 mills
on each beverage container,
was in effect for one year,
expiring on July 1, 1973, after
which a deposit on beverage
containers would be paid in-
stead. This refund may not be
less than five cents and is
payable by any retailer providing
that the bottle be labeled
with the name of the state and
the refund value. Redemption
centers may be established on
approval by the Secretary of
Environmental Conservation.
Payments collected under the
levy scheme are "paid by every
manufacturer or distributor to
the commissioner of taxes;"
funds shall be used to establish
sanitary land fills.
Vermont Environmental Protection
Regulation, Chapter 10, Deposit
for Beverage Containers
225
228
ix
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Summary:
Appendix H:
Summary •
Appendix I:
Provided here are the accompany-
ing regulations for the Vermont
beverage container deposit law.
Most important of these specific
delineations are the labeling
requirement (section 10-1523.2)
which states that "VERMONT"
and the amount of deposit
must be clearly printed on
the container for a refund to
be received. The retailer (or
distributor) is required to
redeem only those containers of
a brand, type and size as are
sold by him, and for a period of
sixty days following the cessation
of sales he is responsible for
refunds. Section 10-1523.5
and .6 outline the establishment
of redemption centers. Effec-
tive July 1, 1973.
Chapter 394, Laws of New York
1971, Taxation, Cigarettes
and Tobacco
This New York state enabling
act provides that a city with
a population of at least one
million persons may adopt a
law taxing cigarettes and
tobacco based on their amounts
of tar and nicotine. Section
l(a)(l) specifies that "one
and one-half cent for each ten
cigarettes [may be imposed]
where either their tar content
exceeds seventeen milligrams
per cigarette or their nicotine
content exceeds one and one-tenth
milligrams per cigarette."
Section l(a)(2) provides that
where both these nicotine and
tar levels are exceeded a tax
of two cents may be levied on
each ten cigarettes. This law
took effect July 1, 1971.
Administrative Code of the City
of New York, Title D, Cigarette
Tax
232
233
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Summary;
Appendix J;
SmtmiflTy!
Appendix K:
Summary;
Under the powers granted the
City of New York by the State
of New York in an enabling act
(chapter 394 of the Laws of
New York — see Appendix H), it
became lawful to enact a tax
on cigarettes and tobacco based
on their tar and nicotine content,
The city law uses the exact
wording of the state enabling
act.
Chapter 399, Laws of New York
1971, Cities of One Million or
More — Solid Waste Disposal,
Containers — Tax
Provided in this New York state
enabling act is the power of
"any city with a population of
one million or more to impose
taxes to promote the recycling
of containers and reduce the
cost of solid waste disposal
to such city." Amendments to
this law include rates not to
exceed one cent on fibre and
paperboard containers, two cents
for metal and glass containers,
and three cents on plastic
bottles (section l(f)(l)).
This law took effect July 1,
1971.
Administrative Code of the City
of New York, Title F, Tax on
Containers
This section of the New York
City Administrative Code pro-
vides for the imposition of a
two cent per item tax on plas-
tic containers, codifying Local
Law 43 of 1971. A one cent
per container tax credit is
allowed as an offset for each
container manufactured with a
minimum of thirty per cent of
recycled material. The City of
New York argued unsuccessfully
234
237
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Appendix L:
Summary:
Appendix M:
Summary:
Appendix N:
Summary:
that this local enactment was
authorized by the state law in
Appendix J.
Vermont Property Tax Relief
Act, 32 V.S.A. §5961
Effective May 1, 1973 this act
imposes a tax on the capital
gains from the sale or exchange
of land in Vermont. The tax
increases as the time the trans-
feror holds the land decreases
and as his gain becomes larger
(section 10003). The first
$500,000 in revenues collected
yearly from the land gains tax
will be used to pay for "the
preparation of property maps"
(section 10). Monies received
over and above the first $500,
000 are to be deposited in
a property tax relief trust
fund (section 5976).
Decree of the Government of
Czechoslovakia No. 16 from
March 12, 1966 concerning indem-
nities for discharging un-
treated or insufficiently treated
wastes
The object of this "Collection
of Laws of the Czechoslovak
Socialist Republic," "considering
the necessity of gradual
improvement of the water quality
in streams" (Par. 1), is for
"water users to pay accordingly"
(Par. 1) to "the quantity
of discharged pollutants and their
harmfulness" (Par. 2.(1)).
Appendix to State Decree No.
40/1969/XI.25., Hungary
Two tables outline the amount of
charges levied for seventeen
specified "polluting matters"
and fourteen "toxic matters"
247
251
255
xii
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Appendix 0:
Summary;
Appendix P:
Summary:
according to the limits of dis-
charges of the matters.
EPA Parking Surcharge Proposal:
Massachusetts
EPA's proposed regulation for a
parking surcharge in Massachu-
setts provided a surcharge of
$5.00 per day vehicle in downtown
Boston and at Logan Airport and
of $4.00 per day per vehicle in
downtown Springfield on the
use of any off-street parking
spaces operated or controlled
by private or public parties.
EPA Parking Surcharge Proposal:
Texas
Applicable to "Houston-Calveston,
Dallas-Fort Worth, and San
Antonio Intrastate Regions"
(section 52.2297(b)) this pro-
posal would have made mandatory
a surcharge on employees whose
employers maintained a parking
lot of more than 700 spaces.
Employees traveling to work by
two-person carpools would be
charged no more than half the
parking rate, and three person
carpools could park free of
charge. Net revenues were to
have been used to subsidize
employees* use of mass transit.
256
257
xiii
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ACKNOWLEDGMENTS
This report was prepared by members of the staff of the Environmental
Law Institute. The project director, Will A. Irwin, Esq., wishes
to thank his associate, Richard A. Liroff for effective and unselfish
collaboration, and his assistants, Marguerite Mehlig and Ross D.
Pollack, Esq., for cheerful and valuable contributions to writing
and producing the report. In addition, thanks are given to:
Frederick R. Anderson, Esq., the executive director of the
Institute, and the entire Institute staff, for helpful cooperation;
David F. Cavers, Professor of Law and President of the Council
on Law-Related Studies, under whose auspices the information in
Section VI was first obtained;
John A. Jaksch, the project officer for the Environmental Pro-
tection Agency, for encouraging and professional guidance;
Lynne Siena and Kip Woodward for quick fingers and alert minds
in typing the manuscript.
Several other persons, in the United States and Europe,
for generously providing essential information or thoughtful review
comments; and
Frances and Amanda Irwin, for providing a sense of why it is
worth caring.
Will A. Irwin exercised overall responsibility for the report and
wrote Sections II, III, IV (with the exception of the legislative
history of the Federal Water Pollution Control Act Amendments of 1972,
which was written by Mr. Pollack), V (with the exception of the sub-
sections on the City of New York's nicotine and tar tax and its tax
on plastic containers, which were written by Mr. Pollack), and VI.
Richard A. Liroff wrote Section VII (with the exception of the por-
tions of the subsection on administrative feasibility of disincentives
under present federal environmental laws applicable to pesticides,
and applicable to solid wastes, which was written by Mr. Pollack).
Ms. Mehlig contributed substantially to Sections II and V. Section
I was a joint effort of Messrs. Irwin and Liroff.
xiv
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SECTION I
CONCLUSIONS AND RECOMMENDATION
CONCLUSIONS
1. An economic disincentive is properly defined as a monetary
charge levied by government on conduct which is not illegal
but which does impose social costs, for the purpose of dis-
couraging the conduct. Disincentives should be distinguished
from fines, civil penalties, forfeitures, bonds, user charges,
license or permit fees, taxes, loans, grants, payments, tax
expenditures, and contingency fees.
2. Neither pollution charges in Vermont nor surveillance fees
in Michigan are properly characterized as disincentives,
as defined above. Rather they are, respectively, fines and
user charges.
3. The Congress may constitutionally enact laws providing for
disincentives by exercising either its power to regulate
commerce or its power to levy taxes. The Fifth Amendment
due process guaranty and its requirement for compensation
for taking of private property for public purposes would
not significantly limit the exercise of these powers. The
Fifth Amendment privilege against self-incrimination and the
Fourth Amendment requirement for a warrant as the pre-requisite
for a search may impose some limitations on how disincentives
may be implemented. Congress may delegate legislative power
to define the details of disincentive programs so long as it
establishes standards for doing so.
4. States may exercise their police and taxing powers to enact
laws providing for disincentives. The constitutional law of
a particular state must be consulted for limitations on these
powers in that state. The provisions of the Fourth and Fifth
Amendments to the U.S. Constitution referred to in Conclusion
number 3 apply to the states. The due process and equal
protection clauses of the Fourteenth Amendment impose limits
on the exercise of state powers analogous to those imposed
on the Congress by the due process guaranty of the Fifth
Amendment. States are precluded from exercising their regula-
tory and taxing powers in ways which unduly interfere with
the exercise of the concurrent powers of Congress.
5. The Administrator of the Environmental Protection Agency has
no authority under the provisions of the Federal Water Pollution
Control Act Amendments of 1972 to adopt disincentives but
States are not pre-empted from doing so.
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6. The Administrator of the Environmental Protection Agency has
authority under section 110 of the Clean Air Act to adopt
disincentives other than parking surcharges if he finds them
necessary components of state implementation plans to achieve
ambient air quality standards. States are not pre-empted
from adopting disincentives applicable to sources of air
pollution other than new motor vehicles, aircraft or fuels,
7. The Administrator of the Environmental Protection Agency
has authority under section 3(d)(l)(C) of the Federal In-
secticide, Fungicide and Rodenticide Act (FIFRA), as amended,
to adopt disincentives applicable to the use of pesticides
classified for restricted use. He may also have authority
to impose payment of disincentive charges as conditions of
experimental use permits under section 5. States are not
pre-empted from adopting disincentives applicable to pesti-
cides classified either for general use or restricted use.
8. The Administrator of the Environmental Protection Agency
may have authority under section 104(a) of the Marine
Protection, Research, and Sanctuaries Act of 1972 to impose
payment of disincentives as conditions of permits to dump
material into ocean waters. Section 108 would authorize
him to adopt regulations providing for disincentives applic-
able to ocean dumping. States are pre-empted from adopting
disincentives applicable to ocean dumping.
9. The Administrator of the Environmental Protection Agency has
no authority under the Solid Waste Disposal Act to adopt
disincentives but states are not pre-empted from doing so.
10. The Administrator of the Environmental Protection Agency
does not have authority under section 6 of the Noise Control
Act of 1972 to adopt regulations imposing disincentives on
products which are major sources of noise but may adopt
regulations under sections 17 and 18 imposing disincentives
to control noise from interstate rail and motor carriers.
States are not pre-empted from adopting disincentives applic-
able to use of new products covered by federal noise emission
limits. As to rail or motor carriers states may adopt use
limitations or disincentives only if approved by the Adminis-
trator of the Environmental Protection Agency. States or
their subdivisions may impose disincentives on the noise
from flights into airports they own.
11. The Oregon and Vermont laws imposing mandatory deposits on
non-returnable beverage containers are constitutional.
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12. The City of New York ordinance levying a tax based on levels
of cigarette tar and nicotine content and requiring the
tax differentials to be reflected in retail prices is consti-
tutional.
13. The City of New York tax on sales of plastic containers but
not on other containers has been declared illegal and un-
constitutional by the New York State Supreme Court.
14. The Vermont tax on capital gains from speculative land sales
is constitutional.
15. The charges imposed on discharges of wastevaters and emissions
of air pollutants in the German Democratic Republic, Hungary,
Czechoslovakia, France, The Netherlands, and the Land (cf. State)
of Northrhine-Westphalia in the Federal Republic of Germany
are more analogous to fines or user charges than to disincen-
tives .
16. Enforcement of federal and state pollution control laws prior
to 1970 was uneven. Economic disincentives or charge systems
are seen by some as more effective and more economically
efficient approaches to environmental quality management
than previous and existing federal approaches. The political
dimensions and general strengths and limitations of charge
systems as alternatives or supplements to.-existing regulations
are explored in analyses of recent proposals for sulfur taxes,
parking surcharges, and lead additive taxes. In weighing
the desirability of disincentive systems, consideration must
be given to the scope and level of the charge, the nature of
business response, and the administrative burden imposed on
government and on those subject to charges.
17. Proposals for national sulfur emission taxes produced con-
flict over the scope and level of such taxes. Concern was
expressed as well over both their industry-specific and
regional impact. The administration could not find Republican
sponsors for its proposals. All bills establishing sulfur
emission taxes died, without hearings being held, in the House
Ways and Means Committee. The proposed sulfur emission
taxes were designed to spur industry development of sulfur
emission control technology. EPA contends that the utility
industry does not appear to have made a serious commitment
to development of such technology.
18. The tax on lead additives was proposed by the administration
as a means of increasing demand for lead-free fuels, thereby
providing an incentive to gasoline manufacturers to enlarge
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refining capacity for production of such fuels. The House
Ways and Means Committee held hearings on the proposal and
failed to report it. Little outside support was obtained
for it and industry voiced considerable opposition on eco-
nomic grounds.
19. Parking surcharges were proposed by EPA as part of state
transportation control plans. Its actions were highly
controversial and resulted in congressional action forbidding
EPA from requiring parking surcharges as part of state
transportation control plans.
20. At this time, it is unclear whether the existing, complex
regulatory system established by the Federal Water Pollution
Control Act Amendments of 1972 is going to succeed or whether
it is going to founder under a deluge of litigation, missed
deadlines and unsatisfied unrealistic expectations. States
may question the feasibility of adopting disincentives given
the present difficulties of statutory implementation and
charges' potential for overburdening municipalities and in-
dustries .
21. Charges (such as sulfur emissions charges) other than parking
surcharges could be used as a supplementary means of encour-
aging compliance with the deadlines established for state
implementation plans under section 110 of the Clean Air
Act.
22. Pollution charges might be desirable as supplements to new
source controls under the Clean Air Act so as to prevent
significant air quality deterioration while encouraging
considerable industrial development in regions with relatively
clean air. On the other hand, if the Clean Air Act permits
no significant. air quality deterioration to occur, then a
ceiling or quota for emissions would have to be imposed
on individual dischargers and there would be no need for
pollution charges.
23. The structure of hazardous emission regulation under section
112 of the Clean Air Act does not lend itself to inclusion of
supplementary disincentive devices.
24. It may be feasible to incorporate disincentives into the
regulatory scheme for restricted use of pesticides under
the Federal Insecticide, Fungicide, and Rodenticide Act.
25. Criteria used in evaluating applications for ocean dumping
permits might serve as the basis for establishing ocean
dumping disincentive charge rates. However, these criteria
could be improved and there is still much to be learned about
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the effects of ocean dumping.
26. The decibel A-scale (dB(A)) is a commonly accepted indicator
of sound levels. Many municipalities presently have ordinances
prohibiting noises in excess of specified decibel readings.
This approach might serve as the point of departure for
federal or state or local regulation of noise by imposing
disincentives on noise emissions.
RECOMMENDATION
1. The Environmental Protection Agency should consider adopting
disincentives as supplementary means of control under
the Clean Air Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Marine Protection, Research,; and
Sanctuaries Act of 1972 and the Noise Control Act of 1972
(see conclusions 6-8 and 10). States should consider
adopting disincentives as supplementary means of control
under the statutes enumerated above (with the exception of
the Marine Protection, Research and Sanctuaries Act of 1972)
where not precluded from doing so by federal preemption,
and under the Federal Water Pollution Control Act Amendments
of 1972 and the Solid Waste Disposal Act.
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SECTION II
A DEFINITION OF DISINCENTIVE
At the outset, this report should set forth its authors' definition
of a disincentive and distinguish a disincentive from several mechanisms
(e.g., fines, user charges, license fees) commonly employed by legis-
latures to encourage or regulate or sanction certain conduct.
A disincentive is a monetary charge levied by government on conduct
which is not illegal but which does impose social costs, for the
principal purpose of discouraging the conduct. The mechanism which
is employed may be called a charge, a tax, or a fee, but if its
principal purpose is to discourage the conduct it applies to (rather
than to compensate the public for the use of public resources or to
raise revenues or to punish illegal conduct) then it may properly
be characterized as a disincentive.
This report confines itself to disincentives. Similar devices are
often discussed in the literature of economics, (e.g., proposals
for effluent charges), where they are justified theoretically as
promoting internalization of social costs and proper allocation of
resources. In the next section Vermont pollution charges and Michigan
surveillance fees, which are often mentioned as "effluent charges",
are described and distinguished from disincentives, but first the
following mechanisms are distinguished. These mechanisms are not
disincentives because their purpose is not usually to discourage
conduct.
1. Fines; The most common sanction for violating a law or regulation
is payment of an amount of money determined, after a trial or hearing,
on the basis of the seriousness of the infraction. Fines may be
imposed for committing a misdemeanor or felony, i.e., for being
convicted of violating a provision of law which states it is a crime
to behave in ways it proscribes, or they may be imposed as so-called
"civil money penalties" for behavior which is not defined as criminal
but which is nevertheless deemed illegal. The distinctions between
fines and civil money penalties are not important here. What is
important is the distinction between both of them and disincentives:
both are imposed as the result of a judicial or quasi-judicial
determination that a violation of law has occurred. Examples
of fines and civil money penalties are those^ providing for fines
of $2,500-$25,000 for willful or negligent violations of several
33 U.S.C. §1319(c) and (d).
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provisions of the Federal Water Pollution Control Act Amendments
of 1972 and civil penalties of up to $10,000 for the same violations.
2. Forfeitures: Like fines or civil money penalties, forfeiture
provisions come into play for violations of laws and, also like
them, they provide an incentive not to misbehave because they pose
the risk of governmental deprivation of valuable property if the
violation is discovered. The Marine Mammal Protection Act of 1972?
for example, provides that "any vessel ... employed in any manner
in the unlawful taking of any marine mammal shall have its entire
cargo of the monetary value thereof subject to seizure and forfeiture."
Cancellation of mineral leases for mining of oil, gas, suphur,
or other minerals for failure to comply with the provisions of the
Outer Continental Shelf Lands Act^ or of leases or permits authorizing
the grazing of domestic livestock on federal lands for violating
prohibitions on taking American or golden eagles^ are analogous
to forfeiture provisions.
3. User Charges; User charges are paid by those who use or otherwise
derive a benefit from a service of facility which is provided in
whole or in part at public expense. These charges are in the nature
of compensation — fees to help defray the costs of construction and
maintenance of highways, airports, sewage treatment plants, parks,
parking spaces, etc. Such f sea, may be based on a variety of reason-
216 U.S.C. §1376.
343 U.S.C. §1334(b).
416 U.S.C. §668(c).
Examples of user charge provisions may be found in: 1) 49 U.S.C.
§1718(8): airport owners must "maintain a fee and rental structure
for the facilities and services being provided the airport users
which will make the airport as self-sustaining as possible" in order
to gain approval of an airport development project by the Secretary
of Transportation 2) 16 U.S.C. §460k-3: the Secretary of Interior
may establish charges for public use of national wildlife refuges,
game ranges, national fish hatcheries and other conservation areas
administered by the Department of the Interior; 3) 43 U.S.C. §315b,
establishes annual fees for participating in the use of grazing
districts on U.S. public lands; and (4) 33 U.S.C. §1284(b): prohibition
on EPA approval of a construction grant to a municipality unless
the municipality has adopted or will adopt a system of charges to
assure that each recipient of waste treatment services will pay its
proportional share of the costs of operation and maintenance (including
replacement) of any waste treatment services provided by the munici-
pality.
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able measures of actual use of the facilities or they may be flat
fees for the privilege of use without regard to amount or extent
of that use so long as the fees are not excessive in relation to
costs incurred. Sometimes the fee structures provide for a surcharge
on industrial discharges whose strength exceeds that of normal domestic
sewage. While these surcharges have been studied for indications
of whether they encourage change in dischargers1 behavior^ they are
As a result of this requirement, added by the FWPCA 1972 amendments,
many cities are adopting surcharge provisions as described above, and
the field is generally in flux.
""James A. Johnson, Associate Professor of Economics at McMaster
University in Ontario, summarized the results of a survey he had
conducted of municipal treatment systems in all American cities of
more than 10,000 population and in 1,000 towns of lesser population.
Of the respondents, 86% had user chargers, but the majority of these
were based solely on water use without regard to waste production.
As of 1970, approximately 400 municipalities were empowered to sur-
charge for industrial wastes exceeding specified limitseof concen-
tration of BOD and suspended solids. Of the respondent municipalities
having surcharge systems, nearly 200 collected no revenue from this
source, either because no industry exceeded the prescribed limits
or because the municipality chose not to exercise its surcharging
power. Only a few charged for all the BOD and SS deposited into
municipal sewers. In many, the limit was defined in terms of the
strength of normal sewage but in others it was set well above this
level (ranging from 250 to over 1,000 parts per million, with most
municipalities concentrated in the 300-500 range). Surcharges were
usually set so as to recover the additional cost of treating wastes
with above "normal" concentrations of pollutants. The rates varied
from 1 cent to 3 cents per pound of BOD and SS in most cities;
rates of up to 8 cents were found in a few that wished to encourage
industries to cut back their waste production. From operating
surcharge systems, annual revenues varied from less than $100 to
approximately $500,000 in large cities like Gincinatti. Surcharge
revenues were usually less than 5% and very rarely more than 10%
of a city's total sewerage revenue. From these data, it seemed
clear that many municipalities were not yet in a position to comply
with the new cost-sharing requirements.
"Dr. Johnson had gained some general impressions of the responses
of industry to these surcharges. Normally, firms reduced their
wastes significantly while the surcharge was being considered and
in the early stages of its implementation. Reductions had been
greatest in comparatively small cities where the chief "offender"
was a food or beverage industry. However, after the surcharge had
been in effect for a few months, further waste reductions occurred
slowly, if at all. The reasons appeared to be twofold: rates set
8
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primarily based on a rough approximation of the increased costs of
treating such stronger wastes rather than on a legislative design
to discourage the discharges.
4. License Fees; These fees are analogous to user charges, dis-
cussed immediately above, in that they are levied as a means of
funding public programs regulating the licensed activity and of com-
pensating for the public resources the activity uses or affects. Such
fees must generally bear a reasonable relation to the costs of adminis-
tering the program, although in some instances they may be based also
on social costs or on the potential that the activity may become a
nuisance. Many fees relate to management of natural resources, e.g.:
1) fees for hunting and fishing licenses,7 fees for permits to hunt
and fish on military reservations, to be used for protection, .conser-
vation and management of fish and wildlife; and fees for migratory
bird hunting stamps,- based on, among other things, the increased
cost of lands needed for conservation of migratory birds, paid into the
Migratory Bird Conservation Fund for printing the stamps, acquiring
refuges and wetlands;" 2) fees for transferring oil from ship to
shore payable to a special fund maintained for use in defraying
clean-up costs for waters and shorelands damaged by oil spills,^
only high enough to recover costs of treatment were too low to pro-
vide a continuing incentive, and industrial influents were not
sampled often enough. Frequent testing, however, might cost nearly
as much as the revenue obtained from the surcharge, especially for
small industries* [Approximately 78% of the cities placed the average
cost of testing a firm's effluent at $100 or less, but 6% placed it
over $500. This large discrepancy resulted from differences in
waste mix, in the number of samples taken, in the periods over which
they were taken, and in methods of costing the tests.]" Edward I.
Selig, Effluent Charges on Air and Water Pollution; A Conference
Report (1973, Environmental Law Institute), 66-68. See also J.A.
Johnson, "The Distribution of the Burden of Sewer User Charges Under
Various Charge Formulas," 22 National Tax Journal 472 (1972);
and Maystre and Geyer, "Charges for Treating Industrial Wastewater
in Municipal Plants," December 1969 Journal of the Water Pollution
Control Federation.
716 U.S.C. §670a.
816 U.S.C. §718.
9E.g., Town of Huntington, N.Y., Oil Spillage Ordinance, Chapter 60,
sections 60-30 et. seq.; Maine Rev. Stat. Ann., Title 38, section
551; Annotated Code of Maryland, Art. 96A, section 29F(b).
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3) fees for licenses to take shellfish, 4) fees to engage in whaling,1
5) fees to remove sand, gravel, marl, shell, etc.,,12 and 6) royalties
payable to the U.S. for oil, gas and sulfur produced under lease
of Outer Continental Shelf lands13 or other public lands.^
5. Bonds t Some laws provide that the recipient of a license to
conduct an activity must bind himself to the state for the payment
of money unless certain conditions are complied with thus rendering
the obligation void. Ohio, for instance, requires applicants for
licenses to conduct strip ^nlng operations to post performance
bonds for amounts which increase with the number of acres to be
mined, 5 The bonds issued range from the minimum of $5,000 to over
$5 million depending on the number of acres involved.
Such bonds, while they have the effect of encouraging satisfactory
reclamation and mining procedures which facilitate this, are, like
fines, incentives to comply with the requirements of the law rather
than disincentives designed to discourage strip mining. In effect
the fine for violation is put "up front" rather than being imposed
as a result of a—trial. (Determinations of unsatisfactory reclam-
E.g., from the Potomac River, section 4, Potomac River Compact of
1958, Pubi Law No. 87-783, 76 Stat. 797, and from Maryland waters,
Art. 66C, section 698 of the Annotated Code of Maryland.
1;L16 U.S.C. §916d.
12E.g., Article 4053, Vernon's Ann. P.C., State of Texas; Md.,
Art. 66C, section 302.
1343 U.S.C. §133.
1430 U.S.C. §191.
Section 1513.08(A), Ohio Rev. Code. The bond form reads:
X, as principal and Y (insurance company) as surety are held and
firmly bound unto the State of Ohio in the penal sum of $
for the payment of which sum, well and truly to be made, we
hereby jointly and severally bind ourselves, our heirs, adminis-
trators, executors, successors and assigns. The condition of
the above obligation is such, that, whereas the above named
applicant estimates that acres of land will be affected
by strip mining during the one year period following the
beginning of the license issued pursuant to application number
, now, if the said principal shall satisfactorily reclaim,
as provided in Section 1513.16 of the Revised Code of Ohio,
all lands affected by strip mining by said principal within
the State of Ohio within the period of one year following the
date of beginning of the license issued pursuant to the
aforesaid application, then this obligation shall be void;
otherwise it shall remain in full force and effect.
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ation in Ohio may be appealed to a Reclamation Board of Review and
a trial-like de novo administrative proceeding ensues.) A licensee
found not in compliance with the provisions of §1513.16 forfeits
a "penal sum" just as does one sentenced to pay a criminal fine.
In addition to such reclamation bonds, Maryland's strip mining law
calls for a $400 per acre bond to be posted and liability under the
bond endures for the life of the mining operation and five years
thereafter.16 Maryland also has a bond requirement for shippers
of oil: they must post a bond in an amount dependent on the tonnage
of the vessel, which bond is forfeited if there is a spill."
One of the provisions of Title 18 governing crime and criminal pro-
cedure authorizes the Secretary of the Treasury to "require the furnishing
of an appropriate bond when desirable to insure compliance with"
provisions prohibiting importation, shipment or possession of
various kinds of wild animals, birds and fish prescribed by Secre-
tary of Interior regulations as injurious to humans, agriculture,
forestry, horticulture, or wildlife.1**
Act 136 of the State of Michigan's Public Acts of 1969 provides that
before engaging in the business of removing liquid industrial wastes
from the premises of another, a person must obtain a license and
submit with the application for the license a surety bond of $15,000
for residents and $30,000 for non-residents. The water resources
commission is the obligee,
and the bond shall be for the benefit and purpose to in-
demnify the state for the elimination of hazardous or nui-
sance conditions and for the abatement of any pollution of
waters which results from the improper disposal of industrial
waste by the licensee.
6. Loans; Government loans to persons, businesses, or governmental
agencies to encourage or facilitate action the government wishes to
subsidize are the converse of disincentives — payments exacted as
a means of discouraging unwanted conduct. For example, the Secretary
of Agriculture is authorized to make loans or advancements to local
organizations or State and local agencies to finance the local share
of costs of carrying out works of improvement for flood prevention,
conservation, development, utilization and disposal of water; or
conservation and proper utilization of land in small water sheds.
Ann. Code of Maryland, Art. 66C, sections 663, 667.
17Ann. Code of Maryland, Art. 96A, §29AB(a).
1818 U.S.C. §42(a)(5).
1916 U.S.C. 1006a.
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The Secretary of Commerce may make loans to States or organizations
to assist in financing the purchase or development of land and im-
provements for public works, public service and development facility
usage and to aid in financing any project within a redevelopment
area for the purchase or development of land and facilities (including
machinery and equipment) for industrial or commercial use under the
Public Works and Economic Development Act of 1965.20 The Small
Business Administration makes loans to industry for pollution
abatement investments. •
7. Payments; Like loans, payments are the converse of disincentives.
The Water Bank Act authorizes the Secretary of Agriculture to make
annual payments to landowners and operators in return for their agree-
ment to undertake obligations for the conservation of water on speci-
fied land in important migratory water fowl nesting and breeding
areas. The payments are to be fair and reasonable in consideration
of the obligations undertaken by the owner.22
8. Grants; Grants from one level of government to another for
construction of public facilities or operation and maintenance of
programs or facilities are prevalent means for encouraging these
activities by lightening the local financial burden. They are a
form of subsidy to induce behavior rather than a levy to discourage
it. Examples are: 1) federal and state grants to municipalities
for the construction of wastewater treatment facilities,2 . 2)
federal grants to states or their subdivisions for acquisition or
development of land and improvements for public works;2;*, and
3) federal funding of various kinds of highway systems.25 Grants
are also made to fund demonstrations, training and planning in
certain fields.26
9. Taxes: Taxes have as their principal purpose the raising of
general revenue. They may incidentally more or less discourage the
business or behavior subject to the tax but they usually are not
2042 U.S.C. §§3141, 3142.
2116 U.S.C. §1304.
2216 U.S.C. §1304.
23
Authorized, for example, by 33 U.S.C. § 128,1 (g), and analogous
provisions of state law.
2442 U.S.C. §3131.
2523 U.S.C. §103.
26E.g., solid waste management under 42 U.S.C. §325a, b and d of
the Solid Waste Disposal Act.
12
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designed to do so as disincentives are. For example, in 1969
Pittsburgh placed a 20 per cent tax on the gross receipts of all
transactions involving the parking of automobiles at non-residential
places in return for a fee.27 As of April 1, 1973, the tax took
the form of a 20 per cent tax on the fees paid for parking and is
collected by the operator from the patron. Although an effect of
the higher parking rates resulting from this tax may be that more
persons will use public rather than private transportation (and thus
reduce the demand for parking services) the ordinance provides that
its purpose is "to provide for the general revenue by imposing a
tax." The reasons for taxing parking garages specially were recited
in the ordinance:
...non-residential parking places for motor vehicles, by
reason of the frequency rate of their use, the changing in-
tensity of their use at various hours of the day, their lo-
cation, their relationship to traffic congestion and other
characteristics, present problems requiring municipal services
and affect the public interest, differently from parking
places accessory to the use and occupancy of residences.28
As the U.S. Supreme Court has recently said, by enacting the tax
Pittsburgh "insisted that those providing and utilizing non-resi-
dential parking facilities should pay more taxes to compensate the
city for the problems incident to off street parking. "^
Occasionally the intent of a tax measure is as much to guide behavior
as it is to raise revenue. Examples from New York and Vermont are
described in section V. In general, however, taxes are to be
distinguished from disincentives as having primarily revenue-
generating functions.
10. Tax Expenditures; There are several provisions of the Internal
Revenue Code which are tantamount to government loans or disburse-
ments. 1) Persons are authorized to claim deductions for amortization
O/%
over a five year period of water and air pollution control facilities;
2) gross income from mines, oil and gas wells, other natural de-
posits and timber is subject to a deduction of from five to twenty-
two per cent (as depletion allowances) for purposes of figuring
taxable income,'•*• 3) expenses for exploring for minerals may be
27City of Pittsburgh, Ordinance No. 704.
28w.
of Pittsburgh v. Alco Parking Corporation, 42 U.S. Law Week
4874 at 4877 (June 10, 1974).
3026 U.S.C. §169.
3126 U.S.C. §§611t 613.
13
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deducted for purposes of figuring taxable income. *• These tax
provisions are defended, if not intended, as inducing action in
the national interest in response to the monetary benefits conferred.
They are in effect subsidies like grants or loans, discussed above.
11. Contingency Fees; These fees were proposed by the Atomic
Energy Commission staff early in 1972 in connection with proposed
alternative amendments extending the Price-Anderson Act, * which
limits liability for nuclear powerplant accidents. Under present
law, there is an upper limit of $560 million on damage claims,
with the Federal Government indemnifying all losses between the
operator's maximum insurance benefits (usually about $125 million)
and this Statutory ceiling. Had contingency fees been adopted,
they would have been assessed on all nuclear powerplant and reprocessing
plant licenses granted on or after August 1, 1977. No money would
actually pass to the Federal Treasury until a reimbursible accident,
triggering Federal outlays for damage claims, occurred. The Senate,
however, has just adopted a compromise five-year Price-Anderson
extension, which makes no provision for contingency fees. In their
stead, the bill sanctions the 'retroactive premium* concept, whereby
utilities would be covered by a double layer of insurance. The
basic layer consists of about $125 million per utility, purchased
as now with frequent premiums. The secondary layer would cover
all reimbursements which a utility had to pay to the Federal Govern-
ment in the event of a major nuclear accident, and premiums for that
coverage would be paid retroactively as the need arose. The $560
million ceiling is retained. Fees (or retroactive premiums) such
as those proposed, which spread the burden of a nuclear accident
across the entire industry, are not a disincentive because they would
not discourage an undesired course of conduct, or compel safety
measures otherwise not likely to be taken. In fact, it can be
argued that the risk-sharing and limitation of liability embodied
in contingency fees undercut whatever deterrent effect arises from
a private company's exposure to the possibility of immense personal
injury recoveries. Even less would fees operate as a disincentive,
if, as hinted by the Agency, these paper liabilities were treated
as tax deductible or allowed as a portion of a utility's ratebase.
3226 U.S.C. §615.
33
Surrey, "Tax Incentives as a Device for Implementing Government
Policy: A Comparison with Direct Government Expenditures,"
83 Harv. L. Rev., 705, 711 (1970).
3442 U.S.C. 2210 et. seq.
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SECTION III
VERMONT POLLUTION CHARGES AND MICHIGAN SURVEILLANCE FEES:
MYTHICAL DISINCENTIVES
INTRODUCTION
To illustrate the distinctions between disincentives and other
mechanisms set forth in the preceding section and to dispel the pop-
ular notion that disincentives are actually imposed in Vermont and
Michigan, this section describes the pollution charges in Vermont
and the surveillance fees in Michigan.
POLLUTION CHARGES IN VERMONT
In 1970 Vermont enacted a law which authorized and directed the
administrative adoption and assessment of "pollution charges,"
commencing at a later date. They were intended to establish some
semblance of equity between those dischargers who incurred the
costs of adequately treating their wastes prior to discharge and
those dischargers who previously had the economic advantage of being
allowed the free use of the public waters as a place for the dis-
posal of untreated or inadequately treated wastes. The charges
were also intended to encourage polluters to adopt interim abatement
measures during the period in which they were legally allowed to
pollute. The pollution charges envisioned by the 1970 Act were
but one integral part of a substantial revision of Vermont's water
pollution statutes designed to introduce a comprehensive system of
water pollution control which would integrate with and implement
the Federal Water Pollution Control Act.l
The law imposed a requirement that all dischargers of wastes directly
or indirectly into the waters of the state obtain a permit from the
Department of Water Resources by July 1, 1971. The law attempted
to discriminate between "polluters" and "non-polluters" by creating
two types of permits. The first permit was denominated a "discharge
permit" and could be issued by the Department to those dischargers
whose wastes did not reduce the quality of the receiving waters
below the standard required by the applicable classification and
water quality criteria. The second permit was denominated a "pollution
permit." It could be issued by the Department to those dischargers
who did not quality for a "discharge permit" but who were taking
No. 252 of the Adjourned Session of the 1969 Vermont General
Assembly, approved on April 4, 1970.
15
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the necessary steps in order to be able to qualify for a discharge
permit, i.e. a polluter who needed time to install treatment measures.
The Department had to make an affirmative finding on seven criteria
before it could issue a "pollution permit." Furthermore, any
"pollution permit" issued was for a fixed term, non-renewable and had
to contain several terms and conditions among which was the condition
requiring payment of periodic pollution charges in accordance with
pollution charge rates established by the water resources board
pursuant to subsection (e) of section 912a. Subsection (e) was the
key provision which authorized and directed the board to establish
the pollution charge rates and, because of its significance in relation
to the original concept of pollution charges under this act, it is
set forth in its entirety:
(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: It is expressly recognized that the
authorized discharge of certain wastes which will reduce the
quality of receiving waters below the established classifi-
cations 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 the 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 navi-
gation 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 sec-
tion shall be used solely for purposes of water quality manage-
ment 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 of 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 approxi-
16
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mate in economic terns 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 parameters such as biochemical
oxygen demand and suspended solids and may express the unit
charge in terms of such standards of measurement.
It should be emphasized that section 912a(e)(2) only authorizes unit
charges, i.e., "the price to be paid per unit of waste discharged
into waters of the state." As passed by the House of Representatives
the bill which became Act No. 252 included the following language
in section 912a(e)(2): "The Board may establish a different method
for computing the degrading effects of the discharge of waste from
municipal facilities based upon the amortized capital, operational
and maintenance expense of the pollution abatement facility or
alternate waste disposal system contemplated in the application for
the permit."2 This language was deleted from the bill by the Senate
upon the recommendation of Senator Arthur Jones, chairman of the
Senate Natural Resources Committee.3 This recommendation was based
on the Committee's consideration of a conclusion reached by Silas
Robert Lyman in an LL.M. thesis that "if the effluent charge is
computed upon the basis of the dischargers' costs of treatment and
reduction, rather than cost of downstream damages, the charge will
probably be held unconstitutional because of the obvious and un-
reasonable discrimination implicit in the method of its assessment."
2
Journal of the Vermont House of Representatives, March 26, 1970,
pp. 496-498; Calendar of the Vermont Senate, March 27, 1970, pp.
488-490.
Journal of the Vermont Senate, March 3 , 1970, 441-442.
Silas Robert Lyman, "The Constitutionality of Effluent Charges,"
Technical Report OWRR A-022-Wis., May 1969, the University of Wis-
consin Water Resources Center, p. 198. "This would be true," Lyman
continued:
whether or not this charge was considered a regulatory measure,
or a tax measure, because the classifications and rates
created thereby would be unreasonable, and because all of the
persons within a class, waste dischargers similarly situated
on a water course, discharging similar qualities and quantities
of waste, are not treated equally. Under these circumstances,
this method of computing the effluent charge would not afford
equal protection of the law or due process, and would therefore
be unconstitutional.
17
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Lyman's conclusion has since been challenged by Professor Peter N.
Davis.5
Vermont's Department of Water Resources obtained a demonstration
grant from the Federal Water Quality Administration and contracted
with Arthur D. Little, Inc. to assist it in preparing the regulations
required by section 912a(e). The contractor's interim report described
alternative methods of implementing charges and evaluated them on the
Peter N. Davis, "Institutional Design for Water Quality Management:
A Case Study of the Wisconsin River," vol. VII, section I, Five Legal
Studies on Water Quality Management in Wisconsin, 1970, Technical
Research Project Completion Report, Title II-C-1228, p. 179:
The most important conclusion Lyman reached was that an
effluent charge system based on costs of waste treatment would
be unconstitutional. He feels such a basis for calculating
effluent charges would involve "obvious and unreasonable
discrimination implicit in the method of its assessment...
because the classifications and rates created thereby would
be unreasonable, and because all of the persons within a
class, waste dischargers similarly situated on a water course,
discharging similar quality and quantities of waste are not
treated equally."
The basis for that assertion is his interpretation of an
effluent charge system based on treatment costs. He presumes
that waste dischargers would be assessed charges on units of
raw waste produced, although the amount those same dischargers
introduced into the watercourse per unit volume of raw waste
produced may vary greatly as a result of treatment.
Of course, if an effluent charge system were set up that
way, his conclusion would probably be correct. But all effluent
charge systems based on treatment costs proposed so far are
grounded on units of waste loadings introduced into the water-
course, or on units of raw waste produced coupled with reim-
bursement or credit for treatment costs. In either of those
situations, there would be no unequal treatment of dischar-
gers in equivalent situations.
Lyman's other conclusion was that an effluent charge
system based on downstream damages would be constitutional.
This conclusion seems to be correct.
18
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basis of several criteria. The contractor's personnel recommended
annualized cost of treatment as the easiest and most efficient method
to follow and the Department, which had advocated this method before
the legislature, readily concurred. In making its recommendation,
the contractor concluded both that this method would be constitutional^
and would be in accordance with the requirements of the Vermont law.
The process of drafting these regulations was initiated in November
1970 by a committee composed of personnel from Arthur D. Little,
Inc. and the Department of Water Resources and a representative of
the Attorney General's office. This committee's first draft of
regulations was sent to the Water Resources Board on November 20,
1970, along with a memorandum stating that an amendment to Act No.
252 would be required if the annualized cost of treatment method
were to be employed." It had been hoped that a set of proposed
Part IV, "Interim Report on Economic Incentives in Water-Quality
Management: Alternative Effluent Charge Methods" to the Department
of Water Resources, Agency of Environmental Conservation, State of
Vermont, October 15, 1970, by Arthur D. Little, Inc.
7j[d., pp. 104-114.
0
"Final Report — Phase I, Economic Incentives in Water Quality
Management: The Application of Effluent Charges in a Permit-Charge
System" to the Department of Water Resources, Agency of Environmental
Conservation, State of Vermont, December 1970, by Arthur D. Little,
Inc., pp. 53-56.
9
This draft is summarized in Development of a State Effluent Charge
System, by [the] 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, at page 105
as follows:
The initial (November) draft rules and regulation regarding
the computation of pollution charges followed closely the recommen-
dations of the consultants. Charges were based on the annualized
cost of treatment to the discharger (i.e., federal and state
subsidies were excluded to derive 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-tern reductions in waste
loadings could be provided by allowing adjustment in the charge
19
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rules could be agreed upon quickly in order to enable prompt
publication of proposed rules and a scheduling of the hearing
required by the provisions of Vermont's administrative procedure act
governing the adoption of rules. But, "as it turned out,
greater time was required than anticipated to coordinate the various
views of the Department and the Board. In addition, a legislatively
prescribed administrative reorganization occurred in early 1971
which created a new Agency for [sic] Environmental Conservation and
transferred the Department of Water Resources along with several
others to the new Agency. These changes further complicated the
task of preparing a set of proposed pules and regulations suitable
for publication and public hearing."
Over the course of the next three months more than two dozen drafts
of proposed rules were prepared by various members of the Department,
the Agency and the Board. Some of the drafts employed the annualized
cost of treatment method, some the unit charge method, some attempted
to combine the two approaches, and the later drafts incorporated
provisions for credits, rebates, and deferred obligations. Finally,
on March 31, 1971, the Board published a set of proposed rules and
scheduled a hearing on them for April 21, 1971.^ Shortly prior to
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 dischar-
ger.
See the March 31, 1971 and April 7, 1971 editions of the Brattleboro
Daily Reformer , the Rutland Daily Herald, and the Burlington Free Press .
These proposed rules are summarized as follows at pp. 105-107 of
Development of a State Effluent Charge System, supra, note 9:
"Subsequent [to the November draft, the] deliberations of the
Agency and the Board concerning the charge schedule centered
on the desirability of charging temporary pollution 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 com-
plying 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 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
20
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the hearing date the General Assembly passed a bill which included
a section postponing the date on which charges were to begin to
BOD discharged plus $0.04-3/4 per pound of suspended solids
discharged plus $0.02-1/2 per 1000 gallons of liquids requiring
disinfection 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 Board1s 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 relevant 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
dischargers, provision was made for reduced payment in the
amount of 15% of annualized capital cost plus delivery of a
demand note for the 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 Depart-
ment 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.
21
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accrue from July 1, 1971, to July 1, 1972. Although this relieved
some of the pressure, most of the comments at the hearing on the
proposed rules were negative. The day after the hearing the Board
requested an Attorney General1 s opinion on whether the proposed rules
conformed to the requirements of Act No. 252. On May 10, 1971,
the Attorney General's office issued an opinion that they did not
conform because 1) the rules employed the annualized cost of treatment
method for which authorization had been deleted from the bill (and
which had not been authorized by obtaining an amendment as suggested
in November 1970) and 2) the rules provided for credits and rebates
which were likewise unauthorized by section
As a result of this Attorney General's opinion the Board in June 1971
requested Commissioner of Water Resources Martin L. Johnson and
Assistant Attorney General John D. Hans en to prepare a draft of
pollution charge rules which would conform to and implement section
912a(e) . This resulted in a draft which was presented to the Board
on December 24, 1971. This draft employed a graduated unit charge
approach adjusted to reflect impact upon receiving waters. It is
b) Should a temporary pollution permit holder fail to
qualify and receive a discharge permit in accord with the
schedule contained 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 pollu-
tion 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.
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 pre-
sent 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 five per cent of the annualized
capital costs plus one-half of 'the operating costs of providing
the required abatement measures."
12Section 1, Act No. 93 of the 1971 Session of the Vermont General
Assembly, approved April 22, 1971.
130pinion No. 691, May 10, 1971, Office of the Attorney General,
prepared by Assistant Attorney General John D. Hansen.
22
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included in full as Appendix A to this report since it provides
a concise statement of the rationale of section 912a(e) as well as
a means for implementing it in accordance with the original intent.
Meanwhile Governor Davis had decided to suggest to the General
Assembly that it amend section 912a(e) to provide that no pollution
charges would he paid so long as a municipal temporary pollution
permit holder maintained its schedule. "Unless this is done the
legislature will feel the law [Act No. 252] is unworkable," Governor
Davis said at a January 11, 1972 press conference. Governor Davis
was concerned that subsection (e) would require municipalities without
sewage treatment plants to pay pollution charges for an extended
period of time for reasons which were essentially, i.e. economically,
beyond their control. Since they could not economically build sewage
treatment plants until such time as federal and state grant funds
were available to them, the pollution charges assumed the appearance
of a penalty rather than an incentive to adopt interim abatement
measures. The magnitude of the charges for certain municipalities
under the Johnson-Hansen draft helped to reinforce his argument.
The Governor did not suggest industrial dischargers also be "exempted"
because their progress in achieving abatement did not depend on the
availability of government funding.14
14
The Governor's proposed amendment would have added a subsection
(D) 1o 912a(e)(3) and a subsection (f) to 912a:
(D) A city, town, village, school district or fire
district holding a temporary pollution permit which has been
issued upon the conditions that a pollution abatement facility
or alternate waste disposal system will be constructed,
ins tailed and placed into operation according to plans and
schedules approved by the department shall not be required
to pay pollution charges accruing for its discharge of domestic
wastes if it is in compliance with the approved plans and
schedules. A city, town, village, school district or fire
district which fails *:o comply with the plans and schedules
approved by the department in connection with its temporary
pollution permit shall thereupon be assessed and required
to pay all pollution charges accrued for its discharge of
domestic wastes since July 1, 1972, and shall thereafter be
assessed and required to pay all pollution charges that accrue
as provided in the regulations of the board establishing such
charges.
(f) The department is authorized to amend a temporary
pollution permit to account for any changes in the circum-
stances of the permittee after the time of issuance.
23
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Although the Governor's proposal was initially rejected by the
Senate, his initiative led to the enactment of a law which made
significant amendments in the regulatory system, including the pollution
charge concept.*^ The changes in the pollution charge provision
made by the 1972 amendments may be seen from the following text. (Dele-
At the Governor's January 11, 1972 press conference, Board Chairman
Denning Miller stated that the Board would hold an informtional
meeting on the Johnson-Hansen draft pollution charge rules later
in the month and then, unless the legislature responded favorably
to the Governor's suggested amendment, the rules would be formally
proposed by publication in accordance with the administrative pro-
cedure act.
The Governor's suggestion, which was taken up by the Senate Natural
Resources Committee, prompted considerable public comment. In res-
ponse, the Committee requested interested state agencies and other
persons to submit written briefs by February 8, 1972, on the pro-
posed amendment. The Agency of Development and Community Affairs
suggested that all holders of temporary pollution permits — including
Industries — be exempted from paying "penalties" unless not in com-
pliance with abatement schedules. The Attorney General's office
opposed the Governor's proposed amendment and offered as alternative
suggestions that the General Assembly (1) pass a resolution telling
the Water Resources Board to establish pollution charges as it was
directed to do in 1970; or (2) enact additional guidelines for the
Board to follow in establishing charge rates (e.g., by setting maxi-
mum and minimum rates); or (3) modify the pollution charge concept
by attempting to devise a statewide equalized sewerage charge per
person served by a municipal system. The Agency of Environmental
Conservation proposed amendments which elaborated on those suggested
by the Governor and the Agency of Development and Community Affairs
by providing for deferments and rebates of charges.
On March l, 1972, the Senate met as a committee of the whole to
hear presentations of those who had submitted briefs. On March 16,
1971, it passed a bill (S. 173) postponing charges until 1973,
establishing maximum and minimum limitations of $30.00 and $3.75
on the amount of annual charges per polluter, allowing the amendment
of temporary pollution permits and appointing four legislative
committees to "conduct a review of the practicability and effects
of [the water pollution control law] as well as alternative means
of financing sewage treatment facilities for individuals, municipalities
and commercial enterprises... [and] report their findings together with
their recommendations for appropriate legislation to the 1973
General Assembly."
Since the Senate's bill did not accomplish what Governor Davis
24
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ted language is bracketed, added language is underlined).
(e) Pollution charges: [By January 1, 1971] Before July 1.
1972, the board shall adopt rules and regulations fixing and
establishing the 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
and shall adopt such other and additional rules and regulations
as may be necessary to implement the provisions of Chapter 33
of Title 10, The board is authorized to revise such charge
rates from time to time therafter.
(1) Purpose: It is expressly recognized that the author-
ized 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] an 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, thereby raising the quality of the waters in
the state] comply with the requirements, conditions and
restrictions of their permits.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.
and members of his administration wanted, they prepared a proposed
substitute for the consideration of the House Committee on Natural
Resources. The Committee modified the proposed substitute only
slightly, combined it with some provisions of the Senate's bill, and
recommended that the House amend the Senate's bill by replacing it
with the revised substitute. The House passed the revised substitute
with only a few minor amendments from the floor. Predictably, the
Senate refused to concur in the House amendment and requested a
committee of conference. The conference committee's report, which
was accepted by both the House and the Senate, amended section
912a(e) as indicated in the text immediately following.
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(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 of classes
of wastes to account for the 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 board may employ
any scientific or technical criteria or parameters such as
biochemical oxygen demand and suspended solids and may ex-
press the unit charge in terms of such standards of measurement.
In establishing all pollution charges, the board shall be
guided by the limitation that the annual charge per person
equivalent may not be greater than $30.00 nor less than $3.75.
(3) (A) When effective: [Notwithstanding any other
provision or procedure set forth in this subchapter or contained
in any rules or regulations duly adopted by the board, a]
A person qualifying for and obtaining a temporary pollution
permit shall not be assessed a pollution charge until the
year commencing July 1, 1972_^ [provided the department
shall find that the plans and reasonable schedules for
construction, installation or operation of an approved
pollution abatement facility or alternate waste disposal
system have been established and that the necessary financing,
including approvals by state or federal agencies of financing
participation, if any, may be reasonably anticipated before
July 1, 1972.]
(B) Commencing July 1, 1972, said pollution charges
shall accrue as provided in the regulations of the board
establishing said charges. The charges shall be payable 45
days after the end of each fiscal year ending on June 30.
£(C) A person holding a temporary pollution permit under
the provisions of this subsection, who abandons or rescinds
or otherwise fails or refuses to carry out his plans upon
which the temporary permit has been granted, shall thereupon
be assessed the charges which would otherwise have been
applicable for the year commencing July 1, 1971 which charges
together with the charges accrued from July 1, 1972 shall be
immediately due and payable.]^
amendments were made by section 5 of Act No, 255 of the 1971
Adjourned Session of the Vermont General Assembly.
26
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By amending section 912a(d)(4) the law also allowed temporary
pollution permits to be extended and amended, "provided ... that if
the permit is amended so as to provide for a change in the manner,
nature, volume or frequency of the discharge permitted, the depart-
ment shall require as a condition for such amendment the payment of
periodic pollution charges in accordance with pollution charge
rates established by the board pursuant to subsection (e) of this
section." 17
In addition, the law added section 912a(g) supplementing the guidelines
for the Board's pollution charge rules:
(g) Notwithstanding any of the provisions of Chapter
33 of Title 10, the rules adopted by the Board shall
expressly provide that in the case of municipalities and persons
connected to a municipal system operating under a temporary
pollution permit, the charges established by the board shall
not begin to accrue until three months after the department
notifies the person, that state and federal grant funds
have been allotted. The board's rules shall further provide
that the charges accrued during each fiscal year in which
a holder complies strictly with each of the requirements,
conditions and restrictions contained in his permit shall be
deferred. The board's rules shall further provide that deferred
charges shall be excused and charges paid for non-compliance
with the terms of a permit shall be refunded if the holder
achieves compliance with the terms of his permit by its
expiration date. The decision of the department on whether
the holder achieved compliance with the terms of his permit
may be appealed as provided for in section 9l4a of this sub-
chapter. The board is authorized to revise the rules establishing
such charge rates and procedures from time to time thereafter.18
In April 1973, Governor Thomas P. Salmon signed into law Act No. 103
of the 1973 Session of the General Assembly. Its purpose was to
amend Vermont's water pollution control laws to enable the state to
administer the National Pollutant Discharge Elimination System
permit program in accordance with section 402(b) of Public Law No.
92-500. Pollution charges were specifically retained by this law.
The only change made in section 912a(e), since recodified as section
1265(e), was to delete the power of the Water Resources Board to
"adopt such other and additional rules and regulations as may be
necessary to implement the provisions of Chapter 33 of Title 10."
Section 912a(g) was similarly amended.
Section 4, Act. No. 255 of the 1971 Adjourned Session.
1 8
Section 11, Act No. 255 of the 1971 Adjourned Session.
27
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These amendments changed the nature of pollution charges in Vermont
from an incentive to take interim treatment measures to a fine for
violating the terms and conditions of a temporary pollution permit.
They also provide for deferral of charges paid if the discharger
complies with his permit and refund of charges paid for any year he
is assessed them if he achieves compliance by its expiration date.
At the expiration date all deferred charges are to be excused.
The terms and dates of temporary pollution permits may also be amen-
ded. The combined effect of these amendments is increased flexi-
bility of permits and decreased likelihood that a permit holder will
ultimately have to pay any pollution charges.
The Board adopted rules in accordance with the legislature's revised
guidelines on June 29, 1972. These rules provide for uniform charge
rates per increment of BOD, suspended solids, infected wastes and
BTUfs without regard to impact on receiving waters. The Board's
rules are included as appendix C to this report.
As of December 1973, no charges had actually been imposed. Commissioner
of Water Resources Gordon Pyper wrote on December 14, 1973:
Essentially all amended permits not only having been issued
for the same volume of waste have in all instances to my
recollection contained the same terminal date, therefore
pollution charges have not been assessed.
It is difficult to say whether the pollution charges provide
more Incentive to permit holders to comply with the terms of
their permits than the normal legal sanctions as no pollution
charges have been assessed to date. It is however our
general opinion that the magnitude of the pollution charges
particularly in the case of small industry or individuals
is not significant enough to afford any. major impact.1°
This last comment refers to the fact that the Board's charge rules
would assess a per person equivalent annual fee of $4.76. Commented
then-Commissioner of Water Resources Martin L. Johnson when these
rules were proposed: "It's like spending two years building a man-
made volcano and then gathering people around it, and all it does is
19
Letter to William A. Irwin, Environmental Law Institute, December
14, 1973.
28
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burp."20
SURVEILLANCE FEES IN MICHIGAN
After mercury was unexpectedly discovered in the effluents of several
Michigan enterprises in 1970, causing widespread concern and issuance
of executive orders which significantly affected the state's commer-
cial fishing industry, Governor William G. Milliken determined there
should be a law requiring enterprises to disclose the hazardous or
toxic constituents uaed in their manufacturing processes which might
be discharged and requiring payment of surveillance fees to fund
increased monitoring of discharges by state personnel.21
House Bill 4021, sponsored by Rep. Ray Smit of Ann Arbor and tagged
as the "truth in pollution" bill, became Public Act No. 200 when
signed by Governor Milliken on August 25, 1970. Its stated purpose
was "to require the registration of manufacturing products, production
materials, and waste products where certain wastes are discharged;
[and] to provide for surveillance fees upon discharges to the waters
of the state in order to provide for investigation, monitoring and
surveillance necessary to prevent and abate water pollution."22
The law added subsections 13 and 6b to section 323 of the Michigan
Compiled Laws. These subsections provided:
§23.13(a) In order to provide for increased surveillance,
investigation, monitoring and other activities necessary to
provide greater protection of the quality of waters of this
state, an annual surveillance fee is payable by a person,
20
Rutland Daily Herald. June 3, 1972, p.l, col.l. For law review
commentaries on Vermont's pollution charges, see Nicholas P. Moros,
"Effluent Fees in Water Quality Management: The Vermont Water Pollu-
tion Control Act," 1 Environmental Affairs. 631-53 (1971); Note,
"Water Pollution Control in Vermont: A System of Effluent Charges,"
4 Journal of Law Reform. 135-47 (1970). Vermont's Act No. 252
was chosen by the Council on State Goverments as a model water
pollution control statute in 1970. See volume XXX, Suggested State
Legislation. 215.
21
Governor Milliken said the aim of the surveillance fee is to "more
than double the capacity of the Air Pollution Control Commission
and increases the surveillance capability of the Water Resources
Commission by 50 per cent." Ann Arbor News, Monday, May 4, 1970,
p. 5.
22
Public Act No. 200, 1970 Regular Session, section 1, amending the
title of Michigan's water pollution control law, codified as
M.C.L.A. prec. section 323.5.1.
29
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company, corporation, but not a municipality, discharging
water borne waste directly or indirectly into any waters of
the state from any manufacturing facility; or from any other
commercial establishment which may generate a discharge in-
consistent with the protection of waters of the state. The
fees shall be for the cost of surveillance of industrial and
commercial discharges and receiving waters. The cost of necessary
surveillance of municipal discharges shall not be financed
from revenues to be derived but may be provided otherwise
by law. In any year, the total surveillance fees assessed
on discharges shall not exceed the total amount appropriated
to the commission and other appropriate state agencies for
the surveillance, monitoring and related activities necessary
to adequately assess the impact of commercial and industrial
waste--water discharges on waters of the state.
(b) On or before February 1 of each year the commission
shall inform each such discharger and the state treasurer of
the annual surveillance fee due, from each plant location or
major manufacturing component and commercial enterprise as
provided by rules.
(c) On or before March 1 of each year a discharger
shall pay to the state treasurer the amount of surveillance
fee due who shall deposit it in the general fund of the state.
The treasurer shall report the total annual amount collected
to the governor and the legislature on or before April 15 of
each year.
(d) The annual surveillance fee shall be based on an
administrative fee of $50.00 and an additional fee set by the
commission. The additional fee shall be determined on a
graduated basis using the volume of discharge to determine a
base fee which shall be multiplied by a factor dependent on
the strength of organic and inorganic waste constituents to
establish the total annual surveillance fee. The maximum
annual fee assessed upon any discharge which is in conformance
with commission effluent restrictions shall not exceed
$9,000.00 per manufacturing location. Discharges into a
municipal sewerage system shall be assessed only the $50.00
administrative fee unless such discharge after municipal
treatment is or may become injurious to the waters of the state
as set forth in section 6 in which event the assessment will
be based upon the same considerations as if the discharge
after treatment were being discharged by the manufacturing
facility or commercial establishment directly into the waters
of the state. The commission shall.adopt such rules as are
necessary to implement this section in accordance with Act
No. 306 of the Public Acts of 1969, being sections 24.201
to 24.313 of the Compiled Laws of 1948.
30
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323.6b Every person, doing business within this state
discharging waste water to the waters of the state or to any
sewer system, which contains wastes in addition to sanitary
sewage shall file annually reports on forms provided by the
commission setting forth the nature of the enterprise, a list
of materials used in and incidental to its manufacturing pro-
cesses and including by-products and waste products, which
appear on a register of critical materials as compiled by
the commission, and the estimated annual total number of
gallons of waste water, including but not limited to process
and cooling water to be discharged to the waters of the state
or to any sewer system. The information shall be used by
the commission only for purposes of water pollution control.
The commission shall provide proper and adequate facilities
and procedures to safeguard the confidentiality of manufacturing
proprietary processes except that confidentiality shall not
extend to waste products discharged to the waters of the state.
Operations of a business or industry which violate this sec-
tion may be enjoined on petition of the water resources
commission to a court of proper jurisdiction. The committee
shall adopt rules as it deems necessary to effectuate the
administration of this section, including where necessary
to meet special circumstances, reporting more frequently
than annually, in accordance with Act No. 306 of the Public
Act of 1969.
As the law states, the purpose of Michigan's surveillance fee is to
fund increased monitoring. It is thus tantamount to a user charge.
Municipalities were freed from the requirement to pay fees because
the legislature felt it made no sense for the.Water Resources
Commission, which also administers the municipal sewage treatment
plant construction grant program, to collect fees from municipalities
on the one hand and give them grants on the other.
Section 323.13(d) also provided that fees be graduated on the basis
of volume and strength of the discharge. It is this provision
which has led some to characterize surveillance fees as disincen-
tives. Because of the $9,000 ceiling on fees per location, however,
the fees do not have a disincentive effect. The graduation of the
fees is analogous to the surcharges sometimes incorporated in sewer
user charge ordinances, discussed in section II.
The Water Resources Commission's rules implementing section 323.13(d)
have changed as a result of a 1972 amendment to that section.
Originally in addition to the $50 administrative fee there was to be
a volume base fee multiplied by a factor "dependent on the strength
31
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91
of organic and inorganic waste constituents.1 Public Act No. 293
of 1972 provides that the additional fee:
23
The language was Implemented by Rules 47 and 48 of the Water
Resources Commission which provided:
R 323.47: Volume base fees.
Rule 47. The volume base fee shall be on a graduated basis as
follows:
Average Wastewater Discharge Volume
Based on Day When Discharge Occurs
(Million Gallons Per Day) Volume Base Pee
less than .005 $ 25.00
.005 but less than .10 50.00
.10 but less than .50 100.00
.50 but less than 1.0 200.00
1.0 but less than 2.5 350.00
2.5 but less than 5.0 500.00
5.0 but less than 10.0 750.00
10.0 but less than 25.0 1000.00
25.0 but less than 100.0 1250.00
100.0 and over 1500.00
R 323.48: Strength factor.
Rule 48. (1) Determination of the strength factor used in
calculation of a surveillance fee shall be based upon the
following subfactors:
(a) The strength variability of waste effluent flow.
(b) The strength of the waste effluent flow related to flow
conditions in the receiving waters.
(c) The strength of the waste effluent as related to the
critical nature of the receiving water as indicated by its
protected designated uses for public water supplies, cold water
intolerant fish, total body contact, warm water intolerant fish,
industrial water use and commercial water use.
(d) The strength of the waste effluent as related to common
waste constituents to be monitored.
(e) The strength of the waste effluent as related to criti-
cal waste constituents to be monitored.
(f) The recent history of the waste strength impact on
the receiving waters.
(2) The strength factor shall have a possible calculated
range from 1.0 to 10.0
These rules were effective November 1, 1971.
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shall be determined on a graduated basis using a formula
developed by rules of the commission. The formula shall include
the volume and nature of the discharge, number of discharge
locations, variability of flow volume, stream characteris-
tics, laboratory tests required, area surveillance, diffic-
ulty of survey setup, history of compliance and provisions
for compliance, and such other factors as the commission
deems appropriate...
Rules 237 and 238 on page 20 of the Commission Wastewater Report
Forms booklet (Appendix C) show how this amendment has been implemented,
pages 15-16 show how a sample fee is calculated on the basis of
these rules. The amount of critical materials (which are selected
because they are, or are believed to be, toxic to humans and fish
in small concentrations, or are accumulated in tissue and concen-
trated in food chains, or cause fish taint problems) discharged
is not a factor in the formula.
Approximately 1,000 firms file reports each year and about $1
million in fees is collected annually. As the law provides, no
more money may be collected for surveillance activities in any year
than the legislature appropriates for those purposes. The surveillance
fee program requires approximately two and one-half person-years
to administer, mostly between the October 1 billing date and the
February 1 due date. The fees have facilitated a substantial expan-
sion of water quality monitoring, industrial wastewater surveys and
bioassays, stream surveys and plant visits according to the program1s
coordinator, Jerry Fore. Discharges of critical materials have not
changed since fees were introduced, although (largely as a result of
the FWFCA Amendments of 1972) many companies are making an effort
to reduce the volume of wastewaters discharged. Firms have not needed
to add personnel because of the surveillance fee program. In sum,
says Fore, "there have been no great difficulties in administering
this program. Industry has been very cooperative and has willingly
supplied the information required. The present law accomplishes
its purpose well and we would not recommend amendments."
By Public Act No. 257 of the Public Acts of 1972 Michigan amended
its air pollution act and added surveillance fees. Michigan Compiled
Laws section 336.24(a) provides a similar arrangement for emissions
of air pollutants as exists for water pollutants:
(1) Notwithstanding any other provision of this act,
in order to provide for increased surveillance, investigation
and other activities necessary to provide greater protection
of air of this state and for attainment and maintenance of
national ambient air quality standards, the commission shall
levy an annual surveillance fee based on the commission's
estimate of the surveillance cost to the commission or a local
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agency as provided for in subsection (2) for each manufacturing-
or commercial location. The annual surveillance fee shall be
reasonable and uniform as between manufacturing and commercial
locations and shall be based on an administrative fee of $25.00
and an additional fee set by the commission. The additional
fee shall be determined on a graduated basis using a formula
developed by rules of the commission. The formula may include
the volume and nature of discharge, number of discharge
locations, variability of discharge, laboratory tests required,
area surveillance, difficulty of survey setup, history of
compliance and provisions for compliance and such other fac-
tors as the commission deems appropriate to establish the
total annual surveillance fee. The maximum annual fee assessed
shall not exceed $8,000.00 per manufacturing location. In
any year, the total surveillance fees assessed shall not exceed
the total amount appropriated to the commision or other appro-
priate state or local agencies for such surveillance. On
or before February 1 of each year the commission shall inform
a discharger and the state treasurer of the annual surveillance
fee due for a plant location or major manufacturing component
and commercial enterprise as provided by rules. On or before
March 1 of each year a discharger shall pay to the state
treasurer the amount of surveillance fee due who shall deposit
it in the general fund of the state. The treasurer shall
report the total annual amount collected to the governor and
the legislature on or before April 15 of each year. In
addition, the state or local agency may require an annual
report that states the nature of the enterprise, list of
materials used in and incidental to the person*s manufacturing
processes including by-products and waste products which
appear on a commissionTs register of materials and shall
promulgate any additional rules that may be necessary or
required to implement this section and the applicable federal
law or regulations.
(2) The commission may suspend the enforcement of this
act or the rules promulgated under this act as to specific
counties or local units of government when it finds that com-
pliance with the local air pollution control ordinance or
rules would effectuate substantial compliance with this
act, the rules promulgated under this act or applicable
federal law or regulations where such an agency has an estab-
lished program of surveillance, investigating or other activity
for the purpose of providing greater protection of air in
their area or for attainment and maintenance of national
ambient air quality standards equal to or greater than the
m-iTiimiiTn applicable requirements of this act or applicable
federal law or regulations. That portion of the fees to be
returned to the local agency shall be determined by the
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commission and shall be based upon that portion of cost for
the overall air pollution control program borne by the local
agency. A local agency shall not assess any type of fee
for its air pollution operations.
