United States
Environmental Protection
Agency
Office of Water
Program Operations (WH-547)
Washington, DC 20460
March 1981
Water
&EPA
Report to Congress
Industrial Cost Exclusion
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ri
3 UNITED ST TES ENVIRONMENTAL PROTECTION AGENCY
* WASHINGTON. D.C. 20460
MAR 13 1981
THE ADMINISTRATOR
Honorable Thomas P. O'Neill, Jr.
Speaker of the House of Representatives
Washington, D.C. 20515
Dear Mr. Speaker:
I am pleased to submit to the Congress our report on the study of
the effect of the Industrial Cost Exclusion (ICE) on the construction
grants program. This study and the report were directed by the Congress
in section 4 of a recent amendment to the Federal Water Pollution
Control Act (Public Law 96-483). This report reflects the full range of
opinions expressed to the Agency during the conduct of our study. Comments
and data were provided by water pollution control agencies of the several
States, communities and industries that will be affected by the industrial
cost exclusion, interested public and private interest groups and other
parties.
The impacts of ICE have been assessed from both the industrial and
municipal perspectives in order to objectively analyze the potential
consequences. Further, the report analyzes the impacts on rural communities
and on industries in economically distressed areas and areas with high
unemployment. Specific communities and projects are identified and each
State 1s analyzed 1n terms of short-term and long-term effects of ICE.
This report contains a factual analysis of the effect of the ICE as
well as a review of the impacts of a number of alternatives to the ICE
requirements.
I trust that this report will be satisfactory to you and the Public Works
and Transportation Committee.
Sincere!
Walter C. Barber
Acting Administrator
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'•i
| UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C 20-160
MAR 1 3 jggj
THtt ADMmiSTKATOR
Honorable George Bush
President of the Senate
Washington, D.C. 20510
Dear Mr. President:
I am pleased to submit to the Congress our report on the study of
the effect of the Industrial Cost Exclusion (ICE) on the construction
grants program. This study and the report were directed by the Congress
in section 4 of a recent amendment to the Federal Water Pollution
Control Act (Public Law 96-483). This report reflects the full range of
opinions expressed to the Agency during the conduct of our study. Comments
and data were provided by water pollution control agencies of the several
States, communities and industries that will be affected by the industrial
cost exclusion, interested public and private interest groups and other
parties.
The impacts of ICE have been assessed from both the industrial and
municipal perspectives in order to objectively analyze the potential
consequences. Further, the report analyzes the impacts on rural communities
and on industries in economically distressed areas and areas with high
unemployment. Specific communities and projects are identified and each
State is analyzed in terms of short-term and long-term effects of ICE.
This report contains a factual analysis of the effect of the ICE as
well as a review of the impacts of a number of alternatives to the ICE
requirements.
I trust that this report will be satisfactory to you and the Environment
and Public Works Committee.
Sincerel
C. Barber
Acting Administrator
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REPORT TO CONGRESS
INDUSTRIAL COST EXCLUSION
MARCH 1981
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This report to Congress on the effect of the Industrial Cost Exclusion
is required by Public Law 96-483, enacted on October 21, 1980. The statute
requires the report to be submitted to Congress by March 15, 1981.
The required study was conducted between November 1980 and January 1981
Since completing the study, President Reagan has proposed a reduction in
appropriations and a more cost-effective targeting of the Municipal Waste-
water Treatment Grant Program.
Specific legislation to implement President Reagan's reforms will be
forwarded to Congress in the near future. Therefore, the analyses in this
report do not reflect President Reagan's proposed reforms.
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Public Law 96-483
Section 3. Section 201 of the Federal Water Pollution
Control Act is amended by adding at the end thereof
the following new subject:
"(k) No grant made after November 15, 1981, for a
publicly owned treatment works, other than for facility
planning and the preparation of construction plans and
specifications, shall be used to treat, store, or
convey the flow of any industrial user into such treat-
ment works in excess of a flow per day equivalent to
fifty thousand gallons per day of sanitary waste. This
subsection shall not apply to any project proposed by a
grantee which is carrying out an approved project to
prepare construction plans and specifications for a
facility to treat wastewater, which received Its grant
approval before May 15, 1980."
Section 4. The Administrator of the Environmental
Protection Agency shall study and report to the Congress
not later than March 15, 1981, on the effect of the
amendment made by section 3 on the construction of
publicly owned treatment works, Industrial participation
1n publicly owned treatment works, treatment of industrial
discharges, and the appropriate degree of Federal and non-
Federal participation in the funding of publicly owned
treatment works.
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TABLE OF CONTENTS
Executive Summary 1
I. Municipal Perspective 1-1
The effect of the Industrial Cost
Exclusion on the construction of
publicly owned treatment works.
II. Industrial Perspective II-l
The effect of the Industrial Cost
Exclusion on industrial participation
in publicly owned treatment works and
the treatment of industrial discharges.
III. Case Studies III-l
Perceived impact of the Industrial Cost
Exclusion; a qualitative research study.
IV. Funding Alternatives IV-1
The appropriate degree of Federal and
non-Federal participation in the funding
of publicly owned treatment works.
V. National Effect . . . . V-l
Analysis of communities affected by the
Industrial Cost Exclusion in each State.
Appendix A A-l
Analyses from industries affected
by the Industrial Cost Exclusion.
Appendix B B-l
Selected responses from interested
parties to a notice published in
the Federal Register.
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EXECUTIVE SUMMARY
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EXECUTIVE SUMMARY
INTRODUCTION
In 1972, Congress enacted the Federal Water Pollution Control Act
(FWPCA), which required many municipalities and industries either to upgrade
existing wastewater treatment facilities or to construct new ones, if neces-
sary to meet treatment standards. The FWPCA included a multibillion
dollar construction grant program which provided for all industrial users of
a municipal wastewater treatment system to repay the Federal portion of a
Clean Water Construction Grant. Under this provision, called Industrial Cost
Recovery (ICR), municipalities received 75 percent of treatment facility
capital costs, with the requirement that the industrial share be repaid by
the industries using the treatment facility. Thus, industries using publicly
owned treatment works (POTWs) rather than financing their own self-treatment
works, repaid over 30 years the Federal share of the construction costs
attributable to the industry's use of the POTW. Industrial payments were
made directly to the grantees (municipalities) which, in turn, returned 50
percent to the U.S. Treasury, retained 40 percent for future facility
improvements, and used the remaining 10 percent for other municipal expenses,
including the cost of administering the ICR system. This amounted to a 30-
year, unsecured, interest-free loan via the 'Federal grant process and the ICR
provision.
As ICR progressed, there were increasing reports from grantees regard-
ing financial and administrative burdens associated with coordinating the
collection of payments from industries. To ameliorate this situation, the
1977 Clean Water Act revised ICR so that small industries whose process
wastewater was less than the equivalent of 25,000 gallons per day of normal
domestic wastewater were excluded from payment requirements. Individually
these industries did not significantly contribute to construction costs, but
collectively they placed an administrative strain on grantees. In addition,
these 1977 amendments placed a moratorium on collection of ICR payments
until July 1979, while the Environmental Protection Agency (EPA) studied the
ICR program and reviewed its effectiveness and while legislative alterna-
tives were considered.
In January 1979 the mandated study, conducted by an EPA contractor,
Coopers and Lybrand, was presented to Congress with the conclusion that ICR
was not effective in accomplishing its legislated purpose. However, because
this study had been conducted early in the implementation of ICR with limited
data, Congress extended the moratorium on ICR to July 1980, while EPA pre-
pared its own analysis of ICR's effectiveness.
The EPA study, completed in May 1980, concluded that ICR could be
effective if some changes were made, and recommended retention of the pro-
gram in a modified form. Both Houses of Congress held hearings and reviewed
testimony from all parties concerned. It concluded that ICR should be
repealed to allow grantees and industries to develop equitable grant repay-
ment provisions on a case-by-case basis. Public Law 96-483 of October 21,
1980, thus repealed Industrial Cost Recovery as a condition of Federal grant
awards for the construction of publicly owned treatment works.
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An amendment to P.L. 96-483 (Section 3) was the Industrial Cost Exclusion
(ICE) provision, which made all industries with process waste in excess of a
flow per day equivalent to 50,000 gallons per day of sanitary waste ineligible
for Clean Water Construction Grants awarded after November 15, 1981. This ICE
provision differs from ICR in that it is a method of calculating the Federal
share of capital costs for construction of wastewater treatment systems while
ICR is a cost pay-back mechanism. An additional amendment, Section 4 of P.L.
96-483, requires EPA to study and report to the Congress the potential effect
of ICE on the construction of publicly owned treatment works, the treatment of
industrial discharges, the appropriate degree of Federal and non-Federal par-
ticipation in the funding of POTWs, and the overall impact on municipalities
and industries; this report is in response to this mandate.
THE EPA STUDY
EPA compiled information from various sources documenting the impact that
ICE will have on industries and on the communities in which they are located.
An announcement appeared in the December 1, 1980, Federal Register requesting
comments from municipalities, industries, and other interested parties regard-
ing the potential effects of ICE. In addition, the ten EPA regions prepared
data on demographic features and wastewater flow characteristics within their
respective areas. Specific industries and trade associations, such as dairies,
breweries, and food processors, submitted assessments of the impact of ICE on
their operations. Economic data were also contributed by the three communi-
ties which had participated in a case study: Watsonville, California;
Gloversvilie-Johnstown, New York; and Milwaukee, Wisconsin. This EPA study
includes qualitative analyses of industrial and municipal perceptions of the
potential effect of ICE on these three cities, and discusses alternative
funding sources for those industries planning to self-treat or use a POTW.
MUNICIPAL PERSPECTIVE
Federally mandated wastewater treatment requirements have major financial
impacts on local communities. A community must raise sufficient funds for the
local share of capital costs and for operation and maintenance of facilities
to comply with sewage discharge requirements. At present, there is consider-
able community concern over inadequate resources to meet these demands.
SHORT-TERM EFFECTS OF ICE
This section of the EPA report to Congress analyzes the short-term effects
and potential impacts of ICE on municipalities, and includes possible savings
to EPA from not funding major industrial flow capacity to POTWs and the allo-
cation of the cost of funding such industrial capacity among citizens and
industries. Since ICE decreases the amount of Federal funding for POTW con-
struction, it requires communities to seek alternate financing arrangements for
Industrial discharges in excess of a flow per day equivalent to 50,000 gallons
per day of sanitary waste into publicly owned treatment works.
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For this analysis, data from 48 States and 7 territories totaling 40Z.
communities were used. Evaluation of impacts of ICE on these communities
considered population, per capita income, size of treatment plant, amount of
industrial flow, total cost of a proposed POTW, the cost of the industrial
portion, and the unemployment rate.
General effects on communities are that any net savings to EPA from ICE
will be limited by the delays that ICE itself will cause, that the increase in
costs of POTW projects may affect the profitability and viability of indus-
tries, and that communities that have already built POTWs have a competitive
advantage over those affected by ICE. Municipalities that built plants under
Industrial Cost Recovery received 75 percent grants for capital costs and are
no longer required to pay back these funds and can charge lower sewage rates
to industries than can ICE-affected municipalities.
Costs to Communities
A major finding from the analysis of the impact of ICE in the short term
is that the costs are not uniform across communities. The severity of the
impact on any community depends on the percentage of industrial flow, the size
of the community, and its relative wealth. It must also be noted that the
median household income in nonmetropolitan areas is 20 percent less than the
median household income in metropolitan areas. On average, ICE will turn a 25
percent non-Federal share of costs to communities into a 40 percent non-Federal
share. From the point of view of the community, ICE will increase the non-
Federal share by 60 percent. The average additional one-time capital charge
per household is $89 with a range from $1 to $10,000 in the most extreme case.
However, because the largest per household costs without ICE already occur in
the small towns and cities (less than 50,000), ICE will pose some degree of
financial burden. Significant financial burdens may occur in 20 percent of
affected communities.
Another factor to be considered in evaluating ICE effects on communities
is that the provision will result in delays of construction of POTWs while
alternate financing is sought, new agreements with industries are negoti-
ated, public meetings are held, and facilities plans are revised or redone
completely. The effects of these delays will be increased costs from infla-
tion, greater borrowing costs, and greater administrative costs. In real
terms, delays alone from ICE will increase the non-Federal share of costs to
communities from 1 percent to 18 percentJ
Possible Community Responses
There are six possible responses, with variations, available to communi-
ties to deal with increased costs resulting from ICE. These are:
1. The community may raise the ICE portion itself through a one-time
charge on its citizens and/or by borrowing. In this option the community pays
^Calculations based on President Reagan's economic assumptions suggest a
similar, or parallel, range of costs.
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as a whole for the industrial capacity in a POTW excluded from Federal support
under ICE.
2. The community may require affected industries to finance themselves
through "up-front" payments to the municipality at the time of construction.
Apart from the effects of delay, this option would not result in a higher debt
service obligation to the community, but could cause significant economic
effects on industrial users.
3. The community may share with industry the cost of POTW construction
through an increase in property taxes or by industries servicing the debt.
4. Industry may choose self-treatment. If the percentage of industrial
flow is high to a POTW, this option may result in fewer economies of scale
after ICE which would, in turn, result either in higher user charges or in
lowered costs from alternative residential treatment methods such as lagoons
or septic systems.
5. A community with a high percentage of industrial flow may form a non-
profit public benefit corporation jointly owned by the city and industries.
Under this option, the municipality would receive no EPA assistance and could
avoid some Federal and State requirements regarding construction.
6. A community may cancel or postpone the building of a treatment plant
indefinitely.
It is suggested that 46 percent of affected communities, those with a
$100 or less one-time per household charge, and possibly the next 34 percent
with a $100-400 per household charge, could take a "cost minimizing" approach
of (1) combining industrial self-treatment and residential alternative treat-
ment, or (2) charging both industry and residents to protect its bond rating
and to preserve jobs. However, some communities are too small and too poor to
remain viable under any of the options listed, and would need assistance to
comply with the requirements of the Clean Water Act. Tables in the report
present specific percentages and cost impact by community, show the distribu-
tions of costs of ICE among population categories, name the communities with
one-time capital charges per household greater than $400, and report the
projected effects of inflation and increased interest charges resulting from
construction delays.
Short-Term Effects Evaluation
The total cost of construction of projects affected by ICE is approxi-
mately $8 billion with the excluded Industrial portion of these projects top-
ping $1 billion. These figures, however, will Increase for several reasons.
Inflation will increase both the Federal and non-Federal share of POTW con-
struction projects, thus Increasing the capital costs of construction per
household to greater than 1980 figures. Further, localities will pay a larger
finance charge on sums borrowed* and there will be added administrative costs
associated with aspects of wastewater treatment that are not eligible for
grant funding.
This report considers the effects on communities of construction delays
of one year or three years, terming these evaluations high-low analyses, or
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high option-low option estimates. These evaluations were obtained by project-
Ing the growth of the median household income as a measure of a community's
ability to absorb an increase in the non-Federal share of POTW financing. In
all, five financial variables were considered:^
1. Increases in construction costs of sewage treatment plants;
2. Length of delay—either one or three years;
3. The annual increase in median household income, 7.5 percent under low
option, 10 percent under high option;
4. The interest rate on tax-exempt bonds, 8-1/2 percent and 11 percent;
5. The length of tax-exempt bonds, 20 or 30 years.
If the rate of inflation of construction costs and interest rates exceed
the rate of increase in the median household income, delays resulting from ICE
will add significant costs to communities. It is projected that the combined
effects of higher construction costs and financing charges would add 1-15 per-
cent for a one-year delay and 0.5-18 percent for a three-year delay.
If a community subsidizes the financing of industrial capacity to its
POTW, the total increase in costs under a one-year delay would be about 80
percent and about 100 percent under a three-year delay. Any possibility of a
reduction in the Federal share of a project if industries paid the cost of
POTW industrial capacity under a one-year delay would be eliminated under a
three-year delay.
Summary
In general, EPA analysis of the short-term effects of ICE on municipali-
ties indicates that while the costs of ICE can be substantial, the costs of
construction delays to Federal, State, and local governments may be a transi-
tory phenomenon in the next four to five years in communities with well-defined
plans now.
However, P.L. 96-483 will extend the planning period for POTW construc-
tion projects, and to that extent may decrease any reduction in the Federal
share realized. It 1s estimated that delays greater than two years may elimi-
nate any savings to EPA from the ICE provision. Many communities will be
unable to raise the money for a 40+ percent local share before inflation and
finance charge Increases.
For specific projects the projected breakeven point for EPA's short-term
savings from ICE 1s about two years of delay. This analysis, however, assumes
that unobligated balances remain uncommitted. To the extent that States can
fund other projects that are "ready to go," the Federal funds excluded from
current economic assumptions of the Administration suggest the following
values for these variables: Median household income, 10.25 percent; annual
Increases in construction costs of sewage treatment plants, 8-13 percent;
interest rates on tax-exempt bonds, 7 percent and 11 percent.
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industrial users will remain intact, undiminished by delay. The technical
section of this report presents the results of all calculations and tabulations
by community, percentage of cost increases, and formulas of analysis used to
obtain projections.
LONG-RANGE IMPACTS OF ICE
Long-range impacts of ICE concern the fact that many local communities
are already near the margin of their financial capabilities. Exclusion of
Federal funding must be viewed within the overall context of local sewerage
expenditures and local financial viability.
OVERVIEW OF SEWAGE TREATMENT COSTS AND LOCAL FINANCIAL CAPABILITY
While there is a wide variation between communities in the expected cost
burden of future sewerage costs, it is expected that these costs will continue
to rise for all communities. Cost impact will be greatest for older urban
centers with major rehabilitation needs and for small communities facing high
per capita costs.
Increasing Sewage Treatment ..Costs
Several factors influencing the increases in sewage treatment costs na-
tionally are listed and summarized below:
1. Clean Water Act Requirements - Most communities have not yet faced
costs of meeting these requirements.
2. Non-eligible Costs - These pollution control costs include new col-
lection system costs for new populations, operation and maintenance (O&M),
replacement costs, and interest.
3. Inflation and the Cost Index for O&M and Construction - Inflation
will affect the cost components of labor, materials, equipment, chemicals, and
energy.
4. Added O&M Costs for Higher Levels of Treatment - Many communities will
face higher O&M costs associated with treating sewage at levels higher than
secondary.
5. Meeting the Backlog of Deferred Maintenance - Many cities, particu-
larly in the Northeast and Midwest, that have cut back on maintenance spending
must soon face massive maintenance backlogs.
Increasing Pressures on Revenues
The financial capability of a community to build and operate POTWs is not
only a function of the cost of wastewater treatment, but also the general fi-
nancial condition of the community based on personal income, population, and
property value increases and decreases, caps on taxes and expenditures, infla-
tion rates, level of intergovernmental aid, municipal bond interest rates, and
the national and regional economy.
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Three trends pointing to sharply increased pressures on municipal reve-
nues in the near future are:
o Increased fiscal stress
o Decrease in Federal assistance to cities
o Increase in competition for scarce resources
Costs Estimates
A national cost estimate for wastewater treatment expenses is difficult
because of the lack of direct, unequivocal data. Additional difficulties con-
cern the wide variety of local governments possessing different fiscal systems
and operating under different State laws, and the large scope of current
pollution control activities. However, EPA has developed some cost estimates
and projections.
Total direct sewerage expenditures have increased rapidly in recent years,
at an annual rate of more than 15 percent. The 1980 Needs Survey estimates
that local capital and O&M costs in 1980 were $4-5 billion.
A projection model estimates that total direct sewerage costs will in-
crease 88 percent during the 1978-1990 period. Per capita costs are expected
to increase 68 percent during the same period. In addition, there is expected
to be a 150 percent increase in the State and local share of total sewerage
costs.
These estimates do not reflect increases in future interest payments on
debt; since it is expected that there will be pressure for increased local
borrowing, the estimated expenditure increases will be higher than those cited
here. These figures also do not reflect inflationary increases and the fact
that many localities can expect increases higher than the national average.
Small Communities
Financial problems of small communities affect a large segment of the U.S.
population. (More than 38 percent [1970 Census] of the population resides in
communities under 10,000.) The financial issues facing these small communities
are a result of the following factors:
1. Availability of Financial Resources
Lower household income of small communities results in a smaller resource
base; governmental expenditures have risen faster than revenues; there are im-
pediments to bond financing that place small communities at a disadvantage.
2. High Cost of Sewering Small, Dispersed Populations
The per capita costs for conventional sewage treatment are higher in small
communities; a diseconomy of scale results in higher operation and maintenance
costs; dispersed populations necessitate higher collection costs; there is
reluctance to use on-site systems because of pollution and public health
concerns.
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3. Limited Financial Management Capability
Small towns have little need for financial management expertise and must
obtain outside assistance in this area if needed. Many rural localities have
no annual management plans, no fiscal accounting, and no middle management,
and may have .sporadic work schedules with no written policies or task
procedures.
OLDER URBAN CENTERS
A major problem for many large urban centers is the age of the sewer in-
frastructure and the attendant large-scale replacement or rehabilitation needs.
The following is a brief outline of the major financial issues facing these
older, large urban areas based on the 1978 EPA Needs Survey and an Urban
Institute study.
o Concentration of rehabilitation and combined sewer overflow needs -
These are particularly great in Baltimore, New York City, and other
older Northeastern and Midwestern cities.,
o Concentration of needs in financially distressed areas - Infrastruc-
ture needs are most apparent in cities least able to afford improve-
ments.
o Reliance of l-arge cities on Federal aid — To the extent that Federal
funding does not keep pace with local expenditures, large cities will
have major difficulties in financing sewage treatment systems.
ICE AND LOCAL FINANCIAL CAPABILITY
If the increased local share of construction costs from ICE can be passed
directly to industry, the long-term direct costs impacts of ICE to communities
should be minor. Three conditions that might lead to increased costs for
local communities and their potential impacts are:
1. Industry construction cost subsidized by the local community - Impacts
are an inability to borrow funds and high debt service costs.
2. Industry self-treatment - Impact may be loss of economy of scale, but
avoidance of other costs.
3. Industry shuts down or decreases production - Impacts are loss of jobs
and a decline in the tax base.
OTHER ISSUES
In addition to the potential economic effects of ICE on local communities,
several other issues were raised by communities in their responses to EPA. To
provide a comprehensive view of community concerns, these considerations are
presented as follows:
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Issue 1. Inequities Between Communities
One concern is that application of deadlines for industrial flow eligi-
bility would establish inequities between those facilities able to offer low-
cost treatment and those that could not. This was a particular concern for
those communities who believed that they were missing the deadline because of
slow State or EPA processing of facility plan approvals.
Another concern, involving the 50,000 gallons per day cut-off, is that a
community with many small industries, all with flows under 50,000 gallons,
could receive funding for all of its industrial flow, while a community with
only one industry, but above the 50,000 gallons limit, could not, even though
its flow was smaller.
Issue 2. Retroactivity
Those communities far along in Step 1 planning, but unable to meet the
eligibility deadlines, feel it is unfair to be required to revise already com-
pleted work. The suggestion was made to revise the cut-off date for eligi-
bility.
Issue 3. Inequities Between Industries
/
Some communities feel that because of the 50,000 gallons per day limit,
they might be forced to charge industrial users widely different rates, when
the only difference between them is amount of flow. Others are concerned that
some industries would have low rates because of use of previously completed
facilities, while newer industries in development areas would face higher rates
or self-treatment costs.
INDUSTRIAL PERSPECTIVE
This section, documenting the potential impact of ICE on industry, is
based on information contained in the January 1979 Coopers and Lybrand report
to Congress and the May 1980 Report to Congress, supplemented by material sub-
mitted to EPA by specific industries and their trade associations. Topics
covered here include an evaluation of tax laws as they pertain to wastewater
treatment costs for industries, the feasibility of alternative approaches for
funding industrial treatment plants, and funding sources available to indus-
tries.
Compliance with industrial wastewater treatment requirements can be
achieved by industries in two ways: self-treatment or use of a publicly owned
treatment works (POTW). The decision on which type of facility to use is based
on three kinds of factors: direct economic, indirect economic, and non-
economic. Evaluations of each follow.
Direct Economic Factors
There are six basic wastewater treatment options available to industries
discharging process wastewater. These alternatives are summarized below.
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1. Self-treatment - Industry would use Its own capital to plan, con-
struct, and operate Its facility.
2. Jointly owned POTW - Industry would jointly finance and thus own part
of the plant, but the municipality would manage it. The portion owned and
financed by industry would be proportionate to each user's share of the POTW's
design flow and pollutant loading.
3. Jointly financed POTW - Industry would contribute to construction and
maintenance of the POTW without the responsibility of ownership. The portion
financed by industry would be proportionate to each user's share of the POTW's
design flow and pollutant loading.
4. Binding contract - The municipality would own, operate, and finance a
POTW, and industry would pay its share under the equivalent of a long-term
lease, even if Industry reduced or eliminated its use of the POTW.
5. Non-binding contract - Similar to ICR, an industry would pay only for
actual use of a POTW owned and financed by the municipality. However, this
option differs from ICR in that payments by industry would be 100 percent
(rather than 75 percent) of construction costs for treatment of industrial
process waste, would include an interest component, and all funds collected
would be retained by the municipality.
6. Treatment in a POTW with debt service based on ad valorem taxes - No
direct Industrial payment.Municipalities would sell bonds, with all users
paying additional ad valorem taxes on the 75 percent industrial share of con-
struction costs formerly paid by EPA grant assistance.
The choice of Options 2 through 6 is not that of the industrial discharger
alone, as the municipality must agree to the industry's choice. In addition,
for Options 4 through 6, the municipality must also be able to sell bonds in
order to raise the necessary capital.
In analyzing the direct economic factors associated with each wastewater
treatment option, the most basic comparison is the total cost of each option.
The Initial and annual cost components for each option are summarized in the
text.
To some extent, the initial costs to industries under Options 1 and 2 can
be offset by two Federal tax incentives for pollution control investments, both
of which are mandated by the Internal Revenue Code. One of these concerns an
exception to the restrictions placed by Congress in 1968 on the use of indus-
trial development bonds (IDBs) issued by State or local governments to finance
privately owned Industrial plants, the interest on which is tax exempt. This
exception was for investment in pollution control facilities, thereby allowing
an incentive to Industrial dischargers of the Investment tax credit, deprecia-
tion deductions, and an interest saving of 30 to 35 percent.
The second tax incentive, enacted in 1969 and amended in 1975 and 1978,
provides for the amortization over five years of pollution control facilities
Installed In industrial plants in existence on December 31, 1975, while still
allowing qualification for the full 10 percent investment tax credit.
This analysis suggests that 1t may be more economical for some large industrial
dischargers to self-treat 1n accordance-^th Best Available Technology guidelines,
rather than to discharge to a POTW under proposed Pretreatment Standards. However,
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for most small Industrial dischargers it may be more economical to use a POTW.
The breakeven size ranges from 25-150 thousand gallons per day depending uporv
the size of the PQTW find the industrial cost sha.rj.ftg agreement between the POTW
and the industrial discharger,
In the present study, the difficulty is recognized of quantitatively
evaluating the relative costs for the six wastewater treatment options on a
national basis, since each industry operates with a unique combination of phy-
sical and economic circumstances. In addition, there is reluctance on the
part of industrial dischargers to reveal detailed data on the financial impact
of ICE to their operations because of employee morale and productivity issues,
competitive practices by competitors, and public image considerations. How-
ever, the evaluation of costs on a nationwide basis, using data for the textile
industry, is included and can be used for evaluating the relative cost of each
option, for various sizes of POTWs and various industrial discharge volumes.
Indirect Economic Factors
In addition to the direct costs associated with the construction and
operation of a self-treatment facility or the use of a POTW, the choice by an
industry of a treatment option will result in other incurred costs. Although
such costs are even more difficult to quantify than direct costs, they gener-
ally tend to make use of a POTW more attractive compared to self-treatment
than it might otherwise be.
One potential indirect economic pressure is the chance of a partial or
complete shutdown of the industry operation in the event of a treatment facil-
ity malfunction. This would occur as a result of any wastewater processing
problem since an industry which self-treats is fully responsible for the
quality of its discharge.
A second indirect economic consideration is an unfavorable debt-to-equity
ratio caused by the debt required to finance construction of treatment facili-
ties. This situation may lower the attractiveness of the industry's stocks
and bonds to investors and would require higher dividends and interest rates
to sell future new issues.
A third aspect of the choice to self-treat by an industry concerns the
necessary diversion of management attention and engineering expertise away
from direct corporate operations to the planning, construction, maintenance,
and operation of pollution control wastewater treatment facilities. This
stretching of personnel expertise and time to include wastewater treatment
lessens their availability for focusing on corporate profits.
To the extent that pretreatment would be required of an industry choos-
ing to use a POTW, the distinction between self-treatment and POTW use may be
lessened or eliminated in terms of indirect economic factors.
Non-economic Factors
There are several factors, not economic in nature, that have significant
impact on the decision by an industry whether to self-treat or use a POTW.
Location of the industrial plant is the most important factor. If it is
currently discharging into a POTW, it is unlikely that self-treatment would be
a viable option. First, it would be considered a new source, since it is not
currently discharging direct. Federal and State permits for new direct dis-
charges are difficult to obtain for new dischargers. Second, communities are
xi
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reluctant to zone land for wastewater treatment purposes. Also, in order to
self-treat, adequate land and waterways for the construction of a self-
contained water treatment system must be available within reasonable distance
of the industrial plant. An additional requirement is that the waterway must
be able to accept the waste discharge of the industry without resulting in
water quality deterioration; or adequate land for spray- or furrow-irrigation,
without run-off, must be available. If these conditions cannot be met, an
industry will be forced to use a POTW, regardless of cost.
Similarly, a POTW with a capacity to treat the industrial wastewater must
be located within reasonable distance of the industrial facility. If this
condition cannot be met, an industry will be forced to self-treat, regardless
of cost.
As few industrial plants meet all prerequisites for both alternatives to
wastewater management, the choice between self-treatment and use of a POTW
will be based on the unique combination of all factors pertaining to each dis-
charger. In addition to the considerations previously described, attention
must also be given to those such as recruiting and training of plant operators;
sludge disposal; compliance with water pollution control, solid waste, clean
air, and safe drinking water regulations, including permit and monitoring
requirements; and commitment of financial, legal, and engineering resources.
CASE STUDIES (OPINIONS OF COMMUNITY ANE INDUSTRY LEADERS)
It was not considered practical to conduct a full-scale survey of all
communities potentially affected by ICE under the time constraints of this
study. Therefore, to assess the perceptions, opinions, and decisions of com-
munity and industry leaders concerning the effects of ICE, a qualitative rather
than a quantitative approach was taken. Specifically, a focus group interview
technique was used in three communities selected by geographical location
(East, Midwest, and West) and amount of industry located within the immediate
areas. Seven group interviews were held with various combinations of industry
representatives and municipal officials from the three communities. In dis-
cussing ICE and its potential effects, several topics were covered:.
o Understanding of ICE;
o Municipal response to ICE;
o Extent of impact on industry;
o Options available to industry and municipalities;
o Probability of self-treatment by industry; and
o Possibility of industry closing.
The interviews indicate that the following perceptions are evident
in the three communities which participated in the case studies. These
statements shall be viewed as the perceptions of significant members of
the community as opposed to a factual description of actual conditions.
These perceptions cannot be generalized to all communities potentially
impacted by ICE. ^
-------
1. ICE has create- an impasse in the minds of community and industry
leaders.
The feeling is that local government is expected to collect cost revenues
from industry, but that industry is not able to pay. The industry position is
that ICE is financially impossible to undertake, and is viewed as a barrier to
further progress.
2. ICE tends to be regarded as a capital commitment, making the impasse
between industry and the community worse.
Industry regards ICE as an expenditure for an unproductive asset, thus
raising concern about the return on the investment and indebtedness. In addi-
tion, industry notes its lack of control over, or equity in, this type of
facility, the result being a reluctance to spend stockholders' money on muni-
cipal issues that provide no return.
3. If ICE could be considered an expense item, it would be evaluated on
an ongoing basis.
Except in Milwaukee, industry does not see ICE as an operating expense,
but as a capital commitment. However, this could change, and industry could
find ways to reduce costs. At present, industry still feels unable to pay for
ICE.
4. Self-treatment is not considered a viable option, although pretreat-
ment to offset increased rates would be viable.
Self-treatment is viewed by industry as technically but not economically
feasible. In many cases, land is not available for this purpose. In addition,
there are too many uncertainties associated with self-treatment and no guaran-
tees of success. However, pretreatment is possible, and may be essential in
spite of concern over the fixed costs of a municipal facility.
5. Local government is perceived to be in a bind with almost no options.
Local governments feel that the burden of finding a solution to the ICE
impasse has been left to them. Only Milwaukee sees any hope of financing such
a burden; proposition 13 in California prohibits any bond issues without two-
thirds of the registered voters. Local reaction has been to proceed as if ICE
were not a factor.
6. Political action to repeal ICE is considered the best course, at
present.
The feeling is to revert back to the position existing before ICE, in
which availability of Federal and State funds required that a city absorb only
12-1/2 percent of the total cost of facility construction.
7. Industry closings are a distinct possibility if ICE is implemented.
Small firms could be forced to go out of business, while larger firms
would shift production to other plants. There would also be a domino effect
xiii
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such that remaining business would bear a greater burden of the ICE cost; this
would result in economic disaster.
8. Implementation would involve a long, drawn-out process.
Due to negotiations and litigations that would cause enforcement delays,
ICE would stop progress on existing plans, and would lessen cooperation between
community and industry by forcing an adversary relationship. A possible posi-
tive effect would be a forced reexamination of existing programs which may be
overdesigned and which do -not consider less expensive facilities possible
without government funding and the attendant regulations.
9. Resistance to ICE is increased by the general perception that it is
inherently unfair.
ICE is seen as arbitrary and poorly conceived, especially concerning the
50,000 gallons limit and the cut-off date of November 15, 1980, for receipt of
grants, and is believed to promote unfair competitive advantages among firms.
Those firms already funded do not have to repay grant money if ICE is imple-
mented. There is also doubt about benefit to the environment, i.e., cost-
benefit logic, with ICE.
In summary, ICE has described the decision process over wastewater treat-
ment.
o ICE has created an impasse rather than an impetus for progress.
o Efforts have been redirected from existing plans to political action.
o Cooperation between industry and community has been strained.
o There has been a perceived narrowing of options and a tendency to a
"wait and see" attitude.
FUNDING ALTERNATIVES
The purpose of this section is to respond to the request of Congress to
include in the ICE report a consideration of the appropriate degree of Federal
and non-Federal participation in the funding of publicly owned treatment works.
In dealing with this request, EPA has developed a series of possible alterna-
tives which are intended to reflect the concerns of the many parties involved
in this issue. The list of alternatives is not intended to be exhaustive or
exclusive. The absence of an alternative from this list does not mean that EPA
would view it with disfavor. Furthermore, the list does not indicate a prefer-
ence for any particular action, but is intended to present a range of possible
alternatives, along with their probable impacts. It should also be noted that
this list is limited to consideration of alternatives in the context of current
project category eligibilities and a 75 percent Federal share. Changes in
eligibility or Federal share are not addressed.
xiv
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The alternatives to ICE are identified below and briefly characterized.
They are grouped according to those which would retain ICE but modify its
provisions and those which would replace ICE with different requirements.
1. Retain ICE but do not apply it to any Step 3 project which is the
result of a Step 1 project to plan a wastewater treatment facility when the
grantee received Step 1 approval before a specified date.
Potential effects of delays in implementation of ICE include costs of
replanning and ensuring more time to communities to adjust to ICE impacts.
2. Retain ICE but modify Section 213 of the Water Pollution Control Act
to provide loan guarantees to municipalities for that portion of a POTW con-
structed to serve industrial users, with an interest rate not exceeding the
Dow-Jones municipal average rate. The municipal requirement to implement a
local capital recovery system would be based on letters of intent from major
industrial users.
Potential effects involve ensuring the construction of POTWs where the
per capita cost impact of the industrial cost exclusion is great, and that
local costs are borne by industrial users.
3. Retain ICE but increase Federal assistance to industrial users of
POTWs from other agencies that deal with industrial development (Department of
Commerce, Small Business Administration).
Potential effects concern the focus of financial aid onto Individual
industrial users needing capital for POTW participation, thereby lessening
Federal costs of across-the-board industrial funding, but increasing adminis-
trative costs due to involvement of additional Federal agencies and case-by-
case implementation of guidelines.
4. Retain ICE but provide that POTW capacity for treatment of waste dis-
charged by industrial users be funded by industrial users with no financial
assistance from grantee.
Potential effects concern prevention of subsidizing industrial use of a
POTW by municipalities at the expense of residential and commercial users.
The concept of "proportionality" would be expanded here to cover capital costs,
5. Retain ICE but decrease or eliminate the current tax incentives for
pollution control investment (five-year amortization and use of industrial
development bonds).
Potential effects concern increases in the cost of self-treatment, making
it comparable to joint treatment under ICE; elimination of economic disadvan-
tage to those unable to self-treat because of location; and increases in tax
revenues to the Federal government.
6. Repeal ICE so that industrial capacity of a POTW could be funded but
do not reinstate ICR.
Potential effects concern funding of industrial flow on the same basis as
waste from commercial and domestic sources, increasing Federal costs via grant
xv
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funds but partially offsetting these by increasing corporate income tax reve-
nues from greater earnings possible from elimination of ICE and ICR expenses,
shifting of the cost balance in favor of joint treatment for some industries,
and avoiding administrative complexity of ICE.
7. Replace ICE with the requirement that all POTW users make debt service
payments proportionate to their use of a POTW (70 percent of grantees already
comply with this provision).
Potential effects concern funding industrial waste on the same basis as
commercial and domestic, ensuring proportionality in debt service charges as
well as user charge rates, and requiring 30 percent of grantees to develop new
debt service charge systems, thereby altering their present methods of financ-
ing the local share of POTW construction costs.
8. Replace ICE with the requirement that all industrial users of a
Federally assisted POTW pay a uniform charge for process wastewater discharged
with all collections, audits, and enforcements performed by the Treasury
Department and all revenues going to the Treasury Department. The user rate
would be set as necessary to recover, nationwide, the same amount recovered by
ICR (estimated $60 million per year).
Potential effects involve equalization of user costs and capital share
costs, recovery of a portion of Federal funding for treatment of industrial
wastewater, a less costly recovery mechanism than ICE or ICR, and placement of
a recovery program in the logical agency to administer revenue programs.
9. Repeal ICE and modify the user charge proportionality requirement to
allow grantees to charge higher rates to large-volume users.
Potential effects concern funding industrial flow on the same basis as
commercial and domestic but giving grantees flexibility in the development of
user charge systems, and encouraging water conservation through higher rates
for large-volume use.
10. Replace ICE with the requirement that each grantee develop and imple-
ment a long-term financial plan for reconstruction and expansion of existing
or proposed wastewater treatment facilities. This would apply to all new
grants and to previous grants where grantees wish exemption from the require-
ment of proportionate recovery of local capital costs under P.L. 84-660.
Potential effects involve funding of industrial flow on the same basis as
commercial and domestic, fostering complete local self-sufficiency for future
POTWs, ensuring enough lead time for grantees to make arrangements for raising
capital costs for reconstruction and expansion, eliminating administrative ICE
costs but incurring administrative costs of reviewing long-term financial
plans, and lessening future construction expenditures through the
encouragement of water conservation measures.
xvi
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National Summary
(Excluding Missouri and Nebraska)
I. Short Term Effect (From State Reported Data)
Number of communities affected 402
Communities
0
3,600
10,100
50,100
100,100
500,100
over
3,500
10,000
50,000
100,000
500,000
1,000,000
1,000,000
Total Affected
Number of
Communities
56(13.9%)
71(17.7%)
156(38.8%)
50(12.4%)
51(12.7%)
14( 3.5%)
4( 1.0%)
402 100.0%
Population
120,300( .3%)
487,700( 1.3%)
3,747,000( 9.6%)
3,550, 000( 9.1%)
11,096,000(28.6%)
9,537,900(24.5%)
10,340,100(26.6%)
38,879,000 100.0%
Industrial
Portion
47,441,000( 3.6%)
66,867,000( 5.1%)
291,113,000(22.3%)
118,093,000( 9.0%)
421,042,000(32.2%)
300,837,000(23.0%)
62.422.000( 4.8%)
17307
2.422.000(
,415,000 1
00.0%
Communities that exceed specified unemployment rate (National rate s 7.1%)
+ Exceed State rate yet below National rate
++ Exceed National rate
+++ Exceed State rate which exceeds National
37
123
61
POTW flow affected
Industrial flow
7,919.8 Million Gallons per Day
1,254.3 Million Gallons per Day
POTW construction cost affected
Industrial portion
$8,158.9 Millions
$1,307.4 Millions
15.8% of POTW flow
16% of POTW cost
Average industrial cost $ 3.25 Millions per community
Average industrial cost $33.63 per person
Average industrial cost $92.48 per household
II. Long Term Effect (From EPA Needs Survey)
Total needed facilities with substantial industrial flow 1,382
Needed facilities serving less than 10,000 population 764 55% of total
POTW construction cost $16.338 billions
Industrial portion $3.538 billions 22% of POTW cost
xvii
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ESTIMATE OF PERCENTAGES TO BE AFFECTED
402 Communities were reported by States as being affected:
83% of those reporting were from communities of less than 100,000
70% of those reporting were from communities of less than 50,000
32% of those reporting were from communities of less than 10,000
38,879,000 Total population affected as reported
20% of those reporting were from communities of less than 100,000
11% of those reporting were from communities of less than 50,000
2% of those reporting were from communities of less than 10,000
$1,307,444,000 Total industrial cost as reported
38% of those reporting were from communities of less than 100,000
31% of those reporting were from communities of less than 50,000
9% of those reporting were from communities of less than 10,000
32% of reported affected industrial users are in communities of less than 100,000
38% of reported affected POTW costs are in communities of less than 100,000
27% of reported affected POTW flows are in communities of less than 100,000
34% of reported affected INO flows are in communities of less than 100,000
THE MAJOR INDUSTRIAL GROUPS AFFECTED BY THE INDUSTRIAL COST EXCLUSION
(Based upon State reported data)
1)
2)
3
4
5
6
7)
8)
9
10]
11
12)
Major Industrial Group
Food and Kindred Products
Fabricate Metal Products
Chemical and Allied Products
Electrical and Electronic Equipment
Transportation Equipment
Textile Mill Products
Paper and Allied Products
Machinery except Electrical
Primary Metal Industries
Leather and Leather Products
Rubber and Plastic
Petroleum and Coal Products
Amount
549,000,000
183,000,000
130,700,000
117,700,000
104,600,000
65,400,000
52,300,000
39,200,000
26,100,000
13,100,000
13,100,000
13.100,000
1,307,400,000
% of Total
42
14
10
9
8
5
4
3
2
1
1
1
100
XV111
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INDUSTRIAL COST EXCLUSION (ICE)
ESTIMATE OF NATIONAL EFFECT
When statistical data are taken from a large population, observed
behavior becomes more uniform and sample observations more accurately
reflect the true population.
For this report, the percentage of cumulative construction grant allot-
ments for each State represents an accurate estimate of the relative level
of other populations, i.e., percentage of industrial establishments and
percentage of human population. It follows that the cumulative allotment
percentage indicates the percentage effect of the Industrial Cost Exclusion,
since there is a correlation between percentage of allotments, census popu-
lation, and industrial establishments. There would also be a logical rela-
tionship between percentage of cumulative allotments, industrial/municipal
wastewater flow, and the grant funds to be excluded due to major industrial
users.
Correlation
*No. Industrial
*1980 Population Establishments **Cumulative Allotments
Penna. 11.866 x 106 18,735 $1,562.7 x 106
Nation 226.5 x 106 359,928 31,580 x 106
% 5.2 5.2 ***4.59
*Bureau of Census **Clean Water Fact Sheet Dec. 1980
***If 4.95 percent were adjusted upward for Talmadge/Nunn, it would
approach 5.2 percent.
If one State out of fifty correlates this well, then a region or the
Nation may correlate equally well. In the EPA's Region III, a survey
indicated that $54.8 million per year of industrial funding would be
excluded if one assumes an appropriation of $500 million per year for the
region. This suggests a national industrial cost exclusion of $430 million
at an assumed one-year national appropriation of $3.925 billion. Put
another way, 10.955 percent of any appropriation would be excluded.
Conclusion
Estimated Size of Industrial Cost Exclusion
Annual Nationwide
Appropriation Industrial Cost Exclusion
$2.3 billion $253 million
$2.4 $264
$2.5 $275
$3.3 $363
$3.4 $374
$3.5 $385
xix
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I. MUNICIPAL PERSPECTIVE
The effect of the Industrial Cost Exclusion on
the construction of publicly owned treatment works.
-------
I. MUNICIPAL PERSPECTIVE
INTRODUCTION
Federally mandated wastewater treatment requirements have major
financial impacts on local communities. To achieve and maintain compliance
with sewage discharge requirements, a community must raise sufficient funds
for the local share of capital costs, as well as money for operation and
maintenance (O&M). In addition, there is growing concern that many local
communities will not have adequate resources to meet the long-range
financial demands for expansion and major capital replacement.
This chapter discusses the potential effect on the construction of
publicly owned treatment works (POTWs) of the repeal of Industrial Cost
Recovery (ICR) and the enactment of Industrial Cost Exclusion (ICE).
The first section of the chapter deals with the financial impacts
expected from the loss of ICR revenues. The next section focuses on
short-term effects of Industrial Cost Exclusion, including expected reduc-
tions in Federal funding and costs of delay and administration. The third
section discusses options available to local communities in responding to
Industrial Cost Exclusion. The fourth seqtion deals with potential long-
range effects of ICE on economic self-sufficiency for POTWs, and identifies
a basic problem for communities: increasing sewerage costs in a time of
increasing pressures on municipal finances. Direct and indirect costs to
municipalities due to ICE are examined. The final section reviews other
issues raised by municipalities, such as retroactivity and equity.
IMPACT OF ICR REPEAL ON MUNICIPAL ECONOMIC SELF-SUFFICIENCY
Section 204(b)(3), repealed by Public Law 96-483, of the Clean Mater Act
had made clear that one of the primary purposes of the Industrial Cost Recov-
ery requirement is to promote POTW self-sufficiency by generating revenue for
the "expansion and reconstruction" of POTWs. This section summarizes infor-
mation regarding the potential effect of the repeal of ICR on the ability of
POTWs to pay for future replacement and expansion costs. This information
is based upon:
o Previous reports to Congress by the Environmental Protection Agency
(EPA) regarding Industrial Cost Recovery,
o Estimates of potential ICR revenues as a portion of POTW costs, and
o Responses from municipalities.
The EPA's "Report to Congress, Industrial Cost Recovery" was submitted
to Congress on January 25, 1979. This report, prepared by Coopers and
Lybrand under contract to EPA, concluded that ICR revenues "would not have
any significant contribution toward the grantee's financial capability to
meet the cost (when adjusted for inflation in the ensuing recovery period)
for future expansion and upgrading of the wastewater treatment works."
1-1
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Two major findings support this conclusion. First, the ICR revenues
are modest for the average grantee in terms of the overall sewage treatment
budget. In the communities studied by Coopers and lybrand, the average
total cost per grantee was $6 million per year (including O&M and debt
service), while average ICR revenues to be retained by the grantee for
future expansion and upgrading were $40 thousand per year. For the average
grantee, this portion represents less than one percent of the annual total
sewerage costs. Second, since ICR revenues remain constant, their impor-
tance to local sewerage needs decreases as costs of administration and
future construction increase due to inflation. According to Coopers and
Lybrand, for the average grantee, administrative costs would overtake local
ICR revenues long before the industrial share was paid back.
In a supplementary report to Congress in May 1980, EPA concluded that
for some grantees ICR revenues could provide "a significant supplemental fund
for treatment system improvements." According to this view, a primary bene-
fit of ICR requirements is that 80 percent of the local ICR revenues are
dedicated, that is, they must be held and used for treatment system improve-
ments. Unlike user charge revenues, 80 percent of the ICR revenues cannot
be transferred into general revenue accounts. As a source of dedicated
reserve funds, ICR revenues provide a step in the direction of economic self-
sufficiency for local treatment systems. For most communities, however, the
revenues will not have a significant effect.
From a national perspective, potential ICR revenues are small in
comparison with overall public sewerage costs. In the 1979 ICR report,
Coopers and Lybrand estimated that total ICR revenues to be collected would
average $60 million per year when all POTWs which could be constructed by
funds authorized under P.L. 92-500 and P.L. 95-217 are in place. Total ICR
revenues retained by all the grantees would average $24 million per year.
In contrast, capital expenditures for public sewerage in 1978 exceeded
$6 billion (including Federal, State, and local expenditures), with debt
service and operations and maintenance costs adding approximately $4 billion
more to the total. Thus, ICR revenues represent less than one quarter of
one percent of current annual spending for POTWs.
Responses from municipalities to the Federal Register notice on the
industrial user study suggest that ICR revenues are not a major factor for
most local communities. Responses were received from more than 60 States,
municipalities, sewer districts, and planning agencies. The majority of
these letters were vocal in their opposition to the exclusion of funding for
industrial flow from large water users. Many of the responses from munici-
palities indicated that the new legislation would result in financial hard-
ship due to fewer Federal funds, and four responses indicated preference for
the old ICR system over the current legislation. Not a single respondent,
however, indicated that loss of ICR revenues would create financial hardship
or make local economic self-sufficiency more difficult. This indicates that
few municipalities regard the loss of potential ICR revenues as significant.
1-2
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SHORT-TERM EFFECTS OF THE INDUSTRIAL COST EXCLUSION
UPON THE CONSTRUCTION OF POTWs
OVERVIEW
This section estimates the possible short-term effects of the Indus-
trial Cost Exclusion upon municipal decisions to build POTWs. Another
section discusses possible long-term effects of ICE.
The short-term effects of the Industrial Cost Exclusion concern (1)
possible savings to EPA from not funding major industrial capacity in POTWs
and (2) allocation of the cost of that industrial capacity among the citi-
zens and industries in affected communities.
The communities of interest are those well into the Step 1 planning
phase which are able to define the cost of their plants and the industrial
portion affected by ICE~roughly those communities which would have begun
construction between 1982 and 1985.
Briefly, ICE decreases Federal funding for constructing POTWs. It
requires communities with major industries to seek alternative financing for
the capacity assigned to industrial users having flows greater than 50,000
gallons per day (gpd) of equivalent sanitary waste. The word "affected" in
the rest of this section describes both an industry with such a flow, and
the community in which it is located.
Data from 48 States and 7 territories concerning affected industries
and communities form the base for this analysis. A fuller description of
the data appears in the general discussion.
In general, the effects of ICE upon EPA and upon affected communities
are the following:
(1) From the point of view of EPA, the savings in the short term from
ICE available to the Construction Grants Program are limited by
delays in projects that ICE itself will cause. Some delays due to
ICE are inevitable, and Federal law allows construction grant
dollars to be used only to build POTWs. Current projections of
the construction index for sewage treatment plants suggest that a
delay of projects for little more than two years eliminates any
savings to EPA from ICE.
(2) From the point of view of affected communities, ICE imposes real
costs, not only upon POTW projects, but also upon the profit-
ability and sometimes viability of local industries. As a matter
of definition, it is misleading to characterize affected indus-
trial users as generally large and highly profitable. Rather,
affected industries use large volumes of water in their opera-
tions, with the profits of a particular user depending upon a host
of business variables, such as the efficiency of its plant, the
nature of demand, and the competitiveness of its market.
1-3
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(3) Communities that have already built POTWs have a competitive
advantage over communities affected by ICE. P.L. 96-483 repealed
ICR as well as instituted ICE. Communities that built POTWs under
the program of Industrial Cost Recovery received 75 percent grants
for the capital costs of industrial capacity. Industries in these
communities no longer have to make ICR payments for their capa-
city. Such communities will be able to charge lower sewer rates
to industries than will most communities affected by ICE.
An examination of the potential costs of ICE to affected communities
shows that these costs are not evenly distributed. (Table 1-1 suggests the
variation in the effects of ICE.) A sense of likely community responses to
ICE depends, therefore, upon knowing the range and variation of potential
costs.
Consider the following characterizations. Before considering the
effects of inflation and interest charges, ICE will make the 25 percent non-
Federal share of the capital costs of a POTW into a 26 percent to 50 percent
non-Federal share. The average non-Federal share in an affected community
will increase to 40 percent. From the point of view of affected communities,
that is an average increase of 60 percent in the local share, since (0.40-
0.25)/0.25 =0.60.
Viewed as a one-time capital charge to households, ICE will require
less than $1.00 per household in some communities, but more than $10,000 per
household in the most extreme case, with the average one-time capital charge
per household being $89.
o Forty-five percent of the affected communities would experience an
additional one-time capital cost per household of $100 or less in
1980 dollars.
o Eighty percent of the affected communities would experience an addi-
tional one-time capital cost per household from ICE of $400 or less
in 1980 dollars.
The severity of the potential impact of ICE upon a community depends on
the percentage of industrial flow, on the size of the community, and on its
relative wealth.
o The largest per household costs due to ICE occur in the smallest
communities. Twenty percent of the communities would experience an
additional one-time capital cost per household of $400 or more.
With seven exceptions, all of these communities have populations of
50,000 or less.
o On average, median household income in nonmetropolitan areas is 20
percent less than median household income in metropolitan areas.
Thus, a one-time capital charge of $100 has a greater impact in a
small community than in a metropolis.
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TABLE 1-1. MUNICIPAL PERSPECTIVE
Community
Los Angeles
County, CA
Los Angeles, CA
Phoenix, AZ
Duluth, MN
Boise, ID
Frederick, MD
Pepper's Ferry,
Martinsburg, WV
Salina, UT
Percent
Industrial Project
Population Flow Cost
3,500,000
3,000,000
919,000
110,000
100,000
30,000
VA 30,000
15,000
2,000
16
2
5
44
1
5
20
7
40
$75M
$200M
$66M
$ 4M
$20M
$13M
$17M
$ 3M
$ 2M
Non- Non-Federal
Federal Share per
Share Household*
$19M
$50M
$16. 5M
$ 1M
$ 5M
$3.3M
$4M
$0.8M
$0.5M
$15
$46
$49
$25
$138
$298
$390
$69
$688
Industry Percent
Portion Increase in
Affected Non-Federal
bv ICE Share
$12M
$ 7M
$5.2M
$2M
$0.2M
$0.7M
$3M
$0.2M
$0.1M
63
14
32
200
4
21
70
25
20
ICE
Cost per
Household
$7
$9
$16
$50
$6
$64
$303
$37
$138
Percent
Increase
in Capital
Costs per
Household
from ICE
47
20
32
200
4
22
77
54
20
*The U.S. Census reported an average of 2.75 persons per household for March 1980.