Section 336.24(a) specifically provides that the annual fee be
based on the air pollution control commission*s estimate of the
surveillance cost to the commission for each manufacturing or commer-
cial location. In addition to the $25 administrative fee, it "may"
be based on a list of other factors nearly identical to those
enumerated in Act 293 of the Public Acts of 1972 for water surveillance
fees. The fee may not exceed $8,000 per manufacturing location.
Although the formula developed by the commission for the additional
fees establishes more proportionality between level of emissions and
amount of the fee,24 this $8,000 ceiling is reached very quickly
24
Rule 336.82 of the Michigan administrative rules for air pollution
control provides:
R 336.82. Annual fees.
Rule 82. Except as provided in rule 83, a person who
operates any air contaminant source at a commercial or manu-
facturing location, which source emits 1 or more of the
contaminants listed in table 5 to the outer air, shall pay to
the State of Michigan an annual surveillance fee as required
by section 14(a) of Act No. 348 of the Public Acts of 1965,
as amended, being section 336.24(a) of the Michigan compiled
Laws. This fee shall be that calculated by the following
formula, however, the fee shall not exceed $8,000.00 per
location:
Annual Fee = $25 + [($50 • N) + ($100 • W + $20 - X + $10 •
Y + $1 - Z)] (r).
N = Number of surveillance investigations per year scheduled
by the state or local air pollution control agency which has
been deemed eligible by the commission to receive a portion
of the fees collected.
R « Correction factor — this factor to be established each
year by the commission at some value not to exceed 1.0. The
exact value of R will be established so that the total
amount of fees paid to the state shall not exceed the total
amount appropriated to state and local air pollution control
agencies for conducting air pollution surveillance.
W = Annual emission* of all pollutants in group 2, table 5,
(tons/year).
X = Annual emission* of particulate matter (tons/year).
35
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even by small firms and prevents the fees from having a disincentive
effect.
Y = Annual emission* of sulfur dioxide (tons/year)
Z = Annual emission* of all other pollutants named in group
1, table 5 (tons/year).
*The annual emission will be calculated by use of emission
factors contained in the United States Environmental Protection
Agency, Office of Air Programs publication, "Compilation of
Air Pollution Emission Factors," (Publication Number AP-42,
dated February 1972, which may be purchased from the Superin-
tendent of Documents, U.S. Government Printing Office,
Washington, D.C. 20402, at a cost of $1.50. It is avail-
able for inspection at the Department of Public Health,
3500 North Logan Street, Lansing, Michigan 48914). Unless,
data considered by the Commission to be more reliable for
the purpose of determining air contaminant emissions is
available, in which case the more reliable data shall be used.
Table 5 lists the following materials in Groups 1 and 2:
TABLE 5
REGISTER OF MATERIALS
Group 1
Particulate (except those
listed in group 2)
Sulfur Dioxide
Oxides of Nitrogen
Carbon Monoxide
Ammonia
Alcohols
Ethers
Esters
Ketones
Halogenated Hydrocarbons
Non-methane Hydrocarbons
Group 2
Asbestos
Benzo-a-pyrene
Beryllium or its Compounds
Bromine
Chlorine
Cyanides
Flourides
Flourine
Iodine
Lead or its Compounds
Mercaptans
Mercury or its Compounds
Pesticides
Sulfides, Organic and Inorganic
The exception referred to is for manufacturing or commercial
locations where the only source of an air contaminant listed on
table 5 is a solid waste disposal incinerator. Depending on the
size of the incinerator, such a location will either pay no
surveillance fee or only a $25 administrative fee. Rule 336.83.
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Michigan*s surveillance fees are thus a means of funding increased
monitoring, inspections, lab tests, etc. They are currently under
study by the U.S. Environmental Protection Agency as potential
models for other states to supplement their budgets in lieu of federal
air and water program grants, which may be discontinued."
25
"EPA Explores User Fee System as Means of Financing Pollution
Control Agencies," Environment Reporter. July 5, 1974, Current
Developments, p. 277. See also 4 C.C.H. Clean Air and Water News
777 (1972) for other state actions based on the Michigan law.
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SECTION IV
LEGAL FEASIBILITY OF UTILIZING DISINCENTIVES
AS SUPPLEMENTS TO FEDERAL ENVIRONMENTAL LAWS
This section analyzes the legality of employing disincentive mechanisms
such as effluent charges or emission fees in conjunction with existing
federal laws and regulations administered by the Environmental Protec-
tion Agency. This analysis involves two questions: 1) whether
there are any constitutional difficulties with disincentives as a
means of governmental control over behavior affecting the natural
environment; and 2) whether the statutes governing water pollution,
air pollution, noise, pesticides and solid wastes leave any room for
federal regulations or state or local laws or regulations adopting
a disincentive approach as a supplement to the existing framework
of regulation. The constitutional landscape has already been surveyed
by several legal scholars; they found no barriers to disincentives
approaches in general although they suggest certain precautions in
proceeding. 1 The legislative histories and provisions of some of
the statutes EPA administers have been analysed for authority to
adopt disincentives, others have not. This section deals first with
constitutional aspects of employing disincentives and then with the
possibilities under each of the specific statutes involved.
See, Silas Robert Lyman, TheConstitutionality of Effluent Charges.
Technical Report OWRR A-022-Wis, May 1969, a study conducted as a
part of a research project supported by the U.S. Department of Interior,
Office of Water Resources Research and performed jointly by the Uni-
versity of Wisconsin ¥ater Resources Center and the U.S. Department
of Agriculture, Economic Research Service. Note, "The Effluent Fee
Approach for Controlling Air Pollution," Duke Law Jour. (1970),
943-90; Edward I. Selig, "Legal Considerations of An Effluent Charge
System": a technical appendix in a report submitted by Meta Systems,
Inc. under EPA Contract No. 68-01-0566 entitled Effluent Charges —
Is the Price Right?; and Frederick R. Anderson, "The Law of Charges,"
in Economic Incentives for Environmental Control; Legal, Economic,
Technical and Political Aspects, forthcoming in 1974 from Johns
Hopkins Press for Resources for the Future, Inc.
For an excellent discussion of the constitutional aspects of environ-
mental law, see Philip Soper, "The Constitutional Framework of Federal
Environmental Law," in Federal Environmental Law, Erica Dolgin and
Thomas Guilbert, eds., Environmental Law Institute, West Publishing
Co., forthcoming 1974.
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CONSTITUTIONALITY OF DISINCENTIVES
Introduction
The constitutional bases for and limits on disincentives such as
effluent charges have been carefully researched and described. The
principal questions involved are:
1. What powers could the federal government employ to establish
a disincentive regime?
2. What limits are there to those powers?
3. What other constraints govern the exercise of those powers?
4. What powers could the states (or their subdivisions)
exercise to establish disincentives?
5. What limits and constraints are there to those powers?
It is important to re-emphasize the definition of disincentive in
this context because the nature and purpose of a particular approach
are central to discussing its constitutional aspects. A disincen-
tive is a monetary charge levied on conduct which is not illegal for
the purpose of discouraging that conduct.
Federal Power to Adopt Disincentives
Power to Regulate Commerce — "The Congress shall have Power To ...
regulate Commerce with foreign Nations, and among the several States,
and with the Indian Tribes." This short clause from Article I,
section 8 has been interpreted to mean that Congress may regulate (1)
the means of producing goods which pass in interstate commerce^ (2) the
2United States v. Darby, 312 U.S. 100 (1941), upheld the Fair Labor
Standards Act of 1936, §15(a)(l) prohibition on shipment in interstate
commerce of any goods produced by employees who were paid less
than the minimum wage prescribed by the Act or whose maximum hours
of employment without overtime pay exceeded forty-four.
The motive and purpose of the present regulation are plainly
to make effective the Congressional conception of public
policy that interstate commerce should not be made the instru-
ment of competition in the distribution of goods produced
under substandard labor conditions, which competition is
injurious to the commerce and to the states from and to which
the commerce flows. The motive and purpose of a regulation of
interstate commerce are matters for the legislative judgment
upon the exercise of which the Constitution places no restric-
tion and over which the courts are given no control.
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channels through which these goods may pass in interstate commerce3
Section 15(a)(2) of the Act also proscribed paying employees engaged
in the production of goods for interstate commerce less than the pre-
scribed minimum wage or causing them to work more than forty-four
hours per week at regular pay. Darby's employees processed raw
materials into finished lumber and Darby then shipped it to out of
state customers. Since the employees were not themselves engaged
in interstate commerce, the question, the Court stated, is "whether
the employment under other than the prescribed labor standards,
of employees engaged in the production of goods for interstate
commerce is so related to the commerce and so affects it as to be
within the reach of the power of Congress to regulate it." The
question was answered affirmatively and the proscription of section
15(a)(2) was also sustained as a means reasonably adapted to attaining
the permitted end of excluding from interstate commerce all goods
produced for it which do not conform to the specified labor stan-
dards even though these means "involve control of intrastate activi-
ties."
Congress amended the Fair Labor Standards Act to cover "all employees
of any enterprise engaged in commerce" (instead of engaged in commerce
or in the production of goods for commerce) and then amended it again
to include hospitals, nursing homes and public or private educational
institutions (elementary, secondary or higher). For the Supreme
CourtTs opinion sustaining these extensions of coverage, see
Maryland v. Wirtz, 392 U.S. 183 (1968), a case also based on the
authority of United States V. California, infra, footnote 8.
3In Champion v. Ames. 188 U.S. 321 (1903) the Supreme Court upheld
the Federal Lottery Act, which prohibited importing, mailing or
causing interstate carriage of lottery tickets. "Why," asked Mr.
Justice Harlan rhetorically for the Court, "may not Congress,
invested with the power to regulate commerce among the several
states, provide that such commerce shall not be polluted by the carrying
of lottery tickets from one state to another?" He concluded it
could. "As a state may, for the purpose of guarding the morals
of its own people, forbid all sales of lottery tickets within its
limits, so Congress, for the purpose of guarding the people of the
United States against the widespread pestilence of lotteries
and to protect the commerce which concerns all the states, may
prohibit the carrying of lottery tickets'from one state to
another."
The federal district court in Maryland, in upholding the validity
of the Clean Air Act, expressed similar reasoning in regarding air
pollutants (including odors) as articles moving in commerce which
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and, most generally, (3) activities which affect interstate commerce.
Congress may regulate. United States v. Bishop Processing Co.. 287
F. Supp. 624, 629 (1968); affirmed, 423 F.2d 469 (4th Cir. 1970);
cert, denied. 398 U.S. 904 (1970). Congress has also proscribed
the shipment of stolen goods and the transportation of kidnapped
persons in §§2312-15 and 1201 of Title 18, U.S.C., respectively.
A
One of the best known cases illustrating this aspect of Congress1
power to regulate commerce is Wickard v. Filburn. 317 U.S. Ill (1942).
Under the Agricultural Adjustment Act of 1938 a wheat acreage
allotment of 11.1 acres at 20.1 bushels per acre was established for
Filburn for 1941. Filburn planted more than twice that many acres
and harvested an excess of 239 bushels which was subject to a penalty
of 49 cents per bushel. Filburn normally sold part of his crop,
fed some of it to his poultry and stock, used some for making flour
for home consumption, and kept some for next year's seed. He con-
tended that Congress had exceeded its power under the Commerce Clause.
"The question would merit little consideration," wrote Mr. Justice
Jackson for the Court, "since our decision in United States v. Darby
[see note 2, supra]...except for the fact that this Act extends
federal regulation to production not intended in any part for commerce
but wholly for consumption on the farm." The opinion then explained
the futility of attempting to decide such cases with the aid of
labels as "direct" and "indirect" effects on commerce. "[E]ven
if [Filburn1s] activity be local and though it may not be regarded as
commerce, it may still, whatever its nature, be reached by Congress
if it exerts a substantial economic effect on interstate commerce..."
The Court went on to analyze the wheat industry and the effect on
market demand for wheat of growing wheat for home consumption.
"That [Filburn's] own contribution to the demand for wheat may be
trivial by itself is not enough to remove him from the scope of
federal regulation where, as here, his contribution, taken together
with that of many others similarly situated, is far from trivial."
The Court concluded that it was within Congress1 power to regulate
commerce in wheat by stimulating its prices via restricting compe-
tition from home-grown wheat.
A more recent decision on the constitutionality of the Civil Rights
Act of 1964 is in the same category. In Katzenbach y. McClung,
379 U.S. 294 (1964), the Supreme Court upheld the application of the
Act's requirements to a local restaurant as a valid exercise of the
commerce power on the grounds that there was a reasonable basis for
concluding that discrimination by such restaurants resulted in less
sale of interstate goods and less interstate travel by Negroes.
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The principles stated by the Supreme Court in interpreting the Commerce
Clause lead to the conclusion that if it wished to do so Congress
could regulate behavior affecting the environment by means of dis-
incentives. If lottery tickets which pollute the channels of commerce
can be prohibited altogether^ then the decibels and bottles and sulfur
oxides and suspended solids which pollute their respective media —
or the goods which produce them — can certainly be subject to charges
designed to reduce their occurrence. Just as Congress may provide
that lumber cannot be produced for shipment in interstate commerce
without paying the minimum wage it establishes? so it could provide
that the goods causing pollution cannot be produced without paying
a charge designed to discourage the pollution. If growing wheat
for home consumption in excess of prescribed quotas can be fined
per bushel of excess because it has an effect on national commerce
in wheat' then applying toxic pesticides to one's garden could,
constitutionally, be subjected to a charge per pound. The fact that
these activities are already regulated under permit-and-standards
laws enacted by Congress does not constitutionally prevent their
being additionally regulated by applying disincentives.
Exercise of this power to regulate commerce applies not only to
private enterprises but also to public entities. Neither states
nor their subdivisions are excused from compliance with provisions
of law enacted by Congress under the Commerce Clause®.
Cf. note 3.
6Cf. note 2.
Cf. note 4.
8In United States v. California, 297 U.S. 175 (1936), California
contended it could not be compelled to pay a penalty for a violation
of the federal Safety Appliance Act by its state owned and operated
State Belt Railroad because it was engaged in performing a public
function in its sovereign capacity and for that reason could not
constitutionally be subjected to the provisions of the federal Act.
Mr. Justice Stone answered for the Court:
The only question we need consider is whether the exercise of
that power, [reserved to the States] in whatever capacity,
[sovereign or private] must be in subordination to the power
to regulate interstate commerce, which has been granted
specifically to the national government. The sovereign
power of^fehe states is necessarily diminished to the extent
of the grants of power to the federal government in the Consti-
tution. ,.[T]here is no such limitation [like the immunity
of state instrumentalities from federal taxation] upon the
plenary power to regulate commerce. The state can no more
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Q
The Fifth Amendment to the Constitution provides the"basis for
judicial limitations on Congress* exercise of its power to regulate
commerce. The current approach of the courts was first articulated
by the Supreme Court in Nebbia v. New York,^-^ in which the conviction
of grocer Nebbia for selling milk below the minimum price fixed
by New York's Milk Control Board pursuant to a 1933 statute was
upheld:
The Fifth Amendment, in the field of federal activity, and
the Fourteenth, as respects state action, do not prohibit
governmental regulation for the public welfare. They merely
condition the exertion of the admitted power, by securing that
the end shall be accomplished by methods consistent with due
process. And the guaranty of due process, as has often
been held, demands only that the law shall not be unreason-
able, arbitrary, or capricious, and that the means selected
shall have a real and substantial relation to the object
sought to be attained.
deny the power if its exercise has been authorized by Con-
gress than can an individual. California, by engaging in
interstate commerce by rail, has subjected itself to the
commerce power, and is liable for a violation of the Safety
Appliance Act. . .
Cf. City of Eufala, Ala, v. U.S., 313 F.2d 745 (5th Cir. 1973),
in which the city's right to discharge sewage into a river was cut
off in favor of a navigation project because the right was "subject
to the power of Congress to control the waters for the purpose of
commerce.11 The quoted words are from U.S. v. Appalachian Electric
Power Co., 311 U.S. 377 (1940).
^"No person shall. ..be deprived of life, liberty, or property,
without due process of law..."
10291 U.S. 502 (1934).
opinion for the court was written by Mr. Justice Roberts.
Later he restated the principle:
So far as the requirement of due process is concerned, and in
the absence of other constitutional restriction, a state is
free to adopt whatever economic policy may reasonably be
deemed to promote public welfare, and to enforce that policy
by legislation adapted to its purpose. The courts are without
authority either to declare such policy, or, when it is declared
by the legislature, to override it. If the laws passed are
seen to have a reasonable relation to a proper legislative
purpose, and are neither arbitrary nor discriminatory, the
requirements of due process are satisfied... The Constitution
does not secure to any one liberty to conduct his business
in such fashion as to inflict injury upon the public at
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The Fifth Amendment also limits government regulation by providing
"nor shall private property be taken for public use, without just
large, or upon any substantial group of people. Price
control, like any other form of regulation, is unconstitutional
only if arbitrary, discriminatory, or demonstrably irrelevant
to the policy the legislature is free to adopt, and hence
an unnecessary and unwarranted interference with individual
liberty.
This case dealt with a state law, but the approach is the same for
federal laws. In United States v. Darby, supra, note 2, the mini-
mum wage and maximum hours provisions were also attacked as in
violation of the due process guaranty. "Since our decision in [West
Coast Hotel Co. v. Parrish. 300 U.S. 379 (1937)3," wrote Mr. Justice
Stone, "it is no longer open to question that the fixing of a mini-
mum wage is within the legislative power and that the bare fact of
its exercise is not a denial of due process under the Fifth any more
than under the Fourteenth Amendment." In the Parrish case Washing-
ton's statute authorizing the establishment of minimum wages for
women and minors was upheld:
In dealing with the relation of employer and employed, the
legislature has necessarily a wide field of discretion in
order that there may be suitable protection of health and
safety, and that peace and good order may be promoted through
regulations designed to insure wholesome conditions of work
and freedom from oppression.. .What can be closer to the public
Interest than the health of women and their protection from
unscrupulous and overreaching employers? And if the protection
of women is a legitimate end of the exercise of state power,
how can it be said that the requirement of the payment of
a minimum wage fairly fixed in order to meet the very necessi-
ties of existence is not an admissible means to that end?...The
legislature was entitled to adopt measures to reduce the evils
of the "sweating system," the exploiting of workers at wages
so low as to be insufficient to meet the bare cost of living
thus making their very helplessness the occasion of a most
injurious competition. The legislature had the right to
consider that its minimum wage requirements would be an
important aid in carrying out its policy of protection.
The adoption of similar requirements by many States evidences
a deep seated conviction both as to the presence of the evil
and as to the means adapted to check it. Legislative res-
ponse to that conviction cannot be regarded as arbitrary
or capricious, and that is all we have to decide. Even if
the wisdom of the policy be regarded as debatable and its
effects uncertain, still the legislature is entitled to its
judgment, (emphasis added)
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compensation." Unfortunately "there is no set formula to determine
where regulation ends and taking begins."^ In some fields the
power is fairly well defined. The "right" of a riparian property
owner to reasonably use water, for example, is subject to regulation
under laws to control navigability or pollution.13 But, as recent
analyses^ have demonstrated, there are various tests the Supreme
Court has applied over the decades in deciding whether a particular
law is a taking requiring compensation or merely a reasonable
regulation to protect a legitimate public interest, and it is not
possible to predict outcomes of particular cases with certainty.
The most frequently employed test seems to be that if the regulation
causes a drastic reduction in the economic value of the property
it is deemed a taking.^
A carefully designed disincentives system would not be prevented
by these two limitations on the exercise of the power to regulate
commerce: the goal of controlling pollution or otherwise preserving
environmental quality to promote the public welfare is not unreason-
able and both economic theory and practical experience with the
effects of taxes in controlling behavior indicate that charging
sufficiently for pollution or other detrimental behavior has a
The end of Supreme Court review of legislation for conformance with
due proeess was emphatically stated by Mr. Justice Douglas for a
unanimous Court in Olsen v« Nebraska ex rel. Western Ref. and Bond
Ass'n., 313 U.S. 236 (1941): "We are not concerned ...with the
wisdom, need, or appropriateness of the legislation. Differences
of opinion on that score suggest a choice which ^should be left
where ... it was left by the Constitution — to the states and to
Congress'..." For more recent restatements of this position see
Ferguson v. Skrupa, 372 U.S. 726 (1963) and Heart of Atlanta
Motel. Inc. v. United States, 379 U.S. 241 (1964).
12Goldblatt v. Hempstead. 369 U.S. 590 (1962).
13United States v. Willow River Power Co.. 324 U.S. 499 (1945);
United States v. Appalachian Electric Power Co., 311 U.S. 377 (1940);
Zabel v. Tabb, 430 F.2d 199 (Sth Cir., 1920).
14See. for example, Sax, "Takings and the Police Power," 74 Yale
Law Journ. 36(1964); Sax, "Takings, Private Property and Public
Rights," 81 Yale Law Journ. 149 (1971); "The Law and Land Use Pweg-
ulation," Ch. 4 of Environmental Quality, The Fourth Annual Report
of the Council on Environmental Quality, September 1973.
Goldblatt v. Hempstead, supra, note 12, referring to two other
important cases, Pennsylvania Coal Co. v. Mahon, 260 U.S. 393
(1922) and Hadachek v. Los Angeles, 239 U.S. 394 (1915).
45
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real and substantial relation to that goal.16 A disincentive
regulation which did not go "too far"17 toward reducing the value
of property would not be viewed as a taking.
18
Rodgers v. U.S. is a case which both illustrates the use of disincen-
tives under the Commerce Clause and provides a basis for distinguishing
such disincentives from those which may be imposed under the next
Congressional power to be discussed, the power to levy and collect
taxes.1' In this case a sanction of three cents per pound of cotton
marketed in excess of quotas under the Agricultural Adjustment Act
of 1938 was held to be:
not the levying of a tax under the government fs taxing power,
but a method adopted by the Congress for the express purpose
of regulating the production of cotton affecting interstate
commerce. The test to be applied is to view the objects and
purposes of the statute as a whole and if from such examination
it is concluded that revenue is the primary purpose and
regulation merely incidental, the imposition is a tax and is
controlled by the taxing provisions of the Constitution.
Conversely, if regulation is the primary purpose of the statute,
the mere fact that incidental revenue is also obtained does
not make the imposition a tax...
There is a marked distinction between taxation for revenue..,
and the imposition of sanctions by the Congress under the
commerce clause. The power of Congress to 'regulate commerce*
is the power to prescribe the rules by which commerce is to be
governed and the Congress is at liberty to adopt any method
which it deems effective to accomplish the permitted end.
The court further noted that the monetary sanction of three
cents per pound was one of a class of
impositions made incidentally under the commerce clause...
as a means of constraining and regulating what may be considered
by the Congress as pernicious or harmful to commerce.
The imposition...has for its object the fostering, pro-
A.V. Kneese and B. T. Bower, Managing .Water Quality; Economics,
Technology and Institutions (1968), ch. 6| 21 U.S.C. §801 (1970).
This is Mr. Justice Holmes1 test in Pennsylvania Coal Co. v. Mahon,
supra, note 15, which of course doesn't answer the question "how
far is too far?"
18138 F.2d 992 (6th Cir., 1943).
19
U.S. Constitution, Article I, section 8, clause 1.
46
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tecting and conserving of interstate commerce and the prevention
of harm to the people from its flow.
Power to Lay and Collect Taxes, Duties, Imposts and Excises — There
are many Supreme Court cases dealing with various kinds of indirect
taxes^O but the scope of Congress' power is not entirely clear.
In general Congress may levy exactions which have the effect of
controlling behavior in addition to raising revenue. But it may not
20
In addition to the indirect taxes it may impose under Article I,
section 8, clause 1, Congress may levy direct taxes under Article I,
section 9, clause 4. Direct taxes, e.g., capitation taxes, taxes on
land, or taxes on stock dividends must be apportioned among the
states according to the census, however. The Sixteenth Amendment
obviated the need to apportion taxes on income.
21
Veazie Bank v. Fenno, 8 Wallace 533 (1869) (10 per cent tax on
amount of private bank notes):
It is insisted...that the tax...is excessive, and so excessive
as to indicate a purpose on the part of Congress to destroy
the franchise of the bank, and is., therefore beyond the consti*-
tutional power of Congress. The first answer to this is that
the judicial cannot prescribe to the legislative department of
the government limitations upon the exercise of its acknow-
ledged powers. The power to tax may be exercised oppressively
upon persons, but the responsibility of the legislatures is
not to the courts, but to the people by whom its members
are elected. So if a particular tax bears heavily upon a
corporation, or a class of corporations, it cannot, for that
reason only, be pronounced contrary to the Constitution.
McCfay v. United States, 195 U.S. 27 (1904) (ten cent per pound tax
on colored oleomargarine as compared to $.0025 per pound for
uncolored oleo): McCray argued the Congress could not employ its
power "so as to destroy or restrict the manufacture of artificially
colored margarine." To this the Court replied:
This, however, is but to say that the question of power
depands, not upon the authority by the Constitution, but upon
what may be the consequences arising from the exercise of
lawful authority. Since...the taxing power conferred by
the Constitution knows no limits except those expressly
stated in that instrument, it must follow, if a tax be within
the lawful power, the exertion of that power may not be judicially
restrained because of the results that arise from its exercise.
47
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22
go so far as to exact a penalty under the label of a tax. Nor
may it regulate behavior via the tax power unless it otherwise has
the power to regulate, excepting, of course, a separately valid
revenue-raising measure which only incidentally regulates commerce
United States v. Doremus. 249 U.S. 86 (1919) (tax on persons dispen-
sing drugs):
tF]rom an early day the Court has held that the fact that other
motives may impel the exercise of federal taxing power does
not authorize the courts to inquire into that subject. If
the legislation enacted has some reasonable relation to the
exercise of the taxing authority conferred by the Constitution
it cannot be invalidated because of the supposed motives which
induced it.
United States v. Kahriger. 345 U.S. 22 (1953) (ten per cent tax on
all wagers accepted plus a special tax of $50 a year).
Bailey v. Drexel Furniture Co.. 259 U.S. 20 (1922) (ten per cent
tax on net profits of company employing children under 14 or children
between 14-16 for more than eight hours a day); Hill v. Wallace,
259 U.S. 44 (1922) (twenty cent per bushel tax on futures contracts
in grain except those of an approved board trade which approval
involves compliance with many detailed regulations); U.S. v. Cons tan-
tine, 296 U.S. 287 (1935) (special excise tax of $1000 on liquor
dealers who operate their businesses in violation of state or local
law).
23
United States v. Butler. 297 U.S. 1 (1936). Cf. Steward Machine Co.
V. Davis. 301 U.S. 548 (1937); Helvering v. Davis; 301 U.S. 619 (1937),
Another example of the use of the power to tax in conjunction with
the power to regulate commerce (in addition to that provided in
the text at note 18) is the tax on coal sold in excess of the prices
established under the Bituminous Coal Act of 1937 which was upheld
in Sunshine Anthracite Coal Co. v. Adkins. 310 U.S. 381 (1940). In
its opinion the Court said:
Clearly this tax is not designed merely for revenue purposes.
In purpose and effect it is primarily a sanction to enforce
the regulatory provisions of the act...Congress may impose
penalties in aid of the exercise of any of its enumerated
powers. The power of taxation...may be utilized as a sanction
for the exercise of another power which is granted it.
48
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Indirect taxes may not be imposed on some of the property or activi-
ties of the States.2^ Whether municipalities could be required to
pay disincentives, in the form of taxes on sewage treatment plant
effluents, for example, is not clear. Potential difficulties could
be avoided by levying the tax on those using the state governmental
facility and requiring the municipality to collect and account for
the tax.25
Indirect taxes must be levied uniformly throughout the U.S.2" This
requirement means that the tax must be in general operation throughout
the U.S., not that there may not be differences in taxes based on
different circumstances.2? But the due process guaranty of the Fifth
Amendment requires that tax exemptions and classifications may not
be arbitrary.2^
24New York v. United States, 326 U.S. 572 (1946). Which activities
and properties are immune from federal taxation and which are not
is unclear. In Brush v. Commissioner of Internal Revenue, 300 U.S.
352 (1937), New York Cityfs water system was held immune from federal
taxation on the grounds that it was an adjunct of the government's
functions. In New York v. United States the state's sales of bottled
mineral water were held not immune.
25Wilmette Park District v. Campbell, 338 U.S. 411 (1949).
26
Article 1, section 8, clause 1.
27Knowlton v. Moore, 178 U.S. 41 (1900).
The question always is, when a classification is made, whether
there is any reasonable ground for it, or whether it is only
and simply arbitrary, based upon no real distinction and entirely
unnatural...If the classification be proper and legal, then
there is the requisite uniformity...
Nichol v. Ames, 173 U.S. 509 (1899). Cf. Fernandez v. Wiener, 326
U.S. 340 (1940).
OQ
*°Steward Machine Co. v. Davis, 301 U.S. 548 (1937). In upholding
the tax imposed by the Social Security Act on employers of more than
eight or more, which also did not apply to private domestic service
of agricultural labor, Mr. Justice Cardozo wrote:
The Fifth Amendment unlike the Fourteenth has no equal
protection clause...But even the states, though subject to
such a clause, are not confined to a formula of rigid unifor-
mity in framing measures of taxation...They may tax some kinds
of property at one rate, and others at another, and exempt
others altogether...They may lay an excise on the operations
49
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These cases lead to the conclusion that Congress could enact disin-
centives measures under its power to lay and collect taxes. The
requirement that the taxes be "uniform" would require care in struc-
turing the bases and rates of the disincentives, but no more so than
would be required by the guaranty of due process. If Congress
wished to apply the law to public as well as private entities the
doctrine of immunity of state governmental instrumentalities from
federal taxation would have to be taken into account.
Limitations on Potential Federal Disincentives Programs
In addition to the limitations on the exercise of the commerce
power or the taxing power imposed by the due process guaranty and
the requirement for compensation for private property taken for
public purposes contained in the Fifth Amendment, that amendment
and the Fourth Amendment contain limitations applicable to the
implementation of disincentives plans adopted by Congress. y
of a particular kind of business, and exempt some other kind
of business closely akin thereto...If this latitude of judg-
ment is lawful.for the states, it is lawful, a fortiori,
In legislation by the Congress, which is subject to restraints
less narrow and confining...The classifications and exemptions
directed by the statute now in controversy have support in
considerations of policy and practical convenience that
cannot be condemned as arbitrary. The classifications and
exemptions would therefore be upheld if they had been adopted
by a state and the provisions of the Fourteenth Amendment
were invoked to annul them...The act of Congress is therefore
valid, so far at least as its system of exemptions is con-
cerned, and this though we assume that discrimination, if
gross enough, is equivalent to confiscation and subject under
the Fifth Amendment to challenge and annulment.
Professor Philip Soper has commented:
Even though particular environmental objectives may be within
the reach of congressional regulatory power, the means by
which those objectives are attained must still comply with
specific constitutional limitations imposed by various provi-
sions of the Bill of Rights. In fact, the potential clash
between federal regulatory schemes in the environmental
context and individual constitutional safeguards promises to
be a more active area for future judicial attention than the
logically prior question of congressional power for at least
two reasons. First, the extreme breadth of congressional
power in this area makes it likely that political rather than
50
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Fifth Amendment: Self-Incrimination — Most proponents of disin-
centive schemes have come to the conclusion that self-monitoring
and self-reporting of emissions or discharges or other conduct
subject to the requirement to make payments would be more efficient
ways of determining the basis of the periodic payments than regular
monitoring and supervision by governmental officials, so long as
those officials conducted spot checks to assure the accuracy of the
monitoring and reporting.
The Fifth Amendment, however, provides: "Nor shall any person...
be compelled in any criminal case to be a witness against himself..."
Person, for purposes of the privilege against self-incrimination, does
not include a corporation. 30 in a 1943 case the Supreme Court held
that the privilege may not be invoked to bar the use of records
required by Congress to be kept concerning transactions of a regulated
business activity.31 This so-called "required records" doctrine
is still valid so long as those required to keep the records are not
"a highly selective group inherently suspect of criminal activities."
A recent case applying this doctrine to a law which requires reporting
analogous to that presently called for under the Federal Water
Pollution Control Act Amendments of 1972 and the Clean Air Act and
which would be required under most disincentive programs, is Califor-
constitutional considerations will prove to be the limiting
factor in determining the proper federal-state balance, thus
avoiding the need to probe judicially the ultimate limits
of federal authority. Second, the imposition of governmental
controls, whether state or federal, over essentially private
activities raises issues that have received a. considerably
greater degree of respectful judicial attention in recent
years than is the case with respect to claims that Congress
has invaded areas reserved to the states by the Tenth
Amendment.
Soper, supra note 1, at I.E.
30Wilson v. United States. 221 U.S. 361 (1911); George Campbell
Painting Corp. v. Reid, 392 U.S. 286 (1968).
31Shapiro v. United States. 335 U.S. 1 (1948):
[The privilege]...cannot be maintained in relation to
"records required by law to be kept in order that there may
be suitable information of transactions which are the appro-
priate subjects of government regulation and the enforcement
of restrictions validly established." Davis v. United States,
328 U.S. 582 (1946).
32
Marchetti v. United States. 390 U.S. 39 (1968).
51
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oo
nia v. Byers. J The case upheld the California vehicle code pro-
visions that the driver of any vehicle involved in an accident resul-
ting in damage to any property including vehicles must immediately
stop the vehicle at the scene of the accident and locate and notify
the owner or person in charge of such property of the name and
address of the driver and owner of the vehicle involved. ^ Even
though it may not seem so to the Jonathan Byers1 of the world, four
of the justices of the Supreme Court said that disclosing automobile
accidents in this way does not entail the kind of substantial
risk of self-incrimination that registration and reporting require-
ments for members of the Communist Party, gamblers, owners of pros-
cribed fire arms, and dealers in drugs do.-*5 Chief Justice Burger's
opinion stated: "An organized society imposes many burdens on its
constituents [including that] industries must report periodically
the volume and content of pollutants discharged into our waters and
atmosphere. Comparable examples are legion," he said, citing the
Shapiro case, and the "tension between the State's demand for dis-
closures and the protection of the right against self-incrimination...
must be resolved in terms of balancing the public need on the one
hand and the individual claim to constitutional protections on the
other..."36
The decision in California v. Byers does not clearly authorize the use
of the kind of information which would be generated by self-reporting
in disincentives programs for criminal prosecutions since only three
other justices joined the Chief Justice's opinion and four justices
dissented from the Court's judgment upholding California's hit-and-
run statute. But the opinion does indicate the Court's current
analytical approach.
Fourth Amendment: Administrative Searches — The spot checks of
monitoring equipment referred to above or other inspections for the
purposes of checking compliance with regulatory requirements must
be conducted in accordance with the Fourth Amendment. That amend-
ment provides:
The right of the people to be secure in their persons, houses,
papers, and effects, against unreasonable searches and
33
402 U.S. 424 (1971).
34
California Vehicle Code, §20002(a)(1).
These are the people who are in the highly selective groups inherently
suspect of criminal activities category discussed in the Marchetti
case, and in Grosso v. United States. 390 U.S. 62 (1968), Haynes
v. United States. 390 U.S. 85 (1968), and in Albertson v. Subversive
Activities Control Board. 382 U.S. 70 (1965).
36
39 U.S. Law Week 4579 at 4580.
52
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seizures, shall not be violated, and no Warrants shall issue,
but upon probable cause, supported by Oath or affirmation,
and particularly describing the place to be searched, and
the persons or things to be seized.
Until recently the Fourth Amendment was not interpreted to preclude
government officials entering premises without warrants to check
for violations of health or safety ordinances.37 But in 1967 the
Supreme Court held unconstitutional San Francisco's ordinance giving
city employees the right, upon presentation of proper credentials
but without securing a search warrant, to enter any premises in the
city pursuant to a duty imposed on them by the municipal code.38
A person cannot be required to admit a health inspector on an annual
routine inspection to determine compliance with the housing code
without a warrant because "except in certain carefully defined
classes of cases, a search of private property without proper consent
is funreasonable' unless it has been authorized by a valid search
warrant." In a companion case^9 the Court applied Camara to invali-
date Seattle's ordinance authorizing a warrantless inspection of
commercial premises for purposes of ascertaining possible fire hazards,
The Court did, however, sanction the use of warrants to inspect
particular premises issued on the basis that the circumstances
in an area including the premises satisfied reasonable legislative
or administrative standards for conducting an "area inspection."^
37
In Frank v. Maryland. 359 U.S. 360 (1959), the Supreme Court upheld
a $20 fine prescribed by a municipal ordinance for refusing to
allow a Commissioner of Health daytime entrance to a house in which
he had cause to suspect a nuisance (rats). Ohio ex rel. Eaton
v. Price. 364 U.S. 263 (1960).
38
Camera v. Municipal Court of the City and County of San Francisco,
387 U.S. 523 (1967).
39
See v. City of Seattle. 387 U.S. 541 (1967).
40
Justice White wrote, in the Camara opinion:
There can be no ready test for determining reasonableness
other than by balancing the need to search against the in-
vasion which the search entails. [A] number of persuasive
factors combine to support the reasonableness of code-enforce-
ment area inspections. First, such programs have a long
history of judicial and public acceptance. Second, the
public interest demands that all dangerous conditions be
prevented or abated, yet it is doubtful than- any other canvassing
would achieve acceptable results...Finally, because the inspec-
tions are neither personal in nature nor aimed at the dis-
covery of evidence of crime, they involve a relatively
limited invasion of the urban citizen's privacy.
53
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The Court also stated that its decision was not intended to foreclose
warrantless searches in emergencies, e.g., the seizure of unwhole-
some food or health quarantines. The case thus requires that warrants
be obtained to conduct administrative searches but modifies the probable
cause requirement that the warrant be based on the inspector's
belief that a particular dwelling contains a code violation.
Subsequent decisions have helped delineate the circumstances when
warrantless administrative searches are permissible. In Colonnade
Catering Corp. v. United States^ the Supreme Court held that evidence
obtained by federal agents who entered Colonnade's liquor storage
area forcibly without a warrant could not be used in a trial. ^2 in
doing so, however, the Court indicated that historically warrantless
inspections of businesses involved in the liquor industry were not
deemed unreasonable and that Congress could enact standards setting
forth rules governing inspection procedures. In United States v.
the Court held that a warrantless search based on the autho-
rization of a statute was constitutional if the inspection was part
of a regulatory program which promoted urgent federal interests and,
more importantly, if the law could not be effectively enforced
unless warrantless inspections were permissible.
The law involved in this case was the federal Gun Control Act.
Unlike the potential building code violations discussed in See v.
City of Seattle, 44 violations of the program of licensing firearms
dealers can be quickly concealed and thus unnanounced spot checks
are essential to effective enforcement. 45 The Court also pointed
out that such checks were relatively insignificant intrusions on
privacy and were to be expected in heavily regulated businesses.
41397 U.S. 72 (1970).
"The judicially implied sanction to enforce compliance with the
Fourth Amendment is the so-called exclusionary rule, i.e., that
evidence seized in violation of the Amendment may not be used in a
prosecution. Weeks v. United States 232 U.S. 383 (1914); Mapp v.
Ohio. 367 U.S. 643 (1961).
43406 U.S. 311 (1972).
44Supra. note 39.
45
Warrants are obtained for administrative searches only after con-
sent has been refused. If warrants were required before inspec-
ting for illegal firearms, the dealer could simply refuse consent to
the warrantless search and conceal the firearms while the inspector
was away obtaining the necessary warrant.
54
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It is possible, after the Biswell decision, that administrative
inspections to check compliance with the environmental standards
would not often have to be preceded by warrants. The language of
the FWPCA Amendments of 1972 and the Clean Air Act is not signifi-
cantly different from that of the Gun Control Act of 1968.^6 Even
if warrants were required prior to inspections pursuant to a disin-
centive program it is likely that they could be issued on the basis
of satisfying conditions calling for area inspections, as in Camara
and See.47
Separation of Powers: Delegation of Legislative Power — Although
it would be possible — and perhaps preferable — to have the details
of disincentive programs, e.g., the incidences and rates of charges,
spelled out in legislation it is more likely that Congress would
delegate these tasks. It is a maxim of constitutional law that
powers delegated to Congress (in Article I) may not be further
delegated^ but the maxim overstates the scope of the actual
limitation. In the early days of the New Deal legislation the Supreme
46
The Gun Control Act authorizes entry "during business hours...
to the premises (including places of storage) of any firearms
or ammunition importer, manufacturer, dealer or collector,...for
the purpose of inspecting or examining...records or documents
required to be kept...and...any firearms or ammunition..." 18
U.S.C. §923(g) (1970).
The Clean Air Act states that officials "shall have a right of entry
to,.upon, or through any premises in which an emission source is
located...[and] may at reasonable times have access to and...inspect
any monitoring equipment or method...and sample any emissions..."
42 U.S.C. §1857c-9(a)(2) (1970).
47
Soper, supra note 1, at I.E. 1.
Soper has suggested that "it is possible that pollution control
schemes, e.g., a system of effluent charges which depends on reliable
self-monitoring by the affected polluter, can be enforced only by
random and frequent inspections. Whether such inspections must
also occur unannounced depends on the ease with which the polluter,
in the short period following a refusal to permit the
search and the securing of a warrant, can remedy the unlawful
pollution practice or disguise tampering with self-monitoring
equipment." The pollution practice would not have to be unlawful
for this to be true, of course.
48
Delegata potestas non potest delegari.
55
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Court invalidated some provisions of the National Industrial Recovery
Act of 1933 on grounds that Congress had insufficiently defined
its policy objectives and standards which the agency to which the
power was delegated should follow in attaining those objectives.^
But broad delegations of power have since been upheld, so long as
policies and standards are clearly articulated. In Yakus v. United
Statess50 for example, the Court sustained the provisions of the
Emergency Price Control Act which authorized the Administrator of the
Office of Price Administration to fix fair and equitable prices.
After reciting that Congress* purposes were stated in section 1
and the standards in section 2, the Court stated:
The Act is thus an exercise by Congress of its legislative
power. In it Congress has stated the legislative objective,
has prescribed the method of achieving that objective — maxi-
mum price fixing — and has laid down standards to guide
the administrative determination of both the occasions for
the exercise of the price-fixing power, and the particular
[range of] prices to be established.51
49
Panama Refining Co. V. Ryan, 293 U.S. 388 (1935); Schecter Poultry
Corp. v. United States. 295 U.S. 495 (1935).
50
321 U.S. 414 (1944).
Yakus v. United States, supra, note 40. The Court's opinion
stated further:
The Constitution as a continuously operative charter of
government does not demand the impossible or the impractible.
It does not require that Congress find for itself every fact
upon which it desires to base legislative action or that it
make for itself detailed determinations which it has declared
to be prerequisite to the application of the legislative
policy to particular facts and circumstances impossible for
Congress itself properly to investigate. The essentials
of the legislative function are the determination of the
legislative policy and its formulation and promulgation as
a defined and binding rule of conduct. ..These essentials are
preserved when Congress has specified the basic conditions of
fact upon whose existence or occurrence, ascertained from
relevant data by a designated administrative agency, it directs
that its statutory command shall be effective. It is no
objection that the determination of facts and the inferences
to be drawn from them in the light of the statutory standards
and declaration of policy call for the exercise of judgment,
and for the formulation of subsidiary administrative policy
within the prescribed statutory framework.
56
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State Power to Adopt Disincentives
Congress may only exercise powers specifically granted it in the
Constitution plus the power to make laws "necessary and proper for
carrying into execution" the powers enumerated in Article I, section
8, and other powers vested by the Constitution in the U.S. government
or a department or officer of it.52 Powers not delegated to the
United States by the Constitution, nor prohibited by it to the states,53
are reserved to the states respectively, or to the people.54
For understanding the powers of a state — and the state constitutional
limitations on them— it is imperative to examine the constitution
of the particular state involved and the cases construing it.55
One generalization is possible: with respect to delegation of legis-
lative power to regulate, state courts have generally analyzed the
issue as the federal courts have, with similar results.56
Limitations on State Powers
So far as the U.S. Constitution's limitations are concerned, the
provisions of the Fourth and Fifth Amendments discussed above which
apply to Congress have been applied by the Supreme Court to the states
by "incorporating" them into the Fourteenth Amendment's requirement
that no state "deprive any person of life, liberty, or property,
without due process of law."57 The Fifth Amendment's due process
52
U.S. Constitution, Article I, section 8, clause 18.
For example, by Article I, section 10, and Amendments XIII, XIV,
and XV.
54
U.S. Constitution, Amendment X.
For analyses of the constitutionality of employing effluent charges
under state powers to regulate and to tax, See Lyman, supra, note
1, chapters II and V, respectively.
56
Jaffe and Nathanson, Administrative Law; Cases and Materials
(3rd edition, 1968) 68; Lyman, supra, note 1, chapter IV. The law
of the particular jurisdiction should be checked, however.
The requirement that compensation be provided for taking private
property for public purposes was applied to the states by Chicago,
B. & 0. R.R. v. Chicago, 166 U.S. 226(1897). Malloy v. Hogan.
378 U.S. 1(1964), applied the Fifth Amendment privilege against
self-incrimination and Mapp v. Ohio. 367 U.S. 643(1961), applied
the exclusionary rule prohibiting the use in courts of evidence
obtained in searches which violate the Fourth Amendment.
57
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guaranty imposes virtually the same constraints as does the Fourteenth
Amendment's.58 The Fourteenth Amendment's Equal Protection Clause
precludes arbitrary classifications; these are tested by standards
comparable to those under the Fifth Amendment's due process guaranty.59
58
Goldblatt v. Hempstead. 369 U.S. 590 (1962):
The term "police power" connotes the time-tested conceptional
limit of public encroachment upon private interests. Except
for the substitution of the familiar standard of "reasonable-
ness," this Court has generally refrained from announcing any
specific criteria. The classic statement of the rule in
Lawton v. Steele. 152 U.S. 133...(1894) is still valid today:
"To justify the state in...interposing its authority in behalf
of the public, it must appear — First, that the interests
of the pub lie...require such interference; and, second,
that the means are reasonably necessary for the accomplish-
ment of the purpose, and not unduly oppressive upon indivi-
duals." Even this rule is not applied with strict precision,
for this Court has often said that "debatable questions as
to reasonableness are not for the courts but for the Legislature..."
59
Supra, notes 27-28. "In the general area of tax and police power
regulating legislation the Court has exercised a minimal review
under the equal protection clause by employing the test of ration-
ality coupled with a presumption in favor of the statute. This
approach is in contrast to the Court's decisions invalidating classi-
fications based on alienage, race, and religion." Kauper, Constitutional
Law: Cases and Materials (3rd edition, 1966), 1288.
Cf. Soper, supra, note 1, at I.B.4.b.: "For the most part, legislative
regulation of environmentally harmful activities of individuals or
business concerns should not be vulnerable to claims that others
'similarly situated,' have not been dealt with equally harshly.
In this respect •..environmental regulation resembles economic
regulation and should similarly require only a rational relationship
to a legitimate legislative objective in order to withstand attack
on equal protection grounds. Familiar principles in this context —
a statute is not invalid under the Constitution because it might
have gone farther than it did [Miller v. Watson. 236 U.S. 373 (1915)];
a legislature need not 'strike at all evils at the same time'
[Semler v. Dental Examiners. 294 U.S. 608 (1935)]; 'reform may take
one step at a time, addressing itself to the phase of the problem
which seems most acute to the Legislative mind' [Williamson v. Lee,
Optical Co.. 348 U.S. 483 (1955)] — should operate to provide /
wide leeway for legislative initiatives. Recent cases that have
considered the issue in the environmental context have had little
trouble rejecting the equal protection argument [Chicago Allis Mfg.
Corp. v. Metropolitan Sanitary District. 52 111. 2d 320, 288 N.E.2d 436
(1972)]."
58
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In addition to these limitations on the exercise of state powers, the
existence of congressional powers to regulate commerce and levy
taxes and Congress1 exercise of these powers have called for Supreme
Court decisions resolving conflicts in the exercise of these con-
current powers. To the extent a conflict exists, of course, the
federal power prevails.60
If a state attempts to exercise its police power over subject matters
which Congress could regulate under the Commerce Clause and which
"are in their nature national, or admit only of one uniform system , or
plan of regulation"61 the Supreme Court is likely to hold that the
subject matters require exclusive legislation by Congress and the
state laws will be invalidated.62 if the subject matter is not of
this nature the Court is likely to uphold state or local regulations
if they do not impose an undue burden on interstate commerce.63
The most recent statement of the extent to which a state may interfere
with interstate commerce is phrased in terms of accommodating competing
federal and state interests:
Although the criteria for determining the validity of State
statutes affecting interstate commerce have been variously
stated, the general rule that emerges can be phrased as follows:
where the statute regulates evenhandedly to effectuate a legi-
timate local public interest, and its effects on interstate
commerce are only incidental, it will be upheld unless the
burden imposed on such commerce is clearly excessive in relation
to the putative local benefits. If a legitimate local purpose
is found, then the question becomes one of degree. And the
extent of the burden that will be tolerated will, of course,
depend on the nature of the local interest involved, and on
whether it could be promoted as well with a lesser impact on
60
Article VI, clause 2 of the U.S. Constitution provides:
This Constitution, and the Laws of the United States which
shall be made in Pursuance thereof; and all Treaties made, or
which shall be made, under the Authority of the United States,
shall be the supreme Law of the Land; and the Judges in every
State shall be bound thereby, any Thing in the Constitution
or Laws of any State tb the Contrary notwithstanding.
61
Cooley v. Board of Wardens of Philadelphia, 53 U.S. (12 How.) 299
C1951).
62E.g., Bibb v. Navajo Freight Lines. Inc.. 359 U.S. 520 (1959); cf.
Northern States Power Co. v. Minnesota. 405 U.S. 1035 (1972),
affirming 447 F.2d 1143 (8th Cir., 1971); City of Burbank v. Lockheed
Air Terminal. Inc.. 411 U.S. 624 (1973).
£O
In Huron Portland Cement Co. v. City of Detroit. 362 U.S. 440 (1960),
the City of Detroit's ordinance requiring a company operating
ships in interstate commerce to install smoke abatement equipment
was upheld.
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interstate activities.
64
If Congress has enacted legislation in a field then that legislation
and the history of its enactment must be examined to determine whether
Congress "intended to occupy the field."" If the statute is clear,
as some in the environmental area are,66 then the extent of pre-emption
is also clear. Often, however, it is not clear, and then the extent of
tolerable state interference with federal laws must be analyzed on
a case by case basis."' "Innumerable cases have either sustained
64
Pike v. Bruce Church, Inc.. 397 U.S. 137 (1970). For an excellent
opinion analyzing the extent of state authority to burden interstate
commerce where Congress has not legislated, see the December 1973
opinion of the Oregon Court of Appeals in American Can Company v.
Oregon Liquor Control Commission, 4 ELR 20218, Appendix E.
65
Pennsylvania v. Nelson. 350 U.S. 497 (1956).
66
E.g., 33 U.S.C. §1370; 42 U.S.C. §1857d-l. The latter section,
from the Clean Air Act, provides:
Except as otherwise provided in sections 1857f-6a, 1857f-6c
(c)(4) and 1857f-ll of this title (preempting certain State
regulation of moving sources) nothing in this chapter shall
preclude or deny the right of any State or political subdivi-
sion thereof to adopt or enforce (1) any standard or limitation
respecting emissions of air pollutants or (2) any requirement
respecting control or abatement of air pollution; except
that if an emission standard or limitation is in effect under
an applicable implementation plan or under section 1857c-6 or
section 1857c-7 of this title, such State or political sub-
division may not adopt or enforce any emission standard or
limitation which is less stringent than the standard or limi-
tation under such plan or section.
67In Hines v. Davidowitz. 312 U.S. 52 (1941), the Supreme Court
characterized the history of its efforts and its function in reviewing
such conflicts as follows:
This Court, in considering the validity of state laws in
the light of treaties or federal laws touching the same sub-
ject, has made use of the following expressions: conflicting;
contrary to; occupying the field; repugnance; difference;
irreconciliability; inconsistency; violation; curtailment;.
and interference. But none of these expressions provides an
infallible constitutional test or an exclusive constitutional
yardstick. In the final analysis, there can be no one crystal
clear distinctly marked formula. Our primary function is to
determine whether, under the circumstances of this particular
case, Pennsylvania's law stands as an obstacle to the accomplish-
ment and execution of the full purposes and objective of Congress.
60
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or Invalidated state regulation challenged as invalid because of the
impact of federal commerce legislation. Each is a separate problem
involving the history, terms, purposes and effect of particular
legislation and has little precedent value outside the particular
area of regulation involved."68
The extent of federal pre-emption in the environmental statutes
administered by the Environmental Protection Agency is thus most
appropriately discussed in the next subsection.
AUTHORITY FOR DISINCENTIVES UNDER FEDERAL ENVIRONMENTAL LAWS
Introduction
This subsection analyzes the statutes administered by the U.S.
Environmental Protection Agency to determine whether any of their
provisions would authorize the Environmental Protection Agency to
adopt disincentives (particularly governing toxic or hazardous
substances) and whether state adoption of disincentives in the fields
regulated by these statutes is pre-empted by any of their provisions.
Federal Water Pollution Control Act
Legislative History — When the legislation which later became the
Federal Water Pollution Control Act Amendments of 197269 was first
under consideration in the Senate, Senator William Proxmire proposed
an amendment from the floor which employed the concept of effluent
charges, as contained in his earlier proposed bill, S. 2696, 92nd
Congress, 2nd Session. After debate, the objections of Senator
Edmund Muskie, Chairman of the Air and Water Pollution Subcommittee
and prime sponsor of the original legislative package, carried the
body and the amendment was defeated. During House consideration,
Representative Heinz of Pennsylvania offered a nearly identical
amendment, which the Chair ruled nongermane and which the lower
house therefore did not consider. The discussion that follows
examines these congressional actions for their preclusory legal
impact on EPA and state efforts to use pollution charges to achieve
compliance with FWPCA requirements.
Tiockhart, Kamisar and Choper, Constitutional Law; Cases,
Questions (3rd edition, 1970), 337. For a helpful analysis of recent
pre-emption cases in three environmental areas (nuclear power plants,
airport noise regulation -and oil spills), see, Soper, supra, note 1,
at II.B.I.a.
69Pub. L. No. 92-500; 86 Stat. 816; 33 U.S.C., §1251 et seq.
61
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A point of departure is the relevant language of Sutherland on Statutory
Construction.70 "Generally the rejection of an amendment indicates
that the legislature does not intend the bill to include the provisions
embodied in the rejected amendment." Six federal cases are cited in
support of this proposition, four from the United States Supreme Court,
which amplify and qualify this broad rule.71 The preclusory effect
of such rejection can be reckoned with greatest certainty where the
amendment offers substitute language for provisions already within
the proposed bill. Where, as here, the concept and language offered
as amendment are entirely outside the four corners of the bill to
be amended, it is more difficult to assess the impact of rejection.
In such circumstances, history in committee and other extrinsic
evidence must be examined to determine the extent to which the concept
and language contained in the amendment were specifically omitted
from the draft bill. In addition to testing the range of consideration
given to the ideas contained within the amendment, it is useful
to examine the specificity and comprehensiveness of the amendment
itself.
The Proxmire amendment72 — Senator Proxmire^ floor amendment
stressed that its purpose was "to supplement the enforcement pro-
cedures of this Act," and in no way did it seek to have effluent
charges supplant the regulatory powers given by the Act. In language
as well as concept it was an add-on, and therefore no section of
the adopted legislation can be said to precisely contain the Senate's
resolution of the issues it contained. Nor was any section of the
legislation adopted in lieu of it. The amendment proposed a schedule
of national effluent charges for all discharges which "detract from
the quality of the water for municipal, agricultural, industrial,
recreational, sport, wildlife, and commercial fish uses." Certain
deletrious discharge substances were named, but additional ones could
be enumerated by regulation. A fee schedule for the enumerated
substances had to be prescribed by June 30, 1972. Misdemeanor
penalties were provided for willful violation of regulations pro"-
mulgated pursuant to the section and the U.S. District Courts were
70
J. Sutherland, Statutory Construction, section 48.18, entitled
"Legislative Action on Proposed Amendments to a Bill."
71Lapina v. Williams 232 U.S. 78, 58 L.Ed. 515, 34 S.Ct. 196
(1914); United States v. Pfitsch. 256 U.S. 547, 551, 65 L.Ed. 1084,
41 S.Ct. 569 (1921); United States v. Great Northern R. Co.. 287
U.S. 144, 155, 77 L.Ed. 223, 53 S.Ct. 28(1932); Norwegian Nitrogen
Products Co. v. United States» 288 U.S. 294, 306, 77 L.Ed. 796,
53 S.Ct. 350 (1933); J.W. Quid Co. v. Davis. 246 F. 228 (C.C.A.
4th, 1917); Madden v. Brotherhood & Union of Transit Employees of
Baltimore. 147 F.2d 439 (1945).
Tlie following discussion is based on the Congressional Record of
Proceedings and Debates of the 92nd Congress. 1st Session, vol. 117,
No. 164, for Tuesday, November 2, 1971, pp. S17425-32.
62
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given power to enjoin violations as well. All revenues collected
were to be deposited in a dedicated fund which could be spent
without further congressional appropriation action. Regional
water pollution control agencies were specifically granted authority
to impose a more rigorous schedule of charges.
In floor debate, Senators Proxmire and Muskie clashed repeatedly.
The amendment's author argued that economic disincentives such as
those embodied in his proposal were necessary to insure compliance
with the FWPCA timetable. To Senator Muskiefs chief objection, that
establishing such a charges schedule might be mistaken for selling
a license to pollute, Proxmire responded that if the charges were
in all cases higher than the polluter's cost of abatement, they would
not constitute such a license. Muskie stressed that he had long been
familiar with proposals for effluent charges, had personally inspec-
ted the West German systems that use charges, and had discussed
their merits and drawbacks adequately in his subcommittee. In effect,
he was establishing legislative history aimed at showing that not
only should the Senate turn back Proxmirefs charges amendment, but
that in fact the sub- and full committees had rejected such an approach
in their deliberations.
This earlier rejection did not constitute Muskie's only angle of
attack. He seized upon the amendment's use of the word "revenues"
to characterize the proposal as one calling for a tax, and criticized
the enforcement abilities of the IRS. Beyond that, Muskie posed
three problems to which he said insufficient solutions had been
offered; (1) how to make charges sufficiently "uniform" to comply
with constitutional requirements for taxes; (2) how to fix the basis
for assessment; and (3) how to create constitutionally a dedicated
(trust) fund in a revenue measure. Also, he argued, the amendment
would impose a penalty if piggybacked upon user fees already extant.
Only in cases of direct discharges, Muskie said, would there be a
disincentive to dump untreated or undertreated wastes. Compounding
the uncertainty present in the three conceptual questions above were
two nagging doubts about feasibility: how to guarantee that charges
will always exceed specific abatement costs, and how, if revenues
were being raised, to avoid having revenue flow become the motive
force behind the charges since effective charges that curtailed dum-
ping would theoretically yield decreasing revenue over time.
Muskie viewed the Proxmire amendment as opening the way to "unaccept-
able enforcement compromises," and further he believed that even if
the handicaps facing a charges scheme were overcome, they would
merely accomplish a "marginal task." As an additional argument to
persuade his colleagues to reject the Proxmire amendment, Muskie
observed, "[t]he bill already... does a great deal of what the Senator
from Wisconsin proposes." He argued that the Proxmire amendment was
63
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duplicative insofar as the proposed legislation provided for payment
of user charges by industrial dischargers-to municipal sewage treat-
ment plants and encouraged regionalization of pollution abatement
schemes. This line of argument cuts against Huskie's earlier attempt
to create legislative history by citing previous committee rejection
of the Proxmire ideas, and is key to understanding the limited
effect of the rejection of the amendment; Sutherland suggests that
the general rule that rejection expresses the legislature's intention
not to incorporate an amendment's provisions may not be controlling
where "such rejection may occur because the bill in substance already
includes these provisions."73 Although this is not the case here,
Senator Muskie's remarks complicate the evaluation of the legislative
history.
The two legislators skirmished further on whether the major bill or
the amendment would require a larger enforcement bureaucracy.
Proxmire again characterized his amendment as piggybacking upon
tax collection. Huskie countered by arguing that in order to have
a fairly based tax it would be necessary to link specific chemical
discharges with specific levels of damage to water quality. Not a
single witness before his committee could suggest how the vast mass
of regulatory data could fairly be collected, assessed and processed
into a schedule of charges, Muskie alleged.
The exchange then shifted to the question of technology assessment
and judging when industry was acting in good faith to seek out and
apply nbest available technology." Huskie asked Proxmire how a
charge would be calculated if no technology was available above
whose marginal cost the effluent charge would be established. Prox-
mire responded by arguing that in such instances the magnitude of
the charge would be based on environmental damage avoided. Huskie
commented in response to Proxmire's shifting the charge's conceptual
basis: "This is a new factor introduced in this subject this after-
noon. That has never been suggested in any hearings I have conducted.
It was always geared to the cost of cleanup." Huskie added that damage
assessment is quite difficult and little damage information is avail-
able. Proxmire, without presenting much evidence, responded,"...we
know it can be worked out."
The colloquy shifted once again, with Proxmire contending that it
would take a minimum of three and one half years under the S. 2770
timetable for regional pollution control agencies to organize, to
develop cleanup plans, and to have such plans approved by EPA. He
believed that requiring charges to be imposed by June 30, 1972, as
per his amendment, would produce quicker pollution abatement.
73
Sutherland, supra, note 70 at 224.
64
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Muskie responded that the calendar S. 2770 established was appropriate
for the reasoned analysis that would have to support any control pro-
gram and further, that the evaluations necessary for a good effluent
charge program could not be completed as quickly as Proxmire con-
tended.
The suggestion above that in rejecting this amendment the Senate
intended only a narrow preclusion is buttressed by the floor remarks
of Senator Buckley (R-C, NY), who, while opposing "the specific
language" which Proxmire proposed, felt that "the concept of a tax
on the discharge of pollutants is not inconsistent, nor would it
set back the objectives of the bill." Further, Buckley urged
Proxmire to continue to press forward with effluent charges. Senators
Percy and Humphrey both endorsed the amendment, but not in ways
amplifying the issues here. Senator Baker opposed the amendment
with a negative characterization: "1 think that imposing a tax or
user fee on the right to pollute, no matter whether it is a little
or a lot, is also not the right way to approach it...." Proxmire
countered by stressing the enforcement history of tax measures,
saying that he doubted that the Refuse Act of 1899 would have lain
dormant for so long had it been a tax act. When the voice vote
was called, Proxmire stated that he knew the committee was in opposi-
tion, and expected the defeat.
The Heinz amendment — On March 29, 1972, Representative Heinz
offered an amendment on the House floor to the House version of the
FWPCA.74 Almost identical to the Proxmire amendment, the Heinz
proposal allowed a longer grace period before enforcement, but included
municipal sewage within the schedule of effluent charges. Another
modification provided for delayed rebating of 50 per cent of the
effluent charges paid by any polluter who installed or altered
abatement equipment to comply with the law's standards. An upper
limit on the rebate was set at full compensation of abatement costs.
No sooner had this amendment been introduced than Congressman Harsha
of Ohio reserved a point of order against it, allowing floor debate
to continue, but allowing Harsha to cut it off at any point by calling
for a ruling from the Chair. Arguing much as Proxmire had, Heinz
alleged that effluent charges would be an abatement incentive, and
would shift some of the cleanup costs to polluters, thereby saving
the taxpayers money and avoiding an enlarged federal enforcement
bureaucracy. Little evidence was presented to support these asser-
tions. The technology thus compelled into existence by effluent
charges, Heinz asserted, would benefit the nation's economy and avoid
the specter of unemployment.
Representative Harsha held fast on his point of order, that the amend-
ment was nongermane in that three of its stated purposes were the
?4H.R. 11896.
65
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raising of revenue, regulation of some aspects of business behavior,
and encouragement of the sales of different product mixes, which
three all lie outside pollution control and enforcement. Further,
Harsha seized upon the word "revenue" to argue that the bill properly
could only have originated in the House Ways and Means Committee.
Finally, argued Harsha, the language creating and directing the ex-
penditures from a fund are appropriations; these are likewise improper
in legislative bills. As Senator Muskie had done, Congressman Don
Clausen rose to suggest that section 317 (a) of the bill overlapped
the objectives of the amendment by requiring a study of alternative
methods of financing, including a pollution abatement fund.
To avoid the issue raised concerning approprate committee jurisdiction,
Representative Heinz labeled his charges "user fees" and asserted
that raising monies and expending them for treatment was essential
to the functioning of the bill. He cited two House precedents
allowing consideration of legislative bills containing the collection
of tolls on freight, and of fines and penalties for offenses on
public lands, both despite objections grounded in House Rules.
The Chair ruled that while points of order did not lie against the
sections to which Heinz likened his amendment, they did with respect
to his floor amendments. The Chair held that the questioned pro-
visions of the amendment did provide for raising revenue, and for
making an appropriation, and were therefore nongermane, rendering
the amendment out of order and violative of House Rules, and it could
not be considered further or voted upon.
Evaluation of Congress* preclusory intent — This recitation of the
floor debate is required in order to test the force which a court
interpreting the FWPCA would assign to the rejection.of the Proxmire
and Heinz amendments. It is possible to conclude that the latter
failed for reasons wholly unrelated to a consideration on the merits,
and a case can be made that the former was not so totally rejected
as to preclude federal administrative adoption of effluent charges.
Rather than to hold the Senate voice vote as a flat and absolute
rejection of effluent charge schemes, it seems from the positions
taken and the provisions which received attention in floor debate
that Congress rejected something far narrower. The constant dis-
cussion of the measure in taxing-revenue-IRS terms indicates that
chief among the opponents1 objections to the amendment was a belief
that it improperly involved the Congress* taxing power while at the
same time failing to meet the constitutional uniformity test for
revenue legislation. As noted above, it was for precisely this
reason that the House of Representatives failed to consider Rep. Heinz*
parallel amendment.
66
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Second, the senators questioned the legality of incorporating a
trust fund provision in a general revenue measure. When coupled
with authorization for non-appropriated spending beyond the reach of
Congress1 power of the purse, the provisions became so offensive
that a rather persuasive argument emerges that the Senate, too, might
have rejected the Proxmire amendment without reaching the merits of
effluent charge schemes.
Third, it is necessary to give some credence to the argument em-
ployed by Senator Muskie that the amendment was somewhat duplicative
of provisions already incorporated in the main bill. If so, Congress
did not so much register its sentiment against effluent charges
as in favor of the committee's package bill. In that view, an effluent
charges scheme which was not revenue-oriented, and not in conflict
with the FWPCA, might not be precluded by this vote from being applied
administratively.
A countervailing argument derives from Senator Muskie's remarks during
Senate floor debate that S. 2770 drew upon various sources including
hearings and other proposed legislation. The fact that Senator Prox-
mire 's effluent charges bill was before the committee and was not
incorporated into the final draft is some evidence that Congress
did intend to preclude the charges method of pollution control.
On balance, however, it seems that the stronger evidence is that
preclusion was never fully and firmly expressed. It is worth nothing
that rejection of the amendment came on a voice vote, which courts
are not inclined to accept as binding statutory construction so
rigidly as a rollcall vote. If the Senate had viewed effluent
charges as a very serious threat to the integrity of the bill, it
would have wished a more formal and definitive resolution of the
issue.
As with grey areas in general, a deciding factor in divining Con-
gressional intent may be the level of specificity which Congress
has brought to bear in a particular decision-making process. First
it should be said that the Proxmire amendment urged upon the Congress
a regulatory method sufficiently unfocused in its author's mind that
when he was vigorously challenged in debate, he could offer only the
vaguest guides to standards to be employed in setting initial charge
schedules. Failure to delineate the differences between charges,
taxes, user fees, penalties, and civil fines did not help achieve
specificity. When negative legislative actions are being asserted
as precluding acts, they must be of sufficient clarity that ordinary
ambiguities are avoided. Applying such a test here, the rejection
of the Proxmire amendment did not, of itself, preclude application
of effluent charges.
67
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Statutory Provisions — If Congress has neither specifically enacted
effluent charges nor specifically precluded them, the next line of
inquiry is whether any provisions of the Act would authorize
administrative adoption of the charges.
Hazardous substances — Section 311(b)(2) of the Act directs the
Administrator of the EPA to develop and publish regulations desig-
nating as hazardous substances (other than oil) elements and com-
pounds which, when discharged in any quantity into or upon the navi-
gable waters of the U.S. or adjoining shorelines, or the waters of
the contiguous zone, present an imminent and substantial danger to
the public health or welfare, including, but not limited to, fish,
shellfish, wildlife, shorelines and beaches. Section 311(b)(1) de-
clares U.S. policy to be "that there should be no discharges of
oil or hazardous substances."
Section 311(b)(2)(B)(ii) provides that any person who between October
18, 1972, and October 18, 1974, discharges a hazardous substance
which cannot be removed "shall be liable ... to the United States for
a civil penalty per discharge established by the Administrator based
on toxicity, degradability, and dispersal characteristics of such
substance, in an amount not to exceed $50,000." If the discharge is
willful, there is no limit to the amount so established. After
this two year period the Administrator has discretion to impose a
penalty for the discharge of a nonremovable hazardous substance
either of not less than $500 nor more than $5,000 based on the toxi-
city, degradability and dispersal characteristics of the substance
or "a penalty determined by the number of units discharged multi-
plied by the amount established for such unit under clause (iv) of
this subparagraph..." Clause (iv) provides that the Administrator
shall establish by regulation "a unit of measurement based upon the
usual trade practice and, for the purpose of determining the penalty...,
for each such unit a fixed monetary amount...not less than $100 nor
more than $1,000 per unit. He shall establish such fixed amount
based on the toxicity, degradability, and dispersal characteristics
of the substance."
x
As yet no regulations with a list of hazardous substances has been
promulgated under section 311(b) (2) (A) nor have any civil penalties
been levied under section 311(b)(2)(B)(ii). The intent of Congress
in enacting these provisions is clear from these excerpts from the
report of the Senate Public Works Committee on S. 2270:
...The Committee was concerned that many hazardous substan-
ces cannot be cleaned-up by standard methods because they
immediately dissolve in the receiving waters.
These substances, the discharge of which may cause environ-
mental disaster, could not be subject to any meaningful
cleanf-up liability. A clean-up liability provision therefore
would provide no incentive to carriers and handlers of these
68
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substances to exercise the great caution that such materials
warrant.
The Committee belives that the discharge of such sub-
stances should be subject to penalty even though clean up is
not practicable. In this way, each carrier or handler evaluates
the risk of discharge and determines whether or not thepotential
penalty is worth the risk. Because the penalty to be imposed
under this section should relate to the environmental hazard
involved, the Committee determined that the Administrator
should set the amount of penalty on the basis of the actual
amounts of aaterial released into the waste environment. The
bill would establish a minimum fine of $50,000 and a limit
per barrel fine of $5,000. The Administrator is expected
by regulation to set the fine per barrel of discharge based
on toxicity, degradability, and disposability of such sub-
stances.
Because no outside limit is proposed the potential penalty
would be the amount of substance involved times the amount
of penalty set by the Administrator.75
This statement indicates that civil penalties for discharges of
non-removable hazardous substances are to be levied in a way analo-
gous to one means of imposing effluent charges, i.e., by basing them
on the extent of social costs (or damages) imposed by particular
discharges. However, unlike most effluent charges, the civil penalties
proposed in section 311 are not keyed to differing water conditions
in different basins. Further they are designed to punish illegal
behavior and require either agency policing, or reliance upon
reporting of violations. A charge scheme would normally involve
routinized monitoring of effluents, and is a cost which can be reckoned
by the polluter as a factor of doing business, rather than merely
an incident of being caught. The history of section 311(b)(2)(B)(ii)
shows that it was intended to be used in the event of short-life in-
advertent or unavoidable spills, and was not designed to provide
the Administrator with regular, on-going monitoring or enforcement
powers. Section 311, which is cast in the language of penalties
for offending behavior, does not provide authority for administrative
adoption of a charges scheme applicable to hazardous substances.
Toxic pollutants — Section 307 is the provision of the Act governing
toxic pollutants. Toxic pollutants are defined (in section 502(13))
as "those pollutants, or combinations of pollutants, including disease-
causing agents, which after discharge and upon exposure, ingestion,
inhalation or assimilation into any organism, either directly from
"Report of the Committee on Public Works," United States Senate,
together with Supplemental Views, to accompany S. 2770,..Report
No. 92-414, 92nd Congress, 1st Session, ..October 28, 1971, at 66.
69
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the environment or indirectly by ingestion through food chains, will,
on the basis of information available to the Administrator, cause
death, disease, behavioral abnormalities, cancer, genetic mutations,
physiological malfunctions (including malfunctions in reproduction)
or physical deformations, in such organisms or their offspring."
Pollutant, in turn, is defined (in section 502(6)) as "dredged spoil,
solid waste, incinerator residue, sewage, garbage, sewage sludge,
munitions, chemical wastes, biological materials, radioactive materials,
heat, wreaked or discarded equipment, rock, sand, cellar dirt and
industrial, municipal, and agricultural waste discharged into water.11
After the Administrator publishes a list of toxic pollutants he must
publish proposed effluent standards or prohibitions for these pollu-
tants which take into account the toxicity of the pollutants, their
persistance, degradability, the usual or potential presence of the
affected organisms in any waters, the importance of the affected
organisms, and the nature and extent of the effect of the toxic
pollutants on such organisms. Hearings must be held on these pro-
posed standards prior to the ir promulgation. Any effluent standard
promulgated shall be at a level the Administrator determines will
provide an ample margin of safety and must designate the categories
of sources to which it applies. After the effective date of any
effluent standard or prohibition under section 307 it is unlawful
for the owner or operator of an source to operate any source in
violation of the standard or prohibition.
On December 27, 1973, the Environmental Protection Agency published
proposed toxic pollutant effluent standards for nine pollutants (in-
cluding aldrin, dieldrin, cadmium, mercury, cyanide and DDT).76 A
hearing was held in accordance with section 307(a)(2) on January
25, 1974 in Washington, D.C.
Although the criteria which section 307(a) requires the Administrator
to take into account in formulating toxic pollutant effluent stan-
dards or prohibitions could serve as the basis for a charges system
applicable to those pollutants, the section only authorizes a con-
trol strategy based on effluent standards or prohibitions and does
not authorize the adoption of a charges system by the federal govern-
ment.
General provisions — Section 501(a) authorizes the Administrator to
prescribe "such regulations as are necessary to carry out his functions
under this Act." This section cannot be construed to authorize the
38 Fed. Reg. 35388. The nine substances covered by the proposed
regulations are: aldrin, dieldrin; benzidine; cadmium; cyanide;
DDD, DDE, and DDT; endrin, mercury; polychlorinated biphenyls;
and toxaphene.
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Administrator to promulgate regulations adopting effluent charges as a
means for achieving the goals of the Act. Delegation of legislative
authority requires more or less articulated standards governing the
means for achieving the objectives of a piece of legislation and this
section contains no guidelines which the Administrator is to follow
in adopting charges. The section limits the Administrator's power
to adopting those rules which are necessary to carry out "his functions"
under the Act. It does not permit him more discretion by authorizing
"appropriate" rules. An administrative officer may not extend the
reach of an Act of Congress, nor impose additional or more strin-
gent requirements for the granting of a permit, by regulation under
a general statutory authorization to make rules.
Extent of Pre-emption — Section 510 of the act provides that, unless
expressly provided otherwise, nothing "shall preclude or deny the
right of any State or political subdivision thereof or interstate
agency to adopt or enforce any standard or limitation respecting
discharges of pollutants or any requirement respecting control or
abatement of pollution." If an effluent standard or limitation is
in effect under the FHPCA Amendments of 1972, however, no state or
political subdivision may adopt or enforce any limitation or stan-
dard which is less stringent than the federal one. Section 301(b)(1)(C)
reinforces this authority preserved for the states: prior to July
1, 1977, pollution sources must achieve not only effluent limitations
which shall require the application of the best practicable control
currently available as defined by the Administrator (or, for publicly
owned treatment works, which shall be based upon secondary treatment
as defined by the Administrator), but also "any more stringent
limitation, including those necessary to meet water quality stan-
dards, treatment standards, or schedules of compliance, established
pursuant to any State law or regulations (under authority preserved
by section 510 of this title)...."
Nothing in section 307 expressly, provides that states or political
subdivisions may not adopt and enforce more stringent standards
for or limitations on the discharge of toxic substances. Section
311 not only does not contain any language precluding or denying
the right of states to adopt or enforce any limitation respecting
discharges of hazardous pollutants but also specifically provides,
in section 311(o)(2): "Nothing in this section shall be construed
as preempting any State or political subdivision thereof from
imposing any requirement or liability with respect to the discharge
of oil or hazardous substances into any waters within such State."
Nor do other applicable sections of the Act provide that states
may not adopt more stringent standards or controls.
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Control over water pollution, as congressional debates repeatedly
indicate, has traditionally been exercised by states and their
subdivisions. This fact, plus the normal judicial presumption in
favor of sustaining state laws against claims they are pre-empted by
federal law unless there is a clear expression of congressional intent
to do so, helps explain why section 510 (and its analogues in other
federal environmental statutes) so explicitly sets forth the extent
of federal pre-emption. A Supreme Court decision (concerning
Florida's authority to regulate oil tanker and terminal facilities
equipment and to subject these tankers and facilities to unlimited
liability without fault for damages and cleanup costs caused by oil
spills) suggests that the states will be allowed substantial latitude
for their own initiatives until and unless they clearly conflict
with federal provisions in fact, not just in theory. In Askew v.
American Waterways Operators, Inc.,77 decided in April 1973, the
Supreme Court unanimously held that Florida's law was not pre-empted
by the Water Quality Improvement Act of 1970, which introduced the
precedessor section to section 311 of the FWPCA Amendments of 1972.
The combination of these statutory provisions and the Supreme Court's
decision in Askew leaves state legislatures ample room to adopt
effluent charges if they wish to do so.
Conclusion — There are no provisions of the Federal Water Pollution
Control Act Amendments of 1972 which authorize the adoption of effluent
charges by the Administrator of the Environmental Protection Agency.
If there were such provisions, the legislative history of the defeat
of Senator Proxmire's proposed amendment would not preclude their
adoption by the Administrator. The Act does not pre-empt state laws
which would impose effluent charges.
The Clean Air Act
The legislative history of the Clean Air Act Amendments of 1970,
which substantially amended the Clean Air Act, contains no references
to emission fees or other disincentives. Thus the inquiry into whether
the Administrator may adopt emission fees begins with an analysis
of the provisions of the statute.
Statutory Provisions — Hazardous air pollutants — Section 112(a)7°
defines a hazardous air pollutant as one to which no ambient air
quality standard is applicable and which in the judgment of the
Administrator of the EPA "may cause, or contribute to, an increase
77411 U.S. 325 (1973).
7R
42 U.S.C. §1857c-7(a).
72
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in mortality or an increase in serious irreversible, or incapaci-
tating reversible, illness." Section 112 requires the Administrator
to publish a list of hazardous pollutants for which he intends to
establish emission standards for such pollutants and requires
that such standards as he prescribes be established "at the level
which in his judgment provides an ample margin of safety to protect
the public health from such hazardous air pollutant[s]." The stan-
dards are effective when promulgated, after which no air pollutants
to which they apply may be emitted from a stationary source in violation
of the standard applicable and no person may construct a new source
or modify an existing source which may in the Administratorfs judgment
emit a hazardous pollutant unless the Administrator finds that if the
source is properly operated it will not violate the standard. The
Administrator may grant up to a two-year waiver of the standard if
a source needs time to install controls and will take interim steps
to avoid threats to public health. The President may exempt any
stationary source from compliance with an emission standard for
hazardous air pollutants for a period of two years if technology
to implement the standard is not available and the operation of
the source is required for reasons of national security.
If the Administrator finds a person is in violation of a hazardous
emission standard he may issue an order requiring compliance or
file a civil action for an injunction or other appropriate relief.^9
The states may submit to the Administrator procedures for implementing
and enforcing hazardous emission limits within their jurisdictions.
If the Administrator finds the procedures adequate he must delegate
his authority to implement and enforce the standards to the state.80
These provisions governing control of emissions of hazardous sub-
stances limit the authority of the Administrator to listing hazar-
dous pollutants, prescribing emission standards for hazardous pollu-
tants (i.e. rules limiting the amount of such pollutants discharged),
and issuing enforcement orders or initiating civil suits if he finds
a person in violation of these standards. There is no authority in
section 112 upon which the Administrator could base rules adopting
charges or other disincentives applicable to emissions of hazardous
pollutants.
Implementation plans — Section 110(c) of the Act directs the Ad-
ministrator to publish proposed regulations setting forth part or
all of an implementation plan for achieving primary and secondary
ambient air quality standards for any state which (1) fails to submit
79Section
on
ouSection
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such a plan, or (2) submits a plan determined by the Administrator
to be not in compliance with the requirements of section 110(a)(2),
or (3) fails to revise a plan. If, within six months thereafter, the
state has not submitted an acceptable plan or revision, the Administrator
must promulgate his regulations. '
The requirements of section 110 (a) (2) also provide that the plan
include "emission limitations, schedules, and timetables for com-
pliance with such limitations, and such other measures as may be
necessary to insure attainment and maintenance of...primary or secon-
dary standard[s], including, but not limited to, land use and trans-
portation controls."
If the Administrator finds that emission charges or other disin-
centives are "necessary" to achieving the standards in a particular
state which has not submitted or revised its plan, then section 110(c)
would authorize him to adopt rules incorporating such disincentives
for that state. It was under this provision that the Administrator
proposed parking surcharges prior to withdrawing them under congressional
guidance. Public Law No. 93-319, signed by the President on June
24, 1974, now expressly prohibits promulgation of parking surcharges
by the Administrator as part of transportation control measures in
Implementation plans, although he may approve surcharges if they are
included in an implementation plan submitted by a state.81
General provisions — Section 301(a), like section 501(a) of the
Federal Water Pollution Control Act Amendments of 1972, authorizes
the Administrator "to prescribe such regulations as are necessary
to carry out his functions under this chapter." Section 301(a) was
cited In conjunction with section 110(c) as authority for the pro-
mulgation of parking surcharges. But standing alone this section
would not authorize the Administrator to promulgate disincentives, for
the same reasons that section 501(a) of the Federal Water Pollution
Control Act Amendments of 1972 would not.
Extent of Pre-emption — Section 116 of the Clean Air Act provides
that "except as otherwise provided in sections 209, 211(c)(4),
and 233 [pre-empting state regulation of emissions from new motor
vehicles and from aircraft and of the use of a fuel or fuel additive]
nothing in this Act shall preclude or deny the right of any State
or political subdivision thereof to adopt or enforce any standard
or limitation respecting emissions of air pollutants or any require-
ment respecting control or abatement of air pollution." No state or
subdivision may adopt or enforce any emission standard or limitation
81
Parking surcharges are discussed in section VII of this report.
74
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less stringent than one applicable to a new source under section 111
or to a hazardous pollutant under section 112 or in effect under
an implementation plan, however.
This broad latitude for state initiatives — including emission
charges — has been restated in regulations implementing the Clean
Air Act. On April 6, 1973, the Environmental Protection Agency
promulgated emission standards for three hazardous air pollutants,
asbestos, beryllium, and mercury.82 Section 61.16 of these rules
provides that they "shall not be construed in any manner to preclude
any State or political subdivision thereof from adopting and enforcing
any emission limiting regulation applicable to a stationary source,
provided that such emission limiting regulation is not less strin-
gent than the standard prescribed..." State control strategies for
achieving ambient air quality standards have been defined to include
"federal or state emission charges or taxes or other economic in-
centives or disincentives."°^ And revisions in plans are to be made
as necessary, to take account of "the availability of improved or
more expeditious methods of attaining ... standards, such as improved
technology or emission charges or taxes..."°^
Conclusion The Administrator of the Environmental Protection
Agency may adopt disincentives (excluding parking surcharges)
under section 110(c) of the Clean Air Act if he finds them a necessary
part of implementation plans to achieve primary and secondary air
quality standards in a state. The states and their subdivisions
are not -pre-empted from adopting disincentives applicable to other
than new motor vehicles, aircraft or the use of fuels or fuel
additives.85
Federal Insecticide, Fungicide and Rodenticide Act
The Federal Environmental Pesticide Control Act of 197286 substantially
8238 Fed. Reg. 8820; 40 C.F.R. Part 61.
8340 C.F.R. 51.1(n)(2)
8440 C.F.R. 51.6(a)(2).
85
California is exempt from the pre-emption applicable to new motor
vehicles and fuels and fuel additives. Sections 209(b), 211(c)
(4)(B). Other states may provide for controls on the use of fuels
or fuel additives in their implementation plans if the Administrator
finds them necessary to achieve primary and/or secondary ambient
air quality standards. Section 211(c)(4)(C).
86
Pub. L. No. 92-516; 86 Stat. 973; 7 U.S.C. §135.
75
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amended the Federal Insecticide, Fungicide and Rodenticide Act. Al-
though the legislative history of the 1972 amendments does not mention
applying disincentives to discourage the use of pesticides, several
provisions of the amended act provide such authority.
Statutory Provisions — Registration — Section 3 of the Act requires
all pesticides to be registered before being introduced into inter-
or intrastate commerce. The Administrator shall register a pesticide
if he determines that when used in accordance with widespread,
comnonly recognized practice it will perform its function "without
unreasonable adverse effects on the environment."87 if he registers
a pesticide the Administrator must classify a pesticide either for
general use or for restricted use unless its various users call for
dual classification.88 A pesticide is to be classified for restricted
use if the Administrator determines that "when applied in accordance
with its directions for use, warnings and cautions and for the uses
for which it is registered, or for one or more of such uses, or in
accordance with a widespread and commonly recognized practice, [it]
may generally cause, without additional regulatory restrictions,
unreasonably adverse effects on the environment, including injury to
the applicator."8^ If the Administrator classifies a pesticide for
restricted use because of its effects on the environment (as distinct
from on the applicator) it may be applied for any use to which the
classification applies "only by or under the direct supervision of
a certified applicator, or subject to such other restrictions as
the Administrator may provide by regulation."9°This provision would
authorize the Administrator to promulgate regulations — after affor-
ding those affected with an opportunity to comment — requiring that
the application of a restricted-use pesticides would require payment
of charges which would discourage its use.91
87
Section 3(c)(5).
QQ
Section 3(d)(l)(A). A general use pesticide is one which, "when
applied in accordance with its directions for use, warnings and
cautions and for the use for which it is registered, or for one or
more of such uses, or in accordance with a widespread and commonly
recognized practice, will not generally cause unreasonable adverse
effects on the environment." Section 3(d)(l)(B).
on
Section 3(d)(l)(C). The term "unreasonable adverse effects on
the environment" tneans any unreasonable risk to man or the environ-
ment, taking into account the economic, social,, and environmental
cost and benefits of the use. Section 2(bb).
on
Section 3(d)(1)(C)(ii) (emphasis added).
91Rep. No. 838, 92nd Congress, 2d Session, 20-22 (1972); H.R. Rep.
No. 511, 92nd Congress, 2d Session, 13 (1971). These reports indi-
76
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General provisions — Section 25(a) authorizes the Administrator to
"prescribe regulations to carry out the provisions of this Act. Such
regulations shall take into account the difference in concept and
usage between various classes of pesticides." This section reinforces
the Administrator's authority to adopt regulations imposing disincen-
tives charges on the use of restricted-use pesticides.
Experimental use permits — Section 5 of the Act authorizes the
Administrator to issue experimental use permits for a pesticide if
the applicant needs the information about it necessary to register
it. Use of a pesticide under such a permit is "subject to such terms
and conditions" as the Administrator may prescribe in the permit.^2
This provision may authorize the Administrator to impose a condition
on the experimental use of a pesticide that the applicant pay charges.
Extent of Pre-emption — Section 24(a) of the Act authorizes states
to "regulate the sale or use of any pesticide or device in the State,
but only if and to the extent the regulation does not permit any
sale or use prohibited by this Act." This provision does not pre-empt
states from adopting disincentives applicable to pesticides classified
either for general use or for restricted use under federal registration.
Conclusion — The Administrator may adopt regulations providing for
disincentives on the use of restricted-use pesticides and may
condition experimental use permits upon the payment of disincentive
charges. The states are not pre-empted from adopting disincentives
for any federally registered pesticide.
cate Congress intended, among other things, to authorize the Adminis-
trator to limit quantity, frequency and geographical area of restricted-
use pesticide applications. Congress did not intend that the Ad-
ministrator use this provision to impose a restriction that a restricted-
use pesticide could only be used if a permit were obtained prior to
each application. "The Committee wishes to emphasize, however,
the language contained in this paragraph authorizing the Administrator
to impose alternative restrictions does not constitute open-ended
authorization for the Administrator." Senate Rep. No. 838, at 21.
Whether the Committee would consider imposing disincentives under
this authority as going too far cannot be predicted, since the subject
was not considered. But the language of the provision is broad
enough to support such action.
92
Section 5(c).
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Marine Protection, Research, and Sanctuaries Act of 1972
Statutory Provisions — Section 102(a) of the Marine Protection, Re-
search, and Sanctuaries Act of 197393 authorizes the Administrator of
the Environmental Protection Agency to issue permits for the transpor-
tation of matter of any kind94 for the purpose of dumping into ocean
waters95 Or for the dumping of matter of any kind into the territorial
sea of the U.S. or a zone contiguous to that sea extending twelve miles
seaward from the baseline from which the breadth of the territorial
sea is measured. In order to issue a permit the Administrator must
determine "that such dumping will not unreasonably degrade or endanger
human health, welfare, or amenities, or the marine environment,
ecological systems, or economic potentialities."96
Section 104(a) requires that these permits shall include^7 "such other
matters as the Administrator...deems appropriate." This section
may authorize imposing the payment of disincentives to discourage
dumping of toxic or any other matter as a condition of a permit, if
the Administrator deemed it appropriate.
Section 108 provides that "[i]n carrying out the responsibilities
and authority conferred by this title, the Administrator...[is]
authorized to issue such regulations as...[he] may deem appropriate."
This section would authorize the Administrator to issue regulations
adopting disincentives for dumping matter into the oceans if the
Administrator deemed it appropriate.
93
Pub. L. No. 92-532; 86 Stat. 1052; 33 U.S.C. §1401.
Except radiological, chemical and biological warfare agents and
high-level radioactive wastes, transportation and dumping of which
is prohibited by section 101, and dredged material, the dumping of
which is regulated by the Secretary of the Army in accordance with
section 103.
*0cean waters means "those waters of the open seas lying seaward
of the baseline from which the territorial sea is measured, as pro-
vided for in the Convention on the Territorial Sea and the Con-
tiguous Zone." Pub. L. No. 92-532, section 3(b).
96Id., section 102(a).
97In addition to designations of the type of material to be trans-
ported for dumping or dumped, the amount authorized to be trans-
ported for dumping or dumped, the location where such dumping will
occur, the length of time for which the permit is valid, and any
provisions necessary for monitoring or surveillance of the dumping.
78
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Section 106(d) provides that "no State shall adopt or enforce any
rule or regulation relating to any activity regulated by this title."
This pre-empts any state initiatives for regulating ocean dumping,
by disincentives or otherwise.98
Conclusion — The Administrator may impose disincentives on ocean
dumping as conditions to permits or by promulgating regulations
if he deems the disincentives appropriate. States are pre-empted
from regulating ocean dumping in any way.^9
Solid Waste Disposal Act
The Solid Waste Disposal Act, as amended by the Resource Recovery
Act of 1970,^00 limits the Environmental Protection Agency to pro-
viding information, technical assistance and grants to aid the states
in developing solid waste management practices. There are no pro-
visions of the Act which would authorize the Administrator to adopt
disincentives, although section 205 does require the Agency to prepare
reports to Congress on "recommended...disincentives to accelerate
the reclamation or recycling of materials from solid wastes, with
98
A state may, however, propose criteria relating to ocean dumping
in waters within its jurisdiction which the Administrator may
adopt, after notice and an opportunity for hearing, if he determines
they are not inconsistent with the purposes of the ocean dumping
title.
99
It should be added that section 104(b) of the Act authorizes the
Administrator to prescribe fees for permits. These fees are limited
by that section to fees for "processing" the permits. The section
would not authorize fees similar to royalties for oil produced from
outer continental shelf lands or "yearly dumping fees" based on the
difference between the cost of ocean dumping and the cost of an
alternative means of waste disposal in order to offset the economic
advantage gained by ocean dumping enterprises over those who do not
have that waste disposal option. Both of these suggestions were
made by James L. Collins, Regional Hearing Officer, EPA Region VI, in
his discussion of the hearing December 13, 1973, on the application
of the GAF Corporation, pages 5 and 7. The discussion is attached
to a February 8, 1974 memo from Collins to Regional Administrator
Arthur W. Busch.
10042 U.S.C. §3251.
79
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special emphasis on motor vehicle hulks."101 The Act's provisions do
not pre-empt state initiatives to adopt disincentives,10* which are
discussed in section V.
The Noise Control Act of 1972
Statutory Provisions — Section 6(a)(l) of the Noise Control Act of
197210-* requires the Administrator of the Environmental Protection
Agency to publish proposed regulations governing noise emissions of
products (other than aircraft) identified in accordance with section
Section 205(a)(5). The special emphasis on motor vehicle hulks
may be attributed to Senators Javits and Gurney (see S. Rep. No.
91-1034, 91st Congress, 2d Session (1970) at 39).
Senator Javits had wanted to propose an amendment to the Resource
Recovery Act, and missed his opportunity due to a parlimentary
snafu, but his idea was included in the record of that legislation's
Senate floor debate. Senator Javits* proposed Title IV called for
the creation of a motor vehicle disposal fee to be paid by every
car manufacturer' for each vehicle it sold, and by each registered
owner for each pre-existing vehicle. Monies collected would be
deposited in a revolving fund called the Motor Vehicle Disposal Fund.
Processors of junked cars would be licensed, in order to guarantee
that they had available suitable machinery to process vehicle hulks
into established grades of scrap. Upon surrendeirng a vehicle to
such a licensed wrecker, the owner would receive a certificate
proving that the car was properly disposed of, and entitling him to
a disposal payment equal to the disposal fee. It would be illegal to
avoid paying the fee, to manufacture a car which did not carry a fee-
paid plaque, or to manufacture or furnish counterfeit plaques. Criminal
and civil penalties were provided.
While the Javits proposal was not incorporated into the Resource Recovery
Act nor has it been independently adopted since, his legislative
staff suggests that it will be reintroduced in the 94th Congress.
102
Section 202(a)(6)provides that "the Congress finds...the collection
and disposal of solid waste should continue to be primarily the function
of State, regional and local agencies..."
See aJ.so, American Can Company v. Oregon Liquor Control Commission,
Oregon~Court of Appeals, December 17, 1973, 4 ELR 20218 at 20221.
ino
Pub. L. No. 92-574; 86 Stat. 1234.
80
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5(b) as "major sources of noise." He is required to propose such
regulations for such products if they are construction equipment,
transportation equipment (including recreational vehicles and related
equipment), motors or engines (including any equipment of which a
motor or engine is an integral part), or electrical or electronic
equipment, and if noise emission standards are, in his judgment,
feasible. To date the Administrator has identified two products —
medium and heavy duty trucks with a gross vehicle weight of more than
10,000 pounds and portable air compressors rated above 75 cubic feet
per minute — as major sources of noise under section 5(b),^^ although
proposed regulations governing their noise emissions have not been
issued. Section 6(b) provides that the Administrator may publish
proposed regulations for any product for which he is not required
to publish them under section 6(a)(l) if, in his judgment, noise
emission standards are feasible and the regulations are required
for protecting public health and welfare. After the effective date
of regulations published under these subsections the manufacturer
of each new product to which such regulation applies shall warrant
to an ultimate purchaser that the product is designed, built and
equipped so as to conform at the time of sale with the regulations.
Both section 6(a) and 6(b) call for regulations "meeting the require-
ments of subsection (c)." These requirements are (1) that the regula-
tion "shall include a noise emission standard which shall set
limits on noise emissions from such product and shall be a standard
which in the Administrator's judgment, based on criteria published
under section 5,105 is requisite to protect .the public health and
welfare, taking into account the magnitude and conditions of use of
such product (alone or in combination with other noise sources), the
degree of noise reduction achievable through the application of the
best available technology, and the cost of compliance," and (2)
that a noise emission standard shall be a performance standard.
In addition the regulations may contain testing procedures necessary
to assure compliance with the emission standard and may contain
provisions respecting instructions of the manufacturer for the
maintenance, use, or repair of the product.
104
39 Fed. Reg. 22297, June 21, 1974.
Section 5(a)(l) requires the Administrator to develop and publish
criteria with respect to noise which shall reflect the scientific
knowledge most useful in indicating the kind and extent of all identi-
fiable effects on the public health or welfare which may be expected
from differing qualities and quantities of noise.
81
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Read together these provisions of section 6 do not authorize the
Administrator to promulgate regulations adopting disincentives, such
as charges on the decibel rating of each product. To "meet the
requirements of subsection (c)" the regulations need only set a
performance standard-'for noise emissions from a product. In addition
subsection (c) specifies two other kinds of requirements which may
be imposed — testing procedures and instructions concerning maintenance
and use. By ending the list here, Congress implicitly excluded
authority for the Administrator to issue regulations which would
go further.
Sections 17(a) and 18(a) respectively authorize the Administrator of
the Environmental Protection Agency to promulgate noise emission
regulations for "surface carriers engaged in interstate commerce
by railroad" and for "motor carriers engaged in interstate commerce."
These regulations "shall include noise emission standards setting
such limits on noise emissions...which reflect the degree of noise
reduction achievable through the application of the best available
technology, taking into account the cost of compliance." The
Secretary of Transportation has the authority to promulgate regula-
tions to insure compliance with the Administrator's standards.
The Administrator's authority is not limited to setting the stand-
ards. The language in section s 17 (a) and 18(a) differs from that
in section 6. In these sections the Administrator is required to
"include" noise emission standards in his regulations but nothing is
provided concerning what he may include in addition. And both sections
17(a) (1) and 18 (a) (1) provide that these regulations "shall be in
addition to any regulations that may be proposed under section 6."
These provisions, read together, might authorize the Administrator
to adopt regulations imposing disincentives to discourage noise
emissions from interstate rail and motor carriers. Sections 17 and
18 require the Administrator to confer with .the Secretary of
Transportation before promulgating any regulations "to assure appropriate
consideration for safety and technological availability."106
Extent of pre-emption — Sections 17 and 18 provide for complete
federal pre-emption of regulatory control of noise emissions from
surface carriers engaged in interstate commerce by railroad and from
motor carriers engaged in interstate commerce, after the effective
date of adequate federal standards. A narrow exception is carved
for state and local regulations which the Administrator determines
to be necessitated by special local* conditions and not in conflict
with relevant federal regulations. Likewise, the authority of the
106Section 17(a) (3), and section 18(a)(3).
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state and local governments to establish noise emission performance
standards enforceable against the manufacturer for the manufacture
of any product governed by federal standards after the effective
date of an applicable federal standard is precluded. Thereafter,
Section 6(e)(2) provides that state limitations may only reach to the
mode and manner of using these products: "Subject to sections 17
and 18, nothing in this section precludes or denies the right of
any State or political subdivision thereof to establish and enforce
controls on environmental noise (or one or more sources thereof)
through the licensing, regulation, or restriction of the use,
operation, or movement of any product or combination of products."
The language subordinating section 6(e)(2) to sections 17 and 18
serves to limit the states' power to regulate noise associated with
use to products other than surface carriers engaged in interstate
commerce by railroad and motor* carriers engaged in interstate commerce,
As indicated above, there is total pre-emption as to those two
modes of interstate commerce, and the states generally may not even
regulate use without the Administrator's approval.
In addition, the Supreme Court has recently held in City of Burbank
v. Lockheed Air Terminal^ Inc.^Q^ that a locality is pre-empted from
exercising its police powers to impose curfews on flights into an
airport not owned by it. Most airports at which federally-regulated
aircraft land are owned by states or their subdivisions, however,
and as owners they may regulate the use of their airports on the
basis of noise considerations.-108
Conclusion — The Administrator does not have authority under section
6 of the Noise Control Act of 1972 to adopt regulations imposing
disincentives on products which are major sources of noise but may
adopt regulations under sections 17 and 18 imposing disincentives
to control noise from interstate rail and motor carriers. States
are not pre-empted from adopting disincentives applicable to use
of new products covered by federal noise emission limits, but as to
rail or motor carriers or their components, states may adopt use
limitations and disincentives only if the Administrator determines
'special local circumstances1 warrant their/approval. States or
their subdivisions may impose disincentives on the noise from flights
into airports they own.
107
All U.S. 624 (1973).
108
American Airlines v. Town of Hempstead, 272 F. Supp. 226 (E.D.
N.Y. 1967); S. Rep. No. 90-1353, 90th Congress, 2d Session (1968) at
6-7 City of Burbank v. Lockheed Air Terminal, 411 U.S. 624, note
14 (1973).
83
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Reorganization Plan No. 3
Section 6 of Reorganization Plan No. 3 of 1970 authorizes the Environ-
mental Protection Agency to establish generally applicable environmental
standards for the protection of the general environment against radio-
active material, i.e., limits on radiation exposures or levels, or
on concentrations or quantities of radioactive material in the
general environment outside the boundaries of locations under the
control of persons possessing or using radioactive material. Res-
ponsibility for the implementation of these radiation standards
remains with the Atomic Energy Commission, however. ^ The Agency
has no authority to adopt disincentives for controlling radiation.
This control is vested with the Atomic Energy Commission and state
authority to impose standards stricter than the AECfs is pre-empted
by the Atomic Energy Act. 110 Because EPA has no implementation and
enforcement responsibilities in the radiation field, the use of
economic disincentives to promote compliance with EPA-established
radiation standards will not be discussed here.
109
See EPAfs announcement of intention to issue standards for normal
operations of activities in the uranium fuel cycle, May 19, 1974,
39 Fed. Reg. 16906.
110
Northern States Power Co. v. Minnesota. 405 U.S. 1035 (1972),
affirming 447 F.2d 1143 (8th Cif. 1971).
84
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SECTION V
STATE AND LOCAL DISINCENTIVE INITIATIVES
INTRODUCTION
State and local governments have considered several bills providing
for disincentives in various environmental fields and have enacted
a few. As discussed in section IV above, the legal issues raised by
these initiatives usually involve questions whether the police or
taxing powers to adopt disincentives (1) have been pre-empted by
federal laws or (2) have been exercised constitutionally.
These questions have so far been predominantly resolved in support
of the disincentives which the courts have been asked to consider.
This section describes several representative measures — the "bottle
laws" of Oregon and Vermont, the nicotine and tar tax of New York
City, the tax on plastic containers of New York City, and Vermont's
tax on capital gains from speculation in land — and how the courts
have analyzed these measures.
BOTTLE LAWS
Oregon
Oregon's bottle law^ took effect October 1, 1972. It governs sales of
"beer or other malt beverages and mineral waters, soda water and
similar carbonated soft drinks."2 Its aim is to reduce solid waste
and promote resource conservation. Under the law the amount of a
bottle deposit is added to the beverage price at the time of sale;
this increase in price is refunded to the consumer when bottles are
returned to the retailer or to a reclamation center. In this way
Oregon's 1971 law "makes bottles ... too valuable to heap on the
countryside."3
The bill states that "every beverage container sold or offered for sale
in this state shall have a refund value of not less than five cents,"4
except beverage containers certified by the Oregon Liquor Control Com-
mission. Certified bottles carry a mandatory deposit of two cents,
Oregon Revised Statutes [hereinafter cited as ORS], §§459.810-459.992.
2ORS §459.810(1).
3
Environmental Action Bulletin, Washington, D.C., March 24, 1973, p. 8.
4ORS §459.820(1) (emphasis added).
85
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the minimum deposit value any marketed beverage container subject to
the law may have. By definition a certified beverage container is
"reusable ... by more than one manufacturer;"5 certification is
designed "to promote the use in this state of reusable beverage
containers of uniform design, and to facilitate the return of con-
tainers to manufacturers for reuse as a beverage container.""
Bottle uniformity is promoted so as to ease retailers1 sorting and
storage tasks and to promote fungibility of the bottle supply.
A beverage container may not be certified:
if by reason of its shape or design, or by reason of words or
symbols permanently inscribed thereon, whether by engraving,
embossing, painting or other permanent method, it is reusable
as a beverage container in the ordinary course of business only
by a manufacturer of a beverage sold under a specific brand
name.7
Thus, those beverage companies unwilling to relinquish outstanding
trademarks and the resultant sales benefits they might confer are
forced to post a higher refund. — of at least five cents — which
adds eighteen cents to the price of a six-pack of beverages, and
which may discourage consumers from buying such a comparatively
expensive product.
All empty bottles and cans are worth money, whether found on a high-
way or purchased at a store. Dealers must accept any type bottle
they sell, regardless of whether or not a consumer purchased a
particular container at that store, thus facilitating beverage
container return. Not only must a retailer accept empty beverage
containers from a consumer if he sells that beverage, but a distri-
butor must accept all containers from a retailer providing they are
the kind, size and brand sold by him.
Also, the law bans "any metal beverage container so designed and
constructed that a part of the container is detachable in opening
the container without the aid of a can opener. "8
Legality of the Law — In February 1974 the Oregon Supreme Court
affirmed the December 17, 1973, opinion of the Oregon Court of
Appeals which sustained the Oregon law against challenges that it
5ORS §459.860 (2) (a).
6ORS §459.860(1).
7ORS §459.860(3).
8ORS §459.860(1).
86
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(1) placed undue burdens on interstate commerce, (2) violated the
due process clause of the Fourteenth Amendment (3) violated the plain-
tiffs' right to equal protection of the law, and (4) violated pro-
visions of the Oregon State constitution. Plantiff canners and
brewers have decided not to appeal that decision to the U.S. Supreme
Court. Because the Court of Appeals opinion thoroughly analyzes
the effects of the Oregon law and the legal issues involved, and
because the opinion was relied on in upholding Vermont's mandatory
deposit law, it is reproduced in full as Appendix E. In summary
the principal points are:
1. The federal Solid Waste Disposal Act places the responsibility
for solid waste control with state and local governments rather than
pre-empting the field.
2. U.S. Supreme Court cases invalidating state intrusions on the
free flow of instrumentalities of commerce are inapplicable because
this law regulates goods in commerce, not the means for conveying them.
3. The purpose of the Oregon law was not to protect economic inter-
ests of Oregon to the detriment of those in other states, therefore
cases weighing the extent to which state interests may interfere
with interstate commerce by such protectionist legislation are inapposite,
4. The legislature judged that the benefits to the public from the
law outweighed the detriments to the beverage industry and the courts
will not review that judgment to assure "substantive" due process.
5. The law is reasonably calculated to achieve legitimate state
objectives under the police power. The fact that other containers
may also cause litter does not mean plaintiffs have been denied
equal protection of the law: "It is no requirement of equal protection
that all evils of the same genus be eradicated or none at all."
Effect of the Law on Litter, Prices — Section 11 of the law requires
that a study be conducted of the act's operation, including an
analysis of its economic impact "on persons...who engage in the non-
alcoholic beverage manufacturing business" and on all others who
must comply with the act.9 The rate of the reduction of bottle and
can litter is to be studied, along with enforcement costs.10 A pre-
liminary, six month progress report notes that the bottle container
component of roadside litter along Oregon's highways has been reduced
by 50-70 per cent.H By some estimates bottle litter was reduced 90
90regon Laws of 1971 (uncodified bill), chap. 745, §11(1).
100regon Laws of 1971 (uncodified bill), chap. 745, §11(1)(d).
Environmental Action Bulletin, supra, note 3, p. 2.
87
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per cent one year after the date of implementation of the bill.12
While beverage manufacturers are wont to make a connection between
the increased demand for soft drinks since the end of the 1950's
and the switch to the no-deposit-no-return bottle, no documentation
presently exists which substantiates this claim. Oregon soft drink
sales have increased since the enactment of the bottle bill; whether
this is attributable to the bottle bill is not known. Canners have
suffered to a much greater degree than bottlers. One canning company,
Emerald Canning Company, owned by the Coca Cola Company, recently
closed down. Canned beverage sales have dropped from 25 per cent of
all sales to less than 5 per cent.13 Before the effective date of
the bill, 35-40 per cent of all beer sales were in cans; canned beer
sales have now fallen to less than 5 per cent of all beer business. 14
Prior to the bottle bill, about half of Oregon's beverages were
packaged in returnable bottles. Handling costs to retailers were
estimated at between 15 and 25 cents per ease.15 Soft drink prices
in Oregon tend to be less than those in Washington where returnable
bottles are not as prevalent; canned soft drink prices vary from 21
to 23 per cent more per ounce than beverages purchased in Oregon's
returnable bottles.1"
Beer prices have had a more unusual history. A series of price in-
creases have raised beer prices a total of 15 cents per sixpack. But
retailers have not credited the price rise to increased handling
caused by the bottle bill.1? Apparently beer price increases are
the result of cost pressures on other products which retailers could
not readily pass on to consumers; instead prices were raised on beer.
Vermont
In order to reduce litter, Vermont's bottle law provided for a
levy of four mills per beverage container from July 1, 1972 to July
1, 1973, payable by manufacturers or distributors of containers to
the Commissioner of Taxes. 18 Up to the first $1 million of this tax
12
Don Waggoner, "Oregon's 'Bottle Bill1 — One Year Later," Oregon
Environmental Council, October 4, 1973, at 1.
13Id., at 12.
14Id., at 13.
Id., at 11.
16Id., at 9.
17Xd., at 10-11.
1810 V.S.A. 1522.
88
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was to be distributed to towns on a per capita basis for use by them
in operating or maintaining sanitary landfills.19
In lieu of this tax — and on a mandatory basis after July 1, 1973,
except for wine and liquor containers, as to which the tax continued —
manufacturers or distributors were to require a deposit of not less
than five cents per container to be paid by the consumer and refunded
to him upon return of the empty container. 20 Container was defined
to exclude biodegradable containers.21 Beverage was defined to include
beer, malt beverages, mineral waters, soda water, soft drinks, and
wines,22 a definition which the Attorney General was asked to clarify.23
The law requires that each container sold or intended for distribution
in Vermont be labeled with a statement of the amount of the deposit
and the name of the state.24 it also requires that retailers "must
be reimbursed [for handling costs]... by the manufacturer or dis-
tributor in an amount directly proportional to the quantity of
beverage containers redeemed."25 Vermont's Environmental Protection
Regulation 10-1523.7 implements this requirement by providing that:
A retailer required to collect and refund deposits of con-
sumers, and to redeem containers upon which deposits are
required, shall be reimbursed by the manufacturer or
distributor of such beverage containers in the amount of 20
per cent of the amount of such deposit returned to the con-
sumer.
19
10 V.S.A. 1524(1).
2010 V.S.A. 1523(a).
2110 V.S.A. 1521(3). The full definition reads:
Container means the individual, separate, bottle, can, jar
or carton composed of glass, metal, paper, plastic or any
combination of those materials containing a consumer product.
This definition shall not include containers made of biodegrad-
able material.
2210 V.S.\. 1521(1). The full definition reads:
Beverage means beer or other malt beverages and mineral waters,
soda water and similar soft drinks in liquid form and inten-
ded for human consumption, whether or not carbonated, but does
not include uncarbonated water, soups, fluid milk products,
unadulterated, natural, reconstituted or frozen fruit, vege-
table or meat juices, or liquids intended for medicinal purposes
only. The term beverage also includes spirituous liquors and
vinous beverages as defined in section 2 of Title 7.
23
Opinion Number 88 of the Office of the Attorney General, May 2, 1973.
2410 V.S.A. 1523(b)(l).
2510 V.S.A. 1523(b)(2).
89
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Alternatively, the manufacturer or distributor may establish state-
approved redemption centers for his containers, at least one in each
town, where the deposit fee may be returned to consumers.26
Legality of the Law — Both beverage distributors27 and retail grocers
filed suits challenging the constitutionality of the law. The grocers'
case, Francis Speno et al. v. Kimberly Cheney, et al.,28 was decided
on April 1, 1974, by the Addison County Court, the trial court.
Judge Larrow deemed "the element of time ... of more importance
than the drafting and filing of a lengthy opinion. "29 in a brief
opinion he held that Vermont fs law did not violate the Commerce
Clause, the Due Process Clause or the Equal Protection Clause. He
cited the Oregon Iitigation30 for all three propositions as well as
U.S. Supreme Court opinions relied on in the Oregon opinion.31
Effects of the Law — Revenues from the litter levy from July 1,
1972 to July 1, 1973, were just over $800,000.32 It is anticipated
that $40,000 will be generated in fiscal year 1973-74 from the con-
tinuing levy on liquor and wine bottles.33
In June 1973 there were large inventories of products on which the
container levy had already been paid. In order to assist the transi-
tion from the levy to the deposit system, the Agency of Environmental
Conservation's implementing regulations postponed the effective date
26T,
Id.
77
Wark Bros.. Inc.» et al. v. Martin L. Johnson, et al». Chitenden
County Court, Docket No. C449-73Cnc, filed August 24, 1973.
28
Addison County Court, Docket No. C4-74Ac.
29
j[d., Conclusions, issued April 1, 1974, at 1.
*yf\
American Can Co. v. Oregon Liquor Control Commission. Oregon Court
of Appeals, December 17, 1973, 4 ELR 20218, affirmed without opinion
by Oregon Supreme Court, February 1974.
31Judge Larrow cited Ferguson v. Skrupa. 372 U.S. 726 (1973), in
support of his holding that the Vermont statute did not violate the
due process clause of the Fourteenth Amendment. He cited Williamson
v. Lee Optical Co., 348 U.S. 483 (1955), in support of his holding
that the law did not violate the Equal Protection Clause of the
Fourteenth Amendment.
ort
Report to Governor Thomas P. Salmon from the Highway Litter Evalu-
ation Committee," December 1973, 32.
90
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of the deposit and labeling requirements until September 1, 1973. ^
The deposit system has thus not been in effect long enough for
definite conclusions about its effects. Comparative data about amounts
of litter are unavailable,35 although the general impression is of
less littered roadways.36 Soft drink bottlers have been prompted
by the law and increasing costs of the materials for their products
to reintroduce reusable containers.37 Beer distributors have not done
so, however, and have generally simply taken the returned containers
to the dump.3° The beer distributors sometimes placed the deposit
label on container bottoms.39 They also have retained the price
increase instituted when the levy became effective, thus increasing
their profits. As explained to the Senate Committee on Commerce
on May 6, 1974 by Donald Webster, Director of Environmental Pro-
tection in Vermont:
Price adjustments made by distributors followed this pattern.
An increase in retail price of 36 to 48 cents per case was
placed on merchandise, ostensibly to defray increased costs
and handling fees. Additionally, the full cost of deposit
and retail handling was billed to the retailers at delivery
so that any breakage would accrue to the distributors.
This system works this way:
36 to 48 cent per case general increase
$1.20 pre-collected deposit
24 cents pre-collected handling fee
$1.80 to $1.92 increase at purchase
The industry, by their own admission, expected a container re-
turn of approximately 80%. This would indicate an expected yield
34
"The Vermont Beverage Container Law," Statement of Donald W. Web-
ster, Director of Environmental Protection, Agency of Environmental
Conservation, State of Vermont, May 6, 1974, to the Committee on
Commerce, 4.
35
Report to the Governor from the Highway Litter Evaluation Committee,"
supra, note 32, 12.
36
Statement of Donald W. Webster, supra, note 34, at 11; Catharine
Bothwell, "Vermont: The Verdict's Not In," in Environmental Action.
November 10, 1973, 6.
37
Statement of Donald W. Webster, supra, note 34 at 5.
38
Id., Bothwell, supra, note 36 at 6.
39
Statement of Donald W. Webster, supra, note 34, at 5.
91
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as follows:
General increase — $.36 to $.48
Deposit net — $1.20-$. 96 = $.24
Handling fee net — $ .24-$. 192 = $.048
Total Breakage (per case) - $.648 to $.768
Add to this the four mill Litter Levy formerly paid to the State
($.096) and the total expected differential is $.744 to $.864
per case.
It is interesting to note that while the soft drink industry
likewise kept the former Litter Levy in their price structure,
and added the Container Deposit as a direct billing, there was
no general increase added, nor was the handling fee "front-
ended," they preferring to wait upon experience. (The soda
bottlers, incidentally, were expecting, and hoping for, a higher
rate of return for more economic utilization of refillables.
In point of fact, container return in the soda industry is
running about 90%, with a high month of 94%.) 40
It was the grocers who were the most directly affected by the deposit
system and who reacted most vigorously against it, both via public
campaigns for the law's repeal and private harrassment of customers
seeking deposit refunds. 41 Grocers (and distributors) near borders
were most noticeably affected. 42
There are reported declines in sales of soft drinks and malt beverages
in Vermont which are attributed by brewers to the deposit system.
Other factors also played a role, however, including adverse weather
and fuel shortages which depressed tourism and thus beverage sales. 43
Some retailers — including Vermont *s largest soft drink distributor —
are returning to previous sales levels or exceeding them. 44
CITY OF NEW YORK NICOTINE AND TAR TAX
Pursuant to a state enabling act*-* ^g city of New York adopted a
local law effective July 1, 1971,46 which imposed, in addition to
Id., at 6-7.
1ld,, at 8.
^ Id.; "Report to the Governor from the Highway Litter Evaluation
Committee," supra, note 32, Conclusion No. 12, 4.
/ O
Statement of Donald W. Webster, supra, note 34, at 9-10.
44Id., at 9.
45Chapter 394, Laws of New York, 1971 Regular Session.
46Local Law 1971, No. 34, June 30, 1971, codified as section D46-2.0
and section D46-8.0, Administrative Code, the City of New York.
92
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basic cigarette tax of two cents for each ten cigarettes or fraction
thereof, an "additional tax at the following rates: 1. One and one-
half cents for each ten cigarettes where either their tar content
exceeds seventeen milligrams per cigarette or their nicotine content
exceeds one and one-tenth milligrams per cigarette; 2. Two cents for
each ten cigarettes where their tar content exceeds seventeen miligrams
per cigarette and their nicotine content exceeds one and one-tenth
milligrams per cigarette."
Despite the absence of illuminating floor debate from the Journals
of the New York State Senate and Assembly, it appears that the
intention of the enabling act was to make relatively more expensive
the smoking of cigarettes with a high content of nicotine and tar,
because of the threat to health which they constitute. Further, the
local law stressed, "[i]t is intended that the ultimate incidence
of and- liability for the tax shall be upon the consumer."47 TO
achieve this, regulations were promulgated which required differentiated
retail prices reflecting the higher tax on high nicotine and tar
content, and giving notice to the consumer of the tax he has paid.
Legality of the Law
The enabling act and Local Law 34 were upheld as constitutional in a
criminal case, People v. Cook.^° That decision was affirmed without
opinion at the first appeals level, and the decision of New York's
highest court (the Court of Appeals) is awaited.^
The requirement for .a retail price differential was at issue in a
second case.50 The Long Island Tobacco Company sought a preliminary
injunction against enforcement of this provision. The City of New
York moved to dismiss for failure to state a cause of action, and the
New York Supreme Court (the state's trial level court) granted the
motion, holding that the local law was proper and in conformity
with the enabling act.
The plaintiff, Long Island-Tobacco Company, owned and operated
vending machines and was arguably burdened more than other vendors
because although the law called for a four cent per pack or three
cent per pack increment on over-the-counter sales, regulations promul-
gated by the City's Finance Administrator imposed a five cent per pack
47
Section D46-2. Oa.3.
48
New York Law Journal. February 14, 1973, 19, col. 4.
-
Island Tobacco Co.. Inc. v. Lindsay. 343 N.Y.S.2d 759, 764
(1973).
50Id.
93
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differential on cigarettes in vending machines.51 In the view of the
Finance Administrator such a five cent increment was required by
the fact that most vending machines cannot handle smaller than nickel
price variances, and the alternative would be to exempt cigarette
sales in vending machines, which are substantial.
The taxation of cigarette sales by the City of New York was not
novel; it had occurred under an enabling act adopted in 1952.52 The
novel provisions were those pegging tax rates to nicotine and tar
levels, and piggybacking them atop the basic cigarette tax rate.
Further, it was novel to require retail prices which kept a fixed
differential based upon nicotine and tar toxicity levels. The language
of the local law and its enabling act defining these new taxes are
identical, so that no question arose regarding whether the munici-
pality was within the scope of state authorization.
The key operative language of the local law specifically empowered the
Finance Administrator to "provide by appropriate regulation for the
maintenance of such differentials in wholesale and retail prices
of cigarettes...so as to reflect the amounts of tax attributable to
the tar and nicotine content of cigarettes sold ... In addition,
he may consider the mode or method by which retail sales are effected
and limit his regulations so as to affect any one or more or all of
such modes or methods."53
The regulations of the Finance Administrator amended Article 2-A of
the regulations under the Cigarette Tax Law (originally promulgated
May 15, 1952) to provide:
In furtherance of the purpose of the additional tax to direct
attention to the cigarettes containing excessive tar and nico-
tine and to thereby promote the health and welfare of the
people of the City, the prices of all cigarettes subject to
the additional tax, sold in the City by vendors other than
manufacturers, shall reflect a difference in price at least
equivalent to the amount of the additional tax imposed, and
such differences in price must be clearly marked in all price
lists, bills, advertisements, catalogues or publications
pertaining to the sale of such cigarettes. However, with res-
pect to vending machine sales the prices of all cigarettes
subject to the additional tax regardless of the actual amount
of such tax, may reflect a difference in price of at least
five cents, and such differential shall be clearly indicated
on all vending machines.
Supra, note 49, at 762.
52Chapter 235, 1952 Laws of New York.
53Section D46-8.0(ll) of the Administrative Code of New York.
94
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Plaintiffs* contentions were that requiring the price differential
(1) constituted an unlawful enactment beyond the scope of power given
to the city by the enabling act; (2) represented a denial of due
process of law because it would be possible for regulation achieving
the same ends without placing such an onerous burden on these ven-
dors; (3) the federal government has pre-empted regulation of the
health concerns raised by smoking; and (4) imposition of a compulsory
differential is not a regulatory methodology supported by the city's
police power.54
Justice Silverman, however, rejected each of these arguments. The
enabling act speaks of bestowing upon the city all authority to
impose cigarette taxes "which the legislature has or would have
power and authority to impose...."55 Requiring a tax reflecting
price differential is based on the desire to prevent marketers from
absorbing the tax cost in their general overhead, and general pro-
visions prohibiting sellers from absorbing tax costs can be found in
section 471(2) of the Tax Law of New York, and in section D46-2.0(3)
of the Administrative Code of the City of New York, cigarette tax
provisions which both predate the nicotine and tar tax.
Further, Justice Silverman agreed with the City that use of a price
differential to call public attention to the health hazards of
smoking high nicotine and tar cigarettes was a proper exercise of
the police power under New York's Municipal Home Rule Law section
10." Disposing of the pre-emption issue next, the Justice recited
the cardinal rule that a judicial finding of federal pre-emption is
unwarranted unless all state legislation in an area is clearly
barred. No such Congressional policy was found here, even despite
the fact that local regulation was in the realm of price lists and
advertisements, and the federal law is specifically directed to
advertising and promotion.57 Finally, the Justice rejected plaintiff's
arguments regarding machine vendors' special circumstances:
54
Long Island Tobacco Co., Inc. v. Lindsay, supra, note 49 at 762.
This language is quoted from the Preamble to Chapter 394 of the
Laws of New York, 1971 Regular Session.
Subdivision l(a)(11) allows the city to enact ordinances for the
protection and enhancement of its physical and visual environment.
The tobacco company argued that the City's ordinance was barred
by section 5(b) of the Federal Public Health Cigarette Smoking Act
of 1969, 15 U.S.C.- §1334[b], which pre-empts any state or local
regulation "[biased on smoking and health...with respect to the
advertising or promotion of any cigarette" bearing the warning
required by that Act.
95
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...the special vending machine provision appears to be an
effort to help that industry meet the problems arising from
the machine's apparent inability to handle transactions except
in multiples of five cents; it permits one price differential
of five cents instead of two different price differentials
of three and four cents respectively.58
Holding the statute and regulations valid, the Justice dismissed the
suit with prejudice to the plaintiffs, in order that an appeal might
be taken.
In the Appellate Division, First Department, Justice Silverman was
unanimously affirmed59 and no further appeal was taken. As the City
°f Nfn Y°rk ±S the °nly municiPality within the reach of the enabling
act,°° no parallel local laws or regulations have been adopted, and
there has been no further litigation under New York City's provisions,
which remain good law.
Effects of the Law
It is difficult to assess the net effect of the New York City nicotine
and tar tax, which is now ending its third year of operation.
William Drayton, in his exhaustive study of the economic and legal
aspects of the nicotine and tar taxes, attempted such analysis when
the law was but one year old:
New York's experience seems to support this expectation [that
cigarette consumers are sensitive to price]. An analysis of the
tax receipts from the city's two cigarette taxes, the old four-
cents-a-pack, flat-rate tax and the new tar and nicotine tax,
suggests that there may have been a shift from taxed to
exempt brands of approximately twelve to thirteen per cent of
all cigarettes sold in the city. This estimate is especially
encouraging as New York is a rather difficult test case:
Even before the incentive tax was imposed the city had one of
the highest per pack cigarette taxes in the country and conse-
quently a major smuggling problem. While this means that the
incentive differentials had to be greater than elsewhere to
have the same impact on the city's inflated prices, the fear
of encouraging even more smuggling led officials to impose
58
Long Island Co.. Inc. v. Lindsay, supra, note 49 at 764.
59348 N.Y.S.2d 122.
^°Chapter 235 of the Laws of 1952 was re-entitled by chapter 369 of
the Laws of 1959 to read "an act to enable any city of the state
having a population of one million or more to adopt and amend local
laws imposing certain specified types of taxes on cigarettes...."
New York City is the only city in New York with more than one million
population.
96
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smaller differentials of three and four cents. Although each
retailer is required to post the amount each brand is taxed
and why, most retail prices in the city do not reflect the
taxfs low rates.
The twelve to thirteen per cent estimate of cons timer switching
could be wrong for three reasons.
First, it is possible that the pretax distribution of brands
sold in New York was different from the national mix used in
calculating the shift. If New York consumers were already
purchasing more low tar and nicotine brands than the national
average, the shift estimate would be too high. [The reason for
this is that what is being compared is actual brand selections
data for New York City after adoption of the act and a nationwide
consumer preference average before the Actfs adoption. To
the extent that the national average failed to reflect New
Yorkers* preferences for low tar and nicotine cigarettes
before the tax, this computation will overstate the shift
to them after its adoption.] Unfortunately there is almost no
evidence available on this point.
Second, if the period of analysis coincided with a national
trend away from high tar and nicotine brands, the twelve to
thirteen per cent figure would also be overstating the impact
of the tax. However, this was almost certainly not the case.
The average tar and nicotine consumed nationally during the
period did not decrease, it increased. Thus, unless New York's
consumption was shifting against national trends for reasons
other than the tax, the estimate seems to err on the side of
being conservative, if it errs at all.
Third, New York's significant level of smuggling, about thir-
teen per cent of all cigarette sales in the city, may distort
the calculations. Smugglers may prefer to sell high tar and
nicotine brands because of the greater tax-untaxed differential.
If they were able to manipulate their market, this would create
an exaggerated impression of shifting to untaxed brands in
measurements based only on cigarettes actually taxed. But
this seems limited. .There was only about a two per cent in-
crease in the volume of both smuggling and avoidance attributable
to the tax over its first ten months. Moreover, the smugglers
probably have supplied whatever brands their customers demand.
Finally, the smugglers1 response to the tax actually seems
quite different; they are reported to be charging higher
prices for brands subject to the tax. Thus, the impact of the
tax's incentives seems not to be lost even on those who do not
legally pay it.
While the twelve to thirteen per cent estimate amy require some
modifications, the revenue figures do suggest that the tar and
nicotine tax has had at least some of the public health impact
97
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intended.61
To evaluate the effectiveness of New York City's nicotine and tar
tax as an economic disincentive charge requires isolating the monetary
impact of the price differential from the notice impact of govern-
ment action telling the consumer that two levels of medical risk
exist, and from the anti-smoking campaign on television and in the
print media. Drayton is aware of no published study attempting to do
this in the two years since his article appeared. The Ways and Means
Committee of the New York State Assembly apparently has conducted a
staff study of the nicotine and tar tax, but Drayton asserts that it
has been held back from him and from others for political reasons.
The New York legislature has not, however, adopted additional enabling
acts opening such taxation up to smaller cities or to the counties.
CITY OF NEW YORK TAX ON PLASTIC CONTAINERS
Pursuant to a state enabling law6^ the City of New York adopted a
local law"-* which imposed a tax upon every sale of a plastic
container at the rate of two cents for each container sold...."64
The local tax law further permitted a credit of one cent per con-
tainer if "manufactured with a minimum of thirty per cent of recycled
material."65 The Society of the Plastics Industry promptly commenced
legal action to have the law declared unconstitutional, and moved
for a temporary injunction against enforcement pending judgment.
Such preliminary relief was denied, however, as the matter could be
brought to trial before any tax liability would accrue.66
The trial was held in the New York Supreme Court (the trial level
court) in and for New York County, Justice Streit presiding. The
61
6281 Yale Law Journal 1487.
Chapter 399, Laws of New York, 1971, entitled "An Act to Amend Tax
Law, by Adding Thereto Provisions Enabling Any City with a Population
of One Million or More to Impose Taxes to Promote Recycling of Con-
tainers and Reduce the Cost of Solid Waste Disposal to Such City."
63
Local Law No. 43 of the City of New York, June 30, 1971, entitled
"A Local Law to Amend the Administrative Code for the City of New
York in Relation to Raising Revenue by Imposing Taxes on Plastic Con-
tainers and to Promote the Recycling .of Such Containers and Reduce
the Cost of Solid Waste Disposal to the City."
^Section F46-2.0, Administrative Code of the City of New York.
65Section F46-2.0(2) , Administrative Code of the City of New York.
66Society of the Plastics Industry. Inc. v. City of New York, index no.
15225/1971 (New York Supreme Court, September 16, 1971), 1 ELR 20467.
98
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Society sought a declaratory judgment that Local Law 43 was unconsti-
tutional and invalid, and asked for permanent injunctive relief. The
Society contended the local law (1) failed to comply with the provi-
sions of chapter 399,67 (2) unconstitutionally discriminated against
them by taxing only plastic containers rather than the entire range
of packages enumerated in the enabling act, (3) was a taking without
due process of law, and (4) imposed an undue burden on interstate
commerce.68
Justice Streit enunciated the legal principle that a municipal
corporation has no inherent power to assess and levy taxes, deriving
it instead from enactments of the state legislature. Such taxation
enabling acts are to be strictly construed, and local laws adopted
thereunder must strictly conform. "If the authority of the City to
tax is doubtful, the doubt must always be resolved against the
tax."69 Under chapter 399, New York City could impose "[tjaxes on
the sale of containers made in whole or in part of rigid or semi-
rigid paperboard, fibre, glass, metal, plastic or any combination of
such materials..."70 The stated purpose for the taxation was "to
promote the recycling of containers and reduce the cost of solid
waste disposal to such city."71 Maximum rates were set by the legis-
lature at: "(i) three cents for each plastic bottle, (ii) two cents
for each other plastic container, (iii) two cents for each glass con-
tainer, (iv) two cents for each metal container except one cent for
metal containers shown to be made of one metal only." Containers
made of two or more constituent elements are treated as if made of the
material having the highest tax rate of the following: fiber and
paperboard, one cent; metal, two cents; glass, two cents; plastic,
three cents. The enabling act also contains tax credit provisions
based upon the material used and the percentage of recycled material
composing the container.
67
Codified as Article 29, section 1201[f], Tax Law of New York.
fift
Society of the Plastics Industry. Inc. v. City of New York. 326
N.Y.S.2d 788, 68 MLsc. 2d 366 (1971).
Society of the Plastics Industry, Inc. v. City of New York, 326
N.Y.S.2d 788, 794.
Id. The quoted language is from the title to chapter 399.
72ia.
99
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Local Law 43 provided for a two cent tax on the sale of a plastic con-
tainers only, and a one cent credit for each taxable container composed
of a minimum of 30 per cent recycled material. Plaintiffs contended
that the fatal defect of Local Law 43 was that it taxed plastic con-
tainers only, rather than imposing a tax upon the entire "taxable
class" set forth in chapter 399. The City argued that as "the use of
taxes for waste disposal control purposes is a novel device not before
used..." selective application should initially be permitted.
The Justice disagreed: "The type of tax set forth in subdivision
(f) was a tax on rigid and semi-rigid containers made of five speci-
fied types of materials. The contention that each type of container
material may thus be the subject of a separate tax strains the plain
meaning of the law,and contravenes the tenet of strict construction
of tax statutes." By comparison, subsection (c) of section 1201
allows municipalities to select from among the various classes and
types of coin operated amusement devices in imposing local taxes.
If specific language is needed to give (c) this flexibility, its
absence underlines the rigidity of (f).75 Not content with statutory
construction alone, the Justice chose to examine the policy behind
chapter 399:
Unless the tax were imposed upon all the enumerated types of
container materials there could be no "incentive" to recycle
containers nor to reduce significantly the amount of solid
waste or the cost of its disposal. The only "incentive"
created by a tax on one, rather than all types of containers,
would be the incentive to switch from the taxed type to the ex-
empted types, with no reduction in the volume of containers
used and no recycling.
When the City chose to tax only plastic containers, it did
not, as it contends, simply enact a "lesser" included tax.
Rather, it legislated an entirely different tax; one whose true
purpose and effect was, as conceded by defense counsel, "to
curtail the amount of plastics and to eliminate as many
plastics as possible."7**
Thereupon, the Justice held that Local Law 43 exceeded the grant of
73Id., at 795.
74Id., at 796.
In reaching this conclusion Justice Streit relied on the case of
Glen Cove Theatres. Inc. v. City of Glen Cove, 36 Misc. 2d 772,
233 N.Y.S.2d 972.
76
Society of the Plastics Industry. Inc. v. City of New York. 326
N.Y.S. 2d 788, at 797.