-------
As stated earlier, ICE will impose inevitable delays on the projects it
affects. These delays will occur because communities will have to explore
financing alternatives- for the affected industrial capacity, negotiate new
agreements with participating industries, hold public meetings with their
citizens, and perhaos refashion facilities -plans.
The effects of delay— inflation, increased borrowing costs, and_
administrative costs—will add to the impact of fCE. The appropriate calcu-
lations show that even if the affected industries themselves pay "up-front"
sums for their capacity in POTWs, ICE typically will increase the remaining
non-Federal share in real terms from 1 percent to II percent J If a commu-
nity as_a_wholje_ pays for the affected industrial capacity, ICE typically will
increase the non-Federal share in real terms from 55 percent to J(H perceat.
Faced with these potential effects, communities affected by ICE will
consider several possible responses. First, communities with significant in-
dustrial flows (defined as 15 percent or more of total flow) will try to
scale down the size of their proposed plants. In eliminating some reserve
capacity, they will reduce the non-Federal share of the capital -cost.
Second, they will decide which options are feasible. The main options are
listed below.
•
(1) A community may raise the ICE portion itself, either by a one-time
charge upon its citizens or by borrowing a greater sum than it had
first planned in the tax-exempt bond market. Here, the community
as a whole pays for the industrial capacity excluded from Federal
support by P.L. 96-483.
(2) A community may require its participating industries to finance
their planned industrial capacity themselves; that is, to provide
"up-front" payments to the municipality at the time of construc-
tion. Such industries would have to generate these funds in-
ternally or borrow them in the capital markets. Apart from the
costs of delay, however, the community itself would face no higher
debt service or user charges under ICE.
(3) A community may examine ways to share with affected industries the
cost of building their POTW capacity. Variations of this option
range from increasing the property taxes of all in the community
to requiring affected industries to service the debt the community
borrows on their behalf.
(4) Industries may choose to treat their wastes themselves and not
participate in a POTW. Each will reexamine the economics and
feasibility of self -treatment. If sufficient land is available,
if community ordinances do not require industrial participation in
a POTW, if the corporate planning horizon is long enough, if the
Calculations based on the current economic assumptions of the Administra-
tion suggest a range for the cost of delay of -4 percent (a real savings) to
10 percent (a real cost).
1-6
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industry can obtain the necessary permits, and if the after-tax
costs are less than for joint treatment, an industry will "self-
treat."
If the percentage of POTW capacity first planned for such indus-
tries is high, residents and commercial establishments remaining
in the POTW may face higher unit costs for user charges after ICE
than before because of fewer economies of scale. On the other
hand, some communities may then turn to alternate methods of
treating waste-water, perhaps lagoons or improved septic systems,
and face lower unit costs than before ICE.
(5) A community with a high percentage of industrial flow may form a
nonprofit, "public benefit" corporation jointly owned by city and
industries. Such a corporation will forego any EPA assistance,
but may save money by avoiding some Federal and State requirements.
(6) A community may decide to postpone indefinitely building a sewage
treatment plant. A community with a large proportion of industrial
capacity but whose industries are marginal may decide that neither
its citizens nor its industries can shoulder the increased burden.
Of the options outlined, those that a community will entertain serious-
ly depend on factors such as:
(1) The financial burden of the previously planned local share,
(2) The incremental size of ICE,
(3) The community's general financial condition,
(4) The cost and availability of capital,
(5) Competing needs for municipal funds,
(6) The strength of its local industries, and
(7) Benefits which the community sees as arising from compliance with
the Clean Water Act.
In dealing with these factors, a community may take an approach which
tries to minimize costs to its citizens and damage to its economic base.
Such an approach appears practical for 46 percent of affected communities for
which one-time capital charges per household are $100 or less. It may also
be feasible for the next 34 percent of communities whose one-time costs per
household range from $101 to $400. Thus 80 percent of affected communities
may find a way to share the costs of ICE with affected industries. As part
of this approach, a community would examine the feasibility of the combina-
tion of industrial self-treatment and residential alternate treatment. If
industrial participation and secondary treatment are necessary, the community
would strike a balance between assessing affected industries and charging
1-7
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residents. The community would both borrow a larger sum ?i the municipal
bond market and charge its taxpayers a small, one-time fet. It would both
require some "up-front" money from affected industries and arrange annual
surcharges for a portion of the additional debt service. In so doing,
it would try to protect its bond rating and prevent the loss of jobs in the
community.
Not all affected communities, however, will have the financial leeway
to devise such an approach. Those that cannot are likely to be small and
poor with marginal industries. Such communities may need counsel and assis-
tance if they are to meet the requirements of the Clean Water Act.
In sum, ICE-induced delays of projects in the short term will probably
eliminate most savings EPA would gain from not funding the industrial capa-
city of large water users. What savings do occur will impose additional
real costs upon those communities whose facilities plans are well defined.
Without knowing the financial condition or the competing demands for funds
in affected communities, EPA can only suggest those categories of communi-
ties which may be able to absorb the increased costs. Those whose one-time
capital charges per household due to ICE are $100 or less may be able to
afford the increases. Others can be judged only case by case. The main
section of this chapter shows distributions of the costs of ICE among popu-
lation categories, names communities whose one-time capital charges per
household due to ICE exceed $400, and reports projected effects of inflation
and increased interest charges.
GENERAL DISCUSSION
The Industrial Cost Exclusion contained in P.L. 96-483 reduces Federal
funding for POTWs. It changes the Clean Water Act to prohibit the use of
Federal funds to build capacity in POTWs for industrial users whose flow
exceeds 50,000 gallons per day of equivalent sanitary waste. The law, how-
ever, specifically exempts from ICE those communities which meet one of the
two conditions below:
(1) Award of a Step 2 design grant before May 15, 1980;
(2) Award of a Step 3 construction grant before November 16, 1981.
Thus, communities affected by ICE are (1) all future grantees, (2) grantees
that have just begun the Step 1 planning process, (3) Step 1 grantees that
have defined their POTW plans and identified industrial participants, and
(4) those Step 1 grantees that have completed their facilities plans and are
awaiting EPA's approval. For the purpose of assessing the short-term
effects of ICE upon the construction of POTWs, the communities of interest
are (1) those well into the Step 1 planning phase that are able to define
the cost of their proposed plants and the industrial portion affected by ICE
and (2) those Step 1 grantees whose plans are done but have not received a
Step 2 grant. The word "affected" refers to both an industry with a flow
greater than 50,000 gallons per day of equivalent sanitary waste and the
community in which it is located. "Short-term" is an approximate phrase
meaning the five years between now and 1985.
1-8
-------
The short-term effects of ICE concern (1) possible savings to EPA from
not funding major industrial capacity in POTWs and (2) the allocation of the
cost of that industrial capacity among the citizens and industries in af-
fected communities. The following pages (a) discuss the savings available
to EPA from ICE, (b) discuss the variation in the impact of ICE upon com-
munities, (c) report present value calculations (contained in the technical
section) of the cost of ICE to communities, and (d) discuss possible options
and likely responses by communities to ICE.
To provide data for this analysis, 48 States2 and 7 territories re-
ported information about 401 communities that will be affected by ICE in the
short term. They reported each affected community's population, the size of
its proposed plant, the total cost of the proposed POTW, the types of
affected industries, the amount of affected industrial flow, the cost of the
industrial portion affected by ICE, and the unemployment rate. Section V,
the "National Effect," conveys this information for each of the 55 States
and territories that reported to EPA and provides a national summary. These
401 communities should reasonably.represent the universe of communities
subject to ICE in the short term.6
To show the general dimensions of ICE, Table 1-2 displays some of the
national summary data: projects affected by ICE total more than $8 billion,
with communities foregoing more than $1 billion in grants. ICE will in-
crease the average non-Federal share by more,than 60 percent. If the cost
of affected industrial capacity were charged solely to households in a one-
time bill sent tomorrow, the average bill per household would be $89.
Possible Federal Savings from ICE
Table 1-2 suggests that EPA will save over $1 billion by not funding
industrial capacity in POTWs for large water users. Table 1-2, however,
does not consider the effect of inflation, and, more importantly, does not
consider the effect of delay. Any discussion of the savings to EPA result-
ing from ICE must take into account the delays in projects that ICE will
inevitably induce.
ICE will delay projects because communities that had their facilities
plans well under way must now explore different ways to finance the EPA
grant shortfall, including that of charging industries directly for the
entire amount. For their part, industrial firms will want to reconsider
their decisions to join POTWs. They will look again at the alternatives of
self-treatment, shifting production to other plants, or even closing down in
States of Nebraska and Missouri did not submit lists of affected
communities.
^Section V also lists communities which other sources named as being
affected by ICE. However, data from these other sources are often incom-
plete, and they are not included in this analysis.
1-9
-------
TABLE 1-2. NATIONAL AVERAGES AND TOTALS FOR DATA
THAT 48 STATES AND 7 TERRITORIES REPORTED FOR THE ICE STUDY
(a) Total number of States and territories reporting to EPA 55
(b) Total number of communities reported as affected by ICE 401
(c) Total cost of affected projects In 1980 dollars* $8,124.5M
(d) Federal share of affected projects without ICE in 1980
dollars* $6.093.4M
(e) Total Industrial portion excluded by ICE 1n 1980 dollars* $1.243.7M
(f) Federal share of affected projects with ICE 1n 1980
dollars* $4.849.7M
(g) Average Industrial portion per community excluded by ICE $3.10M
(h) Average increase in the non-Federal share due to ICE** 61%
(1) Average cost of ICE per household $89
(j) Range of percentage of Industrial flow in affected POTWs 1-92X
(k) Average percentage Industrial flow in an affected POTW 15.8%
*EPA has assumed that the reports that came in January 1981 from 55 States
and territories describe project costs and the excluded industrial costs
In 1980 dollars.
**For this analysis, EPA has Ignored ineligible costs and assumed that the
non-Federal share is 25 percent of the total cost of a project.
1-10
-------
light of potential ICE costs. The administrative time and money spent by
both municipal and corporate officials in exploring treatment and financing
possibilities, negotiating new agreements, and possibly revising facilities
plans will be significant.
No one knows yet how long ICE will delay projects. Moreover, other
factors can delay projects as well. (For example, given particular funding
rules, a State may delay projects which are "ready to go" but occupy low
positions on its priority list.) Estimates from industry suggest 18 months
as a typical delay resulting from ICE; an affected municipality has suggested
two years. These estimates give a sense of how much time is required by
willing parties to explore financial options and to negotiate agreements.
For the purpose of this analysis, EPA will estimate its savings from ICE
after project delays of one, two, and three years.
This analysis of delay entails (a) estimating the inflation of con-
struction costs, (b) assuming a year (or years) when POTWs otherwise would
have been built, and (c) calculating the difference between what the Federal
share would have been without ICE and what it will be with ICE after delays
of one, two, and three years. A full analysis would also consider the cost
of postponing environmental benefits, but that is beyond the scope of this
report.
To estimate the inflation of construction costs, EPA used a sewage
treatment plant construction index based on its own data. Using 1980 as the
base year, Table 1-3 shows that model's predictions. Note that these predic-
tions are not of inflation throughout the economy, but only of inflation in
one sector of the economy, a sector in which historically inflation has been
relatively high.
TABLE 1-3. PREDICTIONS OF A SEWAGE TREATMENT PLANT CONSTRUCTION INDEX
BASED UPON EPA's DATA
Fiscal Year '80 '81 '82 '83 '84 '85 '86
Index 1.00 1.088 1.203 1.335 1.469 1.605 1.748
Percent Change
from Preceding
Year 8.8 10.6 11.0 10.0 9.3 8.9
Average annual percent change from previous year for 1980-1985 is 9.9
percent.
1-11
-------
By using this index and assuming project costs to be reported in 1980
dollars, EPA can illustrate the savings from ICE to the Construction Grants
Program. For a first illustration, EPA has assumed that all projects
affected in the short term would otherwise have begun construction in 1982.
It also has assumed that without ICE all projects would receive 75 percent
grants. A one-year delay means that all projects would begin construction
in 1983. A two-year delay means that all projects would begin construction
in 1984, and so forth. To calculate its savings, EPA has subtracted the
Federal share with ICE and after delay from the Federal share without ICE and
with no delay. The net savings appear in Table 1-4. The technical section
of this chapter shows the calculations and presents the rationale for them.
Note that EPA's savings are not $1 billion and, in fact, become nega-
tive after little more than two years of delay (about two years and two
months). Increased construction costs will outstrip savings. If one-third
of the projects were delayed one year, one-third were delayed two years, and
one-third were delayed three years, EPA would save $155 million for these
401 projects.
However, not all affected projects would have begun construction in
1982. Many would not have been "ready to go." Others would have occupied
low positions on States' priority lists. Moreover, it is realistic to
assume the budget for construction grants will at most remain level and will
likely decrease in real terms.
Hence, it is more appropriate to report percentage savings to EPA from
ICE. Table 1-5 shows the percentage savings to the Construction Grants
Program after delays of one, two, and three years for projects that would
otherwise have begun construction in 1982.
TABLE 1-4. CONSTRUCTION GRANT SAVINGS FROM THE INDUSTRIAL COST EXCLUSION
AFTER TAKING ACCOUNT OF DELAYS
Delay
EPA.S
Savings
1983
1 Year
$855 million
1984
2 Years
$206 million
1984-1/2
2-1/2 Years
-$124 million
1985
3 Years
-$453 million
Assumptions: (a) Project costs in 1980 dollars of $8,124.5M
(b) ICE affected industrial capacity of $1,243.7M
(c) All affected projects would have begun construction
in 1982 without ICE.
1-12
-------
As above, for these projects EPA's savings become increased costs in
little more than two years. If one-third of the projects "ready to go" in
1982 were delayed one year, one-third were delayed two years, and one-third
were delayed three years, savings to the Construction Grants Program would
be approximately 4 percent. If, however, projects unaffected by ICE are
"ready to go," EPA can fund those projects and offset its losses from delay.
Again, the factors that drive this analysis are increasing construction
costs and a budget for the Construction Grants Program that does not in-
crease with inflation. Delays of longer than two years eliminate savings to
EPA from ICE.
Costs to Communities from ICE
A serious question concerns the magnitude of the costs that ICE will
impose on communities. Table 1-2 describes some typical effects of ICE,
reporting an average increase of 60 percent in the non-Federal share for the
401 projects. Yet the potential impact of ICE on communities is not uni-
form. For example, the increase in the non-Federal share in affected com-
munities ranges from 4 percent to 330 percent. This section will show the
distribution of affected communities and the variation in potential impact.
Then, using a variation of present value analysis to incorporate the effects
of inflation and delay, it will estimate increases in real costs under
several sets of assumptions. Another section discusses possible responses
by communities to these potential costs.
In terms of the numbers of affected projects, ICE affects primarily
small towns and small cities. Table 1-6 shows the distribution of affected
communities by size. Over 70 percent of the affected projects are in
communities smaller than 50,000 persons. Thirty-two percent of the affected
communities have fewer than 10,000 people. At the same time, communities of
50,000 or less accounted for only 30 percent of the excluded dollars. (See
Table 1-7.) However, the proportion of small communities (less than 10,000)
affected by ICE is less than the percentage of all small communities
receiving grants (32 percent versus 66 percent).
A more important question than the proportion of small communities
affected by ICE is whether the relative burden of ICE is greater in small
communities than in large ones. To characterize the relative burden of ICE
on communities, EPA calculated an incremental, one-time cost per household
from ICE in each affected community. Table 1-8 shows the resulting distri-
bution of one-time ICE costs per household by size of community, using the
March 1980 Census figure of 2.75 persons in the average American household.
It is true that the incremental costs per household shown in Table 1-6
assume that only householders pay the industrial costs excluded from Federal
participation under P.L. 96-483. If communities raised funds for industrial
capacity through a one-time increase in ad valorem taxes, the average charge
per household due to ICE would be less than the figures here because indus-
tries and commercial establishments are part of the cities' tax bases. EPA
does not have data by community showing the industrial and commercial
1-13
-------
portions of assessed value. Nevertheless, the list of household costs by
affected community allows one to examine the relative impact of ICE.
The distribution of one-time, 1980 dollar charges per household from
ICE illustrates several important points.
o The range of one-time, "up-front" charges per household is large,
from less than $1.00 per household to over $10,000 per household.
o More than 45 percent of the affected communities would experience
one-time charges of $100 or less.
o The most extreme effects occur in the smallest communities.
Significant burdens per household generally fall upon cities of fewer
than 50,000 people, with the most severe burdens per household occurring in
communities smaller than 10,000 persons. However, some older cities (7 in
this analysis) also bear significant burdens under ICE. EPA chose $400/house-
hold as a plausible threshold figure for significant burden. At this point,
if a community were to finance the industrial capacity through municipal
bonds, additional annual debt service per household for a 30-year
TABLE 1-5. PERCENTAGE SAVINGS FROM ICE TO THE CONSTRUCTION
GRANTS PROGRAM AFTER DELAYS OF 1-3 YEARS
Delay
EPA's Savings
1983
1 Year
12X
1984
2 Years
13%
1984-1/2
2-1/2 Years
-2X
1985
3 Years
-6%
TABLE 1-6. SIZE OF AFFECTED COMMUNITIES—48 STATES
Population Categories
0-3,500 3,600 10,000 50,100 100,100 500,100 More than
10,000 50,000 100,000 500,000 1,000,000 1,000,000
Number of
Communities
Percentage
of Total
Cumulative
Percentages
56
14X
14X
71
18X
32%
155
39%
71%
50
12X
83%
51
13X
96%
14
3%
99%
4
IX
100X
N = 401
1-14
-------
TABLE 1-7. COST OF AFFECTED INDUSTRIAL CAPACITY
BY POPULATION CATEGORIES (1980 DOLLARS, 48 STATES)
Less than 3,600 10,100 50,100 100,100 500,100 More than
3,600 10,000 50,000 100,000 500,000 1,000,000 1,000,000 Total
Cost of
Affected
Industrial
Portion
Percent of
Affected
Costs
Cumulative
Percent
$47
3.
3.
.4M
7%
n
$66.
5.
8.
9H
2%
9%
$270. 5M
21.0%
29.9%
$118. 1M
9.2%
39.1%
$421. OM
32.7%
71.8%
$300.
23.
95.
4M
3%
1%
$62. 4M
4.8%
100%
$1,287M
-------
ICE Costs Per
Household
TABLE 1-8. DISTRIBUTION OF COMMUNITIES BY SIZE AND BY ONE-TIME
ICE CHARGES PER HOUSEHOLD IN 1980 DOLLARS (48 STATES)
(Interest charges, Inflation, and delay not accounted for)
Population Categories
(1980
dollars)*
$ 0-100
101-200
201 -300
301-400
401-500
501 -600
601 -700
701 -800
801-900
901-1,000
1,001-1,100
1,101-1,200
1,201-1,300
1,301-1,500
1,501-2,000
2,001-2,500
2,501-3,000
3,001-3,500
3,501-4,000
4,001-4,500
0-
3,500
6
8
4
2
3
4
2
0
1
3
1
2
2
2
4
3
1
3
1
1
3,600
10,000
20
13
14
7
4
3
1
1
2
3
0
0
1
0
1
0
1
10,100
50,000
70
45
6
11
9
5
1
1
2
1
0
0
0
1
0
2
0
1
50,100 100,100 500,100 More than
100,000 500,000 1,000,000 1,000,000 Total Percentage
36 36 11 4 183 46%
462
530 135 34%
320
220
0 0
1 1 52 13%
0
0
0
0
0
1 15 3.7%
13 3%
-------
TABLE 1-8 (Continued). DISTRIBUTION OF COMMUNITIES BY SIZE AND BY ONE-TIME
ICE CHARGES PER HOUSEHOLD IN 1980 DOLLARS (48 STATES)
(Interest charges, Inflation, and delay not accounted for)
ICE Costs Per
Household
(1980
dollars)*
4,501-5,000
5,001-6,000
6,001-7,000
7,001-8,000
8,001-9,000
Population Categories
0-
3,500
o
1
0
0
1
3,600 10,100 50,100
10,000 50,000 100,000
100,100
500,000
500,100 More than
1,000,000 1,000,000 Total
Percentage
i\%
. O/o
9,001-10,000
10,001-11,000
11,001-12,000
.2%
Total (401)
56
71
155
50
51
14
401
100.4%
*U.S. Census reports an average of 2.75 persons per household for March 1980.
-------
bond at 11 percent interest would be $46. That would be approximately an
added $4 per household per month for 30 years. However, 76 communities
under 50,000 people (19 percent of all affected communities) have one-
time incremental capital costs per household greater than $400. If such
communities financed ICE with 30-year municipal bonds at 11 percent interest,
additional monthly charges per household would range from $4 to $105. Table
1-9 lists those communities whose one-time incremental costs of ICE per
household would exceed $400.
Again, the purpose of showing ICE as a cost per household is not to
suggest that communities will require their residents to pay the entire
industrial portion affected by ICE. Rather, the intent, in the absence of
specific data about the financial condition of most affected communities and
the profitability of industrial users, is to capture the magnitude of the
financing problems which ICE places before communities. As the Overview
suggested, communities may consider several financing options, including
that of requiring up-front sums from the affected industries themselves.
One can take this discussion of the relative impact of the Industrial
Cost Exclusion upon communities two steps further. The first is to compare
the incremental costs of ICE per household to a measure of communities'
abilities to absorb these costs. The best measure would be median household
income since the household is the unit of analysis here, because median
household income implicitly takes account of unemployment rates and, because
unlike personal wealth or assessed valuation, it reflects liquid assets.
However, figures for median household income from the 1980 Census will not
be available until the summer of 1981. The Bureau of Economic Analysis
(BEA) has 1978 figures for the per capita income of U.S. counties. These
income figures are derived from payroll data and reflect non-cash benefits
as well as wages and salaries. On average, they are about 15 percent higher
than figures the U.S. Census would report. For each affected community,
Table 1-17 at the end of this section reports its population, the BEA per
capita income of the county surrounding each affected community, and
industrial portion per household.
In general, Table 1-17 shows that per capita income is lower in coun-
ties containing small towns than in counties containing large cities. Hence,
even a one-time charge of $100 per household resulting from ICE would have a
greater impact in a small community than in a large city. Graphing popula-
tion against the ratio of the industrial portion per household to per capita
income will illustrate the relative impact of ICE in small communities.
The second step one can take in examining the relative impact of ICE in
large and small communities is to examine differences in interest rates paid
on tax-exempt bonds. In genera.1, small communities tend to have lower bond
ratings than large communities or to be unrated.'* Thus, smaller communi-
ties will pay higher interest rates to finance the non-Federal share of their
POTWs. The current market for tax-exempt bonds (late February 1981) is
the Booz, Allen, Hamilton Study.
1-18
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TABLE 1-9. NAMES OF COMMUNITIES WHOSE INDUSTRIAL COST EXCLUSION EXCEEDS $400 PER HOUSEHOLD
ICE
Costs Per
Household
$ 401 - 500
$ 501 - 600
$ 601 - 700
$ 701 - 800
$ 801 - 900
0 - 3,500
Saglnaw, MI
Albany, MN
Blooming Pr, MN
Decatur, AR
Morton, MS
Avon, NY
Jay, OK
Almo, AR
Heuvelton, NY
Hudson, MI
3,600 - 10,000
White Hall, MI
M. Butterfleld, NJ
New Holland, PA
Roxboro, NC
Berry vllle, AR
Columbia, IN
Rouses Pt, NY
Tecumseh, MI
Dequeen, AR
Ft. Edwards, NY
Population Categories
10,100 - 50,000 50,100 - 100,000
Chandler, AZ Modesto, CA
Blllerlca, MA Decatur, IL
Asheboro, NC
Morganton, NC
Roanoke Rapids, NC
Avon Lake, OH
Bellefontalne, OH
Fremont, OH
Ironton, OH
Middle town, OH
Marshfleld, WI
E. Chicago, IN
Corinth, MS
Bellefontalne, OH
Warwick, RI
Ithaca, NY
Brenham, TX
Kankakee, IL
100,100 - 500,000
Duluth, MN
Camden Co, NJ
Chattanooga, TN
New Bedford, MA
Milwaukee, WI
Seneca Falls, NY Taylorvllle, IL
$ 901 - 1,000 Huntsvllle, AR
Dundee, NY
Randleman, NC
Montlcello, IL
Marine City, MI
Plymouth, WI
Port Huron, MI
$1,001 - 1,100 Cedar Spring, MI
-------
TABLE 1-9 (Continued). NAMES OF COMMUNITIES WHOSE INDUSTRIAL COST EXCLUSION EXCEEDS $400 PER HOUSEHOLD
ICE
Costs Per
Household
$1,101 - 1,200
$1,201 - 1,300
$1,301 - 1,500
$1,501 - 2,000
Population Categories
0 - 3,500 3,600 - 10,000 10,100 - 50,000 50,100 - 100,000
Memphis, MI
Perham, MN
Hughson, CA L. Wissahicken, PA
Silver Creek, NY
Wilson, NY Webster, MA
Westville, OK
Clinton, AR St. Helens, OR
100,100 - 500,000
Middlesex Co, NJ
Murphysboro, AR
Corinna, ME
E. Greenwich, RI
$2,001 - 2,500 S. Paris, ME
Frazee, MN
Pollock, SD
$2,501 - 3,000 Lincoln, NH
$3,001
Canastata, NY
3,500 Sparta, MI
Pelican Rapids, MN
Troy, VT
$3,500 - 4,000 Aitkin, MN
$4,001 - 4,500 Calumet, MI
$5,001 - 6,000 Cuba, NY
$8,001 - 9,000 Worthington, NY
$11,001 - 12,000 Lake George, NY
Watsonville, CA
Gloversvllle, NY
Beaver Dam, WI
Dalton, GA
-------
"relatively flat," but even so, the Municipal Finance Officers Association
(MFOA) reports a 0.625 percent difference between interest rates of recent
AA and BBB+ issues. MFOA suggests that when demand for tax-exempt issues
increases, the difference between interest rates on the two categories of
bonds may grow to 0.875 percent. Moreover, the difference in interest rates
for AA and non-rated issues is larger yet. Finally, given even the same
bond rating for issues, small communities tend to pay higher interest rates
than do cities.5
Thus, the combination of higher incremental costs per household, lower
personal income, and higher interest rates means that any portion of
excluded industrial costs which a community decides to bear as a whole
rather than charge to industry will have relatively greater impact in a
small community.
Finally, one can attempt to incorporate the findings about economies of
scale of sewage treatment plants into this discussion of the relative impact
of ICE upon small and large communities. In general, economies of scale
exist in conventional secondary sewage treatment plants and appear as lower
unit costs for treatment in large POTWs. Total per capita costs (capital
plus O&M) for activated sludge plants of 1 MGD (population approximately
10,000) and 0.1 MGD (population approximately 1,000) exceed per capita costs
for a 10 MGD plant by factors of 1.6 and 2.6, respectively. Thus, in smaller
communities, both residents and industries generally face larger unit costs
for conventional treatment.
However, ICE will not affect the unit prices customers already expect
to be charged in a community unless the percentage of industrial flow is
great, unless the affected industries decide to self-treat, and unless the
communities must use conventional treatment. In this situation a community
will have an inefficient POTW.with higher capital and O&M charges if it does
not reduce the size of its treatment plant. And even if such a community
scales down its plant, its residents and small industries will face higher
unit charges than they expected before ICE.
On the other hand, if industrial flow is a large percentage of total
flow to a POTW in a community, if the affected industries decide to self-
treat, and if the community can then turn to an alternate method of treat-
ing its wastes, perhaps a lagoon or improved septic systems, residents will
have lower charges than they would have had with a conventional treatment
plant.
The main point to be made about economies of scale in conventional sew-
age treatment plants, then, is that smaller communities are already paying
larger capital and O&M charges per household than cities, and the differen-
tial effects of ICE can only add to the disparity. Another point to be made
5Interview with Edwin Wells, President, Bartle Wells Associates, Municipal
Financing Consultants, San Francisco, CA, April 1980.
1-21
-------
1s that some communities with large industrial flows that are affected by
ICE may experience increasing capital costs per household and higher unit
costs for treatment if their industries decide to self-treat in the wake of
ICE.
Many affected communities reported unemployment rates that exceed the
national average of 7.1 percent. It is difficult to define the effect which
arr above-average unemployment rate in itself would have on the construction
of POTWsT Median household income and per capita income, however, reflect
the interaction of the unemployment rate with the ability or willingness of a
community to pay for industrial capacity affected by ICE. Nevertheless, for
those wtio are interested, EPA reports in Table 1-10 the number of communi-
ties with significant unemployment rates: those communities whose unemploy-
ment rates exceed the national average of 7-.1 percent. Table I-11 shows the
distribution of one-time costs of ICE per household for such communities.
Table 1-12 names those communities whose~tinemployment rates exceed 7.1
percent and whose one-time costs of ICE per household exceed $400 in 1980
dollars.
A last point is that some States contribute-a portion of the non-Federal
share of POTW projects. If a State's contribution is a function of size of
the Federalshare, then ICE will have a relatively greater effect upon
projects in that State. The percentage change in a community's local share
will be more drastic.
Delay, Inflation, and Interest Charges
Thus far, this report has characterized variations in the effect of ICE
on communities in terms of one-time incremental costs per household in 1980
dollars with only limited reference to interest rates and inflation. Infla-
tion, however, increases both the Federal and non-Federal shares of POTW
projects. When construction begins, capital costs per household will exceed
1980 figures, and Increased interest charges (if not higher rates) will soon
follow.
More Importantly, insofar as the inflation of construction costs and
Interest rates exceed the growth of median household income, any delays that
occur in a community impose real additional costs upon that community.
Inevitable delay from ICE will exacerbate the effects of inflation in com-
munities that would otherwise begin construction of POTWs in 1982. This
section discusses these costs of delay and quantifies some of them.
First, delay affects the cost of the entire project, not just that
portion affected by Federal funding. As Inflation increases the absolute
cost of a project, both the Federal share and the non-Federal share increase.
Second, 1n general, localities must pay greater financing charges on
the larger sums they borrow. In some cases, the increased financing charges
are simply the previously anticipated interest rate applied to a larger
principal. In other cases, the incremental amount borrowed results in a
1-22
-------
TABLE 1-10. NUMBER AND PERCENTAGE OF COftlUNITIES WITH SIGNIFICANT
UNEWLOYHEMT RATES BY POPULATION CATEGORIES
Degree of
Unenploynent
Population Categories
0-
3.500
3,600
10.000
10,100
50.000
50,100
100.000
100.100
500.000
500.000
1.000.000.
More Than
1.000.000
Marginal
Total
Percentage of
Conmunltles
In Each
Category of
Unanploynent
B.I. No. of comunltles
whose uneaploynent rate
exceeds 7.12, and whose
State's rate Is less
than 7.It
11
25
56
3U
No. of comunltles with
serious uneaploynent:
A.I comunity rate
exceeds the national
rate of 7.12, but Is
less than Its State's
unenploynent rate
14
33
11
67
371
II. No. of connunltles
with extreme unenploy-
nent:Conaunltles'
rates exceed State's
rate, which exceeds
the national rate of
7.1t
13
13
17
60
33%
COLUMN TOTALS
30
33
75
21
19
183
1011
Percentage of coanunltles
with significant unenploy-
nent rates by population
category
16%
18S
411
lit
101
2S
It
Percentage of communities
In each population cate-
gory having significant
uneapl oyaent
591(56)461(71) 48t(155) 42SI50). 37t(5.1). . 29t*(14) 25t**(4).
Total nunber of cotmun1t1es reported as affected by ICE • 401.
Total nunber of conmunltles with significant unenploynent rates • 183.
Percentage of comunltles affected by ICE that have significant unenploynent rates • 46 percent.
•Only 14 coanunltles 1n this category are affected by ICE.
**0n1y 4 comnunltles In this category are affected by ICE.
-------
TABLE I-11. DISTRIBUTION OF COST OF IMDUSTRIAL COST RECOVERY PER HOUSEHOLD
IN COMMUNITIES WITH SIGNIFICANT UNEMPLOYMENT RATES*
Costs of ICE
per Household
(Principal
Only In 1980
Dollars)
Population 1n
thousands
$ 0- 100
101- 200
201- 300
301 - 400
401- 500
501- 600
601- 700
701- 800
801- 900
901- .000
.001- .100
.101- .200
.201- .300
.301- ,500
.501- 2,000
2.001- 2.500
2.501- 3.000
3.001- 3.500
3.501- 4.000
4.001- 4.500
4.501- 5.000
5.001- 6.000
6.001- 7,000
7.001- 8,000
8.001- 9,000
9,001-10,000
10.001-11,000
11,001-12,000
No. of Communities Whose
Unemployment Rate Exceeds the
National Rate of 7.11. Which
Exceeds Their State's Rate
0 3.6 10.1 50.1 100.1 500.1
3.5 10.0 50.0 100.0 500.0 1,000.0
1 3 14 1 5 2
2 5 1
1 2
2 1
11111
1
1
1
1
2 1
1 1
1
No. of Communities Whose
Unemployment Rate Exceeds the
National Rate of 7.11, but Which Is
Less Than Their State's Rate
0 3.6 10.1 50.1 100.1 500.1
3.5 10.0 50.0 100.0 500.0 1,000.0
6 15 9 1 1
2 3 11
2 11
2 1 1
2 1
2
1
1
1
1
1
1
No. of Communities Whose
Unemployment Rate Exceeds Their
State's Rate, Which Themselves
Exceed the National Rate of 7.11
0 3.6 10.1 50.1 100.1 500.1
3.5 10.0 50.0 100.0 500.0 1,000.0
12846 1
1 1 6
22132
1 1
1 1
2 1
2 1
1 1
1
1
1
1 1
1
1
1
TOTAL
11
25
14
33 11
13 13
17
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TABLE 1-12. NAMES OF COMMUNITIES WHOSE EMPLOYMENT RATE EXCEEDS THE
NATIONAL RATE OF 7.U, WHICH EXCEEDS THEIR STATE'S RATE
AND WHOSE ICE COST PER HOUSEHOLD IS GREATER THAN $400
Cost Per
Household 0-3,500 3,600-10,000 10,100-50,000 50,100-100,000 100,100-500,000
401- 500 Albany, MN Roxboro, NC Roanoke Rapids, NC Modesto, CA Chattanooga, TN
501- 600 Corinth, MS
601- 700 New Bedford, MA
701- 800
801- 900
901- 1,000
1,001- 1,100
1,101- 1,200
1,201- 1,300 Hughson, CA
1,301- 1,500 Westville, OK
1,501- 2,000
2,001- 2,500 South Paris, ME Beaver Dam, WI
Frazee, MN
2,501- 3.000
3,001- 3,500 Troy, VT Dal ton, GA
3,501- 4,000 Aitkins, MN
4,001- 4,500
4,501- 5,000
5,001- 6,000
6,001- 7,000
7,001- 8,000
8,001- 9,000
9,001- 10,000
10,001- 11,000
11,001- 12,000
-------
higher interest rate charged on the entire principal. This situation occurs
when raters of bonds perceive that a community's ability to repay debt has
not kept pace with the inflation of construction costs. (At other times,
however, the general level of interest rates shifts, resulting in a different
interest rate, higher or lower as the case may be.)
A third cost of delay is the administrative cost of exploring ways to
finance the affected industrial portion and of negotiating new agreements
with industries. These administrative costs are generally not eligible for
EPA grant funding. As stated earlier, industries affected by ICE will re-
consider their decisions to join POTWs, examining anew the alternatives of
self-treatment, shifting production, and closing down in light of potential
ICE costs. Both municipal and corporate officials will spend time and money
exploring treatment and financing possibilities, in negotiating new agree-
ments, and possibly in revising facilities plans. The process of renego-
tiating agreements is not simple because industries will refrain from making
decisions about participating in POTWs until all their costs are known,
including pretreatment, user charges, and capital costs. At the same time,
because of economies of scale, capital charges and O&M charges per unit of
flow are an inverse function of the size of the plant. Small municipalities
with a "large" proportion of industrial flow cannot reasonably estimate
future charges to industries without knowing what the total industrial flow
will be. These municipalities will find themselves calculating charges and
economic burdens for several possible facilities plans. Large cities will
have less difficulty in revising facilities plans, but they too will face
the task of financing the industrial portion and renegotiating agreements
with industries.
Many letters to EPA concerning the Industrial Cost Exclusion commented
on these administrative costs of delay. Virtually all of the communities
listed as affected by the ICE in the short term will bear these costs.
(Only those communities that recently received Step 1 planning grants and
who have yet to secure industrial participants and to define the sizes and
types of POTWs they want will escape.)
Thus, one issue implicit in P.L. 96-483 as it now stands may be its
retroactive effect in the next several years. Citizens—private, corporate,
and municipal—have previously criticized EPA for promulgating retroactive
regulations and other program requirements. Many comments to EPA recognized
that the statutory requirement of Industrial Cost Exclusion may well require
communities and industries to reevaluate decisions already made and force
changes in some facilities plans and designs that are nearly complete.
From a municipal perspective EPA has explicitly estimated two of the
three parts of the cost of delay: the increased cost of construction and
increased financing charges. Although administrative costs of delay will be
important, EPA is not able to estimate them because they will be unique to
each community. They are a function of the number of affected industries,
the feasibility of the options considered, and the desire of all parties to
negotiate agreements and begin building a POTW. Although the administrative
1-26
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costs of delay remain unquantified, they are, nevertheless, reflected in
increased construction costs: the time that these administrative activities
consume drives the increased construction costs.
Possible Municipal Savings from ICE
Like the preceding analysis of EPA's savings from ICE, this analysis of
municipal costs due to ICE considers delays to projects of one to three
years. Because of the number of financial variables involved and because of
the variety of financial arrangements a municipality and its industries may
contemplate, however, EPA has conducted a "high-low" analysis to provide a
range of possible effects. Here EPA considers delays of one and three years.
The essence of EPA's approach is to calculate increased construction
costs and their associated financing costs and to compare these increases
with the ability of the communities to pay them. For this study EPA chose
the projected growth of median household income as a measure of communities'
ability to absorb larger non-Federal shares.
The appropriate technique to use for this purpose is that of present
value analysis. Elements in the calculations are (1) projected increases in
construction costs for sewage treatment plants, (2) estimates of future
interest rates for 20 and 30 year tax-exempt bonds, (3) estimates of future
growth of median household income, and (4) the recent reports from States
describing costs of projects and the cost of affected industrial capacity.
Conceptually, the method EPA used is as follows:
Present value of Incremental construction Incremental
the cost of delay = costs due to inflation + financing charges
to communities Discounted to present Discounted to present
Projections for the sewage treatment plant construction index entered the
numerator of the first term. Estimates of municipal bond rates entered the
second term. Estimates of growth in median household income became the
discount rates. The technical section of this chapter presents the basis
for these projections, displays the formulae used, and tabulates the results
of the calculations.
In addition to the projections used in the calculations, EPA made
several other assumptions. The chief assumption is that communities
affected by ICE will eventually construct sewage treatment plants. This
assumption may not hold in all instances.
A second assumption is that while EPA can show a method of calculating
the cost of delay in a specific community, the data immediately available to
EPA allow it to calculate only a probable range for the national cost of
delaying construction of POTWs. In the absence of other data about an
affected community, that probable range, expressed as a percentage increase
in the non-Federal share, becomes an expected range for a community.
1-27
-------
A third assumption is that the cost of delay should first be studied
apart from the question of who will pay for industrial capacity in POTWs
affected by ICE. This means that the first calculations show the cost of
delay applied only to the non-Federal share before ICE. A second step
assumes municipalities as a whole pay the additional non-Federal share and
adds the effect of financing ICE to the previously calculated cost of delay.
This approach is equivalent to calculating a set of minimum and maximum
estimates of the effect of ICE. To the extent that communities share the
costs of ICE with affected industries, the direct cost of ICE to communities
would be expected to fall between the two extremes.
The following are the projections and high and low estimates of
variables which EPA used in the present value calculations:
o Construction costs of sewage treatment plants increase according to
the projections appearing in Table 1-3 of this report.
o Length of delay: one year and three years.
o Annual increase in median household income: 7.5 percent and 10
percent.
o Interest rate on tax-exempt bonds: 8-1/2 percent and 11 percent.
o Length of tax-exempt bonds: 20 years and 30 years.
The use of four sets of high and low variables led to 16 different
combinations* shown in the diagram below.
1-28
-------
FIGURE 1-1. SIXTEEN COMBINATIONS OF FINANCIAL VARIABLES
USED IN THE PRESENT VALUE ANALYSES
11* bonds
1 yr. delay
8.5% bonds
11% bonds
3 yr. delay
8.5% bonds'
*MHI = growth rate of median household income.
20 yrs.
30 yrs.
.20 yrs.
30 yrs.
20 yrs.
30 yrs.
20 yrs.
30 yrs.
-low MHI*
high MHI
-low MHI
high MHI
-low MHI
.high MHI
low MHI
•high MHI
-low MHI
•high MHI
~low MHI
•high MHI
- low MHI
high MHI
.low MHI
•high MHI
These 16 combinations cover a range between a "low" combination of a
one-year delay, 8.5 percent bonds for 30 years, and a growth rate of 10 per-
cent in median household income to a "high" combination of a three-year
delay, 11 percent bonds for 30 years, and a growth rate of 7.5 percent in
median household income.
In answering the question of whether delay imposes real costs on a com-
munity, the analysis suggests that if the rate of inflation of construction
costs and the interest rate on municipal bonds exceed the rate of increase
in median household income, delay imposes real costs on a community. In
answering the question of how large a cost delay imposes on projects, the
analysis suggests that the most important factor is the difference between
1-29
-------
the estimated growth rates of median household income and the inflation of
construction costs. For delays of three years, the difference between the
growth rate of median household income and the interest rate charged on tax-
exempt bonds also becomes important. Then the combined effect of higher
construction costs and greater financing charges can add significantly to
project costs. The technical section of this chapter shows the present value
of the cost of delay for all 16 combinations. Table 1-13 shows the percent-
ages by which delay increases the non-Federal share in real terms under the
assumptions made. The increases range from 1 to 5 percent for a one-year
delay and from O.Z, to io.3percent for a three-year delay.
It is important to note that a disparity between the inflation of con-
struction costs and the growth rate of median income has existed for the last
decade. Between 1967 and 1979 the construction index for sewage treatment
plants increased 30 percent more than did median household income during the
same period.°»'
TABLE 1-13. ESTIMATED REAL INCREASE NATIONWIDE
IN NON-FEDERAL SHARE DUE TO DELAY FROM ICE
Years
Delay
1
1
3
3
Inflation of
Construction Costs
11%
11%
10.1% Avg.
10.1% Avg.
Growth of Median
Household Income
7.5%
10%
7.5%
10%
Percentage Increase
in Non-Federal Share*
3.6-4,6%*
0.8-0.9%*
8.3-1 0.5%*
0.2-0.3 %*
*Differences in interest rates and length of bonds account for the range.
^Robert Michel, "Escalation of Municipal Wastewater Treatment Costs
Compared with the Increase in Nationwide Median Household Income," EPA,
January 30, 1981,
Calculations based upon the Administration's revised economic assumptions
suggest a parallel range of -.4 percent to 6 percent for a one-year delay
and -H percent to S.5 percent for a three-year delay. The "low" estimates
(real savings) result from percentage increases in median household income
which exceed percentage increases in construction costs. The "high" esti-
mates (real costs) result from accepting the revised estimate of personal
income but assuming the historical relationship between construction costs
and household income (a 30 percent faster rate of increase in construction
costs).
1-30
-------
The Expected Impact of ICE on Communities
In estimating the expected impact of ICE alone on communities, EPA's
approach, again, was to perform a "high-low" analysis, using the same assump-
tions as those used in analyzing the cost of delay. The "high" municipal
option assumes that the community pays for affected industrial capacity; the
"low" municipal option assumes that affected industries themselves pay for
capacity excluded by P.L. 96-483. (The technical section contains rationale,
the formulae, and the tabulations.)
Because Table 1-13 examines the cost of delay t'o communities without
considering the question of who pays for affected industrial capacity, it
also represents the "low option," the cost of ICE to a community whose
affected industries pay the entire industrial cost exclusion. The percentage
increases in Table 1-13 show how much such a community can expect ICE to
increase its non-Federal share.
Showing expected costs of the "high" option involves two steps: (1)
calculating the cost of publicly financing ICE-affected capacity for the same
group of communities and using the same financial variables, and (2) adding
the present values thus calculated to the costs of delay already figured.
Table 1-14 reports real percentage increases nationwide in the non-Federal
share for financing affected capacity with tax-exempt bonds serviced by the
community as a whole. These percentages (column 3) should be compared to the
average increase in the local share of 60 percent, which was calculated
before considering the effects of inflation and financing charges. (From
Table 1-2, $1,243.7 - 0.25 x $8,124.5 = 0.61.) Table 1-14 thus shows that
the incremental effect of ICE alone—without considering the effects of delay
upon the original 0.25 non-Federal share—is to add, not 60 percent to the
local share, but from 55 percent to 93 percent, depending upon the assump-
tions chosen. In this analysis, all four financial variables were important:
growth rate of median household income, bond interest rates, length of bonds,
and length of delay. Costs were minimal (or even negative) when growth in
household income exceeded interest rates on bonds.
The results of Step 2, adding increases from delay to the construction
and financing costs of ICE, appear in Table 1-15. Total increases in the
local share for communities that choose the "high option" of subsidizing
industrial capacity range from 3 percent (a net saving resulting from one-
year delay, high growth in median household income, and low interest on
bonds) to iM percent (three-year delay, high interest rate on bonds, low
growth in median household income). Again, one can interpret these percent-
ages both as potential aggregate effects and as average municipal effects
under the assumptions chosen.
To gain an idea of the net savings/costs of ICE, one can contrast the
percentage savings to EPA from Table 1-5 with the percentage costs to local-
ities from Tables 1-13 and 1-15. Table 1-16 collects the three sets of
figures, labeling maximum and minimum costs to communities from ICE as "high
option" and "low option." With a one-year delay there is the possibility of
a net savings of public money (Federal and local) if affected industries pay
most of the cost of their capacity in a POTW. However, three years of delay
make ICE expensive to both EPA and communities.
1-31
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TABLE 1-14. ESTIMATED REAL INCREASE NATIONWIDE
IN NON-FEDERAL SHARE DUE JO FINANCING ICE*8
Percentage by Which
Construction and Financing
Years
Delay
1
1
1
1
3
3
3
3
Growth of Median
Household Income
7.5%
7.5%
10%
10%
7.5%
7.5%
10%
10%
Interest Rate on
Municipal Bonds
8.5%
' 11%
8.5%
11%
8.5%
11%
8.5%
11%
of ICE Increases the
Non-Federal
71 -73%
84-90%
55%
66-67%
74-75%
88-93%
55-60%
65-66%
Share**
Construction costs are assumed to increase according to the projections
shown in Table 1-3.
**The high and low assumptions of 20 years and 30 years for the length of
municipal bonds explain the individual ranges.
TABLE 1-15. ESTIMATED REAL PERCENTAGE INCREASE NATIONWIDE
IN THE NON-FEDERAL SHARE DUE TO ICE AND TO DELAY^
(1)
Years
Delay
1
1
1
1
3
3
3
3
(2)
Growth of
Median
Household
Income
7.5%
7.5%
10%
10%
7.5%
7.5%
10%
10%
(3)
Interest
Rate on
Bonds
8.5%
11%
8.5%
11%
8.5%
11%
8.5%
11%
(4)
Percentage
Increase in
Non-Federal Share
Due to Delay
(from Table 1-13)
3.6-3.7%
4-4.6%
0.8%
0.9%
8.3- 6.5£
«*.<*- lo.STi
0.2- O."V7o
O.Z7.
(5)
Percentage
Increase
in Non-Federal
Share from
Financing ICE
(from Table 1-14)
71-73%
84-90%
55%
66-67%
74-75%
88-93%
55-60%
65-66%
(6) =
(4)+(5)
Total
Percentage
Increase in
Non-Federal
Share
75-77%
88-95%
56%
67-68%
02 -set,
S8-io%>
^Projects using the revised economic assumptions of the Administration would
parallel these ranges, with the most optimistic projections suggesting, not
costs of delay, but potential savings if inflation decreases Awd, the rate
of growth in personal income remains high.
1-32
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TABLE 1-16. COMPARISON OF ERA'S SAVINGS FROM ICE
WITH THE AGGREGATE COSTS OF ICE
One-Year Delay Three-Year Delay
I
Percent Savings to EPA
"Low" Option: National
Costs as a Percent of
Non-Federal Share
"High" Option; National
Costs as a Percent of
Non-Federal Share
12% I -6%
1-5% I 0.2 -
55% | 5S-
"Low" Option: Affected industries pay for capacity excluded by P.L. 96-483.
"High" Option: Communities finance affected capacity with tax-exempt bonds.
"Breakeven" point for EPA's short-term savings from ICE is about two years
and two months of delay.
In closing, one can suggest that the cost of delay to the Federal
government and to State and local governments will be a transitory phenomenon
experienced only in the next four to five years by communities whose facili-
ties plans are now well defined. One can suggest further that once these
communities have built POTWs or postponed them indefinitely, Federal savings
will be real, unaffected by delay. For the most part, this position is
valid. However, the nature of P.L. 96-483 will extend the planning period
for most projects, and to that extent lessen the potential savings. Further,
with competing needs for local funds and economic uncertainties many communi-
ties may be unable to raise the money for what will amount to, on the aver-
age, a 40+ percent local share before inflation and financing charges. These
concerns are discussed more thoroughly in the section on the long-range
impact of ICE.
Responses of Communities to the Industrial Cost Exclusion
An important question in every community affected by the Industrial
Cost Exclusion will be whether it can raise the sums suggested by its per
household cost of ICE, projected increases in construction costs, financing
charges, and delay. The Overview listed a number of options communities may
consider when faced with the potential costs of ICE.
(1) A community may scale down the size of its POTW.
(2) A community may pay the entire cost of industrial capacity
affected by ICE.
(3) A town may require industries that use a lot of water to pay
"up-front" sums for their capacity 1n a POTW.
(4) An industry, given sufficient land, available capital, and a long
enough planning horizon, may choose to self-treat its wastes.
1-33
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(5) A ctnmunity may postpone indefinitely building a POTW.
(6) A community may form a nonprofit, "public benefit" corporation
jointly owned by city and industries. Such a corporation, without
an EPA construction grant, would build a sewage treatment plant
that satisfies the requirements of the Clean Water Act. Glovers-
vine, New York, with 85 percent industrial flow, is one community
that may consider this option. Although a public benefit corpora-
tion would have to raise the funds EPA otherwise would supply,
some suggest that avoiding Federal and State requirements, such as
paying "prevailing wages," buying American made equipment, and
buying duplicate equipment, may make this choice cost-effective.
(7) A community may share the cost of excluded industrial capacity
with affected industries.
Option 7 can be enlarged. Four variations concern the extent to which
a community and its industries shar$ the cost of constructing capacity
affected by ICE.
(a) A community may borrow the entire amount necessary to build ICE-
affected capacity and enter into contracts with the firms involved
for them to service this debt (both principal and interest).
In this instance, the town is borrowing at a lower rate than
industry would be able to, and is borrowing on the industries'
behalf. To be sure that its bond rating does not suffer, the town
must be sure to describe this debt as the contractual obligation
of the industries involved. Presumably, industries would expense
their annual payments. Their contractual arrangements would be
footnoted in annual reports, and sophisticated financial analysts
would take account of them in assessing the debt of such companies.
(b) A community may borrow the entire amount necessary to build ICE-
affected capacity, but require of its industries (possibly via con-
tracts) only "ICR-like" payments. In this instance, residents,
commercial establishments, and small industries are collectively
paying the interest on "ICE debt," while affected industries pay
the principal.
(c) A community may borrow the entire amount necessary to construct
ICE-affected capacity, but decide that it will pay both principal
and interest with ad valorem taxes. Because the industries
affected by ICE are part of the tax base, they pay for part of
their capacity in the POTW, but pay less than under either of the
two preceding options. In this instance, per household costs as
calculated in this report would be overstated, and should be
corrected for the proportion of assessed evaluation assigned to
business and industries. Note, however, that debt ceilings and
limits of tax rates may make this option impractical for some
communities.
1-34
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(d) In some instances a community with marginal industries may
consider paying all costs associated with ICE without charging
affected industries anything. Communities likely to consider this
option would have one-time ICE costs per household well under
$100. A number of communities affected by ICE face one-time
incremental costs per household due to ICE of less than $25.
A fifth variation may occur when none of the options above works. If a
marginal industry cannot negotiate an acceptable agreement with municipal
officials, cannot self-treat its wastes, and the community goes ahead with
building a POTW, then the affected industry will have to close down. A
large city with many industries may be able to absorb such a loss (e.g.,
Milwaukee), but many small towns with only a few employers cannot. Even if
industries affected by ICE are able to negotiate agreements with municipal
officials, part of those negotiations may involve reducing production in
affected plants. Some firms will shift production to plants in areas with
lower water charges. Others, faced with an "elastic" demand to which they
cannot pass on cost increases, will find that maximizing profits in an ICE
world means producing smaller quantities. In either instance, there will be
economic effects upon the communities involved unless these communities can
compensate by attracting new businesses that do not use much water.
Finally, although the option of postponing indefinitely the construc-
tion of POTWs appeared earlier, it requires more comment. This option will
attract communities that are economically distressed and whose industries
are marginal. These communities will perhaps wait for a court-ordered com-
pliance schedule before seriously planning treatment works. In distressed
communities with marginal industries, competing needs for funds, the neces-
sity of keeping existing industries, lagging growth in assessed valuation
and in personal income, a reluctance to raise taxes and/or increase user
charges, and upcoming reauthorization hearings for the Clean Water Act may
dictate indefinite delay as the most prudent policy. Barely able to afford
the 25 percent local share before ICE, they may decide after ICE that they
cannot afford a POTW.
Of the options outlined, those two or three that a community will
entertain seriously depend upon factors such as the following:
(1) The financial burden of the previously planned local share.
(2) The size of the industrial costs excluded by ICE.
(3) The community's general financial condition.
(4) The cost and availability of capital.
(5) Competing needs for municipal funds.
(6) The strength of its local industries.
1-35
-------
(7) Any benefits which the community sees as arising from compliance
with the Clean Water Act.
As stated before, the data available for this report concern principally the
industrial flows affected by ICE, the costs of capacity to handle them,
population, and unemployment rates. Hence EPA can do little more than
suggest types of communities which will consider specific options.
However, in dealing with these seven factors and exploring financing
alternatives with affected industries, many communities that want to meet
the standards of the Clean Water Act may take a "cost minimizing11 approach.
A community using such an approach would seek to minimize both the cost of
ICE to its citizens and damage to its economic base—subject to constraints
suggested by the seven factors listed above. An acceptable solution would
be negotiated and approximate, but guided nonetheless by the principle just
described.
As part of this approach, an affected community may re-examine the type
of treatment plant it needs. It may look first at the feasibility of indus-
trial self-treatment and residential alternate treatment. If joint partici-
pation and secondary treatment are necessary, communities will look at
options like the following:
o Self-treatment by a major user which also treats the community's
residential wastes under a contract with the municipality. This
approach may be feasible in small, "single-industry" towns.
o Joint treatment in a jointly owned sewage treatment plant. This is
the "public benefit corporation" option described earlier. It may
be feasible in a small town with a large percentage of industrial
flow from several industries.
o Reduction in the size of the POTW planned. If corporate or joint
ownership is impractical, eliminating reserve capacity in a POTW
will reduce the non-Federal share and thereby lessen the incremental
impact of ICE.
In financing ICE-affected capacity in a scaled down POTW, communities
in most cases will be sharing the cost of ICE with their industries. The
question then is how to apportion the cost. A "cost minimizing" approach
would (a) charge industries for their capacity up to the point where the
affected industries would shift or reduce production and (b) spread the rest
of the cost among citizens and other businesses. Affected industries would
pay for all their excluded capacity only if they can pass cost increases on
to their customers; that is, if the demand for their products is "inelastic."
More often, however, industries face elastic markets, and communities will
have powerful incentives to share ICE costs with their affected industries.
1-36
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A community will consider five ways to raise funds.
(1) Charging its taxpayers a small one-time fee.
(2) Borrowing a larger sum in the tax-exempt bond market.
(3) Increasing the local tax rate.
(4) Requiring some "up-front" money from affected industries.
(5) Imposing a surcharge on sewer bills of affected industries to
cover part or all of the additional debt service.
The allocation of the costs of ICE among these five sources of funds will be
unique to each community. Allocating costs will also require affected
industries to participate fully in negotiations, sharing financial data with
city officials.
As a "first cut" EPA suggests that the 80 percent of affected communi-
ties whose one-time costs of ICE per household are $400 or less may consider
such an approach. Certainly, the 46 percent of affected communities whose
one-time costs of ICE per household are $100 or less can consider it.
However, the 20 percent of affected communities for whom the potential
impact of ICE exceeds $400 per household will need expert counsel if they
are to comply with the requirements of the Clean Water Act in an ICE world.
If they cannot devise an innovative solution, they may become candidates for
postponing their projects indefinitely.
1-37
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TABLE 1-17. ECONOMIC INDICATORS OF AFFECTED COMMUNITIES
NOTES:
Population: From 1970 census or latest available.
Unemployment: The October 1980 unemployment rate for the county 1n
which the community 1s located (unemployment rate
under State).
+ Exceeds State rate yet below national rate.
++ Exceeds national rate yet below State rate.
++ Exceeds national rate which exceeds State rate.
Exceeds State rate which exceeds national rate.
Income: 1978 per capita personal Income from U.S. Department of
Commerce.
Industrial Portion:
Industrial portion derived from State reported
data.
Household 1s based on U.S. Census Report of an
average of 2.75 persons per household from March
1980.
Community
Affected
Alaska - Not Affected.
Alabama
UR 8.7X
Arizona
UR 6.9*
Arkansas
UR 7.3X
AnnIston
Boaz
Cullman
Gadsen
Opellka
Casa Grande
Chandler
Flagstaff
Phoenix
Alma
Atkins
Bentonvllle
Berryvllle
Clarksvllle
Clinton
Decatur
Oequeen
Estimated
Population
Affected
38,529,200
31,000
14,000
22,000
36,000
20,000
18,000
30,000
35,000
919,000
1,600
4,000
19,500
4,500
4,600
1,000
3,000
3,900
October 1980
Unemployment
Rate (UR)
7.1
1978
Per Capita
Personal
Income
Estimated
Industrial
Portion Per
Household
$ 8,700 $ 88.74
$ 5,900
6,000
5,800
6,400
5,800
$ 5,900
8,200
5,900
8,200
$ 5,400
5,600
5,700
6,200
5,100
5,700
7,100
6,200
$
100.00
236.00
99.00
77.00
65.00
$15.00
403.00
71.00
16.00
654.00
124.00
193.00
550.00
185.00
1,840.00
596.00
728.00
1-38
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ECONOMIC INDICATORS OF AFFECTED COMMUNITIES (Continued)
California
UR 6.7%
Colorado
UR 6.3%
Community
Affected
Fayettevllle
Harrison
Huntsville
Jonesboro
Little Rock
Monticello
Morrilton
Murfreesboro
Nashville
North Little Rock
Rogers
SHoam Springs
Pine Bluff
Springdale
Stuttgart
Texarkana
Van Buren
West Memphis
Corning
Eureka
Hughson
Malibu
Manteca
Modesto
Oak view
Orange City
Santa Rosa
Vacaville
Watsonville
Contra Costa Co.
San Francisco
San Jose & Santa
Los Angeles Co.
Los Angeles
Broomfield
Delta
Fort Morgan
Greeley
Montrose
Westminster
Colorado Springs
Denver
Pueblo
Estimated October 1980
Population Unemployment
Affected Rate (UR)
31,000
7,200
2,600
25,000
168,500
12,600 -H-
6,800 ++
1,400
6,500
73,000
20,000
15,000
57,500
51,000
10,500
86,000 +++
8,500 +++
45,500
5,000 ++
25,000 ++
3,000 ++
70,000
14,000 -H-
2,700
2,500 ++
75,000
51,000
22,000
15,000
320,000
800,000
Clara 550,000
3,500,000 -H-
3,500,000 ++
57,000
5,800 +
8,000 +
40,000 +
30,000 -H-
64,000 +
232,000 ++
655,000 +
110,000 +
1978
Per Capita
Personal
I ncome
6,000
6,400
4,800
6,200
7,600
5,200
5,300
$ 5,000
6,600
7,600
7,100
7,100
6,500
6,000
7,400
6,500
5,400
5,200
$ 6,700
7,300
7,900
9,400
8,300
7,900
7,900
7,900
9,300
7,800
7,800
9,800
11,900
9,800
9,400
9,400
$ 8,300
5,400
7,700
6,900
5,800
8,200
7,000
9,900
7,400
Estimated
Industrial
Portion Per
Household
246.00
57.00
920.00
168.00
44.00
166.00
135.00
$ 1,650.00
376.00
8.00
338.00
43.00
275.00
320.00
32.00
39.00
291.00
25.00
$ 15.00
77.00
1,285.00
3.00
59.00
10,300.00
1,100.00
187.00
1.00
119.00
2,200.00
5.00
6.00
41.00
9.00
7.00
$ 11.00
223.00
258.00
174.00
147.00
5.00
4.00
8.00
20.00
1-39
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ECONOMIC INDICATORS OF AFFECTED COMMUNITIES (Continued)
State
Connecticut
UR 5.6X
Delaware
UR 6.9X
Community
Affected
Manchester
Milford
New Haven
North Haven
Suffield
Wallingford
Winchester
U1Imington
District of Columbia - Not Affected.
Florida
UR 6.8*
Georgia
UR 6.3%
Hawaii
UR 5.4X
Idaho
UR 6.IX
Illinois
UR 8.8%
Orlando
Pensacola
Fort Lauderdale
Jacksonville
Miami
Calhoun
Dalton
LaGrange
Rome
Honolulu
Blackfoot
Boise
Idaho Falls
Lewiston
Pocatello
Arthur
Belleville
Belvidere
Canton
Central1a
ChillIcothe
Clinton
Decatur
Falrfleld
Geneva
Estimated
Population
Affected
50,000
60,000
138,000
15,000
9,000
40,000
15,000
393,000
99,000
59,500
140,000
528,900
334,900
7,500
26,000
24,000
43,000
350,000
10,000
100,000
40,000
30,000
72,000
2,300
44,000
17,000
14,000
13,000
6,000
7,600
89,000
5,800
9,100
October 1980
Unemployment
Rate (UR)
1978
Per Capita
Personal
Income
$ 8,900
8,100
8,100
8,100
8,900
8,100
8,500
Estimated
Industrial
Portion Per
Household
113.00
5.00
23.00
72.00
320.00
72.00
18.00
$
$ 9,200 $ 42.00
$ 8,000
6,000
9,000
7,500
8,600
$ 5,800
7,000
6,400
6,700
8,800
$ 5,700
8,800
7,300
8,300
5,700
$ 8,300
7,000
9,000
7,100
6,800
6,900
6,800
6,400
6,600
8,900
$ 56.00
32.00
1.00
26.00
1.00
$ 253.00
3,043.00
327.00
138.00
31.00
$ 2.00
6.00
48.00
0.30
1.50
$ 3.00
9.00
388.00
9.00
106.00
4.00
291.00
426.00
250.00
37.00
1-40
-------
ECONOMIC INDICATORS OF AFFECTED COMMUNITIES (Continued)
Indiana
UR 8.6%
Iowa
UR 5.3%
Community
Affected
Herrin
Jacksonville
Joliet
Kankakee
Milan
Monticello
Peotone
Roselle
St. Charles
Spring Valley
Streator
Taylorvllle
Waverly
Woodstock
Anderson
Bloomington
Clarksville
Columbia
East Chicago
Elkhart
Jeffersonvllle
Michigan City
Mooresville
Muncie
New Albany
Plymouth
Terre Haute
Vincennes
Warsaw
Fort Wayne
Hammond
Indianapolis
Boone
Cedar Falls
Charles City
Falrfield
Fort Dodge
Iowa City
Marshalltown
Newton
Waterloo
Des Moines
Estimated October 1980
Population Unemployment
Affected Rate (UR)
9,500 +++
19,000
74,000 +++
31,000 +++
5,100 +++
4,500
2,500 +++
9,200
16,000 ++
5,400 +++
15,000 ++
11,000 +++
1,400
11,000 ++
75,000 -H-+
45,000
15,000
5,500 +++
50,000 +++
45,000 +*+
21,000
42,000 +++
6,000
72,000 +++
40,000 ++
8,000 ++
72,000 -H-
22,000 -H-
11,000
185,000 +++
120,000 +++
775,000 ++
12,500
35,000
9,100
8,700
31,200 +
47,700
26,500 +
15,600
73,000 +
220,000
1978
Per Capita
Personal
Income
6,600
8,700
8,100
8,100
9,000
8,800
8,100
10,900
8,900
7,800
8,200
7,900
8,700
8,600
$ 7,700
6,000
6,800
7,700
8,200
8,300
6,800
7,900
7,100
6,800
7,200
7,300
7,000
6,700
7,500
8,300
8,200
8,700
$ 7,300
8,100
7,400
7,700
7,600
7,700
8,300
7,700
8,100
8,200
Estimated
Industrial
Portion Per
Household
376.00
30.00
241.00
831.00
85.00
986.00
210.00
149.00
365.00
83.00
129.00
816.00
20.00
20.00
$ 238.00
1.00
183.00
218.00
583.00
134.00
13.00
105.00
275.00
306.00
48.00
34.00
19.00
250.00
250.00
123.00
62.00
18.00
$ 16.00
20.00
158.00
12.00
18.00
102.00
136.00
289.00
88.00
38.00
1-41
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ECONOMIC INDICATORS OF AFFECTED COMMUNITIES (Continued)
State
Kansas
UR 4.4X
Kentucky
UR 7.8%
Louisiana
UR 6.1%
Maine
UR 7.OX
Mary!and
UR 5.9*
Massachusetts
UR 5.6%
Michigan
UR 12.IX
Community
Affected
Dodge City
Hutchinson
Liberal
0lathe
South Hutchinson
Kansas City
Wichita
Lexington
Middleboro
Owensboro
Pineville
Shreveport
Biddeford
Carinna S.D.
North Berwick
South Paris
Frederick
Billerica
Dudley
Gardner
South Bridge
South Essex
Taunton
Webster
New Bedford
Worcester
Boston
Benton Harbor
Calumet
Cedar Springs
Constantian
Flushing
Hudson
Marine City
Midland
Memphis
Monroe
Estimated
Population
Affected
23,000
40,000
15,000
20,000
5,000
200,000
300,000
90,000
11,700
51,400
18,000
133,000
20,000
2,000
2,000
2,700
30,000
32,000
9,000
20,000
18,000
80,000
60,000
20,000
160,000
300,000
3,000,000
72,000
1,000
2,900
1,700
7,100
2,600
4,600
34,900
1,100
23,900
1978
October 1980 Per Capita
Unemployment Personal
Rate (UR) Income
$ 8,900
•H- 7,600
9,000
+ 10,700
•H- 7,600
+ 8,200
16,700
$ 7,800
•H- 5,600
-H- 7,600
++ $ 6,000
t 7,400
$ 6,600
5,900
6,600
•H- 5,700
•H- $ 7,100
$ 8,900
7,400
•H- 7,400
•H- 7,400
+ 8,300
•H- 6,700
+ 7,400
•H- 6,700
+ 7,400
7,100
++* $ 7,600
•H- 5,300
-H- 8,000
•H- 7,300
•H-f 9,000
+** 7,700
•H- 7,300
8,500
•H- 7,300
-H" 7,700
Estimated
Industrial
Portion Per
Household
$ 957.00
350.00
300.00
138.00
220.00
138.00
6.00
$ 9.00
141.00
5.00
$ 67.00
47.00
$ 92.00
1,513.00
96.00
2,118.00
$ 64.00
$ 455.00
38.00
193.00
229.00
382.00
62.00
1,458.00
653.00
37.00
21.00
$ 1.00
4,070.00
1,067.00
12.00
107.00
844.00
970.00
1.00
1,125.00
24.00
1-42
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ECONOMIC INDICATORS OF AFFECTED COMMUNITIES (Continued)
Minnesota
UR 5.4%
Mississippi
UR 6.8%
Community
Affected
Mount Clemens
Muskegon Co.
Otsego
Paw-Paw
Port Huron
Reed City
Rochester
South Haven
Sturgis-St. Joseph
Saginaw
Saginaw-Frankenmuth
Saline -
Sault St. Marie
Sparta
Tecumseh
Vasser
Wyoming
Muskegon
Lansing
Genesee
Aitkin
Albany
Blooming Prairie
Frazee
Le Sueur
Owatonna
Pelican Rapids
Perham
Sleepy Eye
Spring Valley
Weseca
Well
Worth ington
Duluth
Minneapolis-St. Paul
Biloxi
Clarksdale
Corinth
Hattiesburg
Jackson
Laurel
McComb
Estimated October 1980
Population Unemployment
Affected Rate (UR)
20,500 +++
5,400 +-H-
4,500 ++
3,200 ++
35,800 +++
2,300 +++
7,100
6,500 ++
9,300 ++
92 ,000 +-H-
2,800 +++
4,800 ++
15,000 +++
3,100 -H-
7,100 -H-+
2,800 +++
57,000 -H-
114,000 +++
132,000 ++
657,000 +++
1,800 -H-
1 ,600 -H-
1,800
1,000 -H-
3,800 +
15,300
1,800 +
2,000 +
3,400
2,600
6,800
2,800
800
110,000 -H-
1,800,000
89,300
21,700
11,600 ++
38,300
170,000
24,100
12,000 +
1978
Per Capita
Personal
Income
9,400
6,900
6,700
6,800
7,300
5,100
10,900
6,800
7,300
8,400
8,400
9,200
5,000
8,000
7,700
7,200
8,000
6,900
8,500
9,000
$ 4,700
•5,850
8,300
6,500
7,600
8,300
5,900
5,900
7,200
7,800
7,400
7,800
7,600
7,500
9,900
$ 6,100
4,700
5,900
5,900
7,900
6,000
4,700
Estimated
Industrial
Portion Per
Household
90.00
458.00
81.00
138.00
931.00
102.00
62.00
3.00
157.00
33.00
472.00
37.00
166.00
3,325.00
697.00
264.00
23.00
101.00
313.00
13.00
$ 3,819.00
154.00
458.00
22.00
362.00
126.00
3,056.00
1,169.00
80.00
370.00
45.00
246.00
8,250.00
50.00
35.00
$ 97.00
51.00
521.00
72.00
49.00
167.00
115.00 .
1-43
-------
ECONOMIC INDICATORS OF AFFECTED COMMUNITIES (' ontinued)
State
Mississippi
Montana
UR 5.3%
Community
Affected
Morton
Ocean Springs
Pearl
Hamilton
Estimated
Population
Affected
3,000
10,000
10,000
October 1980
Unemployment
Rate (UR)
-H-
1978
Per Capita
Personal
Income
5,200
6,200
5,800
Estimated
Industrial
Portion Per
Household
550.00
87.00
19.00
Nebraska - No information was available.
Nevada
UR 6.4X
New Hampshire
UR 4.5X
New Jersey
UR 6.8X
New Mexico
UR 7.7X
Carson City
Las Vegas
Reno/Sparks
Lincoln
Manchester
Bayshore
dnnaminson
East Windsor
Ewing-Lawrence
Landis
Linden-Rosell
Lepatcong
Manasquan
Mapleshade
North Burlington
Raritan
Rochaway Valley
Morris
Morris
Camden
Elizabeth
Gloucester
Hudson
Middlesex
Passalc Valley
Rahway Valley
Somerset-Raritan
Trenton
Las Cruces
Roswell
3,000
32,000
196,000
130,000
1,300
84,600
65,000
26,000
40,000
55,000
47,600
25,000
39,000
60,000
36,000
84,000
9,000
59,000
10,000
20,000
485,000
500,000
277,000
605,000
100,000
250,000
200,000
126,000
264,000
95,000
120,000
+
+
$ 5,400 $
92.00
$ 9,600
9,000
11,200
$ 7,400
7,800
$ 7,800
7,400
8,500
8,500
7,500
9,600
7,700
8,600
7,500
7,500
10,700
10,100
10,100
10,100
7,700
9,600
6,800
8,100
9,100
8,300
9,600
10,800
8,500
$ 5,700
6,200
$ 26.00
3.00
3.00
$ 2,623.00
255.00
$ 47.00
107.00
23.00
11.00
150.00
64.00
14.00
118.00
57.00
34.00
173.00
22.00
427.00
115.00
415.00
17.00
11.00
59.00
1,290.00
199.00
122.00
22.00
45.00
$ 7.00
20.00
1-44
-------
ECONOMIC INDICATORS OF AFFECTED COMMUNITIES (Continued)
State
New York
UR 7.3%
North Carolina
UR 6.3%
Community
Affected
Auburn
Avon
Batavia
Blasdell
Canastota
Champlain-Rouses
Cuba
Dundee
Endicott
Fort Edwards
Fulton
Gloversville
Granville
Heuvelton
Ithaca
Kingston
Lake George
Orange
Rochester
Syracuse
Yonkers
Norwich
Oswego
Orangeburg
Port Jefferson
Seneca Falls
Silver Creek
White Plains
Wilson
Asheboro
Durham
Forest City
Greenville
High Point
Lexington
Morganton
New Bern
Randleman
Roanoke Rapids
Roxboro
Thomasville
Buncombe
Charlotte
Winston-Salem
. 1978 Estimated
Estimated October 1980 Per Capita Industrial
Population Unemployment Personal Portion Per
Affected Rate (UR) Income Household
46,000 +++
3,000
18,000 +++.
4,000 +++
5,000 +++
4,000 +++
2,000 +++
2,000
17,000
4,000 +++
15,000 -H-+
27,000 +++
3,000 +++
1 ,000 +++
27,000
26,000 +++
1 ,000 +++
230,000 +++
300,000 -H-
200,000 +++
205,000
9,000 +++
21,000 +++
3,500
8,000
8,000
3,500 +++
51,000
1,500 +++
10,800
95,500
7,200 +
29,100 +
63,200 +
17,200 ++
33,600
14,700 ++
2,300
13,500 ++
5,400 -H-
15,200 ++
. 145,000
241,000
133,000
$ 6,500
6,600
7,000
7,700
6,100
5,300
5,600
6,200
7,500
5,900
6,300
6,300
5,900
5,500
6,600
7,100
7,200
7,400
8,900
7,500
11,300
6,100
6,300
9,000
7,900
7,000
6,800
11,200
6,700
$ 7,000
7,600
5,900
6,100
8,300
6,900
6,600
6,200
7,000
5,000
5,900
6,900
6,700
8,500
8,300
$ 19.00
587.00
108.00
323.00
2,772.00
536.00
5,857.00
916.00
176.00
832.00
1,125.00
2,096.00
69.00
605.00
608.00
85.00
11,275.00
10.00
116.00
23.00
8.00
87.00
62.00
354.00
113.00
847.00
1,257.00
1.00
1,467.00
$ 432.00
26.00
191.00
38.00
22.00
303.00
467.00
75.00
957.00
407.00
458.00
54.00
85.00
10.00
66.00
1-45
-------
ECONOMIC INDICATORS OF AFFECTED COMMUNITIES (Continued)
State
North Dakota
UR 4.3*
Ohio
UR 8.1*
Oklahoma
UR 5.1*
Community
Affected
Fargo
West Fargo
Alliance
Ashland
Avon Lake
Barberton
Bedford Heights
Bellefontalne
Berea
Bryan
Conneaut
Clyde
Defiance
Delaware
Easterly
ElyHa
Euclid
Flndlay
Ironton
Jackson
Lancaster
Mansfield
Marietta
Maryvllle
Mentor
Miami District
Middletown
Montgomery Co.
Newark
Norwalle
Orrvllle
Piqua
Sidney
Springfield
Akron
Columbus
Dayton
Anadorko
Ardmore
Guymon
Jay
Midwest
Estimated October 1980
Population Unemployment
Affected Rate (UR)
72,000
15,500
25,800 -H-
20,300 ++
12,500 -H-
27,000 -H-
12,000 -H-
11,000 -H-
20,000 -H-
7,000 -H-
15,000 -H-
6,100 -H-
16,000 -H-
20,000
24,000 -H-
32,000 -H-
60,000
38,000
14,000 -H-
7,000 -H-
40,000 -H-
57,000 -H-
16,000 -H-
8,000 +++
42,000 -H-
11,000 -H-
48,000 -H-
52,000
40,000 -H-
14,000 -H-
8,000
20,000 -H-
18,000 -H-
73,400 -H-
240,000 -m-
524,000
195,000 +++
7,000
40,700
12,200
3,500 +
77,000
1978
Per Capita
Personal
Income
8,600
8,600
$ 7,700
7,200
7,900
8,000
9,500
7,600
9,500
7,900
7,000
7,400
8,400
7,200
9,500
7,900
9,500
8,100
5,900
5,200
7,400
7,400
6,600
6,800
8,100
8,400
7,100
8,200
7,000
7,300
7,000
8,400
7,200
7,300
8,000
7,700
8,200
$ 5,500
6,900
11,300
4,400
8,500
Estimated
Industrial
Portion Per
Household
3.00
13.00
$ 28.00
108.00
418.00
117.00
50.00
525.00
6.00
118.00
35.00
361.00
132.00
48.00
74.00
120.00
115.00
111.00
479.00
334.00
31.00
93.00
138.00
223.00
42.00
125.00
327.00
116.00
323.00
102.00
103.00
151.00
112.00
33.00
264.00
115.00
253.00
$ 22T.OO
103.00
349.00
558.00
7.00
1-46
-------
ECONOMIC INDICATORS OF AFFECTED COMMUNITIES (Continued)
State
Oklahoma
Oregon
UR 8.0*
Pennsylvania
UR 7.7%
Rhode Island
UR 5.9X
South Carolina
UR 6.7%
South Dakota
UR 4.9%
Tennessee
UR 6.OX
Texas
UR 4.4%
Community
Affected
Stillwell
Westvllle
Norman
Tulsa
Eugene
St. Helens
Springfield
Portland
Berwick
Hanover
Lower Wissahickon
New Holland
Springettsbury
West Chester
York
Lancaster
Wyoming Valley
Bristol
East Greenwich
Warwick
West Warwick
Fort Mill
North Charleston
Hoven
Huron
Madison
Pollock
Rapid City
Chattanooga
Knoxville
Memphis
Nashville
Brenham
Corsicana
Sulphur Springs
Vernon
AmaMllo
San Antonio
Estimated October 1980
Population Unemployment
Affected Rate (UR)
32,000 -H-
1,200 -H-
112,000
270,000
80,000 ++
7,000 ++
30,000 -H-+
400,000
12,000 -++
30,000
10,000
5,000
87,000 -H-
20,000
75,000 ++
308,000
300,000 -m-
15,000
2,500
10,500
18,000 +
4,500 ++
61,200 +
700
13,000
7,000 +
400
46,000 +
130,000 ++
180,000
700,000
400,000
10,500
22,800
11,600
11,500
137,500
879,000
1978
Per Capita
Personal
Income
3,700
3,700
6,300
9,200
$ 7,400
7,600
7,400
10,000
$ 6,100
7,800
NA
7,800
NA
9,000
7,800
7,800
6,100
$ 8,100
7,900
7,900
7,900
$ 6,700
6,800
$ 7,500
7,000
6,700
6,500
7,000
$ 8,000
6,900
7,600
8,500
$ 7,300
7,300
6,700
7,000
8,800
6,600
Estimated
Industrial
Portion Per
Household
3.00
1,352.00
3.00
3.00
$ 21.00
1,964.00
8.00
2.00
$ 120.00
128.00
1,240.00
457.00
221.00
367.00
26.00
11.00
4.00
$ 189.00
1,969.00
523.00
129.00
$ 53.00
66.00
$ 197.00
12.00
196.00
2,406.00
16.00
$ 425.00
80.00
19.00
61.00
$ 760.00
49.00
122.00
87.00
40.00
137.00
1-47
-------
ECONOMIC INDICATORS OF AFFECTED COMMUNITIES (Continued)
State
Utah
UR 6. IX
Vermont
UR 6.4X
Virginia
UR 5. IX
Washington
UR 7.5X
West Virginia
UR 8.7X
Wisconsin
UR 6.3X
Community
Affected
Central Weber
Salina
Bennington
St. Albans
Swanton,
Troy
Pepper's Ferry
Waynesboro
Walla Walla
Prosser
Martinsburg
Butte Des Morts
Plymouth
Abbotsford
Marshfield
Beaver Dam
Madison
Milwaukee
1978 Estimated
Estimated October 1980 Per Capita Industrial
Population Unemployment Personal Portion Per
Affected Rate (UR)
192,000
2,000
12,500 -H-
8,000
3,000
600 -H-
30,000 ++
14,000 ++
23,000
10,000 -H-
1,500
5,100 +
6,100
1,900 -H-
17,500 +
14,500 ++
170,000
725,000
Income
$ 6,900
5,800
$ 7,100
6,100
6,100
5,400
$ NA
NA
$ 8,000
9,000
$ 6,600
$ 7,800
7,800
5,700
7,400
7,000
8,000
8,700
Household
$
$
$
$
$
$
9.00
576.00
110.00
216.00
183.00
3,007.00
69.00
65.00
26.00
289.00
37.00
205.00
969.00
188.00
432.00
2,181.00
242.00
687.00
Wyoming - Not Affected.
American Samoa American Samoa
Guam - Not Affected.
North Marianas - Not Affected.
Puerto Rico San Juan
Bayaman
Pacific Trust Territories - Not Affected.
Virgin Islands - Not Affected.
35,000
450,000
180,000
NA $ 157.00
NA
NA
30.00
46.00
1-48
-------
TECHNICAL SECTION
Discount Rates Used in Calculating the Savings to
EPA from ICE and the Cost of ICE to Communities
To set the context for this discussion, consider three parties who are
interested in EPA's dispersal of funds in the Construction Grants Program:
(1) Treasury, (2) EPA, and (3) recipient communities. From the point of
view of Treasury, which must borrow money to cover the Federal deficit, any
funds that EPA has been appropriated but does not spend means that Treasury
has to borrow less. Those unborrowed and unspent funds remain invested in
the economy, growing at the "opportunity cost of capital." Hence, Treasury
reaps benefits that occur from delay.
From the point of view of EPA's Construction Grants Program, however,
any part of an appropriation that is unspent at the end of the year cannot,
by law, be invested in securities until the time it is needed or shifted into
another type of investment. The funds remain in a ledger account at
Treasury. Having no alternative uses for these unspent funds, EPA's discount
rate is zero. The funds remain "on the books," but decrease in value during
delays. Further, EPA's budget for construction grants is likely to decrease
in the future. It will not increase with inflation or with growth in the
gross national product. Delays from ICE of more than two years are likely
to impose, not savings, but costs upon EPA. For these reasons, calculations
of the cost of delay to EPA, for example, subtract construction dollars
indexed to 1983 (what EPA will spend with ICE) from construction dollars
indexed to 1982 (what EPA would have spent without ICE) without discounting.
From the point of view of affected communities, however, money does
have alternative uses. It can be spent on other local projects and reap
social benefits. Communities' budgets can increase fairly easily with growth
in personal or household income. This study judges increased costs in
relation to the rate at which money grows. The growth rate of median
household income captures the ability of communities to pay higher future
costs and is used to discount costs to communities from ICE.
Calculations of the Savings to EPA from ICE
The calculations used to determine the savings left after a delay of one
year are the following (the procedure is the same for calculating the savings
left after two and three years of delay in millions):
(a) Cost of all affected projects in 1982 dollars (CBO/DRI) - $ 9.773.8M
b) Federal share without ICE in 1982 dollars - $ 7.330.3M
c) Cost of all affected projects in 1983 dollars - $10,846.2M
Cost of affected industrial portion in 1983 dollars - $ 1.660.3M
Federal share with ICE in 1983 dollars - $ 6,474.3M
(f) "Nominal" Federal savings from ICE with a one-year
delay, (b) - (e) - $ 855.5M
(d!
(e)
1-49
-------
More relevant than the dollars cited here are the percentage savings to EPA
from ICE listed in Table 1-5. No year has seen 10 billion dollars worth of
projects start. Further, budgetary uncertainty in the Construction Grants
Program makes even historical levels questionable.
Present 1/alue of the Cost of Delay to Municipalities
Table 1-18 shows the formula used to estimate the present value of the
cost of delay to municipalities. In essence, it calculates the present
value of the difference between two cost streams.
TABLE 1-18. FORMULA USED TO COMPUTE THE COST OF DELAY
Present Value of
Cost of Delay to
Municipalities at
Time 0
r
"C X *ttd
(1 + r)d
• —
t
\
- C x It 1 (1 + r)d (ap)
ab
(1 + r) - (t + d)
C = Cost of construction of non-Federal share of POTW before ICE in 1980
dollars.
d = Projected years of delay due to ICE.
t - Number of years from 1980 a project was slated to begin construction
before ICE.
r = Projected percentage increase in median household income.
ar = Annuity factor for projected rate of increase in median household
income for n years.
I - Projected Sewage Treatment Plant Construction Index.
n = Number of years in which bonds will be paid off.
aj - Annuity factor for calculating annual debt service on a bond at a
given interest rate for n years.
Elements in the calculations are (1) projected increases in construc-
tion costs for sewage treatment plants, (2) estimates of future interest
rates for 20 and 30 year tax-exempt bonds, (3) estimates of future growth of
median household income, and (4) the recent reports from States describing
project costs and the cost of industrial capacity in communities affected by
ICE.
1-50
-------
TABLE 1-19. FORMULA USED TO COMPUTE THE COST OF FINANCING ICE
Present Value of (C x It+d)(ar)
Cost to Municipality a.
of Financing ICE =
C = Cost of construction of ICE-affected industrial capacity in 1980
dollars.
I = Projected Sewage Treatment Plant Construction Index.
t = Number of years from 1980 a project was slated to begin
construction before ICE.
d = Projected years of delay due to ICE.
r = Projected percentage increase in median household income.
ar = Annuity factor for projected rate of increase in median
household income for n years.
ajj = Annuity factor for calculating annual debt service on a bond at
a given interest rate for n years.
r = Number of years in which bonds will be paid off.
To estimate increases in the construction costs of sewage treatment
plants, EPA used the projections shown in Table 1-3.
To estimate future interest rates on tax-exempt bonds, EPA referred to
the January 6, 1981, issue of The Bond Buyer and to The Wall Street Journal.
The Bond Buyer lists the average interest rate of a selected group of 30
year revenue bonds for each week in 1980. The Wall Street Journal graphs
average weekly interest rates of the Dow-Jones municipals, a group of 20
year municipal bonds. The highest weekly average interest rate during 1980
for the 25 revenue bonds was 11.4 percent; the lowest was 7.2 percent.
Interest rates on the Dow-Jones municipals were similar. Based on these
weekly averages, EPA chose interest rates of 8-1/2 percent and 11 percent to
represent high and low estimates of interest on tax-exempt bonds during the
next five years.
To estimate increases in median household income, EPA looked first at
the pattern of increases in median household income over the last 12 years.
Table 1-20 shows median household income for U.S. households in current
dollars from 1967 to 1979. From 1967 to 1979, median household income
increased 132 percent. The approximate compound rate over the 12 years is
6.7 percent. At the same time, in constant dollars, as measured by the CPI,
1-51
-------
median household income actually declined from the previous year in 1970,
1971, 1974, 1975, and 1979. To illustrate the cost of delay under different
scenarios, EPA used low and high growth rates for median household income:
7.5 percent and 10 percent.
TABLE 1-20. U.S. MEDIAN HOUSEHOLD INCOME IN CURRENT DOLLARS
Median
Household Percent Change from
Year Income Previous Year
1967 $7,143
1968 7,743 8.4
1969 8,389 8.3
1970 8,734 4.1
1971 9,028 3.4
1972 9,697 7.4
1973 10,512 8.4
1974 11,197 6.5
1975 11,800 5.4
1976 12,686 7.5
1977 13,572 7.0
1978 15,064 11.0
1979 16,550 9.9
Average increase from the previous year is 7.1 percent. The
approximate compound rate over the 12 years is 6.7 percent.
Source: U.S. Census.
Like the calculations of the savings to EPA from ICE, the most important
results of the present value calculations are not the dollar figures, but
the percentages derived from them.
The present value calculations in the tables that follow are based upon
aggregated data from 160 communities in 15 States: Arizona, California,
Idaho, Illinois, Indiana, Kansas, Kentucky, Maryland, Minnesota, Nevada,
Ohio, Pennsylvania, Virginia, West Virginia, and Wisconsin. Their projects
affected by ICE totaled $3.94 billion, not far different from historical
construction grant budgets. More important, the ratio of ICE costs to the
25 percent non-Federal share for these States differed by only 0.002 from
the same ratio for the national totals. Thus the percentages reported for
these 16 States should hold nationally.
1-52
-------
Further, in the absence of detailed data about a community, these
percentages also represent expected effects of ICE in a community.
o Table 1-21 shows the results of calculating the cost of delay and
the resulting percentage increase in the local share.
o Table 1-22 calculates the present value of and percent increase in
non-Federal share from publicly financing the industrial costs
excluded by P.L. 96-483, again using the growth of median household
income as the discount rate. It shows present values of 16
combinations for collectively financing ICE portions of POTWs with
tax-exempt bonds. Since the 1980 cost of the ICE portions is $605M,
the financing and inflation effects are substantial in all
combinations except those which assume an annual increase in median
household income of 10 percent.
o Table 1-23 adds the present value of the cost of delay to the present
value of building and financing ICE-affected capacity with tax-exempt
bonds—the "high option." It also shows the potential combined
effect of delay and ICE as a percentage increase in local share.
Again, one can interpret these percentages both as the potential
effect for the 15 State total and as an average, or expected, effect
in a municipality.
1-53
-------
TABLE 1-21. PRESENT VALUE OF THE COST OF DELAY
AND PERCENTAGE INCREASE IN THE LOCAL SHARES
Sixteen combinations, lettered (a) through (p), of
high and low values of four variables: (1) length
of delay, (2) annual percentage increase in median
household income, (3) interest rate on tax-exempt
bonds, and (4) length of bonds.
High and low values for the four variables:
(1) length of delay: One year and three years;
(2) annual increase in median household income;
7.5 percent and 10 percent;
(3) interest rate on tax-exempt bonds: 8-1/2
percent and 11 percent;
(4) length of bonds: 20 years and 30 years.
The present values of the cost of delay for the combinations below
are based upon a total of $3,939M for 160 projects in 15 States, which
together have industrial costs excluded by P.L. 96-483 of $605M. The
State and local share of these 160 projects is $985M. More important
than the present values listed are the percentages by which combinations
of variables increase the non-Federal share.
Assumptions:
(1) Reports from States about communities affected by
ICE are in 1980 dollars.
(2) The entire non-Federal share is financed with tax-
exempt bonds.
(3) The increases in median household income are annual
increases and occur over the entire length of the
bonds issued.
(4) Projects delayed one year would otherwise have
begun construction in 1982 and now begin
construction in 1983.
(5) Projects delayed three years would otherwise have
begun construction in 1982 and now begin
construction in 1985.
(6) The cost of delay as calculated here deals with the
cost to localities of delaying the original projects
and concerns only the 25 percent non-Federal shares.
Table 1-21 shows potential financial effects of the
ICE portion if municipalities were to finance that
with no industrial contribution.
(7) Construction costs increase according, to the
projections shown in table 1-3.
1-54
-------
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Growth
in Median Interest
Combin- Years Household Rate on
ation Delay Income Bonds
PV (1980) of
Length Incremental PV (1980) of
of Construction Incremental
Bonds Costs Financing
Percentage
Increases in
Non-Federal
(6)+(7) Share
(a)
(b)
(c)
(d)
(e)
(f)
(9)
(h)
(i)
(j)
(k)
(1)
(m)
(n)
(o)
(P)
1
1
1
1
1
1
1
1
3
3
3
3
3
3
3
3
7.5X
7.5%
7.5X
7.5X
10.0X
10.0X
10. OX
10. OX
7.5X
7.5X
7.5X
7.5X
10.0X
10. OX
10.0X
10. OX
8.5X
8.5X
11. OX
11. OX
8.5X
8.5X
11. OX
11. OX
8.5X
8.5X
11. OX
11. OX
8.5X
8.5X
11. OX
11. OX
20yrs
30yrs
20yrs
30yrs
20yrs
30yrs
20yrs
30yrs
20yrs
30yrs
20yrs
30yrs
20yrs
30yrs
20yrs
30yrs
$33. 1M
33. 1M
33. 1M
33. 1M
8.6M
8.6M
8.6M
8.6M
75. 8M
75. 8M
75. 8M
75. 8M
2.3M
2.3M
2.3M
2.3M
$2.6M
3.3M
6.3M
1 1 . 8M
-0.9M
-1.1M
0.6M
0.7M
S.9M
7.5. M
il.ZM
27.8 IM
-0.2M
-OL3M
0.2 M
0.2 M
$35. 7M
36. 4M
39.4M
44. 9M
7.7M
7.5M
9.2M
9.3M
ei.7M
8*3 M
•VT.O'M
iOJ.feM
2.1 M
2.0 M
2.5 M
2.5 M
3.6X
3.7%
4. OX
4.6%
0.8%
0.8%
0.9%
0.9%
83%
8-5%
<*.&SM
-*«.C.M
(8)
(6)
(7)
*36M
-* Mrt
^3
-*42*
(9)
Percent
Increase
in
Non-Federal
Share
•3re
-.V70
«*.S7«,
-13X,
9A chart showing the results of calculations based upon the revised economic assumptions of
the Administration's appears A&OME. Like the other optimistic calculations
presented in the body of this paper, the optimistic estimates here depend upon the growth rate
of median household income exceeding the inflation rate of construction costs. The pessimistic
estimates here assume the historic relationship between construction costs and household income.
1-5S
-------
TABLE 1-22. PRESENT VALUE OF COSTS TO COMMUNITIES TO FINANCE THE
CAPACITY EXCLUDED BY ICE WITH TAX-EXEMPT BONDS (15 States)10
Combination
(a)
(b)
(c)
(d)
(e)
(f)
K>
(h)
I1}
(j)
00
(1)
On)
(n)
(o)
(p)
(1)
Years
Delay
1
1
1
1
1
1
1
1
3
3
3
3
3
3
3
3
(2)
Growth
in Median
Household
Income
7.5%
7.5%
7.5%
7.5%
10.0%
10.0%
10.0%
10.0%
7.5%
7.5%
7.5%
7.5%
10.0%
10.0%
10.0%
10.0%
(3)
Interest
on Bonds
8.5%
8.5%
11.0%
11.0%
8.5%
8.5%
11.0%
11.0%
8.5%
8.5%
11.0%
11.0%
8.5%
8.5%
11.0%
11.0%
(4)
Length
of Bonds
20 yrs.
30 yrs.
20 yrs.
30 yrs.
20 yrs.
30 yrs.
20 yrs.
30 yrs.
20 yrs.
30 yrs.
20 yrs.
30 yrs.
20 yrs.
30 yrs.
20 yrs.
30 yrs.
(5)
PV of
Cost of
Financing
ICE
$700M
715M
832M
883M
546M
532M
649M
658M
729M
743M
866M
919M
542M
593M
645M
654M
(6)
Percentage
Increase
in Non-
Federal
Share
0.71
0.73
0.84
0.90
0.55
0.55
0.66
0.67
0.74
0.75
0.88
0.93
0.55
0.60
0.65
0.66
Cost of Industrial Capacity Affected by ICE in 1980 dollars = $605M,
Cost of non-Federal share before ICE in 1980 dollars = $985M.
10A range of present value calculations based upon the current economic
assumptions of the Administration would parallel the ranges shown in this table
1-56
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TABLE 1-23. PRESENT VALUE OF TH« COMBINATION OF THE COST TO COMMUNITIES
OF DELAY AND THE FINANCING OF COSTS EXCLUDED BY ICE
(1)
Combination
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(1)
(m)
(n)
(o)
(P)
(2)
PV of Delay
$35. 7M
36. 4M
39. 4M
44. 9M
7.TM
7.5M
9.2M
9.3M
Bl.lM
*3.3M
-------
LONG-RANGE IMPACTS OF INDUSTRIAL COST EXCLUSION
Exclusion of Federal funding for large industrial flows must be viewed
in the overall context of local sewerage expenditures and local financial
capability. Incremental costs for a local community due to ICE are more
likely to affect POTW construction if the community is already near the
margin of its financial capability. For this reason, this section begins
with an overview of the anticipated cost impacts of wastewater treatment,
and then attempts to estimate the incremental cost effects of ICE by focus-
ing on three areas: (1) the ability of local communities to raise capital
for construction; (2) impacts on user charges; and (3) secondary economic
impacts due to location or relocation decisions made by industrial users.
AN OVERVIEW OF SEWAGE TREATMENT COSTS AND LOCAL FINANCIAL CAPABILITY
Sewage treatment costs are increasing at a time when pressures on
municipal finances are increasing. This fact is highlighted by long-range
estimates of anticipated sewerage costs which suggest that this trend can be
expected to continue. While there is a great variation from community to
community in expected cost burden, cost impacts will probably be greatest
for older urban centers with major rehabilitation needs and for many small
communities facing high per capita costs.
Increasing Sewage Treatment Costs
A number of factors point to substantial increases in sewage treatment
costs on a national scale.
1. Clean Water Act requirements
Most communities have not yet faced the costs of constructing and
operating facilities necessary to meet Clean Water Act requirements. Much
of the approximately $25 billion previously awarded for construction repre-
sents projects not yet on line and with cost impacts not fully realized. In
addition, the 1980 Needs Survey estimates remaining needs at $119 billion,
with a State and local share of nearly $30 billion.
2. Non-eligible costs
Most communities will face water pollution control costs in addition to
those associated with Construction Grants eligibilities. For example, the
1980 Needs Survey identifies $113.7 billion in needs to control pollution
from the non-eligible category of urban stormwater. Other communities,
especially in fast-growing areas, will be paying for collection systems for
new populations. Also, most projects in eligible categories involve some
aspects that are ruled non-eligible, so that the State/local share is, in
effect, greater than 25 percent. The total costs of non-eligible water
pollution control needs are unknown, but an estimate has been prepared in
conjunction with the 1980 Needs Survey. The Needs Survey estimate, illus-
trated in Figure 1-2, is based on the assumption that all construction
necessary to meet identified needs is completed or under way by the year
2000. Total local funding required is approximately $208 billion, with only
1-58
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$25 billion related to construction of grant eligible projects. The three
largest items for localities are operations and maintenance (O&M) ($95
billion), major capital replacement costs for worn-out sewers and plants
($55 billion), and interest ($33 billion).
3. Inflation and the cost index for O&M and construction
Costs can also be expected to rise as a result of inflation on the cost
components of wastewater treatment: labor, materials, equipment, chemicals,
and energy. EPA-maintained cost indices for these components show, however,
that costs for construction and O&M have been increasing faster than the
general rate of inflation. (Using 1972 as the base year, the O&M cost index
has increased 40 percent more than the GNP implicit price deflator, while
the construction cost index has increased 17 percent more.)
4. Added O&M costs for higher levels of treatment
In addition to construction costs needed to meet the Clean Water Act
requirements, many communities will be facing the higher O&M costs associated
with higher levels of treatment. According to the 1978 Needs Survey, 22
percent of the population was being served by plants treating sewage at
levels higher than secondary. By the year 2000, more than 51 percent of the
population will be served by treatment higher than secondary.
5. Meeting the backlog of deferred maintenance
Deterioration of the capital plant of older cities has accelerated in
recent years due to fiscal stress and aging, according to a recent report by
the Urban Institute, a nonprofit research organization. Faced with tight
budgets, many cities have cut back on maintenance spending more sharply than
spending for other operations. As a result, many cities, particularly older
cities in the Northeast and Midwest, have accumulated massive maintenance
backlogs which eventually must be faced.
Increasing Pressures on Revenues
The financial capability of a community to build, operate, and maintain
POTWs is not only a function of the cost of wastewater treatment, but also a
result of the general financial condition of the community and its residents.
The community's general financial condition is the product of several
factors, including personal income, population growth or decline, property
value growth or decline, the inflation rate, the level of intergovernmental
aid, caps on taxes or expenditures, municipal bond interest rates, and the
condition of the national and regional economy. It is difficult to predict
the long-range impact of these factors, but three trends point to sharply
increased pressures on municipal revenues in the near future.
1-59
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FIGURE 1-2
REQUIRED FUNDING SOURCES TO SATISFY 1991-2008 NEEDS
(BILLIONS OF 1980 DOLLARS)
8
Operations and $104
Maintenance
Replacement Costs $55
Debt Service and $33
Interest During
Construction
$23 Local Construction Funds
$90 EPA Construction Grants
$63 Other Federal Funding
$15 State Government
$72 Private Sources
TOTAL 1981-2000 NEEDS FOR DOMESTIC HASTEMATER
COLLECTION *. TREATMENT * $455 BILLION
-------
1. Increasing fiscal stress
According to a study of 300 cities prepared for the Congressional Joint
Economic Committee,7 many cities will experience severe fiscal stress in
the coming decade. During the period from 1978 to 1980, current expendi-
tures were rising faster than current revenues for cities of all sizes. As
a result, an increasing number of cities faced operating deficits in 1978
and 1979, and by 1980 more cities anticipated deficits than anticipated
surpluses.
2. Decline in Federal assistance to cities
During the early and mid-19701s city budgets were buoyed by increases
in Federal and State assistance. The following table indicates the growing
importance of intergovernmental aid to the general revenues of the Nation's
45 largest cities during the period 1967-1977.
TABLE 1-24. PERCENTAGE COMPOSITION OF GENERAL REVENUES;
45 LARGEST CITIES, 1967-1977
1967 1977
Total General Revenues 100%
Own Source Revenues 74.3
Property Tax 36.2
Other Taxes 24.9
Charges/Fees 13.2
Intergovernmental Revenues 25.7 42.3
State TO" TO
Federal 4.7 21.1
Other 2.4 1.9
Source: John E. Peterson, "Tax and Expenditure Limitations: Projecting
Their Impact on Big City Finances," presented at the American
Finance Association, Atlanta, Georgia, December, 1979.
The figures in this table indicate an important change in the way cities
have been raising their general revenues (including capital). In the 45
largest cities revenues raised by local sources declined from 74.3 percent
of revenues in 1967 to nearly 58 percent by 1977. At the same time, there
was an increase in Federal aid from 4.7 percent to more than 21 percent of
total general revenues. Although smaller cities are generally less depend-
ent on Federal aid, they experienced similar increases in Federal assistance
through most of. the 1970's.
^"Trends in the Fiscal Condition of Cities: 1978-1980," Subcommittee on
Fiscal and Intergovernmental Policy, Joint Economic Committee, United
States Government Printing Office, Washington, D.C., 1980.
1-61
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According to the Joint Economic Committee study, however, Federal funds
for operating purposes have declined as a proportion of current total reve-
nues for all sizes of cities during the 1978 to 1980 period. Federal funding
decreased in absolute terms for all cities except the largest. Cities which
enhanced their budget position by depending on Federal funds may anticipate
future financial pressures if costs rise faster than Federal aid.
3. Increasing competition for scarce resources
Under increased public pressures for budgetary constraint, a downward
trend in real (constant dollar) government spending began in the late 1970's.
As the graphs in Figure 1-3 indicate, this trend reverses nearly three de-
cades of continued growth in expenditures at the local, State, and national
levels. At the same time, cities and States are facing deferred expendi-
tures for infrastructure improvements and employee wage increases.
Bureau of Economic Analysis data suggest that declining capital stock
(roads, bridges, public buildings, sewers, etc.) may be a major problem for
State and local governments. State and local constant dollar capital
investment increased regularly from 1957 to 1968, but declined between 1969
and 1972 and again between 1974 and 1977 (the last year for which data are
available). In real per capita terms, capital investment for States and
localities was slightly lower in 1977 than in 1957 (approximately $116
versus $119). State and local net capital investment (investment minus
depreciation) generally Increased during the 1957 to 1967 period, but
declined rapidly from a 1968 high of $23.3 billion to $6.8 billion in 1977.
States and cities appear to be Increasingly hard pressed to maintain a
healthy capital infrastructure. Clearly, during a time of expenditure
restrictions and competition for scarce resources, there will be severe
economic and political constraints on public services, such as wastewater
treatment, that call for Increasing expenditures and larger shares of the
State and local budgets.
Cost Estimates
A national cost estimate for wastewater treatment expenses 1s difficult
to obtain because no direct, unambiguous source of data exists. The variety
of local governments in the United States—possessing different fiscal sys-
tems and operating under a diversity of State laws—means that the financial
mechanisms for raising and spending funds for water pollution control also
vary greatly. In addition, the scope of pollution control activities pre-
sents many definitional problems, especially when one attempts to compare
such expenditures with the means of their financing.
Acknowledging difficulties in measurement, 1980 Needs Survey estimates
of the local share of sewage treatment costs (capital and O&M) suggest that
1980 expenditures were in the $4-5 billion range, exclusive of debt service.
Debt service costs would add approximately $1-1.5 billion to the total.
1-62
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FIGURE 1-3
STATEANO LOCAL GOVERNMENT EXPENOTTURE. AMD FEDERAL AID,
SELECTED FISCAL. YEARS 19*9-80
(St»l»Loril Spending Slowdown)
Local e&m&ut* (tram own funds)
As a pwcant of Grass National Product
Par Capita in Constant (1967) Cedars
• WH**I
a
s
4.
2
0
194
N^
~"
'Collars
300
200
100
a
_-- ^
•^
^^^
9 M 59 64. S3 74 1980 «sL 1948 54 59 S4 69 74 1980tst
Stat*£xp«rdtEurr (from own funds)
A* a paRantoi Gross National Product PerCapftxin Constant (19S7) Oollarr
a-
f
4.
•y
74. 19«
' Cottars
wn
9WT
100
o
).«c, 19
^'^^
^f
^
-------
In addition, total direct expenditures for sewerage (including Federal
grants) have increased rapidly in recent years. According to data from the
U.S. Bureau of the Census for the 1967 to 1977 period, total direct expen-
ditures for sewerage increased at an annual rate of more than 15 percent.
During the same period, direct expenditures for sewerage increased to become
more than 5 percent of all local government costs (excluding school dis-
tricts). Similarly, sewerage expenditures became an increasingly large
portion of national personal income, growing from 0.25 percent of income in
1967 to 0.45 percent by 1977. Much of this growth was fueled by large
amounts of Federal assistance. While Federal aid of all types to local
government grew at a rate of 25 percent per year between 1967 and 1977,
Federal aid to the sewerage function increased at the rate of 47 percent per
year during this period. As a result, Federal aid to local governments for
the sewerage function rose from 4.7 percent of all such Federal assistance
in 1967 to 24.5 percent by 1977.
Projections of future sewerage costs vary widely depending upon
assumptions regarding Federal funding levels, the nature of technology
applied, population growth, and the impact of enforcement on construction.
All projections are in agreement, however, that significant increases in
sewerage costs will be forthcoming. A conservative estimate has been
developed using a projection model with a data base from Census Bureau
reports of local sewerage expenditures. This model, which assumes a
constant level of Federal funding throughout the 1980's, points to the
following real (constant dollar) increases during the period 1978 to 1990:
o An 88 percent increase in total sewerage costs,
o A 68 percent increase in per capita costs, and
o A 150 percent increase in the State and local share of total
sewerage costs.
These numbers do not include possible increases in future interest payments
on debt. Since the model indicates that there will be strong pressure for
Increased local borrowing, the expected expenditure increases will probably
be higher than those cited here. It should also be noted that expenditure
increases in this model were calculated in constant 1978 dollars, and do not
reflect possible cost increases due to inflation. For example, if sewerage
expenditures were subject to 8 percent inflation during this period, the
1990 costs would be roughly two and one-half times higher than the above.
Many regions, States, and communities can expect increases much higher
than the national average. The model forecasts, for example, that real per
capita costs will increase 100 percent or more by 1990 in Regions I and X,
and that several States can expect sewerage expenditures as a portion of
personal income to more than double by 1990. The model does not provide
information regarding impacts on particular communities, but other evidence
suggests that small communities and older urban areas are likely to be
especially prone to financial capability problems.