100
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authority in chapter 399, and thus violated Article III, section 1,
and Article XVI, section 1 of the New York State Constitution.77
Discussing next the claim that the challenged tax violated the Equal
Protection Clauses of the Fourteenth Amendment and Article I, section
11, New York State Constitution, in imposing unreasonable and arbi-
trary classifications unrelated to its object, Justice Streit chided
the city for changing legal arguments in mid-stream. He contended
that the Corporation Counsel had shifted his explanation of statutory
purpose from pollution regulation to revenue-raising.78 Likely this
was because the test for granting a preliminary injunction requires
the judge to evaluate plaintiffs1 chance for success on the merits,
and probably when the Corporation Counsel read the Justice's order
denying the injunction he chose to shift ground. Dismissing the
enactment's presumption of constitutionality as rebuttable,79 the
Justice bore in on the distinction between plastic and non-plastic
containers. He cited a long line of oleomargarine and butter cases
in the United States Supreme Court,
wherein the factual basis underlying the distinction between
the two products was judicially examined in extensive detail
before any conclusion on the equal protection or due process
assertions was reached. Not only was there careful consideration
of such things as the ingredient composition of the two products
and the danger of consumer fraud and deception (passing off
colored margarine as pure butter), but also consideration of
the legitimate state interest in protecting the dairy farming
industry (which formed the principal tax base in states adopting
such legislation) from the destructive onslaught of cheaply
produced butter substitutes.80
With reference to the case before him, the Justice was emphatic: "This
Court perceives no obvious distinction between plastic containers and
all other types and, in line with impressive precedents, has put the
parties to their proof on this question."81 Further, the disparities
between chapter 399 and Local Law 43 are even more inexplicable
since the enabling act was itself drafted by the City's Environmental
Protection Administration after hearings. From its inception, the
Court suggests, the measure was intended as an environmental protec-
tion, and not as a revenue bill. The Justice was therefore piqued
by the Corporation Counsel's tactical shift:
79Id., at 798.
8°Id., at 799.
81Id.
101
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(Interestingly, the architect of this law, Mr. Kretchmer,
had a great deal more to say about its background and pur-
poses on the motion for preliminary injunction herein. Upon
the trial, however, the defendants disavowed all that Mr.
Kretchmer had to say upon the preliminary proceeding, failed
to offer in evidence his sworn affidavits thereon, and declined
to call him as a witness...)^
The Justice found that plaintiffs1 claim of a discrimination against
plastic containers was valid, and that this discrimination did not
arise from any difference having a fair and substantial relation to
the object of the legislation.8*
Expert evidence which was introduced clearly showed that plastic
containers are cheaper to collect than glass and metal because
the chief cost factor is weight. And as to disposal, in sanitary
landfill and incineration operations, the Judge found that plastics
are cheaper to incinerate and do not damage disposal equipment in
small concentrations, as in household waste. "(Surprisingly, defen-
dants could point to no current survey conducted by the City which
established the actual composition of the City's solid waste.)"84
Further, plastic containers do not occupy more volume during
haulage, and probably occupy less, since they are more compactable
than glass or metal. In effect, Justice Streit suggested that far
from environmental protection, a disguised attack on plastic solid
waste alone might actually result in a greater weight and volume
of non-biodegradeable glass. The Justice found that the discrimina-
tion against plastic "does not rest upon any ground of difference
having any relation to the objective of the legislation to reduce
the City's cost of solid waste disposal."85
Further, in taxing only one type of container, New York City did not
at all spur recycling, but only could cause a shift away from plastic
containers to the untaxed alternatives. As to recycling of plastic
containers themselves, the Justice commented that the authors of the
act noted that disposed plastic containers are "generally unrecyclable."
Justice Streit concluded, therefore, that, "plaintiffs have established
by a preponderance of the credible evidence that Local Law No.
43 is violative of the Equal Protection clauses of the Federal and
State Constitutions."&7
82
^d., at 800.
83T^
Id.
84Id., at 801.
85
Id., at 802.
86Id., at 803.
87id.
102
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Reaching next the assertion of a non-due process "taking" without
compensation, the Justice recited the maxim of law that a statute
which deprives a person of his property must be reasonably calculated
to advance the public's proper purposes. Description of the local
law as a valid revenue measure he dismissed as sham.°° Further,
"[u]ncontradicted testimony of witness after witness bolstered by
documentary proof, has established that the mere passage of this tax
has already cost individual plaintiffs hundreds of thousands of
dollars in business (i.e., cancelled orders) and that implementation
of the tax will result in the total destruction of the business of
many plaintiffs."89 Justice Streit held, therefore, that this local
law is an unjust taking. For the additional reason of vagueness
of the term "rigid or semi-rigid plastic," the law was separately
in violation of the due process protections of state and federal
government, he concluded.^0
Only plaintiffs' assertions that the law is an undue burden on inter-
state commerce and (because of the language urging an investigation
of disposal charges) is pre-empted by the Federal Solid Waste Dis-
posal Act, were rejected by the court.91 On all other constitutional,
state authorization, and public purpose grounds, the Court held for
plaintiffs, declaring the local law unconstitutional, invalid and
void, and specifically enjoining the City from enforcing it.
The City of New York did not appeal, and as the enabling act encom-
passes only cities of a million in population or more, no other communi-
ties exist which could have attempted to enact local legislation
properly within its authorization. Since the enabling act was not
struck down here, New York City would be free to adopt a proper
enactment, comprehensively taxing all containers at the rates speci-
fied. That it has not attempted to do so may be motivated by the
inchoate feeling that the Justice Streit opinion is so strong that
its precedential value could be difficult to overcome if the new
law were attacked. Then too, the departure of Environmental Pro-
tection Administrator Jerome Kretchmer may have undercut the push for
such taxes.
88
Id., at 804.
89
Id.
90Id., at 805.
91Id., at 807.
92Id.
103
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It Is important to stress that the New York experience does not stand
for the unconstitutionality of charges in the solid waste area..
Rather, a sloppy, blatantly confiscatory local law was struck down
for penalizing one segment of the container industry while fattening
its competitors. Clearly, a far stronger showing of imminent danger
to the public health, safety and morals must be made before a
community may single out one industry for ruin. But a balanced law
which sought to reduce container use in toto, or to provide for recycling
of all container types, or even to alter the mix of container materials
short of confiscation, is implicitly approved here by the fact that
the Court let the enabling act stand and used it as a comparison
to detail the local lawfs shortcomings. Emotionally this case may
have undercut support for pollution charges, but legally it has
strengthened it.
VERMONT LAND GAINS TAX
In April 1973, in response to a suggestion of Governor Thomas P.
Salmon, the Vermont General Assembly enacted a property tax relief
act which greatly expanded an already existing property tax relief
law theretofore covering only senior citizens. The act grants a
credit against a person's income taxes regardless of age*, equal
to the amount his property taxes exceed a percentage of his income,
according to the following table;93
If household income (rounded Then the taxpayer is entitled
to the nearest dollar) is: to credit for property tax
paid in excess of this percent
of that income
.00 - $ 3,999.00 4%
$ 4,000.00 - 7,999.00 4.5%
8,000.00 - 11,999.00 5%
12,000.00 - 15,999.00 5.5%
16,000.00 - and up 6%
The act also imposes, "in addition to all other taxes imposed by this
title, a tax on the gains from the sale or exchange of land in Vermont."
The tax is structured so that the rate is higher the shorter the time
the land has been held and the larger the percentage of gain, as
* In the case of claimants under 63 years of age, the claim cannot
be taken as an income tax credit until they file for tax year 1975.
In the meantime a direct rebate is paid to them.
9332 V.S.A. 5967(a).
94
32 V.S.A. 10001.
104
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follows:
.95
Gain, as a percentage of basis
(tax cost)
0-99% 100-199% 200% or more
60%
50%
40%
30%
20%
10%
30%
25%
20%
15%
10%
5%
45%
37.5%
30%
22.5%
15%
7.5%
Years land held by
transferor
Less than 1 year
1 year, but less than 2
2 years, but less than 3
3 years, but less than 4
4 years, but less than 5
5 years, but less than 6
The land gains tax exemplifies the difficulty of ascertaining
primary legislative purpose. The stated purpose of H. 155, the
bill which became, the property tax relief act, was to "limit
a person's property tax on his basic housing to five per cent of
his household income; and to provide partial funding for such property
tax relief by imposing a tax on the gains from certain sales in
exchanges of real property." Several legislators, however,
— and Governor Salmon, himself — stated at various times that the
purpose of the land gains tax was to discourage speculation in Ver-
mont land.
Legality of the Law
The tax was upheld by the Vermont Supreme Court in February 1974
against a challenge that it violated the Equal Protection Clause of
the Fourteenth Amendment.96 The challengers attempted to show that
the General Assembly had enacted the tax to deter speculation and
that this purpose was so unrelated to the stated purpose of the tax
"as to constitute an arbitrary and capricious exercise of legislative
power under the Equal Protection Clause."^ The Washington County
Court — the trial court — held that the presumption of the law's
constitutionality had not been overcome and the Vermont Supreme
Court agreed. Its opinion fully summarizes the legality of utilizing
the taxing power to achieve objectives in addition to raising
revenue.
Legislation may frequently serve multiple objectives, wrote Justice
Daley for the court:
95
32 V.S.A. 10003.
96
97
Andrews v. Lathrop, No. 166-73, opinion filed February 6, 1974.
Id., at 2 (in the typewritten opinion).
105
-------
There is no requirement that the objectives served by the manner
in which a tax is collected and those served by the manner
in which it is spent be related to each other for constitutional
purposes. Cf. Magnano Co. v. Hamilton, 292 U.S. 40 (1935).
The Equal Protection Clause, recognizing that no scheme of
taxation has yet been devised which is free of all discrimina-
tory impact, "imposes no iron rule of equality, prohibiting
the flexibility and variety that are appropriate to reasonable
schemes of state taxation." Allied Stores of Ohio v. Bowers,
358 U.S. 522, 526 (1958). What is required is that the dis-
criminatory classification not be capricious or arbitrary,
but rest on some reasonable consideration of legislative
policy. Id. Judicial inquiry, therefore, is not directed
toward a comparison of legislative purposes, but rather toward
the nexus between a classification and such purposes as it
may serve. ,
The determination of purpose is a question of law, as it is
in the process of statutory construction. The presumption of
constitutionality sets the standard for that determination.
Inherent within it is the further presumption that the legis-
lature has not acted unreasonably, without purpose. Thus, if
any reasonable policy or purpose for the legislative classifi-
cation may be conceived of, the enactment will be upheld.
Allied Stores, supra. We are not here concerned with a classi-
fication involving suspect criteria or affecting fundamental
rights, such as may nullify the presumption of constitutionality
and require a different standard as to legislative purpose.
Cf. Veilleux v. Springer. 131 Vt. 33 (1973). Although such
purpose is not subject to proof, it must be consistent with
whatever indicia of purpose may be drawn from the statute
itself and other relevant materials. See e.g., State v.
Taranovich's Estate, 116 Vt. 1 (1949) .^8~
Legislative purpose is to be divined from examining all of a statutory
provision, its subject matter and its effect and consequences,
rather than legislators' testimony. In examining the land gains tax
structure the court said:
One apparent effect of the holding period classification is
to discourage the rapid turnover of land at high profits.
The gains tax is a tax on profits in sale, so structured as to
place a burden on the taxpayer which increases as high profit
increases, and decreases as the period for which he retains the
land lengthens. This alone is sufficient for constitutional pur-
98
Id., at 2-3.
106
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poses to support the view that the Legislature could have had
as a purpose the determination [sic] of land speculation.yy
In addition, the Court took judicial notice "of an increasing con-
cern within the State over the use and development of land as a
natural resource, a concern to which the legislature has responded in
other instances with appropriate legislation."
The Court then concluded that it would be constitutional for the
General Assembly to discourage land speculation via the exercise of
the taxing power.
It is not the function of this Court to pass upon the validity
of this concern or the wisdom of the means the legislature has
chosen to deal with it, but merely to determine whether the
legislature may have acted in response to such a concern and
whether in doing so it acted within its constitutional bounds.
Lehnhausen v. Lake Shores Auto Parts Co., 410 U.S. 356 (1973);
General Mills v. Div. of Employment and Security. 28 N.W.2d 847
(Minn. 1947). It is by now beyond question that the legislature
may legislate to achieve particular social and economic ends
by the manner in which a tax is imposed, even if such objectives
might otherwise be beyond the legislature's constitutional
powers. San Antonio School District v. Rodriguez. 411 U.S.
1 (1973); Magnano Co. v. Hamilton, 292 U.S. 40 (1935).
The objective may extend to discouragement of what is otherwise,
as here, a legitimate economic activity. Magnano v. Ham-tit on,
supra; Virgo Corp. v. Paiewonsky. 384 F.2d 569 (3rd Cir. 1967),
cert, denied, 390 U.S. 1041. We find no reason to hold,
therefore, that the legislature could not have acted to restrict
land speculation by means of the land gains tax structure,
within its constitutional powers.^^
The ultimate issue to be determined, the Court said, "is whether the
classification [in 32 V.S.A. 10003] rests on grounds relevant to the
achievement of some legitimate State purpose."101 Having found the
99
Ld., at 5. "Speculation in land," the Court said, "may be adequately
here defined as the purchase of land in the expectation of deriving
a profit from its later sale at a higher price. Both high gain and
a relatively short holding period are essential for such speculation
with its inherent risk of market fluctuation, to present an attractive
alternative to, for example, depositing the equivalent capital in
a savings account and drawing interest on it. See The "Capital
Asset" Concept» 59 Yale L. J. 837 (1950)."
100
Id., at 6.
101 .
Id., at 5.
107
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purpose to be legitimate, as described above, the Court proceeded
to hold that the classification was reasonably related to the achieve-
ment of that goal:
The tax places a burden on short-term ownership and on high
profits in the resale of lands, two attributes of property
ownership closely linked to the holding of land for speculative
purposes. The taxing of short-term ownership as opposed to
long-term ownership, and the taxing of short-term ownership
at higher rate, is integral to the deterrent affect. No other
objective of property ownership is so directly affected as is
land speculation. Indeed, certain provisions of the tax evidence
an attempt on the part of the legislature to minimize the tax
impact on property owned and sold for other reasons. 32 V.S.A.
10002; 32 V.S.A. 10005(c).!02
The appellants also specifically questioned the rational basis for a
six-year holding period. The standard for judging, the court said,
was that "a quantitative distinction created by the legislature will
be .upheld unless it is so fwide of the mark* 103 that it cannot be
said to tend toward achievement of any legislative purpose it might
be said to serve."104 T^±S the appellants had not shown, the court
held.
Finally, the appellants challenged the land gains tax on the proce-
dural grounds that the bill had not originated in the House of Repre-
sentatives as required by Chapter II, Article 6 of the Vermont Consti-
tution. Since this was the first time such a question had been
102TJ
Id., at 7.
103
The quoted language paraphrases that of Justice Holmes' dissent
in Louisville Gas Co. v. Coleman, 277 U.S. 32 (1928), which the
court said is the dominant standard today:
When a legal distinction is determined, as no one doubts that
it may be,... a point has to be fixed or a line drawn,...
to mark where the change takes place. Looked at by itself
without regard to the necessity behind it the line or point
seems arbitrary. It might as well or nearly as well be a
little more to one side or the other. But when it is seen
that a line or point there must be, and that there is no
mathematical or logical way of fixing it precisely, the
decision of the legislature must be accepted unless we can
say that it is very wide of any reasonable mark. Id. at 41.
104
Andrews v. Lathrop, supra, note 96, at 8.
108
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raised in Vermont, the Supreme Court referred to decisions under
similar provisions of other constitutions:
Where the matter has been considered in other jurisdictions, the
term * revenue bills1 has been construed as referring to levy
taxes in the strict sense of the word, whose primary purpose
is to raise revenue to be applied in meeting the general ex-
penses and obligations of the government, and not bills which
create revenue incident to other purposes. Millard v. Roberts,
202 U.S. 429 (1905); Twin City Bank v. Nebeker. 167 U.S. 196
(1897); Mikell v. School Dist. of Philadelphia. 58 A.2d 339
(1948) (and cases cited therein).105
Since the trial court found the primary purpose of the land gains
tax provision was to raise revenue specifically to fund the tax
relief program, "the bill was not, therefore, a revenue bill within
the meaning of Chapter II, Article 6 of the Vermont Constitution."!06
Effects of the Law
The land gains tax went into effect May 1, 1973.107 In the last two
weeks of April 1973 land sales boomed in Vermont. They had been
rising steadily since 1970, albeit at smaller increases each year.
Sale of tracts over 100 acres of unimproved land seemed to be one
kind of transaction which has been considerably less frequent since
the tax became effective. Commissioner of Taxes Robert 6. Lathrop
has the impression from the increased number of inquiries to the
Department about the tax that more people are taking the tax
consequence of selling land into consideration prior to doing so
(since the transferor is liable for the tax) and speculative land
sales have declined. 1°^ it would be difficult to assess the impact
105
Id., at 10.
106T, ,,
Id., at 11*
Section 11, Act No. 81 of the 1973 Session of the General Assembly.
108
Letter to Will Irwin, Environmental Law Institute, dated July 3,
1974, and telephone conversation with Ross D. Pollack, Environmental
Law Institute, August 28, 1974. Commissioner Lathrop:
From all indications, the sale of residences has not been
particularly affected by the tax even though opponents of the
tax said that it has made it difficult for Vermonters to buy
first homes. However, we believe that the tax has slowed
speculative land sales, particularly the larger parcels.
While the environmental people still continue to issue a
number of development permits and many think that that is
evidence of the fact that the land gains tax has not slowed
109
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of the land gains tax on speculation without considerable data on
the impacts on sales from inflation, general economic, weather, and
energy factors, Lathrop said.
In fiscal year 1973-74 the net receipts from the capital gains tax
were $1.222 million.109 The first $.5 million of this (and the first
$.5 million each succeeding fiscal year) funds a comprehensive pro-
perty mapping program conducted by the Department of Taxes.
down anything, I am of the opinion that those developments
were started before the land gains tax was even thought of
and in two or three years we will probably see some slowing
down of the volume of those permits.
As you know, it was never intended that the land gains tax
completely curtail development, but to simply slow it down
and in those areas where people would speculate anyway then
the state would tax a heretofore untapped source of revenue
to help provide property tax relief. After one year's
experience it seems to be working pretty much along that line.
10Q
7Id.. "For the fiscal year just ended, the tax raised about $1.222
million. We had estimated that it would raise about $3 million
and I think it would have given a normal economic situation and if
there had not been serious court challenges to the constitutionality
of the statute and rumblings by the Legislature that it would repeal
it."
Section 10, Act No. 81 of the 1973 General Session of the General
Assembly. The mapping program is required by 32 V.S.A. 3409.
110
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SECTION VI
CHARGES IN OTHER INDUSTRIALIZED NATIONS
INTRODUCTION
Many of the "effluent charges," "emission fees" or other disincentives
which have been reported as existing in other industrialized nations
are in fact more analogous to fines or user charges than to disin-
centives as defined in section II. The laws and regulations of
several European nations will be described to demonstrate this.
GERMAN DEMOCRATIC REPUBLIC
Beginning in 1969 in the Halle region on an experimental basis-'- and
extended nationwide by December 1970 regulations,2 East Germany
applied "economic levers" to encourage compliance with the effluent
limitations imposed in the permits governing dischargers. If a
discharger's wastewaters exceed his permitted limits he must pay
a fine based on the amount of specific substance in excess times a
per unit charge.^
Effective May 1, 1973, similar provisions were implemented for emissions
of air pollutants (dust and gaseous emissions) exceeding authorized
individual limits. This fine is based on the difference between actual
and authorized emissions times the hours of the excess times cost
factors which vary with the kind of pollutant emitted.5
Christian Science Monitor, November 11, 1970, page 7.
2
Zweite Durchfuhrungsverordnung (Second Implementing Regulation to
the Water Law), 16 December 1970, 1971 Gesetzblatt der Deutchen
Demokratischen Republik [hereinafter cited as Gesetzblatt der DDR],
Teil II, Nr. 3, 25-29. The regulations are based on sections 19
and 55 of the water law of April 17, 1963.
3
Id., section 9C2) and (3), and the Anlage. It is reported that
500 industries paid such fines in 1972. Der Spiegel, February 26,
1973, at 51.
^Funfte Durchfuhrungsverordnung zum Landeskulturgesetz (Fifth Imple-
menting Regulation of the National Environment Act), 17 January 1973,
Gesetzblatt der DDR, Teil I, Nr. 18, section 18.
-*Erste Durchfuhrungsbestimmung zum Funften Durchfuhrungsverordnung
(First Implementing Decree to the Fifth Implementing Regulation),
13 April 1973, 1973 Gesetzblatt der DDR, Teil I, Nr. 19, section
8(3); Anlage .
Ill
-------
After January 1, 1968, a person withdrawing land from vise as farmland
or forest must pay a land use fee based on the kind of land withdrawn
(fields, meadows, forests, orchards, etc.) times the number of acres
withdrawn. *>
"[T]he land use charge and the air and water pollution charges ...
are considered as economic penalties cutting into the profits of
individual enterprises and ... may not be budgeted or passed on to
consumers by way of price adjustments. Unlike a general tax, the
revenues from both types of charges are earmarked for special
pollution abatement, compensation, and environmental improvement
measures in the areas concerned. These revenues are channelled
through a special fund administered by the State Food and Agriculture
Bank. Payment of the charges does not, however, shield the polluter
from legal liability for compensation of damages, nor from the obli-
gation to enter into environmental improvement contracts for long-
term preventive measures."7
HUNGARY
In 1969 Hungary modified the charges and fines it had been imposing
on effluents since 1961. It established limits in milligrams per
liter of seventeen polluting and fourteen toxic substances and fine
rates per kilogram of material discharged in excess of such a
limit." As of January 1, 1970, fines must be paid for each pollu-
tant discharged in excess of permissible concentrations. The fines
are progressive: the third year a discharger pays he must pay double
the fine he would otherwise be liable for; the fourth year, threefold;
the fifth and succeeding years, fivefold. The President of the
National Water Authority was authorized to establish numerical values
Verordnung uber die Einfuhrung einer Bodennutzungsgebuhr zum
Schutz des land-und forstwirtschaftlichen Bodenfonds (Regulation
concerning the Introduction of a Land Use Fee for the Protection
of agricultural .and forestry resources), 15 June 1967, 1967 Gese-
tzblatt der DDR. Teil II, Nr. 71, sections 2, 3; Anlage.
Peter H. Sand, "The Socialist Response: Environmental Protection
Law in the German Democratic Republic," 3 Ecology Law Quarterly
451, 477 (1973).
o
State Decree 40/1969/XI.25, Vizugyi Ertesito, Az Orszagos Vizugyi
Hivatal Hivatalos Lapja, 8 December 1969, page 254, section 1(2);
Appendix. The fine rates are set so that it would be less expensive
to build a treatment plant for the wastes than to pay the fine for
five years.
112
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for factors modifying the level of the fines based on impact on the
quality of receiving waters., impact on assimilative capacity or
other factors.9 The Authority bases the fines on laboratory analyses
it makes of effluent samples it may take. The schedule of substances
and fine rates is included as Appendix N.
Charges on emissions of air pollutants are scheduled to take effect
in Hungary January 1, 1975.10
CZECHOSLOVAKIA
In 1966 Czechoslovakia promulgated a decree concerning "indemnities"
for discharging untreated or insufficiently treated waste waters
directly into receiving waters.H The indemnities are to be paid
by those discharging oxygen-consuming wastes (BOD) or suspended
solids (SS).12 The indemnity rates are based on annual operating
and capital amortization costs for a treatment plant to adequately
treat the discharger's BOD or SS wastes. Indemnities must be paid
even if a permit has been issued for the discharges; fines are levied
for violating the permits. A discharger may have to pay an additional
surtax of up to 100 per cent of his annual charge based on the
extent to which his discharges degrade stream quality.
Proceeds from the indemnities go to the Water Economy Fund, a special
fund separate from the regular budget and used for contributing to
the costs of municipal or industrial waste treatment measures. In
addition to supporting this Fund, the indemnities serve the purpose
of equalizing prices between goods produced by factories without
the costs of adequate treatment facilities and those with those
costs, and of encouraging dischargers without adequate treatment to
install it. The Czechoslovak decree is included as Appendix M.
9
Id,, section 2. These modifying factors were promulgated as an
appendix to Departmental Order of the President of the National
Water Authority No. 1/1969/XI.25./.
Section 9, Ministertanes 1/1973. (1.9.) szamu rendelete, in Magya
Kozlony. January 9, 1973, at page 20.
Decree No. 16 of March 12, 1966, based on paragraph 27, chapter
2 of the Water Act 1955 (No. 11).
12
Id_., paragraph 2. At the discretion of a river authority, up to
fifty tons of BOD and 300 tons of suspended solids may be exempted.
113
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FRANCE
France's 1964 water law13 divides the nation into six river basins,
each of which is administered by a basin financial agency. These
agencies1 functions include doing research, aiding treatment
works financially and managing the financial aspects of water manage-
ment programs, including preparing and administering a system of fees
(redevances). The total amount of fees to be collected from users of
waters for water supply or waste disposal or other purposes is based
on a multi-year plan for agency loans and subsidies. Article 14 of
the law makes clear that these fees are essentially user charges:
"Each agency shall establish and collect dues from public and private
persons to the extent to which the said ... persons make action by
the agency necessary or useful or to the extent to which such action
is of benefit to them."
The charges for wastewater discharges are figured on the basis of
quantity and quality of the wastewater, effect on the receiving
waters and local water conditions.^ Private enterprises which dis-
charge directly into a receiving water or discharge into a municipal
sewer system without paying a sewer user charge and municipalities
are both assessed a gross charge (redevance brut) based on total
discharges of BOD and suspended solids (and salts in some basins)
against which is credited an amount based on how much waste is removed
by treatment prior to discharge (prime pour epuration). Municipalities
are charged on the basis of the population equivalents of their
discharges, unless they have taken responsibility for a non-domestic
source, in which case the charge for it is added. Industrial dis-
chargers are charged on the basis of their production times a coefficient
reflecting the normal wastewaters from the kind of establishment,
unless they wish to have their wastes specially analyzed. The amount
of the charge per kilogram of waste varies from basin to basin with
the annual costs of the programs which are to be funded. Within a
basin charge rates vary depending on whether the discharge is into a
protected zone of water or not.
13
Loi No. 64-1245 relative au regime et a la reparation des eaux et
a la lutte contre leur pollution, 16 December 1964, Journal Offi-
ciel de la Republique francaise No. 295, 18 December 1964, page
11258.
The standards for establishing the redevances were promulgated in
Decret No. 66-700 du 14 Septembre 1966 relatif aux agences finan-
cieres de bassin crees par 1* article 14 de la loi no. 64-1245 du
16 decembre 1964, Journal Officiel du 23 Septembre 1966, article
17 e
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THE NETHERLANDS
The Netherlands1 1969 law against pollution of surface waters,"
in order to generate revenues for a fund to make grants to public and
private entities to assist with the construction of wastewater
treatment facilities,16 provides that direct dischargers into nationally-
owned waterways must make payments to the national government based
on the population equivalents of oxygen consuming wastes or the number
of units of other wastes discharged.17 Public entities whose treat-
ment facilities discharge into national waters may collect the charges
from those who are connected to the facilities, or may ask the national
government to do so. Persons discharging directly or indirectly
into surface waters owned by the provinces must also make payments
based on oxygen-consuming wastes to the provinces or their desig-
nated water boards to help. >defray the costs of operating treatment
facilities, making the annual payments on loans for construction,
and administering the provinces1 water quality programs. All dis-
chargers are required to have permits authorizing their discharges.18
The Netherland's 1970 Air Pollution Act similarly provides that emitters
of air pollutants must pay levies which finance the implementation
of the act and the measures taken to prevent or limit air pollution. 1'
A law recently passed but not yet put into effect by royal decree
will require the payment of up to a 25 per cent tax on the costs
of buildings to be erected in the western part of the Netherlands,
as a means of slowing congestion in that part of the nation.20 The
tax will be paid by the one who must obtain a license to construct
the building.
Law No. 536, November 13, 1969, 1969 Staatsblad van het Konin-
krijk der Nederlanden, at page 1321.
Id.» section 17. Anticipated needs for revenues from 1970-
1985 were one billion guilders. Because of the need to catch up
on construction the charge rates have increased rapidly each year.
Id., section 19. Residences may be alternatively assessed on the
basis of number of rooms or tax assessed values. The regulations
implementing this section were promulgated November 6, 1970. No.
536, 1970 Staatsblad van het Koninkrijk der Nederlanden, at page
1209.
18
Id., section 1.
19
Problems of the Human Environment in the Netherlands; A National
Report, United Nations Conference on the Human Environment, Stock-
holm, June 1972, F/4107/71, at pages 60-61.
20
Act on Selective Investment Regulation.
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FEDERAL REPUBLIC OF GERMANY
In the Land of Northrhine-Westphalia in the Federal Republic there
are several public corporations which have been created by the legis-
lature to carry out various water management assignments in the
river basins of small tributaries of the Rhine.21 Membership in
these associations is prescribed by the special laws establishing
them; the Ruhrverband, for example, contains mines, commercial
enterprises, and other installations which contribute to pollution
of the Ruhr River; municipalities lying in its ^watershed; and
an association of waterworks on behalf of all those who withdraw
water from the river and its tributaries for purposes other than
producing power.22
The functions of the various associations are based on a general
determination of the principal use of the rivers. The Ruhrverband,
for example, is assigned by law to keep the Ruhr River clean for
water supply purposes while the Emschergenossenschaft's principal
assignment is to assure proper drainage of wastewaters. Of course,
these various functions dictate what programs each association
carries out and what construction projects it undertakes. The Ruhr-
verband builds sewage treatment plants all along the river while
the Emschergenossenschaft principally builds and maintains drainage
courses (although it has recently built a large treatment plant
at the mouth of the Emscher to reduce the burden of wastes it dumps
into the Rhine).
The membership of an association meets annually in assembly and
votes to approve a budget. This budget is met largely through assess-
ments collected from the members of the association, although for
certain projects the Land of Northrhine-Westphalia may provide
financial assistance. How the burden of the budget is borne depends
on the particular bylaws of an association, but in general one is
assessed according to the relative burden he imposes on the program
of the association or the benefit he receives from it. A person on
low land receives relatively more benefit from the efforts of a
drainage association, for example, than one on high land, and is
accordingly assessed a larger share of the budget to bear.
21
See generally. Gordon M. Fair, "Pollution Abatement in the Ruhr
District," in H. Jarrett (ed.), Comparisons in Resource Manage-
ment (1961) at 142-171; Allen V. Kneese, Managing Water Quality;
Economics. Technology. Institutions (1968), at 237-253, 258-262.
22
Section 4, Ruhrreinhaltungsgesetz of 5 June 1913, Preussische
Gesetzsammlung, at p. 305.
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There are. two basic ways associations which have water quality manage-
ment functions distribute the costs of carrying out these functions
among their memberships; (1) according to the expenses which accrue
(or would accrue) from treating a particular memberfs wastewaters; or
(2) according to some measure of the effect (or harmfulness) of the
member's wastewater discharges. The Linksniederrheinischeentwasser-
ungsgenossenschaft follows the first approach, the Ruhrverband and
the Emschergenossenschaft the second for example. There are varying
degrees of refinement in distributing the costs of an association's
wastewater treatment activities according to the effects of a member's
wastes. Some associations simply multiply the volume of an industry's
wastewaters times a factor based on the kind of industry. Others,
such as the Ruhrverband, add up the pollution unit values (based
on information provided by the members' annual reporting forms),
divide the sum into the figure which represents the total budget
needs for the year (in order to arrive at a "rate" for each unit
of pollution) , and then multiply this rate times the units discharged
by each discharger. If a discharger is able to reduce his pollution
load, he obviously reduces the share of the budget he will be assessed.
There are likewise complicated formulas for what the municipalities'
shares are.
It should be clear from the above that the assesments which members
of water management associations pay are not disincentives but rather
user charges to help fund the activities which the associations are
required by law to carry out. The amounts of assessments paid by
the members of the Ruhrverband to support a staff of 900, the operating
expenses of over a hundred sewage treatment plants, and the annual
payments on the loans to build those plants are not insignificant,
but they are spread over more than 1200 members and so do not consti-
tute nearly the burden individual treatment plants would be for each
member. The associations are quasi-public entities with specific
mandates to manage water for the public welfare. As such they may
assess those who use the facilities they build and the services they
provide in proportion to the amount of that use.23
23
For more details on the water management associations of North-
rhine-Westphalia and their assessment systems see, Irwin, Charges
on Wastewaters in Europe, forthcoming as Environmental Law Institute
Monograph No. 2.
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SECTION VII
ECONOMIC DISINCENTIVES: POLITICAL AND ADMINISTRATIVE DIMENSIONS
INTRODUCTION
This section discusses aspects of the political and administrative
feasibility of federal or state adoption of disincentive measures
in matters within the jurisdiction of the U.S. Environmental
Protection Agency. It begins with a brief review of the conceptual
bases of disincentives (particularly those using the mechanism of
effluent charges). It then describes Congress1 treatment of proposed
taxes on sulfur emissions and on lead in gasoline, and Congress1
reaction to the Environmental Protection Agency's proposal to impose
parking surcharges as elements of transportation control plans to
achieve ambient air quality standards. It concludes with brief
discussions of the feasibility of adopting disincentives under the
statutes EPA administers.
THE ROLE OF ECONOMIC DISINCENTIVES IN ENVIRONMENTAL REGULATION:
PRINCIPAL CONCEPTUAL ISSUES
Environmental quality management, like other areas of governmental
regulation, is susceptible to manipulation by public and private
parties seeking to minimize the adverse economic impact upon them
of strict control. Environmental quality management can be more
symbolic than substantive if the regulatory procedures established
are weak and resources devoted to their operation are inadequate.
With increasing frequency, pollution charge proposals dot the land-
scape of the economic and environmental control literature. Eco-
nomic disincentives schemes are preferred by some to schemes of
environmental regulation based on standard setting and civil and
criminal enforcement of compliance, ostensibly because polluting
interests would have a lesser incentive to delay achievement of
environmental quality goals than they have had under regulatory
systems. The following subsection discusses the weaknesses of past
regulatory systems and the general strengths and limitations of
charge systems as alternatives or supplements to existing regulatory
systems. It is designed to provide an overview of the principal
assertions that have been made on the several sides of the pollution
charge debate. The succeeding subsections illustrate how these
agruments figured, along with political factors, in the fate of pro-
posals for sulfur taxes, parking surcharges, and lead additive
taxes.
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Regulatory Systems
Enforcement of pollution control laws prior to 1970 was an exercise
in futility. In the area of water pollution, federal jurisdiction
was considerably limited, no effluent standards existed, no pro-
vision was made for civil penalties, and the conference-hearing
procedures established to promote abatement were "cumbersome and time-
consuming."-'- To achieve compliance, the government's most powerful
tool was the judicial cease and desist order, noncompliance with
which was punishable as a contempt of court.
The Council on Environmental Quality has stated that the procedure
under which enforcement had been carried out was less than satisfac-
tory. There was no clear pattern to the convening of enforcement
conferences, but in the early days of the water pollution control
program these conferences apparently avoided focusing on major,
heavily polluted water courses.2 In many cases abatement schedules,
once established, were substantially disregarded. The ultimate
step in enforcement was filing of an abatement suit in federal court.
This point was reached only once, in a case concerning municipal
pollution from St. Joseph, Missouri. This instance demonstrates how
cumbersome the enforcement process could be. The initial abatement
conference was held in 1957, but shortly thereafter St. Joseph
citizens rejected an environmental bond issue that would have funded
sewer construction and primary sewage treatment facilities. The
second abatement step, a public hearing, was reached in 1959, but
one year later a bond issue was again rejected. Suit was then filed
and a court order obtained requiring completion of municipal treat-
ment facilities by 1963. By 1967, the treatment plant was completed,
but only half of the necessary sewer connections had been made.
Court action was again necessary, producing an order to the city
to expedite work. City officials replied that they could not complete
all the projects necessary to provide comprehensive primary treatment
until 1973.
Air pollution control was sadly similar. Federal jurisdiction was
limited, the conference—hearing procedure was cumbersome and time-
consuming, and no civil penalties could be levied. Only one enforce-
ment action, involving Bishop Processing Corporation in Maryland,
was undertaken by the federal government and this also took many
Council on Environmental Quality, First Annual Report — 1970
at 53.
2
See David Zwick and Marcy Benstock, Water Wasteland (New York:
Grossman, 1971), chapter 6.
119
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years to complete.
Enforcement has always been the most politically sensitive aspect
of federal pollution control programs, and the choice of targets
for enforcement actions has been determined not only by the serious-
ness of the problem in an area but by the possible political
ramifications of initiating an enforcement case. In general, the
primary purpose of the federal enforcement actions, when they occurred,
was to prod state and local control agencies into taking action;
there was greater reliance placed on informal bargaining rather than
on legal proceedings. Informal negotiation was also often preferred
to a judicial process that could impose a considerable demand on
limited time and manpower resources and which placed a heavy bur-
den of proof on government enforcement personnel.
Even the strongest set of regulatory powers would be meaningless,
absent a commitment of manpower and resources to carry them out.
In an August 1973 report, the General Accounting Office found in
seven states it surveyed a lack of complete emissions inventories
of sources of air pollution, insufficient enforcement resources,
and inadequate surveillance of air polluters.^ The report alleged
in addition that there was too great a reliance on voluntary compliance
and negotiation.
Effluent and Other Pollution Charges
The failure of the regulatory systems of the 1950*8 and 1960fs
has led to development of new, tougher regulatory frameworks that
include effluent standards and civil penalties. But it has also
been suggested that these be supplemented or supplanted by systems
of pollution charges or similar disincentives according to which pol-
luters would be required to pay for each unit of pollution discharged
to the environment.
The original rationale for some form of pollution charge is found
in the literature of welfare economics.5 There it is argued, for
3
For a discussion of federal enforcement efforts in general, see
J. Clarence Davies.The Politics of Pollution (1970), especially
the chapter on compliance. For a muckraking view of enforcement
efforts in the air arena, see John Esposito,Vanishing Air (New
York: Grossman, 1970).
4
Reported in the Washington Post. August 29, 1973.
This discussion is based on review of the following material:
Allen V. Kneese, "Strategies for Environmental Management;11 A My-
120
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example, that air and water pollution occurs because air and water
are treated as free goods in production decisions; their use as
rick Freeman III and Robert H. Haveman, "Water Pollution Control,
River Basin Authorities,and Economic Incentives: Some Current
Policy Issues," Marc J. Roberts, "Organizing Water Pollution
Control: The Scope & Structure of River Basin Authorities," Public
Policy. XIX: 3 1 (Winter 1971).
Hearing on Economic Analysis and the Efficiency of Government
before the Subcommittee on Priorities and Efficiency in Govern-
ment of Joint Economic Committee, U.S. Congress, 92nd Cong.,
1st Sess. (Part 6 - Economic Incentives to Control Pollution)
(July 1971).
Harold Wolozin, "The Economics of Air Pollution: Control Problems,"
Paul Gerhardt, "Incentives to Air Pollution Control," George Hagevik,
"Legislating Air Quality Management: Reducing Theory to Practice,"
Law and Contemporary Problems 33; 227, 358, 169 (Spring 1968).
Edward Selig (ed.) Effluent Charges on Air and Water Pollution (Wash-
ington: Environmental Law Institute, 1973).
Allen V. Kneese et al« Economics and the Environment (Baltimore
Johns Hopkins Press for Resources for the Future, 1970).
James C. Hite et al., The Economics of Environmental Quality
(Washington: American Enterprise Institute for Public Policy
Research, 1972).
Frederick R. Anderson, Allen Kneese, Russell Stephenson and Sarge
Taylor, Economic Incentives for Environmental Control: Legal,
Economic, Technical and Political Aspects (Baltimore: Johns Hopkins
Press for Resources for the Future, forthcoming).
Talbot Page "Economics of Recycling," in Resource Conservation.
Resource Recovery, and Solid Waste Disposal. Studies prepared for the
U.S. Senate Committee on Public Works by the Environmental Policy
Division of the Library of Congress Congressional Research Service,
Committee Print, (November 1973).
Robert H. Haveman and Julius Margolis (eds.), Public Expenditures
and Policy Analysis (Chicago: Markham, 1970).
H. Rep. No. 89-1330, "Views of the Governors on Tax Incentives
and Effluent Charges," Twenty-First Report by the Committee on
Government Operations, 1966.
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receptacles for human wastes, disposed consumer goods and the by-pro-
ducts of industrial production has no price attached to it and thus
neither private nor public waste producers have any economic incen-
tive to reduce their abuse of these resources* assimilative capaci-
ties. While the use of these media imposes no costs on producers,
costs are imposed on society at large, in the form of increased
medical bills, increased maintenance requirements for materials,
and restricted uses of common property resources. Moreover, in the
case of industrial production, because these production costs are
passed on to society generally, the market price to the consumer
of the products manufactured does not reflect the total social cost
of production; the result may be the oversupply of environmentally
costly goods to satisfy a demand induced by artificially low prices.
Similarly, the costs of public waste disposal services may be kept
artificially low.
By attaching a price to the use of hitherto free atmospheric and
hydrospheric resources, it is argued, their abuse and the costs
unilaterally imposed upon society by polluting producers can be
reduced. In some proposals, the price takes the form of a fee
per unit discharge and is an approximation of the damage caused by
a polluter's effluents and emissions. Once the amount of damage
is determined the price can be set at which a maximally efficient
solution to the pollution problem exists. At this price, each
polluter will abate his discharges to the point where the marginal
cost of abatement is equal to the marginal cost of social damage.
For further abatement below this level of discharge, the cost to the
polluter of each additional unit of abatement will be greater than
the reduction in social damages resulting from such abatement.
It will be cheaper — and economically more efficient — to pay a
fee on the remaining residuals than to abate them.
The efficiency of pollution charges has made them theoretically
far more appealing to economists than .regulatory schemes in which
all polluters have to reduce their effluents by a uniform percen-
tage to meet a legislatively or administratively determined stan-
dard. While having apparent equity, such uniform reductions can be
quite an inefficient means of achieving standards, for they ignore
A. Myrick Tree-man and Robert H. Haveman, "Residuals Charges for
Pollution Control: A Policy Evaluation," Science, 177:322 (July
28, 1972).
Robert M. Solow "The Economist's Approach to Pollution and its Con-
trol, Science. 172:498 (August 6, 1971).
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the differences in marginal abatement costs that exist for large
and small dischargers.
Proponents of pollution charges have also argued that they provide
a powerful incentive to abate pollution quickly because they impose
an immediate economic cost on dischargers. Under regulatory schemes,
it is contended, dischargers do not have such a strong motivation
to abate, but rather have a considerable incentive to delay imple-
mentation of required pollution control schemes. Rulings will be
judicially contested, variances sought, and other efforts at delay
will be employed, so as to postpone an investment in pollution con-
trol equipment which represents either a company's use of capital
from which it receives no financial return or a significant bur-
den on a municipality's budget.
Yet another argument made for pollution charges is that they provide
a continuous incentive to abate pollution. Functioning alone and
not in conjunction with a system of ambient air or water quality
standards, the continuous cost they impose on a polluter provides
him with an incentive to find new ways of reducing his total
effluent discharge.
Proponents of pollution charges also contend that they provide con-
siderable flexibility in achieving abatement. Each company could
decide for itself how to abate in order to reduce its charges.
Because the assimilative capacity of a water course or air shed
may vary with hydrological or meteorological conditions, a uniform
percentage of effluent or emission reduction or a specified
level of treatment that might be required by a regulatory scheme
may produce abatement action which is overly effective and expensive
during one season, yet is grossly inadequate at another time of year.
In contrast, charge levels might theoretically be adjusted to produce
discharger abatement behavior better adapted to changing environmental
conditions.
The principal argument against true effluent charges is that it is
so difficult to establish societal damage functions that the level
for the effluent charge based on such functions cannot be found.
Even the strongest proponents of effluent charge systems concede
that this is true, but respond that surrogate damage functions can
be established. Often these surrogate damage functions can be
established to work in conjunction with some form of ambient or
effluent standard system; the price per unit of discharge is set at
a level whereby it becomes more expensive for polluters to pay the
charge than to install the pollution control equipment that will
permit water quality or effluent standards to be achieved.
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The demand for surrogate damage functions serves to undercut one
of the arguments made in favor of pollution charges — namely that
they reduce the information burden of regulatory agencies and lay it
principally on polluters. The regulatory agency, to establish an
artificial price, must have considerable knowledge about industrial
abatement costs so as to enable it to establish charge rates which
will induce pollution abatement by dischargers. This information
demand is not so great, however, when the pollution charge takes
the form of a municipal user charge for treatment of industrial
wastes in the municipal sewage treatment plants. A municipality,
in the course of designing and operating its plant will have developed
cost estimates. These function as surrogates for the environmental
damage avoided by effluent treatment and can be apportioned among
industrial dischargers.
The need to establish surrogate damage functions also undercuts
somewhat the contentions of charge proponents that an effluent charge
might bring about faster polluter response than some form of stan-
dard-based regulation. Promulgators of pollution charges will have
to experiment with alternative charge schedules until they find the
schedule that produces the amount of abatement they consider desir-
able. The period of time between rate establishment, initial polluter
response, rate adjustment and additional polluter response may be
considerable. In addition, the tentative nature of the charge
structure may confound business planning because of uncertainty
over future abatement and fee costs.
Pollution charges may also be used as an incentive in situations
where the technology for pollution abatement has yet to be developed.
Because investment in pollution control research may be a highly
risky investment in which little or no profit may be found, polluters
having no economic incentive to do so may not devote much of their
resources to the necessary research effort and may use the resultant
abas en ce of suitable technology as an excuse for not abating their
pollution. Pollution charges in such a situation might be arbi-
trarily selected by the legislature as a prod to industries to devote
funds to an adequate research effort.
The rationale behind all pollution charge schemes is that business-
men are profit-motivated and city managers cost-cons clous and that
if it is more expensive to pay an effluent fee than abate pollution,
abatement action will be taken. While some studies of sewage treat-
ment plant user charge schemes have suggested that this will be the
case, the matter of business response is still the subject of debate.
First, business response to a fee system will be dependent upon the
size of the fee, its predictability, and the opportunities provided
within the statutory and regulatory structure under which the fee
is levied to delay its imposition or influence its magnitude.
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Second, business response will be conditioned by the nature of a
polluterfs market. A monopoly business may respond differently to
a fee than a non-monopoly business. Third, business response will be
conditioned by regulatory factors. If a polluter's product price
structure must be approved by a government regulatory commission,
his ability to pass on his abatement costs or fee payments will
influence his response to the fee.
The effectiveness of a fee system for achieving environmental goals
will also be contingent in part on the mix of sources that contribute
to the pollution of a particular medium. If a large portion of the
pollution in a medium is attributable to non-point source pollution,
a fee system for polluting discharges from point sources may have to
be supplemented by a regulatory system for the control of nonpoint
sources.
Another argument made against pollution charges is that the monitoring
required will be too difficult or expensive to be practical. Any
effective pollution control system will require some system of
monitoring and it can be implemented by means which fairly apportion
the burdens, e.g., via self-reporting by dischargers complemented by
periodic governmental spot-checks. Charges can also be based on
formulas derived from various measures of plant activity. Allegations
as to the monitoring burden must be evaluated on a case by case
basis.
The strongest argument usually made against pollution charges is
that they impose a double burden on polluters. That is, the
polluter is expected to invest his oftentimes limited resources
in pollution abatement while he is simultaneously paying the govern-
ment for his polluting discharges. Both industrial and municipal
interests argue that it is unfair"to make capital demands for pollution
charges while also expecting investment in pollution control equip-
ment on which little return is gained.
The double burden argument may indeed be applicable in some industries
for which effluent charge payments may comprise a considerable por-
tion of work capital or total investment. However, the argument
must be evaluated on an industry by industry basis, for in some indus-
tries, there might be sufficient capital available and so little
invested in pollution control, that the double burden argument is
more rhetorical than substantive. Furthermore, the double burden
argument against an effluent fee can be defused somewhat by establish-
ing a fee system in which the effluent charge starts at a low
level and then rises over time. The initial capital impact on
industry will be slight while the industry is oh notice that if it
does not accelerate its pollution control efforts, its burden may
become heavier.
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In considering the efficacy of a charge system, the desirability
of application to municipal dischargers must also be considered.
While application of a fee solely to industrial dischargers may
lead to allegations of discrimination in favor of municipal dis-
chargers, charges on municipalities may not be as efficacious as
those on industrial dischargers. The ultimate aim of an effluent
fee is to provide an incentive for the discharger to find the
most efficient means of abating his pollution. For the industrial
discharger, the abatement process might include an end of the pipe
control process, but it might also entail a process change, increased
recycling and waste recovery, changed inputs, or other adjustments.
The spectrum of choices available to municipalities amy not be as
wide as the spectrum for industries because the inputs in the form of
human wastes can scarcely be modified. Municipal response to an
effluent charge, furthermore, might be different from industrial
response, for it might have to be conditioned upon voter approval
of a bond issue. Also, to the extent that municipal response is
governed by allocation of federal sewage treatment plant subsidies,
it is contingent upon congressional appropriations and the smooth
functioning of the federal bureaucracy in the timely allocation of
construction grant funds.
The considerations of fairness embodied in the dispute over municipal
effluent taxation can be found as well in discussions over the scope
of pollution charges. Should they be national or regional, or
should both national and regional charges be developed? National
charges may be inequitable because they take insufficient account
of differences in the regional impact of pollutants, but regional
charges may not be functional because political considerations, i.e.,
fear of industrial loss, may preclude their being levied. The levying
of regional charges also raises the question of political and adminis-
trative responsibility. If a regional organization fixes assess-
ments, how are its boundaries to be defined and how are states and
local interests to be represented?
The discussion that follows of sulfur emission taxes, lead additive
taxes, and parking surcharges demonstrates how many of the points
. raised above figured in deliberations over three specific federal
disincentive proposals.
POLITICS OF DISINCENTIVES
Sulfur Emission Taxes
Sulfur oxides constitute a threat to human health and can damage
vegetation and property. The cost to human health of sulfur oxide
emissions is estimated at over $3.3 billion annually and property
and vegetation damage is estimated to amount to an additional $5
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billion. An estimated 36,600 t of sulfur oxides are emitted to
the air each year; these cause about one-half of all damage attri-
buted to air pollution.7 Without controls, emissions are expected
to quadruple by the year 2000.**
55 per cent of the sulfur oxides are emitted by power plants, 11
per cent by smelters, 7 per cent by refineries, 22 per cent by
other combustion sources and 5 per cent from other miscellaneous
sources."
While in the early 1970's a need was felt to control pollution from
sulfur oxides, the technology had not yet been perfected to desul-
furize fuels or stack emissions. The absence of such technology
prompted the development of competing proposals for charging
polluters for their sulfur emissions, as a means of providing them
an incentive to research, develop, and invest in pollution control
technology. The Nixon administration proposal sought to piggyback
an emission charge onto the regulatory structure created by the Clean
Air Act of 1970. The emission charge proposals of environmentalists,
in contrast, were not linked to the Act. The debate over the competing
proposals highlights several problems that must be confronted in
designing economic disincentives for pollution control; these include
Council on Environmental Quality, The President's 1971 Environmental
Program at 26. EPA figures for 1970 published in May 1974
differ somewhat from these CEQ figures. An EPA researcher provided
a "best estimate" of $1.9 billion for the human health cost of
sulfur oxides, and high and low estimates of $3.1 billion and $0.7
billion respectively. The EPA researcher estimated material and pro-
perty damage to be $3.5 billion with a high estimate of $4.9 billion
and a low estimate of $2.1 billion. Vegetation damage was estimated
to be negligible. See Thomas E. Waddell The Economic Damages of
Air Pollution (Environmental Protection Agency Office of Research
and Development Socioeconomic Environmental Studies Series, Report
No. EPA-600/5-74-012, May 1974) at 130.
The President's 1971 Environmental Program, id. These emission
estimates are somewhat higher than EPA's estimates for 1970 that
were published in January 1973. EPA researchers estimated emissions
for 1970 of 33,900 t, almost all of which resulted from fuel com-
bustion in stationary sources and from industrial process losses.
See J. H. Cavender, D.S. Kircher, and A.J. Hoffman, Nationwide Air
Pollution Emission Trends 1940-1970, Publ. No. AP-115, (Environmental
Protection Agency, Research Triangle Park, January 1973). Cited
in Waddell, id. at 127..
V
V
127
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the disincentives' appropriate level, geographic scope, timing and
microeconomic impact.
Initial Administration Proposal — President Nixon first mentioned
administration plans for a tax on sulfur emissions in his environ-
mental message to Congress of February 8, 1971, but it was not until
the following year that a formal legislative proposal was submitted.
Delay was occasioned by differences within the administration con-
cerning the form of the proposed tax.10
Initially the intention was to have a national, uniform tax on sulfur
oxide emissions that would be imposed at a low level in its first
year but would rise rapidly over a period of five years. The Com-
merce Department opposed this proposal, arguing that it unfairly
singled out a few industries. The plan was also vigorously opposed
by industrial interests, especially copper companies, who argued
that there should be no tax in regions where air quality surpassed the
primary and secondary ambient standards for S02 established pursuant
to the Clean Air Act. Under the Act, states were to develop imple-
mentation plans for each region to meet by 1975 the primary air
quality standards for S0£ and other pollutants, though extensions
of up to three years for meeting these deadlines could be granted by
the EPA Administrator. Industry argued that since no damage pre-
sumably occurred when the standards were not breached, there was no
rationale for taxing emissions in regions having clean air. Opponents
of the plan also contended that it should be modified to take account
of a possible mid-1970fs shortage of low sulfur fuels. A uniform
national charge would increase demand for scarce low sulfur fuels
even in areas where they were not needed for achievement of ambient
air quality standards.
1972 Administration Proposal — For sulfur tax purposes, the 1972
administration proposal divided the nation into three classes of
regions: those whose sulfur oxide levels exceeded primary ambient
air quality standards and therefore represented a health hazard;
those whose sulfur oxide levels did not exceed the primary stan-
dards but which exceeded the secondary standards above which SOo
concentrations cause vegetation and property damage; and those clean
air" regions in which sulfur oxide levels are below the secondary
10
John F. Burby, "Environmental Report/White House, Activists Debate
Form of Sulfur Tax; Industry Shuns Both," National Journal, 4:1643
(October 21, 1972). '
128
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standards.
These three types of regions were for sulfur tax purposes respectively
labeled class I, class II and class III regions. A sulfur tax was
to be levied in 1976 in class I and class II regions. In class III
regions, no tax whatsoever was to be levied, for absent SC>2 control
technology development, if such a tax were levied, dischargers in
relatively clean regions would compete for limited low sulfur fuel
supplies with polluters in dirtier class I and class II regions.
Also, there was little purpose requiring polluters to abate pollution
in clean air regions if there was no threat to human health,
property or vegetation from the pollution.
Fuels used in class I regions were to be taxed at a rate of 15
cents per pound of sulfur and fuels used in class II regions were to
be taxed at a rate of 10 cents per pound. Air quality regions estab-
lished pursuant to the Clean Air Act Gould also be subdivided into
two or more sulfur tax regions to isolate heavy polluters, the magni-
tude of whose emissions might otherwise force installations in the
larger region to pay higher taxes. The proposal also provided for
the levying of additional taxes where sulfur oxide levels rose from
one year to the next; the penalty was to be 5 cents per pound in a
region that changed from class II to class I, 10 cents per pound for
a region which changed from class III to class II and 15 cents per
pound for a region which changed from class III to class I.
The tax would be levied on sales of fuel. Sellers of fuel would
register with the government for this purpose. Sales to buyers having
stack emission monitoring capability would not be taxed. Such registered
buyers would only have to pay a tax on actual emissions as
measured by their monitoring equipment. They would thus be encouraged
to remove as much sulfur as possible from their stack gases. Emissions
from industrial, non-fuel sources would also be taxed on this basis.
Finally, if they desired, states could levy their own sulfur taxes
to supplement the federal levies.'
The tax's purpose was to provide industry with an incentive to
research, develop and invest in pollution control equipment. In
the absence of proved SC>2 control technology, industry had little
incentive to invest in control equipment, until it had been tested
for some time. Enforcement was likely to be hampered by polluters'
The text of the administration bill is found in the Council on
Environmental Quality's The President's 1972 Environmental Program
at 44.
129
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subsequent arguments concerning the technological feasibility of
compliance with clean air standards. The administration saw the tax
as providing pressure on industry to demonstrate and use technology
as soon as possible to avoid the charge. ^
At the time of the Clean Air Actfs enactment, no feasible technology
for control of S02 emissions had been demonstrated. While several
processes for flue gas control of SOj had been developed and some
were being marketed, little consistent information existed on their
costs, efficiencies and technical problems. The uncertainties
delayed both the perfection of available approaches to reducing
emissions and the commitment by utilities to implement whatever
controls were available.13
Historically, electric utilities have invested little money in
research and development, preferring to rely for research on their
equipment suppliers. In 1970, the industry spent .23 per cent
of its gross revenues, $46 million, on research and development^ and
only a small proportion of this was devoted to pollution control. 14
The Office of Science and Technology called the .23 per cent figure
"a remarkably small percentage by most industry standards," repre-
senting less than one-tenth of the average for American industry
as a whole.-"-^ In contrast, the utilities spent $395 million in
1970 on advertising, eight times their research and development
expenditures.-^-" The utilities claim that the regulatory process
discourages expenditures for research and development, but the Office
of Science and Technology responds that R&D expenditures have generally
been included in cost of service for rate-making purposes by the Fed-
eral Power Commission and by state commissions.17
The Administration's 1972 proposal encountered considerable opposi-
tion and no Republican sponsors for it could be found in the
House of Representatives; it was therefore introduced into the
Council on Economic Priorities, The Price of Power (1972)
at 19.
14Id. at 76.
15Id.
16Id. at 92.
17Id. at 87.
130
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House by three Democratic, environmentally-oriented congressmen.
18
1973 Administration Proposal — In 1973 the administration revised
its proposal, the 1972 version having died in the House Ways and
Means Committee. The 1973 version called for a charge of 20 cents
per pound of sulfur emitted, to take effect in 1976 in regions where
the national primary standard for sulfur oxides had not been met
by the 1975 Clean Air Act deadline.19 After 1978, in regions which
met the primary standards but exceeded the secondary standards,
a charge of 20 cents per pound would also be imposed. As in the
previous proposal, regions meeting both standards would be exempt
from a charge, as a means of alleviating demand for scarce low sulfur
fuel supplies.
Coalition to Tax Pollution Proposal — Competing with the adminis-
tration proposal was one developed by the Coalition to Tax Pollution
and introduced into Congress by Representative Les Aspin and Senator
William Proxmire.^0 The proposal would levy a charge of 20 cents
per pound on the sulfur content of fuel. The fee would be set at
5 cents per pound in 1972 and increased 5 cents each year until
1974, when it would reach a level of 20 cents per pound. The tax
would continue to be imposed even after Clean Air Act standards
were met. Senator Proxmire, introducing the proposal, noted that the
ultimate level of 20 cents per pound represented more than it would
cost industry to abate sulfur pollution. He contended that the most
expensive abatement means, fuel oil desulfurization, was estimated to
cost 11-19 cents per pound of sulfur removed. The 20 cents per
pound charge was reportedly based on two studies, one by EPA and one
by NAS, which suggested respectively that each pound of sulfur
in the air caused 25 cents of health and property damage and that the
average cost of removing the sulfur would be 5-15 cents per pound.2l
18
Burby, supra, note 5 at 1643. The S02 tax bill was reintroduced by
the three Representatives, Dingell, Reuss and Moss into the 93rd
Congress as H.R. 5334, March 7, 1973.
19
The 1973 version is described in the Council on Environmental
Quality's The President's 1973 Environmental Program at 20. A
search of the Library of Congress* Digest of Public General Bills
reveals no record however of the bill actually being introduced into
the House, although the 1972 version was reintroduced as H.R. 5334.
The text, and Proxmire's introductory comments, can be found at
118 Cong. Rec. S276 (daily ed. January 24, 1972). Proxmire's
bill was S. 3057 and Aspin1s H.R. 10890.
21!d.
131
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In addition to promoting technological development, the tax was also
seen as encouraging a least cost solution to environmental quality
problems. Instead of a state requiring all sources to reduce emissions
by 75 per cent, or ordering exclusive use of low sulfur fuels, opera-
tion of the tax would encourage polluters to find the least cost
solution for themselves.
Congressional Response — Neither of these taxation proposals ever
moved beyond the House Ways and Means Committee, which never held
hearings on them. The fee was roundly opposed by all industrial
groups and obtained only mixed support from environment alists.22
It is alleged that the present committee chairman, Wilbur Mills,
views with disfavor any efforts to use the tax system to curb pollu-
tion. 23 While the existence of pollution control tax write-offs and
other subsidies would belie this belief, it is apparent that Chair-
man Mills certainly does not have any great liking for pollution
control proposals which would have a considerable adverse economic
impact on American industry.
The sulfur tax was viewed by CEQ as a first test of the effluent
tax concept. Relatively easy to administer because of the few pollu-
ting sources involved, it was hoped that if it gained congressional
approval, then some effort might be expended to develop the concept
for other more complex and diverse sources of pollution.
Conceptual Problems — Geographic scope and level of fee — A
whole host of political and economic problems accompanied the two
sulfur tax proposals. For example, an emission charge is ideally
pegged to the cost to society of the damage caused by a pollutant.
Emission charges are set at levels whereby for each polluter the
marginal cost of abatement is equal to the marginal cost of damage
from uncontrolled emissions. But how is damage to be measured? The
proposals described here were pegged to the damage ostensibly
created by SC^, but these damage estimates were only crude, nationally
based calculations.24 Some economists believe that regional charges
are to be preferred to a national uniform charge, because the marginal
damage caused by each pound of sulfur in a clean region will differ
from the marginal damage of each additional pound in a dirty region.
22
John F. Burby, "Environment Report/White House Plans Push for
Sulfur Tax Despite Strong Industry Opposition," National Journal
4:1663 (October 28, 1972.)
23Id. at 1671.
These estimates were questioned in Edward Selig (ed.) Effluent
Charges (Washington: Environmental Law Institute, 1973) pp. 53
et seq.
132
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A single uniform national emission charge might bear an imperfect
relationship to the damage functions of both the clean and dirty
regions. But on the other hand, regional charges might not account
sufficiently for inter-regional movements of pollutants, e.g.
damages from acid rains in one region resulting from emission of
sulfur oxides in another.
Some have argued that fee levels should be set on the basis of
disincentive, rather than economic efficiency criteria. If an
emission charge is set at too low a level, it may be cheaper for a
polluter to pay the fee than abate his pollution. The fee thus be-
comes a license to pollute. Some environmentalists contended
that the 15 and 10 cent fees of the initial administration proposals
were too low. Establishment of an appropriate charge was also compli-
cated by inflationary trends in the economy.
Regional fee proposals suffer from the weakness that exemption of
selected regions from fee schedules gives major polluters an in-
centive to locate in such areas to avoid a tax. This might induce
abatement in dirtier regions but might worsen air pollution in clean
ones. The relocation problem was identified with the administration
proposal, though the administration responded that it could be met
through implementation of "new source" controls on new industrial
operations.25 Also, the carving up air quality regions into two
or more sulfur tax regions might be a process susceptible to con-
siderable political manipulation.
Demand for low sulfur fuel — The administration argued that the
exemption of clean air regions was necessary to reduce demands for
low sulfur fuels. This latter argument seemed to have some merit,
for by late 1972 the regulatory system established pursuant to the
Clean Air Act was exacerbating the low sulfur fuel supply problem in
the same manner a nationwide sulfur tax might.26 Various states, in
developing their implementation plans, were imposing sulfur emission
restrictions even where they were not needed to meet primary
standards, so the market demand for low sulfur fuel was considerable.
As a result, the EPA Administrator in December 1972 requested governors
to postpone low sulfur fuel requirements where they were not needed
25
The administration stated in its 1972 Environmental Program, supra,
note 11 at 5, that the tax would in no way compromise achievement
of the national ambient standards.
The discussion here draws from the Council on Environmental
Quality's Environmental Quality — The Fourth Annual Report of
the Council on Environmental Quality (1973), at 161-162.
133
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to meet primary standards, a request endorsed by President Nixon
in his April 1973 energy message. The request could only be advisory,
however, because under the Clean Air Act states were permitted to
set air standards tougher than those of the federal government if
they so desired.
Microeconomic impact — A close look also has to be taken at the
microeconomic impact of the emission charges. Under the Coalition
proposal, even if polluters met primary and secondary standards,
they would have to continue to pay an emission charge. While this
charge might encourage continued research into means for reducing the
levels of pollution, large generators of sulfur oxides who had
achieved high levels of pollution control might have to continue to
pay large sums of money which they could ill afford.
The microeconomic impact of the sulfur tax proposal was of special
concern to the copper smelting industry. Under the administration
proposal, most of the smelters would not be seriously threatened,
because most were located in regions with relatively clean air.27
Were a flat tax to be imposed on the smelters, however, it could
have a considerable regional impact, particularly in Arizona.
Arizona has 8 of the nationTs 19 copper smelters and 48 per cent
of the nation's smelting capacity.28 Utah and Montana each have 11
per cent of the nation's smelting capacity. Moreover, because the
domestic primary copper industry is controlled by only 12 firms,
the tax would concentrate a considerable capital cost on a few
entrepreneurs. In addition, considerable price competition for
copper exists from overseas and from aluminum substitutes. During
past periods of high demand, American firms have rationed copper
rather than raise prices for fear of losing markets to aluminum.
Were emission charges to be passed on to consumers in the form of
raised copper prices, increased aluminum substitution might occur.
This might have an adverse environmental impact inasmuch as aluminum
production is notorious for its consumption of electrical power.
A microeconomic evaluation would also have to be conducted on the
impact of the charges on the utility industry. Some contend that
this industry is in an enormous capital squeeze now and that
97
Wall Street Journal. February 15, 1972.
T!he description here of the composition and economics of the
copper smelting industry is derived from the Council on Environ-
mental Quality, The Economic Impact of Pollution Control (1972), at
191 et seq.
134
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an emission charge would be unduly burdensome.2^ Analysis of the
charges1 impact on the industry would be complicated by the need to
incorporate regulatory behavior into such calculations; utilities
might not be permitted to pass emission charges on to consumers
but would have to absorb their costs.
Present Status of 803 Abatement — In 1974, three years after the
sulfur tax's initial proposal, it appears that many S02 emission
limitations will not be met by the mid-1975 compliance date of most
state implementation plans. Testimony and data submitted at EPA
hearings on S02 emission limitation compliance by the utility indus-
try in October-November 1973 revealed the following:
1. Some utilities have applied greater efforts to defending
their lack of progress or to attempting to change existing
emission requirements than they have to controlling their
S02 emissions through flue gas desulfurization technology.
2. Although control of the chemistry of flue gas desulfur-
ization systems is critical to reliable operation, few
utilities have hired personnel skilled in such chemical
operations.
3. Utilities are not aggressively following the work of those
companies in the U.S. and Japan that have installed full
scale flue gas desulfurization systems. This lack of
active monitoring makes utilities1 "wait and see"
attitude towards abatement technology less defensible.
4. While a number of state public utility commissions allow
an automatic pass through of increased costs resulting
from switching to a low-sulfur fuel, similar automatic
pass throughs are not generally allowed for increased
costs resulting from the installation of desulfurization
systems. This tends to bias utilities toward fuel switching
as a compliance mechanism.
5. Industry investment in R&D has increased four-fold in three
years, but still constitutes a low .69 per cent of gross
revenues. Also, only a small portion of this R&D invest-
For further discussion of this point see, "Financial Require-
ments of the Nation's Energy Industries," Hearing before the
Senate Committee on Interior and Insular Affairs, March 6, 1973
(Serial No. 93-5).
135
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ment is for S02 control
Tax on Lead Additives
30
Administration Proposal — In 1970 the Nixon Administration proposed
the imposition of a tax of $4.25 per pound on the lead additives
used to raise gasoline octane levels.*1 The objective of the tax
was to increase the demand for lead-free fuels thereby providing an
incentive to gasoline manufacturers to enlarge refining capacity
for production of such fuels. The administration saw the tax as
providing a financial incentive that would assure that lead-free
gas would be widely available by July 1974, when automobile manufac-
turers would introduce 1975 model automobiles utilizing catalytic
converter emission control devices. These devices, required for the
attainment of automotive emission control standards, would be dis-
abled by lead and thus it was necessary to assure that lead-free
gas would be widely available to those purchasing cars equipped with
them.
The addition of lead to gasoline provides an inexpensive means of
raising octane levels; a leaded gasoline is cheaper than an un-
leaded gasoline of equivalent octane rating whose octane has been
raised by some other means. Companies that had introduced no-lead
or low-lead fuels found little demand for them in 1970, for consumers
could obtain leaded gas of equivalent or even higher octane rating
at a cheaper price. The administration lead tax was a simple device
to encourage consumption of lead-free gas and discourage consumption
of leaded gas by making unleaded gas more competitive. It was not
an effluent charge, in that it did not bear any relationship to
the alleged cost of lead pollution to the environment.
30
The discussion here draws from the Environmental Protection Agencyfs
"Report of the Hearing Panel — National Public Hearings on Power
Plant Compliance with Sulf-ur Oxide Air Pollution Regulations"
(1974). The report is reprinted in "The National Coal Conversion
Act and the National Crude Oil Refinery Development Act," Hearings
before the Senate Committee on Interior and Insular Affairs, Decem-
ber 6, 1973 (Serial No. 93-27) pp. 92 et seq. The testimony and
data cited here are found at pp. 92, 103, 120.
The description of the proposal found here and the arguments
in support of and in opposition to it derive from "Tax Recommen-
dations of the President," Hearings before the House Committee on
Ways and Means, 91st Cong., 2nd Sess. (September 1970JI
136
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The administration proposal had the subsidiary aim of reducing the
overall level of lead in gasoline, because it was feared that am-
bient lead might be a danger to human health. However, the danger
to human health was not well-established, so reducing lead contami-
nation of the atmosphere was only a secondary objective.
An across-the-board tax would have had the greatest impact on the
many small refiners who relied on lead additives to a greater
extent than major refiners. The administration proposal provided
an exemption from the tax for these small refiners on the purchase
of their first one million pounds of lead in 1972. This exemption
was to be decreased by two hundred thousand pounds per year until
it was completely eliminated by 1976.
The administration lead tax was presented to the House Ways and
Means Committee along with proposals to increase the federal
government's tax revenues, so the lead tax was also seen by some as
a revenue raising proposal. It would have raised $1.6 billion in its
first year, and thus would have had a considerable impact on indus-
try.
Opposition to the Proposal — The administration proposal was sup-
ported by only one environmental group, was called a "license to
pollute" by AFL-CIO lobbyists, and was strongly attacked by rep-
resentatives of the oil and lead industries. Among the pertinent
objections to the tax were the following:
1. Industry was already planning to produce no-lead or low
lead gasoline, so no financial incentive was necessary
to speed the process.
2. Detroit was planning to introduce 1971 models that could
be run on 91 octane gas, instead of the 94 or 100 octane
gas used by earlier models. This would increase the
demand for 91 octane gas, most of which was low-lead or
lead-free.
3. Imposition of the tax on lead would be a disincentive
to research on lead traps that could capture lead prior
to its entering emission control devices.
4. Decreasing the lead in gasoline might require an increase
in aromatics that might pose a danger to human health.
5. The tax represented an excise tax of 450 per cent.
6. The tax was regressive because owners of older cars,
which had to use leaded gas or higher octane gas, were
137
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probably concentrated in lower income classes. These
persons would have no choice but to buy leaded gas and
pay the extra 2-3 cents per gallon that the tax would
cost them.
7. The tax would be inflationary because it would require a
massive, immediate investment in new refinery construction.
8. The tax would increase demands for crude oil by smaller
refiners becasue it would require a shift in refining
methods that would produce a lower yield of gasoline.
In large, integrated refineries the alteration would
not produce waste, for the process change would yield a
larger proportion of petrochemicals. But in smaller,
unintegrated refineries not equipped for petrochemical
production, more crude would be wasted as the byproducts
would be burned off rather than converted to petrochemicals,
9. Ambient lead's danger to human health had not as yet been
proven.
These and other arguments convinced the Ways and Means Committee
not to approve the lead tax proposal. Chairman Wilbur Mills was
later to tell the American Petroleum Institute that the tax was
the first he had seen proposed that was "intentionally designed
to drive an industry out of business."32
The lead tax was proposed again by the administration the following
year,3 but a check of the House Ways and Means Committee calendar
reveals that the only lead tax bills referred to it were two bills
introduced by liberal Democrats which featured a lead tax as part
of a larger lead additive control program.
EPA Regulatory Actions — Under provisions of the Clean Air Act,
enacted after the Ways and Means Committee's September 1970 hearings
on the lead tax, EPA was given authority to regulate the composition
of fuels and fuel additives. EPA has since ordered oil companies
to make lead-free fuel available by July 1, 1974. EPA also ordered
a gradual reduction by 1979 of the overall lead content of gasoline,
32
Quoted in "Lead Tax: The First Try Fails," National Journal,
4:1647 (October 21, 1972).
33
Council on Environmental Quality, The President's 1971 Environ-
mental Program, at 30.
138
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o /
requiring a cumulative reduction of 60-65 per cent. ^ Small refiners
do not have to begin such reductions until January 1977. The rules
were challenged in lawsuits filed by several major oil companies,
but were upheld as valid in all but one respect by the D. C. Circuit
of the U.S. Court of Appeals.35 While the oil companies have argued
that the rules are too strict, environmentalists have contended
that the EPA regulations do not sufficiently control what they believe
to be a serious environmental pollutant.
Restriction of lead in gasoline is currently the only effort EPA
is making to control ambient lead levels. The agency feels that
the scientific data concerning threats to human health is not
sufficiently conclusive to merit establishment of a national ambient
standard for lead similar to those established for sulfur dioxide,
carbon monoxide, nitrogen oxides, and particulates. "
Parking Surcharges
EPA Action — Under provisions of the Clean Air Act, section 110(a)
(2)(B), state implementation plans for achievement of national air
quality standards are to include transportation control plans.
These plans are to be approved by EPA, and the agency is given
authority to promulgate its own transportation control plans should
state plans be found inadequate [section 110(c)(2)]. In late
1973, under court order, EPA approved or proposed transportation
control plans for 30 major urban areas. The provisions of the plans
for Texas, Massachusetts, Maryland, Virginia and the District of
Columbia, in which EPA approved or proposed the levying of a sur-
charge on downtown and suburban parking, proved to be among the most
controversial of EPA actions. [See Appendices 0 and P for the texts
of two EPA-proposed surcharge regulations.]
The conflict over EPAfs proposed parking surcharges demonstrates
the potential conflict that is likely to arise any time an economic
disincentive is proposed. The parking surcharges would have required
a dramatic change in behavior, or else would have imposed a highly
O/
38 Fed. Reg. 33735 (December 1973).
Amoco Oil Company v. Environmental Protection Agency (D.C. Cir.
May 1, 1974), 4 ELR 20397.
36
This scientific controversy over lead levels was briefly de-
scribed by EPA Deputy Administrator John R. Quarles at a November
28, 1973 news conference at which the lead phase-out regulations
were released.
139
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visible economic cost on non-responding individuals. For these
reasons, they were politically unpopular and attacked by many
elected officials.
Parking surcharges were viewed by EPA as a powerful disincentive
to individual car use in urban areas. Most commuter automobiles
are occupied solely by their drivers during urban rush hours and
the parking surcharge was seen as a device for encouraging more
commuters to carpool or to switch to mass transit. A powerful
incentive was in order since voluntary alteration of behavior
did not seem a viable alternative. This was demonstrated in Washington
D.C. in 1973 where during pollution emergencies in which stagnant
air caused a dramatic, health-threatening increase in ambient levels
of air pollutants, government pleas made to commuters to carpool
had no impact. The power of a non-exhortatory incentive was
demonstrated in January and February 1974, when long waits in service
station lines that imposed enormous time costs on automobile
operators produced a dramatic upswing in mass transit usage and
carpooling behavior.
EPA was initially uncertain about the legal feasibility of utilizing
parking surcharges.38 While it knew that agencies can charge fees
37
The parking surcharges and their underlying rationale are discussed
by EPA at 38 Fed. Reg. 30629 (November 6, 1973)
38
For example, in its proposed regulations for New Jersey, which
did not include parking surcharge provisions, EPA stated:
EPA doubts whether it has authority in all cases where
it must promulgate portions of an implementation plan to
require the state concerned to enforce that promulgation.
This is so even though one Circuit Court of Appeals has
indicated that such a power does indeed exist: Natural
Resources Defense JCouncil v. EPA, No. 72-1219 (1st Cir.
May 2, 1973).
Instead, it is EPA's position that it may require states
or cities to enforce regulations that are related to their
position as owners of roads. As owners of roads, states
and cities may be held directly responsible for the pollu-
tion caused by those roads, and by the traffic which the
roads make possible, and may be required to take such
steps as are necessary to ensure that the roads and the
activities carried out on them cease to cause violations
of air quality standards. Regulations have accordingly
been drafted to impose enforcement responsibility on the
140
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to cover the costs of regulation, EPA could not at first find legal
support for the levying of fees to control behavior. The only
states or cities only where the activity being regulated
is in the judgement of EPA closely enough related to the
government's position as owner of the roads to justify
the imposition of responsibility under this theory. 38
Fed. Reg. 17784 (July 3, 1973).
In the case cited by EPA, the judge ruled that EPA had the
authority to augment state plans with federal regulations en-
forceable by the states:
The Administrator asserts that he is powerless to remedy
deficiencies in state laws: Even if the Administrator
disapproved the enforcement authority of Rhode Island,
there would be no substantive corrective action which he
could take to remedy the deficiency. All that he could
do would be to publish a disapproval notice in the Federal
Register. Admittedly, if a State fails to submit a satis-
factory implementation plan, the Administrator is directed
to promulgate regulations setting forth a plan for that
State. Section 110(c), 42 U.S.C. sec. 1875c-5(c). It
is doubtful that Congress ever intended this provision to
be used by the Administrator to revise the basic statu-
tory authority of state agencies.
We do not accept these protestations of helplessness.
Of course, the Administrator cannot repeal the state laws.
He is specifically empowered, however, to disapprove not
only a state implementation plan, but "any portion thereof"
(§1857c-5(a)(2) and §1857c-5(c); and he '-'shall ...
promptly prepare and publish proposed regulations setting
forth an implementation plan, or portion thereof, for a
State if ... (2) the plan, or portion thereof, submitted
for such State is determined by the Administrator not to
be in accordance with the requirements of this section, ..."
§1857c-5(c).
We hold that these statutory provisions not only empower,
but also require, the Administrator to disapprove state
statutes and regulations, or portions thereof, which are
not in accordance with the requirements of the Clean Air
Amendments. Congress plainly intended the federal statute
and regulations promulgated thereunder to take precedence
over state laws and regulations. By enabling the Adminis-
trator to insert his own regulations in a state plan, it
141
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relevant authorities it could find were decisions upholding the
Bureau of Land Management's levying of grazing fees under its
broad authority to manage the public lands with concern for the
public welfare.
Because EPA was uncertain of its authority to require and approve
surcharges in state transportation control plans it initially
deferred their adoption. It preferred to rely on other regula-
tory means which were more readily defensible, on the grounds that if
too much reliance were placed on parking surcharges which were then
judicially overruled, compliance timetables would be upset.39
EPA later took a more positive view of the legality of parking
surcharges as a means of controlling private vehicle use in
light of a long line of judicial decisions upholding the right
of municipalities to use parking meters (and their required fees)
to regulate traffic. The general legal reasoning was essentially
the following:^0
Municipalities may exercise their police powers by establishing
regulations to promote public health, safety, welfare and morals.
The police power supports outright prohibition of an activity, so,
a fortiori, the police power authorizes licensing as one means of
regulation. Fees may be imposed to cover the cost of regulation and
these must bear a reasonable relationship to the cost of administra-
provided him with the needed authority to substitute appro^-
priate provisions for inappropriate ones. Thereafter,
as legal components of the state plan, the Administrators
regulations may be both federally and locally enforced;
violations thereof are violations of a state plan. §1875c-
8(a)(l); see §§1857c-7(d)(l), 1957c-9(b); 3 ELR 20374, 20379.
Additional insight into EPA's views was provided by John Bonine,
Office of Enforcement and General Counsel, in a June 6, 1974
telephone interview.
on
In instances where EPA approved surcharges, it approved alternative
measures as well which would be implemented in the event parking
surcharges failed to survive judicial tests.
40
The discussion that follows of the regulatory power and parking
meter cases is derived from the following sources: memoranda
and court decisions furnished by the Natural Resources Defense
Council, Inc., and S. Lyman, "The Constitutionality of Effluent
Charges," Technical Report #OWRRA-022-Wis., University of Wisconsin
Water Resources Center (May 1969).
142
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tion.4l In some cases, however, where the regulated activity has
the potential of becoming dangerous or a nuisance, the license fees
may exceed the cost engendered and may even be high enough to dis-
courage the activity.
These general principles were applied specifically to parking
meter statutes in several cases. In State v. Douglas43 the court
held that Vermont can regulate the use of streets and highways
by restricting parking. This power may be delegated to municip-
alities. Municipalities can charge parking meter fees, and though
revenue from these may exceed regulatory costs, this imbalance
does not invalidate the practice. A similar conclusion was reached
in City of Buffalo v. Stevenson^
A Florida court recognized the regulatory function of parking
meters noting that they "regulate traffic and keep such traffic
as liquid as is reasonably possible."45 A similar conclusion was
reached in New Hampshire:
An act designed to regulate the use of highways by enabling
cities and towns to install parking meters would not be
invalid because of the imposition of a fee in excess of
the cost of meters and their operation, since one object of
parking regulations may be to reduce the number of cars
seeking parking accommodations at a particular time and place
and a fee may be fixed at a point where some parking will be
discouraged without violating the limitation of reasonable-
ness...^
By extension, EPA concluded, parking surcharges could be used by
municipalities to regulate and discourage parking and thus were a
promising element of transportation control plan strategy. Ear-
marking of proceeds for transportation-related expenditures (i.e.
41
See generally 33 Am. Jur., "Licenses." §19, at 340; 16 C.J.S.,
Const. Law. §174, at 890-891; Johnson v. County of Goochland,
1206 Va. 235, 142 S.E.2d 501.
42See U.S. v. Sanchez, 340 U.S. #42, 71 S.Ct. 108, 95 L. Ed. 47;
§26.31 Me Quillan, Mun. Corp; 4 T.N. Cooley, Taxation. §1809
at 3555 (4th ed., 1924).
4394 A.2d 403 (1958).
44207 N.Y. 258, 263, 100 N.E. 797, 800.
State ex rel. Harkow v. McCarthy. 126 Fla. 433, 171 So. 314, 316
(1936).
460pinion of the Justices of the Supreme Court of N.H., 51 A.2d
836 (1947).
143
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mass transit) would be considered part of a comprehensive regulatory
scheme in which individual behavior of a particular kind was
discouraged while the receipts from the sanctions imposed on that
behavior would be used to encourage an alternative mode of behavior.
Congressional Response — Those opposing the surcharges questioned
EPA s authority to impose them, regarded them as regressive, and :
feared their deleterious impact on downtown businesses. Among the
opponents in the District of Columbia was Congressman Wayne L. Hays,
who said he would call the Capitol police to eject any official
trying to collect a surcharge from congressmen and their employees.4'
The EPA proposals were promulgated in the midst of the so-called
"energy crisis." About this time, Congress was considering bills
which would give the federal government powers to cope with the
energy emergency. The House Committee on Interstate and Foreign
Commerce, which had jurisdiction over the Clean Air Act, reported
an Energy Emergency Act whose provisions weakened the Clean Air
Act*s regulatory requirements. One provision forbade EPA from
imposing parking surcharges without congressional consent.48
Further, it directed the EPA Administator to submit a study to
Congress within six months on the necessity and desirability of
such fees to achieve air quality standards.
The prohibition was retained by the conference committee considering
the conflicting House and Senate versions of the energy emergency" ^
legislation. Sitting on the conference committee were three members
of the Subcommittee on Air and Water Pollution of the Senate
Committee on Public Works, in which the transportation control pro-
visions of the Clean Air Act had originated. These three members
were part of a conference subcommittee that gave special consideration
to all the language in the Energy Emergency Act pertaining to the
Clean Air Act.
The Energy Emergency Act was never passed by Congress, dying in
a Senate dispute over inclusion of provisions governing oil
companies' "windfall" profits. EPA nevertheless responded to the
congressional actions described above by withdrawing its surcharge
regulations. In doing so, EPA Administrator Russell Train took
47
Quoted in the Washington Post. May.14, 1974.
The following description of congressional and EPA action is
drawn from EPAfs announcement of withdrawal of its proposed parking
surcharges, 39 Fed. Reg. 1848 (January 16, 1974). The House bill
was reported December 10, 1973.
144
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note of the conference committee action. Train added that EPA
could still approve any surcharge submitted by a state, though adoption
of the surcharge would not be made a condition of EPA approval of
a state plan. He stated that EPA would make the study called for by
the draft Energy Emergency Act, on the necessity for and desira-
bility of parking surcharges.
The Congress weighed revisions to the Clean Air Act in the course of
its deliberations in Spring 1974 over H.R. 14368, the Energy Supply
and Environmental Coordination Act. Section 3 of the bill contained
the surcharge prohibition and was approved by the House. When
H.R. 14368 was passed by the Senate, this provision was deleted
at the request of Senator Muskie. It was, however, restored in
conference, passed by both houses, and signed into law on
June 22, 1974 as Public Law No. 93-319.
ADMINISTRATIVE FEASIBILITY OF DISINCENTIVES UNDER FEDERAL ENVIRON-
MENTAL LAWS
Feasibility of Applying Disincentives to Water Pollution
In section IV we concluded that although the Administrator of the
Environmental Protection Agency is not granted authority in the
Federal Water Pollution Control Act Amendments of 1972 to impose
effluent charges or other disincentives, the states are not precluded
from doing so.
Having reached this conclusion, it is appropriate now to inquire
whether it is at all feasible or desirable to incorporate dis-
incentives into the existing framework of water pollution control
regulations established pursuant to the FWPCA Amendments. A pre-
requisite of such an inquiry is an analysis of the adequacy of the
administration of the existing system, particularly the portions
of it pertaining to standards, permits and regional planning.
In a January 1974 speech, EPA Deputy Administrator John Quarles
discussed some of the administrative difficulties confronting EPA
in administering the FWPCA. With respect to approval of state
National Pollutant Discharge Elimination System (NPDES) programs,
he noted that although very real progress had been made at the state
level, the primary responsibility for operating the permit program
had remained with EPA far longer than anyone would have expected
one year ago. June 1974 EPA figures prepared for congressional
oversight hearings indicate that through FY74, only 15 state permit
programs had been approved. Approval of an additional 15 programs
was expected by the end of FY75. Thus, only 60 per cent
of the states would be administering their own permit programs
145
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just two years prior to the July 1, 1977 deadline for existing
industrial sources to have implemented "best practicable control
technology currently available" [section 301(b)(1)(A)].
As for the effluent guidelines for various categories of industrial
dischargers, EPA has fallen behind in their issuance. A total of
121 separate standards are involved, for some 30 different industrial
categories. EPA has submitted to court-approved consent order to
have the guidelines for the 1977 standards, 1983 standards, new
source performance standards and pretreatment standards prepared by
November 1974. EPA expects most of these to be challenged in court
once they are promulgated, and as of August 15, 1974, over 100
challenges had been filed.
EPA has also had considerable difficulty in developing "a sound
basis for regulating toxic pollutants" [section 307(a)]. In
Quarles* words:
We have found it virtually impossible to devise intelligent
standards which specify an appropriate degree of control
over toxic pollutants irrespective of the sources of those
pollutants and factors affecting the feasibility and timing
of their abatement.
Furthermore, issuance of specific permits has predated in many
instances development of both industry-specific effluent guidelines
and comprehensive river basin plans. Also, development of areawide
waste treatment management plans pursuant to section 208 of the
act is just now getting off the ground, nearly two years after the
law's passage.
When Congress enacted the FWPCA Amendments of 1972, it was upset
at the lack of pollution control progress under the existing FWPCA.
As a result, it enacted a law imposing very short deadlines for
the promulgation of very complex regulations. At this time, it is
unclear whether the existing, complex regulatory system is going to
succeed or whether the entire structure is going to founder under
a deluge of litigation, missed deadlines, and unsatisfied expec-
tations. While EPA has been criticized for its administration of
the FWPCA program, if the entire structure of regulation fails,
Congress must bear the burden of having established a basic regula-
tory framework which expected too much, too soon. Be that as it may,
we will nevertheless explore the feasibility and desirability of
adding pollution disincentives to the existing regulatory structure.
Legal Authority for Monitoring — Section 308 of the FWPCA Amendments
provides authority for recordkeeping, monitoring and inspection
requirements. Any monitoring and record-keeping requirements of an
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economic disincentive system could be ordered pursuant to the broad
provisions of this section. The technological feasibility of
monitoring particular pollutants and the cost of such monitoring
would have to be taken into consideration in determining whether
particular pollutants should be subject to economic disincentives.
Economic Analyses — The new source standards required by section
306(b)(l)(A), and determination of the "best practicable control
technology currently available" and "best available technology eco-
nomically achievable" (these respectively being the 1977 and 1983
abatement goals for existing industrial sources) require the gathering
of economic data by EPA. The current, somewhat rushed promulgation
of guidelines pursuant to court order may produce a series of
guidelines that are highly susceptible to successful court challenge
because they are based on an unduly limited economic data base.
However, to the extent EPA has the time and means to produce in-
depth economic studies, it may have developed a data base which
will provide- the information it and the states need to formulate
a series of sensible pollution disincentives that would encourage
timely compliance with abatement schedules.
Toxic Substances — Section 307 of the FWPCA requires the EPA Adminis-
trator to establish effluent standards for toxic substances. In
establishing these standards the Administrator is to take into account
the toxiclty of the pollutant, its persistence, degradability, the
usual or potential presence of the affected organisms in any waters,
the importance of the affected organisms and the nature and extent
of the effect of the toxic pollutant on such organisms. The standards
are not based on economic considerations or upon availability of
treatment technology.
Pursuant to the mandate of section 307, EPA proposed, such standards
on December 27, 1973. These are to be promulgated shortly in final
form unless their modification is required as shown by evidence
presented at public hearings which were to have been held within
30 days of issuance of the proposed standards. Standards are to
become effective no later than one year after their final issuance
and compliance is to be immediate. Standards were established
for nine substances. They are keyed to type of receiving water
(stream, lake, coastal water or estuary) and stream flow. In
many instances daily quotas were established; in some, zero dis-
charge was required while in others the maximum allowable discharge
was quite low. For example, the maximum permitted daily discharge
of aldrin-dieldrin in a stream is 0.162 pounds per day regardless
of receiving water flow [proposed 40 C.F.R. section 129.02c(b)
(3)(i)]. Though the toxic substances standards are not based upon
economic considerations, their impact upon the economy was examined
and did not appear to be too.great.
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It has been asserted that the technology is available for continuous
monitoring of some of the toxic pollutants for which standards
have been established by EPA, though this technology is expensive,
costing $10,000-$15,000.49 If the number of dischargers is relatively
small, imposing a pollution charge on existing discharges subject to
abatement might not be overly difficult from an administrative point
of view. However, as in all other cases where pollution charges
might be proposed, those subject to such charges will argue that a
pollution charge on top of expenditures for pollution abatement
constitutes a double burden. Again, the economics of the industry
affected would have to be closely analyzed to determine just how
onerous a burden such a pollution charge might be.
Areawide Waste Treatment Management — Operating agencies respon-
sible for management of areawide waste treatment management (sec-
tion 208) plans are supposed to have adequate revenue-raising
authority, including power to assess waste treatment charges. EPA
has only recently issued regulations for approval of section 208
planning agencies. These agencies will produce regional plans which
in turn will be managed by designated management agencies. Regional
plans are supposed to include land use programs designed to regulate
the location, modification and construction of any facilities within
an area which may result in any effluent discharges within that area.
Presumably disincentives could be employed to discourage particular
modes of development. See, for example, the description of the Vermont
land gains tax in Section V.
The Role of Marketable Permit Systems — In a marketable permit sys-
tem, a central authority issues or sells permits specifying rates
of allowable discharges. The total discharges permitted can be
made equivalent to the assimilative capacity of the waterway or to
some lower level chosen by the political process. In such a system,
dischargers are, within certain limitations, permitted to exchange
certificates with other dischargers, thereby allowing allocation
of the waterway's assimilative capacity through the marketplace.
Marketable permit systems might be employed in the regulation of
water quality pursuant to sections 302 and 303 of the act. In
accordance with these sections, water bodies can be divided into
effluent limited and water quality limited segments. The former are
those in which compliance with existing effluent limitations will
permit attainment of established water quality standards, while
water quality limited segments are those for which higher levels
49
See Anderson, et al, supra note 6.
148
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of effluent abatement than those necessary under section 301 of the
law will be required, for otherwise water quality standards will
not be met. For the many reasons cited at the beginning of this
subsection, there is little need now even to consider burdening
the existing regulatory system with a marketable permits component.
Feasibility of Applying Disincentives to Air Pollution
State Implementation Plans — Fees could be used as a supplementary
means of encouraging compliance with the deadlines established for
state implementation plans. Of the substances for which ambient
air quality standards have been established, sulfur emissions would
probably be the likeliest candidates for emission charges, for the
number of stationary sulfur emission sources is relatively small
as compared to the number of sources of particulate matter and car-
bon monoxide and the damages from sulfur oxides are generally
greater. Proposed sulfur emission tax proposals are discussed
in the preceeding subsection of this report.
New Source Controls — There may not be an immediate need for incen-
tive charges to be used as supplements to the new source requirements
of section 111 of the Clean Air Act. New sources would be designed
to meet strict emission standards established by the EPA Administrator
after a careful deliberative process considering both economic and
environmental factors. State preconstruction review could assure
adherence to emission limitations by new source design and refusal
to permit construction of pdorly designed sources might be an ade-
quate enforcement measure. Operations producing emissions in excess
of standards could be punished through the courts.
Pollution charges might be desirable as supplements to new source
controls so as to prevent significant air quality deterioration
while permitting industrial development in regions with relatively
clean air. Charges coupled with new source control standards
would enable a larger number of industrial facilities to locate in
an area, without significant air quality deterioration resulting,
than otherwise would be permitted. This is especially true if new
sources at present are merely required to provide a percentage
reduction in emissions with no quota or ceiling placed on the abso-
lute quantity of permitted emissions. On the other hand, if the
Clean Air Act permits no significant air quality deterioration to
occur, then a ceiling on emissions would have to be imposed and
there would be no need for pollution charges.
Hazardous Emissions — To date, hazardous emission standards have
been established only for asbestos, beryllium, beryllium rocket
motor firing and mercury. For asbestos, the standards do not take
a readily quantifiable form. Either no visible emissions are
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permitted (from asbestos mills) or behavior which might contribute
asbestos to the air is prohibited or subject to government approval.50
There would appear to be little room for pollution charges in such
a stringent regulatory scheme.
The emission standard for beryllium is 10 grams per 24 hour period,
though ambient air levels below .01 micrograms per cubic meter
averaged over 30 days in the vicinity of a stationary beryllium
source will also satisfy the regulatory requirements.53- Inasmuch
as the emission standard is quantified, emission charges could be
levied on discharges in excess of standards to encourage rapid com-
pliance on the part of sources currently over-emitting and to dis-
courage applicants for the two-year variances permissable under law.
Fees could also be levied on discharges below standards so as to
encourage zero discharge, but inasmuch as the current standard is
so low, the desirability of such charges is questionable. Their
feasibility at such low levels would also be contingent upon develop-
ment of a highly sensitive monitoring technology which might be
inordinately expensive.
For mercury, the emission standard is 2,300 grams (5.06 pounds)
per 24 hour period,52 significantly higher in absolute terms than
the beryllium standard. Pollution charges might be desirable as
a supplementary enforcement technique for the same reasons they
might be applied to beryllium emissions, i.e., to discourage
applications for variances and to encourage discharges below the
standards.
Feasibility of Applying Disincentives to Use of Pesticides
Section 3(c) of the amended Federal Insecticide, Fungicide, and
Rodenticide Act requires each applicant for registration of a
pesticide to provide the Administrator of the Environmental Pro-
tection Agency information about the pesticide, including its com-
plete formula and, if requested by the Administrator, a full descrip-
tion of tests made and the results. The Administrator utilizes
this information in determining whether to register the pesticide
and, if so, whether to classify it for general or restricted use.
**
The criteria employed in evaluating whether a pesticide may be
classified for general use are 1) degree of hazard to humans;
2) frequency of contact with humans; 3) degree of persistence;
5°40 C.F.R. Part 61.22.
5140 C.F.R. Part 61.32.
40 C.F.R. Part 61.52.
150
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4) method of application; 5) degree of biomagnification or bio-
concentration; and 6) kind of pest which it is supposed to control.
Levels of severity could be devised for each of these criteria and
values assigned each level. Above a certain sum of points a
pesticide would be classified for restricted use. This same
system could serve as the basis for establishing how much the
disincentive charge per unit of the restricted use pesticide would
be.
The disincentive charges could be imposed as fees for registering
the restricted-use pesticides. The annual charge would be based
on the amount of charge per unit multiplied by the number of units
manufactured that year. The Administrator could require that the
pesticide's label give notice to purchasers of the portion of the
product's price attributable to the disincentive charge. He could
also require that the amount of the charge be reflected in the
price.
The proceeds generated by the disincentive charges could fund
1) the additional supervision required for restricted-use pesticides;
2) research into the environmental and social effects of their
use; 3) the indemnity payments called for under section 15 of
the act to persons suffering losses as a result of the suspension
or cancellation of the registration of a pesticide, or any combina-
tion of these.
Disincentive charges for a pesticide being used under a section 5
experimental use permit could be based on a rating, according to the
six criteria above, of the chemicals and combinations of chemicals
found in registered pesticides, and/or the results of studies which
may be required under section 5(d) for those chemicals not contained
in an already-registered pesticide. The charges would be_ imposed
as conditions of the permits, payable at the time of issuance.
Feasibility of Applying Disincentives to Ocean Dumping
Section 102(a) of the Marine Protection, Research, and Sanctuaries
Act of 1972 requires that the Administrator of the Environmental
Protection Agency "establish and apply criteria for reviewing and
evaluating" applications for ocean dumping permits, and sets forth
nine factors to be considered in establishing or revising these
criteria.53 These criteria were issued in final form on October
The factors are, paraphrased: need for the dumping, effect on
human health and welfare, effect on fisheries resources; effect
on marine ecosystems; the persistence and permanence of the effects
151
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54
15, 1973. They distinguish between highly toxic, moderately
toxic and non-toxic substances, and provide for prohibition (except
for trace contaminants), strict regulation and permissive regulation
respectively. While these criteria could be improved,55 and although
there is a great deal unknown about the effects of ocean dumping,
they could serve as the basis for establishing disincentive charge
rates per unit of matter discharged, which rates could be applied
either as regulations under section 108 or as permit conditions
under section 104(a)(6).
Feasibility of Applying Disincentives to Solid Wastes
As the discussion in section IV demonstrates, state initiatives to
adopt disincentives applicable to some kinds of solid wastes, notably
bottles, have proven feasible. The March 1974 report of the
Environmental Protection Agency to the Congress under section 205
of the Solid Waste Management Act,5^ which is summarized in the
following discussion, gives attention to product charges as specific
disincentives to be applied to undesirable solid waste matter. In
discussing product controls, the report assesses the alternative
bases for charges: weight of the product (disposability), product
lifetime (curtail new manufacturing now spurred by planned obsolescence),
specific material usages. However, "[tjhese are fairly broad-
based measures applicable to wide classes of products. Therefore,
determining the appropriate level of the charge and predicting
effectiveness and impacts are complex and difficult tasks." Special
emphasis is placed upon four categories of waste: automobiles,
packaging, beverage containers, and tires.
For autos, the major problem is the backlog of uncontrolled aban-
donments, currently estimated at over 3.5 million and projected at
nearly 5 million by 1980. A certification system similar to
of the dumping; effect of dumping particular volumes or concentrations
of materials; appropriate locations and methods of disposal, including
land-based alternatives; effect on alternate use of the oceans;
location of the dumping sites.
5438 Fed. Reg. 28609; 40 C.F.R. Part 127.
55See "Petition of the National Wildlife Federation to the Honorable
Russell E. Train, Administrator, Proposing Amendment and Requesting
Revision of Environemtal Protection Agency Criteria and Regulations
Governing Evaluation and Issuance of Permits for Ocean Dumping of
Waste and Other Materials," April 18, 1974.
Second Report tc± Congress; Resource Recovery and Source Reduction,
U.S. Environmental Protection Agency, 1974.
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Senator Javlts1 1970 proposal-^ is discussed in the EPA report.
Other suggestions include municipally-provided free disposal lots,
and bounties, or monetary bonuses, to people collecting abandoned
cars. While motor vehicle abandonment is illegal in all of the
states, lax enforcement is the rule.
In packaging, several control measures are being studied, including:
a flat weight tax, such a tax with rebate for content of recycled
material, per unit tax on rigid containers, and laws requiring
content of recycled material. A weight tax would be somewhat
effective in reducing overall solid waste, the report concludes,
but a per unit tax would be more so. "Both of these broad-based
fiscal measures are likely to discriminate against certain packages
and may even result in shifts to materials and packages that are
less desirable from an environmental point of view." This is
because weight reduction tends to mean comparative advantage for
aluminum throwaways, while per unit taxes may result in more volum-
etric packing.
Three chief strategies have been suggested for curbing the beverage
container contributions to litter or solid waste or both: mandatory
deposit systems, bans on the use of nonrefillables, and container
taxes to generate anti-litter funds. These approaches have been
tried in some states.^ In Congress S. 2026, which would both
establish a nationwide deposit system and impose a ban on some sub-
category of refillables, is under consideration.
Automotive tires are a particularly troublesome solid waste component
because they are difficult to incinerate, have a high volume to
weight ratio, and tend to work their way to the surface of a sani-
tary landfill. They are not biodegradable. Recycling is limited
by the uses to which used rubber can be put. The EPA report is silent
as to tire disposal charges.
Of particular note is the report's Appendix C, "An Analysis of the
Product C3iarge." That brief section is premised on the belief
that the design and disposability of products and their packages
are not dictated by the market. To insure beneficial social input,
EPA proposed the internalization of the cost of collection and
disposal in the product price by means of a charge. Ideally,
such charges should exactly reflect costs of disposal, but this is
impossible, given the wide disparity in costs nationwide, and the
fact that insufficient waste management in many places would lead
See, supra, note 101, section IV.
CO
For discussions of the Oregon and Vermont bottle laws, see section
IV.
153
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to understating full disposal costs. Nor could individual product
inputs accurately be estimated. Approximations would therefore have
to be used. As illustrated above, flat-weight charges are inequitable,
and though compacted volume is a better measure of disposal cost,
it would necessitate crush-tests on almost every item and package
disposed. EPAfs report speaks in terms of the "penny-a-pound" tax,
and the granting of exemptions to non-disposed consumables. If
rebates for recycling were adopted, one cent per pound would be
a considerable spur. Because of conversion lag time, charges could
be expected to influence consumer purchasing choices relatively
s,ooner than they would alter manufacturers1 design and packaging
decisions. In the consumer product areas with the highest packaging
weight to value ratios, i.e., soft drink, canned food, beer and
prepared beverages, such a product charge would amount to less than
3 per cent of retail product cost, and those categories are themselves
only involved with 8 per cent of all consumer purchases. "Thus,
the general impact on the consumer and, hence, the expected source
reduction effect at this level is expected to be small." Not so
for manufacturers, whose charges, expressed as a percentage of
packaging costs, would more nearly approach 8 per cent.
Weight based charges might well have negative environmental impact,
however, as they would tend to, "induce some shifts toward lighter
weight materials. In particular, plastic and aluminum might be
substituted for glass and steel, which could increase the consumption
of resources in total and increase the burden on the environment."
As a percentage of family income, such a charge would clearly be
regressive.
Since a tax of a penny per pound could be expected to generate annual
revenues upward of $1.6 billion, the report offers alternative
methods of disbursement. Monies could be returned to states and
municipalities to finance solid waste facilities, or it could be
awarded for any purpose conditioned upon the recipient first meeting
certain federal environmental objectives. Straight revenue-sharing
would be a third possibility. While the ultimate disposition of
these revenues in no way affects the disincentive functioning of
charges, the alternatives do pose important political choices.
In concluding Appendix C, the EPA report comments that "studies
on the product charge will continue as will analysis of other
product control mechanisms for internalizing solid waste management
costs and reducing the generation of product waste."
Feasibility of Applying Disincentives to Noise Emissions
There is a commonly accepted indicator of sound levels, the decibel
A-scale (dB(A)). Many municipalities presently have ordinances
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prohibiting noises in excess of specified decibel readings. This
approach could serve as the point of departure for federal or state
or local regulation of noise by imposing disincentives on noise
emissions. Sources of noise could be required to pay annual charges
in proportion to the decibels they emit under standardized test
conditions or in actual use. Producers of products could likewise
be taxed per unit of production based on the decibel rating of the
product under normal operating conditions and standardized test
conditions. In certain areas the decibel charge rates could be
varied according to time of day, number of people affected, duration
of the sound level, or context in which the noise is made.59
Disincentives are already in force to discourage airport noise in
Los Angeles, California. There, noisier aircraft must pay higher
landing fees to use the airport.60 Passengers departing from
Roissy airport near Paris must pay charges which defray the costs of
soundproofing homes near the airport or of relocating the people
who want to leave its vicinity."^-
CONCLUSION
As the preceding section indicates there are many difficulties in
translating suggested policies based on economic theory into legis-
lative proposals which are either generally comprehensible or poli-
tically acceptable or both. One of the principal difficulties is
the widespread uncertainty about the actual impact of particular
proposals on the behavior and economics of those who would be
affected. This uncertainty is compounded by the widely divergent
claims made about proposals for disincentives by their proponents
and opponents. A disincentive is neither a panacea nor a cause for
panic. Rather, it is a promising new mechanism for governing our
behavior for the benefit of all. The actual effects of existing
disincentives should be carefully monitored and reported and sugges-
tions for applying the disincentive idea in other areas — such as
those in the last part of this section — should be further analyzed.
59
For a discussion applying economic theory to achieve abatement
of noise from airports, see William F. Baxter, "Legal Aspects of
Airport Noise," 15 Journal of Law and Economics 1 (1972).
Christian Science Monitor, January 27, 1973, "Noise, noise, noise
cities start putting lid on," page 5.
63Montpelier-Barre Times Argus, April 26, 1973, " 'Noise Tax1 Will
Be Imposed On Air Passengers Passing Through Tiny French Village
of Roissy". See also, "Actions and Strategies for Noise Abatement
with Emphasis on Economic Incentives," The OECD Observer, No. 71
August 1974, at page 14.
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Appendix A
PROPOSED
POLLUTION CHARGE BATES
Pursuant to 10 V.S.A. §912a(e)
Submitted at the request of and to
the Vermont Water Resources Board
By: Commissioner of Water Resources
Martin L. Johnson and Assistant
Attorney General John D. Hansen
January 17, 1972
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§1 - Introduction: 10 V.S.A. §912a(e) authorizes and requires
the Vermont Water Resources Board to fix and establish reasonable
and just pollution charge rates for computing the amounts to
be paid by temporary pollution permit holders as a condition
of the permit pursuant to 10 V.S.A. §912a(d). The purpose
of such charges is specified in the statute as follows:
"$912a(e)(l) 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 3uch charge rates from time to
tine thereafter.
(1) Purpose: It 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 the volume and de-
grading 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 pro-
tecting 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 interests. The charges are not imposed
for revenue purposes and any income received by the
state unfcer this section shall be used solely for
purposes of water quality management and pollution
control."
The pollution Charge rates and procedures for reduction
in charges herein fixed and established are particularly
designed and intended to provide an economic incentive for
temporary pollution permit holders to reduce the volume and
degrading quality of their discharges during the limited
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period when such discharges are authorized and thereby raise
ui.vr quality of the waters in the state. These charges are
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 pro-
tecting the general public interest in such waters including
recreational and aesthetic interest.
The Vermont Water Pollution Control Act (10 V.S.A. Chapter
33, Subchapter 1) recognizes that the discharge of certain
degrading wastes which will reduce the quality of receiving
waters below their established classification represents an
expropriation of a valuable public natural resource for
private or limited use, but that such discharges are to be
permitted for economic reasons in the public interest of
providing time during which the degrading effects of such
discharges can be abated. It authorizes the issuance of
temporary pollution permits for such discharges but specifies
that such permits shall be valid only for that period of
time necessary to place into operation an approved pollution
abatement facility or alternate waste disposal system by
means of which the degrading effects of such discharges can
be abated. It provides that such permits shall have a specific
expiration date and does not authorize their renewal. The
statute relies upon the limited duration of such permits
and the severe penalties for discharging after a permit has
expired to provide any necessary incentive for temporary
pollution permit holders to install the permanent facilities
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or systems to abate their polluting discharges. The pollution
charges herein established are not primarily intended as an
incentive for the installation of such permanent facilities
or systems, but rather, as required by 10 V.S.A. §912a(e),
are primarily intended to provide an incentive for interim
measures which will reduce the volume and degrading quality
of such resource-expropriating waste discharges during the
limited period that temporary pollution permits are in existence
Section 912a(e) mandates an economic incentive which will
bring about improvement in water quality during the period
in which degrading discharges are authorized by temporary
pollution permits and the charge rates herein fixed and estab-
lished are designed to comply with this legislative directive.
The charge rates herein set are for the further purpose
of establishing equity between temporary pollution permit
holders and other legitimate users of Vermont waters for
waste disposal purposes. It is recognized that persons,
municipalities, industries and commercial operations who are
discharging wastes which do not reduce the quality of receiving
waters below established classifications pursuant to discharge
permits bear substantial capital, operational and maintenance
costs for the waste treatment facilities and systems which
enabled them to obtain discharge permits. It is inequitable
for such persons, municipalities, industries and commercial
operations to bear such costs if temporary pollution permit
holders are allowed, without charge, to discharge degrading
wastes and thereby expropriate this valuable public natural
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resource for private and limited use by virtue of economic
reasons deemed to be in the public interest. In addition to
i
bringing about an improvement in water quality during the
period that temporary pollution permits are in existence, the
imposition of the pollution charges herein established has
the further public benefit of offsetting the economic advantage
obtained by the temporary pollution permit holders under the
permit system and thereby achieve a reasonable and justifiable
equity between discharge permit holders and temporary pollution
permit holders.
t
The guidelines for establishing pollution charges are
set forth in 10 V.S.A. §912a(e)(2) as follows:
"(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 sub-
section (d) of this section. The board is authorized
to revise such charge rates from time to time thereafter.
(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 hydro-
logic 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 board 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."
The pollution charge rates herein fixed and established
comply with these legislative guidelines in that: (1) They
establish the price to be paid per unit of waste discharged
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to the waters of the state - although the per unit price may
vary according to the volume of waste discharged and/or the
mean annual flow of the receiving waters, the per unit price
is determinable by these regulations for each discharge to
the waters of the state pursuant to a temporary pollution
permit; (2) vary among different types of wastes to account
for variations in relative degrading effect of different wastes -
under these regulations different charge rates are established
for domestic wastes, non-domestic wastes containing biochemical
oxygen demand and suspended solids, and heated effluents; (3)
vary to account for variations in the hydrologic conditions
of different receiving waters; under the "impact approach"
followed in these regulations, mean annual flow provides the
measure of variations in hydrologic conditions and the charges
are inversely related to the amount of mean annual flow of
receiving waters; (4) 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 effects of
various types of waste in varying volumes and frequencies of
discharge upon water quality - these regulations attempt to
satisfy this standard by use of the impact approach, i.e. - the
greater the relative degrading effect, the greater the charge,
and by relating the charge scales to current costs of treating
wastes; (5) reflect "relative degrading effect" in terms of
technical criteria such as number of persons whose wastes are
discharged, biochemical oxygen demand, suspended solids, British
thermal units and mean annual flow of receiving waters.
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With the exception of heated effluents for which
a fixed per unit charge is established by these regulations,
the charge rates herein established are impact oriented, that
is, a relationship is made between impact or relative degrading
effect and the charge rates so that the more deleterious the
impact of a particular discharge upon a particular receiving
water in relation to other discharges and other receiving waters,
the higher the charge. Relative degrading effect is determined
by reference to the volume of polluting waste discharged and
the mean annual flow of the receiving waters. Figures I-A, I-B,
I-C and II of this regulation illustrate these inter-relationships.
The relative degrading effect of the discharge of the domestic
waste of 10,000 persons is greater than the discharge of the
domestic wastes of 1,000 persons on waters having the same
mean annual flow. Similarly, the relative degrading effect of
the discharge of domestic wastes of 100 persons upon receiving
waters having a mean annual flow of 50 cubic feet per second
is greater than the discharge of the domestic waste of the
same number of persons upon receiving waters having a mean
annual flow of 500 cubic feet per second. Where the mean annual
flow is relatively high, the addition of more units of waste
causes little change in relative degrading effect and the charge
t
curves contained in Figure I-A, I-B, I-C and II have been designed
to reflect this fact, yet reflect also that the discharge is
polluting under Vermont water quality standards. Conversely,
the charge curves rise steeply where the mean annual flow is
relatively low to reflect the greater relative degrading effect
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caused by the addition of more units of waste. The curves
are an exponential relationship between dilution and the amount
of pollutants discharged and are asymptotic at two limits selected
as reasonably representative of maximum and minimum waste treatment
costs based upon Vermont experience. These exponential curves
reasonably reflect the relative degrading effect of the discharge
of various wastes in varying volumes into receiving waters having
varying mean annual flows, and the charges determinable therefrom
constitute reasonable approximations of the damage caused to
other users of the waters, both private users and the general
public, by the degrading discharges made pursuant to temporary
pollution permits.
The pollution charge rates herein established categorize
and apply to three types or classes of wastes: (1) domestic
wastes; (2) non-domestic wastes having containing biochemical
oxygen demand and/or suspended solids; and (3) heated effluents.
All wastes which are or will be allowed to be discharged under
temporary pollution permits can be classified and quantified
within this scheme of classification and thus pollution charges
can be universally applied in accordance with the permit system
established by the statute.
The pollution charge rates for domestic wastes are
fixed and established in section 3(a),(b) and (c) of this
regulation and the charges are computed by reference to Figures
I-A, I-B and I-C which respectively correspond thereto. Three
optional methods are provided for computing the charges for
domestic waste discharges in order to afford a reliable and
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reasonably accurate means of computation to all dischargers of
such waste. Section 3(d) of this regulation fixes and establishes
the charge rates for non-domestic wastes containing biochemical
oxygen demand and/or suspended solids and the charges are
computed by reference to Figure II which correspond thereto.
Section 3(e) of this regulation fixes and establishes the charge
rate for heated effluents at $0.025 per million British thermal
units.
The pollution charges herein established are cumulative.
For example, if an industry discharges wastes composed of domestic
wastes, non-domestic wastes containing biochemical oxygen
demand and/or suspended solids and heated effluents, its charge
shall be computed for each such waste constituent for which
the temporary pollution permit is issued.
Section 6 of this regulation establishes the standards
and procedures under which a temporary pollution permit holder
who effects a reduction in the volume and/or degrading quality
of his discharge may obtain a reduction in his pollution
charge. In most cases the reduction in charge is determined
by a recomputation based on the new volume, discharge frequency
or effluent characteristic data for the remainder of the
charge year. For example, if an industry permanently reduces
the total number of pounds of biochemical oxygen demand and
suspended solids in its discharge, its charge is recomputed
for the allocable portion of the charge year and its annual
charge is reduced accordingly. In the case of domestic wastes,
additional percentage reductions in charges are established
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as follows: (1) 33 1/3% for disinfection in a manner approved
by the department; (2) 50 £ for primary treatment including
disinfection in a manner approved by the department. The
procedures for charge reductions involve application to and
investigation by the department, approval or denial by the
department, amendment of the temporary pollution permit to
impose the more stringent discharge limitations, and reduction
of charges.
Procedurally this regulation involves four administrative
stages: (1) computation of charges; (2) assessment of charges;
(3) reduction of charges to account for reductions in relative
degrading effect; and (4) payment of charges. Pollution charges
are assessed and paid on an annual basis, the charge year
commencing on July 1 and ending on the following June 30•
Annually, on or before April 13 charges are computed by the
department for the following charge year based upon information
contained in temporary pollution permit applications, departmental
flow data and any supplemental information furnished by temporary
pollution permit holders who are given the opportunity to
submit such information annually by March 1 in order that the
charges can be computed on the most current, accurate and
reliable data available. Annually, on or before April 15,
charges are assessed to each temporary pollution permit holder
for the following charge year by the department. An appeal
to the Vermont Water Resources Board is provided for any
temporary pollution permit holder aggrieved by his assessment.
The charges assessed shall be the charges due for the charge
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year unless reduced on appeal or by reduction pursuant to
section 6 or unless the temporary pollution permit holder
elects to monitor his discharges as provided for in section
5(d) in which case the charges will 'generally be based upon
the data obtained in the approved monitoring program. Payment
of annual pollution charges is due on or before August 15
following the close of a charge year.
A 1971 amendment to 10 V.S.A. §912a(e) (See Act No.
93 - 1971 Vermont Acts) specifies that any temporary pollution
permit holder who abandons or rescinds or otherwise fails
or refuses to carry out his plans upon which the permit
has been granted shall thereupon be assessed the charges which
otherwise would have been applicable for the year commencing
July 1, 1971 which charges together with charges accrued from
July 1, 1972 shall be immediately due and payable. Provisions
to implement this legislative directive are contained in
sections 4(b), 5(e) and 7 of this regulation.
Except as set forth in the immediately preceding paragraph,
these regulations and the charges herein fixed and established
apply only to temporary pollution permit holders who are or
will be discharging on or after July 1, 1972, from which date
pollution charges shall begin to accrue as specified in 10
V.S.A. §912a(e), as amended (See Act No. 93 - 1971 Vermont
Acts) -
§2. Definitions: Whenever used or referred to in this regulation,
unless a different meaning clearly appears from the context:
(a) "Dilution in cubic feet per second of mean annual
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flow per person polluting'1 means the number obtained by
dividing the mean annual flow in cubic feet per second at the
point of discharge by the total number of persons whose wastes
are discharged at that point. That total number of persons
shall be determined by actual count or by multiplying the
number of households from which waste is discharged at that
point by four- The total number of persons may be adjusted
for seasonal and daily fluctuations where such fluctuations
are substantiated by the permittee. Small industries and
commercial establishments such as laundromats, filling stations
and stores may establish their domestic waste load in terms
of an equivalent number of people, provided such equivalency
is approved by the department. In such cases each person is
assumed to contribute a daily domestic waste load of 0.2 pounds
of BOD, 0.2 pounds of suspended solids, contained in 100 gallons
of water requiring disinfection to destroy an unknown number
of bacteria, fungi, worms and other parasites, both pathogenic
and non-pathogenic. For the purposes of this regulation any
lake, pond or reservoir into which waste is discharged pursuant
to a temporary pollution permit shall be deemed to have a
"Dilution in cubic feet per second of mean annual flow per
person polluting" of 0.01 cubic feet per second.
(b) "Dilution in cubic feet per second of mean annual
flow per 1,000 gallons per day1' means the number obtained by
dividing the mean annual flow in cubic feet per second at
the point of discharge by 0.001 times the number of gallons
discharged per day. For the purposes of this regulation any
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lake, pond or reservoir into which waste is discharged pursuant
to a temporary pollution permit shall be deemed to have a
"Dilution in cubic feet per second of mean annual flow per
1,000 gallons per day" of 0.10 cubic feet per second.
(c) "Biochemical oxygen demand" or "BOD" means the
standard measure of the weight of dissolved oxygen consumed
by microbial life while assimilating and oxidizing the organic
matter present. Analytical Reference: Part 219, Standard
Methods for the Examination of Water and Wastewater, 13th
Edition (1971).
(d) "British thermal unit" means the quantity of heat
required to raise the temperature of one pound of water through
one degree Parenheit. The number of British thermal units
discharged to a receiving water shall be determined based upon
the difference between the discharge temperature and the ambient
temperature of the receiving water. The ambient temperature
of the receiving water shall be determined upstream of the
point of the heated waste discharge or, in a lake, pond or
reservoir, outside the area affected by the heated discharge.
For the purposes of this regulation one gallon of water shall
be deemed to weigh 8.34 pounds.
(e) "Disinfection" or "Disinfected" means the killing
of the larger portion (at least 99-9$ but not necessarily all)
of the harmfal and objectionable micro-organisms in a discharge
by acceptable means.
(f) "Domestic wastes" means spent water from human
activities derived principally from dwellings, business
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buildings and institutions and includes human body waste, sink
waste and wash waste but does not include paint, gasoline, heavy
metals, toxic materials, solids, oils, grease and scum.
(g) "Mean annual flow in cubic feet per second means
the total annual volume of streamflow, measured at the point
of interest in cubic feet, divided by the number of seconds
in one year (31,536,000 seconds in a year). Mean annual flow
at the point of interest shall be determined from acceptable
stream gauging records. In cases where no gauge record exists
for the precise point of interest, mean annual flow shall be
determined by adjusting nearby stream gauging records according
to drainage area ratios. For the purposes of this regulation
any lake, pond or reservoir into which waste is discharged
pursuant to a temporary pollution permit shall be deemed to
have a mean annual flow of 1.0 cubic feet per second.
(h) "Permittee" means a person to whom a temporary
pollution permit has been issued by the water resources depart-
ment pursuant to 10 V.S.A. §912a.
(i) "Primary treatment" means a sedimentation process
followed by disinfection reasonably expected to remove from
505? to 60% of the suspended solids and from 25% to 35% of the
BOD in wastewater.
(j) "Suspended solids" (Non-Filterable Residue) means.,,
those solids which are retained by a standard glass fiber
filter and dried to constant weight at 103° Centigrade for
one hour- Analytical Reference: Part 224 C, Standard Methods
for the Examination of Water and Wastewater, 13th Edition (1971)
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§3 - Charges Established: The following pollution charges and
rates are established as just and reasonable to fulfill the
purposes of 10 V.S.A. §912a(e).
i
(a) Domestic Wastes - Option #1: The annual pollution
charge is the product obtained by multiplying the "Annual
Charge Per Person Polluting as determined from Figure I-A of
these regulations by the number of persons whose domestic wastes
are being or to be discharged pursuant to the temporary pollution
permit. If the domestic waste is disinfected in a manner ap-
proved by the department, the annual charge shall be reduced by
33 1/3?. If the domestic waste receives primary treatment
including disinfection, in a manner approved by the department,
the annual charge shall be reduced by 50?. (This option provides
a method of computing an annual pollution charge where the
number of persons whose wastes are being discharged is relatively
constant as in the case of a municipality or a private home.
The method is predicated upon the assumption that the average
person discharges 100 gallons of domestic waste per day of
constant strength. To compute the charge by this method one
must know the mean annual flow of the receiving waters and
the number of persons whose wastes are being discharged. To
illustrate, if a municipality has a population of 1,000 persons
whose wastes are being discharged into receiving waters having a
mean annual flow of 500 cubic feet per second, one would com-
pute the annual pollution charge by: (1) dividing the mean
annual flow by the number of persons discharging to obtain
the "Dilution in cubic feet per second of mean annual flow
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per person polluting" (500 * 1000 = 0.5 c.f.s.); (2) referring
to Figure I-A to determine the "Annual charge per person
polluting" ($23.W; (3) multiplying the "Annual charge per
person polluting" by the number of persons discharging to
obtain the annual pollution charge ($23.40 x 1,000 = $23,400.00))
(b) Domestic Wastes - Option #2'. The annual pollution
charge is the product obtained by multiplying the "Annual Charge
Per 1,000 Gallons" as determined from Figure I-B of these
regulations by 0.001 times the number of gallons of domestic
wastes discharged or to be discharged per day. If the domestic
waste is disinfected in a manner approved by the department,
the annual charge shall be reduced by 33 1/3%> If the domestic
waste receives primary treatment including disinfection in
a manner approved by the department, the annual charge shall
be reduced by 50$. (This option provides a method of computing
an annual pollution charge where the daily volume of domestic
waste is known and relatively invariable throughout the year
as in the case of most municipalities. To compute the charge
by this method one must know the mean annual flow of the
receiving waters and the number of thousands of gallons
of domestic waste discharged per day (i.e. number of gallons
x 0.001). To illustrate, if a municipality discharges
10,000 gallons of domestic waste per day into receiving waters
having a mean annual flow of 50 cubic feet per second, one
would compute the annual pollution charge by: (1) dividing the
mean annual flow by the number of thousands of gallons of
domestic waste discharged per day to obtain the "Dilution in
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cubic feet per second of mean annual flow per 1,000 gallons
per day" (50 + 10 = 5 c.f.s.); (2) referring to Figure I-B
to determine the "Annual charge per 1,000 gallons" ($234.00),
(3) Multiplying the "Annual charge per 1,000 gallons" by the
number of thousands of gallons of domestic waste discharged
per day to obtain the annual pollution charge ($234.00 x
10 = $2,340.00)).
(c) Domestic Wastes - Option #3: The daily pollution
charge is the product obtained by multiplying the "Daily
Charge Per 1,000 Gallons" as determined from Figure I-C of
these regulations by 0.001 times the number of gallons dis-
charged or to be discharged during that day. The annual
pollution charge for domestic wastes computed on this basis
is the sum of the daily pollution charges for the charge year.
If the domestic waste is disinfected in a manner approved
by the department, the annual pollution charge shall be reduced
by 33 1/3$. If the domestic waste receives primary treatment
including disinfection in a manner approved by the department,
the annual charge shall be reduced by 50%. (This option
provides a method of computing an annual pollution charge
where the domestic waste discharged varies in volume and/or
frequency as in the case of some households and seasonally
occupied establishments. It should also be used where discharges
are monitored as provided for in section 5(d) of these regulations,
To compute the annual charge by this method one must know
the mean annual flow of the receiving waters and the number
of thousands of gallons of domestic waste discharged on each
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day that a discharge occurs (number of gallons x 0.001). To
illustrate, if a ski lodge discharges domestic waste three
days in a year as follows: 700 gallons in day #1, 1,600 gallons
in day #2 and 2,000 gallons in day #3, into receiving waters
having a mean annual flow of 10 cubic feet per second, one
would compute the annual pollution charge by: (1) dividing
the mean annual flow by the number of thousands of gallons
of domestic waste discharged on day #1 to obtain the "Dilution
in cubic feet per second of mean annual flow per 1,000 gallons
per day" (10 T 0.7 = 14.3 c.f.s.); (2) referring to Figure I-C
to determine the "Daily charge per 1,000 gallons" ($0.443
(3) multiplying the "Daily charge per 1,000 gallons" by the
number of thousands of gallons of domestic waste discharged on
day #1 to obtain the pollution charge for day #1 ($0.443 x
0.7 = $0.31); (4) repeating steps (1), (2) and (3) for the
discharge of 1,600 gallons on day #2 and 2,000 gallons on
day #3 (day #2 charge = $0.95; day #3 charge = $1.28 ; (5) adding
the charges for day #1, day #2 and day #3 to obtain the annual
pollution charge ($0.31 + $0.95 + $1.28 = $2.54)).
(d) Non-Domestic Wastes Containing. Biochemical Oxygen
Demand and/or Suspended Solids: The daily pollution charge is
the product obtained by multiplying the "Daily Charge Per Pound"
as determined from Figure II of these regulations by the total
number of pounds of biochemical oxygen demand and suspended
solids discharged or to be discharged during that day. The
annual pollution charge is the sum of the daily pollution
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charges for the charge year. (This subsection and its corres-
ponding Figure II provide the method of computing annual
pollution charges for commercial and industrial discharges
such as dairy wastes, cheese making wastes, paper making
wastes and granite wastes. To compute the charge by this
method one must know the mean annual flow of the receiving
waters and the number of pounds of BOD and suspended solids
discharged on each day that a discharge occurs. No distinction
in relative degrading effect is made between BOD and suspended
solids and thus when both are present in a particular waste
discharge, the computation is based upon the total number
of pounds of BOD and suspended solids (i.e. Ibs. BOD + Ibs.
suspended solids = number of pounds of waste). To illustrate,
if an industry discharges waste containing 100 pounds of
BOD and 50 pounds of suspended solids each day during the
year into receiving waters having a mean annual flow of 100
cubic feet per second, one would compute the annual pollution
charge by: (1) referring to Figure II to determine the "Daily
charge per pound" ($0.0844); (2) adding the number of pounds
of BOD and suspended solids to determine the total number
of pounds (100 + 50 = 150 Ibs.); (3) multiplying the "Daily
charge per pound" by the total number of pounds to obtain
the daily pollution charge ($0.0844 x 150 = $12.66; (4) multi-
plying the daily charge by the number of days in the year
to obtain the annual pollution charge ($12.66 x 365 =
$4,620.90). Where the number of pounds of BOD and/or suspended
solids varies from day to day or where the industry does not
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discharge each day of the year, the daily charge must be
computed for each day of discharge and the annual pollution
charge is obtained by adding all the daily charges for the year).
(e) For heated effluents; The pollution charge rate
for heated effluents for which a temporary pollution permit
has been granted is $0.025 per million British thermal units.
(This subsection provides the method of computing annual
pollution charges for commercial, industrial and utility dis-
charges involving heated effluents. To compute the charge
by this method one must know the volume and mean daily temperature
of the heated effluent discharged each day and the mean daily
ambient temperature of the receiving waters. The charge
rate is fixed at $0.025 per million British thermal units.
To illustrate, if in one day a utility discharges 1,000,000
gallons of heated effluent at a mean daily temperature of
120°P. into receiving waters having a mean daily ambient
temperature of 70°P., the pollution charge for that day would
be computed by : (1) subtracting the ambient temperature
of the receiving waters from the temperature of the heated
effluent discharged to obtain the temperature differential
(120° - 70° = 50°P.); (2) multiplying the number of gallons
discharged that day by 8.31* pounds per gallon to obtain the
pounds of water discharged (1,000,000 x 8.34 = 8,3^0,000
Ibs.); (3) multiplying the pounds of water discharged by
the temperature differential to obtain the number of British
thermal units discharged that day (8,3^0,000 x 50 = 417,000,000
b.t.u.); CO multiplying the number of British thermal units
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discharged that day by 0.000001 to obtain the number of million
British thermal units discharged that day (417,000,000 x
0.000001 - 417); (5) multiplying the number of million British
thermal units discharged that day by $0.025 to obtain the
pollution charge for that day (417 x $0.025 - $10.42). The
annual pollution charge is the sum of the daily charges.
§4 - Time When Pollution Charges Begin to Accrue;
Charge Years
(a) Except as set forth in subsection (b) of this section,
pollution charges for temporary pollution permittees shall
begin to accrue on July 1, 1972 or at such time thereafter as
the permittee first discharges pursuant to the permit.
(b) Pollution charges as established above for any
temporary pollution permittee who abandons or rescinds or
refuses to carry out his plans upon which the temporary permit
has been granted shall accrue from July 1, 1971> or such time
thereafter as the permittee first discharged pursuant to the
permit.
(c) A pollution charge year shall commence on July 1
and terminate on the following June 30.
. $5 - Assessment of Charges
(a) Annually, on or before April 1, the department
shall compute pollution charges for each temporary pollution
j
permittee for the following charge year using information
contained in each application for a permit, any supplementary
information filed by the permittee and mean annual flow data
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available to the department. Any permittee who believes
that his application does not contain accurate or reliable
information upon which to compute the annual pollution charge
shall, on or before March 1, file with the department in
writing such supplementary information as he deems will enable
the department to arrive at a more accurate and reliable
computation of the annual pollution charge. The department
shall consider but shall not be bound by such supplementary
information.
(b) Annually, on or before April 15, the department
shall give written notice to each permittee of his annual
pollution charge and the method of computing it, which notice
shall be deemed the assessment of the charge. Any permittee
aggrieved by such assessment may appeal to the board pursuant
to 10 V.S.A. §91*»a.
(c) Except for those permittees who elect to monitor
and be charged in accordance with subsection (d) of this
section, the pollution charge for a charge year shall be the
amount assessed by the department, as revised on appeal,
unless reduced pursuant to section 6 of this regulation.
(d) Any permittee may elect at any time to monitor
his discharges by methods, equipment and at frequencies ap-
proved by the department and have his annual pollution charges
computed and assessed in accordance with the results of
such a monitoring program. A permittee so electing shall
give notice in writing to the department and shall specify
therein the method, equipment and frequency by which the
177
-------
monitoring program is to be carried out. If the department
approves such monitoring program, it shall give its conditional
approval to the permittee in writing." The permittee may then
proceed to install any necessary monitoring equipment and
arrange for testing and such other activities as are necessary
to carry out the approved monitoring program. The department
shall make a final inspection when the program is ready for
implementation and, if the department gives final approval in
writing, the pollution charges thereafter shall be computed
and assessed on the basis of the monitoring results when and
while the program is operational. Every monitoring program shall
provide for periodic reports at such intervals as the depart-
ment deems proper for the permittee and shall provide for a
final report to be submitted not later than 15 days following
the end of each charge year. Not later than 15 days after
receipt of the final monitoring report, the department shall
compute the pollution charge due from the permittee for the
charge year and give written notice of its assessment to the
permittee. If the department has reason to believe that the
final report does not accurately reflect the actual discharges
of the permittee, it may compute and assess the charges using
the information and data referred to in subsection (a) of this
section.
(e) If a permittee abandons or rescinds or otherwise
fails or refuses to carry out his plans upon which the permit
has been granted, the department shall thereupon compute and
178
-------
assess in writing in accordance with these regulations the
pollution charges accruing since July 1, 1971°
§6 - Reductions in Charges for Reductions in Volume and
Degrading Quality of Wastes; A permittee may reduce his annual
charge by reducing the volume and degrading quality of his
waste in a manner and following the procedures hereinafter
specified.
(a) Domestic Wastes: A permittee whose charges are computed
and assessed pursuant to subsections (a), (b) and (c) of
section 3 may reduce his annual charge by:
(1) disinfection of the domestic waste before discharge in
a manner approved by the department in which case that portion
of the annual charge applicable to the period during which
disinfection is provided shall be reduced by 33 l/3#; or
(2) providing primary treatment including disinfection
to the domestic waste before discharge in a manner approved by
the department in which case that portion of the annual charge
applicable to the period during which primary treatment is provided
shall be reduced by 5Q%.
(b) Domestic Wastes: A permittee who is or will be
discharging domestic wastes, other than one who monitors and
is assessed pursuant to section 5(d), may also reduce his
annual charge as follows:
(1) A permittee whose charges are computed and assessed
pursuant to section 3(a) may reduce his charges by establishing
to the satisfaction of the department that the number of
179
-------
persons whose domestic wastes are being or to be discharged
is and will continue to be less than when the annual charge
was assessed.