1-64
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Small Communities
The financial problems facing small communities affect a large segment
of the population. According to the 1970 Census, 38 percent of the popula-
tion resides in communities under 10,000, and nearly one-fourth of the
population lives in communities smaller than 2,500. According to the 1980
Needs Survey, only 8 percent of the population resides in communities of
less than 3,500 outside of SMSAs (Standard Metropolitan Statistical Areas),
but 16 percent of the remaining sewage treatment needs are in these communi-
ties. Interim Census reports also indicate that during the first half of
the 1970's, nonmetropolitan counties experienced greater population increases
than metropolitan counties. Historically, nearly two-thirds of Construction
Grant awards have been to communities of less than 10,000. Nationally,
nearly 90 percent of all communities have populations below this number.
The financial issues facing small communities are a result of (1) the
limited availability of financial resources, (2) high per capita costs for
sewering small, dispersed populations, and (3) limited financial management
capabilities. While the conclusions reached here do not apply to all small
communities, available statistical and case study analyses indicate that
wastewater treatment costs present a particular financial strain for many
small communities. An analysis of approved user charge systems in EPA
Region V indicates that more than 25 percent of small communities could
expect annual costs per household (based on 100,000 gallons) to be more than
$200, while less than 5 percent of communities above 10,000 population could
expect charges this high.
1. Availability of financial resources
Household incomes in small communities are generally lower than those
in large communities, and governmental per capita revenues are also smaller.
As a result, small communities have a smaller resource base from which to
draw when faced with the need for financing and maintaining a sewage treat-
ment system. The lower per capita revenues found in small communities do
not indicate an untapped potential for tax increases. Smaller communities
have roughly the same proportion of personal income going to local taxes as
do larger communities.
Also, since 1978, small communities' governmental expenditures have
risen significantly faster than revenues. The results of a 1980 study by
the Joint Economic Committee of Congress show that the rate of expenditure
increases exceeds the rate of revenue increases in cities of all sizes, but
is greatest (nearly 5 percent) in smaller towns. The increasing gap between
revenues and expenditures, especially common in small communities, might be
caused by a number of factors, ranging from poor financial management to
accelerated population growth. The net inmigration experienced in small
towns in recent years is likely to bring with it increased demands for public
services that exceed the new sources of revenue.
Small communities desiring to finance the local share of construction
costs will find themselves at a disadvantage when attempting to enter the
bond market. The impediments to bond financing include the following:
1-65
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o Inadequate financial information and infrequent bond issuance
increase uncertainty about risk, and underwriters may refuse to
submit bids.
o State constitutional or statutory restrictions often limit the
volume of general obligations outstanding. Small communities, with
limited assets, have less flexibility in this area.
o State usury ceilings present another problem since small communities
typically pay higher interest rates and are more likely to be limited
by the ceilings.
o Small bond issues may have access to a limited market at the local
rather than national level, making it more difficult to obtain a
good rating and favorable interest rates.
Even if a small community is fortunate enough to receive a rating on
its bond issue, it is likely to pay higher interest for the same rating than
a large community.
2. High cost of sewering small, dispersed populations
The per capita costs for conventional sewage treatment projects are
frequently higher in small communities because of their population size and
distribution. Although less costly alternative systems may be appropriate
in many situations, factors such as lot size, slope of the land, soil condi-
tions, and depth to bedrock and water table limit their applicability.
Citizen concern about pollution of drinking water from wells has also been a
factor limiting their use.
A major source of the increased per capita costs involved in providing
a conventional system to a small population is due to a diseconomy of scale.
As with other large projects, the construction, operation, and maintenance
of sewage treatment plants have a number of fixed costs which do not signi-
ficantly decrease as the number of people served decreases. On a per person
basis, the costs actually rise. Total per capita costs (capital plus O&M)
for activated sludge plants of 1 MGD (population approximately 10,000) and
0.1 MGD (population approximately 1,000) exceed per capita costs for a 10
MGD plant by factors of 1.6 and 2.6, respectively. While one may argue that
the activated sludge process is not the most efficient for most small com-
munities, many such plants have been constructed.
Smaller communities also tend to have relatively dispersed populations,
increasing the costs for collection. In some rural areas the costs of a
conventional collection system have been known to represent more than 80
percent of the total system capital costs. This is primarily due to (1) the
greater length of sewer pipe per contributor, (2) the greater problems with
grade resulting in more lift stations or excessively deep sewers, (3)
criteria which limit the smallest sewer pipe diameter to 8 inches, and (4)
the fact that small communities cannot spread their capital costs among
larger populations sewered previously.
1-66
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Financial resource limitations are less significant when the small com-
munity takes advantage of a less costly alternative system which is appro-
priate to its size and density. The use of on-site systems, for example,
could result in savings of up to 50 percent compared with the cost of conven-
tional systems. Many people are reluctant to use on-site systems, however,
in spite of their low cost and effectiveness, because they perceive a public
health threat to the water supply from subsurface disposal. Further, con-
sulting firms, upon which small communities rely, sometimes are reluctant to
use alternative systems because of their lack of experience with them and
for other reasons.
Even though some public attitudes were formed during a period when the
importance of system design, siting, and O&M was not fully recognized, a
bias exists, at least in some communities, which has become institutional-
ized in certain areas of the public and private sector. In recent years,
with the support of Congress, EPA has attempted to overcome this bias by
stressing consideration of alternative systems in facility planning and
promoting a wide range of alternative systems suitable for a variety of
small community needs.
3. Limited financial management capability
Faced with the financial planning and management of a sewage treatment
project, small towns, more so than large cities, may be forced to obtain
assistance outside the community, because small towns generally have little
need for financial management experts and are unlikely to find them immedi-
ately available. The smallest towns may have at most one or two full-time
employees whose financial management background is likely to be limited to
matters affecting the routine operation of the local community.
The operation and maintenance of POTWs in small towns frequently suffers
from financial management deficiencies, as a recent report by the National
Demonstration Water Project points out:
. . . Many small rural systems have no annual management plans
or fiscal accounting. There is usually no middle management
and inexperienced volunteers may assume what little management
responsibilities there are. Work schedules are sporadic, with
no policies or procedures governing task performance. Systems
are unable to cope with day-to-day problems and the situation
becomes one of slow deterioration.
What emerges from the analysis of small community financial problems is
a pattern of high per capita cost resulting from a combination of disecono-
mies of scale and deficiencies in financial resources and financial manage-
ment. Figure 1-4 illustrates the small community predicament. Again, this
is not to say that all small communities are subject to these problems,
rather to point out the financial pressures brought on many small communi-
ties by sewage collection and treatment costs.
1-67
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FIGURE 1-4 FINANCIAL OBSTACLES TO SMALL COMMUNITY
PARTICIPATION IN THE CONSTRUCTION GRAFTS PROGRAM
o>
00
Slsa
Aooaa* uaually £o anallar
oonaultlng rtfB* without
•uoh ffjtorlanoa ii|
altanutiya
Tmdanoy to raly on
oonvantional syatvaa
not suited to wall,
diaperaed population
laatr ttr Capita
an4
Total Ravanuta
^ r
. >>
X'
p
Kxpanditura-
Ravanua Gap
*•*,
s
Lowar
Bond
Ratine
Higher
Bond
Intaraat
Uok of Piihlj Skilled
In-bouaa finanoial
•anagaawnt
tM in evaluating oonaultanta*
raooaMandationa and pcrforaing
othar finanoial Mnageaant fXinotiona
^
^
Hl|h Par Capita
Traatacnt Coata
-------
OLDER URBAN CENTERS
One major problem for many large urban centers is the age of the sewer
infrastructure. Many sewers have reached or surpassed the end of their
expected life and need to be replaced or rehabilitated. In many areas o-ld
combined sewers exacerbate existing treatment problems by causing wet weather
overflows. In addition, needs appear to be concentrated in-the most finan-
cially hard-pressed cities.
Concentration of Rehabilitation and Combined Sewer Overflow Needs
The 1978 EPA Needs Survey indicates that per capita rehabilitation
needs within SMSAs ($30 per capita) are 15 times as great as those outside
of SMSAs ($2 per capita). According to the survey, these needs are particu-
larly great in Baltimore, Maryland, New York City, and older Northeastern
cities generally.
The Needs Survey underestimates rehabilitation needs, however. EPA
accepted needs for major sewer rehabilitation areas only when they could be
documented by facility plans or engineering studies. Large additional
undocumented needs undoubtedly exist in many areas. For example, the 1978
survey indicates no rehabilitation needs for Buffalo, Cincinnati, Cleveland,
Hartford, Newark, or Pittsburgh, but in response to an Urban Institute study
inquiry, local officials in these cities estimated their needs to be in the
hundreds of millions of dollars. Under current Needs Survey methodology,
the Baltimore and New York City rehabilitation needs constitute 85 percent
of the national total.
Combined sewer overflow (CSO) needs are also concentrated in urban
centers, with 40 percent of 1978 Needs Survey estimates in Region V (the
Midwest) and an additional 44 percent in Regions I, II, and III (New England,
the Northeast, and Central Atlantic States). For the Needs Survey, CSO needs
are estimated using a computer simulation model. Actual costs are possibly
much greater.
Infrastructure needs, as measured by rehabilitation, -infiltration/-
inflow, and CSO needs, are concentrated in cities in the Northeast and
Midwest, as indicated by Table 1-25 adopted from a study of 28 cities
conducted by the Urban Institute.
1-69
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TABLE 1-25. BIG CITY PER CAPITA INFRASTRUCTURE NEEDS BY REGION
Region Category III Categories III & V
NE $64 $265
MW $61 $268
S $187/12* $243/75*
W $38 $149
*Includ1ng Baltimore/not Including Baltimore.
Source: Humphrey and Wilson, "Capital Stock Condition in 28 Cities," Urban
Institute, February 15, 1980.
Of the cities studied by the Urban Institute, those with the highest
per capita category III and V needs Included:
Baltimore $1588
New York $ 516
Cincinnati $ 507
Louisville $ 419
Buffalo $ 338
Seattle $ 332
Kansas City $ 323
Detroit $ 320
Cleveland $ 319
Concentration of Needs in Financially Distressed Areas
When high rehabilitation and CSO needs are viewed in the context of the
local financial capability to meet system needs, It becomes apparent that
Infrastructure needs are most concentrated 1n cities least able to afford
the Improvements. This 1s Illustrated 1n Table 1-26, based on the work done
by the Urban Institute.
1-70
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TABLE 1-26. PER CAPITA NEEDS AND MAINTENANCE SPENDING
BY FISCAL CAPACITY CATEGORY
Category III Category III Change In Maintenance
Fiscal Capacity Needs and V Needs Spending 1975-1978
Weak 76 309 -8*
Moderate 138/17* 260/149* 22%
Strong 23 148 3%
*Includ1ng/not Including Baltimore, a city on the margin between weak and
moderate capacity.
Source: Humphrey and Wilson, "Capital Stock Condition in 28 Cities," Urban
Institute, February 15, 1980.
The measure of fiscal capacity used was based on both the absolute
level and rate of growth of a city's revenue base—retail sales, personal
income levels, and market value of property measured on a per capita basis.
Furthermore, the Urban Institute study indicated that the fiscally weakest
cities have generally cut back more in maintenance spending and the level of
maintenance performed than communities more financially secure.
Reliance of Large Cities on Federal Aid
Large cities have generally been more reliant than small cities on
Federal aid for capital expenditures. According to a 1980 study by the
Joint Economic Committee, 36.4 percent of the general government capital
outlays of cities over 250,000 population during the period 1978 to 1980 was
expected to be from Federal aid. For New York City, which was not included
1n the Joint Economic Committee study, Federal aid was expected to comprise
44 percent of capital expenditure funds. To the extent that Federal funding
does not keep pace with local expenditure demands, large cities dependent on
Federal aid may have major difficulties 1n constructing and maintaining
major sewage treatment systems.
Sewage Treatment Costs and Local Borrowing Capacity
The anticipated growth in national sewage treatment costs will no doubt
be reflected 1n borrowing capacity problems at the local level. In 1978,
the Municipal Finance Officers Association conducted for EPA a study which
attempted to develop several Indicators of local credit capacity and evalu-
ate the potential Impact on credit markets of borrowing for treatment works
construction under varying assumptions of expenditure levels. While this
study did not identify a specific proportion of communities which might
anticipate borrowing problems, it did point to substantial credit pressures
under some assumptions, particularly in some regions of the country.
1-71
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The only available study that attempts to estimate the proportion of
projects which might strain the credit capacity of local governments is an
assessment of communities in New York State (excluding New York City) by the
consulting firm of Booz, Allen and Hamilton. This study, conducted in 1978,
matched local financial capability against local funding requirements based
on projects on the FY 1978 priority list and the 1979-1981 construction
grants list. Municipal financing capacity for the 346 local governments in
the study was assessed in terms of standard measures such as the incremental
increase in per capita debt. As a result of this analysis, 36 percent of
the communities were judged to have inadequate financial capacity, defined
as "a high likelihood of being excluded from the borrowing market." An
additional 8 percent were classified as having marginal financial capacity,
defined as "financing of local share likely to cause lowering of bond
rating." Financial capacity problems were found most frequently in small
communities.
Since this is the only known study of this type to involve a substantial
sample of communities, one should perhaps not place great confidence in the
calculated percentage of communities expected to face financial difficulties.
The New York State situation, for example, may not be typical of the national
picture. The message is clear, however, that a significant proportion of
communities may face borrowing difficulties. For the 89 municipalities in
the "inadequate capacity" category in the New York study, the problems appear
to be severe. Thirty-one of the communities carry the lowest investment-
grade bond funds in the municipal bond market. Of the 58 "inadequate
capacity" communities without bond ratings, 32 face tax increases greater
than 30 percent, and a few face doubling of taxes.
Industrial Cost Exclusion and Local Financial Capability
If the increased local share of construction costs due to ICE can be
passed through directly to industrial users, then the long-term direct cost
impacts of ICE to local communities should be minor. Under some conditions,
however, the additional construction costs cannot be directly passed through
to industry and some costs will accrue to local communities. The following
sections focus on three conditions that might lead to increased costs for
local communities. The conditions and their potential cost impacts are
indicated in Table 1-27.
TABLE 1-27. POTENTIAL COST IMPACTS OF ICE ON POTWs
Condition Potential Impact
1. Industry construction cost Inability to borrow funds or high
subsidized by local community debt service costs
2. Industry self-treats Loss of economy of scale
3. Industry shuts down or Loss of jobs and decline in tax
decreases production base
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The Impact of ICE on Local Borrowing Capacity
In some instances, industrial users may be unwilling or unable to either
self-treat or to raise capital for construction, and the local community
will try to subsidize some portion of the industrial share. This situation
may occur where the lack of available land prevents self-treatment and where
full funding of the industrial portion of a joint treatment facility is not
possible for the industry.
For many communities contemplating a construction subsidy for industrial
flow, the impact of such a subsidy on funding requirements would be prohibi-
tive. Data provided in a previous section on affected communities indicated
that more than 400 communities will face near-term impacts, and that funding
requirements would exceed $400 per household for 20 percent of the commu-
nities. The greatest impacts were found in small communities and in a few
large communities, thus reinforcing the already existing pattern of financial
strain.
An analysis of data from the 1980 Needs Survey provides an estimate of
the long-term effects of the ICE provisions. These data, summarized in
Table 1-28, indicate the future costs for needed facilities (treatment
plants and interceptors) which have significant industrial flows, that is,
over 100,000 gallons per day and 16 percent or more of the total POTW flow.
More than 1,300 facilities, with a total cost of more than $16.3 billion,
may be affected. The industrial flow component of this amount, which will
no longer be grant eligible, is $3.5 billion. The additional incremental
cost to be raised locally is 75 percent of the industrial portion, or $2.6
billion. This represents a 63 percent increase over the current estimated
local share of $4.1 billion (25 percent of the total cost of 16.3 billion).
A majority (55 percent) of the affected communities will be small
communities with populations of 10,000 or less. While these small communi-
ties account for only 5 percent of the flow from affected communities, they
include 16 percent of the industrial cost. The approximate average treatment
need for1communities in this category is $2.8 million, with an industrial
share of 26.6 percent, or $745,000. Prior to ICE, the typical local share
would have been $0.7 million, with a Federal share of $2.1 million. Under
ICE, the typical local share would be $1.25 million, with a Federal share of
$1.55 million. This represents an 80 percent increase over the current
local share. These figures represent the average impact of this affected
group, and the actual impact will vary from community to community.
It is not possible to determine how many of these significantly
affected communities will eventually consider the option of subsidizing
capacity for industrial flows, nor is it feasible to conduct a case-by-case
analysis of local financial capability. However, the incremental size of
the cost impacts, particularly for small communities, suggests that for
many, if not most, of these communities, such a subsidy is not a feasible
alternative.
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TABLE 1-28. LONG-TERM NEEDS IN COMMUNITIES WITH SIGNIFICANT INDUSTRIAL FLOWS*
Size of
Community
SMALL
(10,000 or less
OTHER
TOTAL
Number of
Communities
764
(55%)
618
(45%)
1,382
Total Cost
($ Million)
2,136
(13%)
14,203
(87%)
1
1
16,339
Industrial Cost
($ Million)
569
(16%)
2,968
(84%)
3,538
Total Flow
(MGD)
571
(6.2%)
10,439
(94.8%)
11,010
Industrial Flow
(MGD)
152
(6.4%)
2,232
(93.6%)
2,384
*For this data base, communities with significant industrial flows are those which have industrial flows
greater than 100,000 gallons per day and 16 percent of total flow.
-------
The Potential Impact of ICE on Savings from Economy of Scale
In Construction and Treatment
Since the industrial flow portion of treatment works will not be grant
eligible, many industries will determine that self-treatment is more cost-
effective than joint treatment. Where industries choose to self-treat, the
cost advantages due to economy of scale in both construction and operation
and maintenance will be lost to local communities. This impact will be
greatest in smaller communities where the effects of economy of scale are
most noticeable, and where individual industrial users might amount to a
significant percentage of the total flow.
In some cases, however, joint treatment does not result in a cost
savings to communities. For example, some communities, in order to accom-
modate an industrial discharger, may select treatment technologies that
would not otherwise be used because they are too expensive or unnecessary
for a treatment system designed only for domestic waste. In a previous ICR
report, EPA cited the example of a small community in Iowa which had to
upgrade its simple, non-aerated lagoon system to a more expensive, energy-
intensive system in order to-accommodate the loadings from a sausage plant.
Special design considerations to accommodate industrial flows may not
be uncommon in small communities or in areas where industry is located far
from the municipal facility. A lagoon system, relatively inexpensive to
construct and maintain, would often be the best choice for a small community.
In order to provide capacity for industrial use, however, a small community
may be required to select and share costs for a more sophisticated system
which is more costly to construct and operate.
Another consideration is that some industrial users are primarily sea-
sonal users, and joint treatment plants must be designed for a capacity that
is unused much of the year. The higher costs for operating an underutilized
plant during the off-season may more than offset the cost savings from
economy of scale.
Industrial withdrawal from a municipal treatment system could also prove
costly to a community. Existing regulations do not require industrial users
to sign binding legal documents commiting themselves to long-term financial
obligations for wastewater treatment services. Any number of factors such
as changing business conditions, increased user charges, new production
processes, or the availability of less expensive treatment elsewhere may
result in a decision by an industrial user to discontinue or severely cut
back use of a municipal system. When this occurs, the local community will
be left with overdesigned, and therefore inefficient, facilities as well as
a capital cost obligation. Again, the economic impact will be greatest for
small communities which built treatment systems that included a significant
amount of capacity for industrial use.
Joint treatment also requires more sophisticated work by a municipality
in planning, monitoring, and allocating costs. Planning requires identi-
fying industrial dischargers and determining their treatment needs. Deter-
mining which industrial facilities will actually use a POTW can be difficult
because industries may be unwilling to commit themselves until their costs
1-75
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are Identified. Furthermore, treatment needs for potential industrial users
must be determined based upon a characterization of industry's pollutant
loadings. Information on the industrial waste stream is needed to ensure
compliance with sewer use ordinance and pretreatment programs. Gaining full
information on these matters is a complex undertaking, and, in some cases,
uncertainty regarding industrial treatment needs causes municipalities to
overdesign as a hedge against miscalculation. Further, EPA-sponsored
studies of treatment plants in violation of permit limits have found that
the strength and volume of industrial flows often have been a significant
factor in noncompliance. User charge requirements, sewer use ordinances,
and pretreatment programs require programs for intensive monitoring of
industrial users, and these costs may be s.ignificant for some communities.
Secondary Impacts of ICE on Community Employment and Economic Base
Some communities have expressed concern that implementation of indus-
trial cost exclusion will cause industries to shut down or relocate,
resulting in local unemployment and economic distress. For example, a
marginal firm may have no choice but to use a publicly subsidized municipal
facility if it is to continue operating. It may not be able to borrow money
in the capital markets for its share of POTW costs nor have enough internally
generated funds for a self-treatment facility. If the community is not able
to subsidize the industrial share of construction costs, the firm may have
no alternative but to close down. In other cases, a firm facing high costs
for using a POTW or self-treatment in a community may choose to relocate or
shift production to a community which offers lower treatment costs.
The probable incidence of plant closings, relocations, or production
shifts is impossible to predict. This is a pi ant-by-plant business decision
based on each firm's assessment of the option which offers the least total
cost for complying with pollution control requirements and the most efficient
use of available capital. The decision will be affected by the cost of
borrowing money, the availability of land and capital for self-treatment,
the costs for using the proposed POTW, and the availability of less costly
alternatives in other communities.
There are some factors which suggest that small communities might be
the most susceptible to the loss of industrial jobs. Small communities, if
they have affected industries, are more likely to have individual industrial
users that constitute a substantial percentage of total usage. Because the
industrial users would constitute a substantial portion of design capacity,
the community would need the industrial users either to prefinance their
industrial capacity or to commit themselves to a legally binding, long-term
financial obligation for sewer services. Most small communities do not have
the economic base necessary to subsidize the industrial share. In contrast,
large urban communities, where individual industrial users comprise only a
small percentage of total usage, can afford to permit industries to use
municipal facilities without requiring binding financial arrangements to
secure long-term payments for industrial capacity. Since many large indus-
tries may not be able or willing to make long-term financial commitments for
wastewater treatment, some will consider moving or shifting production to
metropolitan areas in search of flexibility in arrangements. As a result,
there would be a worsening of unemployment problems and related economic
conditions in some small communities.
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On the other hand, some economic consequences of ICE may make small
communities or rural areas more attractive to industrial dischargers.
Industries located in large urban areas may find that self-treatment is not
a realistic option because of the unavailability or high cost of land for
treatment facilities. If costs for using the POTW are high, industries may
be tempted to leave urban areas for new facilities in rural areas or small
communities where cheaper, independent treatment is possible.
Regardless of the potential impacts of ICE on communities of various
sizes, one long-range effect may be to magnify differences between communi-
ties in terms of their ability to appeal to industry through the availability
of moderately priced wastewater treatment. Communities which will be opera-
ting facilities with industrial capacity funded by the grants program will
have an economic advantage over remaining communities. Of the remaining
communities, those that are willing and able to subsidize industrial capacity
will have an advantage,over the rest. One probable result is that economi-
cally distressed communities will be disadvantaged in the competition for
industry by their inability to subsidize construction for industrial
capacity.
OTHER ISSUES
In response to the Congressional directive, this chapter on the munici-
pal perspective has focused on potential economic impacts of ICE and on the
financial capability of communities to construct POTWs. Community responses
to EPA have raised a number of additional issues, however, and these addi-
tional issues are identified here in order to provide a more comprehensive
report on community concerns.
Issue Number 1: Inequities Between Communities. A number of munici-
palities felt that application of existing deadlines for industrial flow
eligibility would create inequities between communities with some able to
offer low-cost treatment to industry while others could not. This was a
particular concern to communities that felt that they would miss the dead-
line for eligibility because of slow processing of facility plan approvals
by EPA or State offices.
Another concern was that the 50,000 gallons/day (sanitary equivalent)
cut-off would affect communities unequally. For example, under the ICE
provisions, a community with many small industries, each with flow under
50,000 gallons/day, could receive funding for all of its industrial flow,
while another community with only one industry, but above the 50,000
gallons/day limit, would not receive funding for its industrial flow, even
though the total industrial flow in the second community was smaller.
Issue Number 2; Retroactivity. Many communities that were far along
in Step 1 planning but unable to meet the eligibility deadlines commented
that they should not be required to revise work already completed. One
community compared the application of ICE to communities nearly finished
with planning to "changing the rules in the bottom of the eighth inning."
Several communities suggested that the date for cutting off eligibility be
revised to provide eligibility for those nearly finished with planning.
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Issue Number 3: Inequities Between Industries. Some communities were
concerned that the SO.OOO gallons/day limit would require them to treat
their Industrial users Inequitably. They felt that might be faced with
charging Industrial users widely different rates when the only difference
between them was amount of flow. Other communities were concerned that some
industries would have relatively low rates because they would use previously
completed facilities while newer industries in "development" areas would be
facing higher rates or self-treatment costs.
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II. INDUSTRIAL PERSPECTIVE
The effect of the Industrial Cost Exclusion on
Industrial participation In publicly owned treatment
works and the treatment of Industrial discharges.
-------
II. INDUSTRIAL PERSPECTIVE
INTRODUCTION
Compliance with industrial wastewater treatment requirements can be
achieved in two ways: self-treatment or use of a POTW. The decision to use
a POTW or to self-treat is based on numerous factors, many of which are
different for each industrial discharger, and some of which cannot be easily
measured in economic terms. For this analysis, the factors weighed in each
case are divided into three categories: direct economic, indirect economic,
and non-economic.
WASTEWATER TREATMENT OPTIONS
After the ICE requirement becomes effective, six basic wastewater
treatment options will be available to industrial dischargers of process
wastewater:
1. Self-treatment. Under this option, the industrial discharger
plans, constructs, and operates its own wastewater treatment
facility.
2. Treatment in a jointly owned POTW. Under this option, the munici-
pality plans, constructs, and operates a POTW that is jointly owned
and jointly financed by the municipality and the industrial user(s),
The portion of the POTW owned and financed by the industrial
user(s) is proportionate to each industrial user's share of the
POTW's design flow and pollutant loading.
3. Treatment in a jointly financed POTW. Under this option, the
municipality plans, constructs, and operates a POTW that is fully
owned by the municipality, but whose construction cost is jointly
financed by the municipality and the industrial user(s). The
portion of the POTW financed by the industrial user(s) is propor-
tionate to each industrial user's share of the POTW's design flow
and pollutant loading.
4. Treatment in a PQTW under a binding contract. Under this option,
the municipality plans, constructs, and operates a POTW that is
fully owned and fully financed by the municipality, with each
industrial user required to sign a contract with the municipality,
specifying the length of time that the industrial user intends to
use the POTW, and establishing each industrial user's obligation to
pay for capacity constructed for treatment of industrial process
wastewater. This contractual provision ensures that the munici-
pality receives sufficient revenue to meet its debt service obliga-
tions, even if an industrial user reduces or eliminates its use of
the POTW. Such a provision is similar to a long-term lease, which
is commonly used in commercial practice.
11-2
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5. Treatment in a POTW without a binding contract. Under this option,
the municipality plans, constructs, and operates a POTW that is
fully owned and fully financed by the municipality, with each
industrial user required to pay its share of the municipality's
debt service obligations. The industrial share of the debt service
obligations is based on each industrial user's actual use of the
POTW, with no obligation to pay for capacity constructed for, but
not used by, the industrial user. Such a provision is similar to
the previous ICR requirement, except that payments include 100
percent (instead of 75 percent) of the cost of constructing capacity
to treat industrial process wastewater, payments include an interest
component, and all funds collected are retained by the municipality.
6. Treatment in a POTW with debt service based on ad valorem taxes.
Under this option, the municipality plans, constructs, and operates
a POTW that is fully owned and fully financed by the municipality,
with the municipality's debt service obligations being paid from ad
valorem tax revenues. Such a provision is similar to the present
situation, except that all users, including the industrial users,
pay additional ad valorem taxes for debt service on the 75 percent
of the industrial share of the construction costs which were
formerly paid by EPA grant assistance.
The choice of Options 2 through 6 is not up to the industrial discharger
alone. The municipality must agree to the industrial discharger's choice
and, in the case of Options 4 through 6, must also be able to sell bonds to
raise the necessary capital. The use of Option 6 might be further restricted
in some instances by State limitations on the sale of general obligation
bonds. The basic characteristics of each option are summarized in Table
II-l.
DIRECT ECONOMIC FACTORS
In analyzing the wastewater treatment options available, the most basic
comparison is on direct economic factors: the total cost, on a present value
basis, of each option. The initial and annual cost components for each
option are summarized in Table II-2 and discussed below:
1. Self-treatment. Initial costs include purchasing additional land
(where required), securing zoning changes and building permits,
planning and constructing the treatment facility and wastewater
outfall, developing and constructing a sludge disposal system,
securing permits required by the National Pollutant Discharge
Elimination System (NPDES) and the Resource Conservation and
Recovery Act (RCRA), and purchasing and installing monitoring
systems required by those permits. Annual costs include salaries
and training for operation and maintenance personnel, energy,
chemicals, insurance, property taxes, and debt service on funds
borrowed. These annual costs are incurred for the operation of the
treatment facility, the sludge disposal system, and the monitoring
system.
II-3
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TABLE 11-1. OPTIONS FOR TREATS NT OF INDUSTRIAL PROCESS WASTE WATER
Option Description Ownership*
1 Self-treatment Corporate
2 Jointly-owned POTW Corporate
3 Jointly-financed POTW Municipal
4 POTW with binding contract Municipal
5 POTW without binding contract Municipal
6 POTW with debt service based Municipal
on ad valorem taxes
Financing* Cost to Discharger after Shutdown
Corporate Debt service on corporate debt
Corporate Debt service on corporate debt
Corporate Debt service on corporate debt
Municipal Debt service on municipal debt*
Municipal None
Municipal Ad valorem taxes on corporate
property
*Refers only to that portion of POTW capacity constructed to treat industrial process wastewater.
II-4
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TABLE 11-2. DISTINGUISHING COST CHARACTERISTICS FOR TREATNENT OPTIONS
Option Description
1 Self-treatment
2 Jointly owned POTW
3 Jointly financed POTW
4 POTW with binding contract
POTW without binding
contract
POTW with debt service
based on ad valorem taxes
Initial Costs
Land; outfall; permits;
bond sales
Interceptors; pretreatment;
bond sales
Interceptors; pretreatment;
bond sales
Interceptors; pretreatment;
hookup/connection charges
Interceptors; pretreatment;
hookup/connection charges
Interceptors; pretreatment;
hookup/connection charges
Annual Costs
Salaries; energy; chemicals;
property taxes; debt service
User charges; property taxes;
debt service*
User charges; no tax incentives;
debt service*
User charges; no tax incentives;
debt service*
User charges; no tax incentives;
debt service*
User charges; no tax incentives;
partial debt service through
property taxes*
*If pretreatment is required, additional annual costs will be incurred for salaries, energy,
chemicals, property taxes, and debt service.
II-5
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2. Treatment in a jointly owned POTW. In* :ial costs are the same as
those for Option 1, except that land acquisition is facilitated by
the municipality's power of eminent domain, zoning permits and
building permits either are normally not required or are more
easily obtained, and the economies of scale reduce the other
initial costs somewhat. However, additional initial costs are
incurred for planning and constructing interceptors to convey the
industrial wastewater to the POTW; for constructing additional POTW
capacity to treat extraneous flows (infiltration/inflow), peak
flows (domestic flows are much more variable than are industrial
flows), and future flow increases (mainly from additional users);
and for such administrative requirements as developing user charge
systems and sewer use ordinances. In addition, industrial users
discharging "incompatible" pollutants incur initial costs for
planning and constructing pretreatment facilities. Annual costs
are the same as those for Option 1, with some reduction through
economies of scale. There are, however, increases in annual costs
due to the cost of treating wastewater that has a lower strength
and more variable flow and pollutant loadings, the cost of treating
extraneous flows, pumping costs, and administrative costs such as
meter reading and billing procedures. Also, if the initial costs
are higher or lower than those for Option 1, debt service payments
are accordingly increased or decreased. Industrial users discharg-
ing "incompatible" pollutants incur additional annual costs iden-
tical in nature to those for Option 1, although of a lesser amount,
for the operation of both the pretreatment facility and its sludge
disposal system.
3. Treatment in a jointly financed POTW. Initial costs are identical
to those for Option 2. Annual costs are also identical to those
for Option 2, except that no property taxes are paid for the POTW.
(Property taxes are still paid for any pretreatment facility.)
4. Treatment in a POTW under a binding contract. There are no initial
costs, except that the municipality might collect hookup and/or
connection charges. Hookup charges constitute a partial recovery
of the capital cost of the POTW, and connection charges cover the
cost of inspection, meter installation, and administrative services
associated with each new connection. Annual costs are identical to
those for Option 3, except that direct debt service payments to
holders of the debt of the industrial user are replaced by debt
service payments to the municipality to cover municipal debt
service obligations. These may be higher or lower than direct debt
service payments, depending on interest rates and maturity dates.
5. Treatment in a POTW without a binding contract. Initial costs are
identical to those for Option 4. Annual costs are also .identical
to those for Option 4, except that they are reduced or eliminated
if an industrial user reduces or eliminates its use of the POTW.
II-6
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6. Treatment in a POTW with debt service based on ad valorem taxes.
Initial costs are identical to those for Option 4.Annual costs
are also identical to those for Option 4, except that debt service
payments are proportionate to each industrial user's share of the
total assessed valuation of properties served by the POTW, rather
than being based on the total cost of ICE. This is the only option
under which the cost of ICE is shared by all users of the POTW,
rather than being borne solely by the industrial users.
To some extent, the initial costs to industries under Options 1 and 2
can be offset by two important Federal tax incentives for pollution control
investments, both of which are mandated by the Internal Revenue Code.
The earlier tax incentive for private investment in pollution control
facilities dates from 1968. In that year. Congress restricted the use of
industrial development bonds (IDBs), the interest on which is tax exempt,
but made limited exceptions for their continued use in financing certain
business investments, one of which was the construction of pollution control
facilities. IDBs are bonds issued by a State or local government, the pro-
ceeds from which are used to construct and equip privately owned industrial
plants. Unlike normal bond issues of State and local governments that are
secured as to principal and interest by the full faith and credit of the
issuing government, IDBs are secured only by the rentals the "lessee" private
firm has agreed to pay. For tax purposes, the facilities so constructed are
considered the property of the private firm since, after termination of the
"lease" agreement under which the bonds have been retired, ownership of the
property remains with the "lessee." These facilities are therefore eligible
for the tax incentives provided for private investment in such facilities,
including the investment tax credit, if qualified, and depreciation deduc-
tions. For financial reporting, the IDBs are regarded as obligations of the
"lessee" corporation. In effect, tax-exempt bonds issued through the agency
of a State or local government are used to finance private property at an
interest saving of 30 to 35 percent to the private firm. This incentive for
financing pollution control facilities has been liberally used by many
industrial dischargers to help pay for pollution control facilities.
The second tax incentive for investment in pollution control facilities
was enacted in 1969. Under this provision, as amended in 1975 and 1978,
pollution control facilities installed in 'industrial plants in existence on
December 31, 1975, and certified as necessary to bring those plants into
compliance with regulations under the Clean Air and Clean Water Acts, may be
amortized over five years and still qualify for the full 10 percent invest-
ment tax credit. However, if the property for which five-year amortization
has been elected in lieu of depreciation is also financed by IDBs, the
investment tax credit is limited to 5 percent.
Through these incentives the Congress has agreed to share the cost of
compliance with environmental regulations. Indeed, at discount rates below
14 percent, the five-year amortization option with the 10 percent investment
tax credit is more generous than the current expensing (one-year writeoff,
II-7
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which is not permitted for capital investments) of such expenditures, as
demonstrated in Table I1-3. This occurs because present law provides for an
investment tax credit which is a stipulated portion of the corporation's
"basis" in the property when it is acquired (the amount of capital to be
recovered as depreciation allowances), while still allowing the depreciation
of the full amount of the cost of the property. At discount rates below 14
percent, the after-tax effect of the investment tax credit exceeds the
after-tax effect of the difference between expensing the full amount of the
expenditures and the present value of the depreciation allowances over the
five-year depreciation period.
The five-year amortization incentive applies only to capital outlays to
retrofit a pre-1976 plant to bring it into compliance with environmental
regulations, while the IDB financing is available for capital outlays
specifically for pollution control in both new and old plants. With the
passage of time, as fewer retrofit modifications of plants built before 1976
remain to be accomplished, the IDB financing available to new plants will
become the principal remaining incentive.
It is difficult to evaluate quantitatively the relative costs for the
six options on a national basis, since each industrial discharger operates
with its own unique combination of physical and economic circumstances. Such
an evaluation is even more difficult with the reluctance of industrial dis-
chargers to disclose financial data on the impact of ICE on their economic
status. There are several reasons for this reluctance. First, any indica-
tion of impending financial difficulties could result in decreased employee
productivity and loss of personnel, especially key personnel. Second, cus-
tomer perception of possible future instability could result in a loss of
business to other corporations. Third, competitors, learning of an adverse
situation, might initiate competitive practices such as price reductions to
drive the firm out of business or pressure it to sell or merge on unfavorable
terms.
Pretreatment costs are especially difficult to quantify on a nationwide
basis, because pretreatment requirements vary widely from one industry to
another. For instance, food'processors, a major source of industrial process
wastewater, face no Federal pretreatment requirements since they do not dis-
charge "incompatible" pollutants. (Some food processors face local pretreat-
ment requirements due to limited POTW capacity.) At the other extreme, pre-
treatment requirements faced by the electroplating and tanning industries
are so stringent that little additional treatment (beyond pretreatment) is
required for these industries to self-treat. Because such industries would
have to undertake substantial capital construction and employ operating
personnel for pretreatment alone, many of those that are physically able to
do so can be expected to choose self-treatment, which requires only limited
additional construction and operating expenses.
As an example, typical wastewater treatment costs for the textile
industry are tabulated in Tables II-4 and II-5, based on a 20-year schedule
of debt retirement, 100 percent debt financing of capital costs, a 22 percent
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TABLE II-3. AFTER-TAX EFFECT OF TAX INCENTIVES FOR POLLUTION CONTROL FACILITIES
Expensing* Using Investment Tax Credit and Rapid (Five-Year) Amortization
Discount Rate - 8.0% 10.0% 12.0% 14.0% 16.0* 18.0% 20.0% 22.0%
First Year:
Expensing 46.0% _.__._._
Investment Tax Credit - 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Amortization** - 9.2% 9.2% 9.2% 9.2% 9.2% 9.2% 9.2% 9.2%
Years Two through Five:
Present Value of
Amortization - 30.5% 29.2% 27.9% 26.8% 25.7% 24.7% 23.8% 22.9%
Total 46.0% 49.7% 48.4% 47.1% 46.0% 44.9% 43.9% 43.0% 42.1%
*Not permitted under current tax law for capital investments.
**0nly straight-line depreciation 1s permitted.
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TABLE 11-4. ANNUAL WASTE WATER TREATS NT COSTS
FOR TYPICAL INDUSTRIAL DISCHARGERS IN THE TEXTILE INDUSTRY;
IDBs NOT USED; THOUSANDS OF 1979 DOLLARS
Industrial
Discharge
(MGD)
0.05
0.10
0.05
0.10
0.50
0.05
0.10
0.50
1.00
2.50
0.05
0.10
0.50
1.00
2.50
5.00
7.50
0.05
0.10
0.50
1.00
2.50
5.00
7.50
POTW
Capacity Option
(MGD)
0.50
0.50
1.00
1.00
1.00
5.00
5.00
5.00
5.00
5.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
1
200
240
200
240
380
200
240
380
520
780
200
240
380
520
780
1,100
1,400
200
240
380
520
780
1,100
1,400
Option
2 or 3
A
210
300
200
280
780
190
250
630
1,100
2,500
180
240
580
960
2,200
4,200
6,100
170
220
480
750
1,600
3,100
4,500
Option
4 or 5
A
200
270
190
260
670
180
240
550
900
2,000
170
230
510
810
1,800
3,500
5,000
170
210
420
640
1,400
2,600
3,700
Option
6
B
180
240
180
240
570
170
220
470
740
1,650
170
220
430
680
1,480
2,930
4,390
160
200
380
550
1,150
2,170
3,090
Pretreatment
but No
A
180
240
180
?40
540
170
220
470
740
1,560
170
220
440
680
1,460
2,780
4,000
160
200
380
560
1,160
2,180
3,100
ICE
B
180
240
180
240
530
170
220
460
720
1,510
170
220
430
670
1,420
2,710
3,890
160
POO
380
550
1,140
2,140
3,030
No Pretreatment
and No
A
29
58
28
56
280
21
42
210
420
1,000
18
36
180
360
900
1,800
2,700
12
24
120
240
600
1,200
1,800
ICE
B
29
58
28
56
270
21
42
200
400
950
18
36
170
350
860
1,730
2,590
12
24
120
230
580
1,160
1,730
A - POTW debt service proportionate to flow
B - POTW debt service proportionate to assessed valuation
11-10
-------
TABLE 11-5. ANNUAL WASTE WATER TREATS NT COSTS
FOR TYPICAL INDUSTRIAL DISCHARGERS IN THE TEXTILE INDUSTRY;
IDBs USED; THOUSANDS OF 1979 DOLLARS
Industrial POTW
Discharge
(MGD)
0.05
0.10
0.05
0.10
0.50
0.05
0.10
0.50
1.00
2.50
0.05
0.10
0.50
1.00
2.50
5.00
7.50
0.05
0.10
0.50
1.00
2.50
5.00
7.50
Capacity Option Option
(MGD)
0.50
0.50
1.00
1.00
1.00
5.00
5.00
5.00
5.00
. 5.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
1
160
190
160
190
320
160
190
320
430
630
160
190
320
430
630
880
1,200
160
190
320
430
630
880
1,200
2 or 3
s
180
240
170
230
630
160
210
510
860
1,900
150
200
470
760
1,700
3,200
4,800
150
180
380
590
1,300
2,300
3,500
Option
4 or 5
R
180
240
170
230
630
160
210
510
860
1,900
150
200
470
760
1,700
3,200
4,800
150
180
380
590
1,300
2,300
3,500
Option
6
B
160
210
160
210
530
150
190
430
690
1,570
150
190
410
660
1,450
2,640
4,020
140
170
350
530
1,130
1,190
3,040
Pretreatment
but No
A
160
210
160
210
510
150
190
420
670
1,500 , 1
150
190
400
630
1,380 1
2,490 2
3,800 3
140
170
340
510
1,080 1
1,890 1
2,900 2
ICE
fi
160
210
160
210
490
150
190
420
670
,430
150
190
390
620
,340
,420
,690
140
170
340
500
,060
,850
,830
No Pretreatment
and No
A
29
58
28
56
280
21
42
210
420
1,000
18
36
180
360
900
1,800
2,700
12
24
120
240
600
1,200
1,800
ICE
B
29
58
28
56
270
21
42
200
400
950
18
36
170
350
860
1,730
?,590
12
24
120
230
580
1,160
1,730
A - POTW debt service proportionate to flow
B - POTW debt service proportionate to assessed valuation
II-ll
-------
corporate borrowing rate, an 11 percent municipal borrowing rate, and average
costs for self-treatment, pretreatment, and POTW construction and operation.
These average costs are based on cost data for 220 self-treaters in the
textile industry, 900 POTW users in the textile industry, and 186 POTWs.
These tables demonstrate that, for the smaller industrial dischargers
subject to ICE, the costs of Options 1 through 6 are about equal. Even the
repeal of ICE would only decrease the annual cost of using a POTW by about
10 percent. On the other hand, for the larger industrial dischargers,
especially those that use 50 percent or more of the POTW capacity, the annual
cost of using a POTW can be more than four times the annual cost of self-
treatment. For these large dischargers, the repeal of ICE could decrease
the annual cost of using a POTW by as much as 35 percent, which would still
be more than double the annual cost of self-treatment.
The cost components of each option—user charges, pretreatment costs,
the cost of ICE, and possible savings through financing of ICE and the capi-
tal costs of pretreatment via IDBs and/or ad valorem taxes—are tabulated in
Table II-6, as are self-treatment costs. Table II-7 shows these same costs
and cost components as a percentage of the total cost of using a POTW. These
tables demonstrate that for small industrial dischargers, the cost of using
a POTW consists primarily of pretreatment costs, which can be as high as 88
percent of the total cost. Because economies of scale are realized as
larger pretreatment facilities are used, pretreatment costs decrease (as a
percentage of total cost) as the size of the industrial discharger increases.
For large industrial dischargers, pretreatment costs can be as low as 21
percent of the total cost of using a POTW. User charges and the cost of
ICE, comprising the remainder of the cost of using a POTW, are about equal
except in small POTWs, where the cost of ICE can be as much as 50 percent
higher than the user charges, and in large POTWs, where the user charges can
exceed the cost of ICE by more than 10 percent.
Tables I1-6 and I1-7 also demonstrate that considerable savings could
be realized by financing capital costs via IDBs and/or ad valorem taxes.
Maximum use of IDBs could save 10 to 26 percent of the total cost of using a
POTW, while maximum use of ad valorem taxes to finance the cost of ICE could
save 6 to 34 percent of the total cost. The percentages for savings due to
use of ad valorem taxes assume only one industrial user per POTW; additional
industrial users would reduce the savings, since there would be a higher
total cost of ICE, resulting in higher-ad valorem taxes being paid by each
user. The combined savings which could be realized by the combined use of
both IDBs and ad valorem taxes range from 17 to 37 percent. These percent-
ages are lower than the sum of the savings which could be realized by using
IDBs and using ad valorem taxes separately, since either IDBs or ad valorem
taxes could be used to finance the cost of ICE.
These tables show that self-treatment is a reasonably priced alterna-
tive for all sizes of industrial dischargers, and that it would cost less
than the total cost of using a POTW for all but the smallest industrial
dischargers. For these small dischargers, self-treatment would cost as much
as 118 percent of the total cost of using a POTW, whereas self-treatment for
11-12
-------
TABLE 11-6. ANNUAL WASTEWATER TREATMENT tOSTS FOR TYPICAL INDUSTRIAL DISCHARGERS
IN THE TEXTILE INDUSTRY, THOUSANDS OF 1979 DOLLARS
Maximum Saving Through
Financing Via
inausir ia i
Discharge
(MGD)
, . » . . / . .
0.05
0.10
0.05
0.10
0.50
0.05
0.10
0.50
1.00
2.50
0.05
0.10
0.50
1.00
2.50
5.00
7.50
0.05
0.10
0.50
1.00
2.50
5.00
7.50
rui w
Capacity
MGD)
. . ».../.
0.50
0.50
1.00
1.00
1.00
5.00
5.00
5.00
5.00
5.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
lOlSI LUbL
of Using
a.PQTW*
210
300
200
280
780
190
250
630
1,100
2,500
180
240
580
960
2,200
4,200
6,100
170
220
480
750
1,600
3,100
4,500
User
Charges
24
48
24
48
240
18
36
180
360
900
16
32
160
320
800
1,600
2,400
11
22
110
220
550
1,100
1,650
P re-
treatment
150
180
150
180
260
150
180
260
320
560
150
180
260
320
560
980
1,300
150
180
260
320
560
980
1,300
ICE
35
70
28
56
280
19
38
190
380
950
16
32
160
320
800
1,600
2,400
10
20
100
200
500
1,000
1,500
IPBs
30
60
30
50
150
30
40
120
240
600
30
40
110
200
500
1,000
1,300
?o
40
100
160
300
800
1,000
Ad Valorem
Taxes
30
60
20
40
210
20
3d
160
360
850
10
20
150
280
720
1,270
1,710
10
20
100
200
450
930
1,410
Total**
50
90
40
70
250
40
60
200
410
930
30
50
170
300
750
1,560
2,080
30
50
130
220
470
1,110
1,460
Self-
treatment
200
240
200
240
380
200
240
380
520
780
200
240
380
520
780
1,100
1,400
200
240
380
520
780
1,100
1,400
*Totals may not agree due to rounding
**Less than the sum of savings using IDBs and using ad valorem taxes separately, since either method can be
used to finance the cost of ICE
11-13
-------
TABLE II-7. ANNUAL WASTEWATER TREATKENT COSTS FOR TYPICAL INDUSTRIAL DISCHARGERS
IN THE TEXTILE INDUSTRY, AS A PERCENT OF THE TOTAL COST OF USING A POTW
Maximum Saving Through
Financing Via
Industrial
AIIUUJl*! IUI
Discharge
(MGD)
0.05
0.10
0.05
0.10
0.50
0.05
0.10
0.50
1.00
2.50
0.05
0.10
0.50
1.00
2.50
5.00
7.50
0.05
0.10
0.50
1.00
2.50
5.00
7.50
POTW
I w i n
Capacity
(MGD)
0.50
0.50
1.00
1.00
1.00
5.00
5.00
5.00
5.00
5.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
Total Cost
I l/VU 1 vWJW
of Using
a POTW*
210
300
200
280
780
190
250
630
1,100
2,500
180
240
580
960
2,200
4,200
6,100
170
220
480
750
1,600
3,100
4,500
User Pre-
Charges treatment ICE
11
16
12
17
31
9
14
29
33
36
9
13
28
33
36
38
39
6
10
23
29
34
35
37
71 17
60 23
75 14
64 20
33 36
79 10
72 15
41 30
29 35
22 38
83 9
75 13
45 28
33 33
25 36
23 38
21 39
88 6
82 9
54 21
43 27
35 31
32 32
29 33
IOBs
14
20
15
18
19
16
16
19
22
24
17
17
19
21
23
24
21
12
18
21
21
19
26
2?
Ad Valorem
Taxes
14
20
10
14
27
11
12
25
33
34
6
8
26
29
33
30
28
6
9
21
27
28
30
31
Total**
24
30
20
25
32
21
24
32
37
37
17
21
29
31
34
37
34
18
23
27
29
29
36
32
Self-
treatment
95
80
100
8fi
49
105
96
60
47
31
111
100
66
54
35
26
23
118
109
79
69
49
35
31
*Thousands of 1979 dollars; totals may not agree due to rounding
**Less than the sum of savings using iDBs and using ad valorem taxes separately, since either method can be
used to finance th« cost of ICE
11-14
-------
large industrial dischargers would cost as little as 23 percent of the total
cost of using a POTW. These relative costs would be altered in some POTWs
through use of IDBs and ad valorem taxes, which can effect savings as high
as 37 percent. For small industrial dischargers, the use of IDBs and/or ad
valorem taxes could make use of a POTW somewhat less expensive than
self-treatment, but for large industrial dischargers, the maximum possible
savings would still result in use of a POTW being almost twice as expensive
as self-treatment, due to the economies of scale which are realized as
larger self-treatment facilities are used.
All figures in Tables II-4 through II-& are pre-tax costs. For a
profitable firm, the after-tax costs would be reduced by the expensing of
operating costs, interest payments, user charges, and debt service on
municipal debt, and by the combined effect of the investment tax credit and
rapid amortization on corporate investments in qualified pollution control
property. On a present value basis, as demonstrated in Table II-3, both
expensing and the tax incentives for pollution control facilities would re-
duce the pre-tax costs by the same 46 percent at a discount rate of 14 per-
cent. Even discount rates as low as 8 percent or as high as 22 percent would
change this effect by less than 4 percent. Therefore, for a profitable firm,
the after-tax costs would be about 46 percent of the pre-tax costs shown in
Tables II-4 through II-3 , except in the case of Option 3, where the after-
tax costs would depend on the tax treatment of the industrial discharger's
capital contribution to the construction cost of the POTW. For an unprofit-
able firm, the after-tax costs would be identical to the pre-tax costs.
INDIRECT ECONOMIC FACTORS
In addition to the direct costs of constructing and operating a self-
treatment facility or using a POTW, the choice of a treatment option results
in other costs being incurred by each industrial discharger. Although such
costs are even more difficult to quantify than direct costs, they generally
make use of a POTW more attractive than it would otherwise be, in comparison
to self-treatment.
11-15
-------
Since an industry that self-treats is fully responsible for the quality
of its wastewater discharge, a treatment facility malfunction may require a
partial or complete shutdown of the industry's process, causing increased
costs and decreased profits. Also, the debt required to finance construction
of the treatment facilities may result in a less favorable debt-to-equity
ratio, diminishing the attractiveness of the industry's stocks and bonds to
future investors. This may require higher dividends and interest rates to
sell future new issues of stocks and bonds. In addition, if an industry
elects to self-treat, it must divert management attention and engineering
expertise away from direct corporate operations (the production and distri-
bution of goods, the source of corporate profits) to tend to the planning,
construction, and operation of pollution control facilities. Finally, the
operation of a self-treatment facility might generate public ill will,
especially among those who live, work, or travel near the facility. This ill
will could result in decreased product sales, a lessened ability to attract
and retain a productive workforce, or a decreased willingness by the munici-
pality to extend future financial assistance to the industry. Such adverse
results could negatively affect corporate profitability, although the
effects cannot be quantified.
To the extent that an industrial user choosing to use a POTW would be
required to pretreat, the distinction between self-treatment and use of a
POTW would be lessened or in some cases eliminated, as far as indirect
economic factors are concerned.
NON-ECONOMIC FACTORS
There are a few factors which, when present, have the greatest impact
on the decision by an industry to self-treat or to use a POTW. Self-
treatment requires land for constructing a pollution abatement system, as
well as a waterway that is within a reasonable distance of the industrial
facility and that can accept its waste discharge without showing water
quality deterioration. If both of these conditions cannot be met, an
industry is forced to use a POTW, regardless of the cost.
Use of a POTW requires that a POTW, with the capacity to treat the
industrial wastewater, be located within a reasonable distance of the
industrial facility. If this condition cannot be met, an industry is forced
to self-treat, regardless of the cost.
CONCLUSION
Because of factors such as location and availability of capital, many
industrial users have no choice in the method of industrial wastewater
treatment to be used. Unless an industrial discharger can secure both land
and capital and is located near a waterway that can accept its waste dis-
charge, it must use a POTW. Similarly, unless an industrial user is located
within a reasonable distance of a POTW that has the capacity to treat its
wastewater, it must self-treat.
-------
Other industrial dischargers meet all of the prerequisites for both
alternatives. In such cases, the choice between self-treatment and use of a
POTW is based on numerous economic factors, including both the direct costs
of construction and operation and indirect costs such as the effect of the
treatment method chosen on production processes, the availability of capital,
demands on executive and engineering expertise, and the public image of the
corporation.
Industrial users of a POTW have several advantages over industries that
construct and operate their own treatment facilities. Unless required to
pretreat, the industrial user of a POTW is not responsible for treatment
system construction, operation, or malfunctions, and is relieved of the
responsibility for recruiting and training treatment plant operators, devel-
oping programs and purchasing facilities for sludge disposal, and modifying
treatment programs to reflect future pollution control requirements, such as
more stringent water quality standards.
An industrial discharger that constructs self-treatment facilities must
negotiate terms and conditions for a NPDES permit, either directly or through
legal and engineering consultants retained for' that purpose, and faces
enforcement liability amounting to $10,000 per day for violations of NPDES
permit effluent limitations. Self-treatment also requires the industry to
provide for safe disposal of process sludges in accordance with the provi-
sions of RCRA, which includes its own permit, monitoring, and reporting
requirements. The industry must also comply with the provisions of the Safe
Drinking Water Act, to ensure that waste is disposed of properly and will not
contaminate groundwater supplies. If sludge incineration is used instead of
land disposal, the industry must comply with the Clean Air'Act and applicable
State implementation plans. In nonattainment areas obtaining a permit for
incineration is difficult unless emission offsets can be secured. The cumu-
lative burden posed by compliance with all environmental regulations is
substantial for an industrial discharger choosing self-treatment, and re-
quires substantial corporate management, financial, legal, and engineering
resources.
Because of the above factors, many Industrial dischargers in the past
have elected to use a POTW. The Coopers and Lybrand study confirms the
financial attractiveness of use of a POTW in most Instances, especially in
the absence of ICR payments, but it appears that the advent of the pretreat-
ment and ICE requirements will alter this situation. In many Instances it
will become cheaper for an Industrial discharger to self-treat, rather than
to use a POTW under the new pretreatment and ICE requirements.
Like self-treatment, pretreatment requires Industrial dischargers to
construct and operate treatment facilities and to be responsible for facility
malfunctions, personnel recruiting and training, and disposal of sludge in
accordance with RCRA, the Safe Drinking Water Act, and the Clean Air Act.
Once these industrial dischargers are required to undertake these responsi-
bilities, only limited additional construction and operating expenses are
required for self-treatment, and many of these industrial dischargers can
therefore be expected to choose self-treatment instead.
11-17
-------
Since ICE will also increase the cost of industrial use of the POTWs to
which it will apply, it will also decrease future industrial participation
in those POTWs, compared to the level of industrial participation that would
occur in the absence of ICE. It is difficult to quantify this decrease.
There are advantages and disadvantages to each option for industrial
wastewater treatment, and the choice made by each industrial discharger will
be based on an amalgamation of all of the advantages of each option, as
applied to each industrial discharger's unique circumstances.
An analysis of the textile industry (Table II-8) suggests that it may
be more economical for some large industrial dischargers to self-treat in
accordance with Best Available Technology guidelines, rather than to dis-
charge to a POTW under proposed Pretreatment Standards. However, for most
small industrial dischargers it may be more economical to use a POTW. The
breakeven size ranges from 25-150 thousand gallons per day depending upon
the size of the POTW and the industrial cost sharing agreement between the
POTW and the industrial discharger. The major reason for the shift in
advantage is that user charges (charges to pay for operation and maintenance
of the POTW) are directly proportional to flow while there are economies
of scale at larger flows for Best Available Treatment, pretreatment and
the industrial cost exclusion.
Thus at large flows, user charges may dwarf pretreatment and ICE costs
for industries that may use a POTW. However, according to industrial souces,
the incremental cost of ICE might be a critical factor in determining
industrial participation in a publicly owned treatment works and industrial
plant closures and relocation.
Any other major unavoidable expense could have the same result by forc-
ing the plant to reduce production or cease operations. Examples include
raw product costs which are higher than other competing production areas,
and labor or transportation costs which become unreasonable.
Management's reactions to such circumstances vary depending on the size
of the company, its profitability, and the number of plants operated. Single
plant companies with low profit margins and limited financial resources
probably would not remain in business when confronted with a significant
increase in cost for wastewater treatment (including user charges or pre-
treatment), raw products, labor, or transportation.
Multi-plant companies have the option of reducing production or closing
plants when costs of operation become too high for any reason. Production
will be moved to other more profitable plants. Several major companies will
close plants this year because of operating costs being too high and profits
too low. It is important to realize that multi-plant companies consider
each plant to be a profit-center in itself. Thus, each plant is operated as
Il-lft
-------
if it were a separate ent y which must achieve a profit margin set by cor-
porate management. If a plant cannot meet the company's profit objective,
the multi-plant company will move production from an unprofitable plant to
one that is more efficient. Single plant companies, of course, cannot exer-
cise this option.
-------
TABLE II-8 COMPARISON OF COSTS FOR DIRECT TREATNENT OF INDUSTRIAL DISCHARGES VERSUS INDUSTRIAL
PARTICIPATION IN PUBLICLY OWNED TREATS NT WORKS
ANNUAL COST - TEXTILE INDUSTRY
Indus-
try
Flow
MGD
0.05
0.10
1.00
2.50
5.00
7.50
Cap. Cost
20 yr
22%
(1)
$ 75,000
96,000
210,000
330,000
560,000
610,000
Self-treat
06M
(2)
120,000
140,000
310,000
450,000
570,000
840,000
t
Total
OH2)
200,000
240,000
520,000
780,000
1,100,000
1,400,000
Service
Charge
(3)
26,000
52,000
520,000
1,300,000
2,600,000
3,900,000
.
Pretreat
(4)
150,000
180,000
320,000
560,000
980,000
1,300,000
10 MGD POTt
Total
(3)+(4)
176,000
232,000
840,000
1,860,000
3,580,000
5,200,000
J Secondary Treatment
I-C E
20 yr ZO yr
11% 22*
(A) (B)
7,000 12,000
14,000 23,000
140,000 230,000
350,000 580,000
700,000 1,200,000
1,000,000 1,800,000
Total
(3)+(4)
+(A)
183,000
246,000
980,000
2,210,000
4,280,000
6,200,000
Total
(3)+(4)
••+(B)
188,000
255,000
1,070,000
2,440,000
4,780,000
7,000,000
NOTES;
Total (l)+(2)
Service Charge (3)
Pretreat (4)
Total (3)+(4)
Total (3)+(4)+(A)
Total (3)+<4)+(B)
Industrial cost to self-treat
ICR repealed or municipality pays for ICE (estimate of the "user charge" for operation and
maintenance plus amortization of 25 percent local share at 22 percent interest over ?0 years)
Pretreatment costs (amortization of capital costs at 22 percent interest over 20 years plus
operation and maintenance costs)
Service charge plus pretreatment cost
ICE prefinanced by municipality, to be repaid by Industrial user (11 percent, 20 years)
ICE financed "up-front" by Industrial user (22 percent, 20 years)
II-20
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III. CASE STUDIES
Perceived impact of the Industrial Cost
Exclusion; a qualitative research study.
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The perceived Impact of the Industrial Cost Exclusion
was determined in three areas: Watsonville, California;
Gloversvilie-Johnstown, New York; and Milwaukee, Wisconsin.
The first part of this chapter contains a qualitative
research study. In the second section of this chapter are
letters from community officials in the study areas, which
describe, in quantitative terms, the potential impact of the
Industrial Cost Exclusion.
-------
III. CASE STUDIES
INTRODUCTION
The objective of this study was to explore the effects of Industrial
Cost Exclusion (ICE) on the thinking and decisiontnaking of community and
industry leaders.These leaders were drawn from cities known to be affected
by ICE. The study thus seeks to increase understanding of the reactions to
ICE by those most concerned with it.
It should be understood that no attempt is made here to evaluate the
objective, long-run economic impact of ICE; rather the goal is to determine
the perceptions and opinions created by ICE. The present analysis deals by
design with the subjective and short term. The perceptions and opinions of
those involved in the local decision process will, however, be a crucial
determinant of eventual economic impact.
METHODOLOGY
The approach taken to explore the effects of ICE on those involved in
the decisionmaking process was qualitative rather than quantitative. Spe-
cifically, focus group interviews were used. These interviews followed an
open group discussion format. Group Interaction results in a high level of
spontaneity and candor. The interviews lasted about two hours and were tape
recorded for analysis.
Seven interviews were held. The composition of the groups varied as
follows:
o One group of community leaders, one group of leaders from
large businesses, and one group of small business leaders
from Watsonville, California.
o One group of engineering and financial personnel from a
large corporation with a plant in Watsonville.
o One group of community leaders and one group of business
leaders from Gloversville and Johnstown, New York.
o One combined group of community and industry leaders (4-hour
session) from Milwaukee.
The cities of Watsonville, Gloversvilie/Johnstown, and Milwaukee were
chosen for their geographic and industrial representativeness.
For this report to be read in proper perspective, the reader should be
acquainted with the following. The focus group interview is a research
technique designed to provide an in-depth rather than statistical analysis.
No attempt is made to quantify or statistically generalize the findings of
this research. The goal is to discover broad patterns of perception and
opinion rather than to pose specific, preconceived questions.
III-l
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Also, It should be noted that the findings examine ICE from the point
of view of community and business leaders—how they see ICE In their own
terms and from their own frame of reference. This report should not be
interpreted as endorsing the objective correctness of any statement. What
people believe to be true, however, affects their decisions.
No single finding applies to every individual. Findings should be
viewed as holding generally across people, with individual variation in the
group pattern. Differences among communities are noted where appropriate.
Quotes from the interviews convey the way people expressed themselves.
The reader can, accordingly, better judge the exact tenor of people's
thoughts. The quotes are also intended to provide a better appreciation of
the basis of the findings. All quotes are typical in that they are similar
to those made by a number of persons.
FINDINGS
1. ICE has created an impasse In the minds of community and industry
leaders.
In each of the three communities in this study there is a general per-
ception that there has been steady progress toward development of a workable
sewage treatment plan. That a facility has not been completed 1s attributed
to problems and unique considerations that have arisen. There 1s a strong
feeling that any delays have been unavoidable, and that the EPA review pro-
cess has been the primary delaying factor.
- "We keep getting this postponement because of new regu-
lations and that not only costs us money but also delay.
Everybody says, well, 1n six years we should have had 1t
accomplished and finished. Well, we probably should
have, but we didn't because we were looking at alterna-
tives hoping that the water situation would change...."
- "I think the record probably would show that the district
moved forward with all deliberate speed consistent with
the encumbrances placed 1n Its way 1n the manner of
various lawsuits. I don't think that the argument will
hold water that there was any foot dragging."
- "We seem like we're on the threshold of getting our
treatment plant, complying with regulations and every-
thing else, and now all of a sudden we come up with this
amendment. You know, everything's dead 1n the water now.
It's just—It's Impractical that Industry can come along
and just make an about face—after five years of putting
all the work and effort. This Industry has been working
very hard together to solve these problems."
III-2
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- "So we put in an application early on feeling that moni-
toring stations, if they were built right away, would
help us with the basic design data, not only in the pre-
treatment program enforcement but the actual design of
the plant. And, as the mayor said, we were led to
believe, I guess you could call it, in project meetings
that this was an eligible cost. Let's see, our first
application goes in very—let's see, late in '78, it
isn't reviewed by the State until August of '79. At
that point they send it down to New York to the Region 2
office. The Region 2 office responds in February that
it was not an eligible cost. We then appealed to
Washington and it was in April or something like that—we
were turned down at that level. We rewrite it, resubmit
it, we are told, without these monitoring stations, we're
told in August of '80 that it's approvable now by the
State and it went down to New York again, and at this
point it is approved September 30. Then the interesting
part there becomes that, after hearing our justification
again, the State appeals to Washington, and we now have
a letter that says it is possible that they are eligible,
that we can produce again a justification, that we can
reapply again. So we went and we came and we went—I
don't know how many times exactly it was. But this
uncertainty has been a problem there. It's held up our
facilities planning."
Communities believe therefore that they are subject to ICE through no
fault of their own. Moreover, ICE is viewed as a barrier to further
progress.
- "And the city, of course, has been involved in a number
of Issues with the Federal government in addition to
studying improvements to meet the secondary treatment
standard. We've applied for a waiver for secondary
treatment and going through that process has taken a lot
of time and required a lot of additional investment and
effort and money on the city's part and has resulted 1n
some cases 1n a large delay in the implementation of the
project. And I think one of the important issues that
needs to be recognized about the project as we have it
planned now is that It's taken six years of coordination
between the various entities in this community to get
support from all sectors for a project that will meet
the standards as required; and finally we've reached
agreement on a way to do that and if the Stafford Amend-
ment [Industrial Cost Exclusion] becomes effective and
we cannot meet the deadline for implementation of the
Stafford Amendment [Industrial Cost Exclusion], then
that project will be infeasible."
III-3
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- "But it isn't like we haven't done anything. We've done
many things for five years. We're waiting for a waiver—
in the meantime we're doing things. We are eligible for
a waiver. That perhaps is two years down the road....
But if we don't meet it, then the Stafford Amendment
[Industrial Cost Exclusion] will put us out."
Industry has taken the position that ICE is financially impossible.
- "That's what the city is telling us...that's .what they
intend to do. That's what the city is telling us the
Stafford Amendment [Industrial Cost Exclusion] is man-
dating them to do, is come to the processors for that
additional money....Well, there's no way our company is
going to pay."
- "Government funding which is enjoyed by a whole bunch of
other communities prior to the Stafford Amendment [Indus-
trial Cost Exclusion], which will pay our fair share and
we will pay the lion's share of the city's 12-1/2 per-
cent, and we figure we can live with that—it might be
tough, but we can live with that. That's the only thing
we can live with."
- "We've been worrying about this process now for six
years, trying to make sure that we were able to keep our
head above water as we've gone, and along comes the
Stafford Amendment [Industrial Cost Exclusion] with this
theory here, and we'll be just down the river. There is
no ifs, ands and buts about it. There is no way that we
can do it."
- "Especially under the ICR, if we get in under the amend-
ment and don't have to pay it back, if Jill Blow or Jim
Blow go broke in the process, we aren't stuck, because
we don't have to worry about that particular deal. But
under the way you're thinking about [ICE] we're—we
would have to pay—pick up their obligation. We can't
do it, regardless.
This position has been accepted by community leaders.
- "They would go out to their industries—their major
industries—and ask them to provide funds upfront and I
think most of the industries have got the position that,
no, we're not going to do that."
. "One company said, I don't have any conversation here.
I don't have anything to participate in any discussion,
the answer from my company is, you tell them if"we have
to put up the money, we're out, and there's no room for
talk."
III-4
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- "Well, they ust told us they'd close down. They'll
move their Operation to another area, not this plant,
but ship the stuff to a different one where they already
are."
- All of our national firms indicate the fact that they
are—each one—responsible as a unit for a profit, and
on their percentage of this, they can't justify it over
even a long period of time, they can't recover."
The net result has been that ICE is perceived as an impasse. Local
government is expected to collect from industry but industry is not able to
pay.
2. ICE tends to be regarded as a capital commitment, making the impasse
between industry and the community much worse.
Industry regards ICE as calling for a capital commitment on its part.
Because the expenditure would be for an essentially unproductive asset, this
raises strong concerns about return on investment and indebtedness.
- "But we have never participated in the capitalization of
a plant for the city—not directly, and what this amounts
to is that kind of involvement."
- "Putting money into a municipal sewer system is the way
I understand it. The way we're looking at it now."
- "You know, quite frankly, our corporation has not ever
invested upfront money into any municipal thing. If you
do it with a waste treatment plant, the next thing you
know we're going to have buses running on the streets...
spend stockholders' money on things we don't manage or
control and get a fair return for. That's not to say we
won't, because I certainly don't speak for the corpora-
tion. But let's be realistic—it's damned doubtful that
we would."
- "Ours is at $81,000. I know how our company feels—that
we need operating capital and they're not looking very
favorable toward putting out $81,000 into a project that
does jnot really improve our set up."
- "I borrow money to run my business, and I'm limited in
my credit. I can't borrow the money anywhere—I'm not
the government, and I can't tax anybody. So, if you
can't borrow money to run your business, what're you
going to do? Are you going to operate very long?
ICE also differs from normal investment decisions in that there is no
control over or equity in the facilities.
III-5
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- "Without really very much control, and it's not the kind
of investment that I think most people would want to
make."
- "If you're going to crash and burn, you have to crash
and burn before you put the money up into the publicly
operated treatment works, because once you got the money
in there, if you crash and burn, they don't give it back
to you, you just own a piece of the sewer plant and
you're not in business anymore."
- "Are you trying to tell me that, if I run an industry
and I commit to you, that I give so much towards that
plant? How do I know how long I'm gonna be in business?
Maybe one year, two years, three years, then what the
hell happens?"
- "The Stafford Amendment [Industrial Cost Exclusion] would
make, as I understand it, would make each of us speak
for a bonding portion of an expanded sewer and be liable
for that without—really without knowing where we're
going to be in seven years or however long it's going to
take to expand the facility and whether or not we could
go to some new concept that might come on the horizon
and do something."
- "What if he's only in business two years—how do you
amortize that damned loss when he goes bankrupt? See, I
mean, it's not feasible."
- "And also you're putting money into a municipal sewer
system. How would you—what do you have—an undivided
interest in the sewer system? It's not your asset, it's
the city's—how would you work that one out?"
Beyond the contrast between ICE and any normal capital investment, there
is a philosophical objection to investing in a public service. It is simply
not the role of business to provide such capital.
- "Now we're confronted with a situation where we're paying
actually for a public utility which is not in the scope
of normal business."
- "I think it's drastically uncommon that you move into a
situation where you're employin1 a sizable amount of
people and then you're asked to put in a public utility.
This is so assinine it turns my stomach."
- "We're supplying labor and a payroll for the city. Now
where in the hell is it our position to now put in a
sewer plant. And that's everybody's feeling in this
damned town."
III-6
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- "So that if our plant should close because of other cir-
cumstances, let's say that some big disease of some kind
swept through the growing areas where our products are
produced, and all of a sudden we don't have a business
there any more, we would still be there—now we wouldn't
have that kind of an arrangement with a power utility—
the water department or anybody else to, you know, pay
after our business was gone; it's only with this sewer
authority."
- "When Pacific Gas & Electric runs out of generating
power, they don't come down to their customers and say,
you know, we've got to have some money to build a new
power plant down here; it just doesn't work that way and
we kind of, I think, see the sewage utility the same."
3. If ICE could be considered an expense item, it would be evaluated on an
ongoing basis.
Except in Milwaukee, industry does not see much chance of being able to
treat ICE as an operating expense as opposed to a capital commitment. This
possibility, however, is far more attractive to industry. It would allow
ICE payments to be evaluated just like any other expense, on an ongoing
basis as they are incurred. The possibility of treating ICE as an operating
expense also suggests that a company would have time to find ways to reduce
their costs.
- "Our options—maybe we go along and continue to pay that
higher sewer bill or we can walk away from it any time
we elect. It's the form of obligation that is so cru-
cial. Will the form of that obligation affect our
balance sheet, our ability to borrow?"
- "I think from the independent standpoint—speaking for
myself and maybe independents too—we're saying, okay,
we can see the light at the end of the tunnel. By
increases we can try to improve our situation, too,
maybe not in the same manner as a national company, but
we can at least have a shot at it and try to stay in
business. If it comes the other way, it's impossible to
go borrow the money to do. It's as simple as that. It
ends it before we even—nobody's putting the effort into
it. So there's a complete difference between the upfront
part and the increase in rates. That's the problem."
Even regarded as an operating expense, however, there is still a strong
skepticism about the ability to pay for ICE. It would be difficult to make
up the additional cost other than by cost reduction efforts.
- "The way all costs are going, you say, oh, you can stand
a little more. Okay, sewage on our cost statement, as
III-7
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it was, say, a year ago, two years ago, is a very small
part of our costs. But if they put a new sewer plant
in, it's gonna be around 20 cents a case from around one
cent to 20 cents a case. That's one hell of a jump.
Okay, our fuel, power and water—three years ago was
2-1/2 cents a case. It's 35 cents a case today. That's
what's happened to that. Well, that has nothing to do
with the product that's in the can or the can or any-
thing else. So...now we're gonna add another 20 cents
for sewage, which is a major cost at this point."
- "In other words, we'd have to go out and recover this
over the period of this project, we'd have to sell better
than 20 million barrels of beer just to pick up the tab
for this."
4. Self-treatment is not considered a viable option, though pretreatment
to offset increased rates would be viable.
Industry generally does not see self-treatment as an alternative to
municipal systems. Self-treatment may be technically feasible but is eco-
nomically doubtful. Most critically, land is typically not available for
this purpose.
- "Knowing the kinds of treatment systems that we're going
to have to have at the joint facility because of the
strength and the nature of the leather tanning wastes,
for the individuals to look at meeting a stream standard
as a direct discharger, the investment that they would
have to make in their own facilities would be substan-
tial. I don't have a good feel for the number, but I
would feel that the economies of scale and so forth, it
would fall out immediately."
- "We are severely limited by space. Now if we're required
to add on an initial pretreatment segment and then forced
to build secondary treatment, you know, you just can't
put that in a quarter-acre lot or in your garage."
- "It would be a tremendous expenditure for these companies
to go and say, okay, we're going to build our own treat-
ment plant. First of all, a company like ourselves
wouldn't put that kind of money in capital dollars into
wastewater treatment and, second, there's no place for
us to do it. We're blocked in. We've got 10-12 acres
over there, we're surrounded—there's ho way where we
could put it in."
- "It's certainly technically feasible for these people, to
do it; however, economically it's not feasible and in
some cases the technical feasibility is even constricted
III-8
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by land constraints. This is not an area that neces-
sarily, around a given plant, they would have the area
required for the treatment."
- "To me, in the real world, 90 percent of the time, that
isn't an option. Your plant has either been served by
the city system and is now land locked and does not have
access to property, does not have easements to get their
wastewater out of their facility, they don't have a
river or stream going by, you know—there they are,
they're stuck 1"
There is also concern that self-treatment is associated with too many
uncertainties. There is no guarantee of success.
- "Well, again, self-treatment is a possibility if we knew
what we were aiming towards. Nobody seems to know other
than taking out solids that you can develop a self-
treatment. There's a limitation as the gentleman pointed
in the land."
- "Nobody has agreed exactly what self-treatment...what
this is. So how do you plan or how do you build some-
thing that could be obsolete in six months or it could
be obsolete in six years?"
- "How can you say self-treatment when the State and the
Federal don't know the answers—how do you expect us to
have the answers? They tell us to do this, but nobody
has the answers. They say, well, you do it, but they
can't prove that you can do it even...."
Pretreatment to reduce rate increases is seen as a very viable option,
Many believe that pretreatment would become essential.
- "And as Jim said earlier, there are no babes in the woods
around this table. And all of us will take out—will
pretreat to 60 or 70 percent that we can take out eco-
nomically and we'll give [the city] the remaining 30 or
40 percent that costs like hell to get rid of."
- "Really, there's two questions here on pretreatment:
(1) Can you afford your overall economics of investing
in nonreturnable assets—assets that you benefit nothing
from? If t.hat's negative, I guess you're out of the
question entirely, but if that's a positive decision, if
you can invest in that, then the question is, do you
invest with the MSD or do you go on your own? That's a
second economic question. I think we'd take a second
evaluation. In our case, we would try awfully hard to
survive the first one; secondly, we would try awfully
III-9
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hard to justify going to pretreatment on our own, to
reduce not only the capital investment but the ongoing
user charge."
Although pretreatment is considered attractive, there is concern that
pretreatment will not eliminate exposure to the built-in fixed costs of a
municipal facility.
- "That rate increase on operating expenses is going to be
damned difficult to offset. One of the things that will
happen is we'll invest money to offset that. The cost
of operating a wastewater treatment plant is not going
to go down.. So everybody else is going to share at what
we're going to offset through investment. So what your
share may be today, at a 500 percent more could very
easily be 1000 percent by the time companies like ours
start investing to offset."
- "Whatever happens from that point on, the capital costs
are still there—whether it be $25 million or $30
million, some of the industries will absorb that. If
they pretreat, remove solids, whatever, has no effect
whatsoever on the initial capital cost. Someone has to
absorb that capital cost."
- "I would imagine that if most of it was pretreated—
whatever the operating needs of the district were—it
would quickly shift to what was left—the dollars would
have to come from somewhere."
5. Local government is perceived to be in a bind with almost no options.
The burden of finding a solution to the impasse over ICE is thought to
fall on local government. Both the Federal government and the city have
left it up to local government to find a solution.
- "The thing that I see 1s the Federal government
attempted, on their own, by direction of Congress, to
come up with a system so that they could be repaid by
Industry. They failed. They had a system that they
couldn't get off the ground. The administration of that
system was unbelievably cumbersome. They found out that
the so-called letters of Intent and all these other
things didn't hold water, that 1f Industry wanted to
fold, they had to go and chase Industry and find them,
they had tremendous problems with sizing the plants and
the facilities properly, based on these letters of com-
mitment. They've failed in their own attempt to try to
come up with some of the questions that you're asking us
now, what are we going to do 1f we don't have that money
available. There has to be a system and commitments,
but the Federal government could not agree—or did not
come up with a system that worked."
111-10
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- "One of the easiest strategies that we could take is to
absolutely do nothing. Throw it back to the city."
Local government, however, is perceived to be in a bind with almost no
options available. Only in Milwaukee was there any hope of financing.
- "We're not sure if the municipal bond market is ready to
absorb Milwaukee County debt at the rate that we're
going to have to issue it under this project; and again,
it's related to the lack of grant funds which has to be
made up in the municipal debt markets on the other side,
so that's a very real problem—and something we're
extremely concerned about in the marketability of the
bonds."
- "We have another situation—you may be acquainted with
Proposition 13 in California. It prohibits us from any
bond issues—impossibility to get a bond issue passed
now because it requires 2/3 of the registered voters,
not of those people who vote. You don't get 2/3 out to
vote, much less getting them all on one side, and we
don't get a 66 percent turnout on an election, which—
and everyone of them would have to vote for it if you
got 'em, so we know that's an impossibility. Revenue
bonds we're extended to our limit just to do what we're
doing now, that's where this million and a half is
coming. As far as our financing potential, no, we do
not have a financing potential for it."
- "We're in an untenable position. We can't afford it.
The industry in this town will die. We have nowhere to
go."
- "I doubt very much whether the city is even going to
even consider the study of a plant when they know
there's no money forthcoming from anyone else but the
city government. I doubt it very much. They don't have
the money."
- "If they elect to enforce the law as presently written
from the Federal government on down, we don't have any
options...."
Local government's reaction to this perceived bind has been to continue
as if ICE was not a factor.
- "We feel that we have to do everything we can at least
and spend the money we have to go ahead and prepare our-
selves for the plan. If it happens at the end of the
line, and we don't get a waiver, we don't get grand-
fathered in, then we're just money down the rathole,
because there's no way we can proceed if we don't get
that at the end of November 1981."
III-ll
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- "Well, there are two ways of looking at it. Yes, we're
in limbo as far as knowing exactly what to do on the
project, but no, we're proceeding as if the Stafford
Amendment [Industrial Cost Exclusion] wasn't there."
- "We don't have a choice, I mean, you can whistle by the
graveyard. We have to go on like this. What is our
alternative? You say what are your alternatives? The
only thing we have right now is one, to go ahead and
hope for the best."
- "We're going on as if we didn't know any better."
There is little active planning for the effects of ICE. Both community
and business leaders have adopted a wait-and-see attitude.
- "We're proceeding with the facilities planning, but the
point that we come to the investment of the capital,
that's definitely wait-and-see."
- "With the changing, the moratoriums and the changing in
the regulations over the years, we felt very strongly
that there's no sense in getting excited about anything
until EPA finally makes its commitments, because we've
had too many of these things change and we've gone down
this path only to have to come back and go this way
again, so we've taken the position, now, let's wait till
we have a more definitive direction to follow and we are
able then to move rather quickly in that direction."
- "But we're taking presently a wait-and-see attitude and
I'm sure that we can convert to a more detailed evalua-
tion if we see things going toward implementation."
6. Political action to repeal ICE is considered the best course presently.
The best thing that could happen in people's minds is for the situation
to revert back to the one before ICE, that is, Industrial Cost Recovery.
- "But I would say that if we could get back to the posi-
tion that we had prior to the amendment where we could
get Federal and State funds to that the city only has to
absorb 12-1/2 percent of the total cost, then I think we
would be in a position to absorb that cost, not that
we'd like it, but I think it's the least of the total
problem."
- "The best thing would be if the Stafford Amendment
[Industrial Cost Exclusion] was revoked or repealed."
111-12
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- "I think the best thing that could happen right now
would be as much pressure on Congress and whomever to
reinstate the 75 percent capital grant—at least there
was a bit of light at the end of the tunnel that there
was some capital reimbursement against improvement at
the plant."
This suggests political action to repeal ICE. Such action is entirely
consistent with the wait-and-see attitude toward the effects of ICE.
- "The only recourse we have is through what little we can
do politically. Start with letters which we started
with, talking with our representative, somehow we've got
to get the State of New York involved, because it could
mean a significant loss to the State if the county
disappears. That's the only recourse we have left is to
have this bad amendment to a relatively seemingly good
act amended."
- "It was our first course of action. We've sent peti-
tions back signed 90 percent of all the employees, even
Stafford's office admitted they'd received all those
petitions."
- "So, we've gotten their ear and they've shown an interest
and I think that we do have plus—I know it may be not a
nice thing to say—I know there's gonna be less emphasis—
everyone knows and The Wall Street Journal indicates that
there's gonna be a great deal less emphasis on the EPA
requirements."
7. Industry closings are a distinct possibility if ICE is implemented.
Although the repeal of ICE is being pursued, as a course of action,
this result is by no means taken for granted. The implementation of ICE is
considered a real possibility. It is believed that implementation would
lead to industry closings. Smaller firms would simply be forced to go out
of business while larger firms could shift production to other plants.
- "Some of them are already paying $2,500 to $3,000 a
month for sewer charges alone, and see if that's gonna
double—$6,000 to possibly $9,000 a month, that'll break
•em."
- "But I quite frankly can see the city really kind of
drawing up to a little shell if it really happened. I
can say that quite frankly, I don't see how we can
survive."
111-13
-------
- "Or, you might just go out of business at that one loca-
tion and add a little bit to the other producing loca-
tions, if you had enough other ones. In fact, the
supply situation in the vegetable business right now is
such that you could close 10 percent of the plants and
never replace the capacity and people would still have
all the vegetables they want."
- "And for the record, the brewing industry in this city
operates approximately 18 to 20 other breweries in other
parts of the country where it would not be unrealistic
to expect shifts in production. To examine just one set
of numbers, the kinds of burden that we're looking at in
the brewing industry here is about 2-1/2 times the cost
per barrel of beer produced in some other locations."
Even if some firms should prove able to pay, there would still be a
domino effect. Those businesses that did not close would have to bear an
even greater burden of ICE cost. This domino effect ensures that implemen-
tation of ICE would result in economic disaster.
- "Well, if you go by the process of elimination—say 90
percent of the group say the hell with it and move out
of town. Where does that leave the 10 percent that're
left in this locality?"
- "They'll lose the major industry, the major industry
can't absorb the total cost. Now this is exactly what
will happen here. Assuming that we all say, well, maybe
we'll commit ourselves over a 30-year period—certainly,
it'd be below 30 years. I don't think there's a single
company that can absorb the allocation of the cost. So
you'll have 21-25 industries committing themselves to
that amortization and within several years, there's no
question but that the smaller companies would be unable
to meet their commitment. And they go out, and there-
fore the balance of the companies have to absorb that
cost and so, over a period of years, there will be a
certain few of the companies, and eventually maybe
you'll end up with maybe two or three industries and
maybe they can stay alive and maybe they can't. So,
over a period of years, you're going to lose the entire
industry of the county."
8. It is felt that implementation would involve a long, drawn-out process,
It is not expected that ICE would result in immediate enforcement and
industry closings. Implementation would more likely be followed by a pro-
tracted period of discussion, negotiation, and litigation. At this point,
however, ICE would bring progress on existing plans to a halt.
111-14
-------
- "There'll be about a six or seven year dialogue when
everybody's in varying degrees out of compliance with
various things and people figure out how to do it....
'Cause I have to think back of what the other situations
we've had here—cities, State and Federal and industry
were in different positions, at each of our locations.
It's been, you know, five to six years, and nothing has
been—confrontation, there's been no real litigation,
all there's been is constant discussion. We'll get a
temporary delay until this, a temporary easement for
this, and we'll meet and disucss this, and it hasn't
been that nobody intended to do anything, it just was
damned hard to get a solution. I suspect this is going
to be the same way.
- "If there's no 75 percent, I'd say, status quo is prob-
ably a close-to-forever."
- "I think it would drag on for several years probably
with no one doing anything."
- "And that's one of the key upshots—five years from now
you will have spent a lot of money—contractors and con-
sultants—the cost of ever doing something will be that
much further away, and probably be no further down the
pike and the quality of the water in Lake Michigan will
probably be no better."
One of the most negative consequences of such a delay would be to
decrease cooperation between the community and industry. Discussions about
implementation are likely to pit the two against each other.
- "The other impact you're going to have if this were to
come to pass is that you're going to have a big argument
between the industries located within this municipality
and the municipal governments."
- "Depending on what decisions would be made by the com-
missioners—we may well wind up in court again, with the
industries on one side and us on the other. I'm paint-
ing an entire picture—a broad picture. I hope that
doesn't happen and I suspect it will not, because we've
had a pretty good rapport."
There is some sentiment that implementation might have a positive effect
of forcing a reexamination of existing programs. In particular, less expen-
sive facilities might emerge as an alternative in the absence of government
funding. Underlying this is the belief that existing plans are over-designed
anyway.
111-15
-------
- "The best possible case In my judgment would be one
wherein if the Stafford Amendment [Industrial Cost
Exclusion] remained a fact, it also mandated a reexami-
nation of both the extent to which the goals and objec-
tives of the '72 water act were to be applied and perhaps
even more importantly, the time frame within which they'd
be achieved—that allows industry and municipalities to
still espouse the noble goal of clean water but accom-
plish it in a framework whereby we're not bankrupt."
- "But, maybe that's a cheaper way to do it, if you say to
heck with Federal money and you build it yourself,
because then you don't have all the Federal rules and
regulations that you've got to...."
- "I'll tell you one thing we're very close to and just
started discussing it maybe a week ago, if the funding
is reduced to the level that the Stafford Amendment
[Industrial Cost Exclusion] would have it, if we were
building the plant without the grants program, we
wouldn't be responsible for a lot of the regulations
that come with the grants program....And we'll do a
building with only local funds, we could easily save the
Federal share I think and just not have to pay the pre-
vailing wage rates."
- "If the Federal government's only going to contribute $3
or $4 million anyway, the question becomes, why bother?
We certainly could do it faster if we did it on our own,
I think."
9. Resistance to ICE is increased by the general perception that it is
inherently unfair!
The details of the ICE are perceived to be arbitrary and poorly con-
ceived. It is felt that little consideration of implementation problems
went into drafting the legislation.
- "I think the problem with the Stafford Amendment [Indus-
trial Cost Exclusion], if I could speak to that for just
a second, not knowing the background, how it came about
or anything else or what the thinking was when it was
enacted—the idea of the 50,000 gallon limit sounds
like, well, that's not a lot of volume. A small plant
here will use 600,000 gallons a day. We use at times
over a million gallons a day, which doesn't mean we're a
big operation. It just means we use a lot of—we're a
very water-intense industry, because of just basically
washing food products."
111-16
-------
- "...where some communities that don't have our problems
are given grant funding and because of two arbitrary
figures—50,000 gallons which was arbitrary, and November 1,
1981, which was arbitrary—all of a sudden we don't get
any grant funding. And there's people all over the
United States that got that 30-year, no-interest money.
That seems to be very arbitrary—that seems to be the
most unfair portion of the whole thing."
- "Why is November the first? That was picked out of the
air."
"How did the 50,000 gallons a day—do you know how that
standard was derived—I mean, tomorrow, if we amended
this to read 350,000 gallons—it used to be 25,000
gallons a day and then the amendment was broadened to
50,000 gallons."
"The 50,000 gallons was arbitrary, they picked it out of
the air. The November 1st was a figure they picked up—
it could have been November 1, 1982, as well; they just
put a deadline on there."
- "The principles sound clear but the details sure sound
fuzzy. In principle, I think we certainly agree in
industry that we should pay our share of whatever
effluent we cause, that we're accountable for whatever
wastes we have. And we want to do that, and we're
thoroughly in accord with the Federal government
decreasing its scale and size and just put those two
together, how do you resolve it, when you start working
with the city, I think that's—I still see the same
problem with the transition...."
The law is also thought to promote rather than reduce unfair competitive
advantages among firms.
- "My competitors got theirs funded by the EPA. They got
theirs paid for, on their own property—competin1 in the
same market. Makes me feel good. Now the EPA's telling
me—you put up the money."
- "In the tanning industry, I believe it's something in
the range of 10 percent of the tanneries are in direct
111-17
-------
dischargers. Well, what we're gonna do is we're going
to help the 10 percent by penalizing the 90 percent. It
doesn't seem fair."
- "We have one example, a major competitor has already had
grant money extended to their facilities wherever they
operate and they had, at one time, a $3 or $4 million
obligation to repay. That has been eliminated as a
result of this recent law."
Perceptions of the law are further colored by doubts about any real
benefit to the environment. Industry particularly does not see any cost-
benefit logic behind ICE.
- "We're being forced to pay out secondary treatment...
we're being forced to comply with a law that appears
simply for the sake of compliance, not because somebody's
gonna get some benefit from it."
- "And they go along one step farther—there's no one
single document out there that says we're doing anything
detrimental to the ecology of the Monterey Bay right
now."
- "Hundreds of thousands of dollars—studies all over—and
there's not one single documentation that we're doing
anything detrimental. That has to be kind of concerning
to the business community."
- "We asked, six months ago at public hearing the head of
the commission, what benefit will accrue to the community
for this bankrupting, we got the answer and I think it's
almost a direct quote, that the water quality will be
improved by about 10 percent. Now I'd like you to ask
any sanitary engineer—anywhere—what that means."
- "My information on the Stafford Amendment [Industrial
Cost Exclusion] was that it was to stick big buisness—
they've been getting a free ride long enough, quote
unquote, let's stick it to them." .
CONCLUSION
These findings have dealt with the perceptions and opinions of community
leaders. It should be kept in mind that the issue is not whether these per-
ceptions and bpinions are right or wrong. At issue are the consequences for
the wastewater treatment decision process.
The interview Indicate that the following perceptions art evident 1n the
three communities which participated In the case studies. These statements
shall be viewed as the perceptions of significant members of the community as
opposed to a factual description of actual conditions. These perceptions
cannot be generalized to all communities potentially impacted by ICE.
Ill-is
-------
o ICE has created an impasse rather than an impetus for
progress.
o Efforts have been redirected from existing plans toward
political action.
o Cooperation between industry and community has been
strained.
o There has been a perceived narrowing of options and an
overall tendency to "wait and see" what happens.
It should be emphasized that this conclusion, in itself, does not imply
that the overall long-run economic impact of ICE will necessarily be nega-
tive. It does imply that the decision process has been adversely affected.
This in turn means that attention should be given to how positive long-run
economic consequences might be attained.
111-19
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CITY OF WATSONVILLE
CITY HALL 250 MAIN ST. P. O. BOX 430
WATSONVILLE. CALIFORNIA 95076
TELEPHONE AREA CODE 408 722-3551
July 23, 1980
Honorable Leon E. Panetta
House of Representatives
431 Cannon House Office Building
Washington, D.C. 20515
Subject: H.R. 666?
Dear keen:
It is our understanding that the House of Representatives
will soon be considering H.R. 6667 to amend the Federal
Water Pollution Control Act. One of the major components
of this bill Is the repeal of the Industrial Cost Recovery
(ICR) provisions of the Act, which provide for larger
Industrial users 'of a municipal wastewater treatment sys-
tem to repay the Federal portion of a Clean Water construe-
tFon grant. The City of Watsonvllle fully supports H.R.
6667 and the repeal of ICR. The basts for our position
Is that the ICR program has not effectively achieved Its
original purpose. Technical support for this conctusion
Is provided In House Report No. 96-983 and Is summarized
In the following sections of this letter.
Background. The passage of the Clean Water Act amendments
of 1977 (P.L. 95-217) officially recognized the procedural
problems experienced In the administration of the ICR
program. The EPA and the Congress recognized that the ICR
program was not efficient In achieving Its original goals,
which included:
• Eliminating a competitive advantage to Industries
utilizing municipal treatment systems,
Providing adequate, but not excess, capacity for
planned future growth,
Encouraging water conservation,
Facilitating local self-sufficiency for financing
future treatment plant expansions, and
• Encouraging Industrial participation In municipal
systems and regional approaches to wastewater
treatment and disposal.
-------
Leon Panetta July 23, 1980
H.R. 6667 Page 2
The 1977 amendments revised the ICR program by setting a
minimum capacity limitation of 25,000 gallons per day on
Impacted industries. In addition Congress placed a mora-
torium on the collection of ICR until July, 1979* white
EPA completed an analysts of methods to Improve the ICR
program. The moratorium was subsequently extended by
Congressional action until July, 1980. EPA contracted with the
consulting firm of Coopers and Lybrand to perform the
analysts of ICR. In its report submitted to EPA in January,
1979, Coopers and Lybrand concluded that ICR had failed
to accomplish the goals established by Congress and actually
recommended repeal of ICR. In transmitting the report to
the Congress, EPA softened the report's conclusion to
"the ICR provisions of P.t. 92-500 have not accomplished
their legislative purposes."
EPA subsequently prepared another analysis of the ICR
program utilizing Agency staff. This JLat-i-«-r -tepor*
recommended the retention of ICR In sofflA mOdlff-ad Form
and suggested a number of revisions for roiraideration to/
Congress. The House Committee on Public works and
Transportation held extensive hearings on the ICR issue
and considered EPA's proposed modifications in detail.
The Committee concluded, however, that the best course
of action is elimination of ICR to "allow grantees and
industries to develop and implement the most equitable
and effective repayment provisions on a case-by-case basis."
The City of Watsonville Is in complete agreement with
recommendations of the House Committee and supports the
concept of each local agency developing an appropriate
financial repayment program.
Issue; Senate Bill 272$. Senate Bill 2725 was the com-
parable bill on the Senate side proposing the repeal of
ICR. It is our understanding that this bill was passed
by a 93 to 0 vote in the Senate during the week of June 23,
1980. However, the bill was passed with an amendment
introduced by Senator Stafford, which makes capacity for
Industries with flows in excess of 50,000 gallons per day
InelIg ible for Clean Water Grants for all projects receiving
Step 3(construction) grants after September 30, 1980.
Thus, the ICR program would be eliminated. However, in the
future, larger industries would be required to provide the
capttal cost for their share of the municipal treatment
works "up front" when the construction contract Is awarded
and would be required to develop a comolete Iv. LadepAndJcat
source of financing.
It is our understanding that S.2725 as *me&a-.d and U.K.
6667, when ratified by the House', will subsequently be for-
warded to a joint conference committee for resolution of
the differences between the two pieces of legislation.
While the City of Watsonville fully supports H.R. 6667, we
are adamantly opposed to the Stafford amendment to S.2725
restricting future grant funding for Industrial capacity.
-------
Leon Panetta July 23, 1980
H.R. 6667 Page 3
Projected Impact on City of Watsonvi 1 le. As you are aware,
the City of Watsonvi lie has been participating in the devel-
opment of a Clean Water C^nt project to Improve our Waste-
water Treatment Plant since 197^. A final Step 1 Project
Report and EIR were published earlier this month, and the
City Is In the process of obtaining a Step, 2 (Design) grant
to prepare construction bidding documents for the project.
To date a total of approximately $1,300,000 have been
obligated to consultant contracts as part of this Step 1
project. Including $165,000 In local funds. In addition,
approximately $180,000 In l^ocarl funds have beefi expended
In the development of our application for a waiver of the
Federal secondary treatment requirement. To date, no State
or Federal grant funds have been made available for waiver
applications.
These cost estimates do not Include the significant efforts
devoted to the project by the staffs of the City, the State
Water Resources Control Board, the Central Coast Regional
Water Quality Control Board, and the many other agencies
Involved In the project approval. In addition, many members
of this community have devoted much time and effort to
the development of the project as currently proposed, which
for the first time in six years has -the support of all aspects
of the community (government, citizens, and industries) as
well as the endorsement of regulatory agencies. If future
funding for industrial capacity Is limited as provided by
the Stafford amendment, our project will be halted.
Of the jj. Industries Involved In our project, 1_7. '(90%) hav-e a
capacity requirement greater than 50 ,000 gal Ions per day
and would be Ineligible for grant funding. Those 17 Industries,
located In the City of Watsonvi lie and in the community of
Pajaro in Monterey County, would be required to provide
Independent financing for approximately $8.3 million of the
total estimated project cost of $20 million. (This estimate
assumes that private funds would be substituted for the
75 percent federal grant, but that State funding at 12i
percent would still be available.) The attached Exhibit A
provides a 1 I s t of our affected I ndustr I es and .the estimated
cost to each for parti c.I pat i ng! •! nf. 'the proposed project. These
estimates are based upon an upgrading at the Wastewater
Treatment Plant to meet State of California standards for
ocean discharge and are 1979 dollar estimates. As you can
see, certain Individual companies would be required to provide
as much as $1.8 million at the Initiation of the project
from an independent financing source. This Initial cost
would be In addition to a projected average Increase In
annual costs of approximately 3^0 percent above current
charges. Certainly many, If not all, of our Industries
will refuse to participate In this project because of the
unacceptable financial burden. . At a minimum, the City
-------
Leon Panetta July 23, 1980
H.R. 6667 Page A
would be required to re-study the situation to determine
which Industries might close down, reevaluate the required
capacity for the treatment plant, and assist the local
Industries In evaluating alternate financing sources. If
our project could be revised and continued in some form,
a minimum delay of at least one year would probably be
required for further study. Furthermore six years of
planning and $1.5 million in consulting contracts would
become obsolete.
Since the passage of P.L. 92-500 In 1972, the requirements
and rules of the federal government regarding wastewater
treatment have continued to change. As a result, In an
effort to comply with federal law, we are continuing to
expend hundreds of thousands of dollars locally (and billions
nationally) on studies which become obsolete before the
recommended project can be constructed. This situation must
be halted.
Conclusion. The City of Watsonville strongly opposes the
Stafford amendment which would limit future grant funding
for industrial capacity. We request your assistance in
ensuring that the Conference Committee resolving the
differences between H.R. 6667 and S.2725 exclude the limi-
tation on funding for Industrial capacity In the final
bill. We furthermore seek your guidance on what additional
actions the City of Watsonville and local Industries can
take to ensure the Stafford amendment Is eliminated from
the ICR repeal bill. There Is no doubt that all groups
including the EPA, the Congress, municipalities, and
industries agree that the ICR provisions of P.L. 92-500,
even as amended in 1977, are not effective in accomplishing
their Intended purpose. Therefore, we believe there is
little doubt that ICR should be repealed. We agree with
the conclusion of the House Committee on Public Works and
Transportation that grant repayment by Industries can best
be treated on a case-by-case basis. We oppose the arbitrary
time limitation proposed for September 30, 1980, after
which date industries over 50,000 gallons per day In capacity
would be denied construction grant funding. This situation
would certainly be Inequitable In' that many large Industries
throughout the country Have already received construction
grant funding and will now be relieved of ICR repayments,
while Industries in projects such as ours will be denied
grant assistance.
As I have described, passage of the Stafford amendment
would have a devastating impact upon our project. I am
sure It would also severly Impact many other projects
throughout the State of California. Unfortunately, most
other municipalities In our situation appear to be unaware
of the potential Impact of the Stafford amendment to
their projects. While the repeal of ICR was subject to
wide-scale public participation and many public hearings,
the proposed limit on Industrial capacity funding has not
been the subject of widespread discussion.
-------
Leon Panetta July 23, 1980
H.R. 6667 Page 5
On behalf of the citizens of Watsonville I wish to thank
you again for your continued assistance In resolving the
many problems we have faced In complying with requirements
of the Environmental Protection Agency. If you should
require additional background Information concerning the
Impacts of the proposed Stafford amendment on our project,
please contact Christine A. Kahr, the City's consulting
engineer, at (^08) 722-3551. We would also appreciate
your suggestions for contacting other appropriate Indivi-
duals who should be made aware of the potential adverse
consequences of the Stafford amendment.
Very truly yours,
11 I am Johns ton
"Mayor
/ta
-------
(Utig of tflmtmtrill*
CITY HALL
GLOVERSVILLE. NEW YORK
12078
MAVOR
LOUIS NICOLELLA
773-7521
CITY ATTORNEY
ALFRED E. GERAGHTY
729-7483
CITY CLERK
MARIO S. BALZANO
773-7527
COMMISSIONER OF FINANCE
LOUIS COCO
773-7527
December 29, 1980
Industrial Users Study
Municipal Construction Division (WH-547)
Room 1217A
U.S. Environmental Protection Agency
401 M Street, S.W.
Washington, D.C. 20460
Dear Sirs:
Please accept this letter and the enclosed materials as comment
regarding the potential effect of Section 3 of Public Law 96-483,
Amendments to the Federal Water Pollution Control Act, as requested
in the Federal Register of December 1, 1980. Please note that
included are Resolutions of the City of Gloversville Common Council,
the City of Johnstown Common Council, the Fulton County Board of
Supervisors, and the Gloversville-Johnstown Joint Sewer Board. You
will see that these bodies desire you to treat these comments as
coming from each and all of their members.
The City of Gloversville has a population of approximately 18,000
persons and the City of Johnstown has a population of approximately
9,000 persons. Fulton County, within which they are located, has a
total population of approximately 50,000 persons within the area of
533 square miles. The economic base of Fulton County is nearly entirely
dependent on the manufacturing jobs located within the two Cities and
has been declining for many years. There are no significant State or
Federal installations and no large institutional employers. Somewhat
more than half of the manufacturing jobs are in the leather industry,
and these are primarily in tanneries. There are also textile dyeing
and finishing plants and miscellaneous individual factories producing
adhesives, phonograph records, refrigeration equipment, and marine
hardware. Present records indicate that most of the thirty factories
would exceed the 50,000 gallons per day sanitary waste equivalent
cut-off. In fact, the primary reason for these firms to be located in
Fulton County is the excellent quality and quantity of water available
for industrial use.
KNOWN THROUGHOUT THB WORLD FOR OLOVC TANNAGE LEATHERS
-------
Industrial Users Study
U.S.E.P.A.
December 29, 1980
Page 2
The relatively large number of firms may be misleading in that
nearly all are small businesses within their respective industrial
classifications. In fact, Fulton County was designated as an "Area
of Substantial Unemployment-Labor Surplus Area" by the Assistant
Secretary of Labor for Employment and Training as noted in the Federal
Register of June 13, 1980. Even more significant is the fact that
Fulton County has been so listed for nearly every year since 1960.
Additionally, the City of Gloversville has been and continues to be
certified as exceeding the minimum levels of physical and economic
distress for Small Cities pursuant to the Department of Housing and
Urban Development UDAG Program.
The Gloversville-Johnstown Joint Wastewater Treatment Facility
is currently involved in an upgrading and expansion under the 201
Program. Step 1, Facility Planning, was begun in 1978 and will not
be completed until late 1981 or early 1982. The reasons for these
delays are being stated in comments being submitted by Stearns §
Wheler, our consulting engineers (copy attached). As a result, our
financing of the improvements will bear the full impact of Public Law
96-483. By the enclosed table of flow and other waste treatment criteria,
you will see that our Facility is essentially an industrial plant. From
a population base of less than 30,000 persons comes an average flow of
8.6 million gallons per day, a BOD loading averaging 49,059 pounds per
day, and a solids loading averaging 54,725 pounds per day. This com-
pares with an expected loading of domestic sewage, based on population
alone, of 3.0 million gallons per day, and 3,500 pounds per day of BOD,
and 5,880 pounds per day of solids. The portion attributable to indus-
trial use is thus 65% on flow, 93% on BOD, and 89% on solids, or 82.3%
overall.
To understand the magnitude of the impact it is necessary to com-
pare the Federal share before and after the passage of Public Law
96-483. Our consulting engineers made a preliminary cost estimate of
$25,000,000 in the first quarter of 1979. AFederal share at 75% of
the total would be $18,750,000. If just the 17.7% of domestic use is
funded at 75% the Federal share would be only $3,318,750. This is
a difference of $15,431,250! This is over 60% of the cost of upgrading!
What we have in our community is a potential crisis of overwhelming
proportions. Could we expect small family-owned corporations to commit
themselves to waste-treatment allocations of greater dollar value than
their own physical plant and equipment? Yet we would be forced by NPDES
enforcement to drive them away if we chose not to upgrade. Gloversville
and Johnstown's combined sewer budgets exceed $2 million for 1981. 0§M
costs, existing debt service, on-going engineering fees, and other re-
lated costs are covered therein and will continue. Bonding all the non-
Federal costs of upgrading at current interest rates of 9% or more will
double these budgets. We would be particularly likely to have a domino
effect. If one firm left, the costs to the remaining would increase.
-------
Industrial Users Study
U.S.E.P.A.
December 29, 1980
Page 3
Gradually at first and accelerating with time the costs would climb
beyond the resources of even the strongest firms.
I have complained many times about the tendency of Federal Laws
and Regulations to make Grantees the executioner of jobs in their own
community. The passing of the carrot of funding assistance always
brings the passing of the stick of enforcement, be it pretreatment,
inflow elimination, ICR, or whatever. Now we are even losing the
carrot! Is there something wrong with a City depending on manufac-
turing jobs? Are we supposed to eliminate any jobs we have outside
the commercial and service fields? Why must there be a bias against
a City which has good water resources? Why must my City die to save
a few pennies for a retiree in the Sunbelt?
I will be instructing every City Department to be prepared to
submit any additional information requested. I will send any City
Official or travel myself to any forum that wants to hear of our
plight. I want to be certain that the constructors of this guillotine
poised over the future of Gloversville and Johnstown understand what
they have done.
Normally I would close my comments with a stock phrase expressing
trust in the reader's good judgement, but this time I cannot. Instead
I must pray and plead that anyone reading this letter will help to
change this unjust law. Please help save Gloversville and Johnstown
from an economic disaster! Please help us survive!