(2) A permittee whose charges are computed and assessed
pursuant to section 3(b) may reduce his charges by establishing
to the satisfaction of the department that the number of gallons
of domestic wastes being or to be discharged during the charge
year is and will continue to be less than when the annual
charge was assessed.
(3) A permittee whose charges are computed and assessed
pursuant to section 3(c) may reduce his charges by establishing
to the satisfaction of the department: (A) that the number of
gallons of domestic wastes being or to be discharged on any
days of the charge year is and will continue to be less than when
the annual charge was assessed; and/or (B) that the number of
days on which domestic wastes are being or to be discharged is
and will continue to be less than when the annual charge was
assessed.
(c) Non-Domestic Wastes: Except for those permittees
who monitor and are assessed pursuant to section 5(d), a
permittee who is or will be discharging wastes other than
domestic wastes may reduce his annual charge as follows:
(1) A permittee whose charges are computed and assessed
pursuant to section 3(d) may reduce his charges by establishing
to the satisfaction of the department: (A) that the total
number of pounds of biochemical oxygen demand and suspended
180
-------
solids being or to be discharged on any days of the charge year
is and will continue to be less than when the annual charge was
assessed; and/or (B) that the number of days on which such
wastes are being or to be discharged is and will continue to
be less than when the annual charge was assessed.
(2) A permittee whose charges are computed and assessed
pursuant to section 3(e) may reduce his charges by establishing
to the satisfaction of the department that the total number
of British thermal units for the charge year is and will continue
to be less than when the annual charge was assessed.
(d) Procedure for reducing charges: A permittee who has
reduced the volume and/or degrading quality of his waste so as
to entitle him to a reduction in the annual pollution charge
assessed may petition the department in writing for an amendment
to his temporary pollution permit and a reduction in his annual
charge assessment. The petition shall specify the reason why
the permittee is entitled to a reduction in his annual charge,
the means, if any, by which the reduction in volume and/or
degrading quality of the waste have been affected and the more
stringent discharge limitations that the permittee is capable
of meeting. The department shall consult with the permittee,
test the waste discharged, inspect and approve or disapprove
of any modifications in the waste treatment system or facility,
if necessary, and determine if the permittee is entitled to
a reduction in his annual charge. If the department determines
that the permittee is not entitled to a reduction in his annual
181
-------
charge, it shall notify the permittee to this effect in writing
and shall specify therein the basis of the determination. If
the department determines that the permittee is entitled to
a reduction in his annual charges, it shall: (1) amend the
temporary pollution permit so as to impose the more stringent
discharge limitations which the permittee is capable of
meeting for the duration of the permit; and (2) issue a new
assessment reflecting the reduction in the annual pollution
charge to which the permittee is entitled. A permittee aggrieved
by any determination of the department pursuant to this sub-
section may appeal to the board pursuant to 10 V.S.A. §91^a.
§7 - Payment of Annual Pollution Charges:
(a) Except as provided in subsection (b) of this section,
all annual pollution charges shall be paid on or before the
August 15th following the termination of the charge year.
(b) A permittee who abandons or rescinds or otherwise
fails or refuses to carry out his plans upon which the permit
has been granted shall pay all pollution charges assessed
pursuant to section 5(e) within 30 days after receipt of
the written assessment from the department.
(c) Checks shall be made payable to the State of Vermont
and transmitted to the Water Resources Department, Montpelier,
Vermont, 05602.
182
-------
10
oo
c
1-1
•o *J
C. 3
O r-4
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10 PL,
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(14 »4
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o
i.o , ZIIIL::!:
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o.oi
'-r: ~v"-" --
S 0 7801
1.00
10.00
Annual Charge Per Person Polluting
(Dollars)
FIGURE I-A
100.00
183
-------
100.0
a
•O Q)
C PH
• O
o m
0 C
CO O
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:'._ L-ji^-Li:.!. iiu.i.-i:;.j.-y
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.!.:: ::•:••• : ' ' i -: I--' t
s 4 s e 7 a a i
67001
10.00
00
Annual Charge Per 1000 Gallons
(Dollars)
FIGURE I-B
1000.00
184
-------
100.0
10
o
•u u
C PM
O
U CO
o> e
co o
• i-C
M »H
0) Q
fe O
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Q
10.0
1.0
oa ,
» e 7 a o i
10.0
Daily Charge Per 1000 Gallons
(Dollars)"
FIGURE I-C
185
-------
1,000
•o
B
O
o
tt>
OT
n
0)
4J
0)
0)
.0
O
I
3
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a
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100 ,
10 .r
.10
Daily Charge Per Pound
(Dollars)
FIGURE n
1.00
186
-------
January 11, 1972
EXPLANATORY NOTES FOR THE APPLICATION OF PROPOSED POLLUTION
CHARGE RATES TO TOWNS AND INDUSTRIES
Note No. 1) Under the proposed amendments to 10 V.S.A., paragraph
S12a, all towns, cities, municipalities, Fire Districts, and
school districts holding a temporary pollution permit will be
exempt from the proposed pollution charges unless and until they
depart from the abatement schedule contained in their temporary
pollution permit.
Note No. 2) The information in the attached Table was compiled
from the best available data, and may be subject to minor adjustments,
Note No. 3) Several towns requiring temporary pollution permits
after July 1, 1972 were omitted from the attached Table because
sufficient data was not available in time for this release.
Note No. 4) The attached Tabulation of proposed pollution charges
for industries does not include all industries requiring temporary
pollution permits after July 1, 1972 and is for purposes of
illustration only.
187
-------
TOWNS REQUIRING TEMPORARY POLLUTION PERMITS AFTER JULY 1972
Town
Arlington
£
00 Barton
Benson
Bethel
Brandon
Bridgewater
Brighton
Canaan
Chelsea
Coventry
Danville
A
i-l
d | S
JUs
cfs
322.0
139.0
1.0
683.0.
725 .0
174.2
60.5
666.7
39.3
202.2
4.0
B
No. of
Polluters
220
1169
42
138
178
18
300
100
175
56
70
C
A"TB
1.464
0.119
0.0238
4.949
4.073
9.678
0.20J
5.667
0.225
3.611
0.0571
D
Population
Served
1550
1380
158
960
2700
700
400
625
362
*» M
E
Annualization
Cost - Bonds
& Operation
$/person/yr
33.00
21.56
24.00
32.44
8.46
53.00
88.60
51.50
50.19
•i m
- -
F
Annual Charge
per Polluter
$ 16.26
38.14
66.07
10.74
11.48
8.56
31.84
9.71
30.73
11.98
48.94
G
V
60
M
1
O d
- *
§H
1 «
< a
$ 3,577.20
44,585.66
2,774.94
1,482.12
2,043.44
154.08
9,552.00
971.00
5,377.75
669.76
3,425.80
-------
Town
Derby Center
Derby Line
*Enosburg Falls
H
100
^53
1200
A-7B
1.222
0.0756
0.658
0.470
0.138
1.402
1.340
5.101
0.1034
1.914
1.508
0.174
1.019
0.243
Population
Served
472
849
1680
230
1420
3400
420
465
2180
350
3890
2100
900
1254
c
O 0}
•H -O d
w a o
«a o -H
N M 4J
•H nj
•H • M
a) ai
3 4J O.
£ co O
$ 8 ^»
$/person/yr
15.00
18.00
16.00
31.00
25.00
24.40
82.00
66.00
21.09
32.00
29.67
14.50
21.75
26.17
Annual Charge
per Polluter
$ 17.27
44.47
21.34
23.90
36.27
16.49
15.74
10.00
40.13
14.84
16.09
33.51
18.39
2S.94
0)
60
h
o ta
-4 6
gH
a n
q o>
< a
$ 3,194.95
28,238.45
35,851.20
1,649.10
51,503.40
13,356.90
5,591.60
4,650.00
140,455.00
519.40
12,550.20
70, 371. '00
4,836.57
35,928.00
-------
B
Town
Orwell
Pawlett
Putney
Randolph
to
o
Itoadsl'oro
Richmond
Rochester
Ryegate
Sautons River
Stowe
Swanton
*Troy
Wallingford F.D.
i-<
cd d o
JSJ § **
a < CM
cfs
22.3
34.2
22.5
200.0
413
1425.0
136.6
98.9
111.9
138.9
1616.S
206.0
180.6
to
m w
0 3
r-l
• r-l
£«s
80
250
70
2230
215
465
400
260
530
221
2300
122
84
\
0
A'TB
0.279
0.137
0.321
0.0897
1.921
3.065
0.342
0.368
0.211
0.629
0.703
1.689
2.150
Population
Served
204
441
330
2230
570
732
525
490
530
1150
2300
210
580
d
O CO
•H -o d
4J d 0
cd 5 -H
M M 4J
•H cd
r-4 1 M
cd oi
3 ** 6>
a m o
% 8 #
$/person/yr
36.00
40.00
36.00
12. 00 (new
60.00
69.00
12.60
43.99
34.00
55.40
11.51
120.00
28.80
0)
00 M
M 0
cd 4J
6 13
r-l
r-l 0
cd PH
|&
< O.
$ 28.64
36.35
27.61
const) 42. 24
14.85
12.63
26.66
25.98
31.36
21.66
20.85
15.48
14.25
01
60
r4
o d
r^g
§H
is
< O.
$ 2,291.26
9,087.50
1,932.70
54,195.20
3,192.75
5,872.95
10,664.00
6,754.flO
16,620.80
4,786.86
47,978.00
1,888.56
1,197.00
-------
D
Town
Whitingham
Woodstock
^^
aS*
S S.2
flj Q iH
,5 ^M PH
cfs
19.4
330.6
a
09 O
w -S
O JJ
°3 -3|
• ** cu w
O O o 8)
» (^ fW 03
A-fs
276 0.0703 307
35 5.446 80
o w
•H -o a
4J C O
0 5 -r<
N fP 0
•H nj
•-< 1 M
§qj
*J 0.
a a o
•§
-------
APPROXIMATE LIST OF VERMONT INDUSTRIES
REQUIRING TEMPORARY POLLUTION PERMITS JULY 1, 1972
(BOD and S.S. values are "best estimates" from available information)
B C D E F
Company
£ Adams Paper Mill
10
Bridgewater
Uoolen Co.
i-l
rt
134
175
Cabot Farmers Coop
Bradford 261 '
forest Poultry
Corp*
Missisquoi
Specialty Board
Mountain Paper
Products
National Fiber
Putney Paper
Ryegate Paper
1000
1500
8460
136
23
3876
« M
.a at
•-« a.
55,000
265,000
9,750
204,000
98,000
76,000
166,000
140,000
152,000
01
60 H
U 0»
o a
« CA
,a •
i-< W
57,400
126,000
11,200
58,600
272,000
129,500
315,800
21,900
190,000
H a.
* * to
W OS M
.a • al
96,600
0
0
1,800
14,400
70,500
25,200
3,100
81,500
t-4
-------
Appendix B
VERMONT V'ATER RESOURCES BOARD
State of Vermont
Agency of Environmental Conservation
RULES ESTABLISHING POLLUTION CHARGES AND RESTATING PERMIT
APPLICATION FEES IN ACCORD WITH TITLE 10, VERMONT STATUTES
ANNOTATED, CHAPTER 33, AS AMENDED
Rule 1. Definitions
The following words and phrases shall have the meaning ascribed to them
unless the context clearly indicates otherwise:
(1) "Act" means the water pollution control act, Title 10, Vermont Statutes
Annotated, Chapter 33, as amended;
(2) "Applicant" means any person as defined herein who has made application
to the Department for a discharge permit or temporary pollution permit;
(3) "Board" means the Vermont Water Resources Board;
(4) "Department" means the Department of Water Resources of the Agency of
Environmental Conservation;
(5) "Discharge" means the placing, deposition or emission of any wastes,
directly or indirectly, into the waters of the State;
(6) "Permittee" means any person as defined herein who has been issued
a discharge permit or temporary pollution permit by the Department or
any person to rfhom a permit has been transferred as approved by the
Department;
(7) "Person" means person as defined in 10 V.S.A. 901 (4).
(8) "Pollution Abatement Facility" means any waste treatment system or
pre-treatment facility and appurtenant works, process, procedures, and
operations required by the Department to modify the characteristics
of the applicant's wastes to meet water quality standards established
by the Act and these regulations;
(9) "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 section 903 (e) of the Act;
(10) "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;
(11) "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;
(12) "Uater Quality Standards" means the Regulations Governing Water
Classification and Control of Quality as may at any time be adopted
by the Board.
193
-------
Rule 2. Temporary Pollution Permits; Applications
A person vho does not qualify for or has been denied a discharge permit shall
apply to the department 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 require. The department may require such person to submit any
additional information it considers necessary for proper evaluation of the
application. The department shall inform the applicant of the reasons why he does
not qualify for a discharge permit, together with a clear and concise description
of the degree of treatment necessary for him to qualify for a discharge permit,
whereupon the applicant for his part shall indicate in a manner satisfactory to
the department his acceptance of providing such degree of treatment or appeal to
the Board or cease and desist from further discharges of polluting wastes. In the
Temporary Pollution Permit that thereafter may be issued to the applicant, the
degree of required treatment, the technical steps necessary to accomplish such
treatment and a time-schedule for the completion of each step shall be set forth
as conditions thereof, and the applicant shall communicate his understanding of
such conditions in a manner satisfactory to the department before such permit shall
take effect.
Rule 3. Pollution Charges per Unit of Waste
The following pollution charges for computing the amounts to be paid by
temporary pollution permittees are established as just and reasonable to fulfill
the purposes of the act:
(1) Per pound of biochemical oxygen demand discharged
to the waters of the State $0.035
(2) Per pound of suspended solids discharged to the
waters of the State $0.025
(3) Per 1000 gallons of liquids requiring disinfection
discharged to the waters of the State $0.01
Rule 4. Pollution Charges, Per person Equivalent
For purposes of computing the per person equivalent in the case of pollution
charges for homes, domiciles and residences, either permanent, temporary or
seasonal, the wastes per person for each day are assumed to contribute 0.2 pounds
of biochemical oxygen demand, 0.2 pounds of suspended solids, and 100 gallons of
liquid requiring disinfection. For purposes of computing accrued pollution
charges, temporary or seasonal residences are deemed to be used six months a year
and permanent residences are deemed to be used twelve months a year unless other-
wise established by the permittee to the satisfaction of the Department. For all
other sources of wastes the Department shall furnish a Temporary Pollution
Permittee with figures representing the pounds of biochemical oxygen demand, the
pounds of suspended solids and the gallons of liquid requiring disinfection, which
can reasonably be expected and inferred from the use and occupancy of his premises
or operations, for such period of time as is most applicable to such use and
occupancy, together with the computation of the per person equivalent where
applicable.
194
-------
Rule 5. Pollution Charges, Heated Effluents
For the discharge of effluents heated in excess of the permissible increment
of temperature increase specified by the water quality standards applicable to the
receiving waters, the charge for such addition of heat is $0.025 per 1,000,000
British Thermal Units.
Rule 6. Temporary Pollution Permits, Municipalities
Every municipality of the State which has not already done so shall inform the
Department, within 30 days of the promulgation of these rules or at such later
date as required by the Department, whether it intends to abate any pollution
within its boundaries which is reducing the quality of the receiving waters below
the established classification by a central pollution abatement facility. If the
municipality intends to abate its pollution by such a facility and if the Depart-
ment determines that the proposed central pollution abatement facility is
technically and economically feasible and of a suitable type, capacity and design
to be eligible for state and federal construction grants, the Department shall
issue a Temporary Pollution Permit to the municipality in accordance with the act
and these rules. If, however, such state and federal funds are not available for
allocation to such a municipality, the Department shall issue to such a
municipality a Temporary Pollution Permit which shall set forth as conditions
such requirements as the Department finds reasonable and appropriate, including
but not restricted to the degree of preliminary planning necessary and the
maximum volume and degrading quality of the wastes to be treated. Within three
months after such state and federal funds become available, .the Department shall
amend such a Permit in accordance with the act and these rules.
Rule 7. Pollution Charges, Dates of Accrual
For those persons whose discharges are degrading the waters of the State
below the established classification on or after July 1, 1972, pollution charges
shall accrue from July 1, 1972, or thereafter, provided, however, that in the
case of municipalities and persons connected to a municipal system operating under
a temporary pollution permit, such charges shall not begin to accrue until three
months after the Department notifies the permittee to the effect that state and
federal funds have been allotted. Such charges shall cease to accrue on the
date that the holder of a Temporary Pollution Permit qualifies for a discharge
permit.
Rule 8. Pollution Charges Deferred
The pollution charges accrued during each fiscal year in which a permittee
complies strictly with each of the requirements, conditions and restrictions of
his permit shall be deferred.
Rule 9. Pollution Charges Excused
Deferred charges shall be excused and charges paid for non-compliance with
the terms of a permit shall be refunded if the permittee achieves compliance with
the terms of his permit by his expiration date.
195
-------
f
Rule 10. Discharge Permits (Restatement of Rule 6 adopted July 9, 1971)
a) Any person intending to discharge wastes 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 nade on a form prescribed by the
Department and shall contain such information as the Department may therein
require. The applicant shall pay to the Department at the time of submitting
his application the following fees:
(1) Applicants whose wastes are domestic in character
and do not exceed 1,000 gallons per day $10.00
(2) All other applicants $50.00
Rule II. Temporary Pollution Permits (Restatement of Rule 7 adopted July 9, 19P71)
A person who does not qualify for or has been denied a waste discharge permit
may apply .to the Department 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 there in require. The Department may require such person to
submit any additional information it considers necessary for proper evaluation.
The applicant shall pay to the Department at the time of submitting his
application the following fees:
(1) Applicant whose wastes are domestic in character
and do not exceed 1,000 gallons per day $20.00
(2) All other applicants $100.00
Adopted June 29, 1972 by the
Vermont Water Resources Board
Filed by:
William A. Irwin
Executive Secretary
196
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Appendix C
Michigan Water Resources Commission
Act 293 Reports
P.O. Drawer M
Lansing, Michigan 48926
Bulk Rate
U.S. Postage
PAID
Lansing, Mich.
Permit 1200
ATTENTION PERSON IN CHARGE OF
ENVIRONMENTAL ACTIVITIES.
MICHIGAN WATER RESOURCES COMMISSION
WASTEWATER REPORT FORMS AND INSTRUCT8ONS
Completion And Return Of This Form Is Required By State Law
Deadline for filing is December 15, 1973.
This booklet contains the necessary forms and instructions for reporting of wastewater and critical materials
data to comply with Michigan Act 293, P.A. 1972. All businesses which discharge wastewater to the waters of
the State (including groundwaters), or wastewater in addition to sanitary sewage to any sewer system are
required to file this annual report.
A separate report is required for each location at which your company does business.
TABLE OF CONTENTS
General Instructions 2
Form I — General Information 3
SIC Code List 5
Instructions for Form II 6
Form II - Outfall Report 7
Instructions for Form III 8
Form III — Critical Materials Report 9
Instructions for Forms IV-A & IV-B 10
Mailing Instructions 10
Form IV-A - Hauled Wastes Report 11
Form IV-B - Wastehaulers Report 11
Mailing Cover 12
Critical Materials Register 13
Examples of Completed Forms 14
How Fees Are Calculated 15
Surveillance Fee Sample Calculation 16
Categories of Typical Waste Constituents 17
Intensive Surveillance Areas 18
Abstract of Act 293, P.A. 1972 19
General Rules 20
197
-------
GENERAL INSTRUCTIONS
Information supplied in this report should reflect your company's operation during calendar year 1973. This
will necessitate preparing the report prior to the end of the reporting period in order to meet the December 15,
1973, filing deadline. In the event of significant change in wastewater disposal after the report has been filed,
an amendment to the report outlining the change should be filed. Also, an interim report is required when:
1. The use of a critical material not previously reported is commenced during the year, or
2. Usage or discharge of a critical material increases sufficiently to move the level of usage or discharge
into a higher category on the critical materials report (Form III, Page 9).
Whatever the nature of your business and resulting waste disposal practices take the time to completely and
accurately fill out the forms since surveillance fees will be calculated using data directly from the forms. Any
omission of data affecting the fee calculation will automatically result in the entering of the maximum value for
that factor in the calculation formula.
Read the instructions carefully and fully before beginning to complete the forms. Refer to page 14 for
examples of completed forms properly filled out for an imaginary company. The examples are followed by an
explanation of the surveillance fee calculation based on the return submitted by the same company.
If you need additional forms you may duplicate any you wish or request additional copies from:
Michigan Water Resources Commission
Act 293 Reports
P.O. Drawer M
Lansing, Michigan 48926
If you have any questions or require help in completing the forms you may call the following person for
assistance:
Jerry Fore
(517) 373-2867
198
-------
FORM I — GENERAL INFORMATION
A separate report is required for each location at which your company does business. If you have sold your facilities at
this address please indicate the new owner's name and address below and return the form to us.
r
L
"1
J
If any part of this mailing label is incorrect
please use the space below to correct it.
If you have sold the business to the person
listed below please check here | |
WRC USE ONLY
NAME OF COMPANY AND/OR OWNER'S NAME
PLANT NAME, ADDRESS OR CONTINUATION OF NAME
STREET ADDRESS OR BOX NUMBER
7.U,
i i
Primary I D|Level | No. | SIC
17
18; 19
aj I
c la.
Sis'
STATE
ZIP CODE
1. Do you or did you own or operate a business (commercial or industrial) in the State of Michigan during any part of
1973 which discharged ANY wastewater (including cooling water and sanitary wastewater from toilets, washrooms,
etc.), or which had wastewater removed by a wastehauler?
A. O Yes. Continue with Question 2.
Initial date
of operation during 1973
Final date
of operation during 1973
If your business is not operating at the
current time is it permanently
closed? CD Yes D No
B. O No. Skip Question 2 thru 7, sign the report and see page 10 for mailing instructions.
2. Is ALL of your wastewater sanitary sewage? (Note: Sanitary sewage includes wastewater from toilets, washrooms,
drinking fountains, kitchens, laundries (except dry cleaning wastes) and other sanitary facilities which may produce
human waste. Sanitary waste does NOT include cooling water, condenser water, or process wastewater.)
A. O Yes. Continue with question 3.
B. LUNo. Skip question 3. Continue with question 4. You must complete and attach Form II, page 7.
3. If ALL of your wastewater is sanitary sewage does it go to a septic tank or a municipal sanitary sewer?
Q Yes. Septic Tank , .
r-iv c •» *r (Note: lagoons are not included in either of these categories)
LJ Yes. oamtary sewer
If you marked either of the above skip questions 4 thru 7, sign the report, and see page 10 for mailing
instructions.
QNo. Continue with question 4. You must complete Form II, page 7.
199
-------
4. Is any portion of your wastewater hauled away by a wastehauler or are you a wastehauler?
Q Yes. Continue with question 5. You must complete and attach Form IV-A or Form IV-B whichever is applicable.
Q No. Continue with question 5.
5. Do you use or discharge to the best of your knowledge any of the critical materials listed on page 13?
Q Yes. Continue with question 6. You must complete and and attach Form III, page 9.
Q No. Continue with question 6.
6. A. Please refer to page 5 and copy the appropriate standard industrial classification code in the box below (if none are
applicable leave blank).
1
1 1
B. Describe in detail the primary activities that generate wastewater at this facility.
Continue with question 7.
7. Schedule of operation
hours/day days/week weeks/year
hours/day days/week weeks/year
hours/day days/week • Weeks/year
Phone Number
Name and Title of Person Completing Report (please print)
Number of Employees
Signature
SEE PAGE 10 FOR MAILING INSTRUCTIONS
200
-------
STANDARD INDUSTRIAL CLASSIFICATION CODES
Note: This is an edited list. Any facility which cannot be categorized with
one of the following listings should leave the box on page 4, question 6, blank.
code
Title
Code
Title
Code
Title
AGRICULTURE
0100 AGRICULTURAL PRODUCTION-CROPS
0200 AGRICULTURAL PRODUCTION-
LIVESTOCK
0211 Bed Cattle Feedtots
0241 Dairy farms
0700 AGRICULTURAL SERVICES
MINING
1000 METAL MINING
1011 Iron Ores
1021 Copper ores
1081 Metal mining services
1300 OIL AND GAS EXTRACTION
1360 Oil and Gas Field Services
1400 NONMETAUC MINERALS
1422 Crushed and broken limestone
1440 Sand and Gravel
1450 Clay and Related Minerals
1470 Chemical and Fertilizer Minerals
1492 Gypsum
CONSTRUCTION
1500 GENERAL BUILDING CONTRACTORS
1600 HEAVY CONSTRUCTION
CONTRACTORS
MANUFACTURING
2000 FOOD AND KINDRED PRODUCTS
2010 Meat Products
2011 Meat packing plants and slaughter houses
2020 Dairy Products
2030 Preserved Fruits & Vegetables
2033 Canned fruits and vegetables
2035 Pickles, sauces, and salad dressings
2037 Frozen (mils and vegetables
2040 Grain Mill Products
2043 Cereal breakfast foods
2047 Dog, cat. and other pet food
2050 Bakery Products
2060 Sugar and Confectionary Products
2063 Beet sugar
2070 Fats and Oils
2076 Vegetable oil mills
2077 Animal and marine fats & oils
2060 Beverages
2062 Malt beverages
2084 Wines, brandy, and brandy spirits.
2085 Distilled Iquor, except brandy
2086 Bottled and canned soft drinks
2067 Flavoring extracts and sirups, nee.
2090 Misc. Foods and Kindred Products
2091 Canned and cured seafoods
2092 Fresh or frozen packaged fish
2200 TEXTILE MILL PRODUCTS
2300 APPAREL AND OTHER TEXTILE
PRODUCTS
2400 LUMBER AND WOOD PRODUCTS
2420 Sawmills and Planing Mills
2430 Mlllwork, Plywood & Structural Members
2440 Wood Containers
2448 Wood pallets and skids
2450 Wood Buildings and Mobile Homes
2490 Miscellaneous Wood Products
2491 Wood preserving
2492 PaiKcleboard
2500 FURNITURE AND FIXTURES
2600 PAPER AND ALLIED PRODUCTS
2611 Pulp mills
2621 Paper mills, except bulling paper
2631 Paperboard mills
2640 Misc. Convened Paper Products
2650 Paperboard Containers and Boxes
2661 Building paper and board mills
2700 PRINTING AND PUBLISHING
2710 Newspapers
2750 Commercial Printing
2790 Printing Trade Services
Manulacturing-cont'd.
2800 CHEMICALS AND ALLIED PRODUCTS
2810 Industrial Inorganic Chemicals
2820 Plastics Materials and Synthetics
2630 Drugs
2640 Soap, Cleaners, and Toilet Goods
2850 Paints and Allied Products
2860 Industrial Organic Chemicals
2870 Agricultural Chemicals
2890 Miscellaneous Chemical Products
2891 Adhesives and sealants
2892 Explosives
2693 Printing inks
2900 PETROLEUM AND COAL PRODUCTS
2911 Petroleum refining
2950 Paving and Roofing Materials
3000 RUBBER AND MISC. PLASTIC PRODUCTS
3011 Tires and inner tubes
3069 Fabricated rubber products
3079 Miscellaneous plastic products
3100 LEATHER AND LEATHER PRODUCTS
3111 Leather tanning and finishing
3200 STONE, CLAY. AND GLASS PRODUCTS
3220 Glass and Glassware, Pressed or Blown
3241 Cement
3250 Structural Clay Products
3260 Pottery and Related Products
3270 Concrete, Gypsum, and Plaster Products
3271 Concrete block and brick
3273 Ready-mixed concrete
3274 Lime
3275 Gypsum products
3290 Misc. Nonmetalic Mineral Products.
3291 Abrasive products
3292 Asbestos products
3295 Minerals, ground or treated
3297 Nonday refractories
3300 PRIMARY METAL INDUSTRIES
3310 Blast Furnaces and Basic Steel Products
3312 Blast furnaces and steel mills
3313 Electrometallurgies products
3315 Steel wire and related products
3316 Cold finishing of steel shapes
3317 Steel pipe and tubes
3320 Iron and Steel Foundries
3321 Gray iron foundries
3322 Malleable iron foundries
3330 Primary Nonferrous Metals
3331 Primary copper
3332 Primary lead
3333 Primary zinc
3334 Primary aluminum
3340 Secondary Nonferrous Metals
3361 Aluminum foundries
3362 Brass, bronze, and copper foundries
3390 Miscellaneous Primary Metal Products
3396 Metal heat treating
3400 FABRICATED METAL PRODUCTS
3410 Metal Cans and Shipping Containers
3420 Cutlery. Hand Tools, and Hardware
3430 Plumbing and Heating. Except Electric
3440 Fabricated Structural Metal Products
3442 Metal doors, sash, and trim
3443 Fabricated plate work (boiler shops)
3444 Sheet metal work
3450 Screw Machine Products. Bolts, etc.
3460 Metal Forginns and Stampings
3462 Iron and steel forgings
3463 Nonferrous forgings
3465 Automotive stampings
3470 Metal Services
3471 Plating and polishing
3479 Metal coating and allied services
3480 Ordnance and Accessories
3490 Misc. Fabricated Metal Products
3500 MACHINERY. EXCEPT ELECTRICAL
3510 Engines and Turbines
3520 Farm and Garden Machinery
3530 Construction and Related Machinery
3540 Metalwortdng Machinery
3550 Special Industry Machinery
3560 General Industrial Machinery
3570 Office and Computing Machines
3580 Refrigeration and Service Machinery
3590 Misc. Machinery. Except Electrical
3600 ELECTRIC AND ELECTRONIC
EQUIPMENT
3610 Electric Distributing Equipment
3620 Electrical Industrial Apparatus
3630 Household Appliances
3640 Electric Lighting and Wiring Equipment
3650 Radio and TV Receiving Equipment
3660 Communication Equipment
3670 Electronic Components and Accessories
3690 Misc. Electrical" *
Manufacturing-cont'd.
3700 TRANSPORTATION EQUIPMENT
3710 Motor Vehicles and Equipment
3711 Motor vehicles and car bodies
3714 Motor vehicle parts and accessories
3715 Truck trailors
3720 Aircraft and Paris
3730 Ship and Boat Building and Repairing
3740 Railroad Equipment
3750 Motorcycles, Bicycles, and Parts
3760 Guided Missies. Space Vehicles. Parts
3790 Miscellaneous Transportation Equipment
3792 Travel Trailers and campers
3795 Tanks and Tank Components
3800 INSTRUMENTS AND RELATED
PRODUCTS
3810 Engineering and Scientific Instruments
3820 Measuring and Controllng Devices
3830 Optical Instruments and Lenses
3840 Medical Instruments and Supplies
3860 Photographic Equipment and Supplies
3900 MISCELLANEOUS MANUFACTURING
INDUSTRIES
3910 Jewelry, Silverware, and Plated Ware
3930 Musical Instruments
3940 Toys and Sporting Goods
3950 Pens, Pencils. Office and Art Supplies
3990 Miscellaneous Manufactures
TRANSPORTATION
4010 RAILROADS
4200 TRUCKING AND WAREHOUSING
4210 Trucking, Local and Long Distance
4221 Farm product warehousing and storage
4222 Refrigerated Warehousing
4230 Trucking Terminal FadSties
4400 WATER TRANSPORTATION
4430 Great Lakes Transportation
4440 Transportation on Rivers and Canals
4452 Ferries
4454 Towing, and tugboat service
4460 Water Transportation Services.
4463 Marine cargo handing
SERVICES
4900 ELECTRIC, GAS, AND SANITARY
SERVICES
4911 Electric services
4925 Gas production and/or distribution
4953 Refuse systems
5810 EATING AND DRINKING PLACES
6512 OFFICE BUILDINGS
7000 HOTELS AND OTHER LODGING
PLACES
7011 Hotels, motels, and tourist courts
7030 Camps and Trailer™ Parks
7032 Sporting and recreational camps
7210 Laundry. Cleaning & Garment Services
7215 Coin-operated laundries
7391 Laboratories — Testing and Research
7399 Water Softener Service
7500 AUTO REPAIR, SERVICES
AND GARAGES
7530 Automotive Repair Shops
7542 Car washes
7900 AMUSEMENT & RECREATION SERVICES
7933 Bowling alleys
7940 Commercial Sports
7941 Sports dubs and promoters
7948 Racing, Including track operation
7992 Public golf courses
7996 Amusement parks
7997 Membership sports & recreation dubs
8000 HEALTH SERVICES
8050 Nursing and Personal Care Fadlties
6060 Hospitals
8070 Medical and Dental Laboratories
6060 Outpatient Care FaditJes
201
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INSTRUCTIONS FOR FORM II
Note that information is to be reported separately for each outfall. An outfall, for purposes of this report, is
considered to be any point at which wastewater enters the waters of the State (including groundwaters) or a
sewer system. Complete a section of information for each wastewater discharge (multiple municipal sanitary
sewer connections may be summarized as one outfall). If more than two outfalls are to be reported, Form II
may be duplicated or additional copies will be supplied on request.
ITEM A—In the spaces provided first copy the six digit facility identification code number from the upper left
hand corner of the mailing label (leave blank if number does not appear on label). Next, in the spaces marked
OUTFALL NUMBER, number each outfall reported using any numbering system of not more than two digits. If
you submit Monthly Operating Reports enter the appropriate station number in the spaces so marked.
ITEM B — Circle the number corresponding to the type of discharge. For surface water discharges list the
name of the receiving water. A DISCHARGE TO A STORM SEWER which directly enters a watercourse is a
SURFACE WATER DISCHARGE and must be reported as such. Lagoons with an outlet to surface waters must
be reported as surface water discharges. Discharges to combined storm-sanitary sewer systems may be
reported as municipal sanitary sewer discharges. For groundwater discharges specify the type of ground-
water disposal by circling the appropriate subgroup under the groundwaters heading. For discharges to a
sanitary sewer system list the name of the municipality operating the system.
ITEM C — Flow figures (Average, Minimum and Maximum) are to be reported in the appropriate spaces in
units of million gallons per day (MGD). For example, a flow of 2,500 gallons per day would be
recordedr..0.0i2.5l (note that decimal points are coded as digits), a flow of 5,000,000 gallons per day would
be recorded I . 15... 51 (any blank spaces should be to the left). Round off flow figures as necessary to fit in
space provided. The average daily flow figure should be based on the number of days during the year on which
the outfall discharged —i.e.:
Average Daily Flow = total outfall discharge volume for the year
number of days discharge took place
except for lagoons, which should report
Averaae Dailv Flow Total influent volume for the year
Average uaiiy now - number of days durjng whjch inf|uent took p|ace
Note: For lagoons, the average Daily Flow and Maximum Daily Flow are the same.
Indicate whether flow figures reported were measured or estimated by placing a check in the correct box.
ITEM D — Indicate the type of wastewater discharged by the outfall in relative percentages adding up to 100
percent. For purposes of this report, sanitary wastewater includes human sewage only, and cooling and
condenser wastewater includes only uncontaminated water resulting from these practices. All other forms of
wastewater are considered process wastewater.
ITEM E — Use this item to indicate months of operation of the outfall during calendar year 1973. If the outfall
operated for the full year check this box. If the outfal I began and/or ended operation during the year or if it was
used only a few months or days list the date(s). If the outfall operated intermittently (on and off several times)
indicate the number of days of discharge.
ITEM F- Briefly describe the nature and source of the wastewater from this outfall, a description of the outfall
and the geographical location of the outfall. Location may be indicated by any of the following methods:
Latitude and longitude in degrees, minutes and seconds; Tier, Range and section along with feet north and
east of the southwest corner of the section; river miles upstream from the mouth of the river; distance from the
nearest bridge along with the name of the road the bridge is on; nearest cross streets for sewer connections,
or street address of a sewer connection point may be used where applicable. A marked and scaled map may be
enclosed to satisfy the location requirement.
202
-------
FORM II — WASTEWATER OUTFALL REPORT
(See Instructions on Facing Page and Example on Page 14)
A-I 7.0.
Outfall
Number
9 10
Monthly Operating Report Station
Number (If Known—Otherwise leave blank)
i i i i
11
16
B. Water from this outfall is discharged to (Circle One Only)
1. Surface Waters
Groundwaters
Name of receiving water
(for storm sewers give where sewer discharges)
2. Lagoon or Seepage Pond With No Outlet
3. Spray Irrigation
4. Septic Tank - Tile Field
5. Deep Well Disposal
6. Surface of Ground
7. Other.
8. Municipal Sanitary Sewer.
(17)
Name of Municipality
C. Volume of Discharge
1. Avg. Daily Flow (MGD)
2. Min. Daily Flow (MGD)
3. Max. Daily Flow (MGD)
4. Total Annual Flow (MGY) [
18
22
28
32
33
38
Was flow (Check One)
Omeasured or
Destimated?
D. Type of Wastewater
1. Process I I I 1
39 41
2. Cooling I I I I
42 44
3. Sanitary!
45
47
E. Outfall Operated
1.D Full Year
2. D Only Part of Year
Initial date
of discharge
3. D Intermittent:.
Final date
of discharge
.days
F. Word Description of Wastewater, Outfall Description and Outfall Location
A.
7.0
Outfall
Number
10
Monthly Operating Report Station
Number (If Known—Otherwise leave blank)
j i
11
16
B. Water from this outfall is discharged to (Circle One Only)
1. Surface Waters
Name of receiving water
(for storm sewers give where sewer discharges)
Groundwaters
2. Lagoon or Seepage Pond With No Outlet
3. Spray Irrigation
4. Septic Tank - Tile Field
5. Deep Well Disposal
6. Surface of Ground
7. Other
8. Municipal Sanitary Sewer
(17)
Name of Municipality
C. Volume of Discharge
1. Avg. Daily Flow (MGD)
2. Min. Daily Flow (MGD)
3. Max. Daily Flow (MGD)
4. Total Annual Flow (MGY)
Was flow (Check One)
Q measured or
^estimated?
33
38
D. Type of Wastewater
1. Process %
39
41
2. Cooling
42
44
3. Sanitary
47
E. Outfall Operated
1. DFullYear
2. QOnly Part of Year
Initial date
of discharge
3. QIntermittent:,
Final date _
of discharge
_days
F. Word Description of Wastewater, Outfall Description and Outfall Location
FOR ADDITIONAL OUTFALLS, MAKE COPIES OF THIS FORM OR REQUEST ADDITIONAL FORMS.
203
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INSTRUCTIONS FOR FORM III
Complete one section of this form for each material listed on page 13 which is used and/or discharged at this
site. Note that usage and discharge are to be reported on a plant wide basis and that they are reported by
ranges rather than by specifying exact pounds.
Note: We are interested in the critical materials contained in your product or used in your manufacturing
process in any way, even if they are recovered or if they do not come in contact with water. Any critical
materials used incidental to your manufacturing process must be reported if they may, at times, be
discharged. If you are uncertain whether a particular material must be reported please call Jerry Fore
(517) 373-2867 for assistance.
Copy the six-digit identifying code number appearing on the mailing label in the space provided (leave blank if
number does not appear on label).
ITEM A — Note that each item on the critical materials list has a corresponding five-digit parameter number.
Copy proper number in the space provided.
ITEM B — Indicate the name of the critical material being reported. (Must match number listed in A.)
ITEM C — Circle the number corresponding to the level of usage of critical material in question at this plant
site during 1973.
ITEM D—Circle the number corresponding to the total level of discharge of the critical material in question in
the wastewater of this plant during 1973.
ITEM E — List the numbers of the outfalls reported on Form II which discharge any amount of the critical
material in question.
ITEM F — If publication of information you supplied in Item C would endanger the confidentiality of
proprietary manufacturing processes, place an "X" in the box provided and that information will be held
confidential.
Repeat sections as necessary to report all critical materials used and/or discharged. You may duplicate page 9
if more than three (3) parameters are reported, or additional forms can be obtained on request to:
Michigan Water Resources Commission
Act 293 Reports
P.O. Drawer M
Lansing, Michigan 48926
204
-------
FORM III — CRITICAL MATERIALS REPORT
(See Instructions on Facing Page and the Example on Page 14)
Copy Code
Number from
Mailing Label
8 ,C
Item A:
Parameter No.
i i i
Item B: Critical Material
Item C: Total Ibs./yr.
us used in plant:
1 =<101 Ibs.
2= 101-1,000 Ibs.
«_. 3= 1,001-10,000 Ibs.
One 4=10,0001-
100,000 Ibs.
5 = 100,001 -
1,000,000 Ibs.
6 =< 1,000,000 Ibs.
(14)
Item D: Total Ibs./yr.
discharged by plant
0 = 0 Ibs.
1 =<11 Ibs.
2 =11-100 Ibs.
One 3= 101-500 IbS.
4 = 501-1,000 Ibs.
5= 1,001-10,000 Ibs.
6= 10,001-
100,000 Ibs.
7 =< 100,000 Ibs.
(15)
Item E: Indicate the numbers of the outfalls reported on Form II which discharge this critical material:
16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47
Item F:
I I Check here if you want the information supplied in ITEM C to remain confidential as provided by
(48, Section 6b of Act 293 and Rule 235(4).
Copy Code
Number from
Mailing Label
Item A:
Parameter No.
8 ,C
Item B: Critical Material
Item C: Total Ibs./yr.
us used in plant:
1 = <101 Ibs.
2= '.01-1,000 Ibs.
_. 3 =1,001-10,000 Ibs.
One 4 = 10,0001 -
100,000 Ibs.
5 = 100,001 -
1,000,000 Ibs.
6 =< 1,000,000 Ibs.
(14)
Item D: Total Ibs./yr.
discharged by plant
0 = 0 Ibs.
1 =<11 Ibs.
c^,. 2 =11-100 Ibs.
One 3= 101-500 IbS.
4 = 501-1,000 Ibs.
5= 1,001-10,000 Ibs.
6= 10,001-
100,000 Ibs.
7 =< 100,000 Ibs.
(15)
Item E: Indicate the numbers of the outfalls reported on Form II which discharge this critical material:
cn en en en en n ED en n m CD CD CD n en a
16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47
Item F:
I I Check here if you want the information supplied in ITEM C to remain confidential as provided by
(48) Section 6b of Act 293 and Rule 235(4).
Copy Code
Number from
Mailing Label
Item A:
Parameter No.
8 ,C
J I
13
Item B: Critical Material
Item C: Total Ibs./yr.
us used in plant:
1 = <101 Ibs.
2= 101-1,000 Ibs.
3 =1,001-10,000 Ibs.
One 4 = 10,0001 -
100,000 Ibs.
5 = 100,001 -
1,000,000 Ibs.
6 =< 1,000,000 Ibs.
(14)
Item D: Total Ibs./yr.
discharged by plant
0 = 0 Ibs.
1 =<11 Ibs.
2= 11-100 Ibs.
101-500 Ibs.
4 =501-1,000 Ibs.
5= 1,001-10,000 Ibs.
6= 10.001-
100,000 Ibs.
7 =< 100,000 Ibs.
(15)
Circle
One o
Item E- Indicate the numbers of the outfalls reported on Form II which discharge this critical material:
mi czi cn en cn cn cn cn cm nnnncDczici]
1617 1819 2021 2223 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47
Item F:
I—I Check here if you want the information supplied in ITEM C to remain confidential as provided by
{48) Section 6b of Act 293 and Rule 235(4).
FOR ADDITIONAL CRITICAL MATERIALS MAKE COPIES OF THIS FORM OR REQUEST ADDITIONAL FORMS
205
-------
INSTRUCTIONS FOR FORM IV-A
Note — A separate section is required for each type of waste.
Enter the facility Identification Number from the upper left corner of the mailing label.
ITEM A—Briefly describe the source and general characteristics of your hauled wastewater. Example: plating
line wastes containing nickel and chrome plus acid bath overflow.
ITEM B — Enter volume that accumulates is one week.
ITEM C — Enter removal frequency
ITEM D — Enter brief description of storage container. Example: Vented rubber lined 2000 gallon steel tank.
ITEME—Describe overflow and spill containment if any. Example: 3foot earth dike 100 ft. in circumferance.
ITEM F — If applicable enter location.
ITEM G — Enter name and address.
INSTRUCTIONS FOR FORM IV-B
ITEM A—Copy the six digit code number from the upper left corner of the mai ling label where indicated (leave
blank if no code number appears on the mailing label). Next, enter your wastehauler license number in the box
provided.
ITEM C—If you use more than two sites to dispose of waste you may attach an additional sheet of paper with
their addresses.
Mailing Instructions: Fold the return mailing sheet (page 12) around all forms being returned. Be sure to write
in your return address and apply sufficient postage. Staple and mail.
206
-------
FORM IV-A — WASTEWATER REMOVED BY WASTEHAULERS
See Instructions on Facing Page
Copy Code Number
from Mailing Label
7,W,
1 1 1 1
8
A. Describe the source and general nature of the liquid wastes you have hauled to another site..
B. Aproximately what volume of this waste accumulates in one week? I i i i i I gallons. I I
9 13 14
C. How frequently is it removed? , ,
4L_IOther
D. Describe the storage container(s) you retain the wastes in.
E. Do you have provisions for containing accidental spills or overflows of this
material? LJYes |~|No
If yes describe. __
F. If you dispose of this waste yourself, indicate the disposal site..
G. If the waste is removed by someone other than yourself, give his name and address.
FORM IV-B — WASTEHAULERS REPORT FORM
(To be completed by haulers of liquid wastes only)
Copy Code Number
from Mailing Label
A. I I License Number
I
B. Do you own your own waste disposal site?
QYes QNO
C. Give the name of the owner and address of the site(s) where you dispose of the waste you haul.
D. On a separate sheet of paper prepare a list of names and addresses of commercial and industrial
establishments where you picked up any wastewater during 1973.
YOU MAY MAKE ADDITIONAL COPIES OF THIS FORM OR REQUEST ADDITIONAL FORMS
207
-------
Michigan Water Resources Commission
CRITICAL MATERIALS REGISTER
Published October 1,1973
I. INORGANIC MATERIALS
Antimony
Arsenic
Cadmium
Chromium
Copper
Cyanides
Lead
II. ORGANIC MATERIALS
Acrid ine
Acrolein
Aldrin
Ammonia
Amyl Acetate
Anilines (incl. Benzidines)
Benzaldehyde
Benzene (Solvent)
Benzyl Bromide
Beta propriolactone
Butyl Alcohol
Butyraldehydes
Butyric Acid
Carbon Disulfide
Chlorinated Benzene Compounds
Crotonaldehyde
Cumene
DDT
Dichloropropane
Dieldrin
Diethylbenzene
Endrin
Ethyl Acrylate
Heptachlor
Parameter
Number
95000
95001
95002
95003
95004
95014
95005
Parameter
Number
95017
95018
95067
95089
95052
95043
95021
95020
95022
95019
95053
95044
95054
95055
95045
95056
95057
95068
95023
95069
95024
95070
95058
95071
Mercury
Nickel
Selenium
Silver
Su If ides
Thallium
Zinc
Hexachlorobenzene (HCB)
Hexachlorobutadiene (HCBD)
Hydroquinone
Isoprene
Lactonitrile
Mesitylene
Mesityl Oxide
Napthol
Naphthenic Acid (Napthalene)
Nitrobenzenes
Phenolic compounds
Phenanthrene
Phthalates
Picramates (nitro-phenols)
Polychlorinated biphenyls (PCB's)
Pyridines
Quinoline
Quinone
Styrene
Tordon
Toxaphene
Vinyl Toluene
Xylenes
2-4-5 T (and its formulations)
Parameter
Number
95006
95007
95008
95009
95015
95010
95012
Parameter
Number
95040
95041
95027
95059
95028
95060
95029
95031
95032
95047
95048
95035
95049
95063
95039
95050
95036
95037
95061
95065
95072
95062
95064
95066
208
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EXAMPLES OF COMPLETED FORMS
Sample Problem: XVE Company is an electroplating firm located in Benton Harbor that has two wastewater
outfalls. One discharges directly to the St. Joseph River and the other discharges to a seepage lagoon on their
property. They have no wastewater hauled to another site. The following illustrations represent properly
completed forms they might have returned.
FORM I — GENERAL INFORMATION
J H ALL ol KV Mimw unu>r »^>> (Mote Smv* MM* nMrfrt .
<>-4~^ kvtwiL kfltflttn Uindivl ItiCTpl OA MAItiHC •*
FORM 111 — CRITICAL MATERIALS REPORT
. 7-M IQOfet
<*. IOI-UO«t
*. 101-IJMO*.
1- 1001-10000
• • IODOI -
2 . .Qi . \ DOS
mi lo
« • moni -
100 000
*• toaooi -
• • 10001-
100 000 «>
I • 009000*1
SOvck hrr •> M« IMM «»
S«i«» feat *« JW »
-------
HOW SURVEILLANCE FEES ARE CALCULATED
Surveillance Fees are determined by applying the following formula.
SURVEILLANCE FEE = ADMINISTRATIVE FEE + (VOLUME BASE FEE x SURVEY FACTOR).
I. Administrative Fee = $50.00
II. Volume Base Fee is determined from the total of the average daily discharges of all outfalls (based on
days when discharge occurs) as specified in Rule 237 - page 20.
This total volume excludes:
a. Discharges of waste to a sanitary sewer unless the discharge is likely to create injuries to the waters of
the State as specified in Rule 240.
b. Discharges of sanitary waste to a septic tank-tile field system, unless the discharge requires surveil-
lance by the Water Resources Commission.
III. The Survey Factor is determined for each outfall from the following subfactors which are weighted as
indicated.
a. Variability =
b. Dilution =
Outfall Maximum Daily Flow
Outfall Average Daily Flow
Outfall Average Daily Flow
(0.1) (7-day, 10-yr. drought flow)
c. Designated use of the receiving water1
d. Category I waste constituents, 2xN2
e. Category II waste constituents, 4xN2
f. Category III waste constituents, 8xN2
g. Critical material factor3
h. Latest rating of facility waste control4
i. Provisions for accident prevention
j. Number of outfalls, 2xN
k. Difficulty of waste survey
I. Intensity of area surveillance5
Minimum
Value
1
4
0
0
0
0
0
0
0
0
0
Maximum
Value
5
10
20
None
None
None
10
15
5
None
10
10
'Designated uses are as follows: Domestic water supply — 20 points; Coldwater fish intolerant species — 20 points; Recreation
total body contact — 16 points; Warm water fish intolerant species — 12 points; Industrial water supply — 8 points; Commercial
— 4 points.
'Categories of typical waste constituents are listed on page 17.
'Critical materials are listed on page 13.
'Ratings are as follows: Adequate waste control — 0 points; Inadequate waste control — 15 points.
'Areas designated for intensive surveillance are listed on page 18.
An Outfall Survey Factor for each outfall is determined by totaling the points assigned each subfactor and
dividing the total by 10. No outfall survey factor will be less than 1.0.
An Adjusted Survey Factor for each outfall is determined by multiplying the outfall survey factor by the ratio of
outfall Average Daily Flow/Total Plant Average Daily Flow.
A Proportional Survey Factor for the entire facility is determined by totaling the adjusted survey factors.
The surveillance fee is then calculated by multiplying the Volume Base Fee by the Proportional Survey Factor
and adding the Administrative Fee of $50.
An adjustment factor from Rule 236(2) will be used to adjust the total of all fees to the legislative appropriation.
210
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SURVEILLANCE FEE SAMPLE CALCULATION
This calculation is based on information obtained from the completed
sample forms on page 14.
Outfall No. 1: Non-contact cooling water to river .130 MGD
Outfall No. 2: Plating wastes to seepage/Lagoon .012 MGD
Total Average Daily Flow .142 MGD
Surveillance fee = Administrative fee + (volume base fee x survey factor)
I Administrative Fee = $50.00
II Volume base fee - $80.00 for 142,000 gallons per day (from rules page 20)
III Survey Factor Outfall No. 1 Outfall No. 2
A. Variability (Max. Flow/Avg. Daily Flow) 1.3 1.75
B. Dilution (Avg. Daily Flow/Drought Flow x 0.1) 0.0 0.0
C. Designated Use No. 1 = Intolerant Fish-Coldwater Species 12.0
No. 2 = Water Supply - Domestic 20.0
D. Waste Constituents No 1 No. 2 2.0 2.0
Category I (N x 2) Temp. pH 2.0 2.0
Category II (N x 4) Oil Sulfate 4.0 4.0
Category III (N x 8) Cr+6, Cu 0.0 16.0
E. Critical Materials Present 0.0 10.0
F. Annual Rating 0.0 0.0
G. Accident Prevention Provisions 0.0 0.0
H. Number of Outfalls (N x 2) 4.0 4.0
I. Survey Difficulty 4.0 1.0
J. Extent of Area Surveillance 10.0 0.0
TOTAL 37.3 58.75
Proportional Survey Factor = [3.73 x (.130/.142)] + [5.88 x (.0127.142)]
= (3.73 x .91) + (5.88 x .08)
= 3.39 + 0.47
= 3.86
Fee = $50. + (80 x 3.86)
= $359.00
Note: The fee may be adjusted upward or downward so that the sum of all fees equals the legislative appropriation.
211
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TYPICAL WASTE CONSTITUENTS
Category I
01. Temperature
02. pH
03. Conductivity
04. Color
05. Turbidity
Category II
10. Alkalinity
11. Hardness
12. Acidity
13. DO
14 BOD
15. Ammonia
16. Nitrate
17. Soluble Ortho-PO4
-Major Ions-
IB. Sodium
19. Potassium
20. Magnesium
21. Calcium
22. Chloride
23. Sulfate
24. Sulfide
-Solids-
25. Total Solids
26. Suspended Solids
27. Settleable Solids
28. Dissolved Solids
29. Susp. Volatile Solids
-Radioactivity-
30. Alpha Radiation
31. Beta Radiation
32. Gamma Radiation
-Minor lons-
33. Bromide
34. Sulfite
35. Boron
36. Silicon
37. Nitrite
38. Oil and Grease
39. Organic Extractibles
40. Anionic Surfactants
Category III
50. Total Phosphorus
51. Kjeldahl Nitrogen
52. Phenol
53. Cyanide
54. TOC
55. COD
-Bacteria-
SB. Total Coliform
57. Fecal Coliform
58. Fecal Streptococcus
-Heavy Metals-
59. Cr+e
60. Cu
61. Zn
62. Cd
63. Pb
64. Hg
65. Se
66. Ag
67. Fe
68. Mn
69. Ni
70. Al
71. Sb
72. Ba
73. Be
74. Co
75. Mo
76. Tl
77. Sn
78. Ti
79. Cr*3
80. Arsenic
81. Fluoride
82. Specific
Radionuclides
83. Pesticides, PCB's,
Chlorinated
Hydrocarbons
Typical waste constituents are categorized by the relative expepse of performing the analyses and sample
collection requirements. Changes and additions may be made to this list.
212
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STATE OF MICHIGAN
Sections 6b and 13 of
Act 293, Public Acts of 1972
AN ACT to amend the title and sections 6,7,8 and 10 of Act No. 245 of the Public Acts of 1929, entitled as
amended
Sec. 6b. Every person, doing business within this state discharging waste water to the waters of the state
or to any sewer system, which contains wastes in addition to sanitary sewage shall file annually reports on
forms provided by the commission setting forth the nature of the enterprise, a list of materials used in and
incidental to its manufacturing processes and including by-products and waste products, which appear on a
register of critical materials as compiled by the commission with the advice of an advisory committee of
environmental specialists designated by the commission and the estimated annual total number of gallons of
waste water including but not limited to process and cooling water to be discharged to the waters of the state
or to any sewer system. The information shall be used by the commission only for purposes of water pollution
control. The commission shall provide proper and adequate facilities and procedures to safeguard the
confidentiality of manufacturing proprietary processes except that confidentiality shall not extend to waste
products discharged to the waters of the state. Operations of a business or industry which violate this section
may be enjoined on petition of the water resources commission to a court of proper jurisdiction. The
commission shall promulgate rules as it deems necessary to effectuate the administration of this section,
including where necessary to meet special circumstances, reporting more frequently than annually.
Sec 13. (a) In order to provide for increased surveillance, investigation, monitoring and other activities
necessary to provide greater protection of the quality of waters of this state, an annual surveillance fee is
payable by a person, company, corporation, but not a municipality, discharging water borne waste directly or
indirectly into any waters of the state from any manufacturing facility; or from any other commercial
establishment which may generate a discharge inconsistent with the protection of waters of the state. The fees
shall be for the cost of surveillance of industrial and commercial discharges and receiving waters. The cost of
necessary surveillance of municipal discharges shall not be financed from revenues so derived but may be
provided otherwise by law. In any year, the total surveillance fees assessed on discharges shall not exceed the
total amount appropriated to the commission and other appropriate state agencies for the surveillance,
monitoring and related activities necessary to adequately assess the impact of commercial and industrial
wastewater discharges on waters of the state.
(b) On or before February 1 of each year the commission shall inform each such discharger and the
state treasurer of the annual surveillance fee due, from each plant location or major manufacturing com-
ponent and commercial enterprise as provided by rules.
(c) On or before March 1 of each year a discharger shall pay to the state treasurer the amount of
surveillance fee due who shall deposit it in the general fund of the state. The treasurer shall report the
total annual amount collected to the governor and the legislature on or before April 15 of each year.
(d) The annual surveillance fee shall be based on an administrative fee of $50.00 and an additional
fee set by the commission. The additional fee shall be determined on a graduated basis using a formula
developed by rules of the commission. The formula shall include the volume and nature of discharge,
number of discharge locations, variability of flow volume, stream characteristics, laboratory tests required,
area surveillance, difficulty of survey setup, history of compliance and provisions for compliance and
such other factors as the commission deems appropriate to establish the total annual surveillance fee.
The maximum annual fee assessed shall not exceed $9,000.00 per manufacturing location. Discharges
into a municipal sewerage system shall be assessed only the $50.00 administrative fee unless such dis-
charge after municipal treatment is or may become injurious to the waters of the state as set forth in
section 6 in which event the assessment will be based upon the same considerations as if the discharge
after treatment were being discharged by the manufacturing facility or commercial establishment directly
into the waters of the state. The commission shall promulgate such rules as are necessary to implement
this section.
Note: Copies of Act No. 245, P.A. 1929 are available from the Michigan Water Resources Commission
upon request.
213
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DEPARTMENT OF NATURAL RESOUCES
WATER RESOURCES COMMISSION
GENERAL RULES
Filed with Secretary ol State.
These rules tiki effect 15 days after ikng MIA the Secretary at Statt
(By authority conlemd on tin water resources comrrtssion By sections 2. 6b and 13 ot Act No. 2*5 ol
the Public Am of 1929. as amended, bang section 323.2. 323 66 and 323.13 ol Die ttchigan
CompUed Laws.)
fart K Waatemer Report** art SumUlmce Fen
R 323.1231: Detrttons A to C.
Rule231. (1) ~Aa"rneansAdNo.24SotlnePubicactsall929.asaniended.beiniiections
323.1 .to 323.13 of the Compiled Laws ol 1948. and the act which these rules implement.
(2) "Advisory comrnttee" means the group ot ennronmenal specatsts crated under section 60
ot the act.
(3) °1^nir5sion"rnaaratliewaterresourcescommissiOTOfthedepirtniemclnahjralresourcts.
(4) "Critical materials" means organic and inorganic substances, elements or compounds which
an Isted in a regrster compiled by the commssion.
R 323.1232: Definitions H to W.
Rule 232. (1) "Haurdous mjttnalj" means oil jnduaincludno but not Imittd ID petrotajm.
gasoine. fuel oil. grease, sludge, oil refuse, ori mxed wan waste, sodium chloride and calcium
chloride, in solid or iquid form.
(2) "Legislative appropriations conversion factor' means a factor which is used to adjust surveil-
lance fees upward or downward, so that the total of annual surveillance lees will equal the Legislative
appropriation designated tor industrial and commercial surveillance activities for a (seal year.
(3) "Person" means an individual, partnership, assocaflon. corporation or any commercial or
industrial entity doing business in the state which discharges wastcwaters but does not include a
municipal corporation, or a governmental unit or agency thereof.
(4) "Sewer system" means enclosed Dices and conduits which conduct wastewater to a waste-
water treatment faqlty and are owned or operated by county, metropolitan rtstnct. city, village or other
pubic body created by or pursuant to state law.
(5) "Wastewater" means both iquid waste discharges resulting from industrial or commercial
processes, including cooling and condensing waters, and samnry sewage from industrial or commer-
cial faculties.
(6) "Waters of the sate" means surface and underground waters including lakes, rivers, streams.
opendrainage conduits and an other watercourses and waters within the state and also the Great Lakes
bordering thereon, except non-potable underground waters ubbed incidental to gas and oil well
operations that are subject to permit and surveillance under Act No. 61 of the Public Acts of 1939. as
amended, being Sections 319.1 to 319.27 of the Michigan Compiled Laws.
R 323.1233: Register of critical materials.
Rule 233. A register of critical materials as initially compiled by the commission shall be pubished
during the month of October 1971 by 1 of the methods prescribed by section 42 ot Act No. 306 of the
Pubic Acts of 1969. being section 24.242 of the Michigan Compiled Laws. Copies shall be made
available to the public upon request. Die register may be revised annually by the commission upon
receipt ot advice from the advisory committee. A revision shall be pubf shed in the same manryrr as the
initial register and Shan become effective only on the next annual anniversary date thereof.
R323.1234: Wastewater reports, contents and forms.
Rule 234. (1) A report shall be lied under section 6b and section 13 of the act by every person
doing business within this state who either discharges wastewater to the waters of the state, or who
discharges wastewater en addition to sanitary sewage to a sewer system. The report shall be on forms
provided by the commission and shall set forth in detail:
(a) Name, location and nature of the enterprise or operation.
(b) Normal schedule ot hours and days ot operation of the enterprise.
(C) AfairestirrutedtnearuiuaJtotalriinioeroloallorisotwastewatefwrucharetobedrschargedto
the waters of the state or to any sewer system.
(d) Name of the watercourse or waters into which the wastewaters are discharged.
(e) Adescriptionoteachpointat which wastewaters enter the waters ot the state, a sewer system or
are disposed of by percolation underground.
(I) A 1st of those materials used in and incidental to operation of the business or manufacturing
enterprise, which appear on the register of cnlical materials.
(g) A 1st of those critical materials fsted on the register, including the annual amounts therof,
which are to be disposed of as waste products or by-products to the waters ot the state, or any sewer
system.
(h) Other information as needed for implementation of sections 6b and 13 of the act.
(2) Not later than October 1 of each year of the year tor when reports are due. the commission shall
mail a standantzed reporting lorm and a register ot critical materials to each person affected by section
6b and these rules.
R 323.1235. Waslewater reports, fling and confidentiality.
Rule 235. (1) A wastewater report shall be tied annually with the comrrassion not later than
December 15 df each year. The reporting period is the calendar year in which the report is (led.
(2) An interim report shall be filed promptly when:
(a) The use of critical materials not previously reported is commenced during any year, or
(b) The amounts of critical materials used or discharged increase sufficiently to move the level of
usage into a higher category on the annual critical materials report.
(3) A person doing business in more than 1 location shall file a separate report for each location.
(4) The information on the critical materials isledman annual report as being used m and incidental
to manutacturing operations shall be available to the puskc unless the release thereof would, in the
opinion of the commission after petition by the person ting the report, fail to protect the confidentaaity
Ol proprietary manufacturing processes.
R 323 1236 Surveillance fees calculation
Rule 236 (t) The annual surveillance lee Shan be calculated by the Wiowingtofiuta annual fee
* $50 00 iC-Tinsfjue l«»(grafluatM volume base lev « survey (actor)
(2) A legislative aoo'opr.atio'* coders x (actor nay te applied by !r« commssion to an annual
survallance tees for the fiscal year to adjust f-e total amount ot lees to be recaved to the legislative
appropriation designated lor industrial and commercial survMlance acN.:*s for tnat Itscal year
(3) The maximum tee for each ndustnal or commercial location shall be $9.000.00.
R 323.1237: Volume base lees.
Rule 237. The volume base fee snarl be on a graduated basis as follows:
Average Waswwater Discharge Volume Based
on Days When Discharge Occurs
(lUlon Gator* Per Day) Volume Be* Fee
IMS than .002 s 10.00
.002 but less than .003 15 00
.003 but less than .005 20 00
.005 but less than .010 25.00
.010 but less than .025 30.00
.025 but less than .050 40.00
.050 *ut less than .075 50.00
.075 but less than .1 65.00
.1 but less than .2 80.00
2 but less than .3 100.00
.3 M less than .5 125.00
.S but less than 1.0 175.00
1.0 but less than 2.5 275.00
2.5 but less than 5.0 400.00
5.0 but less than 10.0 600.00
10.0 but less than 25.0 800.00
25.0 but less than 100.0 1000.00
100.0 and over 1200.00
R 373 1238: Survey (actor.
Rule 238. (1) Determination of the survey factor used in calculation of a surveillance tee shaO be
based upon the tallowing subfadors:
(a) The flow variabilty of waste effluent flow.
(b) The volume ol the waste effluent flow related to flow conditions in the receiving waters.
(c) The waste effluent as related to the critical nature of the receiving water as indicated by its
protected designated uses (or public water supplies, cold water intolerant fish, total body contact, warm
water intolerant fan. industrial water use and commercial water use.
(d) The waste constituents to be monitored. This factor shall include the number of constituents to
be monitored in adtftion to the relative costs of collection and analysis.
(e) The frequency of surveillance required as related to the presence of critical materials.
(f) The frequency of surveillance as related to the recent history of taaity performance.
(g) The facility's provisions for the handing and containment ot hazardous and cntical materials.
(h) The number ol locations at which wastewater is discharged from the tacitly.
(i) The difficulty of survey setup including but not limited to the physical and geographical problems
encountered in surveillance.
0) The amount of surveillance to be conducted in the area where the wastewater is discharged.
12) The survey (actor shall not be less than 1.0.
R 323.1239: Contested fees.
Rule 239. A person who contests a fee established by the commission shall be afforded opportunity
for a hearing thereon in accordance with Act No. 306 ot the Public Acts d 1969. as amended, being
sections 24.201 to 24.315 ol the Compiled Laws of 1948. and the commission rules of procedure.
R 323.1240: Notices of fees due.
Rule 240. On or before February 1 of each year, the commission shall notify each person owing a
' surveillance fee. of the amount thereof which is due. The notice snail set forth the administrative lee and
the calculations used in establishing the total tee due. II an assessment s added to the administrative fee
for wastewater discharges to a sewer system, the notice shall speedy the substances in me waste which
are Ikely to create injuries to the waters of the state after the treatment provided by the municipakty or
other government unit.
R 323.1241: Exemptions from surveillance lees.
Rule 241. A person whose wastewaterrjschargesarelesslhan2.000gallonsperdayilniaceto the
ground, or are less than 10.000 gallons per day if made to a sewer system, or consist only ol sanitary
sewage discharged to a sewer system, is exempt tram payment of the annual surveillance fee on such
discharges unless, in the opinion of the commission, they require surveillance by the state.
R323.1242
Rule 242. (1) A person who fails to tile timely an annual or interim report, falsifies or fails to
provide any information required by Rule 234. after being notified by certified mail thereof by the
commission, shall have 10 days, after the date of mailing thereof, in which to Me the report or corrected
or supplemental information. Upon failure to comply, the commission may notify trie person of the
alleged violation and set a date tor a hearing thereon to show cause why operation ot me business or
industry should i\pl be enjoined Alter the hearing, the commission shall determine il a violation exists
and the action to be taken thereon.
(2) Rule 3 with reference to appearances and Rule 6 with reference to the designation ot a heanngs
officer, ot the General Rules of the commission, apply to a heanng held under this rule.
(3) A person who does not pay the surveillance tee in tut on or before March 1 of each year.
commenting March 1.1972. is subject lo penalties specified m section 10 ol the act.