Sincerely,
Louis Nicolella
Mayor
LN:md
enc.
cc: The President of the United States
Hon. Daniel Patrick Moynihan, U.S. Senate
Hon. Alfonse D'Amato, U.S. Senate
Hon. Donald Mitchell, U.S. House of Representatives
Hon. Robert Flacke, Commissioner, N.Y.S.D.E.C.
-------
Milwaukee Metropolitan Sewerage District
735 North Water Street Milwaukee, Wisconsin 53202
414-278-3958
December 30, 1980
Thomas A. Whalen
Industrial Users Study
Municipal Construction Division (WH-547)
Room 1217A
401 H Street, S.W.
Washington, D.C. 20460
Dear Mr. Whalen:
The following comments are submitted by the Milwaukee Metropolitan Sewerage
District in response to your request for comments (1 December 1980 Federal
Register, 79573) on Section 3 of P.L. 96-483 (Stafford Amendment).
The Stafford Amendment will disrupt the planning and implementation of the
District's Water Pollution Abatement Program and is potentially devastating
to the wet industries and/or taxpayers in the District's service area.
Cost
Although the impact of the Stafford Amendment cannot be precisely
determined until the regulations implementing the Amendment are known,
preliminary calculations establish, without doubt, the gravity of its
potential impact.
The added local cost due to the Stafford Amendment (whether charged
directly to industry or financed by all users via the property tax) is
estimated at about $114 million (1980 dollars—financing costs not
included). If industry were direct-billed or assessed for non-eligible
industrial capacity, the 10 major wet industries in the District would
bear up to $81 million of that total. Faced with added costs ranging from
$1.2 million to $25 million, many of these 10 industries would be hard
pressed to justify expansion and/or continued operation in the Milwaukee
area. The added costs to the 90-100 other industries affected by the
Stafford Amendment could likewise mean the difference in their continued
viability.
If the $114 million in non-grant-eligible costs were financed through
local taxes, area taxpayers would absorb an approximate 10-1/2% increase
in the local costs currently estimated. The local share for the Milwaukee
Water Pollution Abatement Program is currently estimated at $1.1 billion.
Metropolitan Sewerage District of the County of Milwaukee
Sewerage Commission of the City of Milwaukee
Metropolitan Sewerage Commission of the County of Milwaukee
-------
Me. Thomas A. Whalen -2- December 30, 1980
Lest the 10-1/2% increase seem in any way acceptable, it must be
understood the current court-ordered Water Pollution Abatement Program
will already more than quadruple the current tax rate for Sewerage
District capital charges. In addition, it should be noted that the County
of Milwaukee has taken the position that current estimates of District
capital needs will probably cause it to exceed the statuatory debt limit
of the County. An additional increase of 10-1/2% in capital requirements
will only serve to further aggravate the impact of pollution abatement
costs on homeowners, particularly the low and fixed income homeowners who
could be forced from their homes by the increase.
Administrative Impacts
The increase in local costs has been calculated using known industrial
flows and waste strengths. The Stafford Amendment also carries with it
significant additional administrative costs which cannot yet be
quantified. The following types of administrative problems will further
increase costs and, at the same time, drain valuable staff time from the
tightly scheduled Hater Pollution Abatement Program currently at hand:
Added> man-hours for project design and grant application needed to
segregate industrial capacity in each project.
Added manpower and equipment to verify industrial flows and waste
strengths.
Added manhours/legal costs to resolve disputes regarding flow and waste
strengths used to exempt industrial capacity from Stafford Amendment
requirements and regarding capital cost distribution challenges by
industry.
Added manhours to evaluate alternatives for financing non-eligible
industrial capacity—i.e., adding costs to tax rolls, bonding, or
direct billing or assessing industrial users. Using special
assessments would involve a large number of manhours to prepare and
collect assessments and to resolve resultant disputes and litigation.
Added manhours (and possible tax increases) to resolve the administra-
tive problems involved in reallocating costs when an affected industry
either leaves or moves into the District.'
Overall Concerns
Besides added costs and administrative difficulties, the Stafford Amendment
has significant drawbacks as an alternative approach to Industrial Cost
Recovery (ICR). Among its shortcomings are the following:
The Stafford Amendment is much more harsh (both on local communities
and industries) than the original ICR. It does not provide for local
administrative costs and thus, in effect, taxes local communities in
order to save Federal grant dollars.
-------
Mr. Thomas A. Whalen -3- December 30, 1980
The Stafford Amendment is particularly damaging to older industrial
cities. Enormous unanticipated charges for sewerage capac.ity will only
aggravate the flight of industry from cities which sorely need to pre-
serve their tax bases. Increasingly burdened taxpayers will likewise
be encouraged to flee from districts facing large sewerage projects.
The net effect of the Stafford Amendment may well be to reduce the
sources of local funds available for cleaning up the Nation's waters.
The Stafford Amendment provides yet another example of retroactivity
— a regulatory approach which Congress has specifically told EPA to
avoid. An assumption which seems to underlie the Stafford Amendment
is that if design of a project has not started, then the disruption
caused by this regulatory change is acceptable. It is not acceptable.
EPA and Congress must realize that the planning for large, complex
projects such as the District's is not easily/quickly restructured in
the face of new or altered regulations. Over two years of planning
have been recently completed, all based upon regulations which did not
include the Stafford Amendment. The cost of a delay in the District's
construction program is estimated to be in excess of $300,000 per day
— in inflationary costs alone. If projected industrial loadings
change significantly as a result of the Stafford Amendment, significant
— and costly — planning revisions could be required. Thus, much of
the grant money EPA avoids paying for industrial capacity could be
spent on added planning to comply with the Stafford Amendment.
In summary, the District strongly urges that Congress repeal the Stafford
Amendment at the earliest possible date. The goal of cleaning up the
Nation's waters will only be further delayed and frustrated by the
Amendment's implementation.
If I can provide any additional information, or clarify any of the above
comments, please do not hesitate to contact me.
Sincere!
Thomas F. Wolf
Acting Executive Director
TFW/DL/sa
3284A
-------
EXHIBIT A
Company
Green Giant Co.
Watsonville Canning Co.
Del Mar Foods
Ametek
Richard A. Shaw Co.
J.H. Smucker Co.
J.J. Crosettl
S. Martlnelll & Sons
John Inglls Frozen Foods
Coast Counties Canning Co.
Ht. Madonna Apple Co.
Frank Oliver and Son
Paul Hiura Apple Co*
Meadow Gold
H.R. Valentine
Speas
Heinz
Total
Estimated Additional Cost to
Industries to Replace Federal
Share of Construction Grant (1)
$1 ,780,000
1,390»000
912,000
867,000
690,000
489,000
1*77,000
453,000
363,000
327,000
111,000
105,000
99,000
81,000
42,000
39,000
33,000
$8,258,000.
(1) 1979 dollars (ENR 3600); Wastewater Treatment Plant
Improvements to meet California Ocean Plan standards;
Includes only funds to replace 75% federal grant and
assumes that State grants (121%) are still available.
-------
IV. FUNDING ALTERNATIVES
The appropriate degree of Federal and non-
Federal participation in the funding of
publicly owned treatment works.
-------
IV. FUNDING ALTERNATIVES
The purpose of this section is to respond to the request of Congress to
include in the ICR report a consideration of the appropriate degree of
Federal and non-Federal participation in the funding of publicly owned
treatment works. In dealing with this request, EPA has developed a series
of possible alternatives which are intended to reflect the concerns of the
many parties involved in this issue. The list of alternatives is not
intended to be exhaustive or exclusive. The absence of an alternative from
this list does not mean that EPA would view it with disfavor. Furthermore,
the list does not indicate a preference for any particular action, but is
intended to present a range of possible alternatives, along with their
probable impacts. It should also be noted that this list is limited to
consideration of alternatives in the context of current project category
eligibilities and a 75 percent Federal share. Changes in eligibility or
Federal share are not addressed.
The alternatives to ICR are identified below and briefly characterized.
They are grouped according to those which would retain ICE but modify its
provisions and those which would replace ICE with different requirements.
Retain ICE. But Modify Provisions
1. Retain ICE, but do not apply it to any Step 3 project proposed by a
grantee which is the result of carrying out an approved Step 1 project to
plan a facility to treat wastewater, when the grantee received the Step 1
approval before a specified date.
o This alternative delays implementation of ICE to avoid disrupt-
ing the planning/construction process where facility planning is
well under way.
o Costs of delay and replanning would be eliminated for active
projects which missed or will miss the current deadlines.
o Costs to the Federal government would depend on the cut-off date
specified for Step 1, but presumably most of the dollars identi-
fied under short-term effects in this report (approximately $1.2
billion) would revert to Federal funding.
o In the long run, ICE would be fully implemented, but communities
and industries would be given more time to plan for and adjust
to its impacts.
2. Retain ICE, but modify Section 213 of the Water Pollution Control
Act to provide loan guarantees to municipalities for that portion of the
FOTW constructed to serve major industrial users. The interest rate should
not exceed that of the Dow-Jones municipal average rate. The municipality
should be required to implement a local capital recovery system based on
letters of intent from major industrial users.
IV-1
-------
o This alternative ensures that the implementation of ICE does not
prevent the construction of POTWs where the per capita cost im-
pact of the industrial user portion is great.
o The loan guarantee provision could be limited to communities
where the per capita cost impacts of ICE are great, and could be
tied to ability to pay.
o The suggested provision for a local capital recovery system
ensures that local costs for the industrial portion are borne by
industrial users.
3. Retain ICE, but increase the Federal assistance available to indus-
trial users of POTWs from other Federal agencies that deal with industrial
development (e.g., Department of Commerce, Small Business Administration).
o This alternative focuses financial help on individual industrial
users who may need some assistance if required to raise capital
for participation in a POTW. For some industries, self-treat-
ment is not a viable alternative.
o Federal costs would depend on the degree of assistance given,
but would be much less than funding industrial capacity across
the board.
o Federal and grantee administrative costs would probably increase
due to involvement of additional Federal agencies and implemen-
tation of guidelines on a case-by-case basis to determine the
eligibility of each industrial user for Federal assistance.
4. Retain ICE, but provide that POTW capacity for treatment of waste by
industrial users be funded by the industrial users, without financial assist-
ance from the grantee.
o This alternative prevents municipalities from subsidizing indus-
trial use of POTWs at the expense of residential and commercial
users. The concept of "proportionality," now a required part of
user charge systems, would be expanded to capital costs as well.
o Federal costs would not be increased under this alternative.
5. Retain ICE, but reduce or eliminate current tax incentives available
for pollution control investments (five-year amortization pollution control
expenditures and use of industrial development bonds).
o This alternative increases the cost of self-treatment, making it
comparable to the increased costs of joint treatment under ICE,
and thus eliminating possible economic disadvantage for those
unable to self-treat because of location.
IV-2
-------
o Cost to industrial dischargers would increase, as would tax rev-
enues to the Federal government.
o True cost equity between direct and indirect dischargers is dif-
ficult to establish because costs vary greatly from one local
situation to another.
Replace ICE
6. Repeal ICE so that industrial capacity could be funded, but do not
reinstitute the ICR requirement.
o The purpose of this alternative is to fund treatment of indus-
trial flow on the same basis as waste from commercial and domes-
tic sources.
o Federal costs would be greater than under either ICE or ICR, but
the additional grant funds would be partially offset by increased
corporate income tax revenues from improved corporate earnings,
as expenses associated with ICE or ICR would no longer be used
to reduce taxable earnings.
o This would shift the cost balance in favor of joint treatment
for some industries, but not all. For many industrial users,
particularly large-volume users, the user charge rate would
still be the primary determinant.
o The administrative complexity of ICE and the costs of delay from
its implementation would be avoided.
7. Replace ICE with a requirement that all users of a POTW make debt
service payments proportionate to their use of the POTW. (About 70 percent
of our grantees already comply with this proposed requirement.)
o The purpose of this alternative is to fund industrial waste on
the same basis as waste from commercial and domestic sources,
and to ensure that industrial users are not subsidized by other
users in debt service payments.
o Present law requires proportionality in user charge systems, but
not debt service charges. Some grantees now use rate methods
for debt service which favor larger users at the expense of
smaller users.
o The proposed requirement, in furthering proportionality, would
require approximately 30 percent of grantees to develop new debt
service charge systems. As a result, many grantees would need
to alter their method of financing the local share of POTW con-
struction costs.
IV-3
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8. Replace ICE with a requirement that all industrial users of a
Federally assisted POTW pay a uniform charge for process wastewater dis-
charged (e.g., two cents per thousand gallons), with all collections, audits,
and enforcement proceedings being undertaken by the Treasury Department, and
all revenues being deposited in the U.S. Treasury. The rate could be set at
a level necessary to recover, nationwide, the same amount that would have
been recovered by the previous ICR requirement, estimated to average $60
million per year.
o This alternative recovers, at a uniform national rate, a portion
of the Federal funding for treatment of industrial wastewater,
and equalizes capital share costs to industrial users of POTWs.
o Under the ICE requirement, costs for industrial users vary great-
ly from community to community, depending upon such factors as
economy of scale, seasonal versus uniform discharges, and the
level of treatment required—secondary or advanced. A uniform
charge based on flow would equalize these factors.
o A charge based solely on flow would encourage water conservation
to a greater extent than charges which are also based on
pollutant loadings.
o Administration of a uniform national recovery charge would be
simpler and less costly than ICE or the old ICR system.
o This alternative would place the cost recovery program in the
Treasury Department, the logical agency to administer a revenue
program.
9. Repeal ICE and modify the user charge proportionality requirement to
allow grantees to charge higher rates to large-volume users.
o The purpose of this alternative is to fund treatment of indus-
trial flow on the same basis as waste from commercial and domes-
tic sources, and to give grantees added flexibility in develop-
ing user charge systems.
o The higher rates permitted for large-volume users would encourage
water conservation and would permit grantees who have already
instituted this measure for water users to develop compatible
requirements for POTW users.
10. Replace ICE with a requirement that each grantee develop and imple-
ment a long-term financial plan for reconstruction and expansion of the
existing and/or proposed wastewater treatment facilities. This requirement
could apply to all new grants, as well as to previous grants where grantees
wish to be exempt from the requirement for proportionate recovery of local
capital costs under Public Law 84-660.
IV-4
-------
The purpose of this alternative is to fund treatment of indus-
trial flow on the same basis as waste from commercial and
domestic sources, and to foster complete local economic self-
sufficiency for POTWs in the future.
The long-term financial plan could identify for the grantee
future costs for reconstruction and expansion with sufficient
lead time so that the local community could make arrangements
for raising the capital costs.
Once the long-range financial requirements are known, this knowl-
edge could spur both grantees and users to undertake more exten-
sive water conservation measures, thus reducing future construc-
tion expenditures.
Although administrative costs related to ICE would be eliminated,
there would be additional costs in administering the requirement
for a long-term financial plan.
IV-5
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V. NATIONAL EFFECT
Analysis of communities affected by the
Industrial Cost Exclusion in each State.
-------
V. NATIONAL EFFECT
For the States that provided comprehensive data to us directly, or in-
directly .through the Regional Offices of the Environmental Protection Agency
(EPA), the analysis is divided into two sections. The first section, the
short-term effect, is an analysis of those publicly owned treatment works
that may be constructed prior to 1985. The second section, the long-term
effect, is an estimate of those facilities that are needed during the years
1985 to 2000.
In the short-term effect section we have provided an analysis of the
population, flow into publicly owned treatment works, and construction costs
that may be affected by the Industrial Cost Exclusion prior to 1985. The
largest industrial groups that may be affected in each State are noted.
Also noted are the total industrial flow and the total cost of constructing
the industrial portion of the publicly owned treatment works in each State.
The industries that are affected are contained in Division A, and D, E or I
of the Standard Industrial Classification Manual. Also, we have provided a
list of the specific communities that may be affected, their population, and
the estimated cost of constructing the industrial portion of the planned
publicly owned treatment works.
The population of each community is the latest estimate available or
from the 1970 Census. The unemployment data are based upon the October 1980
unemployment rate for the county in which the community is located.
In the long-term effect section we have provided an estimate, based upon
the 1980 Needs Survey, of the number of facilities that may be affected be-
tween the years 1985 and 2000. For the purpose of this report, an estimate
of the number of facilities and cost that may be affected, rather than the
name, is important to quantify the potential effect of the Industrial Cost
Exclusion.
Because the Needs Survey contains industrial flow rather than users of
each facility, the analysis is based upon those facilities that have future
pollution control needs and substantial present industrial flow. Substan-
tial industrial flow is considered in this study to be an excess of 100,000
gallons per day and over 16 percent of the total flow into the publicly
owned treatment works. The 16 percent figure approximates the proportion of
industrial capacity that has been constructed in publicly owned treatment
works since the inception of the construction grants program. The basis for
the estimate of the cost of construction is the cost of previous comparable
construction, the consultants' preliminary estimate, or an EPA cost estimat-
ing procedure. The estimate of the number of communities under 10,000 popu-
lation that may be affected is provided because they have been determined to
be eligible for Farmers Home Administration loan or grant funds.
V-l
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INDUSTRIAL COST EXCLUSION (ICE)
ESTIMATE OF NATIONAL EFFECT
When statistical data are taken from a large population, observed
behavior becomes more uniform and sample observations more accurately
reflect the true population.
For this report, the percentage of cumulative construction grant
allotments for each State represents an accurate estimate of the relative
level of other populations, i.e., percentage of industrial establishments
and percentage of human population. It follows that the cumulative
allotment percentage indicates the percentage effect of the Industrial Cost
Exclusion, since there is a correlation between percentage of allotments,
census population, and industrial establishments. There would also be a
logical relationship between percentage of cumulative allotments,
industrial/municipal wastewater flow, and the grant funds to be excluded due
to major industrial users.
Correlation
*No. Industrial
Establf
*1980 Population Establishments **Cumu1ative Allotments
Penna. 11.866 x 106 18,735 $1,562.7 x 106
Nation 226.5 x 106 359,928 31,580 x 106
% 5.2 5.2 ***4.59
*Bureau of Census **Clean Water Fact Sheet Dec. 1980
***If 4.95 percent were adjusted upward for Talmadge/Nunn, it would
approach 5.2 percent.
If one State out of fifty correlates this well, then a region or the
Nation may correlate equally well. In the EPA's Region III, a survey
indicated that $54.8 million per year of industrial funding would be
excluded if one assumes an appropriation of $500 million per year for the
region. This suggests a national industrial cost exclusion of $430 million
at an assumed one-year national appropriation of $3.925 billion. Put
another way, 10.955 percent of any appropriation would be excluded.
Conclusion
Estimated Size of Industrial Cost Exclusion
Annual Nationwide
Appropriation Industrial Cost Exclusion
$2.3 billion $253 million
$2.4 $264
$2.5 $275
$3.3 $363
$3.4 $374
$3.5 $385
V-2
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UNITED STAT. S OF AMERICA
I. Short Term Effect (From State Reported Data and Excluding Missouri and
Nebraska)
A. Overview
Four hundred two communities ranging in size from 600 to over 3,500,000
with an average population of 97,900 will be affected. The population of
all the communities affected is over 39,274,000. The daily flow into the
affected POTW's is 7,920 mgd of which 1,254 mgd or 16 percent is contributed
by 3,288 affected industrial users. The estimated POTW construction cost is
$8.16 billion of which the industrial share is $1.26 billion or 15 percent.
The largest industrial groups impacted are:
(1) Food and Kindred, 228 mgd, $293 million,
(2) Fabricated Metals, 46 mgd, $96 million,
(3) Chemical and Allied Products, 66 mgd, $67 million,
(4) Electrical and Electronic Machinery, 29 mgd, $58 million,
(5) Transportation Equipment, 46 mgd, $55 million,
(6) Textile Mill Products, 33 mgd, $37 million.
B. Communities with populations less than 100,000
Three hundred thirty-three communities ranging in size from 600 to
100,000 with an average population of 24,800 will be affected. The
population of all the communities affected is over 8,244,500. The daily
flow into the affected POTW's is 2,154 mgd of which 421 mgd or 20 percent is
contributed by 1,065 affected industrial users. The estimated POTW
construction cost is $3.1 billion of which the industrial share is $.5
billion or 16 percent. The largest industrial groups impacted are:
(1) Food and Kindred Products, 116 mgd, $161 million,
(2) Electrical and Electronic Machinery, 16 mgd, $42 million,
(3) Textile Mill Products, 24 mgd, $30 million,
(4) Fabricated Metals, 18 mgd, $22 million,
(5) Chemical and Allied Products, 18 mgd, $22 million,
(6) Transportation Equipment, 20 mgd, $20 million.
C. Communities with populations between 100,000 and 1,000,000
Sixty-five communities ranging in size from 100,000 and 919,000 with an
average population of over 318,000 will be affected. The population of all
the communities affected is over 20,689,000. This daily flow into the
affected POTW's is 4,575 mgd of which 670 mgd or 15 percent is contributed
by 1,499 affected industrial users. The estimated POTW construction cost is
$4.54 billion of which the industrial share is over $.7 billion or 16
percent. The largest industrial groupings are:
V-3
-------
UNITED STATES OF AMERICA
(1
(2
(3
(4
E5
6
Food and Kindred Products, 104 mgd, $128 million,
Fabricated Metals, 26 mgd, $72 million,
Chemical and Allied Products, 44 mad, $42 million,
Transportation Equipment, 26 mgd, $34 million,
Paper and Allied Products, 49 mgd, $17 million,
Electrical and Electronics Machinery, 13 mgd, $16 million,
D. Communities with populations over 1,000,000
Four communities ranging in size from 1,040,000 to 3,500,000, with
an average population of 2,585,000, will be affected. The population of
all the communities affected is over 10,340,000. The daily flow into
the affected POTW's is 1,190 mgd of which 133 mgd, or 11 percent is
contributed by 724 affected industrial users. The estimated POTW
construction cost is $517 million of which the industrial share is $44
million, or 9%. The largest industrial groups impacted are:
11}
1) Food and Kindred, 8 mgd, $4 million,
,2) Petroleum and Coal Products, 15 mgd, $3 million,
(3) Chemical and Allied Products, 4 mgd, $2 million,.
(4) Fabricated Metals, 3 mgd, $2 million,
' Paper and Allied Products, 3 mgd, $2 million,
Primary Metal Products, 2 mgd, $.5 million.
V-4
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National Summary
(Excluding Missouri and Nebraska)
I. Short-Term Effect (From State Reported Data)
Number of communities affected 402
Communities
0 - 3,500
3,600 - 10,000
10,100 - 50,000
50,000 - 100,000
100,100 - soo,ooe
500,100 - 1,000,000
over - 1,000,000
Total Affected
Number of
Communities
56(13.9%)
71(17.7%)
156(38.8%)
50(12.4%)
51(12.7%)
14( 3.5%)
4( 1.0%)
402 100.0%
Population
120,300( .3%)
487,700( 1.3%)
3,747,000( 9.6%)
3,550,000( 9.1%)
11,096,000(28.6%)
9,537,900(24.5%)
10,340,100(26.6%)
38,879,000 100.0%
Industrial
Portion
47,441,000( 3.6%)
66,867,000( 5.1%
291,113,000(22.3%)
118,093,000( 9.0%
421,042,000(32.2%
300,837,000(23.0%)
62.422.000( 4.8%)
2,422,OOP(
,415,000 1(
Communities that exceed specified unemployment rate (National rate = 7.1%)
+ Exceed State rate yet below National rate 37
•H- Exceed National rate 123
+++ Exceed State rate wtuch exceeds National 61
POTW flow affected
Industrial flow
7,919.8 Million Gallons per Day
1,254.3 Million Gallons per Day
15.8% of POTW flow
POTW construction cost affected
Industrial portion
$8,158.9 Millions
$1,307.4 Millions
16% of POTW cost
Average industrial cost $ 3.25 Millions per community
Average industrial cost $33.63 per person
Average industrial cost $92.48 per household
II. Long-Term Effect (From EPA Needs Survey)
Total needed facilities with substantial industrial flow 1,382
Needed facilities serving less than 10,000 population 764 55% of total
POTW construction cost $16.338 Billions
Industrial portion $3.538 Billions 22% of POTW cost
V-5
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ESTIMATE OF PERCENTAGES TO BE AFFECTED
402 Communities were reported by States as being affected:
83% of those reporting were from communities of less than 100,000
70% of those reporting were from communities of less than 50,000
32% of those reporting were from communities of less than 10,000
38,879,000 Total population affected as reported
20% of those reporting were from communities.of less than 100,000
11% of those reporting were from communities of less than 50,000
2% of those reporting were from communities of less than 10,000
$1,307,444,000 Total industrial cost as reported
38% of those reporting were from communities of less than 100,000
31% of those reporting were from communities of less than 50,000
9% of those reporting were from communities of less than 10,000
32% of reported affected industrial users are in communities of less than 100,000
38% of reported affected POTW costs are in communities of less than 100,000
27% of reported affected POTW flows are in communities of less than 100,000
34% of reported affected IND flows are in communities of less than 100,000
THE MAJOR INDUSTRIAL GROUPS AFFECTED BY THE INDUSTRIAL COST EXCLUSION
(Based upon State reported data)
Major Industrial Group
1) Food and Kindred Products
2) Fabricate Metal Products
3) Chemical and Allied Products
4) Electrical and Electronic Equipment
5) Transportation Equipment
6) Textile Mill Products
7) Paper and Allied Products
8) Machinery except Electrical
9) Primary Metal Industries
10) Leather and Leather Products
11) Rubber and Plastic
12) Petroleum and Coal Products
Amount
549,000,000
183,000,000
130,700,000
117,700,000
104,600,000
65,400,000
52,300,000
39,200,000
26,100,000
13,100,000
13,100,000
13.100.000
1,307,400,000
% of Total
42
14
10
9
8
5
4
3
2
1
1
1
100
V-6
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NATIONALLY REPORTED AFFECTED INDUSTRIAL GROUPING
Cost
Flow
Cost/Flow and Rank
1 ) Food
2) Fab Met
3) Elect
4
5
6
7
8
Chem
Trnspt
Text Mill
Paper
Mach
9) Prim Met
10) Leather
11} Rubber
12) Petro
$293,210,000
95,600,000
57,880,000
64,740,000
54,640,000
34,800,000
24,100,000
17,900,000
16,180,000
7,300,000
6,890,000
3,540,000
227.53 mgd
46.14
29.06
65.42
46.37
32.00
87.73
12.60
14.03
2.40
5.98
18.16
$1 .29 per gpd
2.07
1.99
.99
1.18
1.09
.27
1.42
1.15
3.04
1.15
.19
(8)
(ID
(10)
(3)
(7)
(4)
(2)
(9)
(5)
(12)
(6)
(1)
$676,780,000 587.42 mgd $1.15 per gpd
COMPOSITE OF INDIVIDUAL POPULATION CATEGORIES
Population per
community
Population per
Industrial user
Industrial users
per community
Less than
100,000
24,800
7,741
3.2
100,000 to
1,000,000
318,292
13,802
23
Greater than
1,000,000
2,585,000
14,282
181
Average
97,697
11,945
8.2
POTW flow per
population
Industrial flow
per population
POTW cost per
population
Industrial cost
per population
POTW cost per
community
Industrial cost
per community
POTW cost per
POTW flow
Industrial cost per
Industrial flow
261 gpd/person
51 gpd/person
221 gpd/person 115 gpd/person 202 gpd/person
39 gpd/person 13 gpd/person 32 gpd/person
$376 /person
$62 /person
$9,314,000
$1,526,000
$1 .44 /gpd
$1.21 /gpd
$220 /person
.$34 /person
$69,850,000
$10,950,000
$.99 /gpd
$1.02 /gpd
$50 /person
$13 /person
$129,250,000
$11,100,000
$.43 /gpd
$.33 /gpd
$208 /person
$32 /person
$20,296,000
$3,145,000
$1 .03 /gpd
$1 .00 /gpd
V-7
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STATE OF ALASKA
It has been reported that the communities and industries in
Alaska will not be affected by the industrial cost exclusion.
V-8
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STATE OF ALABAMA
I. Short Term Effect (From State Reported Data)
Five communities, ranging in size from 14,000 to 36,000 with an
average population of 24,600, will be affected. The combined population
of the communities affected is over 123,000. The daily flow into the
affected POTWs is 40 mgd of which 3 mgd, or 8 percent, is contributed by
11 affected industrial users. The estimated POTW construction cost is
$87 million of which the industrial portion is over $3 million. The
largest industrial groups affected are:
(1) Food and Kindred Products, 1 mgd, $1 million,
(2) Textile Mill Products, 1 mgd, $1 million,
(3) Primary Metal Industries, .5 mgd, $.8 million.
Industrial
Community Population Portion
+++Anniston 31,000 $1,130,000
+++Boaz 14,000 1,200,000
H-H-Cullman 22,000 789,000
+++Gadsen 36,000 1,000,000
Opelika 20,000 472,000
TOTAL 123.000 $4,591,000
+++ Exceeds State unemployment rate of 8.7% which exceeds the National rate.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 28 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated to
be $84 million of which the industrial portion would be $29 million, or
35 percent. Of these 28 needed facilities, 15, or 54 percent, will serve
communities with populations of less than 10,000.
III. Potential Effects (Data from Other Sources)
Various public and/or private sources have reported that the communities
shown below could be affected. In many cases, the information presented did
not fully or clearly identify the effect of the industrial cost exclusion
(ICE) on the community.
Industrial
Community Population Portion
++Chatoon 1,000 ?
•m-Gadsen 54,000 ?
•m-Livingston 3,500 ?
TOTAT 58,500 I
++ Exceeds National unemployment rate of 7.1%.
+++ Exceeds State unemployment rate of 8.7% which exceeds the National rate.
V-9
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STATE OF ARKANSAS
I. Short Term Effect (From State Reported Data)
The Little Rock metropolitan area, with a population of 168,500, and
25 smaller communities, ranging in size from 1,000 to 86,000, will be
affected. The combined population of the communities affected is over
670,000. The Little Rock area POTW has a daily flow of 18 mgd of which
2 mgd, or 11 percent, is contributed by 13 affected industrial users. The
25 smaller communities have a daily flow of 93 mgd with 70 impacted
industrial users contributing 26 percent, or 24 ntgd, of the total flow. The
combined estimated POTW construction cost is $162 million of which the
industrial portion is $34 million. The cost in Little Rock is $30 million,
with an industrial portion of $3 million; the 25 smaller communities have a
POTW construction cost of $132 million of which the industrial portion is
$32 million. The largest industrial groups affected are:
A. In Little Rock,
Food and Kindred Products, 1 mgd, $2 million,
B. In the 25 remaining communities,
Food and Kindred Products, 19 mgd, $25 million.
Industrial
Community Population Portion Community
Industrial
Population Portion
•H-fAlma
Atkins
Bentonville
Berryville
Clarksville
•m-Clinton
Decatur
Dequeen
Fayetteville
Harrison
Huntsville
Jonesboro
Little Rock
1,600
4,000
19,500
4,500
4,600
1,000
3,000
3,900
31,000
7,200
2,600
25,000
168,500
$
380,000
180,000
1,370,000
900,000
310,000
670,000
650,000
1,030,000
2,870,000
150,000
870,000
1,530,000
2,700,000
++Monticello
++Morrilton
Murphysboro
Nashville
N. Little Rock
Rogers
Siloam Spring
Pine Bluff
Springdale
Stuttgart
•mTexarkana
+++Van Buren
West Memphis
TOTAL
12,600 $ 760,000
6,800 335,000
1,400 840,000
6,500 770,000
73,000 203,000
20,000 2,460,000
15,000 234,000
57,500 5,700,000
51,000 5,930,000
10,500 120,000
86,000 1,224,000
8,500 900,000
45,500 420,000
670,700 $33,436,000
Exceeds National unemployment rate of 7.1%.
Exceeds State unemployment irate of 7.3% which exceeds the National rate,
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 33 needed facilities (treatment
plants and interceptors) each have substantial industrial flows. That is
eash has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated to
be $80 million of which the industrial portion would be $20 million or
25 percent. Of the 33 needed facilities, 23 will serve communities with
populations of less than 10,000.
V-10
-------
STATE OF ARIZONA
I. Short Term Effect (From State Reported Data)
The Phoenix metropolitan area, with a population of 919,000, and 3
smaller communities, ranging in size from 18,000 to 35,000, will be
affected. The combined population of the communities affected is over
1,000,000. The Phoenix area POTWs has a daily flow of 128 mgd of which
10 mgd, or 8 percent, is contributed by 39 affected industrial users.
The three smaller communities have a daily flow of 11 mgd with 10 impacted
industrial users contributing 30 percent, or 3 mgd, of the total flow.
The estimated POTW construction cost is $83 million of which the industrial
portion is $10 million. The cost in Phoenix is $77 million, with an
industrial portion of $6 million; the 3 smaller communities have a POTW
construction cost of $14 million with 10 affected industries of which
the industrial portion is $5 million. The largest industrial groups
affected are:
A In Phoenix,
(1) Electrical and Electronic Machinery, 6.9 mgd, $3 million,
(2) Food and Kindred Products, 1.6 mgd, $1 million,
(3) Fabricated Metal Products and Machinery, .5 mgd, $.7 million.
B - In the three remaining communities,
(1) Electrical and Electronic Machinery, 1.4 mgd, $3 million,
(2) Fabricated Metal Products and Machinery, .6 mgd, $1 million.
Industrial
Community Population Portion
++Casa Grande 18,000 $ 100,000
Chandler 30,000 4,400,000
•H-Flagstaff 35,000 900,000
Phoenix 919,000 5,200,000
TOTAL 1,002,000 $10,600.000
•H- Exceeds National unemployment rate of 7.U (Rate as of October 1980).
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that three needed facilities (treatment
plants and interceptors) each have substantial industrial flows. That
is each has an industrial flow over 100,000 gallons per day and more
than 16 percent of the total POTW flow. The construction cost is
estimated to be $50 million of which the industrial portion would be
$3 million or six percent. Of the three needed facilities, one will
serve a community with a population of less than 10,000.
V-ll
-------
STATE OF CALIFORNIA
I. Short Term Effect (From State Reported Data)
A. Overview
Sixteen communities ranging in size from 2,500 to over 3,500,000
with an average population of 595,000 will be affected. The combined
population of the communities affected is over 9,500,000. The daily
flow into the affected POTWs is 1,354 mgd of which 160 mgd, or 12 percent,
is contributed by over 479 affected industrial users. The estimated
POTW construction cost is $563 million of which the industrial portion
is $60 million, or 11 percent. The largest industrial groups affected
are:
(1) Food and Kindred Products, 42 mgd, $26 million,
(2) Petroleum and Related Industries, 18 mgd, $3 million.
B. Communities with populations under 100,000
Eleven communities ranging in size from 2,500 to 75,000 with an
average population of 31,000 will be affected. The combined population
of these communities is over 300,000. The daily flow into the affected
POTWs is 283 mgd of which 58 mgd, or 20 percent, is contributed by over
97 affected industrial users. The estimated POTW construction cost is
$110 million of which the industrial portion is $30 million, or 21
percent. The largest industrial groups affected are:
(1) Food and Kindred Products, 28 mgd, $20 million,
(2) Petroleum and Related Products, 3 mgd, $.6 million.
Community
++ Corning
•H- Eureka
++ Hughson
Malibu
•H- Manteca
++ Modesto
Industrial
Population Portion
Community Population
5,000
25,000
3,000
70,000
14,000
62,000
$ 27,000 ++0akview
700,000
1,400,000
75,000
300,000
10,100,000
Orange Co.
Santa Rosa
Vacavilla
Watsonville
TOTAL
2,500
75,000
51,000
22,000
15,000
Industrial
Portion
$ 100,000
5,100,000
13,000
950,000
12,000,000
334^500 $30,765,000
++ Exceeds National unemployment rate of 7.
C. Communities with populations between 100.000 and 1,000,000
Three communities, ranging in size from 320,000 to 800,000, will be
affected. The dally flow Into the affected POTWs 1s 280 mgd of which 22
mgd, or 8 percent, is contributed by 61 affected Industrial users. The
estimated POTW construction cost is $178 million of which the Industrial
portion 1s .$11 million or 6 percent. The largest Industrial groups
affected are:
Y-12
-------
STATE OF CALIFORNIA
(1) Food and Kindred Products, 11 mgd, $4.5 million,
(2) Petroleum and Related Industries, .1 mgd, $.1 million,
(3) Fabricated Metals, .8 mgd, $.5 million.
Industrial
Community Population Portion
Contra Costa Co. (WCA) 320,000 $ 600,000
San Francisco (City & Co.) 800,000 1,800,000
San Jose and Santa Clara 550,000 8,200,000
1.670,000 $10,600.000
Communities with populations over 1.000,000
Los Angeles City, with a population of 3,000,000, and Los Angeles
County, with a population of 3,500,000, have daily flows of 360 mgd and
430 mgd, respectively. In the City the industrial flow is 13 mgd, or 4
percent of the total flow; in the County, however, industrial flows
account for 66 mgd or 15 percent of the total flow. The estimated POTW
.construction cost in Los Angeles City is $200 million of which the
industrial portion is $7 million, or 4 percent. In Los Angeles County,
POTW construction cost is estimated to be $75 million of which the
industrial portion is about $12 million, or 15 percent. The largest
industrial groups affected are:
(1) Petroleum and Related Industries (Co. Only), 15 mgd, $2.6 million,
(2) Food and Kindred Products (City Only) 3 mgd, $2 million.
Industrial
Community Population Portion
•H-Los Angeles County 3,500,000 . $11,500,000
•H-Los Angeles 3,000,000 7,200,000
TOTAL 7,500.000 $18.700.000
•H- Exceeds National unemployment rate of 7.1%.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 83 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $1.6 billion of which the industrial portion would be $290 million
or 18 percent. Of these 83 needed facilities, 35, or 42 percent, will
serve communities with populations of less than 10,000.
V-13
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STATE OF CALIFORNIA
III. Potential Effect (Data from Other Sources)
Various public and private sources have reported that the communities
shown below could be affected. In many cases, the information presented
did not fully or clearly identify the effect of the industrial cost
exclusion (ICE) on the community.
Industrial
Community Population Portion
Buena Park 64,000 $ ?
Richmond 85,000 600,000
+San Diego 700,000 2,000,000
+Santa Cruz 33,000 ?
•H-Ventura County 58,000 1,900,000
TOTAL 917,000 $4.500,000
+ Exceeds State unemployment rate of 6.7% which is below the National rate
++ Exceeds National unemployment rate of 7.1%.
V-H
-------
STATE OF COLORADO
I. Short Term Effect (From State Reported Data)
A. Overview
Nine communities, ranging in size from 5,800 to over 655,000 with an
average population of 133,500, will be affected. The combined population
of the communities affected is over 1,201,000. The daily flow into the
affected POTWs is 220 mgd of which 10 mgd, or 5 percent, is contributed by
11 affected industrial users. The estimated POTW construction cost is
$158 million of which the industrial portion is $7 million, or 4 percent.
The largest industrial groups affected are:
(1) Food and Kindred Products, 2 mgd, $6 million,
(2) Electrical and Electronic Machinery, .6 mgd, $.8 million.
B. Communities with populations under 100,000
Six communities, ranging in size from 5,800 to 64,000 with an average
population of over 34,000, will be affected. The combined population of
these communities is over 204,800. The daily flow into the affected POTWs
is 28 mgd of which 1.4 mgd, or 5 percent, is contributed by 6 affected
industrial users. The estimated POTW construction cost is $86 million of
which the industrial portion is $6 million, or 7 percent. The largest
industrial groups affected are:
1) Food and Kindred Products, 1 mgd, $5 million,
2) Electrical and Electronic Machinery, .4 mgd, $.4 million.
Industrial
Community Population Portion
Broomfield 57,000 $ 230,000
+Delta 5,800 470,000
+Fort Morgan 8,000 750;000
+Greeley 40,000 2,530,000
•H-Montrose 30,000 1,600,000
•Westminister 64,000 120,000
TOTAL 204.800 $5,700,000
+ Exceeds State unemployment rate of 6.3% which is below the National rate.
•H- Exceeds National unemployment rate of 7.1%.
C. Communities with populations between 100.000 and 1.000,000
Three communities, ranging in size from 110,000 to 655,000, will be
affected. The daily flow into the affected POTWs is 192 mgd of which 9 mgd,
or 4 percent, is contributed by 5 affected industrial users. The estimated
POTW construction cost is $72 million of which the industrial portion is
over $5 million or 6 percent. The largest industrial group affected is
Food and Kindred Products, .9 mgd, $.9 million.
V-15
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STATE OF COLORADO
Industrial
Community Population Portion
++Colorado Springs 232,000 $ 306,000
^Denver 655,000 1,950,000
-H-Pueblo 110,000 800,000
TOTAL 997,000 $3,056,000
+ Exceeds State unemployment rate of 6.3% which is below the National rate,
++ Exceeds National unemployment rate of 7.1%.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 15 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is each
has an industrial flow over 100,000 gallons per day and more than 16 percent
of the total POTW flow. The construction cost is estimated to be $110
million of which the industrial portion would be $14 million or 13 percent.
Of these 15 needed facilities, 9, or 60 percent, will serve communities with
populations of less than 10,000.
V-16
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STATE OF CONNECTICUT
I. Short Term Effect (From State Reported Data)
The New Haven metropolitan area, with a population of 138,000,
and six smaller communities, ranging in size from 9,000 to 60,000,
will be affected. The combined population of the communities affected
is over 327,000. The New Haven area POTW has a daily flow of 34 mgd
of which 1 mgd, or 4 percent, is contributed by 3 affected industrial
users. The six smaller communities have a daily flow of 30 mgd with
over 12 impacted industrial users contributing 7 percent, or 2 mgd,
of the total flow. The estimated POTW construction cost is $91 million
of which the industrial portion is $6.0 million. The cost in New Haven
is $30 million, with an industrial portion of $1 million; the six smaller
communities have a POTW construction cost of $61 million of which the
industrial portion is $5 million. The largest industrial groups
affected are:
A. In New Haven,
(1) Fabricated Metal Products, 1 mgd, $.9 million,
(2) Paper and Allied Products, .3 mgd, $.2 million,
B. In the six remaining communities,
(1) Food and Kindred Products, .6 mgd, $1 million,
(2) Chemicals and Allied Products, .6 mgd, $.7 million.
Industrial
Community Population Portion
Manchester 50,000 $2,060,000
Mil ford 60,000 100,000
+New Haven 138,000 1,170,000
North Haven 15,000 390,000
Suffield 9,000 1,050,000
Wallingford 40,000 1,050,000
Winchester 15,000 100,000
TOTAL 327.000 $5.920,000
+ Exceeds State unemployment rate of 5.6% which is below the National rate,
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 25 needed facilities (treatment
plants and interceptors) each have substantial industrial flows. That
is each has an industrial flow over 100,000 gallons per day and more
than 16 percent of the total POTW flow. The construction cost is
estimated to be $186 million of which the industrial portion would be
$32 million or 17 percent. Of the 25 needed facilities, 5, or 20 percent,
will serve a community with a population of less than 10,000.
V-17
-------
STATE OF CONNECTICUT
III. Potential Effect (Data from Other Sources)
Various public and private sources have reported that the communities
shown below could be affected. In many cases, the Information presented did
not fully or clearly Identify the effect of the Industrial cost exclusion
(ICE) on the community.
Industrial
Community Population Portion
+East Windsor 9,000 ?
Greenwich 60,000 ?
North Haven 25,000 ?
-H-Plainfleld 3,000 ?
Southington 16,000 ?
Stamford 109,000 ?"
Vernon 30,000 ?
+West Haven 53,000 ?
TOTAL 305,000 ?
+ Exceeds State unemployment rate of 5.6% which is below the National rate,
++ Exceeds National unemployment rate of 7.1%.
V-18
-------
STATE OF DELAWARE
1. Short term Effect (From State Reported Data)
Wilmington, with a population of over 393,800 will be affected.
The daily flow into the affected POTWs is 90 mgd of which 7 mgd, or
8 percent, is contributed by 13 affected industrial users. The
estimated POTW construction cost is $100 of which the industrial portion
is $6 million dollars, or 6 percent. The largest industrial groups
affected are:
(1) Chemicals and Allied Products, 2 mgd, $2 million,
(2) Fabricated Metal Products, 1 mgd, $1 million,
(3) Transportation Equipment, .7 mgd, $.8 million.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 4 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is each
has an industrial flow over 100,000 gallons per day and more than 16
percent of the total POTW flow. The construction cost is estimated to
be $63 million of which the industrial portion would be $30 million, or
49 percent. Of these four needed facilities, 2, or 50 percent, will
serve communities with populations of less than 10,000.
V-19
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STATE OF FLORIDA
I. Short Term Effect (From State Reported Data)
A. Overview
Five communities, ranging in size from 59,500 to 528,900, with an
average population of 232,000, will be affected. The population of all the
communities affected is over 1,100,000. The daily flow into the affected
POTWs is 270 mgd of which 12 mgd or 4 percent is contributed by 79 affected
industrial users. The estimated POTW construction cost is $272 million of
which the industrial portion is $12 million or 4 percent. The largest
industrial groups affected are:
(1) Food and Kindred Products, 3 mgd, $3 million,
(2) Transportation by Air, 2 mgd, $2 million.
B. Communities with populations under 100,000
Orlando and Pensacola, with populations of 99,000 and 59,500 respectively,
will be affected. The daily flow into the Orlando POTW is 48 mgd of which
2 mgd, or 4 percent, is contributed by 10 affected industrial users 1n ,
Pensacola, the daily flow into the POTW is 20 mgd of which about .7 mgd, or
4 percent, is generated by 7 affected Industrial users. The estimated POTW
construction cost in Orlando is $50 million of which the industrial portion
is $2 million, or 4 percent. Pensacola's POTW construction cost is estimated
to be $20 million with an industrial portion of $.7 million, or 4 percent.
The largest industrial groups affected are:
(1) Food and Kindred Products, 1 mgd, $1 million,
(2) Chemicals and Allied Products, .7 mgd, $.7 million.
C. Communities with populations between 100,000 and 1,000,000
Three communities, ranging in size from 140,000 to 528,000, will be
affected. The daily flow into the affected POTWs is 202 mgd of which 9 mgd
or 4 percent is contributed by 62 affected Industrial users. The estimated
POTW construction cost is $202 million of which the industrial portion is
over $9 million, or 4 percent. The largest industrial groups affected are:
(1) Food and Kindred Products, 3 mgd, $3 million,
(2) Transportation by Air, 2 mgd, $2 million.
Industrial
Community Population Portion
Fort Lauderdale 140,000 $ 50,000
Jacksonville 528,900 5,000,000
•H-Mlami 334,900 3,600,000
TOTAL 1,003,800 $8,650,000
Exceeds National Unemployment rate of 7.1%.
V-20
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STATE OF FLORIDA
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 19 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $300 million of which the industrial portion would be $79 million,
or 28 percent. Of these 19 needed facilities, 2; or 10 percent, will
serve communities with populations of less than 10,000.
II. Potential Effect (Data from Other Sources)
Various public and private sources have reported that the communities
shown below could be affected. In many cases, the information presented
did not fully or clearly identify the effect of the industrial cost
exclusion (ICE) on the community.
Industrial
Community Population Portion
Orange Co. 200,000 $3,000,000
St. Petersburg 250,000 350,000
TOTAL 450,000 $3,350,000
V-21
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STATE OF GEORGIA
I. Short Term Effect (From EPA Regional reported data)
Four communities, ranging in size from 7,500 to 43,000 with an
average population of 25,000, will be affected. The combined population
of the communities affected is over 100,000. The daily flow into the
affected POTWs is 63 mgd of which 26 mgd, or 42 percent, is contributed
by 74 affected industrial users. The estimated POTW construction cost
is $70 million of which the industrial portion is 335 million. The
largest industrial groups affected are:
(1) Textile Mill Products, 11 mgd, $12 million
Industrial
Community Population Portion
++Ca1houn 7,500 $ 690,000
•H-Dalton 26,000 28,770,000
La Grange 24,000 2,850,000
•H-Rome 43,200 2,160,000
TOTAL 109,700 $34.470,000
•H- Exceeds National unemployment rate of 7.1%.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 31 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $286 million of which the industrial portion would be $46 million,
or 16 percent. Of these 31 needed facilities, 14, or 45 percent, will
serve communities with populations of less than 10,000.
V-22
-------
Potential Effect STATE OF GEORGIA (Data reported by State)
Potential Impact
of
Stafford amendment
Grantee
Atlanta (R. M. Clayton)
Atlanta (Utoy)
Brunswick
Calhoun
Cedartown
Chickamauga
Conyers (Almond Br.)
Dalton
Douglas
Ellijay
Jasper
LaFayette
LaGrange
Maoon (Poplar St.)
Macon (Rocky Cr.)
Milledgeville
Monroe
Montezurta (#2)
Quitman
Rone
Savannah
Social Circle
Swainsboro
Sylvania
ThomastQn
Thomasville
Waycross
Winder
Estimated
Grant Ant.
($M)
20.8
7.0
5.0
4.0
6.3
4.1
1.3
44.0
1.5
0.8
1.6
2.8
7.3
20.0
32.0
0.2
5.5
0.2
3.0
11.3
0.8
0.3
1.4
0.4
2.7
4.0
6.0
1.0
% Flow From
Industries
> -50,000 GPP
7
7
38
31
12
32
6
49
25
47
7
19
62
34
43
14
6
91
1
10
22
13
23
13
9
11
6
Potential
Impact on Grant
($ M lost)
1.46
0.49
1.90
1.12
0.76
1.31
0.08
21.562
0.38
0.38
0.11
0.53
4.53
6.80
13.76
0.03
0.33
0.18
0.21
2.15
0.0#
0.07
0.18
0.09
0.35
0.36
0.66
0.06
TOTAL
$59.92M
1 Total industrial flow is nearly 60% of design capacity, but mostly
attributable to small industries. Only 5 of 42 exceed 50,000 GPD.
2. Some Step 3 work already awarded; may be exempt.
3. Impact may be greater, depending on final regulations defining "flow
per day equivalent to 50,000 gallons per day of sanitary waste." Rone s
industries contribute 40% of the daily flew and 60% of the organic
loading, but only 19% of this flow is generated by industry discharging
in excess of 50,000 gallons per day.
V-23
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STATE OF HAWAII
I. Short Term Effect (From State Reported Data)
The community of Honolulu, with a population of 350,000, will be
affected. The area POTW has a dally flow of 70 mgd of which 6 mgd, or 9
percent, is contributed by 12 affected Industrial users. The estimated
POTW construction cost 1s $74 million of which the industrial cost is $4
million, or 6 percent. The largest industrial group affected is Food &
Kindred Products, 6 mgd, $4 million.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 2 needed facilities (treatment
plants and interceptors) each have substantial industrial flows. That
is each has an Industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated to
be 74.6 million of which the industrial portion would be $10 million or
13 percent. Of the 2 needed facilities, 1 will serve a community with a
population of less than less than 10,000.
V-24
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STATE OF IDAHO
I. Short Term Effect (From State Reported Data)
The Boise metropolitan area, with a population of 100,000, and 4 smaller
communities, ranging in size from 10,000 to 72,000, will be affected. The
combined population of the communities affected is over 252,000. The Boise
area POTW has a daily flow of 45 mgd of which .2 mgd, or .5 percent is
contributed by 3 affected industrial users. The four smaller communities
have a daily flow of 36 mgd with 8 impacted industrial users contributing
12 percent, or 4 mgd, of the total flow. The estimated POTW construction
cost if $55 million of which the industrial portion is $1 million. The cost
is Boise is $20 million, with an industrial portion of $.2 million; the
4 smaller communities have a POTW construction cost of $10 million of which
the industrial portion is $.8 million. The largest industrial group affected
is Food and Kindred Products, 4 mgd, $.8 million.
Industrial
Community Population Portion
Blackfoot 10,000 $ 6,000
Boise 100,000 200,000
Idaho Falls 40,000 730,000
•Hewiston 30,000 300,000
+Pocatello 72,000 38,000
TOTAL 252,000 $1.274,000
+ Exceeds State unemployment rate of 6.1% which is below the National rate,
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 10 needed facilities (treatment
plants and interceptors) each have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated to be
$103 million of which the industrial portion would be $21 million or
20 percent. Of the 10 needed facilities, 3, or 30 percent, will serve
communities with populations of less than 10,000.
V-25
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STATE OF ILLINOIS
I. Short Term Effect (From State Reported Data)
Twenty-four communities, ranging in size from 1,400 to 89,000 with
an average population of 17,500, will be affected. The combined population
of the communities affected is over 422,000. The daily flow into the
affected POTWs is 120 mgd of which 20 mgd, or 17 percent, is contributed
by 59 affected industrial users. The estimated POTW construction cost is
$275 million of which the industrial portion is $44 million. The largest
industrial groups affected are:
(1) Food and Kindred Products, 8 mgd, $13 million,
(2) Fabricated Metal Products and Machinery, 5 mgd, $5 million,
(3) Transportation Equipment, 1.3 mgd, $1.9 million.
Community
Arthur
Belleville
Belvidere
Canton
++ Central!a
Chillicothe
Clinton
•H- Decatur
•H- Fairfield
Geneva
Herrin
Jacksonville
Industrial
Population Portion
2,300
44,000
17,000
14,000
13,000
6,000
7,600
89,000
5,800
9,100
9,600
19,000
$
24,000
138,000
2,400,000
47,000
50,000
87,000
804,000
13,800,000
527,000
123,000
1,300,000
209,000
Community
•H-+Joliet
•n-Kankakee
++Milan
Monticello
+++Peotone
Roselle
St. Charles
Spring Valley
Streator
Taylorville
Waverly
++Woodstock
TOTAL
Industrial
Population Portion
74,000 $ 6,478,000
31,000 9,365,000
5,100 158,000
4,600 1,614,000
2,500 191,000
9,200 500,000
16,000 2,125,000
5,400 162,000
15,000 704,000
11,000 3,264,000
1,400 9,500
11,000 80,000
422,400 $44.159.000
Exceeds National unemployment rate of 7.1%.
Exceeds State unemployment rate of 8.B% which exceeds the National rate,
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 63 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $1.2 billion of which the industrial portion would be $250 million,
or 20 percent. Of these 63 needed facilities, 39, or 62 percent, will
serve communities with populations of less than 10,000.
Y-26
-------
STATE OF ILLINOIS
III. Potential Effect (Data From Other Sources)
Various public and private sources have reported that the communities
shown below could be affected. In many cases, the information presented
did not fully or clearly identify the effect of industrial cost exclusion
(ICE) on the community.
Industrial
Community Population Portion
+++ Chicago 4,300,000 $ 5,120,000
Galena ? ?
+++ Rockford 196,000 27,700,000
TOTAL 4,496,000 $32,820,000'
+++ Exceeds State unemployment rate of 8.8% which exceeds the National rate,
Y-27
-------
STATE OF INDIANA
I. Short Term Effect (From State Reported Data)
A. Overview
Eighteen communities, ranging in size from 5,500 to 775,000 with an
average population of 89,400, will be affected. The cpmbined population
of the communities affected is over 1,600,000. The daily flow Into the
affected POTWs 1s 338 mgd of which 97 mgd, or 29 percent, is contributed
by 223 affected Industrial users. The estimated POTW construction cost
1s $240 million of which the industrial portion 1s $51 million, or 20
percent. The largest industrial groups affected are:
(1) Transportation Equipment, 10 mgd, $10.7 million,
(2) Primary Metal Industries, 4 mgd, $7.4 million,
(3) Fabricated Metal Products, 5 mgd, $7 million,
(4) Food and Kindred Products, 6 mgd, $4 million,
(5) Electrical and Electronic Machinery, 4 mgd, $2 million.
B. Communities with Populations under 100.000
Fifteen communities ranging in size from 5,500 to 75,000 with an
average population of 35,300 will be affected. The combined population
of these communities is over 529,000. The daily flow into the affected
POTWs 1s 110 mgd of which 24 mgd, or 22 percent, is contributed by 95
affected industrial users. The estimated POTW construction cost is $156
million of which the industrial portion 1s $34 million, or 23 percent.
The largest Industrial groups affected are:
(1) Primary Metal Industries, 4 mgd, $7 million,
(2) Transportation Equipment, 6 ngd, $7 million,
(3) Food and Kindred Products, 1 mgd, $2 million,
(4) Fabricated Metal Products, 5 mgd, $5 million,
(5) Electrical and Electronic Machinery, .9 mgd, $1 million.
Community
+++Anderson
Blcomington
Clarksvllle
+++Columb1a
+++East Chicago
+++E1khart
Jeffersonvllle
+++M1ch1gan City
Industrial
Population Portion
75,000
45,000
15,000
5,500
50,000
45,000
21,000
42,000
$ 6,500,000
19,000
1,000,000
1,200,000
10,630,000
2,210,000
80,000
1,560,000
Community Population
Mooresville
+++Muncie
•n-New Albany
++Plymouth
•H-Terra Haute
•H-Vlncannes
Warsaw
6,000
72,000
40,000
8,000
72,000
22,000
11,000
Industrial
Portion
$ 600,000
7,790,000
650,000
110,000
730,000
1,500,000
900,000
529,000 $35,479,000
Exceeds National unemployment rate of 7.1%.
Exceeds State unemployment rate of 8.6%, which is above the National rate,
V-28
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STATE OF INDIANA
C. Communities with populations between 100.000 and 1,000,000
Three communities, ranging in size from 120,000 to 775,000 with an
average population of over 350,000, will be affected. The combined
population of these communities is over 1,000,000. The daily flow into
the affected POTWs is 228 mgd of which 73 mgd, or 32 percent, is
contributed by 128 affected industrial users. The estimated POTW
construction cost is $84 million of which the industrial portion is $16
million, or 18 percent. The largest industrial groups affected are:
(1) Transportation Equipment, 4.5 mgd, $3 million,
(2) Food and Kindred Products, 5 mgd, $1.3 million,
(3) Fabricated Metal Products, .8 mgd, $1 million,
(4) Electrical and Electronic Machinery, 3 mgd, $.9 million.
Industrial
Community Population Portion
+++Fort Wayne 185,000 $ 8,300,000
+++Hammond (S.D.) 120,000 2,700,000
++Indianapolis 775,000 4,500,000
TOTAL 1.080.000 $15.500,000
++ Exceeds National unemployment rate of 7.1%.
+++ Exceeds State unemployment rate of 8.6fc which is above National rate.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 39 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $295 nillion of which the industrial portion would be $64 million,
or 22 percent. Of these 39 needed facilities, 20, or 51 percent, will
serve communities with populations of less than 10,000.
V-29
-------
STATE OF IOWA
I. Short Term Effect (From State Reported Data)
A. Overview
Ten communities, ranging In size from 8,700 to 220,000 with an average
population of 47,900, will be affected. The population of all the communities
affected is over 479,000. The daily flow into the affected POTWs is 190 mgd
of which 15 mgd, or 8 percent, is contributed by 45 affected industrial users.
The estimated POTW construction cost is $132 million of which the industrial
portion is $11 million, or 9 percent. The largest industrial groups affected
are:
(1) Food and Kindred Products, 8 mgd, $6 million,
(2) Machinery, except Electrical, 2 mgd, $2 million,
(3) Chemicals and Allied Products, 1 mgd, $1 million.
B. Communities with populations under 100,000
Nine communities, ranging in size from 8,700 to 73,000 with an average
population of 28,800, will be affected. The population of all the communities
affected is over 259,000. The daily flow into the affected POTWs is 90 mgd
of which 10 mgd, or 11 percent, is contributed by 24 affected industrial users,
The estimated POTW construction cost is $76 million of which the industrial
portion is $8 million, or 10 percent. The largest industrial groups affected
are:
(1) Food and Kindred Products, 5 mgd, $4 million,
(2) Machinery, except Electrical, 2 mgd, $2 million,
(3) Chemicals and Allied Products, 1 mgd, $1 million.
Communi ty
Boone
Cedar Falls
Charles City
Fairfield
+Fort Dodge
Population
12,500
35,000
9,100
8,700
31,200
Industrial
Portion
$ 72,000
257,000
523,000
38,000
200,000
Community
Iowa City
+Marshall town
Newton
•Waterloo
TOTAL
Population
47,700
26,500
15,600
73,000
Industrial
Portion
$ 1,773,000
1,315,000
1,638,000
2,340,000
259,300 $ 8,156.000
+ Exceeds State Unemployment rate of 5.3% which is below the National rate,
C. Communities with populations between 100.000 and 1,000,000
+Des Moines, with a population of 220,000, will be affected. The daily
flow into the affected POTW is 100 mgd of which 5 mgd, or 5 percent, is
contributed by 21 affected industrial users. The estimated POTW construction
cost is $56 million of which the industrial portion is $3 million, or 5
percent. The largest industrial group affected is Food and Kindred Products,
2 mgd, $1 million.
V-30
-------
STATE OF IOWA
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 34 needed facilities (treatment
plants and Interceptors) have substantial industrial flows. That is each
has an industrial flow over 100,000 gallons per day and more than 16 percent
of the total POTW flow. The construction cost is estimated to be $226
million of which the industrial protion would be $47 million, or 21 percent.
Of these 34 needed facilities, 20, or 60 percent, will serve communities
with populations of less than 10,000.
V-31
-------
STATE OF KANSAS
1. Short Term Effect (From State Reported Data)
A. Overview
Seven communities, ranging in size from 5,000 to over 300,000 with an
average population of 86,187, will be affected. The combined population
of the communities affected is over 600,000. The daily flow into the
affected POTWs is 108 mgd of which 20 mgd, or 19 percent, is contributed
by 50 affected industrial users. The estimated POTW construction cost
is $120 million of which the industrial portion is $25 million, or
21 percent. The largest industrial groups affected are:
(1) Food & Kindred
(2) Transportation
Products, 6 mgd, $7 million,
Equipment, 2 mgd, $3 million.
B. Communities with populations under 100,000
Five communities, ranging in size from 5,000 to 40,000 with an average
population of 20,600, will be affected. The combined population of these
communities is over 103,000. The daily flow into the affected POTWs is
22 mgd of which 6 mgd, or 28 percent, is contributed by 13 affected
industrial users. The estimated POTW construction cost is $28 million of
which the industrial portion is $9 million, or 32 percent. The largest
industrial groups affected are:
(1) Food & Kindred Products, 5 mgd, $7 million,
(2) Transportation Equipment, .5 mgd, $2 million.
Community
Dodge City
++Hutchinson
Liberal
+01athe
-H-South Hutchinson
TOTAT
Population
23,000
40,000
15,000
20,000
5,000
103,000
Industrial
Portion
$ 800,000
5,090,000
1,640,000
1,000,000
400,000
$8.930.000
+ Exceeds State unemployment rate of 4.4 which is below the National rate.
++ Exceeds National unemployment rate of 7.156.
C. Communities with populations between 100.000 and 1,000.000
Two communities, with populations of 200,000 and 300,000, will be
affected. The daily flow into the affected POTWs is 85 mgd of which 14
mgd, or 17 percent, is contributed by 37 affected industrial users. The
estimated POTW construction cost is $43 million of which the industrial
portion is over $16 million, or 39 percent. The largest industrial
groups affected are:
V-32
-------
STATE OF KANSAS
(1) Transportation Equipment, 2 mgd, $2 million,
(2) Stone, Clay & Glass Products, 2 mgd, $1 million,
(3) Chemicals and Allied Products, 1 mgd, $1 million.
Industrial
Community Population Portion
+Kansas City 200,000 $10,000,000
Wichita 300,000 6,481,000
TOTAL 500,000 $16,481,000
+ Exceeds State unemployment rate of 4.4 which is below the National rate.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 22 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $142 million of which the industrial portion would be $39 million
or 28 percent. Of these 22 needed facilities, 7, or 32 percent, will
serve communities with populations of less than 10,000.
V-33
-------
STATE OF KENTUCKY
I. Short Term Effect (From State Reported Data)
Three communities, ranging in size from 11,700 to 90,000 with an
average population of 51,000, will be affected. The combined population
of the communities affected is over 153,000. The daily flow into the
affected POTWs is 22 mgd of which 2 mgd, or 10 percent, is contributed
by 10 affected industrial users. The estimated POTW construction cost is
$12 million of which the industrial portion is $1 million or 9 percent.
The largest industrial groups affected are:
1) Electrical and Electronics Machinery, 1 mgd, $.2 million,
2) Food and Kindred Products, .3 mgd, $.2 million.
Industrial
Community Population Portion
Lexington 90,000 $ 300,000
•n-Mlddleboro 11,700 * 600,000
•H-Owensboro 51,400 100,000
TOTAL 153.100 $1.000,000
++ Exceeds National unemployment rate of 7.1%.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 28 needed facilities (treatment
plants and interceptors) each have substantial industrial flows. That
is each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated to
be $136 million of which the industrial portion would be $20 million or
15 percent. Of the 28 needed facilities, 20, or 71 percent, will serve
communities with populations of less than 10,000.
III. Potential Effect (Data from Other Sources)
Various public and private sources have reported that the communities
shown below could be affected. In many cases, the information presented
did not fully or clearly identify the effect of the industrial cost
exclusion (ICE) on the community.
Industrial
Community Population Portion
Lowrenburg 5,000 ? (Food and
Kindred
Products)
V-34
-------
STATE OF LOUISIANA
I. Short Term Effect (From State Reported Data)
Pineville, with a population of 18,300, and Shreveport, with a
population of 133,000, have daily flows of 3 mgd and 32 mgd, respectively. In
Pineville, the industrial flow is .2 mgd, or 7 percent, of the total
flow; in Shreveport, however, industrial flows account for 2 mgd or 6
percent of the total flow. The estimated POTW construction cost in
Pineville is $6 million of which the industrial portion is $.4 million,
or 22 percent. In Shreveport, POTW construction cost is estimated to be
$48 million of which the industrial portion is about $2 million, or
about 5 percent. The largest industrial groups affected are:
(1) Chemicals and Allied Products, .2 mgd, $.4 million,
(2) Primary Metal Industries, .2 mgd, $.3 million.
Industrial
Community Population Portion
•H-Pineville 18,000 $ 440,000
+Shreveport 133,000 2,250,000
TOTAL 151,000 $2.690.000
+ Exceeds State unemployment rate of 6.1% which is below the National rate.
++ Exceeds National unemployment rate of 7.U.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 9 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is each
has an industrial flow over 100,000 gallons per day and more than 16 percent
of the total POTW flow. The construction cost is estimated to be $32 million
of which the industrial portion would be $.9 million or 3 percent. Of these
9 needed facilities, 5, or 56 percent, will serve communities with populations
of less than 10,000.
III. Potential Effect (Data from Other Sources)
Various public and private sources have reported that the communities
shown below could be affected. In many cases, the information presented did
not fully or clearly identify the effect of the industrial cost exclusion
(ICE) on the community.
Industrial
Community Population Portion
Metarrie 170,000 ?
V-35
-------
STATE OF MAINE
I. Short Term Effect (From State Reported Data)
Four communities, ranging in size from 2,000 to 20,000 with an average
population of 6,700, will be affected. The combined population of the
communities affected is over 26,700. The daily flow into the affected
POTWs 1s 9 mgd of which 3 mgd, or 33 percent, is contributed by 5 affected
Industrial users. The estimated POTW construction cost is $14 million of
which the industrial portion is about $4 million. The largest industrial
groups affected are:
(1) Leather and Leather Products, 1 mgd, $2 million,
(2) Textile Mill Products, 1 mgd, $2 million.
Industrial
Community Population Portion
Biddeford 20,000 $ 670,000
Corinna S.D. 2,000 1,100,000
North Berwick 2,000 * 70,000
++South Paris 2,700 2,080,000
TOTAL 26.700 $3,920,000
++ Exceeds National unemployment rate of 7.1%.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 8 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is each
has an industrial flow over 100,000 gallons per day and more than 16 percent
of the total POTW flow. The construction cost is estimated to be $33
million of which the industrial portion would be $16 million, or 48 percent.
Of these 8 needed facilities, 7, or 88 percent, will serve communities with
populations of less than 10,000.
III. Potential Effect (Data from Other Sources)
Various public and/or private sources have reported that the communities
shown below could be affected. In many cases, the Information presented
did not fully or clearly identify the effect of the Industrial cost exclusion
(ICE) on the community.
Industrial
Community Population Portion
New Port 2,000 (Dairy Industry)
V-36
-------
STATE OF MARYLAND
I. Short Term Effect (From State Reported Data)
The Baltimore metropolitan area, with a population over 900,000,
and one other community, with a population of 30,000, will be affected.
The Baltimore area POTW has a daily flow of 280 mgd of which 16 mgd,
or 6 percent is contributed by 57 affected industrial users. Frederick
City, the smaller community POTW, has a daily flow of 7 mgd of which
.4 mgd, or 5 percent, is contributed by three affected industrial users.
The estimated POTW cost in Baltimore is $280 million, with an industrial
portion of $16 million, or 6 percent. The POTW in Frederick has an
estimated cost of $13 million of which the industrial portion is $.6
million, or 5 percent.
The largest industrial groups affected are:
A. In Baltimore,
(1) Food and Kindred Products, 2 mgd, $2 million,
(2) Paper and Allied Product, 1 mgd, $1 million,
(3) Automotive Equipment, 1 mgd, $1 million.
B. In Frederick,
1) Food and Kindred Products, .2 mgd, $.4 million,
2) Electrical and Electronic Machinery, .1 mgd, $.2 million.
Both Baltimore and Frederick have unemployment rates which exceed
the National unemployment rate of 7.1 percent.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 16 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $176 million of which the industrial portion would be $25 million,
or 15 percent. Of these 16 needed facilities, 10, or 60 percent, will
serve communities with populations of less than 10,000.
V-37
-------
STATE OF MASSACHUSETTS
I. Short Term Effect (From Unconfirmed Sources)
A. Overview
Ten communities, ranging in size from 9,000 to over 3,000,000 with an
average population of 369,900, will be affected. The combined population
of the communities affected is over 3,699,000. The daily flow into the
affected POTWs is 583 mgd of which 153 mgd, or 26 percent, is contributed
by over 14 affected industrial users. The estimated POTW construction
cost is $253 million of which the industrial portion is $95 million, or
38 percent. The largest industrial groups affected are Textile Mill
Products and Plating Manufacturers.
B. Communities with populations under 100,000
Seven communities, ranging in size from 9,000 to 80,000 with an average
population of 34,100, will be affected. The combined population of these
communities is over 239,000. The daily flow into the affected POTWs is
38 mgd of which 19 mgd, or 50 percent, is contributed by over 10 affected
industrial users. The estimated POTW construction cost is $60 million of
which the industrial portion is $30 million, or 50 percent. The largest
industrial groups affected are Textile Mill Products, Plating Manufacturers,
and the Dairy Industry.
Industrial
Community Population Portion
Billerica 32,000 $ 5,300,000
Dudley 9,000 130,000
•H-Gardner 20,000 1,400,000
•n-South Bridge 18,000 150,000
•(•South Essex SO 80,000 11,100,000
++Taunton 60,000 1,350,000
+Webster 20,000 10,600,000
TOTAL 239,000 $30.030.000
+ Exceeds State unemployment rate of 5.6% which is below the National rate,
•H- Exceeds National unemployment rate of 7.1%
C. Communities with populations between 100,000 and 1.000.000
Two communities, with populations of 160,000 to 300,000, will be
affected. The area POTWs have a daily flow of 71 mgd with at least 4
impacted industrial users contributing 46 percent, or 33 mgd, of the
total flow. The POTW construction cost is $85 million of which the
industrial portion is $42 million. The largest industrial groups affected
are Textile Mill Products and Plater Manufacturers.
V-38
-------
STATE OF MASSACHUSETTS
Industrial
Community Population Portion
++New Bedford 160,000 38,000,000
^Worcester 300,000 4.000.000
TOTAL 460.000 $42.000,000"
+ Exceeds State unemployment rate of 5.6% which is below the National rate,
•H- Exceeds National-unemployment rate of 7.1%.
C. Communities with populations over 1,000,000
The Boston metropolitan area, with a population of 3,000,000, will be
affected. The Boston area POTWs have a daily flow of 474 mgd of which
101 mgd, or 21 percent, is contributed by/industrial users. The estimated
POTW construction cost is $108 million of which the industrial portion is
$23 million, or 21 percent. Data on the industrial groups affected is
not available.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 24 needed facilities (treatment
plants and interceptors) each have substantial industrial flows. That
is each has an industrial flow over 100,000 gallons per day and more
than 16 percent of the total POTW flow. The construction cost is
estimated to be $714 million of which the industrial portion would be
$160 million, or 22 percent. Of the 24 needed facilities, 10 will serve
communities with populations of less than 10,000.
III. Potential Effect (Data from Other Sources)
Various public and/or private sources have reported that the communities
shown below could be affected. In many cases, the information presented
did not fully or clearly Identify the effect of the industrial cost
exclusion (ICE) on the community.
Industrial
Community Population Portion
Beverly 40,000 ?
Danvers 30,000 ?
Framlngham 65,000 ?
Lawrenc'e 70,000 ?
Westfield 35,000 ?
ToTAT 240,000
V-39
-------
STATE OF MICHIGAN
I. Short Term Effect (From State Reported Data)
A. Overview
Thirty communities, ranging in size from 1,000 to over 657,000 with
an average population of 44,000, will be affected. The combined population
of the communities affected is over 1,300,000. The daily flow into the
affected POTWs is 232 mgd of which 74 mgd, or 32 percent, is contributed
by 115 affected industrial users. The estimated POTU construction cost is
$445 million of which the industrial portion is $52 million, or 11 percent.
The largest industrial groups affected are:
(1) Transportation Equipment, 12 mgd, $15 million,
(2) Electrical and Electronic Machinery, 8 mgd, $13 million,
(3) Machinery, except Electrical, 2 mgd, $2 million,*
(4) Primary Metal Industries, 2 mgd, $1.4 million,
(5) Paper and Allied Products, 16 mgd, $2 million.
B. Communities with populations under 100,000
Twenty-seven communities, ranging in size from 1,000 to 91,000 with
an average population of 15,900, will be affected. The combined population
of the communities is over 430,000. The daily flow into affected POTWs is
146 mgd of which 32 mgd, or 22 percent, is contributed by 71 affected
industrial users. The estimated POTW construction cost is $345 million of
which the industrial portion is $30 million, or 9 percent. The largest
industrial groups affected are:
(1) Electrical and Electronic Machinery, 8 mgd, $13 million,
(2) Transportation Equipment, 6 mgd, $1 million,
(3) Machinery, except Electrical, 2 mgd, $2 million,
(4) Primary Metal Industries, 1 mgd, $1.3 million.
Community
+++3enton Harbor
++ Calumet
•H-Cedar Spring
++ Constant!ne
+++ Flushing
•H-+Hudson
•H-Marine City
Midland
•H-Memphis
++ Monroe
+++ Mount Clemens
•m-Muskegon Co.-Whitehall
++ Otsego
•H-Paw-Paw
Industrial
Population Portion
72,000
1,000
2,900
1,700
7,100
2,600
4,600
34,900
1,100
23,900
20,500
5,400
4,500
3,200
$ 27,000
1,480,000
1,125,000
72,000
276,000
798,000
1,622,000
158,000
450,000
209,000
678,000
900,000
133,000
161,000
Community
Industrial
Population Portion
•H-+Port Huron
+++Reed City
Rochester
•H-South Haven
•n-Sturgis-St. Joseph Co
+++Saginaw
•H-+Sagi naw-Frankenmuth
•H-Saline
+++Sault St
++Sparta
-t-H-Tucumseh
+++Vasser
++Wyoming
TOTAL
Marie
35,800 $12,127,000
2,300
7,100
6,500
Co. 9,300
92,000
2,800
4,800
15,000
3,100
7,100
2,800
57,000
85,000
159,000
8,000
530,000
1,103,000
481,000
64,000
908,000
3,749,000
1,800,000
269,000
480,000
431,000 $29.852,000
•H- Exceeds National Unemployment rate of 7.1%.
+++ Exceeds State employment rate of 12.1% which exceeds the National rate.
V-40
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STATE OF MICHIGAN
C. Communities with populations between 100,000 and 1,000,000
Three communities ranging in size from 114,000 to 657,000 will be
affected. The-daily flovLinto the affected POTWs is 86 mgd of which 41 mgd,
or 4 percent, is contributed by 44 affected industrial users. The
estimated POTW construction cost is $100 million of which the industrial
portion is over $22 million, or 22 percent. The largest industrial groups
affected are:
(1) Paper and Allied Products, 16 mgd, $2 million,
(2) Transportation Equipment, 6 mgd, $14 million,
(3) Primary Metal Industries, 1 mgd, $.1 million.
Industrial
Community Population Portion
•HH-Muskegon County 114,000 $ 4,200,000
++Lansing 132,000 15,000,000
+++Genesee County 657,000 3,000,000
TOTAL 903.000 $22,200.000
++ Exceeds National Unemployment rate of 7.1%.
+++ Exceeds State Unemployment rate of 12.1% which exceeds the National rate.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 40 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is each has
an industrial flow over 100,000 gallons per day and more than 16 percent of
the total POTW flow. The construction cost is estimated to be $1,087 billion
of which the industrial portion would be $275 million, or 25 percent. Of
these 40 needed facilities, 27, or 68 percent, will serve communities with
populations of less than 10,000.
III. Potential Effect (Data from Other Sources)
Various public and private sources have reported that the communities
shown below could be affected. In many cases, the information presented
did not fully or clearly identify the effect of the industrial cost
exclusion (ICE) on the community.
Industrial
Community Population Portion
+++Detroi t ? $11,500,000
Rochester ? ?
•H-South Essex ? 8,500,000
•m-Wayne County ? 5,000,000
TOTAL $25,000,000"
Exceeds National Unemployment rate of 7.1%.
Exceeds State Unemployment rate of 12.1% which exceeds the National rate.
V-41
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STATE OF MICHIGAN
C. Communities with populations between 100,000 and 1,000,000
Three communities ranging in size from 114,000 to 657,000 will be
affected. The daily flow into the affected POTWs is 86 mgd of which 41 mgd,
or 4 percent, is contributed by 44 affected industrial users. The
estimated POTW construction cost is $100 million of which the industrial
portion is over $22 million, or 22 percent. The largest industrial groups
affected are:
(1) Paper and Allied Products, 16 mgd, $2 million,
(2) Transportation Equipment, 6 mgd, $14 million,
(3) Primary Metal Industries, 1 mgd, $.1 million.
Industrial
Community Population Portion
+++Muskegon County 114,000 $ 4,200,000
•H-Lansing 132,000 15,000,000
•m-Genesee County 657,000 3,000,000
TOTAL 903,000 $ZZ,200.007
•H- Exceeds National Unemployment rate of 7.1%.
+++ Exceeds State Unemployment rate of 12.1% which exceeds the National rate.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 40 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is each has
an industrial flow over 100,000 gallons per day and more than 16 percent of
the total POTW flow. The construction cost is estimated to be $1,087 billion
of which the industrial portion would be $275 million, or 25 percent. Of
these 40 needed facilities, 27, or 68 percent, will serve communities with
populations of less than 10,000.
III. Potential Effect (Data from Other Sources)
Various public and private sources have reported that the communities
shown below could be affected. In many cases, the information presented
did not fully or clearly Identify the effect of the industrial cost
exclusion (ICE) on the community.
Industrial
Community Population Portion
•m-Detrolt 1,500,000 $11,500,000
Rochester 7,000 ?
++South Essex ? 8,500,000
•H-+Wayne County 1,000,000 5,000,000
TOTAL 2,507.000 $25.000.000"
++ Exceeds National Unemployment rate of 7.155.
+++ Exceeds State Unemployment rate of 12.1% which exceeds the National rate.
V-42
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STATE OF MINNESOTA
I. Short Term Effect (From State Reported Data)
A. Overview
Fifteen communities, ranging in size from 800 to over 1,850,000 with
an average population of 135,000, will be affected. The combined population
of the communities affected is over 2,000,000. The daily flow into the
affected POTWs is 252 mgd of which 63 mgd, or 25 percent, is contributed
by 36 affected industrial users. The estimated POTW construction cost is
$238 million of which the industrial portion is $36 million, or 15 percent.
The largest industrial groups affected are:
(1) Food and Kindred Products, 7 mgd, $14 million,
(2) Chemicals and Allied Products, 3 mgd, $2.3 million,
(3) Fabricated Metal Products, 3 mgd, $2 million.
B. Communities with populations under 100,000
Thirteen communities, ranging in size from 800 to 15,300 with an
average population of 3,500, will be affected. The combined population
of these communities is over 45,500. The daily flow into the affected
POTWs is 15 mgd of which 5 mgd, or 33 percent, is contributed by 20
affected industrial users. The estimated POTW construction cost is
$34 million of which the industrial portion is $11 million, or 32 percent.
The largest industrial group affected is Food and Kindred Products,
3 mgd, $10 million.
Community
•+ Aitkin
•+ Albany
Blooming Prairie
•+ Frazee
+ Le Sueur
Owatonna
+ Pelican Rapids
1,800
1,600
1,800
1,000
3,800
15,300
1,800
Industrial
Population Portion Community
$2,500,000 +Perham
Industrial
Population Portion
247,000
300,000
800,000
500,000
700,000
2,000,000
Sleepy Eye
Spring Valley
Waseca
Well
Worthington
TOTAL
2,000 $
3,400
2,600
6,800
2,800
800
850,000
100,000
350,000
110,000
250,000
2,400,000
45,500 $11,107.000
+ Exceeds State unemployment rate of 5.4% which is below the National rate.
++ Exceeds National unemployment rate of 7.1%.
C. Communities with populations between 100.000 and 1,000,000
The only community within the population range affected is the City
of Duluth. The population of Duluth is over 110,000. The daily flow
into the affected POTWs is 36 mgd of which 16 mgd, or 44 percent, is
contributed by 8 affected industrial users. The estimated POTW construction
cost is $4 million of which the industrial portion is $2 million, or
50%. The largest industrial group affected is Paper and Allied Products,
13 mgd, $2 million. The unemployment rate in Duluth exceeds the National
unemployment rate of 7.1%.
V-43
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STATE OF MINNESOTA
D. Communities with populations over 1,000,000
Minneapolis-St. Paul, with a population of over 1,800,100, will be
affected. The daily flow into the affected POTWs is over 200 mgd of
which the industrial flow is 41 mgd, or 20 percent, of the total flow.
The estimated POTW construction cost is $200 million of which the industrial
portion is $23 million, or 12 percent. The largest industrial groups
affected are:
(1) Chemicals and Allied Products, 4 mgd, $2.3 million,
(2) Food and Kindred Products, 4 mgd, $2.3 million,
(3) Paper and Allied Products, 3 mgd, $2 million,
(4) Fabricated Metal Products, 3 mgd, $2 million.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 46 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $91 million of which the industrial portion would be $25 million.
Of these 46 needed facilities, 37, or 80 percent, will serve communities
with populations of less than 10,000.
V-44
-------
STATE OF MISSISSIPPI
I. Short Term Effect (From State Reported Data)
The Jackson metropolitan area* with a population of 170,000, and
nine smaller communities, ranging in size from 3,000 to 89,300, will be
affected. The combined population of the communities affected is over
390,000. The Jackson area POTW has a daily flow of 70 mgd of which
3 mgd, or 5 percent, is contributed by 25 affected industrial users.
The nine smaller communities have a daily flow of 71 mgd with 29 impacted
industrial users contributing 10 percent, or 7 mgd, of the total flow.
The combined estimated POTW construction cost is $244 million of which
the Industrial, portion is $13 million. The cost in Jackson is $71 million,
with an industrial portion of $3 million; the nine smaller communities
have a POTW construction cost of $176 million of which the industrial
portion is $10 million. The largest industrial groups affected are:
A. In Jackson,
(1) Food and Kindred Products, .5 mgd, $.5 million
B. In the nine remaining communities,
(1) Food and Kindred Products, 3 mgd, $5 million,
(2) Rubber and Miscellaneous Plastic, 1 mgd, $2 million.
Industrial
Community Population Portion
B11ox1 89,300 $ 3,155,000
Clarksdale 21,700 400,000
•H-Corlntn 11,600 2,200,000
Hattlesburg 38,300 1,000,000
Jackson 170,000 3,000,000
Laurel 24,100 1,467,000
+McComb 12,000 500,000
Morton 3,000 600,000
++0cean Springs 10,000 315,000
Pearl 10,000 70,000
TUTAT 390.000 $12.707.000
+ Exceeds State Unemployment Rate of 6.8% which is below the National rate.
++ Exceeds National Unemployment rate of 7.1%.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 24 needed facilities (treatment
plants and Interceptors) have substantial Industrial flows. That Is each
has an industrial flow over 100,000 gallons per day and more than 16
percent of the total POTW flow. The construction cost is estimated to
be $246 million of which the industrial portion would be $35 million or
14 percent. Of the 24 needed facilities, 15, or 63 percent, will serve
communities with populations of less than 10,000.
V-45
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STATE OF MISSOURI
I. Short Term Effect
No information was received regarding the short term effect of the
industrial cost exclusion (ICE). The Environmental Protection Agency's
estimate of the industrial portion .is $22 million.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 56 needed facilities (treatment
plants and interceptors) each have substantial industrial flows. That
is each has an industrial flow over 100,000 gallons per day and more
than 16 percent of the total POTW flow. The construction cost is estimated
to be $582 million of which the industrial portion would be $163 million
or 28 percent. Of the 56 needed facilities, 40, or 71 percent, will
serve communities with populations of less than 10,000.
V-46
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STATE OF MONTANA
I. Short Term Effect (From State Reported Data)
The community of Hamilton, with a population of 3,000, will be
affected. The dally flow Into the affected POTW 1s 2.5 mgd of which .1
mgd, or 4 percent, Is contributed by 1 affected Industrial user. The
estimated POTW construction cost 1s $2.3 million of which the industrial
portion is $.1 million. The largest Industrial group affected is Food
and Kindred Products, .1 mgd, $.1 million. Hamilton exceeds the
National unemployment rate of 7.1 percent.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 4 needed facilities (treatment
plants and interceptors) have substantial Industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $14 million of which the industrial portion would be $.6 million,
or 4 percent. Of these 4 needed facilities, 2, or 50 percent, will
serve communities with populations of less than 10,000.
V-47
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STATE OF NEBRASKA
I. Short Term Effect
No information was received regarding the short term effect of the
industrial cost exclusion. The Environmental Protection Agency's estimate
of the industrial portion is $5 million.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 13 needed facilities (treatment
plants and interceptors) each have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated to
be $155 million of which the industrial portion would be $48 million or
31 percent. Of the 13 needed facilities, 7, or 54 percent, will serve
communities with populations of less than 10,000.
V-48
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STATE OF NEVADA
I. Short Term Effect (From State Reported Data)
Three communities, ranging in size from 32,000 to 196,000 with an
average population of 119,000, will be affected. The combined population
of these communities is over 358,000. The daily flow into the affected
POTWs is 52 mgd of which .6 mgd, or 2 percent, is contributed by 9
affected industrial users. The estimated POTW construction cost is $34
million of which the industrial share is $.6 million. The largest
industrial group affected is Personal Services, .7 mgd $.5 million:
Industrial
Community Population Portion
++ Carson City 32,000 $250,000
-H-Las Vegas 196,000 183,000
Reno/Sparks 130,000 140,000
TOTAL 358,000 $573.000
++ Exceeds National unemployment rate of 7.1%.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that one needed facility (treatment
plant or interceptor) has a substantial industrial flow. That is it has
an industrial flow over 100,000 gallons per day and more than 16 percent
of the POTW flow. The construction cost is estimated to be $25 million
of which the industrial portion would be $1 million, or 4 percent.
V-49
-------
STATE OF NEW HAMPSHIRE
I. Short Term Effect (From State Reported Data)
Two communities, Lincoln and Manchester, will be affected. The
combined population of the communities affected 1s over 85,000. The
dally flow Into the affected POTWs 1s 18 mgd of which 7 mgd, or 39 percent,
1s contributed by at least 2 affected Industrial users. The estimated POTW
construction cost 1s $22 million of which the Industrial portion 1s
$9 million. The largest Industrial groups affected are Paper and Allied
Products, and Textile Mill Products.
Industrial
Community Population Portion
+L1ncoln 1,300 $1,240,000
•(•Manchester 84,600 7,861,000
TOTAL 85,900 $9,101,000
+ Exceeds State unemployment rate of 4.5% which is below the National rate.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 17 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is
each has an Industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost 1s estimated
to be $137 million of which the Industrial portion would be $48 million,
or 35 percent. Of these 17 needed facilities, 13, or 77 percent, will
serve communities with populations of less than 10,000.
III. Potential Effect (Data from Other Sources)
Various public and private sources have reported that the communities
shown below could be affected. In many cases, the information presented
did not fully or clearly identify the effect of the industrial cost
exclusion (ICE) on the community.
Industrial
Community Population Portion
•(•Lebanon 10,000 ?
+ Exceeds State Unemployment rate of 4.5% which 1s below the National rate.
Y-50
-------
STATE OF NEU JERSEY
I. Short Term Effect (From State Reported Data)
A. Overview
Twenty-seven communities, ranging in size from 9,000 to over 605,000
with an average population of 125,000, will be affected. The population
of all the communities affected is over 3,382,000. The daily flow into
the affected POTWs is 819 mgd of which 140 mgd, or 17 percent, is contributed
by over 320 affected industrial users. The estimated POTW construction
cost is $1.164 billion of which the industrial portion is $183 million,
or about 16 percent. The largest industrial groups affected are:
(1) Fabricated Metal Products, 11 mgd, $48 million,
(2) Chemicals and Allied Products, 27 mgd, $37 million,
(3) Food and Kindred Products, 8 mgd, $14 million,
(4) Paper and Allied Products, 18 mgd, $12 million,
(5) Electrical and Electronic Machinery, 3 mgd, $13 million.
B. Communities with populations under 100,000
Fourteen area communities, ranging in size from 9,000 to 84,000
with an average population of 41,100, will be affected. The population
of all the communities affected is over 575,000. The daily flow into
the affected POTWs is 100 mgd of which 5 mgd, or 5 percent, is contributed
by 27 affected industrial users. The estimated POTW construction cost
is $215 million of which the industrial portion is $14 million, or 6
percent. The largest industrial groups affected are:
(1) Chemicals and Allied Products, 2 mgd, $4 million,
(2) Food and Kindred Products, 1 mgd, $6 million,
(3) Electrical and Electronic Machinery, 1 mgd, $1 million.
Community
Industrial
Population Portion Community
Industrial
Population Portion
•H-Bayshore Reg S.A.
Cinnaminson, Plymyra,
Riverton
East Windsor
Ewing-lawrence
•H-Landis S.A.
++L1nden-Rosell S.A.
Lopatcong (Phillipsburg)
Manasquan S.A.
65,000 $1,130,000
26,000
40,000
55,000
47,000
25,000
39,000
60,000
1,014,000
331,000
222,000
2,567,000
580,000
198,000
2,567,000
Ma pieshade/
Moorestown
North Burlington
R.S.A. 84,000
Raritan Twp, MVA 9,000
Rockaway Valley, RSA 59,000
TWPSH of Morris
Butterfield Plant 10,000
TWPSH of Morris
Woodland Plant 20,000
36,000 $ 744,000
1,050,000
566,000
471,000
1,553,000
836,000
TOTAL
575.000 $13,829,000
++ Exceeds National unemployment rate of 7.1%.
V-51
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STATE OF NEW JERSEY
C. Communities with populations between 100,000 and 1.000,000
Nine communities, ranging 1n size from 100,000 to 605,000, will be
affected. The dally flow Into the affected POTWs is 719 mgd of which 135
mgd, or 19 percent, Is contributed by over 293 affected Industrial users.
The estimated POTW construction cost 1s $948 million' of which the Industrial
portion 1s over $169 million or 18 percent. The largest Industrial groups
affected are:
1) Fabricated Metal Products, 11 mgd, $48 million,
2) Paper and Allied Products, 18 mgd, $12 million,
)
4)
5)
Food and Kindred Products, 7 mgd, $11 million,
Chemicals and Allied Products, 27 mgd, $33 million,
Electrical and Electronic Machinery, 3 mgd, $11 million.
Industrial
Community Population t Portion
Camden County MUA 485,000 $73,288,000
++E11zabeth Joint Meeting 500,000 3,040,000
Gloucester Co. Ut 11 Authority 277,000 1,146,000
•H-Hudson Co. Ut1l Authority 605,000 13,068,000
Middlesex Co. Ut11 Authority 100,000 46,926,000
++Passa1c Valley Sewerage Com 250,000 18,132,000
+Rahway Valley Sewerage Authority 200,000 8,898,000
Somerset-Rari tan Valley Sewerage Auth 126,000 1,021,000
Trenton Sludge Facility 264,000 4,305,000
TOTAL 2,807,000 $169.824,000"
+ Exceeds State unemployment rate of 6.8% which is below the National rate,
++ Exceeds National unemployment rate of 7.1%.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 41 needed facilities (treatment
plants and Interceptors) have substantial Industrial flows. That 1s
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $1.457 billion of which the industrial portion would be $382
million, or 26 percent. Of these 41 needed facilities, 23, or 56 percent,
will serve communities with populations of less than 10,000.
V-52
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STATE OF NEW MEXICO
I. Short Term Effect (From State Reported Data)
Las Cruces, with a population of 95,000, and Roswell, with a population
of 120,000, will be affected. The two area POTWs have a daily flow of 18
mgd of which 1 mgd, or 5 percent, 1s contributed by 4 affected Industrial
users. The estimated POTW construction cost is $17 million of which the
Industrial portion is $1 million). The cost in Las Cruces 1s $8 million,
with an Industrial portion of $.2 million; the Roswell POTW has a
construction cost of $9 million of which the Industrial portion 1s $.8
million. The largest industrial group affected is Food and Kindred
Products, .8 mgd, $.7 million.
Community
•H-Has Cruces
Roswell
T5TAT
Population
95,000
120,000
Industrial
Portion
$ 234,000
869,000
215,000 $1,103,000
+++ Exceeds State unemployment rate of 7.7% which exceeds the National rate.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 6 needed facilities (treatment
plants and Interceptors) have substantial industrial flows. That is each
has an Industrial flow over 100,000 gallons per day and more than 16 percent
of the total POTW flow. The construction cost 1s estimated to be $40
million of which the Industrial portion would be $4 million or 10 percent.
Of the 6 needed facilities, 3, or 50 percent, will serve communities with
populations of less than 10,000.
NOTE; According to recent Information received by EPA, the following changes
should be made in the above data:
Item
Change From
To
10 mgd
5F,500
43V0150"
TOTAL/105,OOP
The above changes have not been Incorporated into the National Summary.
1) Paragraph I two area POTWs .. flow of 18 mgd
2) Las Cruces Population/95.000
3) Roswell Population/120,000
4) TOTAL/215,^
V-53
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STATE OF NEW YORK
I. Short Term Effect (From State Reported Data)
A. Overview
Twenty-nine communities, ranging in size from 1,000 to over 300,000
with an average population of 43,000, will be affected. The combined
population of the communities affected is over 1,246,000. The daily flow
into the affected POTWs 1s 321 mgd of which 43 mgd, or 13 percent, is
contributed by 131 affected industrial users. The estimated POTW construction
cost is $390 million of which the industrial portion is $76 million, or
19 percent. The largest industrial groups affected are:
(1) Food and Kindred Products, 11 mgd, $18 million,
C2J Machinery, except Electrical, 2 mgd, $7.1 million,
(3) Electrical and Electronic Machinery, 2 mgd, $10 million.
B. Communities with populations under 100.000
Twenty-five communities, ranging in size from 1,000 to 51,000 with an
average population of 12,400, will be affected. The combined population of
the communities affected is over 310,000. The daily flow into the affected
POTWs is 122 mgd of which 32 mgd, or 26 percent, is contributed by 75 affected
industrial users. The estimated POTW cnstruction cost is $268 million of
which the industrial portion is $60 million, or 22 percent. The largest
industrial groups affected are:
(1) Food and Kindred Products, 10 mgd, $17 million,
(2) Electrical and Electronic Machinery, 2 mgd, $9 million.
Community
Industrial
Population Portion
•m-Auburn
Avon
•m-Batavia
•m-Blasdell
•i-H-Canastota
•m-Champlain-Rouses Pt
•m-Cuba
Dundee
Endicott
•i-H-Fort Edwards
•H+Fulton
+++Gloversvt11 e-Johnstown
•H-+Granvtl 1 e
46,000
3,000
18,000
4,000
5,000
4,000
2,000
2,000
17,000
4,000
15,000
n 27,000
3,000
$ 324,000
640,000
710,000
470,000
5,040,000
780,000
4,260,000
666,000
1,090,000
1,210,000
6,140,000
20,575,000
75,000
Industrial
Community Population Portion
•H-+Heuvelton
Ithica
+++K1ngston
•H-Hake George
•i-H-Norwich
•HH-Oswego
Orangeburg
Port Jefferson
Seneca Falls
•H-+Silver Creek
White Plain
+++W11son
TOTAL
1,000
27,000
26,000
1,000
9,000
21,000
3,500
8,000
8,000
3,500
51,000
1,500
$
220,000
5,970,000
800,000
4,100,000
286,000
470,000
450,000
330,000
2,464,000
1,600,000
15,000
800,000
310.500 359,525,000
Exceeds State unemployment rate of 7.3% which exceeds the National rate.
V-54
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STATE OF NEW YORK
C. Communities with populations between 100.000 and 1.000,000
Four communities, ranging In size from 200,000 to 300,000, will be
affected. The dally flow Into the affected POTWs 1s. 198 mgd of which 10 mgd,
or 5 percent, Is contributed by 56 affected Industrial users. The estimated
POTW construction cost Is $122 million of which the Industrial portion 1s
over $16 million or 13 percent. The largest Industrial groups affected are:
1) Food and Kindred Products, 1 mgd, $.4 million,
2) Fabricated Metal Products, .6 mgd, $2 million,
(3) Machinery, except Electrical, 1 mgd, $4 million.
Industrial
Community Population Portion
•m-Orange County 230,000 $ 856,000
•H-Rochester 300,000 12,700,000
+++Syracuse 200,000 1,650,000
Yonkers 205,000 562,000
TOTAL 935,000 $15,768.000
Exceeds National unemployment rate of 7.1%.
Exceeds State unemployment rate of 7.3% which exceeds the National rate.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 45 needed facilities (treatment
plants and Interceptors) have substantial industrial flows. That 1s
each has an Industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $391 million of which the Industrial portion would be $67 million
or 17 percent. Of these 45 needed facilities, 25, or 56 percent, will
serve communities with populations of less than 10,000.
V-55
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New York State Department of Environmental Conservation
Xnalysis - ICE
The New York State Department of Environmental Conservation performed
an indepth analysis of our Construction Grants Program for the purpose of
assessing the potential effects of Section 3 of F.L. 96-483, Industrial
Cost Exclusion (ICE). Based on the results of this evaluation, NYSDEC
firmly believes that it would be to the best interest of the program and the
-tax paying population if ICE were repealed. Not only will such a significant
change in funding criteria delay ongoing projects needed for water pollution
control (40Z - 50Z of Step 3 & Step 2/3 projects we anticipate funding in
FY-82 & 83) but this delay will also require expenditure of more public
funds than if we were to proceed using existing funding criteria.
The Law is unclear in several key areas needed to establish baselines
for our analysis. Formost is the definition of an industrial user. For
the purposes of this study, we used the 40 CFR Fart 35, Subpart E definition
of "Industrial user", which was promulgated pursuant to F.L. 95-217. The
industrial user definition used is:
"Industrial user". Any non-governmental, non-residential
user of a publicly owned treatment works which discharges
more than the equivalent of 50,000 gallons per day (gpd)
of sanitary wastes and which is identified in the
Standard Industrial Classification Manual, 1972, Office
of Management and Budget, as amended and supplemented
under one of the following divisions:
Division A. Agriculture, Forestry, and Fishing.
Division B. Mining.
Division p. Manufacturing.
Division E. Transportation, Communications, Electric,
Gas and Sanitary Services.
Division I. Services.
The extent of the ICE exemption for projects which received a Step 2
grant prior to May 15, 1980 is not clear. For example, does this exemption
apply only to the project phase which received a Step 2 grant or to an
entire project if any phase received a Step 2 grant prior to May 15, 1980?
In our study, we assumed the exemption would only apply to the project phase
which received a Step 2 grant prior to May 15, 1980. We recently received
a copy of EPA*s proposed regulation for implementing ICE. EPA's proposal
is to exempt the entire project if any phase received a Step 2 grant prior
to May 15, 1980. We evaluated the minor differences in interpretation of
the May 15, 1980 exemption and found it to have little or no effect on this
study.
V-56
NYSDEC
1/23/81
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Several grantees have contacted us expressing industry's reluctance to
enter into agreements concerning their wastewater facilities projects. The
reluctance is due to their inability to determine the specific effects of
ICE. Items which must be resolved are:
1. Will the first 50,000 gpd of flow be fundable for
industries with a total flow exceeding 50,000 gpd?
2. Will funding be excluded for the total project based
on percent of industrial capacity, or only to specific
units or portion of units utilized for treatment of
industrial flow?
3. How will the currently allowable design capacity for
future industry be affected by the funding restrictions?
The first task in our study was to develop a list of all affected projects
using our Municipal Sewage Treatment Works Project Priority List as a starting
point. The majority of potentially affected projects in FY-84 & 85 are in
their infancy, and specific information regarding the extent of industrial
participation is not available. For this reason, we have limited our detailed
analysis to projects identified for funding in FY-82 and FY-83. The resulting
lists of affected projects are included as Appendix A, FY-82 & 83, and
Appendix B, FY-84 & 85.
The FY-82 & 83 information tabulates as follows:
FY-82
FY-83
Total Step 3 and
Step 2/3 Projects
NYS Priority List
116
73
Step 3 and Step 2/3
_ Projects
Affected by ICE
43
37
of Total
37%
50*
For the purposes of this report, we have assumed that New York State's
annual allocation will continue at the current level (approximately $350
million) and further, $300 million of New York State's allocation will be
used annually to fund Step 3 and Step 2/3 projects. This translates into
total eligible Step 3 and Step 2/3 costs of $400 million based on a 75%
Federal grant.
Trends which were apparent from this segment of our study are:
A. Forty to fifty percent of identified Step 3 and
Step 2/3 projects during any fiscal year will be
affected. We use 45% in the study.
B. The total eligible Step 3 and Step 2/3 project costs
that could be funded during any year are approximately
$400 million.
C. The dollar amounts excluded by ICE are approximately 5%
of the total eligible costs during any year. This is
based on total Step 3 and Step 2/3 project dollars
compared to estimates of the dollar amounts to be
excluded by ICE. V-57
NYSDEC
1/23/81
-------
The projected fiscal impacts are:
!• Total Project Dollars Affected
Step 3 & Step 2/3 Affected Project Dollars
Program by ICE Affected
$400 million 451 $180 million
II. Dollars attributable to industrial use which are ineligible
due to ICE;
Step 3 & Step 2/3 ICE Percent Attributable ICE Dollars
Program to Industrial Flow Ineligible
$400 million 5Z $20 million
To assess the impact of ICE, we developed an equation which shows the
effect in terms of dollar amounts. The reason for developing the equation
is that ICE will definitely cause delays in all steps of the grant process.
As previously mentioned, projects are already slowing down due to
municipalities and Industry being unable to assess the impacts of ICE.
In the calculations, we use a one-year delay which is conservative and
an annual Increase in construction costs of 9.1Z. Engineering News-Record
reported the annual increase of 9.1Z in the third quarterly cost roundup.
Our detailed calculations are included as Appendix C and the results
noted below:
- Of $21.82 million excluded annually, the result is only
$4.08 million in reduced grant amounts. This is a
direct result of project delay and inflation.
This is a NET • minus .$17.74 million
- The public absorbs the majority of the increase
(this assumes industry pays all excluded costs).
a) Industry's share - $1.97
b) Public's share • $15.77
- In reality, the public pays an added $15.77 million
in order to reduce grant amounts by $4.08 million.
We next developed a listing of projects including all industries known
to be affected (See Appendix C). We also developed cost Information for 32
of these projects for which we had information on an industry-by-industry
basis (See Appendix E).
Using the information accumulated in Appendix E, we did case studies
of three projects to show the effect of ICE on a project specific basis.
The case studies include one project in a large community, the City of
Rochester, and two projects in smaller communities, the Village of Rouses
Point, and the Village of Fort Edward.
V'58 NYSDEC
1/23/81
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The detailed analyses are included as Appendix F and the results
displayed below:
Pre-ICE
Eligible Cost
Federal Grant
Post-ICE
Project Cost
Eligible Cost
Z Subject to ICE
Federal Grant
Change in Costs
to Public
C360745-04
Rochester
$ 270,000,000
202,500,000
297,000,000
258,400,000
4.3
211,400,000
23,900,000
increase
C360873-02
Champ lain/
Rouses Ft.
$ 3,333,000
2,500,000
3,660,000
2,550,000
23.5
2,100,000
100,000
decrease
C361021-02
Fort Edward
$ 13,100,000
9,825,000
14,400,000
11,900,000
9.2
9,750,000
1,187,000
increase
783,000
1,200,000
Excluded Industrial 11,600,000
Cost
We have also included as Appendix G a letter from the City of Gloversville
which addresses the impact of ICE from the viewpoint of an affected community.
V-59
NYSDEC
1/23/81
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Findings
There are two major drawbacks which cause us to believe that institution
of ICE provision at this late date in the Construction Grants Program is unwise.
The underlying intent of ICE is that the Federal Government (Public) can
no longer afford to subsidize industry through the Construction Grants Program.
Our calculations clearly indicate that ICE will generally increase project
costs, resulting in increased costs to the public. Secondly, we are introducing
a major inequity. Municipal Water Treatment Facilities which treat wastewater
from industry, prior to ICE, received full funding, as opposed to those who
are now in the process of a joint venture and will receive no funds for the
industrial portion. The industry or the community must now "front end" the
capital costs.
The funding restriction will introduce delays for those projects already
in the grant program while industry and grantees evaluate the financial
impact. In NTS, 40 - 50Z of our projected F7-82 and FY-83 Step 3 projects
will be affected. This delay is inevitable since industrial participation
is determined during facility planning. Projects that will be affected must
now go back for a complete re-evaluation of the impact. The Step 2
exemption which we assume was intended to address this concern is too late
in the process to be of significant value. Again, funding'criteria must
be established before a project enters the program, not at the mid-point
or end.
The negative impact ICE will have on affected projects in general will
be magnified in the case of small, one or two industry communities.
Historically, these communities and their industries have been partners in
solving their water pollution control problems to the benefit of all.
ICE may very well destroy this often beneficial relationship but, of even
more concern is that it may well destroy needed water pollution control
projects and the economic stability of a small community and the economies
of scale which benefit u* all. The question to be answered in this case is,
Is the small savings of Construction Grants Program dollars expended for
industry worth the increased overall cost to the general public and the
extreme hardship we will impose on small communites? (Ref. Appendix E).
From a program standpoint, ICE is much too major a change to make at
this late date in the program. From a dollar standpoint, the reduction in
expenditure of public funds resulting from ICE may be negated by Increased
public costs due to project delay. From a grantee standpoint, it is just
one more unnecessary delay and, in some cases, hardship caused by a
retroactive change in government policy. ICE, for the present, should be
repealed or, at the very minimum, implemented only for new projects entering
the program.
NYSDEC
1/23/81
V-60
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Calculation to Assess the Dollar Effect of ICE
We previously developed the following:
- Total Step 3+4 Program $400 million
- Project dollars affected by ICE 180 million
- Ineligible for funding 20 million
- Federal allocation available for 300 million
funding Step 3+4 projects
- First, we determine the APPARENT decrease in. grant amounts
due to ICE:
a) ($400 million - $20 million) x 0.75 - $380 million x 0.75
or $285 million Federal participation with ICE
b) $400 million x 0.75 - $300 million Federal participation
without ICE
c) APPARENT decrease in grant amounts due to ICE or:
$300 million - $285 million - $15 million
(Note: Our next set of calculations show why we
emphasized "apparent".)
- Second, we assume a one-year delay in affected projects and
put in increases in project costs due to Inflation.
a) Increase in project costs due to inflation is:
$180 million x 0.091 • $16.38 million
b) The actual Step 3+4 fiscal program is:
$400 million + $16.38 million • $416.38 million
c) The new eligible amount for funding is:
$416.38 - ($20 x 1.091) • $415.84 million -
$21.82 million or $394.56 million
d) The Federal participation at 75% yields:
$394.56 million x 0.75 - $295.92 million
e) This results in an actual reduction in grant amounts of:
$300 million - $295.92 million - $4.08 million
Conclusions:
- Of $21.82 million excluded, only $4.08 million is realized in
reduced grant amounts.