214
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Appendix D
BEVERAGE CONTAINERS
Note: ORS 459.810 to 459.890 and subsections
(5) and (6) of 459.992 become operative on October
1,1972.
459.810 Definitions for ORS 459.810 to
459.890. As used in ORS 459.810 to 459.890
and subsections (5) and (6) of ORS 459.992,
unless the context requires otherwise:
(1) "Beverage" means beer or other malt
beverages and mineral waters, soda water
and similar carbonated soft drinks in liquid
form and intended for human consumption.
(2) "Beverage container" means the in-
dividual, separate, sealed glass, metal or plas-
tic bottle, can, jar or carton containing a
beverage.
(3) "Commission" means the Oregon
Liquor Control Commission.
(4) "Consumer" means every person who
purchases a beverage in a beverage container
for use or consumption.
(5) "Dealer" means every person in this
state who engages in the sale of beverages in
beverage containers to a consumer, or means
a redemption center certified under ORS
459.880.
(6) "Distributor" means every person
who engages in the sale of beverages in bever-
age containers to a dealer in this state includ-
ing any manufacturer who engages in such
sales.
(7) "In this state" means within the ex-
terior limits of the State of Oregon and in-
cludes all territory within these limits owned
by or ceded to the United States of America.
(8) "Manufacturer" means every person
bottling, canning or otherwise filling bever-
age containers for sale to distributors or
dealers.
(9) "Place of business of a dealer" means
the location at which a dealer sells or offers
for sale beverages in beverage containers to
consumers.
(10) "Use or consumption" includes the
exercise of any right or power over a beverage
incident to the ownership thereof, other than
the sale or the keeping or retention of a bev-
erage for the purposes of sale.
[1971 C.745 §1J
459.820 Refund value required. (1) Ex-
cept as provided in subsection (2) of this sec-
tion, every beverage container sold or offered
Oregon's Bottle Law
for sale in this state shall have a refund value
of not less than five, cents.
(2) Every beverage container certified as
provided in ORS 459.860, sold or offered for
sale in this state, shall have a refund value of
not less than two cents.
[1971 C.745 §2]
459.830 Practices required of dealers
and distributors. Except as provided in ORS
459.840:
(1) A dealer shall not refuse to accept
from a consumer any empty beverage con-
tainers of the kind, size and brand sold by the
dealer, or refuse to pay to the consumer the
refund value of a beverage container as es-
tablished by ORS 459.820.
(2) A distributor shall not refuse to ac-
cept from a dealer any. empty beverage con-
tainers of the kind, size and brand sold by the
distributor, or refuse to pay the dealer the
refund value of a beverage container as es-
tablished by ORS 459.820.
[1971 C.74S §3]
459.840 When dealer or distributor au-
thorized to refuse to accept or pay refund in
certain cases. (1) A dealer may refuse to ac-
cept from a consumer, and a distributor may
refuse to accept from a dealer any empty bev-
erage container which does not state thereon
a refund value as established by ORS 459.820.
(2) A dealer may refuse to accept and to
pay the refund value of empty beverage con-
tainers if the place of business of the dealer
and the kind and brand of empty beverage
containers are included in an order of the com-
mission approving a redemption center under
ORS 459.880.
[1971 c.745 §4J
459.850 Indication of refund value re-
quired; exception; certain metal containers
prohibited. (1) Every beverage container sold
or offered for sale in this state by a dealer
shall clearly indicate by embossing or by a
stamp, or by a label or other method securely
affixed to the beverage container, the refund
value of the container.
(2) Subsection (1) of this section shall
not apply to glass beverage containers de-
signed for beverages having a brand name
permanently marked thereon which, on Oc-
tober 1, 1972, had a refund value of not less
than five cents.
(3) No person shall sell or offer for sale
at retail in this state any metal beverage con-
tainer so designed and constructed that a part
215
-------
of the container is detachable in opening the
container without the aid of a can opener.
[1971 c.745 §5]
459.860 Certification of containers as re-
usable by more than one manufacturer. (1)
To promote the use in this state of reusable
beverage containers of uniform design, and to
facilitate the return of containers to manu-
facturers for reuse as a beverage container,
the commission shall certify beverage con-
tainers which satisfy the requirements of this
section.
(2) A beverage container shall be certi-
fied if:
(a) It is reusable as a beverage container
by more than one manufacturer in the or-
dinary course of business; and
(b) More than one manufacturer will in
the ordinary course of business accept the
beverage container for reuse as a beverage
container and pay the refund value of the con-
tainer.
(3) A beverage container shall not be cer-
tified under this section if by reason of its
shape or design, or by reason of words or sym-
bols permanently inscribed thereon, whether
by engraving, embossing, painting or other
permanent method, it is reusable as a bever-
age container in the ordinary course of busi-
ness only by a manufacturer of a beverage
sold under a specific brand name.
[1971 c.745 §6]
459.870 Decision upon certification ap-
plications; review and withdrawal of certifi-
cations granted. (1) Unless an application for
certification under ORS 459.860 is denied by
the commission within 60 days after the fil-
ing of the application, the beverage container
shall be deemed certified.
(2) The commission may review at any
time certification of a beverage container. If
after such review, with written notice and
hearing afforded to the person who filed
the application for certification under ORS
459.860, the commission determines the con-
tainer is no longer qualified for certification,
it shall withdraw certification.
(3) Withdrawal of certification shall be
effective not less than 30 days after written
notice to the person who filed the application
for certification under ORS 459.860 and to
the manufacturers referred to hi subsection
(2) of ORS 459.860.
[1971 c.745 §7]
459.880 Redemption centers. (1) To fa-
cilitate the return of empty beverage con-
tainers and to serve dealers of beverages, any
person may establish a redemption center,
subject to the approval of the Oregon Liquor
Control Commission, at which consumers may
return empty beverage containers and receive
payment of the refund value of such beverage
containers.
(2) Application for approval of a re-
demption center shall be filed with the com-
mission. The application shall state the name
and address of the person responsible for the
establishment and operation of the redemp-
tion center, the kind and brand names of the
beverage containers which will be accepted at
the redemption center and the names and ad-
dresses of the dealers to be served by the
redemption center. The application shall in-
clude such additional information as the com-
mission may require.
(3) The commission shall approve a re-
demption center if it finds the redemption
center will provide a convenient service to
consumers for the return of empty beverage
containers. The order of the commission ap-
proving a redemption center shall state the
dealers to be served by the redemption center
and the kind and brand names of empty bev-
erage containers which the redemption cen-
ter must accept. The order may contain such
other provisions to insure the redemption
center will provide a convenient service to the
public as the commission may determine.
(4) The commission may review at any
time approval of a redemption center. After
written notice to the person responsible for
the establishment and operation of the re-
demption center, and to the dealers served by
the redemption center, the commission may,
after hearing, withdraw approval of a re-
demption center if the commission finds there
has not been compliance with its order ap-
proving the redemption center, or if the re-
demption center no longer provides a con-
venient service to the public.
[1971 c.745 §8]
459.890 Certification and withdrawal
procedures. The procedures for certification
or withdrawal provided for in ORS 459.860 to
459.880 shall be in accordance with ORS
chapter 183.
[1971 c.745 §9]
PENALTIES
459.990 [1967 c.428 §16; 1969 c.593 §48; subsec-
tion (2) enacted as 1969 c.509 §6; repealed by 1971
c.648 §33]
216
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459.992 Penalties. (1) The following are
punishable, upon conviction, by a fine of not
more than $1,000 or by imprisonment in the
county jail for not more than one year, or
both:
(a) Violation of regulations or ordinances
adopted under ORS 459.005 to 459.105 and
459.205 to 459.285.
(b) Violation of ORS 459.205.
(c) Violation of an ordinance enacted un-
der ORS 459.120.
(2) Each day a violation referred to by
subsection (1) of this section continues con-
stitutes a separate offense. Such separate
offenses may be joined in one indictment or
complaint or information in several counts.
(3) Penalties provided in this section are
in addition to and not hi lieu of any other
remedy specified hi ORS 459.005 to 459.105,
459.120 to 459.150 or 459.205 to 459.285.
(4) Violation of ORS 459.510 or of any
rule, regulation or order entered or adopted
pursuant to ORS 453.635, 459.410 to 459.690,
634.250 and 634.350 is punishable, upon con-
viction, by a fine of not more than $3,000 or
by imprisonment in the county jail for not
more than one year, or by both. Each day of
violation shall be deemed a separate offense.
(5) Any person who violates ORS
459.820, 459.830 or 459.850 shall be punished,
upon conviction, as for a misdemeanor.
(6) In addition to the penalty prescribed
by subsection (5) of this section, the commis-
sion or the State Department of Agriculture
may revoke or suspend the license of any per-
son who wilfully violates ORS 459.820,459.830
or 459.850, who is required by ORS chapter
471 or 635, respectively, to have a license.
[Subsections (1), (2) and (3) enacted as 1971 c.648
§20; subsection (4) enacted as 1971 c.699 §20; subsec-
tions (5) and (6) enacted as 1971 c.745 §10]
Note: Subsections (5) and (6) of ORS 459.992
become operative October 1, 1972.
CERTIFICATE OF LEGISLATIVE COUNSEL
Pursuant to ORS 173.170, I, Robert W. Lundy, Legislative Counsel, do hereby certify that I have
compared each section printed in this chapter with the original section in the enrolled bill, and
that* the sections in this chapter are correct copies of the enrolled sections, with the exception
of the changes in form permitted by ORS 173.160 and other changes specifically authorized by law.
Done at Salem, Oregon, Robert W. Lundy
on December 1,1971. Legislative Counsel
217
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Appendix E
AMERICAN CAN COMPANY v. OREGON LIQUOR CON-
TROL COMMISSION, No. 75567 (Ct. App. Ore. Dec. 17, 1973)
The Oregon Court of Appeals upholds the constitutionality of
the state's "bottle bill," finding that it neither places an undue
burden on interstate commerce nor violates the due process rights
of bottle and beverage manufacturers. The legislation is a permissi-
ble exercise of the state's police power, representing a decision by
the legislature that the benefits to the state in reduced litter and
solid waste disposal problems outweigh the economic harm to the
bottle and beverage industries. The Federal Solid Waste Disposal
Act of 1970 expressly disclaimed federal pre-emption of the field of
solid waste disposal. The law is not, as plaintiffs contend, rendered
invalid by the possibility that alternative means, less likely to affect
interstate commerce, might be employed, such as the "Clean Up
America" campaign and the improved litter collecting machines
which plaintiffs predict will be developed. The statute is not a pro-
tectionist attempt to discriminate against out-of-state industry, nor
is the right to sell non-returnable bottles so fundamental as to re-
quire a stepped-up standard of review under the Equal Protection
Clause. For the opinion of the court below, see 2 ELR 20643. See
also Comment, Oregon's "Bottle Bill"Survives Challenges, Produces
Results, 3 ELR 10112 (July 1973).
Counsel for Plaintiffs
George L. Wagner
Dezendorf, Spears, Lubersky & Campbell
Eighth Floor, Pacific Building
520 S.W. Yamhill
Portland, Oregon 97204
C. Lee Cook
Chadwell, Kayser, Ruggles, McGee, Hastings & McKinney
135 South La Salle Street
Chicago, Illinois 60603
Counsel for Intervenor-Plaintiffs Northwestern Glass Co., Owens-
Illinois, Inc., Anchor Hocking Corp., Glass Containers Corp., and
Brockway Glass Co.
Phillip B. Kurland
U. of Chicago Law School
1111 E. 60th Street
Chicago, Illinois 60637
Fredrick A. Yerke
Miller, Anderson, Nash, Yerke & Wiener
Twelfth Floor, American Bank Building
621 S.W. Morrison
Portland, Oregon 97205
Fred E. Fuller
William W. Sadd
Fuller, Henry, Hodge & Snyder
800 Owens-Illinois Building
405 Madison Avenue
Toledo, Ohio 43604
Alexander M. Bickel
Yale University Law School
New Haven, Connecticut 06520
Gerald Gunther
Stanford University Law School
Stanford, California 90680
Counsel for Defendants
Lee Johnson
Attorney General
John W. Osburn
Solicitor General
John B. Leahy
Asst. Attorney General
State Office Building
Salem, Oregon 97310
Counsel for Amici Curiae Natural Resources Defense Council, Inc.
and Peoples' Lobby Against Non-Returnables
John E. Bryson
Natural Resources Defense Council, Inc.
664 Hamilton Avenue
Palo Alto, California 94301
Tanzer, J.
This is an appeal from a circuit court decree declaring that
Oregon's so-called bottle bill, ORS 459.810-459.890, is valid and
denying plaintiffs' and intervenors' application for injunctive relief
against the enforcement of the law. Plaintiffs are (a) manufacturers
of cans who supply the beer and soft drink industries, (b) brewers
who brew and package beer in California and Arizona which is
shipped to and sold in Oregon, (c) out-of-state soft drink canners
218
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who can soft drinks for Oregon bottlers for resale here, (d) soft
drink companies who market their products in Oregon, and (e) the
Oregon Soft Drink Association. Intervenors are five glass con-
tainer manufacturers who supply the beer and soft drink industries.
(The term "plaintiffs" will be used in this opinion to include inter-
venors unless it is specified otherwise.) The defendants include (as
parties responsible for administering the statute) the Oregon Liquor
Control Commission, its commissioners and administrator, the
State Department of Agriculture and its director, and the State of
Oregon.
The bottle bill, enacted by the Oregon legislature in 1971, be-
came effective on October 1, 1972. The statute's principal provi-
sions are as follows:
1. Every retailer of the covered beverages (beer or carbonated
beverages) in Oregon is required to "accept from a consumer any
empty beverage containers of the kind, common size and brand
sold by the dealer" and to pay the consumer the statutory "refund
value" of the container. ORS 459.830 (1). The "refund value" is re-
quired to be indicated on every beverage container "sold or offered
for sale in this state by the dealer." ORS 459.850.
2. A distributor must similarly accept empty containers from a
dealer for the "refund value." ORS 459.830 (2). A distributor is
defined as a person, including a manufacturer, "who engages in the
sale of beverages in beverage containers to a dealer in this state "
ORS 459.810 (6).
3. Metal beverage containers, a part of which is wholly
detachable in opening without a can opener ("pull top" cans), may
not be sold at retail in Oregon. ORS 459.850 (3).
4. A reduced "refund value" may be administratively set for a
beverage container which is acceptable to more than one manufac-
turer for re-use in the ordinary course of business. ORS 459.860.
This reduced "refund value" has been set in the amount of two
cents for such "certified" containers. ORS 459.820 (2).
The primary legislative purpose of the bottle bill is to cause
bottlers of carbonated soft drinks and brewers to package their pro-
ducts for distribution in Oregon in returnable, multiple-use deposit
bottles toward the goals of reducing litter and solid waste in Oregon
and reducing the injuries to people and animals due to discarded
"pull tops."
As bases for attacking the validity of the statute, plaintiffs in-
voke the Equal Protection1 and Due Process' Clauses of the Four-
teenth Amendment to the United States Constitution, and the
Commerce Clause, art. 1, §8, clause 3 of the United States Constitu-
tion.3 In addition, plaintiffs cite various provisions of the Oregon
Constitution.4
One of plaintiffs1 main objectives at trial was to show that the
bottle bill would have an effect not only upon manufacturers of bot-
tles and cans, but also upon an entire distribution chain including
brewers, soft drink bottlers and canners, beer wholesalers, retailers
and, ultimately, consumers. The evidence in this regard demon-
strated that the consumption of malt beverages and soft drinks had
increased greatly in the United States in recent years, and that a
large part of this increase could be attributed to the use of conve-
nient "one-way" packages, including both cans and nonreturnable
bottles. Plaintiffs assert that non-returnable containers are essential
to the existence of national and regional beer markets, and that
non-returnable containers are also essential to the continued exis-
1. "... nor (shall any Slatel deny lo any person within its jurisdiction the equal pro-
tection of the laws."
2. "... nor shall any Stale deprive any person of life, liberty, or property, without
due process of law ..."
3. "The Congress shall have Power... To regulate Commerce with foreign Na-
tions, and among the several Stales —"
4. Plaintiffs and inlcrvenors rely upon a number of provisions of the Oregon Con-
stitution in support of their position:
Art. 1, §10, guarantees every person "remedy by due course of law
for injury done him in his person, property, or reputation."
Art. I, $18, provides that "Iplrivate property shall not be taken for
public use ... without just compensation —"
Art. I, 820, forbids any law "granting 10 any citi/.cn or class of
citizens privileges, or immunities, which, upon the same lerms, shall not
cqu-illy belong lo nil riti/cns."
tence of soft drink enterprises. The non-returnable containers were
shown to have provided economies in the packaging and distribu-
tion of soft drinks and beer by eliminating the cost of shipping the
containers both ways, thus causing an increase in feasible shipping
distances and enlarging the market each manufacturer could cover.
Among the effects of the bottle bill, plaintiffs' witnesses predicted,
would be a substantial reduction in Oregon sales of soft drinks
packaged outside Oregon, and impairment of the ability of the dis-
tant brewers to compete in the Oregon market. The bottle bill
would necessitate substantial changes in the structure of the indus-
tries involved in the manufacturing and merchandising of beer and
soft drinks.
Substantial portions of plaintiffs' evidence was directed to the
extent of the bottle bill's economic impact upon the specific indi-
vidual industries represented by the plaintiffs. Summarized, this
evidence (which was uncontradicted) predicted the following im-
pact upon the various industries:
1. Spokesmen of the three plaintiff soft drink canners
testified that each of their companies would be hurt by the
bottle bill because the statute would substantially eliminate
soft drink cans from the Oregon market. One witness, the
president of an Oregon canning company, predicted that
the statute would put his company out of business. Repre-
sentatives of the two out-of-state companies, while not pre-
dicting complete ruin, predicted that they would suffer
substantial economic loss.
2. Representatives of the plaintiff metal container
companies testified that beer and soft drink containers
represented a substantial percentage of their total metal
container production On the case of one firm, the percen-
tage was 100 percent), and that the Oregon market was a sig-
nificant outlet for their products. Some of the companies
would be forced to eliminate portions of their operations be-
cause of the statute, it was predicted, and each of the repre-
sentatives stated the opinion that nationwide enactment of
laws similar to the bottle bill would severely damage his
business. In addition, the can companies' spokesmen
testified that the bottle bill's ban on pull tops would hurt
that aspect of their businesses too.
3. It was predicted that, because of the changes in the
structure of the industries which would be mandated by the
bottle bill, the Oregon sales of the plaintiff brewers would
be reduced and that the price of beer would have to rise
when the statute went into effect. Similarly, because of the
changes which would be necessary in the soft drink indus-
try, it was predicted that the size and growth of the Oregon
soft drink market would be substantially reduced.
4. Representatives of intervenor glass companies
(which are capable of manufacturing both returnable and
non-returnable bottles) testified that they will lose a subs-
tantial volume of sales because the bottle bill encourages
multiple use of each bottle. Each time a bottle is refilled,
plaintiffs will have lost a potential sale of a new bottle. The
evidence indicated that the extent of loss due to the Oregon
statute would be significant, and if such statutes should be
passed in other states, the effect would be multiplied.
Finally, evidence was introduced by plaintiffs which was
designed to (a) minimize the predicted effectiveness of the bottle bill
toward the statute's purposes of elimination of litter and reduction
of glass and metal refuse in the solid waste stream; (b) contend that
a merchandising system utilizing solely returnable containers is un-
workable, and that consumers would not support it; and (c) point
out alternative means of attacking these problems. In this regard,
plaintiffs presented evidence that the containers regulated by the
bottle bill constitute a relatively small percentage of litter and solid
waste, and expert testimony from a behavioral scientist who
testified that the provision of refund values on beverage containers
will not substantially modify littering behavior. In addition, plain-
tiffs presented evidence of the activities of various civic organiza-
tions designed to alleviate the litter and solid waste problems, and
the establishment in various places around the nation of resource
recovery systems. It was contended that these were viable alterna-
tives to the solution inherent in the bottle bill.
219
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COMMERCE CLAUSE
Plaintiffs' most substantial challenge to the bottle bill is under
the Commerce Clause of the United States Constitution.
The development of the one-way container provided a great
technological opportunity for the beverage industry to turn logisti-
cal advantages into economic advantages. By obviating the expen-
sive necessity of reshaping empty bottles back to the plant for
refilling, the new containers enabled manufacturers to produce in a
few centralized plants to serve more distant markets. The industry
organized its manufacturing and distribution systems to capitalize
maximally on the new technology.
The Oregon legislature was persuaded that the economic
benefit to the beverage industry brought with it deleterious conse-
quences to the environment and additional cost to the public. The
aggravation of the problems of litter in public places and solid waste
disposal and the attendant economic and esthetic burden to the
public outweighed the narrower economic benefit to the industry.
Thus the legislature enacted the bottle bill over the articulate op-
position of the industries represented by the plaintiffs.
As with every change of circumstance in the market place,
there are gainers and there are losers. Just as there were gainers and
losers, with plaintiffs apparently among the gainers, when the in-
dustry adapted to the development of non-returnable containers,
there will be new gainers and losers as they adapt to the ban. The
economic losses complained of by plaintiffs in this case are essen-
tially the consequences of readjustment of .the beverage manufac-
turing and distribution systems to the older technology in order to
compete in the Oregon market.
The purpose of the Commerce Clause, following the intolera-
ble experience of the economic Balkanization of America which ex-
isted in the colonial period and under the Articles of Confederacy,
was to assure to the commercial enterprises in every state substan-
tial equality of access to a free national market. It was not meant to
usurp the police power of the states which was reserved under the
Tenth Amendment. Therefore, although most exercises of the
police power affect interstate commerce to some degree, not every
such exercise is invalid under the Commerce Clause.
Plaintiffs acknowledge the authority of the state to act, but
assert that the state exercise of its police power must yield to federal
authority over interstate commerce because, they claim, the impact
on interstate commerce in this case outweighs the putative benefit
to the state and because alternative methods exist to achieve the
state goal with a less deleterious impact on interstate commerce.
They urge us to assume the role of a "super legislature," as they put
it, and perform for ourselves the weighing process already per-
formed by the Legislative Assembly, relying largely upon Pike v.
Bruce Church. Inc.. 397 US 137, 142, 90 S.Ct. 844, 25 L.Ed.2d 174
(1970), which states:
Although the criteria for determining the validity of
state statutes affecting interstate commerce have been
variously stated, the general rule that emerges can be
phrased as follows: Where the statute regulates evenhan-
dedly to effectuate a legitimate local public interest, and its
effects on interstate commerce are only incidental, it will be
upheld unless the burden imposed on such commerce is
clearly excessive in relation to the putative local benefits.
Huron Cement Co. v. Detroit, 362 US 440,443. If a legitimate
local purpose is found, then the question becomes one of
degree. And the extent of the burden that will be tolerated
will of course depend on the nature of the local interest in-
volved, and on whether it could be promoted as well with a
lesser impact on interstate activities....
The language of the United States Supreme Court is not always
consistent in analyzing the application of the Commerce Clause to
varying facts and it is difficult to rationalize it into one harmonious
jurisprudential whole. On their facts, however, the cases cluster
around certain basic concepts and the treatment accorded to state
action is consistent within each grouping. The cases consistently
hold that the Commerce Clause bars slate police action only where:
(1) federal action has pre-empted regulation of the ac-
tivity;
(2) the state action impedes the free physical flow of
commerce from one state to another; or
(3) protectionist state action, even though under the
guise of police power, discriminates against interstate com-
merce.
In this case there is no claim of federal preemption, so we are
concerned only with the latter two concepts, interstate transporta-
tion and economic protectionism. No party cited and we were una-
ble to find any case striking down state action under the Commerce
Clause which did not come within one of these two categories.
The language of Pike v. Bruce Church, Inc., supra, does not
mechanically compel a weighing process in every case. The lan-
guage is instructive in appropriate cases rather than mandatory in
all cases. The blight of the landscape, and the appropriation of lands
for solid waste disposal, and the injury to children's feet caused by
pull tops discarded in the sands of our ocean shores are concerns not
divisible by the same units of measurement as is economic loss to
elements of the beverage industry and we are unable to weigh
them, one against the other. The United States Supreme Court
recognized the inappropriateness of a weighing process in cases of
non-comparable benefit and injury when it chastised the District
Court for having done so in Firemen v. Chicago, R.I. & P.R. Co., 393
US 129, 89 S.Ct. 323, 21 L.Ed.2d 289 (1968):
We think it plain that in striking down the full-crew
laws on this [weighing] basis, the District Court indulged in
a legislative judgment wholly beyond its limited authority
to review state legislation under the Commerce Clause
...."393 I IS at 136
. . The District Court's responsibility for making
'findings of fact' certainly does not authorize it to resolve
conflicts in the evidence against the legislature's conclusion
or even to reject the legislative judgment on the basis that
without convincing statistics in the record to support it, the
legislative viewpoint constitutes nothing more than what
the District Court in this case said was 'pure speculation.'"
393 US at 138-39.
The court has weighed comparables such as the relative effec-
tiveness of safety measures in transportation cases, see, e.g.. Bibb v.
Navajo Freight Lines, 359 US 520, 79 S.Ct. 962, 3 L.Ed.2d 1003
(1959), and Southern Pacific Co. v. Arizona. 325 US 761,65 S.Ct. 1515,
89 L.Ed. 1915 (1945), or health inspection cases. Dean Milk Co. v.
Madison, 340 US 349,71 S.Ct. 295,95 L.Ed. 329 (1951), Minnesota v.
Barber, 136 US 313, 10 S.Ct. 862, 34 L.Ed. 455 (1890), or economic
benefit and injury in economic discrimination cases such as Pike v.
Bruce Church. Inc., supra, but it does not weigh non-comparables
such as cost to the railroads against arms and legs of the workers in
Firemen v. Chicago. R.I. & P.R. Co.. supra, because the result would
be wholly subjective. That process becomes political and is constitu-
tionally assigned to the legislative branch as the determiner of
policy.
Where the putative state benefit and the impact upon inter-
state commerce are grossly disproportionate, the disparity is ap-
parent without going through the motions of a judicial weighing
process. The question then becomes one of equal protection and we
deal with that below.
The bottle bill is unquestionably a legitimate legislative exercise
of the police power. The breadth of the police power was noted by
the United States Supreme Court in Bennan v. Parker. 348 US 26,75
S.Ct. 98, 99 L.Ed. 27 (1954):
»
... The values [public welfare] represents are spiritual
as well as physical, aesthetic as well as monetary. It is with-
in the power of the legislature to determine that the com-
munity should be beautiful as well as healthy, spacious us
well as clean, well-balanced as well as carefully patrolled—
Specifically upholding the authority of the states to enact en-
vironmental legislation affecting interstate commerce, the court
held in Huron Cement Co. v. Detroit. 362 US 440,442,80 S.Ct. 813,4
L.Ed.2d 852 (1960):
. . Legislation designed to free from pollution the
very air that people breathe clearly falls within the exercise
220
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of even the most traditional concept of what is compen-
diously known as the police power. In the exercise of that
power, the states and their instrumentalities may act, in
many cases of interstate commerce and maritime activities,
concurrently with the federal government. [Citations omit-
ted]"
The United States Supreme Court has also made clear that it
will not only recognize the authority of the state to exercise the
police power, but also its right to do so in such manner as it deems
most appropriate to local conditions, free from the homogenizing
constraints of federal dictation. In Breard v. Alexandria, 341 US 622
64041, 71 S.Ct. 920, 95 L.Ed. 1233 (1951), the court stated:
.'The police power of a state extends beyond health,
morals and safety, and comprehends the duty, within con-
stitutional limitations, to protect the well-being and tran-
quility of a community.'
When there is a reasonable basis for legislation to protect
the social, as distinguished from the economic, welfare of a
community, it is not for this Court because of the Com-
merce Clause to deny the exercise locally of the sovereign
power of Louisiana. Changing living conditions or varia-
tions in the experiences or habits of different communities
may well call for different legislative regulations as to
methods and manners of doing business. Powers of munici-
palities are subject to control by the states. Their judgment
of local needs is made from a more intimate knowledge of
local conditions than that of any other legislative body.
(footnotes omitted).
The Oregon legislature is thus constitutionally authorized to
enact laws which address the economic, esthetic and environmental
consequences of the problems of litter in public places and solid
waste disposal which suit the particular conditions of Oregon even
though it may, in doing so, affect interstate commerce.
The enactment of the bottle bill is clearly a legislative act in
harmony with federal law. Congress has directed that the states
take primary responsibility for action in this field. By enacting the
Federal Solid Waste Disposal Act, 42 USC §3251 (1970), Congress
specifically recognized that the proliferation of new packages for
consumer products has severely taxed our disposal resources and
blighted our landscapes. It disclaimed federal preemption and
assigned to local government the task of coping with the problem
with limited federal fiscal assistance:
(a) The Congress finds—
(1) that the continuing technological progress and im-
provement in methods of manufacture, packaging, and
marketing of consumer products has resulted in an ever-
mounting increase, and in a change in the characteristics, of
the mass of material discarded by the purchaser of such
products;
(4) that inefficient and improper methods of disposal
of solid wastes result in scenic blights, create serious
hazards to the public health, including pollution of air and
water resources, accident hazards, and increase in rodent
and insect vectors of disease, have an adverse effect on land
values, create public nuisances, otherwise interfere with
community life and development;
(6) that while the collection and disposal of solid
wastes should continue to be primarily the function of
State, regional, and local agencies, the problems of waste
disposal as set forth above have become a matter national
in scope and concern and necessitate Federal action
through financial and technical assistance and leadership in
the development, demonstration, and application of new
and improved methods and processes to reduce the amount
of waste and unsalvageable materials and to provide for
proper and economical solid-waste disposal practices.
Congress has recently reaffirmed that allocation of state and federal
responsibility by enactment of the Environmental Quality Im-
provement Act, 42 USC §4371 (1970), which provides:
(b) (1) The Congress declares that there is a national
policy for the environment which provides for the enhance-
ment of environmental quality. This policy is evidenced by
statutes heretofore enacted relating to the prevention,
abatement, and control of environmental pollution, water
and land resources, transportation, and economic and
regional development.
(2) The primary responsibility for implementing this policy
rests with State and local governments.
See also, the Federal Water Pollution Act, 33 USC §1151 (1970). It is
significant that the United States Supreme Court relied upon this
legislation in validating the intrusion upon interstate commerce
caused by the Detroit Smoke Abatement Act in Huron Cement Co.
y. Detroit, supra.
While it is clear that the Oregon legislature was authorized to
act in this area, plaintiffs assert that the means incorporated in the
bottle bill are not effective to accomplish its intended purpose and
that alternative means are available which will have a lesser impact
upon interstate commerce. Particularly, they offered evidence to
show: (1) that the deposit system is inadequate to motivate the con-
suming public to return containers;5 (2) that mechanical means are
being developed for improved collection of highway litter; and (3)
that public education, such as the "Pitch In To Clean Up America"
campaign, is a desirable means of dealing with container litter.
Selection of a reasonable means to accomplish a state purpose
is clearly a legislative, not a judicial, function, to which the admoni-
tive language from Firemen v. Chicago R.I. & P.R. Co., supra, 393 US
at 136 and 138-39, quoted above is clearly applicable. In particular,
the courts may not invalidate legislation upon the speculation that
machines may be developed or because additional and complemen-
tary means of accomplishing the same goal may also exist. The
legislature may look to its imagination rather than to traditional
methods such as those which plaintiffs suggest, to develop suitable
means of dealing with state problems, even though their methods
may be unique. Each state is a laboratory for innovation and experi-
mentation in a healthy federal system. What fails may be aban-
doned and what succeeds may be emulated by other states. The
bottle bill is now unique; it may later be regarded as seminal.
We conclude, therefore, that the bottle bill was properly
enacted within the police power of the state of Oregon and that it is
imaginatively, but reasonably, calculated to cope with problems of
legitimate state concern.
Plaintiffs next assert that "Oregon's 'Bottle Bill' would not
merely 'impede substantially the free flow of commerce' [Southern
Pacific Co. v. Arizona, 325 US 761 (1945) at 767] but in many cases
totally destroy and eliminate it —" The law surrounding the con-
cept of impediments to the flow of interstate commerce relates con-
sistently to the actual instrumentalities of interstate commerce, i.e.,
railroad, truck, air and other of the actual means of transportation
of goods across state lines, not to the goods being transported.
The fact that the flow may be impeded is not in itself enough
to invalidate the state law. As the United States Supreme Court
stated in Southern Pacific Co. v. Arizona, supra, 325 US at 770:
. . . There has thus been left to the states wide scope
for the regulation of matters of local state concern, even
though it in some measure affects the commerce, provided
it does not materially restrict the free Tlow of commerce
across state lines, or interfere with it in matters with respect
to which uniformity of regulation is of predominant na-
tional concern.
If the burden upon interstate commerce is one of actual im-
pediment upon the free physical flow, then the burden will be
viewed with great judicial dubiety. Thus, train length is not subject
5. Bui we Olympia Brewing Co. v. O.L.C.C Or App P.2tl __
(decided ihis day), in which ihc evidence showed a remarkably high return rale of
85 percent on "Tall 12" beer hollies
221
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to state regulation because national uniformity is "practically in-
dispensable to the operation of an efficient and economical national
railway system," Southern Pacific Co. «. Arizona, supra. 325 US at
771, and a state cannot require a unique type of mud flap on trucks
in interstate commerce. Bibb v. Navqjo Freight Lines, 359 US S20 79
S.Ct. 962, 3 L.Ed.2d 1003 (1959). Even the means of interstate
transportation, however, are subject to state police regulation under
limited circumstances. For example, a full-crew law to promote
safety was authorized in Firemen v. Chicago R.I. & P.R. Co., supra.
even though a train may have to stop at state borders to take on or
let off crewmen. Similarly, the application of the municipal smoke
abatement code to federally inspected and licensed steam vessels
engaged in interstate shipping was upheld in Huron Cement Co v
Detroit, 362 US 440, 80 S.Ct. 813, 4 L.Ed.2d 852 (1960).
If the very means of all interstate commerce are subject to the
states' reasonable exercise of police power in the interest of safety
or environmental protection, then surely the containers of one class
of product in that flow are conferred no immunity from regulation
as they cross the state line.
Plaintiffs argue persuasively that this case involves more than
the transportation of bottles and cans, that it involves an interstate
system of distribution for a national industry. Accepting that, the
distribution system is still subject to the reasonable exercise of state
police power. The United States Supreme Court in Breard v. Alex-
andria, 341 US 622,71 S.Ct. 920,95 L.Ed. 1233 (1951), upheld an or-
dinance designed to protect privacy which prohibited door-to-door
sales over an argument that the means of distribution of an inter-
state industry would be rendered illegal in one city. The court held
to the contrary:
We recognize the importance to publishers of our
many periodicals of the house-to-house method of selling
by solicitation. As a matter of constitutional law, however,
they in their business operations are in no different position
so far as the Commerce Clause is concerned than the sellers
of other wares. Appellant, as their representative or in his
own right as a door-to-door canvasser, is no more free to
violate local regulations to protect privacy than are other
solicitors. As we said above, the usual methods of seeking
business are left open by the ordinance. That such methods
do not produce as much business as house-to-house can-
vassing is, constitutionally, immaterial and a matter for ad-
justment at the local level in the absence of federal legisla-
tion. ...
(footnote omitted.) 341 US at 637-38.
Similarly, we are unable to say that the economic burden upon the
plaintiffs is sufficient to displace the authority of the State of
Oregon to legislate regarding environmental problems.
In summary, the "free flow of commerce" cases are of no help
to plaintiffs because they protect only the physical means of inter-
state transportation from unauthorized intrusion. The protection of
the goods in that flow is found in the next cluster of cases, those
that bar economic discrimination against interstate commerce.
Plaintiffs seek the benefit of the latter cases by asserting that
the bottle bill burdens interstate commerce by economic dis-
crimination against out-of-state interests. If that were indeed the
design of the legislature,8 then the burden would likely be intolera-
6. Plaintiffs base their claim of intentional economic protectionism on a statement
of Attorney General Lee Johnson in his testimony before a legislative committee
that the bottle bill would result in more jobs for Oregonians because Oregon pro-
ducers would have a competitive advantage. They quote the statement out or con-
text. The Attorney General was not asserting competitive advantage as a reason
for the legislation. Rather, he was merely answering the anticipated argument
from the bill's opponents that the legislation would cost Oregon business sales and
jobs. The paragraph of his testimony, with the portion quoted by plaintiffs
emphasized, reads as follows:
"We recognize that this bill will face heavy sledding in the Oregon
Legislature. In the Slate of Washington a citizens' group tried to pass a
similar bill by way of referendum. Powerful vested interests, particularly
large national bottle and can manufacturers, mounted a well-financed
campaign and defeated the measure. These same vested interests, most
of whom arc not located in the Stale of Oregon, will be mounting the
same campaign here. They will contend that the bill will increase the
price of soft drinks and beer, hut ! bcl'evc that this is simply not true.
ble, despite a claim of lofty purpose under the police power. The
United States Supreme Court has invalidated milk quota
preferences for instate milk, Baldwin v. G.A.F. Seelig, 294 US 511 55
S.Ct. 497,79 L.Ed. 1032 (1935), Polar Co. v. Andrews. 375 US 361,' 84
S.Ct. 378,11 L.Ed. 389 (1964), preferential inspection laws which in-
hibit non-state distributors, Minnesota v. Barber, 136 US 313 10
S.Ct. 862, 34 L.Ed. 455 (1890), Dean Milk Co. v. Madison, 340 US
349,71 S.Ct. 295,95 L.Ed. 329 (1951), and, in a recent case relied on
heavily by plaintiffs, a requirement that Arizona cantaloupes be
packed in Arizona, Pike v. Bruce Church. Inc.. 397 US 137, 90 S Ct
844, 25 L.Ed.2d 174 (1970), but even there the court carefully
limited its weighing process to economic considerations and speci-
fically distinguished safety or consumer protection legislation. The
purpose of the legislation in each case was protectionist, despite the
invocation of the police power.
On the other hand, legislation which has negative economic
consequences for non-state business is not necessarily discriminato-
ry against interstate commerce. In particular, the Pike case notes
and distinguishes Pacific States Co. v. White, 296 US 176, 56 S Ct
159,80 L.Ed. 138,101 ALR 853 (1935), in which an Oregon regula-
tion of containers for berries packed in Oregon was upheld despite
the diminution of the ability of California box makers to compete
with Oregon interests. It also noted the California raisin marketing
system which was upheld in Parker v. Brown, 317 US 341, 63 S.Ct.
307, 87 L.Ed. 315 (1943), although the express design of that law
was to give the California raisin industry an economic tactical ad-
vantage.
Lower courts have recently upheld the state's authority to ban
products altogether from the state's market for legitimate state
police purposes as against Commerce Clause claims. A New York
law prohibiting sale of products made from the skins of endangered
species, none of which are indigenous to New York, was upheld in
Palladia. Inc. v. Diamond. 321 F.Supp. 630 (SONY 1970), affd 440
F.2d 1319 (2nd Cir. 1971), cert, denied. 404 US 983,92 S.Ct. 4461,30
L.Ed.2d 367 (1971), and labeling restrictions on detergents and a ban
on the sale of phosphate detergents was upheld in Soap and
Detergent Association v. Clark. 330 F.Supp. 1218 (SD Fla. 1971),
although not in Soap and Detergent Association v. City of Chicago,
357 F.Supp. 44 (ND 111. 1973).
On a claim of economic discrimination and relevant also to the
equal protection claim below, it is appropriate to look to the nature
of the economic burden upon interstate commerce and the legisla-
tive motivation in creating that burden. A gross disparity would
tend to evidence police power coloration to an act of economic pro-
tectionism. Plaintiffs offered evidence, much of it necessarily
speculative, as to severe economic effects upon their elements of
the beverage industry. Their evidence that the public would pur-
chase and consume substantially less beer and carbonated
beverages by virtue of the bottle bill is not persuasive. We are not
dealing with a large loss of sales across the industry, but rather with
the ability of various elements of the industry to obtain a share of
the consumers' dollars. As we noted above, the introduction of any
new circumstance affecting competition will cause economic win-
ners and economic losers throughout the industry as it readjusts to
that new circumstance. The evidence is that plaintiffs expect to be
among the losers, unless, of course, they are able to make market-
ing adjustments.
Economic loss restricted to certain elements of the beverage
industry must be viewed in relation to the broader loss to the gener-
al public of the state of Oregon which the legislature sought, by
enactment of the bottle bill, to avoid. The availability of land and
revenues for solid waste disposal, the cost of litter collection on our
highways and in our public parks, the depletion of mineral and
energy resources, the injuries to humans and animals caused by dis-
carded pull tops, and the esthetic blight on our landscape, are all ec-
onomic, safety and esthetic burdens of great consequence which
Any price increase should be offset by the refund. They will also contend
that the bill will destroy Oregon businesses and lead to a loss of jobs. This
likewise is- not true. Many small bottle distributors in Oregon who are
now being forced out of business will be able to survive and provide new
jobs. Many Orww nimvmx will indeed he Kiten a eanpeiitlw advainoKe
over inusiile fimii u1n> haw inadequate dimrihinhm faeililiex In handle re-
evdnl twllli's."
222
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must be borne by every member of the public. The legislature at-
tached higher significance to the cost to the public than they did to
the cost to the beverage industry and we have no cause to disturb
that legislative determination.
The bottle bill is not discriminatory against interstate com-
merce and is not intended to operate to give Oregon industry a
competitive advantage against outside firms. The ban on pull tops
and the deposit-and-return provisions apply equally to all distribu-
tors and manufacturers whether Oregon-based or from out of state.
According to plaintiffs' testimony, the economic burden of the in-
dustry's adjustment to the change will be shared by Oregon
businesses as well as non-Oregon businesses. Indeed, the chairman
of the board of Oregon's only brewery testified that it would be hurt
by compliance more than its out-of-state competitors. A canning
firm from Eugene, Oregon would be among the canners suffering
Ihe-greatest economic Joss. In other, words, the evidence is clear that
the cost of adjustment to the new exigencies of selling beverages in
Oregon will be spread throughout the beverage industry, its sup-
pliers, manufacturers and distributors without regard to whether
they are Oregon-based firms.
Plaintiffs assert particularly that the reduction in the refund
value of standardized containers from five cents to two cents each
operates to discriminate against out-of-state manufacturers. They
argue that they cannot produce the container for two cents and that
an Oregon producer enjoys a competitive advantage by being able
to buy the out-of-state producer's bottles at the lower cost and with-
out the additional expense of shipping them to a distant plant. In
effect, they claim, distant shippers must sell bottles to Oregon firms
at below cost.
We do not agree that the device of a reduced refund for stan-
dardized containers is discriminatory against out-of-state interests.
The purpose of the provision is clearly to provide an incentive to
make bottles as fungible as possible in order to ease the burden
upon the distribution system by eliminating the need for sorting,
facilitating industry-wide redemption and obviating the cost of
reshipment. The firm which attempts to compete at a great distance
from its market suffers a natural disadvantage, whatever container
is allowed. Just as use of the non-returnable container reduced the
inherent disadvantage of a distant competitor, the refund provi-
sions tend to partially restore the former degree of disadvantage.
The disadvantage does nol relate to the state borders. A bottler in
southern Oregon, for example,' would be at a disadvantage compet-
ing to recapture used bottles from Vancouver, Washington. The
competitive disadvantage is one of distance, not one of state bound-
aries. See Olympia Brewing Co. v. O.L.C.C., Adv Sh , Or
App , P.2d , decided today. While the state is under an
obligation not to discriminate against out-of-state business interests,
it is under no obligation to maintain equal levels of competitive ad-
vantage for all producers regardless of their distance from the
market. We hold that the refund provisions of the bottle bill neither
operate nor are designed to operate as devices of protectionism for
Oregon interests or discrimination against non-Oregon interests.
Because the bottle bill is a legitimate exercise of the police
power, consistent with federal policy legislation, which does not im-
pede the flow of interstate commerce and which does not discrimi-
nate against non-Oregon interests, we hold that it is valid legislation
under the Commerce Clause. We turn now to plaintiffs' other con-
stitutional challenges.
DUE PROCESS
Plaintiffs argue that the bottle bill is violative of the Due Pro-
cess Clause of the Fourteenth Amendment and assert that this
court must weigh the legislative purpose against the degree of op-
pression to individuals. We made such a general comparison above
in the section dealing with cases of purported economic discrimina-
tion under the Commerce Clause and we saw no cause to disturb
the legislative judgment. The United States Supreme Court has not
struck down economic legislation on the basis of substantive due
process since the Depression. In one of the more recent attempts to
invoke the doctrine. Firemen v. Chicago R.I. & P.R. Co., supra, 393
US at 143, the court dismissed the challenge without discussion. See
also, Ferguson v. Skrupa. 372 US 726,83 S.Ct. 1028,10 L.Ed.2d 93,95
ALR2d 1347(1963).
EQUAL PROTECTION
Plaintiffs argue that the bottle bill is violative of the Equal Pro-
tection Clause as applied to them. They argue that they have an
affirmative right to engage in interstate commerce .analogous to the
rights of freedom from discrimination based upon race, religion or
sex and the right to engage in travel. They claim that we must ex-
amine any intrusion upon that right with the same "strict scrutiny"
as we would examine those personal rights. They argue that the
bottle bill must fail because its goals do not justify its burdens upon
the plaintiffs, and because it will not tend to accomplish its goals in
that it applies only to beer and soft drink containers and not to
other containers which are equally deleterious to the environment.
We do not accept the plaintiffs' attempted analogy with cases
involving invidious discrimination based upon race or religion or
based on fundamental affirmative individual rights such as the
right to travel or the right to free speech. The Commerce Clause
does not purport to grant a personal right. Rather, it is an allocation
of power between the levels of government in the federal system.
Plaintiffs are entitled to equal protection from arbitrary state inter-
ference into the conduct of their business by arbitrary classification.
The United States Supreme Court stated the general principle
in McGowan v. Maryland, 366 US 420, 425-26, 81 S.Ct. 1101, 6
L.Ed.2d 393 (1961):
. [T]he Fourteenth Amendment permits the States
a wide scope of discretion in enacting laws which affect
some groups of citizens differently than others. The con-
stitutional safeguard is offended only if .the classification
rests on grounds wholly irrelevant to the achievement of
the State's objective. State legislatures are presumed to have
acted within their constitutional power despite the fact that,
in practice, their laws result in some inequality
We find that the bottle bill in all of its aspects is reasonably
calculated to achieve legitimate state objectives under the police
power as discussed above. The ban on pull tops is reasonably calcul-
ated to diminish the injuries to people who step on them and to
animals who eat them at pasture as well as to reduce the litter
which they create. The placing of a monetary value on beverage
containers and its attendant encouragement for people to return
them instead of discarding them by the roadside or in other public
places or throwing them into the garbage is reasonably calculated to
diminish the amount of solid waste and the amount of litter with
which the state is required to deal. See Anchor Hocking v. Barber, 118
Vt. 206, 105A2d271 (1954).
The fact that other containers may also create litter and solid
waste does not invalidate the legislature's intent to deal with this
species of solid waste and litter. As the United States Supreme
Court said in Railway Express v. New York, 336 US 106,110,69 S.Ct.
463, 93 L.Ed 533 (1949), "It is no requirement of equal protection
that all evils of the same genus be eradicated or none at all." The
court further held in Williamson v. Lee Optical Co., 348 US 483,489,
75 S.Ct. 461, 99 L.Ed 563 (1955):
... Evils in the same field may be of different dimen-
sions and proportions, requiring different remedies. Or so
the legislature may think. Or the reform may take one step
at a time, addressing itself to the phase of the problem
which seems most acute to the legislative mind. The
legislature may select one phase of one field and apply a
remedy there, neglecting the others — (citations omit-
ted.)
Plaintiffs' right to equal protection has not been abridged.
THE OREGON CONSTITUTION
Plaintiffs made claims under three sections of the Oregon Con-
stitution.
First, they invoke article 1, section 10, "... Every man shall
have remedy by due course of law for injury done him in his per-
son, property or reputation." Section 10 concerns the administra-
tion of justice. The quoted words were historically directed against
denying a remedy for a legal injury to the named private interests
recognized under the law of torts or property. Cf. Holden v. Pioneer
223
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Broadcasting Co. et al. 228 Or 405,365 P.2d 845 (1961), dismissed, 370
US 157 (1962). It is not to be considered the equivalent of the Due
Process Clause of the Fourteenth Amendment. See Linde, Without
Due Process, 49 Or L.Rev. 125, 136-38 (1970).
Plaintiffs also invoke article 1, section 18, as it provides that
"private property shall not be taken for public use ... without just
compensation." This section was designed to provide compensa-
tion and money damages where the government takes property for
governmental use. See Cereghino et al. v. State Highway Com., 230 Or
439, 370 P.2d 694 (1962); Thomburg v. Port of Portland, 233 Or 178,
376 P.2d 100 (1962). It does not authorize the invalidation of state
law merely because of negative economic consequences to a given
industry.
Plaintiffs next cite article 1, section 20, which states that "[n]o
law shall be passed granting to any citizen or class of citizens, pri-
vileges, or immunities, which, upon the same terms, shall not
equally belong to all citizens." Section 20 is not the equivalent of the
Equal Protection Clause, the latter being adopted several years after
the adoption of section 20. It was essentially a bar to the legislature
against singling out specific individuals or interests for preferential
treatment on an ad hominem basis. There is no such claim in this
case.
The Oregon constitutional provisions are not appropriate to
the challenges raised by plaintiffs in this case.
THE TWENTY-FIRST AMENDMENT
The Attorney General claims that the bottle bill is constitu-
tional as it applies to beer containers under the Twenty-First
Amendment.7 We doubt that the authority of the state to control
the sale and use of liquor extends to regulation of the containers in
interstate commerce for the purpose of abating litter and solid
waste problems. Because we have sustained the bottle bill on other
grounds and because even a ruling favorable to the defendants
under the Twenty-First Amendment would not be dispositive of
the bottle bill as it applies to the soft drink industry, we need not
and do not reach the issues under the Twenty-First Amendment.
Plaintiffs" and intervenors' constitutional challenges having
failed, we hold the bottle bill to be a valid exercise of Oregon's
police power. In doing so, we acknowledge having had the benefit
of an able analysis by the trial court.
Affirmed.
7. "Section 1. The eighteenth article of amendment to the Constitution of the
United States is hereby repealed.
"Sec. 2. The transportation or importation into any Slate, Territory, or posses-
sion of the United States for delivery or use therein ol' intoxicating liquors, in viola-
tion of the laws thereof, is hereby prohibited.
"Sec. 3. This article shall be inoperative unless it shall have been ratified as an
amendment to the Constitution by conventions in the several States, as provided
in the Constitution, within seven years from the date of the submission hereof to
the States by the Congress."
224
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Appendix F
Title 10, Vermont Statutes Annotated
Chapter 53. Litter Levy; Aid to Municipalities for
Sanitary Landfills, Recycling Ccnlertt
SECTION
lf>2L. Definitions.
1522. Imposition of litter levy on nonreturnable containers.
1523. Deposit in. lieu of levy.
1524. Allocation.
ir>2f>. Penalty.
FllSTOUY
Tables of renumbered sec-lions. l''or tables showing disposition of renum-
bered sections of this chapter, KCC tables set out at i-iul of Title 12.
. § 1521. Definitions
For the purpose of this chapter:
(1) "Beverage" means beer or other malt beverages and min-
eral waters, soda water and similar soft drinks in liquid form and
intended for human consumption, whether or not carbonated, but
does not include uncarbonated water, soups, fluid milk products,
unadulterated, natural, reconstituted or frozen fruit, vegetable or
meat juices, or .liquids intended for medicinal purposes only. The
term "beverage" also includes spirituous liquors and vinous bev-
erages as defined in section 2 of Title 7.
(2) "Biodegradable material" means material which is capable
of being broken down by bacteria into basic elements.
(3) "Container" means the individual, separate, bottle, can, jar
or carton composed of glass, metal, paper, plastic or any combina-
tion of those materials containing a consumer product. This defini-
tion shall not include containers made of biodegradable material.
(<1) '.'Distributor" means every person who engages in the
sale of consumer products in containers to a dealer in this state
including 'any manufacturer who engages in such sales.
(5)-•"Manufacturer" means every person bottling, canning, pack-
ing or otherwise filling containers for sale to distributors or deal-
ers.
(6) "Recycling" means the process of sorting, cleansing, treat-
•ing and reconstituting waste and other discarded materials for
the purpose of reusing the materials in the same or altered form.
-—Added JH71, No. 252 (Adj. Sess.), § 1, eff. July J, 1972.
UlSTOKY
Revision note. This section was formerly set out as § 1171.
225
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§ 1522. Imposition of litter levy on nonroturnable containers
(a) A levy is hereby exacted on all beverage containers sold in
the state intended for resale, use or consumption in this slate at
the rate of '1 mills on each beverage container sold, which levy
shall expire on July J, 1973, with respect to all beverage contain-
ers except containers for spirituous liquors and vinous beverages.
(b) The levy provided in this section shall be paid by every
manufacturer or distributor to the commissioner of taxes. Whcn-
. ever a retailer, group of retailers or retail chain contracts for,
receives consignment of, or in any other manner acquires bever-
ages in beverage containers outside of the state for sale, use or
consumption in the state, the levy exacted pursuant to this sec-
tion shall be paid to the commissioner of taxes by such retailer,
retail group or chain. The commissioner of taxes shall adopt and
publish all forms and regulations necessary for the purposes of
this chapter.—Added 1971, No. 252 (Adj. Sess.), § '1, off. July 1,
1972.
IIlSTOflY
Revision nolc. This section was formerly set out as § 1172.
§ 1523. Deposit in lieu of levy
(a) In lieu of. payment of the litter levy provided in section 1522
of this title, any manufacturer or distributor of beverage contain-
ers mny, and on and after July 1, 1973 shall require a deposit of
not less than five cents to be paid by the consumer on each -bev-
ej'agc container sold at the retail level and refunded to him upon
return of the empty beverage container. Whenever a retailor,
group of retailers or retail chain contracts for, receives consign-
ment of, or in any other manner acquires beverages in beverage
containers outside of the state for sale, use or consumption in the
state, the deposit requirements in this section shall be applicable
to such 'retailer, retail group or chain in the same manner as to
manufacturers or distributors of beverage containers.
(b) If a manufacturer or distributor elects or is compelled to
require a deposit pursuant to subsection (a) of this section, that
manufacturer or distributor shall:
(1) Clearly label each beverage container manufactured, sold,
distributed or intended for distribution in the state with a state-
ment indicating the amount of the deposit, and the.name of this
state, and .
226
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(2) Provide eillicr thai all retailers selling such beverage con-
tainers and collecting svnd refunding deposits on such beverage
containers be roiinburscd for those efforts by the; manufacturer or
distributor in an amount directly proportional to the quantity of
bcvera'ge containers redeemed as determined by the secretary of
environmental conservation; or that the manufacturer or distribu-
tor establish, operate and maintain a sufficient number ,of facilities
for the collection and redemption of beverage containers sold or
distributed by him in the state, at least one in each town, at loca-
tions, determined by I he secretary of environmental conservation
with the approval of the legislative body of the town in which Ihe
facility is to be located. .The secretary of environmental conserva-
tion shall have authority to promulgate rules and regulations neces-
sary to implement this section.
(c) The deposit required by this section in lieu of payment of the
litter levy shall not apply to beverage containers of spirituous
liquors which by federal law cannot be reused.—Added 1971, No.
252 (Adj. Sess.), § 1, eft. July 1,1972.
HISTORY
Revision note. This section was formerly set out as § 1173.
Reference to section "1172" of Ibis title was changed to "1522" to conform
reference to rcnuinlKlrini; of such section.
§ 1524. Allocation
Of the funds collected pursuant to section 1522 of this title:
(1) The first $1,000,000.00 or 50 per cent, whichever is greater,
shall be distributed each year to the towns on a per capita basis for
use by them for operation and maintenance of sanitary landfills
required pursuant to law; and
(2) Any excess shall be allocated each year to the secretary of
the agency of environmental conservation to establish and operate
solid waste .recycling centers pursuant to section 2205 of Title 24.
—Added 1971, No. 252 (Adj. Sess.), § 1, eft. July 1, 1972.
HISTORY
Revision nole. This section was formerly set out as § 117-1.
Reference to-section "1172" of this, title was changed to "1522" to con-
form reference to rcnumlierint; of such section.
Distribution of levy. l'J71, No. R--JO-1 (Adj. Sess.), provided: "That the dis-
tribution of said lilliu* liwy to the towns shall be made ns soon as practicable
after the close- of each (|iiartur during the fiscal year 1S73 so as lo permit
use of said funds by the towns for the purposes intended."
§ 1525. Penalty
Any person Who violates the provision of this chapter shall be
fined not more than $1,000.00 for each violation.—Added 1971,
No. 252 (Adj. Sess.), § 1, elf. July 1, 1972. -
IIlRTOHY
Revision note. This unction was formerly set out ns.§ 1175.
227
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Appendix G
Vermont Environmental Protection
REGULATION
CHAPTER 10
DEPOSIT FOR BEVERAGE CONTAINERS
10-1523.1 SCOPE. For the purpose of this regulation, beer and other
malt beverages, mineral waters, soda water and similar soft
drinks shall be subject to the requirement that a deposit of
not less than five cents shall be paid by the consumer on
each beverage container sold at the retail level and refund-
ed to him upon return of the beverage container.
A container is defined as a vessel composed of metal
or^glass, or of any substitute materials, capable of con-
taining a beverage at the time of sale to the consumer.
The deposit shall apply to all containers in which the
above products are sold at retail, unless otherwise provided
herein.
10-1523.2 LABELLING. (a) Each container, subject to -this regulation,
shall contain a label specifying, in letters of not less
than 12 point, either of the following messages:
VERMONT - <: - DEPOSIT
or
VERMONT - <: - REFUND
with the amount of the deposit or refund inserted therein.
Each label shall be so designed and emplaced so that the
message thereon and unencumbered background shall occupy
an area of not less than three quarters of a square inch.
The label may be applied to the container either by molding
thereon, by embossing or imprinting directly thereon, or
by printing upon the regular product label applied thereto.
Except in the case of application by molding, the label and
wording shall'be of clearly contrasting color from that of
the container or of the background color of any other label
placed upon the container. The label or message may be
emplaced upon any readily accessible surface of the container
in the case of molding, embossing or imprinting, or of the
regular product label in the case of printing, and shall not
be covered or obscured in the least by any other application
to the container. The placement of the label or message may
be by horizontal, vertical, diagonal or other manner so long
as all other requirements of this subsection are complied
with. Except where a waiver has been granted under Sub-
section B of this section, in the case of containers of
mineral waters, soda water or similar soft drinks which do
not have a regular product label, a separate label bearing
the name of the product, manufacturer, bottler or distribu-
tor, and in conformance with the other requirements of this
228
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subsection-shall be firrly affixed thereto. A sample copy
of any applied separate label., required under this sub-
section, shall be filed, with the Secretary of Environmental
Conservation.
(b) In the case of existing and legally refillable
containers utilized by manufacturers or distributors of
mineral waters, soda water or similar soft.drinks, which
have a national or regional distribution throughout the
New^England or northeastern states, and to which the appli-
cation of a separate label is impractical because of con-
tainer desien or lack of available space, the labelling may
be waived for a period of one year, upon application by the
manufacturer or distributor to the Secretary of Environmen-
tal Conservation, and upon his decision to grant such a
waiver. The decision of the Secretary shall be final, and
the^period of waiver may be extended if in his opinion it
is in the interest of the State of Vernont to do so.
(c) The labelling requirements of this regulation
shall not apply to beer and other malt beverages contained
in kegs, half kegs, quarter•-ke
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1523(b)(2)0 or in conforraance T-7ith the provisions of
Sections 10-1523.5 and 10^-1523.6 of these regulations,
provided:
(a) The retailer and/or distributor shall be required
to redeem only those containers of a brand, type
and size as are sold by him at any time subse-
quent _ to June 30, 1973, and, in the case of those
containers which the retailer and/or distributor
ceases to sell, he shall be required to redeem
them for a oeriod of sixty days following the
cessation of sales.
(b) The retailer- and/or distributor may refuse to
accept^containers which are hot legally labelled,
or subject to a waiver of labelling requirements
in accordance with Section 10--1523.2 of the regu-
lations .
(c) The retailer and/or distributor may refuse to
accept containers which are in an unsanitary or
unclean condition or contain objects or materials
which are foreign to the norjnal contents of the
container. Ho retailer or distributor shall
refuse to redeem a container if the container has
been rinsed or washed clean of any residual con-
tents or foreign materials.
10-1523.5 REDEMPTION CENTERS
Any manufacturer or distributor may establish a suf-
ficient number of facilities for the collection and redemp-
tion of beverage containers sold or distributed by him in
the State, at least one in each town, at-locations .approved
by the legislative body of the town in which the-facility
is to be located, and the Secretary of Environmental
Conservation. Prior to the operation of such facilities,
the manufacturer or distributor shall present to the Secre-
tary his proposals for the location of such facilities and
evidence showing; •the concurrence .and approval of the legis-
lative body of each town affected.
10-152 3.6 PILOT REDEMPTION CENTERS
Any manufacturer or'distributor, alone, or in conj.unc-
tion with a retailer or retailers, or any combination of
them, raay petition the Secretary of Environmental Conserva-
tion for authority to establish, maintain, operate and
manage a system of pilot redemption centers for the redemp-
tion of containers and the return of consumer deposits,'for
the purpose of obtaining information relating to economic
operation of such centers and the effectiveness of enabling
consumers to redeem containers at centralized, locations.
In considering whether to approve a pilot project the
Secretary shall first determine that sufficient number of
such centers will be established, and have the approval of
the legislative body of the town wherein they will be
located.
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Any proposal for the establishment of pilot redemption
centers shall make adequate provision' for the establishment
of such centers in order to provide for a sufficient number
of such Centers with particular emphasis on location as to
population and distribution of the centers so as to provide
for the^largest reasonable probability of the compilation
of meaningful data relating to•
1• Economy of operation•
2. Ratio of container sold to containers returned;
3.• Reuse of recycling of containers•
4. Convenience to the public-.
5. Reduction in litter or solid wastes, and such
other information as may be of value to the
Secretary and the legislature.
3-0-1523.7 REIMBURSEMENT OF RETAILER
A retailer required to collect and refund deposits of
consumers, and to redeem containers upon which deposits are
required, shall be reimbursed by the manufacturer or dis-
tributor of such beverage containers in the amount1 of 20
percent of the amount of such deposit returned to the con-
sumer.
This regulation shall not aoply in the case of^kegs,
halif-kegs, quarter--kegs, or pony-kegs, and no additional
payment in excess of the acutal redemption of the deposit
shall be required.
JLO-1523.8 POSTING
A copy of these regulations, shall be conspicuously
posted in all retail stores where beer and other malt
beverages, mineral waters, soda waters and similar soft
drinks are sold.
APPROVED:
/s/ Martin L. Johnson
flirtin L. Johnson, Secretary
Agency of Environmental Conservation
Adopted June 1, 1973; Effective July 1, 1973
Amended August 11, 1973; Effective November 1, 1973
231
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Appendix H
State of New York
Taxation—Cigarettes and Tobacco
CHAPTER 394
An Act to amend chapter two hundred thirty-five of the laws of nine-
teen hundred fifty-two, re-entitled by chapter three hundred sixty-
nine of the laws of nineteen hundred fifty-nine "An act to enable
any city of the state having a population of one million or more
to adopt, and amend local laws, imposing certain specified types of
taxes on cigarettes, cigars and smoking tobacco which the legisla-
ture has or would have power and authority to Impose, to provide
for the review of such taxes, and to limit the application of such
local laws," In relation to authorizing the Imposition of additional
taxes based upon the nicotine and/or tar contents of cigarettes.
Approved June 9. 1971. effective as provided In section 2.
Passed on message of necessity. See Const, art DC, { 2(b) (2) and
McKinney's Legislative Law § 44.
The People of the State of New York, represented in Senate and
Assembly, do enact as follows:
Section 1. Paragraph (a) of subdivision one of section one of
chapter two hundred thirty-five of the laws of nineteen hundred fifty-
two, re-entitled by chapter three hundred sixty-nine of the laws
of nineteen hundred fifty-nine "An act to enable any city of the
state having a population of one million or more to adopt, and amend
local laws, imposing certain specified types of taxes on cigarettes, cigars
and smoking tobacco which the legislature has or would have power and
authority to impose, to provide for the review of such taxes, and to limit
the application of such local laws," as last amended by chapter two
hundred fifty-two of the laws of nineteen hundred sixty-three, is hereby
amended to read as follows:
(a) The basic rate of such tax on cigarettes shall not exceed two cents
for each ten cigarettes or fraction thereof and is intended to be imposed
only once on the same package of cigarettes; in addition'to such tax
there may be imposed an additional tax at the following rates
(1) One and one-half cents for each ten cigarettes where either their
tar content exceeds seventeen milligrams per cigarette or their nicotine
content exceeds one and one-tenth milligrams per cigarette;
(2) Two cents for each ten cigarettes where their tar content exceeds
seventeen milligrams per cigarette and their nicotine content exceeds one
and one-tenth milligrams per eigarc-tte.
§ 2. This act shall take effect July first, nineteen hundred seventy-
one, except that local laws may be adopted or amended pursuant to this
act before such date to take effect on or after July first, nineteen
hundred seventy-one.
Changes or additions In text are Indicated by underline
deletions by
232
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Appendix I
ADMINISTRATIVE CODE OF THE CITY OF NEW YORK
TITLE D
CIGARETTE TAX
§ D46-2.0 Imposition of tax. —
a. There is Hereby imposed and shall be paid a tax on:
1. All cigarettes possessed in the city for sale except as
hereinafter provided;
2. The use of all cigarettes in the city except as herein-
after provided;
3. It is intended that the ultimate incidence of and liabil-
ity for the tax shall be upon the consumer, and that any
agent, distributor or dealer who shall pay the tax to the dir-
ector of finance shall collect the tax from the purchaser or
consumer.
Such tax shall be at the basic rate of two cents for each ten cig-
arettes or fraction thereof and shall be imposed only once on the same
package of cigarettes. In addition to such tax there is hereby imposed
an additional tax at the following rates:
1. One and one-half cents for each ten cigarettes where either
their tar content exceeds seventeen miligrams per cigarette or
their nicotine content exceeds one and one-tenth milligrams per
cigarette;
2. Two cents for each ten cigarettes where their tar content
exceeds seventeen milligrams per cigarette and their nicotine
content exceeds one and one-tenth milligrams per cigarette.
(Subd. a amended. fcysL. L. 1971, No. 34, June.-30.,.. eff. July 1,
1971.)
§ D46-8.0 General powers of the director of finance. —
«•••••• •• •
11. In furtherance of the purposes of paragraph three of subdivi-
sion a. of section D46-2.0, to provide by appropriate regulation for the
maintenance of such differentials in wholesale and retail prices of cig-
arettes sold by any vendor, other than the manufacturer, so as to reflect
the amounts of tax attributable to the tar and nicotine content of cigar-
ettes sold. In so doing he may use and consider the factory price of var-
ious brands of cigaretttes. In addition, he may consider the mode or
method by which retail sales are effected and limit his regulations so
as to affect any one or more or all of such modes or methods. (Par. 11
added by L. L. 1971, No. 34, June 30, eff. July 1, 1971.)
233
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Appendix J
State of New York
Cities of One Million or More—Solid Waste Disposal,
Containers—Tax
CHAPTER 399
An Act to amend the tax law, by adding thereto provisions enabling1
any city with a population of one million or more to impose taxes
to' promote the recycling of containers and reduce the cost of
solid waste disposal to such city.
Approved June 9, 1971, effective as provided In section 2.
Passed on message of necessity. See Const art. IX, 5 2(b) (2), and
McKinney's Legislative Law § 44.
The People of the State of. New York, represented in Senate and
Assembly, do enact as follows:
Section 1. Section twelve hundred one of the tax law is hereby
amended by adding thereto a new subdivision, to be subdivision (f),
to read as follows':
(f) (1) Taxes on the sale of containers made in whole or in part of
rigid or semi-rigid, paper-board, fibre, glass, metal, plastic or any com-
bination of such materials, including, but not limited to, barrels, baskets,
bottles, boxes, cans, cartons, carrying cases, crates, cups, cylinders,
drums, glasses, jars, jugs, pails; pots, rigid foil containers, trays, tubs,
tubes, tumblers, and vessels, intended for use in packing or packaging
any product intended for sale. Such taxes shall be levied upon the seller
or supplier of the container who or which makes sales thereof to the per-
son who purchases them (whether filled or unfilled) for the purpose
of using them in connection with and as part of sales at retail or who
receives them as containers of products intended for sale at retail.
Where no tax has been paid by such seller or supplier, the buyer or
person who purchases the container to use it or its contents in making
a sale at retail shall be liable for tax thereon upon purchasing such
container. Notwithstanding the provisions of section twelve hundred
twenty of this article, sellers and suppliers having no business situs
in the city imposing the tax, who sell such containers to retailers with-
in the city may pay the tax so as to prevent its levy upon such retailers.
Such taxes shall be imposed at rates not to exceed (i) three cents for
each plastic bottle, (ii) two cents for each other plastic container, (iii)
two cents for each glass container, (iv) two cents for each metal con-
tainer except one cent for metal containers shown to be made of one
metal only. Where a container is made of a combination of two or more
of the materials with which this subdivision deals, it shall be classified
Changes or additions In text are Indicated by underline
234
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and be taxable as if it were made of that of its component materials for
which the following table provides the highest rate:
fibre and paperboard metal glass plastic
1£ 2£ 2£ 3£
(2) Any local law enacted pursuant to this subdivision may provide
that: (i) metal containers and paperboard or fibre containers which
have been impregnated, lined or coated with plastic or other materials
shall be considered to be classified and taxable as metal containers
and paperboard containers, respectively; (ii) paperboard or fibre' con-
tainers with fastenings, tops and/or bottoms made of other materials
dealt with by this subdivision shall be classified and taxed as paper-
board or fibre containers; (iii) paperboard, metal, or plastic caps that
are easily, readily, xisually, and customarily separated from the con-
tainer before disposal shall not be considered part of the container;
and (iv) notwithstanding any exception made pursuant to subpara-
graphs (1), (ii) and (iii) of this paragraph, where a preponderantly glass
container is made of a combination of taxable materials, the complete
separation of which materials is not easily, readily, usually and cus-
tomarily effected after use and before disposal, such container shall
be taxed one cent in addition to the tax otherwise imposed upon it, but;"
no event shall the aggregate tax on such container exceed three cents.
(3) Any local law enacted pursuant to this subdivision may provide
that containers sold or furnished containing products intended for use in
manufacturing processes and not for final retail sale shall be exempt
from such taxes.
(4) Local laws imposing taxes authorized "by this subdivision shall
provide for the allowance of credits against such taxes as follows:
(i) one cent for each taxable container if manufactured with the fol-
lowing iimumum percentages of recycled material:
(A) Paperboard and fibre containers: eighty per cent, if made of
boxboard; thirty per cent if made of foodboard, fibre or con-
tainerboard. . ' . .
(B) Metal containers: thirty per cent if taxed during the period
beginning July first, nineteen hundred seventy-one and ending
June thirtieth, nineteen hundred seventy-two; and forty per cent,
if taxed thereafter.
(C) Glass containers: twenty per cent if taxed during the period
beginning July first, nineteen hundred seventy-one and ending
June thirtieth, nineteen hundred seventy-two; and thirty per cent,
if taxed thereafter.
(D) Plastic containers: thirty per cent.
(ii) one cent for each container of a clearly distinct type, class, pat-
tern or form taxed during any taxable period provided that sixty per
cent or more of all the containers of such distinct type, class, pattern
or form subject to tax during such period were reused containers.
(iii) provided that the credits for each container during any taxable
period shall not exceed the amount of taxes d\ie on such container for
such period.
tftlttfons fay >tflMtu<>
235
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(5) the fiscal officer of any such city in charge of the administration
of any tax imposed pursuant to this subdivision, may be authorized
by any local law enacted pursuant to this subdivision, to prescribe by
regulation, upon the joint recommendation of the chief officer in charge
of the department or agency of such city dealing with the interests of
consumers and the chief officer in charge of the department or agency
of such city charged with the duty of waste collection and disposal:
(i) additional exemptions from and credits against the tax imposed
by such local law; and
(ii) an additional surtax of no more than one cent per container,
to be imposed upon containers made of any of the taxable components
dealt with by this subdivision or any combination thereof.
In granting such exemption or credit or providing for such additional
surtax, the above mentioned officers shall take into consideration the
following qualities and characteristics of the container in question:
(A) the difficulty the container's material poses to the process of
making recycled material. - - - --'
(B) the difficulty of its manufacture from recycled materials.
,(C) the difficulty and relative oost of its disposal. \
(D) any obstacle it poses to consumer protection.
(E) the degree to which the container can or cannot be reused.
(F) the slowness, difficulty, and incompleteness with which the con-
tainer degrades in the natural environment, either chemically or bio-
logically.
Any such exemption, credit or surtax may be revoked by joint action of
such officers, or by local law.
<6) There shall be exempted from any tax imposed pursuant to the
authority of this subdivision, containers used as receptacles for food,
food products, beverages, dietary foods and health supplements, sold
for human consumption but not including (i) candy aad confectionery,
(ii) fruit drinks with contain less than seventy per cent of natural fruit
juice, (iii) soft drinks, sodas and beverages such as are ordinarily dis-
pensed at soda fountains or in connection therewith (other than coffee,
tea and cocoa) and (iv) beer, wine or other alcoholic beverages.
(7) When used in this subdivision the words (i) "recycled material"
mean component materials which have been derived from previously
used material or from new or old scrap material, (ii) "retail sale" or
"sale at retail" means a sale to any person for any purpose other than
for resale as such or as a physical component part of tangible personal
property, (iii) "taxable period" means each calendar month or such other
periods as the official administering any tax enacted pursuant to this
subdivision may provide for by regulation, (iv) "one metal only" means
metal with such minimum amounts of alloys as the officer charged with
the administration of any local law enacted pursuant to this subdivision
ahall provide by regulation, but shall not include metal which has been
plated or lined with another metal. In formulating .such regalatipns
such officer shall consult with the chief officer in charge of the depart-
ment or agency of such city dealing with the interests of consumer* aod
the chief officer in charge of the department or ageney of such city
charged with the duty of waste collection and disposal and shall con-
sider the difficulty of using the metal in the making of recycled material
and the availability of or technical feasibility of manufacturing other
metals for the same purpose and use as the metal in question but with a
lower alloy content.
§ 2. This act shall take effect July first, nineteen hundred seventy-
one, except that local laws may be adopted or amended pursuant to this
act before such date to take effect on or after July first, nineteen
hundred seventy-one.
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Appendix K
Administrative Code of the City of New York
TITLE F*
TAX Oft CONTAINERS
§ F4S--1.0 Definitions.— Wben used in this title, tlie following
terras bliali rneau. and include:
1. "Per.so.-i." Au individual, partnership, society, r.%oeirtion,
joint j.-toek con\pauy, corporation, estate, receiver trustee, assignee,
i ...iL previously used material or from new or old scrap
4.-. "Taxable period." Such, calendar period prescribed for filing
returns by thjs- title or by the finance administrator.
;3. "Rex?.ii ^ale" or "ssle at retail." A sale to any person for any
purpose oti.cr than for resale as such or as a physical component
part of ter^'ibh) personal property.
G. "B-"lc." The sale or furnishing of a container by a s<;l)r,r or
supplier tc >i retailer.
7. "!?(•] i?r or supplier." Any person who sells containers to a
refaDsr
S. "Beteilej-." Any person who purchases containers (whether
iiUcd or um'iUea) for the purpose of using them in connection with
ii.-.'d as pavt oi' ^alos at retail or who receives them as containers of
products ;5it;:nd'id for sale at retail.
£. "City." The city of New York.
.10. "Fiuau'-e A.dmirdstrator." The finance administrator of the
eji.y.
.1. " Comptroller. ' ' The comptroller of the city.
* Added by T». T/. 1971, No. 43, June 30, eff. July 1, 1971.
237
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' § F46-2.0 Imposition of tax.—1. On and after July first, nine-
teen hundred seventy-one, there is hereby imposed within the
city of New York and there shall be paid a tax upon every sale of
a plastic container at the rate of two cents for each container sold:
2. A credit shall be allowed against the taxes imposed by this
title of one cent for each taxable container if manufactured with a
minimum of thirty per cent of recycled material.
CASE NOTES
U 1. Imposition of a tax only on con- contravenes principles of equal pro-
taincrs made in whole or in part of tection and due process of law and
rigid or semi-rigid plastic arbitrarily hence is invalid. Society of Plastics
discriminates against the plastic con- Industry, Inc. v. City of N. Y., 320
tainer industry in favor of the paper, N. Y. S. 2d 788 (1971).
fibre, glass and metal industries and
§ F46-3.0 Presumptions and burden of proof.—For the pur-
pose of proper administration of this title and to prevent evasion
of the tax hereby imposed, it shall be presumed that all sales of
plastic containers are taxable, and not entitled to any credit allowed
against the taxes imposed hereby. Such presumptions shall prevail
until the contrary is established and the burden of proving the
contrary shall be upon the taxpayer.
§ F46-4.0 Payment of the tax.—The tax imposed hereunder
shall be paid by the seller or supplier. However, where the tax has
not been paid on a sale by such seller or supplier, the retailer shall
be liable for tax thereon upon purchasing the container. Should
sellers and suppliers having no business situs in the city, who sell
containers to retailers within the city, pay the tax, the retailer.
purchasing the containers shall not be liable for the tax.
§ F46-5.0 Records to be kept.—Every seller or supplier and
every retailer shall keep records of all plastic containers taxed here-
under and of all purchases and sales thereof and of the taxes due
and payable on the sale or on the purchase thereof, in such form
as the finance administrator may by regulation require. Such
records shall be available for inspection and examination at any
time upon demand by the finance administrator or his duly author-
ized agent or employee and shall be preserved for a period of three
years, except that the finance administrator may consent to their
destruction within that period or may require that they be kept
longer.
§ F46-6.0 Exemptions.—1. The following shall be exempt from
the payment of the tax imposed by this title:
(a) The state of New York, or any of its agencies, instrumen-
talities, public corporations (including a puuiie corporation
created pursuant to agreement or compact with another state
or Canada) or political subdivisions where it is the purchaser.
user or consumer; .. _ _
(b) The United States of America, and any of its
agencies and instrumentalities insofar as it ±s
immune from taxation where it is the purchaser,
user or consumer;
(c) The United Nations or other international
organizations of which the United States of Amer-
ica is a member; and
238
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(d) Any corporation, or association, or trust,
or community chest, fund or foundation, organized
and operated exclusively for religious, charitable,
or educational purposes, or for the prevention of
cruelty to children or animals, and no part of
the net earnings of which inures to the benefit
of any private shareholder or individual, and no
substantial part of the activities of which is
carrying on propaganda, or otherwise attempting
to influence legislation; provided, however, that
nothing in this paragraph shall include an organ-
ization operated for the primary purpose of carry-
ing on a trade or business for profit, whether or
not all of its profits are payable to one or more
organizations described in this subdivision.
2. The following containers shall be exempt
from the tax imposed by this title:
a. Containers sold or furnished containing pro-
ducts intended for use in manufacturing processes
and not for final retail sale.
b. Containers used as receptacles for food,
food products, beverages, dietary foods and health
supplements, sold for human consumption but not in-
cluding (i) candy and confectionery, (ii) fruit
drinks which contain less than seventy percent of
natural fruit juice, (iii) soft drinks, sodas and
beverages such as are ordinarily dispensed at soda
fountains or in connection therewith (other than
coffee, tea and cocoa) and (iv) beer, wine or other
alcoholic beverages.
§ F46-7»0 Returns. Every seller or supplier
shall file with the finance administrator a return
of containers sold and of the taxes due and payable
thereon for the period from the day this tax takes
effect until the last day of September, nineteen
hundred seventy-one and thereafter for each of the
four-monthly periods ending on the last day of Jan-
uary, May and September of each year.
2. Every retailer shall file with the finance
administrator a return of containers purchased by
him from sellers or suppliers having no situs with-
in the city and of the taxes due thereon for the
same periods provided in subdivision one of this
sectione
3. The returns shall be filed within twenty
days after the end of the periods covered thereby.
The finance administrator may permit or require
returns to be made for other periods and upon such
239
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dates as he may specify. If the finance administra-
tor deems it necessary in order to insure the pay-
ment of the tax imposed by this title, he may require
returns to be made for shorter periods than those
prescribed pursuant to the foregoing provisions* of
this subdivision and upon such dates as he may spe-
cify.
4o The forms of returns shall be prescribed by
the finance administrator and shall contain such in-
formation as he may deem necessary for the proper
administration of this title. The finance adminis-
trator may require amended returns to be filed with-
in twenty days after notice and to contain the infor-
mation specified in the notice.
5. If a return required by this title is not filed or :'< ;• -eturn
when filed is incorrect or insufficient on its face the iiu.r-tco r.d^mn-
istrator shall take the necessary steps to enforce the i;JV,~ o": such
a return or a corrected return.
§ F46-8.0 Betermination of tax.—If a return reqai::-*A by this
title is not filed, or if a return, when, filed is iacorrect or \nt\\
the amount of tax due shall be determined by the finance t.to
tor from such information as roay be obtainable and, .»:•- ;:•:.:
the tax may be estimated on the basis of external indie:-;;, o-;.:jh as
volume of sales, inventories, purchases of container, yv v2 raw
materials, production figures, and/or other factors. Xo'lu-j of such
determination shall be given to the person liable for t:?e eeilectio.n
and/or payment of the tax. Such determination shall £;••.;>.'-.'7 &ad
irrevocably fix the tax unless the person against -whom it :"< /v-^ssed,
within, thirty days after giving notice of such determuu-ifcicn, shall
apply to the finance administrator for a hearing, o r^u-^ the
finance administrator of his own motion shall rc-determ-.-u- ihc najne.
After such hearing the finance administrator- shall ••-. (a) *be
amount of any tax sought to be reviewed, with penalties i.uiu ivitatc-at
thereon, if any, shall be first deposited with the fin^utv.- •••>" :.'iu5s-
trator and there shall be filed with the finance adnih-UU•:.:.;:•• an
undertaking, issued by a surety company authorized to li>in?act
business in this state and approved by the supevii^tstic7 ::-•-. •:•': ir.ru.r-
ance of this state as to solvency and responsibility; in su-.''. inount
as a justice of the supreme court shall approve to the ei'.x-ri- fbrt if
such proceeding be dismissed or the tax confirmed, tK- ;'?,;rv.-uer
w?ll pay all costs and charges which majr accrue in the p"^.•.-••:•'>.•::.'..\?3.
of the proceeding; or (b) at the option of the applicant cv.th under-
taking filed with the finance administrator may bo in a sv-'v .,• raicieat
to cover the taxes, penalties and interest thereon stt.tri: :.£•<. EUCO,
determination plus the costs and charges which may cc'Ciu.i ^;-ia;tsst
it in the prosecution of the proceeduig, in wliiel- event the .-.r-i/'loant
shall not be required to deposit such taxes, penalties and interest
as a condition precedent to the application.
So in original.
240
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§ F46-9.0 Refunds.—a. In the. manner provided in 1> '.<: .vrc'.icn
the finance administrator shall refund or credit. withcus' >n-vest.
any tax, penalty or interest erroneously, illegally or i-TK-onstiiu-
tionally collected or paid if application to the finance administrator
for such refund shall be made within one vear from the payment
thereof. Whenever a refund is made by the finance administrator,
he shall state his reasons therefor in writing. Such application may
be made by the sellor or supplier or the retailer or other person who
has actually paid the tax. The finance administrator may, in lieu
of any refund required to be made, allow credit therefor on pay-
ments due from the applicant.
b. An application for a refund or credit made >as herein pro-
vided shall be deemed an application for revision of any tax, penalty
or interest complained of. If the finance administrator, prior to any
hearing being held, initially denies the application for refund, he
shall give notice of such determination of denial to the applicant.
Such determination shall be final and irrevocable unless the appli-
cant, within thirty days after the giving of notice of such deter-
mination, shall apply to the finance administrator for a hearing,
or unless the finance administrator of his own motion shall redeter-
mine the same. After such hearing the finance administrator shall
give notice of his determination to the applicant, who shall be
entitled to review such determination by a proceeding pursuant to
article seventy-eight of the civil practice law and rules, provided
such proceeding is instituted within four months after the giving
of the notice of such determination, and provided that a final deter-
mination of tax was not previously made, ouch a proceeding shall
not be instituted unless an undertaliing is filed with the finance
administrator in such amount and with such sureties as a justice of
the supreme court shall approve to the effect that if such proceeding
be dismissed or the tax confirmed, the petitioner shall pay all costs
and charges which may accrue in the prosecution of such pro-
ceeding.
c. A person shall not be entitled to a revision, refund or credit
under this section of a tax, interest or penalty which had been deter-
mined to be due pursuant to the provisions of section F46-S.O of this
title where he has had a hearing or an opportunity for a hearing,
as provided in said section, or has failed to avail himself of the
remedies therein provided. No refund or credit shall be made of
a tax, interest or penalty paid after a determination by the finance
administrator made pursuant to section P4G-7.0 of this title unless
it be found that such detei'mination was erroneous, illegal or uncon-
stitutional or otherwise improper, by the finance administrator after
a hearing 01* of his own motion, or in a proceeding under article
seventy-eight of the civil practice law and rules, pursuant to the
provisions of said section, in which event refund or credit without
interest shall be made of the tax, interest or penalty found to have
been overpaid.
§ F46-10.0 Reserves.—In cnses where the seller or supplier
or the retailer has applied for a refund and has instituted a proceed-
ing under article seventy-eight of the civil practice law and rules
to reviev a determination adverse to him on bis application for
refund, the comptroller shall set up appropriate reserves to meet
any decision adverse to the city.
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§ F-16-11.0 Remedies exclusive.—The remedies provided by
sections F46-8.0 and F46-9.0 of this title shall bo the exclusive
remedies available to any persoii for the review of tax liability
imposed by this title; and no determination or proposed determma-
tion of tax or determination on any application for refund shall be
enjoined or reviewed by an action for declaratory judgment, an
action for money had and received or by any action or proceeding
other than a proceeding in the nature of a certiorari proceeding
under article seventy-eight of the civil practice law and rules;
provided, however, that a taxpayer may proceed by declaratory
judgment if he institutes suit within thirty days after a deficiency
assessment is made and pays the amount of the deficiency assess-
ment to the finance administrator prior to the institution of such
suit and posts a bond for costs as provided in section F46-8.0 of
this title.
§ F46-12.0 Proceedings to recover tax.—a. Whenever any
seller or supplier or retailer or other person shall fail to pay any
tax, penalty or interest imposed by this title as therein provided,
the corporation counsel shall, upon the request of the finance
administrator bring or cause to be brought an action to enforce the
payment of the same on behalf of the city of New York in any court
of the state of New York or of any other state or of the United
States. If, however, the finance administrator in his discretion
believes that any such sellor or supplier or retailer or other person
is about to cease business, leave the state or remove or dissipate the
assets out of which the tax, penalties or interest might be satisfied,
.and that any such tax, penalty or interest will not be paid when due,
he may declare such tax, penalty or interest to be immediately due
and payable aud may issue a warrant immediately.
b. As an additional or alternate remedy, the finance administra-
tor may issue a warrant, directed to the city sheriff commanding him
to levy upon and sell the real and personal property cf the seller
or supplier or retailer or other person liable for the tax, which may
be found within the city, for the payment of the amount thereof,
with any penalties and interest, and the cost of executing the warr-
ant, and to return such warrant to the finance administrator and
to pay him the money collected by virtue thereof within sixty days
after the receipt of such warrant. The city sheriff shall within
five days after the receipt of the warrant file with the county clerk
a copy thereof, and thereupon such clerk shall enter in the judg-
ment docket the name of the person mentioned in the warrant and
the amount of the tax, penalties and interest for which the warrant
is issued and the date when such copy is filed. Thereupon the
amount of such warrant so docketed shall become a lien upon the
title to and interest in real and personal property of the person
against whom the warrant is Issued. The city sheriff shall then
proceed upon the warrant, in the same manner, and with like effect,
as that provided by law in respect to executions issued against
property upon judgments of a court of record, and for services in
executing the warrant he shall be entitled to the same fees, which
he may collect in the same manner. In the discretion of the finance
administrator a warrant of like terms, force and effect may be
issued and directed to any officer or employe of the finance adminis-
tration, and in the execution thereof such officer or employee shall
have all the powers conferred by law upon sheriffs, but shall be
entitled to no fee or compensation in excess of the actual expenses
paid in the performance of such duty. If a warrant is returned
not satisfied in full, the finance administrator may from time to
time issue new warrants and shall also have the same remedies to
enforce the amount due thereunder as if the city had recovered
judgment therefor and execution thereon had been returned unsatis-
fied.
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c. "Whenever a seller or supplier or the retailer shall make a sale,
transfer, or assignment in bulk of any part of the whole of his
fixtures, or of his stock of merchandise, or of stock or merchandise
and of fixtures pertaining to the conduct or operation of business of
the seller or supplier or the retailer, otherwise than in the ordinary
course of trade and regular prosecution of business, the purchaser,
transferee or assignee shall at least ten days before taking possession
of the subject of said sale, transfer or assignment, or paying there-
for, notify the finance administrator by resistered mail of the
proposed sale and of the price, terms and conditions thereof
whether or not the seller, -transferrer or assignor, has represented
to, or informed the purchaser, transferee or assignee that it owes
any tax pursuant to this title, and whether or not the purchaser,
transferee or assignee has knowledge that s\ich taxes are owing,
and whether any such taxes are in fact owing.
Whenever the purchaser, transferee or assignee shall fail to give
notice to the finance administrator as required by the preceding
paragraph, or whenever the finance administrator shall inform the
purchaser, transferee or assignee that a possible claim for such tax
or taxes exists, any sums of money, property or choses in action, or
other consideration, which the purchaser, transferee or assignee is
required to transfer over to the seller, transferrer or assignor shall
be subject to a first priority right and lien for any such taxes there-
tofore or thereafter determined to be due from the seller, transferrer
or assignor to the city, and the purchaser, transferee or assignee is
forbidden to transfer to the seller, transferrer or assignor any
such sums of money, property or choses in action to the. extent of
the amount of the city's claim. For failure to comply with the
provisions of this subdivision, the purchaser, transferee or assignee,
in addition to being subject to the liabilities and remedies imposed
under the provisions of article six of the uniform commercial code,
shall be personally liable for the payment to the city of any such
taxes theretofore or thereafter determined to be due to thi city
from the seller, transferrer or assignor, and such liability may be
assessed and enforced in the same manner as the liability for tax
under this title.
§ F46-13.0 General powers of the finance administrator.—In
addition to the powers granted to the finance administrator in this
title, he is hereby authorized and empowered:
1. To make, adopt and amend rules and regulations appropriate (
to the carrying out of this title and the purposes thereof;
2. To extend, for cause shown, the time of filing any return for a
pcr.iod not exceeding thirty days; and for cause shown, to remit
penalties but not interest computed at the rate of six per cent per
annum; and to compromise disputed claims in connection with the
taxes hereby imposed:
3. To request information from the tax commission of the state
of New York or the treasury department of the United States rela-
tive to any person; and to afford information to such tax commission
or such treasury department relative to any person, any other
provision of this title to the contrary notwithstanding;
4. To delegate his functions hereunder to a deputy administrator,
assistant administrator, commissioner or deputy commissioner in
the finance administration or to any employee or employees of the
finance administrator;
5. To prescribe methods for determining the containers sold or
supplied or purchased and to determine which are taxable and
nontasable.
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6. To require sellers and suppliers and retailers within the city
to keep detailed records with respect lo containers bought, sold,
used, manufactured or produced, and stock and production records
with respect to such containers whether or not subject to the tax
imposed by this title, and to furnish any information with respect
thereto upon request to the finance administrator;
7. To assess, determine, revise and readjust the taxes imposed
under this title.
§ F46-14.0 Administration of oaths and compelling testimony.
—a. The finance administrator or his employees or agents duly
designated and authorized by him shall have power to administer
oaths and take affidavits in relation to any matter or proceeding in
the exercise of their pov/ers and duties under this title. The finance
administrator shall have power to subpoena and require the attend-
ance of witnesses and the production of books, papers and documents
to secure information pertinent to the performance of his duties
hereunder and of the enforcement of this title and to examine them
in relation thereto, and to issue commissions for the examination
of witnesses who are out of the state or unable to attend before
him or excused from attendance.
b. A justice of the supreme court either in court or at chambers
shall have power summarily to enforce by proper proceedings the
attendance and testimony of witnesses and the production and
examination of books, papers and documents called for by the sub-
poena of the finance administrator under this title.
c. Any person who shall refuse to testify or to produce books or
records or who shall testify falsely in any material matter pending
before the finance administrator under this title shall be guilty of a
misdemeanor, punishment for which shall be a fine of not more than
one thousand dollars or imprisonment for not more than one year,
or both such fine and imprisonment.
d. The officers who serve the summons or subpoena of the finance
administrator and witnesses attending in response thereto shall be
entitled to the same fees as are allowed to officers and witnesses
in civil cases in courts of record, except as herein otherwise
provided. Such officers shall be the city sheriff and his duly
appointed deputies or any officers or employees of the finance
administration, designated to serve such process.
§ F46-15.0 Penalties and interest.—a. Any person failing to
file a return or to pay any tax to finance administrator within the
time required by this article shall be subject to a penalty of five
percent of the amount of tax due; plus interest at the rate of one
percent of such tax for each month of delay excepting the first
month after such return was required to be filed or siich tax became
due; but the finance administrator if satisfied that the delay was
excusable, may remit all or any part of such penalty, but not
interest at the rate of six percent per year. . Such penalties and
interest shall be paid and disposed of in the same manner as other
revenues from this title. Unpaid penalties and interest may be
enforced in the same manner as the tax imposed by this title.
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b. Any seller or supplier or any retailer or any officer of a cor-
porate seller or supplier or retailer, failing to file a return as
required by this title, or filing or causing to be filed or making or
causing to be made or giving or causing to be given any return,
certificate, affidavit, representation, information, testimony or state-
ment required or authorized by this title which is willfully false,
and any sellor or supplier or any retailer or any officer of a cor-
porate seller or supplier or retailer failing to keep the records
required by subdivision six of section F46-13.0 of this title, shall,
in addition to the penalties herein or elsewhere prescribed, be
guilty of a misdemeanor, punishment for which shall be a fine of
not more than one thousand dollars or imprisonment for not more
than one year, or both such fine and imprisonment. It shall not be
any defense to a prosecution under this subdivision that the failure
to file a return or that the actions or failures to act mentioned
in this subdivision was unintentional or not willful.
c. The certificate of the finance administrator to the effect that a
tax has not been paid, that a return has not been filed, or that
information has not been supplied pursuant to the provisions of
this title, shall be presumptive evidence thereof.
§ F46-16.0 Returns to be secret.—a. Except in accordance
with proper judicial order, or as otherwise provided by law, it shall
be unlawful for the finance administrator, any officer or employee
of the finance administration, any person engaged or retained on
an independent contract basis or any person who, pursuant to
this section is permitted to inspect any return or to whom a copy,
an abstract or a portion of any return is furnished, or to whom any
information contained in any return is furnished, to divulge or make
known in any manner any information contained in or relating to
any return required under this title. The officers charged Avith
the custody of such returns shall not be required to produce any of
them or evidence of anything contained in them in any action or
proceeding in any court, except ou behalf of the finance administra-
tor ir. an action or proceeding under the provisions of this title, or
on behalf of any party to any action or proceeding under the provi-
sions of this title, when the returns or facts shown thereby are
directly involved in such action or proceeding, in either of which
events the court may require the production of, and may admit in
evidence, so much of said returns or of the facts shown thereby, as
are pertinent to the action or proceeding and no more. Nothing
herein shall be construed to prohibit the delivery to a taxpayer or
his duly authorized representative of a certified copy of any return
fil«d.in connection with his tax; nor to prohibit the delivery of such
a. certified copy of such return or of any information contained in
or relating thereto, the United States of America or any depart-
ment, thereof, to the state of New York or any department thereof,
or to any agency or department, of the city of New York, provided
the same is requested for official business; nor to prohibit the inspec-
tion for official business of such returns by the corporation counsel
or other legal representatives of the city of or by the district
attorney of any county within the city; nor to prohibit the publica-
tion of statistics so classified as to prevent the identification of
particular returns and the items thereof. Returns shall be pre-
served for throe years and thereafter until the finance administrator
permits them to be destroyed.
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b. Any violation of subdivision a of this section shall be punish-
able by a fine not exceeding one thousand dollars, or by imprison-
ment not exceeding one year, or both, in the discretion of the court,
and if the offender be an officer or employee of the city he shall be
dismissed from office and be incapable of holding any public office
for a period of five 3rears thereafter.
§ F46-17.0 Notices and limitations of time.—a. Any notice
authorized or required under the provisions of this title may be
given by mailing the same to the person for whom it is intended in
a postpaid envelope addressed to such person at the address given
in the last, return filed by him pursuant to the provisions of this
title or in any application made by him or, if no return has been
filed or application made, then to such address as may be obtainable.
The mailing of such notice shall be presumptive evidence of the
receipt of Hie same by the person to whom addressed. Any period
of time which is determined according to the provisions of this
title by the giving of notice shalj commence to run from the date
of mailing of such notice.
b. The provisions of the civil practice law and rules or any other
law relative to limitations, of time for the enforcement of a civil
remedy shall not apply to any proceeding or action taken by the
city to levy, appraise, assess, determine or enforce the collection
of any tax or penalty provided by this title. However, except in the
case of a wilfully false or fraudulent return with intent to evade
the tax, no assessment of additional tax shall be made after the
expiration of more than three years from the date of the filing of
a return; provided, however, that where no return lias been filed
as provided by law the tax may be assessed at any time.
c. "Where, before the expiration of the period prescribed herein
for the assessment of an additional tax. a taxpayer has consented in
writing that such period be extended, the amount of such additional
tax due may be determined at any time within such extended
period. The period so extended may be further extended by sub-
sequent consents in writing made before the expiration of the
extended period.
§ F46-18.0 Construction and enforcement.—This title shall be
construed and enforced in conformity with chapter three hundred
ninety-nine of the laws of nineteen hundred seventy-one, pursuant
to which it is enacted.
§ F46-19.0 Separability.—In* any provision of this title, or the
application thereof to any person or circumstances, is held invalid,
the remainder of this title, and the application of such provisions
to other persons or cireumstanc3s shall not be affected thereby.
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Appendix L
Vermont Property Tax Relief Act
32 V.S.A. §§5961 etseq.
NO. 81. AN ACT TO AMEND 32 V.S.A. §§ 5961, 5962 (e), 5967, a claimant's request the listers shall certify to him the value of
5968, 5973; TO ADD 32 V.S.A. §§ 5976, 5977 AND 32 V.S.A. his homestead.
CHAPTER 230 AND TO REPEAL 32 V.S.A. § 5966 RE-
LATING TO PROPERTY TAXES. Sec. 3. 32 V.S.A. § 5967 is amended to read:
(H. 155)
It is hereby enacted by the General Assembly of the State of
Vermont:
Sec. 1. 32 V.S.A. § 5961 is amended to read:
§ 5961. Definitions
(a) The following definitions shall apply throughout this chapter
unless the context requires otherwise:
(1) "Effective tax rate" means 100 times the total property
taxes raised by the municipality divided by the equalized fair
market value of the property in the municipality as determined in
section 3458a of Title 16.
(2) "Homestead" means the dwelling, situated within the
state of Vermont, owned or rented by the claimant, and as much
of the land surrounding it as is reasonably necessary for use of the
dwelling as a home but in no event to exceed two acres; and may
consist of a part of a multi-dwelling or multi-purpose buiWing and
a part of the land upon which it is built. A mobile home may con-
stitute a homestead for purposes of this chapter.
(3) "Household" means, for any individual and for any tax-
able year, the individual and such other persons as resided with
the individual in his homestead at any time during the taxable year.
(4) "Household income" means modified adjusted gross in-
come received by all persons of a household in a calendar year
while members of that household.
(5) "Modified adjusted gross income" means the sum of "ad-
justed gross income" as defined in section 5811 of this title, ali-
mony, support money, cash public assistance and relief (not includ-
ing relief granted under this subchapter), cost of living allow-
ances paid to federal employees, allowances received by dependents
of servicemen, the gross amount of any pension or annuity (includ-
ing railroad retirement benefits, all payments received under the
Federal Social Security Act, and all benefits under Veteran's Acts),
nontaxable interest received from the state or federal government
or any of its instrumentalities, workmen's compensation, the gross
amount of "loss of time" insurance, and the amount of capital
gains excluded from adjusted gross income. It does not include
gifts from nongovernmental sources, or surplus food or other relief
in kind supplied by a governmental agency.
(6) "Property tax" means the amount of liability for the ad
valorem tax actually paid by a claimant for real estate taxes, ex-
clusive of special assessments, delinquent interest and charges for
service, assessed on real property in this state used as his home-
stead in the taxable year.
(7) "Rent constituting property taxes" means for any home-
stead and for any taxable year, 20 per cent of the gross rent
actually paid during the taxable year by the individual or other
members of his household solely for the right of occupancy of their
homestead in this state during the taxable year, but shall not in-
clude any part of rent paid for occupancy of premises which are
legally exempt from the payment of property taxes thereon.
Sec. 2. 32 V.S.A. § 5962(e) is amended to read:
-------
ing on June 30, The commissioner shall calculate and publish such
percentages for each municipality.
Sec. 5. 32 V.S. A. § 5973 is amended to read:
§ 5973. Excessive and fraudulent claims
(a) In any case in which it is determined under the provisions
of this title that a claim is or was excessive and was filed with
fraudulent intent, the claim shall be disallowed in full, and, if the
claim has been paid or a credit has been allowed against income
taxes otherwise payable, the credit shall be cancelled and the
amount paid may be recovered by assessment as income taxes
are assessed. A penalty of twenty-five per cent of the amount
claimed shall be imposed and the assessment shall bear interest
from the due date of the return, until refunded or paid, at the
rate of one-half of one per cent per month. The claimant in that
case, and any person who assisted in the preparation of filing of such
excessive claim or supplied information upon which the excessive
claim was prepared, with fraudulent intent, shall be guilty of a mis-
demeanor.
(b) In any case in which it is determined that a claim is or was
excessive the commissioner may impose a ten per cent penalty on
such excess and if the claim has been paid or credited against in-
come taxes otherwise payable, the credit shall be reduced or can-
celled, and the proper portion of any amount paid, shall be simi-
larly recovered by assessment as income taxes are assessed and
such assessment shall bear interest at the rate'of one-half of one
per cent per month from the date of payment until refunded or
paid.
(c) In any case in which a homestead is rented by a person
from another person under circumstances deemed by the commis-
sioner to be not at arms-length, he may determine the tax factor
in rent for purposes of this chapter.
Sec. 6. 32 V.S.A. § 5976 is added to read:
§ 5976. Property tax relief trust fund
(a) A property tax relief trust fund is hereby established for
the payment of property tax credits or claims under this chapter.
The fund shall be comprised of three million dollars of the general
revenue-sharing funds paid to the state in fiscal year 1973 by the
federal government pursuant to the State and Local Fiscal Assis-
tance Act of 1972 (P.L. 92-512), and the entire amount of general
revenue-sharing funds paid to the state in the subsequent fiscal
years by the federal government pursuant to that act. In addition
the fund shall include all revenues collected during each fiscal year
from the tax on the gains from the sale or exchange of land im-
posed by chapter 236 of this Title in excess of $500,000.00. The gen-
eral assembly may appropriate additional funds to the property tax
relief trust fund. All interest accrued or generated by revenue in the
fund shall remain in the fund to be expended in accordance with its
purposes. Of the above funds $200,000.00 shall be made available
to the commissioner of taxes for the administration of this act.
(b) Any funds in the property tax relief trust fund not ex-
pended in any fiscal year shall be carried over for expenditure in
future fiscal years.
Sec. 7. 32 V.S.A. § 5977 is added to read:
§ 5977. Payments of claims
(a) The property tax relief trust fund shall be used for the pay-
ment of claims for credits under this chapter.
(b) No credit shall be claimed or paid in any fiscal year in which
the federal government provides no general revenue-sharing funds
pursuant to the State and Local Fiscal Assistance Act of 1972
(P.L. 92-512).
(c) Credits shall be paid in full upon receipt of claims from per-
sons who were 65 years of age or older during any portion of the
year for which the claims were filed.
(d) The commissioner shall not pay any claims to claimants who
were under 65 years of age on the last day of the taxable year
for which the claim is made until the total amount of all timely-
filed claims has been paid under subsection (c) of this section.
After payment of the claims under subsection (c) of this section
the balance of the property tax relief trust fund shall be available
to pay the claims of claimants under the age of 65 on the last
day of the taxable year for which the claim is made. Such balance
shall be determined as of June 30, annually, less the sum of
$20,000.00 annually for payment of late-filed c'aims approved by
the commissioner under section 5970 of this title and less the sum
of $200,000.00 provided for administrative expenses under § 5976
(a) of this act.
(e) If insufficient funds exist to pay the full amount of all
claims of persons under age 65 on the last day of the taxable year
for which the claim is made, payments shall be made to such claim-
ants proportionately. No payment shall exceed 100 per cent of the
amount of the claim.
(f} Late-filed claims approved by the commissioner under section
5970 of this title shall be paid at the same percentage thereof as
timely-filed claims, until the funds provided under subsection (d)
of this section for the payment of such claims have been exhausted.
(g) All claimants under age 65 on the last day of the taxable
year for which a claim is made shall file for a credit on forms pre-
pared by the commissioner. Such claims filed for the taxable years
1973 and 1974 shall be processed separately from the Vermont
income tax returns filed by the claimants, and no amount of a claim
shall be allowed as a credit against the tax liability under chap-
ter 151 of this title. The commissioner shall not proceed to pay
such claims until after June 30 annually, for claims filed for the
immediately preceding taxable year.
Sec. 8. 32 V.S.A. Chapter 236 is added to read:
Chapter 286. Tax on Gains From the Sale or
Exchange of Land
§ 10001. Tax imposed
There is imposed, in addition to all other taxes imposed by this
title, a tax on the gains from the sale or exchange of land in
Vermont.
§ 10002. Land
Land means all land, whether or not improved, but does not
include land, not exceeding one acre, necessary for the use of a
dwelling used by the taxpayer as his principal residence. Buildings
or other structures are not included in this definition of land.
§ 10003. Rate of tax
The tax imposed by section 10001 of this title shall be based
upon the years held at the following rates on the gain, as gain is
determined under section 10005 of this title:
Years land held by
transferor
0-99%
Less than 1 year 30%
1 year, but less than 2 25%
2 years, but less than 3 20%
3 years, but less than 4 15%
4 years, but less than 5 10%
5 years, but less than 6 5%
*Gain, as a percentage
of basis (tax cost)
100-199% 200% or more
45% 60%
37.5% 50%
30% 40%
22.5% 30%
15% 20%
7.5% 10%
§ 10004. Sale or exchange
(a) As used jn this chapter "sale or exchange of land" shall
mean any transfer of title to land for a consideration. As used in
this chapter "transfer" and "title" shall have the same meaning as
"transfer" and "title to property" as used in section 9601 of this
title, except as modified or enlarged by explicit provisions of this
chapter and as limited herein to land. The transfer of an option
for the sale or exchange of land shall be considered a transfer
of title to land for the purposes of this chapter.
(b) Contracts for the sale of land constitute sales or exchanges
of land for all purposes of this chapter. However, contracts shall
* Gain, as percent of basis, shall be rounded to the next highest whole
percentage.)
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not constitute sales or exchanges until some consideration has
passed thereunder to or for the benefit of the seller or exchanger.
The sale or exchange is considered to take place at the time any
consideration whatsoever, of whatever nature, first passes under
the contract. A mere promise to purchase, and amounts paid as
earnest money, or amounts paid in deposit or ahiounts paid in
escrow to which the seller has no immediate right, do not consti-
tute the passing of consideration for the purposes of this chapter.
(c) Any sale or exchange of shares in a corporation or other
entity, or of comparable rights or property interests in any other
form of organization or legal entity, which effectively entitles the
purchaser to the use or occupancy of land constitutes a sale or
exchange of land.
§ 10005. Basis, gain and holding period
(a) The provisions of the Federal Internal Revenue Code shall
determine the basis (tax cost) of land sold or exchanged.
(b) The amount realized from the sale or exchange shall be
the full actual consideration therefor, paid or to be paid, including
the amount of any liens or encumbrances on the land existing
before the sale or exchange and not removed thereby. The amount
realized from the sale or exchange shall be the gross amount
thereof, reduced by any expenses of sale and commissions. In the
event that a sale includes land and buildings or other structures,
the amount realized shall be allocated between the land and the
buildings or other structures on the basis of fair market value.
(c) The taxable gain from the sale or exchange is the amount
realized minus the basis (tax cost) of the land as determined un-
der subsection (a) of this section. No gain shall be recognized in
cases where gain is not recognized under the Federal Internal Rev-
enue Code, as amended, in relation to the sale or exchange of
capital assets.
(d) The land sold or exchanged shall be deemed to have been
held as determined under the Federal Internal Revenue Code for
the same length of time that the seller or exchanger thereof has
had actual and recorded title thereto in his own name, and shall
include the time the land was so held prior to the effective date
of this chapter. If a husband and wife are tenants by the entirety
there may be added to the holding period the amount of time the
land was held by one spouse alone before that spouse created the
tenancy by the entirety. In the case of a gift, the holding period
of the donee shall include the time that actual and recorded title
was held by the donor.
(e) The taxable gain under this chapter from the sale or ex-
change of land shall not be reduced by any losses incurred in other
transactions.
§ 10006. Liability for tax
The peraon liable for the tax is the transferor (which includes
the owner, seller, or other exchanger) of the land sold or ex-
changed.
§ 10007. Withholding at source; payment
(a) The buyer or transferee of any land held by the seller or
transferor for less than six years, shall withhold ten per cent of
all consideration paid to the seller or transferor for such land,
including ten per cent of all partial payments made pursuant to
installment sales under section 10008 of this title. At the time any
payment is made to the seller or transferor, the amounts withheld
shall be remitted to the commissioner of taxes.
(b) Within 30 days of the sale or exchange of land, for which
withholding is required under this section, the seller or transferor
shall file a return with the commissioner of taxes setting forth the
amount of the tax due pursuant to section 10003 of this title and
the amount withheld by the buyer or transferee pursuant to sub-
section (a) of this section. The seller shall either remit with the
return the balance of the tax due or make claim for a refund. Any
refund not made by the commissioner within 15 days of receipt
by him of a valid claim shall accrue interest at the rate of one-
half of one per cent per month. For good cause shown and upon
conditions sot by him, the commissioner may extend the time for
filing the return and paying the tax required by this chapter.
(c) Notwithstanding either subsection (a) or (b) of this sec-
tion, the seller or transferor may, in advance of the sale or ex-
change, pay the tax imposed by this chapter or obtain a written
ruling from the commissioner of taxes that no tax is due under
this chapter. In either case the commissioner shall certify to the
seller or transferor that such payment has been made or that no
tax is due. Upon receipt by the buyer or transferee of such cer-
tification from the seller or transferor, the buyer or transferee
shall not be required to withhold under subsection (a) of this
section.
(d) All taxes required to be paid or withheld under this chap-
ter shall constitute a personal debt of the person liable to pay or
withhold the same to the state of Vermont to be recovered in an
action on this statute.
(e) An action may be brought to recover the amount of the
taxes to be paid or withheld in the manner prescribed for recover-
ing amounts owed for taxes under chapter 151 of this title. The
amount of taxes to be paid or withheld shall be a lien in favor of
the state of Vermont upon all property and rights to property,
whether real or personal, belonging to the person liable for the tax
or for the withholding. The lien shall be enforced in the manner
prescribed by section 5895 of this title.
§ 10008. Installment sales
(a) For the purpose of this section "installment sale" means
sale or exchange of land as defined in section 10004 of this title
for which the total tax due under this chapter is greater than
$2,000.00 and in which the parties agree in advance that pay-
ments shall be received by the seller or transferor in more than one
installment on a date or dates other than the date of closing. A
sale financed by a mortgage, deed of trust, or other financing ar-
rangement in which the seller or transferor is paid in full on the
dale of the sale or exchange shall not be considered an installment
sale. A lease-purchase agreement under which any part of the rent-
al payments constitute a portion of the purchase price of the land
shall be considered an installment sale, and for the purposes of
this chapter the end of the holding period with respect to the sale
or exchange shall be determined as of the date of the agreement.
(b) Notwithstanding any provision of law to the contrary, the
tax under this chapter on any installment sale shall be due within
30 days of the date of payment of each installment paid to the
seller or transferor. However, except for the first installment the
seller or transferor may elect to file his return as part of his Ver-
mont income tax return for any year in which subsequent install-
ments are paid or due, and to pay the balance of such tax as part
of such income tax; provided that, if the seller or transferor elects
to file annual returns no interest shall accrue on any withholding
as provided by section 10007 (b) of this title.
(c) In an installment sale, the total amount of taxes due under
this chapter shall be the amount that would have been due had
the total purchase price been paid on the date the sale or exchange
took place. The amount of taxes due on each separate installment,
including the first installment, shall bear the same proportion to
the total amount of taxes due as the amount of that installment
bears to the total consideration.
§ 10009. Administration of tax
(a) The commissioner of taxes shall administer and enforce this
chapter and this tax. He may issue, amend, and withdraw from
time to time, reasonable regulations to assist such administration
and enforcement.
(b) All the administrative provisions of chapter 151 of this title,
including those relating to the collection and enforcement by the
commissioner of the withholding tax and the income tax shall ap-
ply to the tax imposed by this chapter.
§ 10010. Criminal penalties
(a) Any person who wilfully defeats or evades or attempts to
defeat or evade the tax imposed by this chapter shall be imprisoned
249
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not more than one year or fined not more than $10,000.00 or five
times the amount of the tax defeated or evaded or attempted to be
defeated or evaded, whichever is larger, or may be both thus
imprisoned and fined. A corporation or other taxable entity not
being a natural person shall be subject to the fine provided by this
section.
(b) Any officer, employee, director, trustee or other responsible
person of a corporation or other taxable entity, and any other per-
son, who counsels, aids, abets, participates in, or conceals the de-
feat or evasion of tax, or the attempt thereat, shall be subject
to the penalties of subsection (a) of this section.
(c) The form for the payment of the tax under this chapter
shall set forth in large type the penalties provided by this sec-
tion.
Sec. 9. 32 V.S.A. § 5966 is repealed.
Sec. 10. Preparation of property maps
The first $500,000.00 of revenues collected during each fiscal
year commencing July 1,1973 and thereafter from the tax on gains
from the sale or exchange of land under chapter 236 of Title 32
shall be used by the commissioner for the preparation of property
maps required by section 3409 of Title 32.
Sec. 11. This act shall take effect May 1, 1973; except that sec-
tions 1 through 7 shall apply only to property taxes assessed and
paid for the calendar year 1973 and thereafter.
Approved: April 23,1973.
250
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Appendix M
COLECTION OF LAWS
OF THE
CZECHOSLOVAK
SOCIALIST REPUBLIC
Decree of the Government No 16 from March 12,
1966 concerning indemnities for discharging
untreated or Insuflclently treated waste waters
Into streams.
In accordance with par. 27, chapt. 2 of the Wa-
ter Act 1955 (No 11), as newly formulated in the
Law No 12, 1959, according to par. 391 of the
Economy Act 1964, according to par. 20 of the
State Budget Act 1959 (No 8), further according
to par. 11 of the Financial Act 1958 (No 83), the
Government of the Czechoslovak Socialist Repu-
blic proclaims.
Par. 1.
The object of the Decree
Considering the necessity of gradual improve-
ment of the water quality In streams the present
Decree states the duty of water users to pay
according to conditions herein stipulated Indem-
nities to appropriate River Boards for dischar-
ging untreated or Insufficiently treated wastes
Into streams.
(2} Idemnltles shall be paid by those water
users, who discharge wastes containing su-
spended solids and organic natter characte-
rized by biochemical oxygen demand *).
(3) The duty to pay indemnities does not con-
cern water users who d'scharge wastes of the
same as taken up quality, or If wastes are
discharged Into public sewers.
(4J The River Board may refra'n frcin demanding
the Indemnity if the pollution does not exceed
50 tons BOD or 300 tons suspended solids per
year.
,5} By paying the indemnity the water user Is
not rid of the liability for damage caused lit
respect of the Code of Economic and Civie
Law; indemnities paid according to the pre-
sent proclamation cannot be regarded as a
part of reccmpensatian paid Ccr such da-
mage.
(6) Payment of Indemnities and rendered infor-
mation, concerning the quality and quantity Df
discharged pollutants (par. 6) cannot be re-
garded neither as a substitution of the Wa-
ter Authority's permission granting water
uptake and discharge, nor as an' application
for it.
Par. 2
Duty to pay indemnities
(1) Water -users discharging untreated or insuf-
ficiently treated wastes Into streams are ob-
liged to pay indemnities for discharging these
wastes according to the quantity of dischar-
ged pollutants and their harafulness. The
duty to pay Indemnities is not affected by
the fact, that the water user has obtained
the Water Authority's consent to discharge
such wastes according to par. 8 sub 3 b of the
Water Act.
Par. 3
The basic indemnity
(1) The basic Indemnity is determined according
to costs required by the specific or generaly
practicable method of treatment.
•J The biochemical oxygen demand (BOD) re-
presents the amount of oxygen consumed for
decomposition of organic putrescible substan-
ces present in the water sample during five
days Incubation.
251
-------
(2) The basic indemnity is the product of the
indemnity unit (par. 4) and the amount of
pollutants per year-
(3) If there are at hand preliminary or design
documentations of the treatment plant for
the disposal of that pollution which has to
be indemnified, these documentations shall
be used with preference for the determina-
tion of the unit and basic indemnities. When
determining the indemnities, the benefits
achieved by operating the treatment plants,
e. g. utilizing valuable substances from waste
waters, shall not be taken in account.
(4) In such cases where an enterprise or sewer
system has several outflows, the amounts of
pollutants from the respective outlets arc su-
mmed for the purpose of determining the
unit and basic indemnities. They are taken
separately only in such cases where techno-
logical reasons and possibilities to link them
do not exist; for the determination of surta-
xes (par. 5, chapt. 1) basic indemnities are
added according to individual Indicators.
(5} If the water user has facilities for accumu-
lation and controlled discharge of polluted
effluents, the indemnities shall be determi-
ned according to the discharged pollution
per year, after subtracting pollutants contai-
ned in the accumulation plant. The subtra-
cted amount, however, must not be greater than
corresponding to water quality deterioration
by 2.5 mg/1 BOO If calculated for the annual
average discharge of the receiving stream.
Par- 4
The indemnity units
(1) The indemnity units for the pollution indica-
tors, BOD and suspended solids, are calcula-
ted as shown in the Appendix, part A.
(2) In such cases where the indemnity unit cal-
culated according to the Appendix, Pi-rt A.
item 2. dees not reflect costs of an effective
treatment of the respective wastes, the indem-
nity unit shall be determined by the use of
technical and economical data as described
in the Appendix, Part A, item 1. On demand.
the water user Is obliged to present to the
River Board the necessary data and docu-
ments.
Par. 5
Surtax
(1) Over and above the basic indemnity (§ 3) a
surtax will be set, the magnitude of which
depends on the degree of water quality dete-
rioration In the receiving stream. The method
of calculation is given in the Appendix, Fart B.
(2) The surtax to the basic indemnity shall be
maximally 100 per cent of :he basic indem-
nity.
• (3) In justified cases the River Board may de-
crease the calculated surtax down to 10 per
cent of the basic indemnity.
Par. 8
Information concerning the amcnnt cf pollutant!
(1) Water users are obliged to Inform the River
Board about the discharged pollutants. Inclu-
ding:
a) the annual discharge of wastes and the
rate of discharge in liters per second
b) the amount cf BOD in mg'l. kg'day and
tons/year
c) the amount of suspended solids in mg/1,
kg'day and tons/year.
(2) Water users will further render information
about dISphargi1 g of wastes In the course of
the day.
252
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If preliminary or design documentations are
at hand, from which the indemnity can be
calculated (§ 3, item 3) this documentations
shall be annexed to the information.
In determining the required data, analysis of
a composite 8"hrs waste water sample, taken
during the main shift Is usually decisive.
Water users may agree with the River Board
on a different way to obtain the data. If se-
veral different results of analyses are avai-
lable, their mean value shall be taken as a
basis.
(3) The first date for presentation the informa-
tion is June 30, 1966.
Par. 7
Determination of the magnitude of the indemnity
(1) The determinations of Indemnities and any
changes are carried out, for the coming year,
before July 31. Request to alter the magnitu-
de of the indemnity shall be delivered to
the River Board not later than 40 days before
this date. If a water user does not nrake a
request of alteration within this term the
preceding indemnity continues to apply. The
River Board shall take a decision on such a
request within 30 days. If no decision is gi-
ven within this period, the data furnished by
the water user shall be decisive.
(2) If water user does not present the data ne-
cessary for the determination of idemnlties
(§ 3, item 3, § 6), data available to the River
Board will be applied.
(3) The River Board shall inform the water user
about the time when the duty of paying an
Indemnity originates, its magnitude and the
magnitude of monthly rates.
f4) In such cases where a substantial, not ftw-
seen changes in the discharged pollutants
will take place, the River Board shall adjust.
the magnitude of the Indemnity either by re-
quest of the water user or based on an In-
spection report, in a temporary or lasting
manner. The request must be made within
one month after the change of discharge
amount of pollutants. Failure to present in-
formation en the magnitude of pollution shall
be punished by a fine according to special
regulations.
Payment of indemnities
Par. 8
(1) In the case of »economlc« and >special bud-
getary* enterprises and organizations the
basic Indemnity is a part of their running
costs.
(2) The surtax is paid by the 'economic* organi-
zations frcm the share of their gross income
(profit), after their quota to the state budget
has been delivered. With »special budgetary*
organizations the surtax forms a part of un-
realizable less.
(3) The »budge!ary« organizations pay the entire
indemnity from the account »various finan-
cial costs*. The basic indemnity only is a
part of budgetary expenditures. The surtax
shall not be included in the budget and is
paid from budgetary savings.
Par. 9.
(1) Indemnities -according to this proclamation
are paid to the River Board.
(2) Indemnities are payable euch 25th day of the
months, the sum paid monthly being one
twelfth of the annual indemnity. The River
Board may agree with the water user also
a different schema of monthly rates. The
payments transferred with delay or Incomple-
te are liable to a penalty of I per thousand
of the non-pa'd sum for every day of delay.
253
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Par. 10
Special waste waters
The proclamation also .relates to special waste
waters (§ 13 of the Water Act 1955) discharged
Into streams, as far as the Central Water Autho-
rity decides otherwise In agreement the -respecti-
ve goverment bodies.
Par. 11
Streams under the administration of agricultural
organizations
This proclamation also applies to the discharge of
wastes into streams, which are administered by
agricultural organizations. Exercise of rights and
duties following from this proclamation belongs
to the River Boards (§ 1).
Par, 1Z
Inspection
The correct application of th'.s Decree shall be
subject to supervision by the State Water Pollu-
tion Inspection Board.
Par. 13
Final statements
(1) Water users are obliged to pay Indemnities
according this proclamation starting from
January 1, 1987.
(2) This Decree shall be effective from April 1
1966.
APPENDIX
A. Method of calculation of indemnity anils
Idemnlty units are calculated from preliminary
or desing documentations, or from general regre-
stons.
1. From a preliminary or design documentations
or from other technical and economical do-
cumentations, as far as they are acceptable
for indemnity determination, the indemnity
unit for BOD is calculated as a ratio of to-
tal annual runnrng costs of the devices re-
moving organic matter characterized by BOO
to total BOD removal per year. The Indem-
nity unit is expressed in KftVkg BOD (KCs -
Czechosl- crown).
Analogically will be calculated the indemni-
ty unit for suspended solids as a ratio of to-
tal annual running costs cf toe devices remo-
ving suspended solids from waste waters to
total suspended solids removal per year. The
Indemnity unit Is expressed in Kcs/ton sus-
pended solids.
For both Indicators, indemnity units are cal-
culated with an accuracy of three decimal
places.
In cases where the device serves to remove
both the substances, organic matter characte-
rized by BOD and suspended solids, the docu-
mentations used to calculate the indemnity
must contain a subdivision of costs Into the
two parts.
2. A general calculation of indemnity units is
based on the annual amount of pollutants,
I. e- the amount of organic matter characte-
rized by BOD and the amount of suspended
solids, expressed In both cases in tons/year.
Regresicns of indemnity units and the amo-
unt of pollutants are as fallows:
a) for BOD the Indemnity unit Is equal to
5 — log x, where x is the amount of
discharged organic matter, characterized
by BOD, expressed In tons/year. The in-
demnity unit is expressed in KCs/kg BOD;
b] for suspended solids logarithm of Indem-
nity unit is equal to 2,75 — 0,25 log y,
where y Is the amount of discharged su-
spended solids, expressed In tons/year.
The indemnity unit is expressed In KCs/
ton suspended solids.
The indemnity units sure calculated with an
accuracy of three decimal places.
The 'basic indemnity for the respective Indi-
cator Is calculated by multiplying the yearly
amount of pollutants with Wie Indemnity unit
In both described methods of calculation
(item 1 or 2).
B. Method of calculation of the surtax to the
basic indemnity
The magnitude of the surtax to the basic indem-
nity depends on the degree of water quality de-
terioration in the stream, caused by the water
user. The basic unit of deterioration is one twen-
tieth of the difference of standards for water
quality class IB and II (According to the Czecho-
slovak standards CSN 830612 — »Appreclatlon
of surface water quality and Its classification*).
The omit for BOD Is 0,25 mg/1 and for suspended
solids 0,50 mg/1.
The amount of discharged pollutants and the flow
In the stream guaranted for 355 days In an avera-
ge year shall be taken In account when calcula-
ting the deterioration. The surtax to the basic
Indemnity makes than so many percent of the
basic indemnity, how many times the unit of de-
terioration Is contained in the calculated deterio-
ration of the water quality in the stream. The
number of percents of the surtax for the respecti-
ve indicators te ralcuk-"kl and rounded off to
next integer.
The resulting surtax to the >asic Indemnity In Its
pecuniary form :n Kes Is the sum of surtaxes cal-
culated according to both Indicators, I. e. BOD
and suspended solids.
254
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Appendix to the staTe^ecree No. 40/1969/XI. 25./,
- . . ,. Peoples' Republic of Hungary
Sorts and limits of harmful pollution andThe amount of the charge
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
Polluting
Sort of Pollution
COD /K2Cr20?/
Oils and fats / by organic solvent
extract
I.
Matters
limit
mg/1
75
10
pH value under 6. 5 - over 8. 5
Dissolved matter natural
technological
Sodium * * 45
Phenolic compounds
Solid substances
Tar
Ammonium ions
Iron
Manganese
Surfactants /anionic /
PO ***
N0_ ***
Sulphide /S /
Chlorine /free /
Fluoride
2000
2000
equivalent %
3
1000
2.5
30
5
2.5
5
4
20
5
2
10
amount of charge
Ft/kg
1.-
20.-
5.-
0.10
1.-
2.-
50.-
0.50
120. -
1.-
5.-
20.-
60.-
5.-
1.-
100.-
50.-
50.-
* Converted to adequate amount of NaOH or HC1
* *The overstepped amount of 45 equivalent % in kg
* * * Those components are to be taken into account in
catchment areas of lakes and reservoirs.
H.
Toxic Matters
18. Cyanide /free /* 0.2 5000.-
19. Cyanide/total/** 10 50.-
20. Copper 25 50.-
21. Lead 10 100.-
22. Chromium/hexavalent / 10 100.-
23. Chromium /trivalent / 50 5. -
24. Arsenic 5 200.-
25. Cadmium 10 100.-
26. Mercury 2 500.-
27. Nickel 2 • 500.-
28. Silver °.l 1000.-
29. Zinc 5 100.-
30 Tin 1 . 1000.-
31 Radioactivity individually laid down
* Free Cyanide distilled out of a medium 7 pH
* * Total Cyanide distilled out of a medium 2 pH
255
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APPENDIX 0
EPA PARKING SURCHARGE PROPOSAL: MASSACHUSETTS3
(h) Regulation for parking surcharge.
(1) For purposes of this paragraph, "off-
street parking space" means any area or
space below, above, or at ground level,
open or enclosed, which is used for park-
ing one light-duty vehicle at any given
time.
(2) A surcharge of S5.00 per day vehi-
cle in the Boston Intrastate Region, and
of $4.00 per day per vehicle in the In-
terstate Resion, shall be applied under
conditions as provided in paragraph
(h) (4> of this section to any contract or
other agreement among private parties
whereby parking a motor vehicle in an
off-street parking space is permitted by
any person in exchange for a considera-
tion. Such surcharge shall be collected
by the person providing the permission
to park and paid to EPA, or any agency
approved by EPA. on a periodic basis as
EPA or the agency approved by it shall
specify. EPA. or the agency approved by
EPA, shall deduct such funds as neces-
sary to properly administer and enforce
the surcharge, and shall transfer the
remainder to the Commonwealth of
Massachusetts.
(3> A surcharge of $5.00 per day per
vehicle in the Boston Ictrastate Region,
and of $4.00 per day per vehicle in the
Interstate Region, shall be levied, under
conditions as provided in paragraph (h)
(4) of this section, for the use of any
off-street parking space in any public
parking facility owned, operated, or con-
trolled by '-he Commonwealth of Massa-
chusetts or the City of Boston or any
agency, department, or commission of
either. Such surcharge shall be collected
by the Commonwealth of Massachusetts
or the City of Boston or their designated
agents, and such proceeds shall after de-
duction of funds necessary to administer
and enforce the collection of the sur-
charge, be utilized to fund mass transit
facilities and service improvements.
(4) The surcharge provided for in
paragraphs
-------
APPENDIX P
EPA PARKING SURCHARGE PROPOSAL: TEXAS3
Section 52.2297 of Title 40 of the Code
of Federal Regulations (set forth at 38
PR 30650) would be amended to read as
follows:
§ 52.2297 Employers prot isiou for mass
transit priority incentives.
(a) Definitions:
(I) For the purposes of this section
"carpool" means a vehicle containing two
or more persons.
(2) "Commercial parking rate" means
the average daily rate charged by the
three operators of commercial parking
facilities containing 100 or more com-
mercial parking spaces which are closest
in location to any employee parking space
affected by this regulation.
(3) "Employer" means any person or
entity that employs 1000 or more persons.
(4) "Employee parking space" means
any parking space reserved or provided
by an employer for the use of his em-
ployees.
(b> This section is applicable in the
Houston-Galveston, Dallas-Port Worth,
and San Antonio Intrastate Regions (the
"Regions").
(c) Each employer in the Regions who
maintains more than 700 employee park-
ing spaces shall, commencing on the date
listed, charge no less than the following
specified daily rate for the use of any
such employee parking space by em-
ployees driving to work and not traveling
in carpools:
Dally rate
commercial rate
Effective date: (CJB) plus
July 1. 1974 $1.00
J\ily 1, 1976 CR plus $2.00
July 1, 1975 CB plus $2.60
No employer may charge employees
traveling to work by two-person carpools
more than half the parking rate specified
for non-carpool vehicles by this table.
Carpools of three or more shall be al-
lowed to park free of charge, and shall
be allotted the spaces closest to the em-
ployment facility. Any net revenues de-
rived from this surcharge program by an
employer shall be used to subsidize his
employee's use of mass transit
(d) Each employer subject to an
obligation under paragraph (c) of this
section, shall on the first date such an
obligation becomes effective, also:
(1) Institute a program of reimburs-
ing employees for their expenses of
utilizing mass transit. However, such re-
imbursements need not exceed $200 per
year per employee.
(2) Take all reasonable steps to en-
courage employees to commute to work
by subscription charter bus and similar
privately owned mass transit facilities.
(e) Each employer subject to an
obligation under paragraph (c) of this
section shall, at least three months prior
to the effective date of any such obliga-
tion, submit to the Administrator a de-
tailed compliance schedule setting forth
the steps it will take to meet these re-
quirements. The compliance schedule
shall include a procedure for checking
vehicles to see whether or not they are
carpool vehicles, a procedure for col-
lecting the fees required to be collected
hereunder, for disbursing any sums to in-
dividual employees in compensation for
their use of mass transit and for ensur-
ing that such disbursements are used
only for that purpose. It shall specify the
steps that will be taken to determine the
commercial parking rate for each
affected employment center and to en-
courage use of such private transit facili-
ties as charter buses.
[FR Doc.73-23188 Filed ll-5-73;8:45 am]
38 Fed. Reg. 30651 (November 6, 1973).
257
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4. Title and Subtitle
Economic Disincentives for Pollution Control
Political, and Administrative Disincentives
Legal,
5. Report Date
July 1974
6.
7. Author(s)
William A. Irwin and Richard A. Liroff
8. Performing Organization Repc.
No.
9. Performing Organization Name and Address
Environmental Law Institute
13^6 Connecticut Avenue, N.W.
Washington, DC 20036
10.
1* No-
11. Contract/Grant No.
68-01-2203
12. Sponsoring Organization Name and Address
Washington Environmental Research Center
Office of Research and Development
Environmental Protection Agency
Washington. D.C. 20460
13. Type of Report & Period
Covered
14.
15. Supplementary Notes
Environmental Protection Agency report number, EPA-600/5-7lt-026, July 1.97k
16. Abstracts
This report defines an economic disincentive as a monetary charge levied by
government on conduct which is not illegal but which floes impose social costs, for
the principal purpose of discouraging the conduct. Disincentives are distinguished
from other legal mechanisms which may have incidental economic disincentive effects,
e.g., fines, user charges, and license fees. The constitutionality of federal or
state imposition of disincentives is examined and the authority of the U.S. Environ-
mental Protection Agency and the States to utilize disincentives under selected
federal environmental statutes is analyzed. The legality of some disincentives adopted
by states is discussed. The charges imposed by several European countries are
described and distinguished from disincentives. The history of some previous proposals
for federal disincentives is reviewed and suggestions for additional disincentives
which might be feasible are offered.
17. Keyword* and Document Analysis. I/a. Descriptor!
* Environment, air environment, aquatic environment
* Legal aspects, jurisdiction, regulations
* Economic, disincentive, taxes
* Constitutional law, legislation
17b. Identifiers/Open-Ended Terms
17e. COSATI Field/Group
18. Availability Statement
Unlimited
19.. Security Class (This
Report)
UNCLASSIFIED
20. Security Class (This
Page
TJNCLASSIFIED
21. No. of Pages
271
22. Price
FORM NTI8-SB (RKV. J-731
UCCOMM'OC
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