NYSDEC
1/23/81
-------
- The net effect of ICE is a $21.82 million increase minus
$4.08 million or:
$21.82 million - $4.08 million - $17.74 million
Net - -$17.74 million
- The public absorbs the majority of the $17.74 million as follows:
1. Assuming industry pays their proportionate share,
Industry's share - 20/180 « 11.1Z or
$17.74 million x 0.111 - $1.97 million
2. Public share - $17.74 million - $1.97 million
or $15.77 million
- Therefore, in reality, the public pays $15.77 million in order
not to reduce grant amounts by $4.08 million
V-62 NYSDEC
1/23/81
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Case Studies of Specific Projects
I. Our first example project is C360745-04, Rochester Pure Water District,
Monroe County. The total eligible cost without ICE is $270,000,000 and
it is programed for fiscal year 1982. It should be noted that the
$270 million is greater than the $180.0 million estimated to be
affected in our previous calculations concerning the statewide
program. This is due to the difference in fundable projects and
programed projects (i.e., $467 million fundable and $1.5 billion
programed). Monroe County is currently accelerating this project.
Using the same reasoning as in our study of the Statewide program,
we can determine the effect of ICE on this project.
Total eligible cost without ICE - $270,000,000
We identified 17 industries which could be affected. They
account for 4.3Z of the project costs:
Rochester Gas & Electric 0.13Z Owen Illinois 0.06Z
Aid to Hospitals 0.16Z Pfaudler Co. 0.38Z
Flower City Tissue Mill 0.13Z Bauch & Lomb 0.13Z
Mixing Equipment 0.15Z General Circuits 0.35Z
Rochester Independent 0.17Z Taylor Instruments 0.37Z
Packers
Rochester Plating 0.07Z Ritter Equipment 0.09Z
Rochester GMC 0.14Z E.J. Dupont 0.62Z
Kleen-Bright 0.09Z Singer Education 0.14Z
Olin Corp. 0.34Z
Eligible amount after excluding portion attributable to industry:
$270 - ($270 x 4.3Z) - $270 - 11.6 - $258.4 million
Federal participation with ICE:
$258.4 x 75Z - $193.8
Federal participation without ICE:
$270 x 75Z - $202.5 million
Apparent decrease in grant amount:
$202.5 - $193.8 - $8.7 million
Our next set of calculations adds in the cost due to a one-year delay
in awarding the grant.
Added cost of a one-year delay:
$270 + ($270 x 9.1Z)- $270 + $24.6 - $294.6 million
NYSDEC
V'63 1/20/81
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New amount eligible for Federal participation:
$294.6 - $11.6 - ($11.6 x 9.12) - $294.6 - $12.7 or $281.9 million
Federal participation at 75%:
$281.9 x 752 - $211.4 million
Actual increase in grant amounts:
$202.5 - $211.4 - -$8.9 million (i.e., an expenditure)
The effect of ICE on this project is:
a) A $24.6 million increase in project costs
b) $8.9 million more in grant amounts when compared
to a program not including an ICE provision.
c) The remainder ($15.7 million) is absorbed by
the Grantee:
1. If industry paid for the portion attributable
to Industry, they would absorb $15.9 x 4.32
or $0.7 million.
2. Therefore, the local share would be $15.0 million.
d) The net effect to the public is $8.9 + $15.0 -
$23.9 million in added costs.
II. Our second example is a small community, Champlain (T) - Rouses
Point (V), Clinton County, C360873-02. The total eligible cost
without ICE is $3,333,000 and it is programed for fiscal year 1982.
There is one industry of greater than 50,000 gpd which accounts
for 23.52 of the project costs.
Total eligible cost without ICE - $3,333,000
The industry affected is:
Ayerst 23.52
Eligible amount after excluding portion attributable to industry:
$3,333 - ($3,333 x 23.52) - $3,333 - $0.783 or $2.55 million
Federal participation with ICE:
$2.55 x 752 - $1.91 million
Federal participation without ICE:
$3,333 x 752 • $2.50 million
Apparent decrease in grant amount:
$2.50 - $1.91 - $0.59 million msVEC
V'64 1/20/81
-------
We now add in the costs due to a one-year delay In the project:
Added cost of a one-year delay:
$3.33 + ($3.33 x 9.1Z) - $3.63 million
New amount eligible for Federal participation:
$3.63 - $0.78 - ($0.78 x 9.12) - $3.63 - $0.85 or $2.78 million
Federal participation with ICE:
$2.78 x 752 - $2.1 million
Actual decrease in grant amount:
$2.5 - $2.1 - $0.4 million
The effect of ICE on this project is:
a) A $0.30 million increase in project costs
b) $0.40 million less in grant amounts
c) The net effect of ICE is $0.40 million minus $0.30 or:
$0.40 million - $0.30 million - $0.10 million
Net « $0.10 million not expended by public
III. Our third example is also a small community, the Village of Fort Edward,
Washington County, C361021-02. The total eligible cost without ICE
is $13.1 million. There are two industries of greater than 50,000 gpd
which account for 9.22 of the project costs.
Total eligible cost without ICE - $13.1 million
The Industries are:
Decora 4.42 Chase Bag Co. 4.82
Eligible amount after excluding portion attributable to industry:
$13.1 - ($13.1 x 9.22) - $13.2 - $1.2 or $11.9 million
Federal participation with ICE:
$11.9 million x 75Z • $8.935 million
Federal participation without ICE:
$13.1 million x 75% - $9.825 million
Apparent decrease in grant amount:
$9.825 - $8.935 - $0.89 million
NYSDEC
1/20/81
V-65
-------
We now add in the costs due to a one-year delay In the project:
$13.1 + ($13.1 x 9.1Z) - $14.3 million
New amount eligible for Federal participation:
$14.3 - $1.2 - ($1.2 x 9.1Z) - $14.3 - $1.3 or $13.0 million
Actual decrease in grant amount:
$9.825 million - $9.750 million - $0.075 million
The effect of ICE on this project is:
a) A $1.3 million increase in project cost
b) $0.075 million decrease in grant amount compared
to a program without an industrial cost exclusion
c) The net effect of ICE is a $1.3 million increase
minus $0.075 or:
$1.3 million - $0.075 • $1.225 million
Net - $1.225 million expended by public
d) The grantee absorbs most of the increase:
1. Industries share - $1.225 x 9.21 or $0.113 million
2. The remainder to the Village or:
$1.3 - $0.113 - $1.187 million
V-fifi NYSDEC
V 66 1/20/81
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STATE OF NORTH CAROLINA
I. Short Term Effect (From State Reported Data)
A. Overview
Fifteen communities, ranging in size from 2,300 to 241,000 with an
average population of over 55,000,. will be affected. The population of
all the communities affected is over 827,000. The daily flow into the
affected POTWs is 141 mgd of which 92 mgd, or 65 percent, is contributed
by 97 affected industrial users. The estimated POTW construction cost
is $87 million of which the industrial portion is $25 million, or 29
percent. The largest industrial groups affected are:
(1) Textile Mill Products, 12 mgd, $11 million,
(2) Food and Kindred Products, 8 mgd, $4 million,
(3) Chemicals and Allied Products, 3 mgd, $2 million.
B. Communities with populations under 100,000
Twelve communities, ranging in size from 2,300 to 95,400 with an
average population of 25,600, will be affected. The population of all
the communities affected is over 307,000. The daily flow into the affected
POTWs is 66 mgd of which 21 mgd, or 32 percent, is contributed by 45
affected industrial users. The estimated POTW construction cost is
$53 million of which the industrial portion is $16 million, or 30 percent.
The largest industrial groups affected are:
(1) Textile Mill Products, 8 mgd, $9 million,
(2) Chemicals and Allied Products, 3 mgd, $2 million,
(3) Food and Kindred Products, 3 mgd, $2 million.
Community
Industrial
Population Portion
Asheboro
Durham, Northside
fForest City
fGreenville
fHigh Point, Westside
(•Lexington
10,800
95,500
7,200
29,100
63,200
17,200
$1 ,700,000
900,000
500,000
400,000
500,000
1,900,000
Community
Morganton
++New Bern
Randleman
++Roanoke Rapids
++Roxboro
•H-Thomasville
Industrial
Population Portion
33,600
14,700
2,300
13,500
5,400
15,200
$5,700,000
400,000
800,000
2,000,000
900,000
300,000
307.700 $16.000.000
Exceeds State Unemployment rate of 6.3% which is below the National rate.
Exceeds National Unemployment rate of 7.1%.
V-67
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STATE OF NORTH CAROLINA
C. Communities with populations between 100,000 and 1.000.000
Three communities, ranging in size from 133,000 to 241,000, will
be affected. The daily flow into the affected POTWs is 75 mgd of which
71 mgd, or 95 percent, is contributed by 52 affected industrial users.
The estimated POTW construction cost is $35 million of which the industrial
portion is over $8 million, or 23 percent. The largest industrial
groups affected are:
(1) Textile Mill Products, 4 mgd, $2 million,
(2) Food and Kindred Products, 5 mgd, $2 million.
Industrial
Community Population Portion
Buncombe County 145,000 $4,500,000
Charlotte 241,000 900,000
Winston Salem 133,000 3,200,000
TOTAL 519,000 * $8,500,000
II. Long Term Effect (From EPA Needs Survey
The 1980 Needs Survey reported that 84 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is each
has an industrial flow over 100,000 gallons per day and more than 16
percent of the total POTW flow. The construction cost 1s estimated to be
$482 million of which the Industrial portion would be $157 million, or 33
percent. Of these 84 needed facilities, 52, or 62 percent, will serve
communities with populations of less than 10,000.
III. Potential Effect (Data from Other Sources)
Various public and private sources have reported that the communities
shown below could be affected. In many cases, the Information presented
did not fully or clearly Identify the effect of the Industrial cost
exclusion (ICE) on the community.
Industrial
Community Population Portion
•H-Goldsboro ? $ ?
•H-Lumberton ? ?
+Mount A1ry 8,200 ?
+Rocky Mount 35,000 40,000,000
TOTAT 43,200 $40,000,000
Exceeds State unemployment rate of 6.3% which is below the National rate.
Exceeds National unemployment rate of 7.1%.
V-68
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STATE OF NORTH DAKOTA
I. Short Term Effect (From State Reported Data)
Two communities, ranging 1n size from 15,500 to 72,000 with an
average population of 43,750, will be affected. The combined population
of the communities affected 1s over 87,500. The dally flow Into the
affected POTWs 1s 10 mgd of .which 1.3 mgd, or 13 percent, 1s contributed
by 6 affected Industrial users. The estimated POTW construction cost 1s
$4 million of which the Industrial portion is $.2 million, or 5 percent.
The largest Industrial group affected 1s Food and Kindred Products,
.8 mgd, $.1 million.
Industrial
Community Population Portion
Fargo 72,000 $ 75,000
West Fargo 15,500 75,000
TOTAL 87,500 ' $ 150,000
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 7 needed facilities (treatment
plants and Interceptors) have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $28 million of which the Industrial portion would be $5 million,
or 18 percent. Of these 7 needed facilities, 2, or 29 percent, will
serve communities with populations of less than 10,000.
V-69
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STATE OF OHIO
1. Short Terra Effect (From State Reported Data)
A. Overview
Forty-six communities, ranging in size from 6,100 to over 524,300
with an average population of 47,800, will be affected. The combined
population of the communities affected is over 2,000,000. The daily
flow into the affected POTWs is 566 mgd of which 95 mgd, or 17 percent,
is contributed by 260 affected industrial users. The estimated POTW
construction cost is $671 million of which the industrial portion is
$115 million, or 17 percent. The largest industrial groups affected are:
(1) Transportation Equipment, 17 mgd, $20 million,
(2) Machinery, except Electrical, 7 mgd, $8 million,
(3) Fabricated Metal Products, 6 mgd, $7 million,
(4) Food and Kindred Products, 6 mgd, $8 million.
B. Communities with populations under 100,000
»
Forty-three communities, ranging in size from 6,100 to 73,400, with
an average population of 275,000, will be affected. The population of
the communities affected is over 1,100,000. The daily flow into the
affected POTWs is 237 mgd of which 42 mgd, or 18 percent, is contributed
by 154 affected industrial users. The estimated POTW construction cost
is $398 million of which the industrial portion is $52 million, or 13
percent. The largest industrial groups affected are:
(1) Fabricated Metal Products, 6 mgd, $7 million,
(2) Transportation Equipment, 6 mgd, $8 million,
(3) Food and Kindred Products, 6 mgd, $8 million.
Industrial
Community Population Portion
•H-Alliance 25,800 $ 260,000
-H-Ashland 20,300 795,000
++Avon Lake 12,500 1,900,000
++Barberton 27,000 1,150,000
•H-Bedford Hght 12,000 220,000
•H-Bellefontaine 11,000 2,100,000
•H-Berea 20,000 40,000
•H-Bryan 7,000 300,000
-H-Conneaut 15,000 190,000
++Clyde 6,100 800,000
•H-Defiance 16,000 770,000
Delaware 20,000 350,000
++Easterly 24,000 650,000
•H-Elyria 32,000 1,400,000
Euclid 60,000 2,500,000
Findlay 38,000 1,540,000
Community
Industrial
Population Portion
++Ironton 14,000
++ Jackson 7,000
++Lancaster 40,000
++Mansfield 57,000
++Marietta 16,000
+++Maryvi11e 8,000
++Mentor 42,000
++Miami District 11,000
++Middletown 48,000
Montgomery Co, E. 52,000
++Newark 40,000
++Norwa1k 14,000
Orrville 8,000
++Piqua 20,000
•n-Sidney 18,000
•H-Springfield 73,400
$ 2,440,000
850,000
450,000
1,930,000
800,000
650,000
640,000
500,000
5,700,000
2,200,000
4,700,000
520,000
300,000
1,100,000
730,000
890,000
Y-70
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STATE OF OHIO
Fostoria
Fremont
Geneva
Greenville
19,000
19,000
7,300
13,000
$1,700,000
2,920,000
650,000
590,000
++Summit Co.
++Tiffin
•n-Troy
++Twinsburg
++Warren
Wooster
++Zanesville
TOTAT
36,200
20,400
18,500
7,200
59,500
20,000
38,000
150,000
520,000
540,000
220,000
4,900,000
350,000
400,000
1,073.200 $52,305.000
++ Exceeds National Unemployment rate of 7.1%.
•i-n- Exceeds State Unemployment rate of 8.1% which exceeds the National rate.
C. Communities with populations between 100,000 and 1,000,000
Three communities, ranging in size from 194,861 to 524,304 with an
average population of 32,000, will be affected. The population of all the
communities affected is over 956,000. The 4aily flow into the affected
POTWs is 330 mgd of which 53 mgd, or 16 percent, is contributed by 106
affected industrial users. The estimated POTW construction cost is $274
million of which the industrial portion is over $63 million, or 23 percent.
The largest industrial groups affected are:
.Transportation Equipment,
Machinery, except
Rubber and Miscellaneous Plastic,
10 mgd,
Electrical, 4 mgd,
Community
+++Akron
Columbus
•m-Dayton
ToTAT
Population
240,000
524,000
195,000
959,000
$12 million,
$4 million,
5 mgd, $5 million
Industrial
Portion
$23,000,000
22,000,000
18,000,000
$63.000.00?
•H-+ Exceeds State unemployment rate of 8.1% which exceeds the National rate.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 82 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $806 million of which the industrial portion would be $203 million,
or 25 percent. Of these 82 needed facilities, 42, or 51 percent, will
serve communities with populations of less than 10,000.
V-71
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STATE OF OHIO
III. Potential Effect (Data from Other Sources)
Various public and private sources reported that the communities shown
below could be affected. In many cases, the information presented did not
fully or clearly identify the effect of the industrial cost exclusion (ICE)
on the community.
Industrial
Community Population Portion
Canton 115,000 ?
Cincinnati 460,000 ?
Deta 5,000 ?
Lima 55,000 ?
Montpelier 5,000 ?
Sylvania 15,000 ?
TOTAL 655.000 ?
V-72
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STATE OF OKLAHOMA
I. Short Term Effect (From State Reported Data)
A. Overview
Nine communities, ranging in size from 1,200 to over 270,000 with an
average population of 58,530, will be affected. The combined population of
the communities affected is over 526,800. The daily flow into the affected
POTWs is 64 mgd of which 5 mgd, or 7 percent, is contributed by 18 affected
industrial users. The estimated POTW construction cost is $51 million of
which the industrial portion is $6 million, or 12 percent. The largest
industrial group affected is Food and Kindred Products, 3 mgd, $4 million.
B. Communities with populations under 100,000
Seven communities, ranging in size from 1,200 to 77,000 with an
average population of 20,700, will be affected. The combined population
of these communities is over 144,800. The daily flow into the affected
POTWs is 19 mgd of which 3 mgd, or 16 percent, 'is contributed by 10
affected industrial users. The estimated POTW construction cost is $29
million of which the industrial portion is over $5 million. The largest
industrial group affected is Food and Kindred Products, 2 mgd, $4 million.
Community
Anadarko
Ardmore
Guymon
+Jay
Midwest
•n-St ill well
•H-Westville
TOTAL
Population
7,000
40,700
12,200
3,500
77,000
3,200
1,200
144,800
Industrial
Portion
$ 562,000
1,530,000
1,550,000
710,000
190,000
349,000
590,000
$5,481,000
+ Exceeds State unemployment rate of 5.1% which is below the National rate.
++ Exceeds National unemployment rate of 7.1%.
C. Communities with populations between 100,000 and 1,000.000
Two communities ranging in size from 112,000 to 270,000 will be affected.
The daily flow into the affected POTWs is 45 mgd of which 1 mgd, or 2
percent, is contributed by 8 affected industrial users. The estimated
POTW construction cost is $23 million of which the industrial portion is
over $.4 million or about 2 percent. The largest industrial groups
affected are Food and Kindred Products, and Petroleum and Related
Industries.
V-73
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STATE OF OKLAHOMA
Industrial
Community Population Portion
Norman 112,000 $120,000
Tulsa 270,000 287,000
TOTAL 382,000 $407,000
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 17 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $53 million of which the industrial portion would be $8 million or
15 percent. Of these 17 needed facilities, 9, or 53 percent, will serve
communities with populations of less than 10,000.
III. Potential Effect (Data from Other Sources)
Various public and/or private sources have reported that the
communities shown below could be affected. In many cases, the information
presented did not fully or clearly identify the effect of the industrial
cost exclusion (ICE) on the community.
Industrial
Community Population Portion
•H-Muskogee 40,000 ?
++ Exceeds National unemployment rate of 7.1%.
V-74
-------
STATE OF OREGON
1. Short Term Effect (From State Reported Data)
A. Overview
Four communities, ranging in size from 7,000 to over 400,000 with an
average population of 129,000, will be affected. The combined population
of the communities affected is over 500,000. The dai.ly flow into the
affected POTWs is 156 mgd of which 42 mgd, or 27 percent, is contributed
by 21 affected industrial users. The estimated POTW construction cost
is $16 million of which the industrial portion is $6 million, or 35 percent.
The largest industrial groups affected are:
(1) Paper and Allied Products, 32 mgd, $5 million
(2) Food and Kindred Products, 5 mgd, $8 million.
B. Communities with populations under 100,000
Three communities, ranging in size from 7,000 to 80,000 with an
average population of 39,000, will be affected. The combined population
of the communities affected is over 117,000. The daily flow into the
affected POTWs is 56 mgd of which 34 mgd, or 60 percent, is contributed
by 5 affected industrial users. The estimated POTW construction cost is
$10 million of which the industrial portion is $6 million, or 60 percent.
The largest industrial groups affected are:
(1) Paper and Allied Products, 32 mgd, $5 million,
(2) Food and Kindred Products, 2 mgd, $.6 million.
Industrial
Community Population Portion
•H- Eugene 80,000 $ 600,000
+++ St. Helens 7,000 5,000,000
+++ Springfield 30,000 90,000
TOTAL 117.000 $5,690,000
++ Exceeds National unemployment rate of 7.1%.
+++ Exceeds State unemployment rate of 8.0% which exceeds the National rate.
C. Communities with populations between 100.000 and 1,000.000
Portland, with a population of 400,000, will be affected. The
daily flow into the affected POTWs is 100 mgd of which 8 mgd, or 8 percent,
is contributed by 16 affected industrial users. The estimated POTW
construction cost is $4 million of which the industrial portion is
over $.3 million, or 5 percent. The largest industrial group affected is
Food and Kindred Products, 3 mgd, $.1 million.
V-75
-------
STATE OF OREGON
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 11 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is each
has an industrial flow over 100,000 gallons per day and more than 16
percent of the total POTW flow. The construction cost is estimated to be
$308 million of which the industrial portion would be $58 million, or 19
percent. Of these 11 needed facilities, 2, or 10 percent, will serve
communities with populations of less than 10,000.
III. Potential Effect (Data from Other Sources)
Various public and private sources have reported that the communities
shown below could be affected. In many cases, the information presented
did not fully or clearly identify the effect of the industrial cost
exclusion (ICE) on the community.
4
Industrial
Community Population Portion
Salem ? ?
V-76
-------
STATE OF PENNSYLVANIA
I. Short Term Effect (From State Reported Data)
A. Overview
Ten communities, ranging 1n size from 5,000 to over 1,040,000 with an
average population of 189,000, will be affected. The combined population
of the communities affected 1s over 1,887,000. The dally flow Into the
affected POTWs 1s 319 mgd of which 18 mgd, or 6 percent, 1s contributed
by 88 affected Industrial users. The estimated POTW construction cost 1s
$212 million of which the Industrial portion 1s $16 million, or 8 percent.
The largest Industrial groups affected are:
ili
1) Chemicals and Allied Products,. 2 mgd, $7 million,
2) Food and Kindred Products, 2 mgd, $4 million.
B. Communities with populations under 100.000
Seven communities, ranging 1n size from 5,000 to 87,000 with an average
population of 34,000, will be affected. The combined population of these
communities 1s over 239,000. The dally flow Into the affected POTWs 1s
49 mgd of which 3 mgd, or 7 percent, 1s contributed by 23 affected Industrial
users. The estimated POTW construction cost 1s $100 million of which the
Industrial portion 1s $11 million, or 11 percent. The largest Industrial
groups affected are:
(1) Chemicals and Allied Products, 1 mgd, $6 million,
(2) Food and Kindred Products, .5 mgd, $3 million.
Industrial
Community Population Portion
+++Berw1ck 12,000 $ 526,000
Hanover 30,000 1,400,000
Lower W1ssah1ckon 10,000 4,509,000
New Holland 5,000 830,000
•H-SpHngettsbury Township 87,000 700,000
West Chester 20,000 2,670,000
++York 75,000 720,000
ToTAT 239.000 $11.355.000
++ Exceeds National unemployment rate of 7.135.
•H-+ Exceeds State unemployment rate of 7.755 which exceeds the National rate.
C. Communities with populations between 100.000 and 1.000.000
Lancaster, with a population of 308,000, and Wyoming Valley, with a
population of 300,000, have dally flows of 30 mgd and 40 mgd respectively.
In Lancaster, the Industrial flow is 1 mgd or 3 percent of the total flow;
1n Wyoming Valley, Industrial flows also account for 1 mgd, or about
3 percent of the total flow. The estimated POTW construction cost 1n
Lancaster 1s $40 million of which the Industrial portion 1s $1 million
or 3 percent. In Wyoming Valley, POTW construction cost 1s estimated to
be $30 million of which the Industrial portion Is about $.4 million or
1 percent. The largest industrial groups affected are:
V-77
-------
STATE OF PENNSYLVANIA
(1) Food and Kindred Products, .8 mgd, $1 million,
(2) Chemicals and Allied Products, .4 mgd, $.5 million.
Industrial
Community Population Portion
Lancaster 308,000 $1,250,000
+-H-Wyoming Valley S.A. (Lucerne Co.) 300,000 387,000
TOTAL eos.ooo $1,537,000
+++ Exceeds State unemployment rate of 7.7% which is above the National rate.
D. Community with population over 1.000,000
Allegheny County, with a population of 1,040,000, has a daily flow
of 200 mgd. In Allegheny County, the industrial flow is 03 mgd, or 7
percent of the total flow of 174 mgd. The estimated POTW construction
cost in Allegheny County is $32 million of which the industrial portion
is $32 million, or 6 percent. The largest industrial groups affected
are:
(1) Primary Metal Products, 2 mgd, $.5 million,
(2) Transportation Equipment, 1 mgd, $.2 million,
(3) Food and Kindred Products, .9 mgd, $.2 million.
Industrial
Community Population Portion
Allegheny County 1,040,000 $2,722,000
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 60 needed facilities (treatment
plants and interceptors) have substantial, industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $466 million of which the industrial portion would be $81 million
or 17 percent. Of these 60 needed facilities, 33, or 55 percent, will
serve communities with populations of less than 10,000.
V-78
-------
STATE OF PENNSYLVANIA
III. Potential Effect (Data from Other Sources)
Various public and private sources have reported that the communities
shown below could be affected. In many cases, the information presented did
not fully or clearly identify the effect of the industrial cost exclusion
(ICE) on the community.
Industrial
Community Population Portion
+++Chester 60,000 ?
Fleetwood 3,000 ?
TOlAT 63,000 1
+++ Exceeds State unemployment rate of 7.7% which is above the National rate.
V-79
-------
STATE OF RHODE ISLAND
I. Short Term Effect (From State Reported Data)
Four communities, ranging in size from 2,500 to 18,000 with an
average population of over 7,450, will be affected. The combined population
of the communities affected is over 46,000. The daily flow into the
affected POTWs is 7 mgd of which 2 mgd, or 28 percent, is contributed by
over 10 affected industrial users. The estimated POTW construction cost
is $21 million of which the industrial portion is $2 million. The
largest industrial groups affected are:
(1) Textile Mill Products, .4 mgd, $.8 million,
(2) Fabricated Metal Products, .3 mgd, $1 million.
Industrial
Community Population Portion
Bristol 15,000 t $1,030,000
East Greenwich 2,500 1,790,000
Warwick 10,500 2,110,000
+West Warwick 18,000 845,000
TOTAL 46,000 $5,785.000
+ Exceeds State unemployment rate of 5.9% which is below the National rate,
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 6 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $170 million of which the industrial portion would be $64 million,
or 38 percent. None of the needed facilities serve communities with
populations of less than 10,000.
V-80
-------
STATE OF SOUTH CAROLINA
I. Short Term Effect (From State Reported Data)
Fort Mill, with a population of 4,500, and North Charleston, with a
population of 61,200, will be affected. The combined population of the
communities affected is over 65,700. The two area POTWs have a daily
flow of 39 mgd of which 3 mgd, or 9 percent, is contributed by 8 affected
industrial users. The estimated POTW construction cost is $19 million of
which the industrial portion is $2 million. The cost in North Charleston
is $17 million, with an industrial portion of $2 million; the Fort Mill
POTW has a construction cost of $2 million of which the industrial
portion is negligible. The largest industrial group affected is Textile
Mill Products, .8 mgd, $.2 million.
Industrial
Community Population Portion
++Fort Mill 4,500 $ 87,000
+North Charleston 61,200 1,474,000
TOTAL 65,700 $1.561.000'
+ Exceeds State unemployment rate of 6.7% which is below the National rate.
++ Exceeds National unemployment rate of 7.1%.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 39 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $111 million of which the industrial portion would be $53 million
or 47 percent. Of the 39 needed facilities, 24, or 62 percent, will
serve communities with populations*of less than 10,000.
III. Potential Effect (Data from Other Sources)
Various public and private sources have reported that the communities
shown below could be affected. In many cases, the information presented
did not fully or clearly identify the effect of the industrial cost
exclusion (ICE) on the community.
Industrial
Community Population Portion
++Aiken 14,600 $550,000
Lancaster 10,000 ?
TOTAL 24.600 $550,000
•H- Exceeds National unemployment rate of 7.1%.
V-81
-------
STATE OF SOUTH DAKOTA
I. Short Term Effect (From State Reported Data)
Five communities, ranging in size from 400 to 46,000 with an
average population of 13,400, will be affected. The combined population
of the communities affected is over 67,100. The daily flow into the
affected POTWs is 17 mgd of which 2 mgd, or 12 percent, is contributed
by 8 affected industrial users. The estimated POTW construction cost is
$15 million of which the industrial portion is $1 million, or 6 percent.
The largest industrial group affected is Food and Kindred Products,
1.5 mgd, $1 million.
Industrial
Community Population Portion
Hoven 700 $ 50,250
Huron 13,000 55,000
+Madison 7,000 500,000
Pollock 400 250,000
+Rapid City 46,000 260,000
TOTAL 67,100 $1,215,250
+ Exceeds State unemployment rate of 4.9% which is below the National rate,
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 14 needed facilities (treatment
plants and Interceptors) have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $96 million of which the Industrial portion would be $21 million,
or 22 percent. Of these 14 needed facilities, 7, or 50 percent, will
serve communities with populations of less than 10,000.
V-82
-------
STATE OF TENNESSEE
I. Short Term Effect (From EPA Data)
Four communities, ranging in size from 130,000 to 700,000 with an
average population of 352,500, will be affected. The combined population
of the communities affected is over 1,410,000. The daily flow into the
affected POTWs is 388 mgd of which 76 mgd, or 19 percent, is contributed
by 143 affected industrial users. The estimated POTW construction cost
is $198 million of which the industrial portion is about $39 million.
The largest industrial groups affected are:
(1) Food and Kindred Products, 26 mgd, $7 million,
(2) Chemicals and Allied Products, 13 mgd, $6 million,
(3) Textile Mill Products, 4 mgd, $5 million,
(4) Fabricated Metal Products, 5 mgd, $3 million.
Industrial
Community Population Portion
++Chattanooga 130,000 $20,080,000
Knoxville 180,000 5,255,000
Memphis 700,000 4,819,000
Nashville 400,000 8,840,000
TOTAL 1,410,000 $38,994.000"
++ Exceeds National unemployment rate of 7.1%.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 42 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $550 million of which the industrial portion would be $191 million,
or 35 percent. Of these 42 needed facilities, 21, or 50 percent, will
serve communities with populations of less than 10,000.
III. Potential Effect (Data from Other Sources)
Various private and public sources have reported that the communities
shown below could be affected. In many cases, the information presented
did not fully or clearly identify the effect of the industrial cost
exclusion (ICE) on the community.
V-83
-------
STATE OF TENNESSEE
Industrial
Community Population Portion
•H-Dayton 4,400 ?
++Jamestown 2,000 ?
•H-Johnson City 50,000 ?
•H-Lewlsburg 7,500 240,000
++L1v1ngston 3,200 ?
Maryvllle 14,000 ?
Rogers vine 4,100 ?
•n-Sewanee 2,000 ?
•H-Smlthvllle 3,000 ?
TOTAL 90,200 $240,000
•M- Exceeds National unemployment rate of 7.1%.
N.B. By letter dated March 2, 1981, the State of Tennessee Department
of Public Health reported: "In summary, we believe that the
Information you (EPA) have regarding the 'Short-Term' and 'Long-
Term1 Impacts of the ICE to the State of Tennessee 1s unfounded
and grossly Inflated relative to what the actual Impacts will be."
These communities have not been deducted from the National totals.
V-84
-------
STATE OF TEXAS
I. Short Term Effect (From State Reported Data)
A. Overview
Six communities, ranging 1n size from 10,500 to. 879,000 with an
average population of 179,000, will be affected. The population of all
the communities affected 1s over 1,173,000. The dally flow Into the
affected POTWs 1s 190 mgd of which 15 mgd, or 8 percent, 1s contributed
by 88 affected Industrial users. The estimated POTW construction cost
1s $201 million of which the Industrial portion 1s $50 million, or
24 percent. The largest Industrial group affected 1s Food and Kindred
Products, 7 mgd, $17 million.
B. Communities with populations under 100,000
Four communities, ranging in size from 10,500 to 22,800 with an
average population of 13,850, will be affected. The population of all
the communities affected 1s over 55,400. The dally flow Into the affected
POTWs 1s 12 mgd of which 3 mgd or 25 percent 1s contributed by 11 affected
Industrial users. The estimated POTW construction cost is $8 million of
which the Industrial portion is $4 million or 50 percent. The largest
Industrial groups affected are:
(1) Food and Kindred Products, 2 mgd, $2 million,
(2) Textile M111 Products, .1 mgd, $2 million.
Industrial
Community Population Portion
Brenham 10,500 $2,900,000
Corslcana 22,800 323,000
Sulphur Springs 11,600 513,000
Vernon 11,500 363,000
TOYAl 55.400 $4.109.000
C. Communities with populations between 100.000 and 1.000,000
Amarlllo, with a population of 137,500, and San Antonio, with a
population of 879,000, have dally flows of 24 mgd and 154 mgd, respectively.
In Amarlllo, the Industrial flow 1s 2 mgd or 8 percent of the total flow;
1n San Antonio Industrial flows account for 11 mgd or 7 percent of the
total flow. The estimated POTW construction cost 1n Amarillo is $7 million
of which the Industrial portion Is $2 million or 29 percent. In San Antonio,
the POTW construction cost is estimated to be $186 million of which the
Industrial portion is about $43 million or 24 percent. The largest
Industrial group affected is Food and Kindred Products, 5 mgd, $15 million.
Y-85
-------
STATE OF TEXAS
Industrial
Community Population Portion
Amarillo 137,500 $ 2,000,000
+San Antonio 879,000 43,800,000
TOTAL 1.115,500 $45.300,000
+ Exceeds State Unemployment rate of 4.4% which is below the National rate,
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 94 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is each
has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated to
be $875 million of which the industrial portion would be $108 million, or
12 percent. Of these 94 needed facilities, 29, or 31 percerlt, will serve
communities with populations of less than 10,000.
III. Potential Effect (Data from Other Sources)
Various public and private souces have reported that the communities
shown below could be affected. In many cases, the information presented
did not fully or clearly identify the effect of the industrial cost
exclusion (ICE) on the community.
Industrial
Community Population Portion
Dallas 1,000,000 ?
•H-E1 Paso 350,000 ?
+Fort Worth 450,000 ?
Houston 1,500,000 ?
Nacogdoches 25,000 ?
•(•Sherman 30,000 ?
T5TAT 3,355,000 1
+ Exceeds State Unemployment rate of 4.4% which is below the National rate.
++ Exceeds National Unemployment rate of 7.1%.
V-86
-------
STATE OF UTAH
I. Short Term Effect (From State Reported Data)
Central Weber County, with a population of 142,000, and Salina,
with a population of 2,000, have daily flows of 41 mgd and .5 mgd,
respectively. In Central Weber County, the industrial flow is .3 mgd,
or about 1 percent of the total flow; in Salina, however, industrial
flows account for .03 mgd or 6 percent of the total flow. The estimated
POTW construction cost in Central Weber County is $19 million of which
the industrial portion is $3 million, or 16 percent. In Salina, the
POTW cost is about $.5 million of which the industrial portion is about
$.4 million, or 87 percent. The largest industrial group affected is
Food and Kindred Products, .3 mgd, $3 million.
Industrial
Community Population Portion
Central Weber 142,000 $3,040,000
Salina 2,000 419,000
TOTAL 144.000 $3.459.000'
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 13 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is each
has an industrial flow over 100,000 gallons per day and more than 16 percent
of the total POTW flow. The construction cost is estimated to be $74 million
of which the Industrial portion would be $8 million or 11 percent. Of these
13 needed facilities, 9, or 70 percent, will serve communities with populations
of less than 10,000.
III. Potential Effect (Data from Other Sources)
Various public and private sources have reported that the communities
shown below could be affected. In many cases, the information presented did
not fully or clearly identify the effect of the industrial cost exclusion
(ICE) on the community.
Industrial
Community Population Portion
•H-Kamas 1,000 $ 798,000
Logan 27,000 138,000
++Moroni 1,000 966,000
North Davis 78,000 1,240,000
Salt Lake City 165,000 1,600,000
Springville 12,000 260,000
TOTAL 284,000 $5,002.000
Exceeds National unemployment rate of 7.1%.
V-87
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STATE OF VERMONT
I. Short Term Effect (From State Reported Data)
Four communities, ranging in size from 600 to 12,500, with an average
population of 6,025, will be affected. The combined population of the
communities affected is over 24,100. The daily flow into the affected
POTWs is 12 mgd of which 2 mgd, or 18 percent, is contributed by 7 affected
industrial users. The estimated POTW construction cost is $16 million of
which the industrial portion is $2 million. The largest industrial group
affected is Food and Kindred Products, 1.5 mgd, $2 million.
Industrial
Community Population Portion
•H-Bennington 12,500 $ 500,000
St. Albans 8,000 628,000
Swanton 3,000 200,000
•H-Troy 600 656,000
—r- < „ ~\
TOTAL 24,100 $1,984', OOP
++ Exceeds National unemployment rate of 7.1%.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 10 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $50 million of which the industrial portion would be $8 million,
or 16 percent. Of these 10 needed facilities, 7, or 70 percent, will
serve communities with populations of less than 10,000.
III. Potential Effect (Data from Other Sources)
Various public and private sources have reported that the communities
shown below could be affected. In many cases, the information presented
did not fully or clearly identify the effect of the industrial cost
exclusion (ICE) on the community.
Industrial
Community Population Portion
Hartford Wilder 2,000 ?
Y-88
-------
STATE OF VIRGINIA
I. Short Term Effect (From State Reported Data)
Pepper's Ferry, with a population of 30,000, and Waynesboro, with a
population of 14,000, have daily flows of 3 mgd and 4 mgd respectively.
In Pepper's Ferry, the industrial flow is .6 mgd or 20 percent of the
total flow; in Waynesboro, however, industrial flows account for .2 mgd
or 10 percent of the total flow. The estimated construction cost in
Pepper's Ferry is $3 million of which the industrial portion is $.7
million or 24 percent. The Waynesboro POTW construction cost is estimated
to be $4 million of which the industrial portion is about $.3 million or
8 percent. The largest industrial groups affected are Food and Kindred
Products, .2 mgd,-$l million, and Electrical and Electronic Machinery,
.3 mgd, $.6 million.
Community
•n-Pepper's Ferry
•H-Waynesboro
Population
30,000
14,000
Industrial
Portion
$
749,000
332,000
44,000
$T708T,000
++ Exceeds National Unemployment rate of 7.1%.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 13 needed facilities (treatment
plants and interceptors) each have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated to
be $139 million of which the industrial portion would be $17 million, or
12 percent. Of the 13 needed facilities, 6, or 46 percent, will serve
communities with populations of less than 10,000.
III. Potential Effect (Data from Other Sources)
Various public and/or private sources have reported that the
community shown below could be affected. In many cases, the information
presented did not fully or clearly.identify the effect of the industrial
cost exclusion (ICE) on the community.
Community
+Winchester
Population
Industrial
Portion
$2,500,000
(Food and Kindred Products)
25,000
+ Exceeds State unemployment rate of 5.1% which is below the National rate,
V-89
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STATE OF WASHINGTON
I. Short Term Effect (From State Reported Data)
Walla Walla, with a population of 23,000, and Prosser, with a
population of 10,000, will be affected. The combined population of the
communities affected is over 33,000. The two area POTWs have a daily
flow of 12 mgd of which 1 mgd, or 9 percent, is contributed by 5 affected
industrial users. The estimated POTW construction cost is $7 million of
which the industrial portion is $1.2 million. The cost in Prosser is $3
million, with an industrial portion of $1 million; the Walla Walla POTW
has a construction cost of $4 million of which the industrial portion is
$.2 million. The largest industrial group affected is Food and Kindred
Products, 1 mgd, $1 million.
Industrial
Community Population Portion
Walla Walla 23,000 $ 217,000
•KProsser 10,000 .1,050,000
TOTAL 33,000 $1,267,000
•H- Exceeds National unemployment rate of 7.1%.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 17 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is
each has an Industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $670 million of which the industrial portion would be $100 million,
or 15 percent. Of these 17 needed facilities, 17, or 59 percent, will
serve communities with populations of less than 10,000.
•
III. Potential Effect (Data from Other Sources)
The communities shown below were reported by various public and/or
private sources. In many cases, the information presented did not fully
or clearly identify the effect of the industrial cost exclusion (ICE) on
the community.
Industrial
Community Population Portion
•w-Everett 54,000 ?
Exceeds State unemployment rate of 7.5% which exceeds the National rate,
V-90
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STATE OF WEST VIRGINIA
I. Short Term Effect (From State Reported Data)
Martinsburg, with a population of 15,000, will be affected. The
daily flow into the affected POTW is 3 mgd of which .2 mgd or 7 percent
is contributed by 1 affected industry. The estimated POTW construction
cost is $3 million of which the industrial portion is $.2 million, or
7 percent. The only industrial group affected is Food and Kindred
Products.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 8 needed facilities (treatment
plants and interceptors) have substantial industrial flows. That is
each has an industrial flow over 100,000 gallons per day and more than
12 percent of the total POTW flow. The construction cost is estimated
to be $36 million of which the industrial portion would be $13 million
or 12 percent. Of these 8 needed facilities, 4, or 50 percent, will
serve communities with populations of less than 10,000.
III. Potential Effect (Data from Other Sources)
Various public and private sources have reported that the communities
shown below could be affected. In many cases, the information presented
did not fully or clearly identify the effect of the industrial cost
exclusion (ICE) on the community.
Industrial
Community Population Portion
Charleston 250,000 $ ?
Chester 4,000 400,000
Huntington 75,000 ?
N. Beckley, PSD 4,500 700,000
Wheeling 50,000
383,500 $1,100,000
V-91
-------
STATE OF WISCONSIN
I. Short Term Effect (From State Reported Data)
A. Overview
Seven communities, ranging 1n size from 1,900 to over 725,000 with an
average population of 134,000, will be affected. The combined population
of the communities affected 1s over 940,000. The dally flow Into the
affected POTWs 1s 380 mgd of which 66 mgd, or 17 percent, 1s contributed by
218 affected Industrial users. The estimated POTW construction cost 1s
$1.1 billion of which the Industrial portion 1s $213 million or 19 percent.
The largest Industrial groups affected are:
(1) Food and Kindred Products, 24 mgd, $71 million,
(2) Fabricated Metal Products, 5 mgd, $15 million.
B. Communities with populations under 100.000
Five communities, ranging 1n size from 1,900 to 17,500 with an average
population of 9,000, will be affected. The combined population of the
communities affected 1s over 45,000. The dally flow Into the affected POTWs
1s 9.3 mgd of which 3.6 mgd or 33 percent 1s contributed by 15 affected
Industrial users. The estimated POTW construction cost is $38 million of
which the Industrial portion 1s $17 million or 45 percent. The largest
Industrial groups affected are:
(1) Food and Kindred Products, 2 mgd, $14 million,
(2) Electrical and Electronic Machinery, .2 mgd, $13 million.
Industrial
Communlty Population Portion
+Butte Des Morts 5,000 $ 380,000
Plymouth 6,100 2,150,000
•H-Abbotsford 1,900 130,000
+Marshf1eld 17,500 2,750,000
•wBeaver Dam 14,500 11,500,000
TDTAT 45,100 $16,910.000'
+ Exceeds State unemployment rate of 6.3% which 1s below the National rate,
•H- Exceeds National unemployment rate of 7.IX.
C. Communities with populations between 100.000 and 1.000.000
Two communities, ranging 1n size from 170,000 to 725,000, will be
affected. The dally flow Into the affected POTWs 1s 370 mgd of which
63 mgd, or 17 percent, 1s contributed by 203 affected Industrial users.
The estimated POTW construction cost 1s $1,094 billion of which the
Industrial portion 1s over $196 million or 18 percent. The largest
Industrial groups affected are:
V-92
-------
STATE OF WISCONSIN
(1) Food and Kindred Products, 22 mgd, $67 million,
(2) Fabricated Metal Products, 5 mgd, $15 million.
Industrial
Community Population Portion
Madison 170,000 $ 15,000,000
+M1lwaukee 725,000 181,000,000
TOTAL 895,000 $196,000.000
+ Exceeds State unemployment rate of 6.3% which is below the National rate.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 63 needed facilities (treatment
plants and Interceptors) have substantial Industrial flows. That is each
has an industrial flow over 100,000 gallons per day and more than 16 percent
of the total POTW flow. The construction cost is estimated to be $897
million of which the industrial portion would be $258 million or 29 percent.
Of these 63 needed facilities, 53, or 64 percent, will serve communities
with populations of less than 10,000.
III. Potential Effect (Data from Other Sources)
Various public and private sources have reported that the communities
shown below could be affected. In many cases* the information presented
did not fully or clearly identify the effect of the industrial cost
exclusion (ICE) on the community.
Industrial
Community Population Portion
Bloomer 3,100 $ 195,000
•t-Menasha 14,200 510,000
++Peshtigo 2,800 11,000,000
TOTAL 20,100 $11,705.000"
Exceeds State unemployment rate of 6.3% which is below the National rate,
Exceeds National unemployment rate of 7.1%.
V-93
-------
Conclusions
An analysis of Wisconsin's industries which discharge to municipal wastewater
treatment systems resulted in the following general observations concerning the
possible impact of the Industrial Exclusion in Wisconsin.
The ultimate implementation of the Industrial Exclusion will cost Wisconsin
industries approximately $375 million. This represents a cost of $132 thousand
for each municipal industrial discharger with a 50,000 gpd or equivalent flow.
Only 25 (2 percent) of the state's industries with flows equal to or greater
than 50,000 gpd or equivalent will be funded before the cut-off dates of the
Industrial Exclusion. This assessment is based on data contained in the State's
FY 81 & 82 priority lists.
Wisconsin can truly claim to be the nation's dairy state since the
dairy industry represents 29 percent of the impacted industries in municipalities
of less than 50,000 people. Approximately 50 percent of the dairy industry is
concentrated in small communities of less than 3500 people. However, the
communities of less than 3500 people represent only 2 percent of the state's
total population. The state's dairy industry represents approximately 11%
of the total industries which will be ultimately impacted by the Industrial
Exclusion.
As the Industrial Exclusion presently stands, its greatest impact in
Wisconsin will be on the larger municipalities since 25 percent of Wisconsin's
V-94
-------
Industrial municipalities contain 78 percent of the impacted industries. The
city of Milwaukee contains 35 percent of the impacted industries in the state,
however, the Industrial Exclusion would allow an exemption for larger municipalities,
the burden of industrial wastewater treatment in Wisconsin would be borne by
industries located outside major urban population centers. Such an exemption
would provide a meaningful encouragement for industries to locate in the
exempted urban communities.
In the State of Wisconsin, an interesting situation would develop if the
»
State's largest municipality, Milwaukee, would be the only exempted community.
The major burden of industrial wastewater treatment remains with 30 of the
State's larger municipalities. These municipalities have populations above
10,000 people and contain 40 percent of the state's impacted industries.
A Milwaukee exemption would tend to limit industrial growth outside the
4
i
Milwaukee wastewater treatment system.
Y-95
-------
INDUSTRIAL WASTEWATER TREATMENT COSTS
for WISCONSIN INDUSTRIES WITH MUNICIPAL DISCHARGES
$375 Million estimated municipal wastewater treatment costs for all
512 industries-with flows equal to or greater than 50,000 gpd or
equivalent.
$16 Million estimated municipal wastewater treatment costs for 608
industries with flows less than 50,000 gpd or equivalent.
$132 Thousand estimated average municipal wastewater treatment costs for
each industry with 50,000 gpd or equivalent flow.
$309 Million estimated municipal wastewater treatment costs for 373
industries with flows equal to or greater than 50,000 gpd or equivalent
on State FY 81 and 82 priority lists which will not be funded before
cut-off dates of Industrial Exclusion.
$11 Million estimated municipal wastewater treatment costs for 25 industries
with flows equal to or greater than 50,000 gpd or equivalent on State
FY 81 and 82 priority lists which will be funded before cut-off dates
of Industrial Exclusion.
V-96
-------
WISCONSIN MUNICIPAL INDUSTRY DISCHARGERS
(100%) 1120 Total number of Wisconsin industries which discharge
to municipal wastewater treatment facilities.
(88%) 982 Industries located in municipalities with one or more
50,000 gpd or equivalent industry.
(12%) 138 Industries located in municipalities with total
municipal industrial flows of less than 50,000 gpd
or equivalent.
(46%) 512 Industries with flows equal to or greater than
50,000 gpd or equivalent.
(54%) 608 Industries with flows less than 50,000 gpd or equivalent.
(33%) 373 Industries with flows equal to or greater than
50,000 gpd or equivalent are located in municipalities
that will not be funded before cut-off dates of the
Industrial Exclusion (State FY 81 and 82 priority list).
(2%) 25 Industries with flows equal to or greater than 50,000
gpd or equivalent located im municipalities that will
be_ funded before cut-off dates of the Industrial
Exclusion (State FY 81 and 82 priority lists).
V-97
-------
WISCONSIN MUNICIPALITIES
(100%) 707 Wisconsin Municipalities with wastewater treatment
facilities.
(32%) 224 Wisconsin Municipalities have industrial wastewater
flows.
(23%) 166 Wisconsin Municipalities have industrial wastewater
flows to or greater than 10,000 gpd.
(18%) 124 Wisconsin Municipalities have at least one industrial
flows equal to or greater than 50,000 gpd or equivalent.
(100%) 124 Municipalities with at least one Industrial flow equal
to or greater than 50,000 gpd or equivalent.
*
(61%) 76 Municipalities have only one industry with a flow equal
to or greater than 50,000 gpd or equivalent.
(14%) 17 Municipalities have only two Industries with a flow
equal to or greater than 50,000 gpd or equivalent.
(2%) 3 Municipalities have only one 50,000 gpd or equivalent
industry which exceeds 50% of total municipal flow.
(48%) 60 Municipalities with at least one industrial flow equal
to or greater than 50,000 gpd or equivalent on State
FY 81 & 82 priority 11st will not be funded before
cut-off dates of Industrial cost exclusion.
(5%) 6 Municipalities with at least one industrial flow equal
to or greater than 50,000 gpd or equivalent on State
FY 81 & 82 priority list will be funded before cut-off
dates of Industrial cost exclusion.
V-98
-------
MUNICIPALITIES with INDIVIDUAL INDUSTRIAL FLOW of 50,000 gpd or equivalent
Municipality 1970 Industrial State Total No. industries / Total Total No. industries / Total
Population Pop. Population Population No. Industries with 50,000 No. industries with 50,000
Number Range {%) (%) gpd or equivalent flows gpd or equivalent flows
«<
1
•0
56
37
23
6
2
124
Less than
3500
3500 -
10,000
10,000 -
50,000
50,000 -
100,000
Greater
than 100,000
Totals 2
State Total 4
98,950 .
225,100
599,200
426,300
858,000
,207,550
,417,900
4
10
27
20
39
100
2
5
13
10
18
48
100
86/66
129/59
241/115
151/69
375/203
982/512
1120
9/13
13/12
25/22
15/13
38/40
100/100
-------
TABLE #1
Distribution of 50,000 gpd or equivalent Industries
1n Wisconsin communities of less than 3.500 population
Industries
% Number
Number
SIC
Type
Industries
% Industries Type
Number General Industry
(8) 5
(54) 33
(10) 6
(2) 1
(5) 3
(7) 4
(2) 1
(2) 1
(2) 1
(3) 2
(2) 1
(2)
(2)
1
1
(100) 61
201 Meat Products
202 Dairy Products
203 Canned Fruits & Vegetables
205 Bakery Products
208 Beverages
261 Pulp Mills
262 Paper Mills
265 Paper Board Boxes
334 Smelting & Refining Metal
343 Heating Equipment
344 Fabricated Structual Metal
346 Metal Forgings
363 Household Appliances
371 Motor Vehicles & Equipment
Total
(79) 48-Good Products
(10) 6- Paper & Allied Products
(3) 2- Primary Metals
(5) 3- Fabricated Metals
(2) 1- Electoral Equipment
(2) 1- Transportation Equipment
(100) 61
V-100
-------
TABLE #2
Distribution of 50,000 gpd or equivalent industries
in Wisconsin communities of 3500 to 10,000 population
X
(34)
(9)
Industries
3
19
5
1
1
2
1
2
1
2
1
2
1
1
1
1
1
1
3
1
1
1
1
1
1
Number
SIC
201
202
203
204
205
206
208
209
225
264
306
311
329
342
344
345
347
349
351
352
355
358
363
364
382
Type
Industries
Meat Products
Dairy Products
Canned Vegetables
Grain Mill Products
Bakery Products
Sugar Products
Beverages
M1sc. Food Products
Knitting Mill
Paper Products
Rubber Products
Leather Finishing
Nonmetallic Mineral
General Hardware
% Industries Type
Number General Industry
(61) 34-Food Products
1 -Textile Products
2-Paper & Allied Products
1-Rubber Products
2- Leather Products
Products 1-Stone Products
(11) 6-Fab. Metal Products
Structual Metal Products
Screws, Bolts, Nuts
Coatings, Engravings
Ammunitions
Engines
Farm Equipment
Special Machinery
Refrigeration
Household Appliances
Electric Equipment
Measuring Equipment
Products
(ll)6-Machinery
2-Electrical Appliances
1-Instruments
(100) 56
Total
(100) 56
Y-101
-------
TABLE #3
Distribution of 50,000 gpd or equivalent Industries
1n Wisconsin communities of 10,000 to 50,000 population
Industries
% Number
(5)
(20)
(5)
(5)
(5)
(5)
(5)
4
<•
15 -
4
4
1
1
2
3
1
1
1
1
4
1
1
1
1
4
1
4
2
1
2
1
2
1
1
1
1
Number
SIC
201
202
203
208
209
225
262
263
265
282
286
301
311
336
342
343
344
346
348
351
353
362
363
367
369
371
373
382
394
Type
Industries
Meat Products
Dairy Products
Canned Fruits & Vegetables
Beverages
M1sc. Food Products
Knitting Mill
Paper Mill
Paperboard Mill
Paperboard Containers
Plastics
Organic Chemicals
Ti res
Leather Finishing
Non-Ferrous Foundries
General Hardware
Heating Equipment
Structual Metal Products
Metal Forings
Ammunitions
Engines
Construction Equipment
Electrical Apparatus
Household Appliances
Electronic Components
M1sc. Electrical
Motor Vehicles
Ship Building
Measuring Equipment
Toys, Amusement Goods
% Industries Type
Number General Industry
(36) 28-Food Products
l-Text1le Products
(8) 6-Paper & Allied Products
2-Chemical Products
1- Rubber Products
(5) 4-Leather Product
1-Prfmary Metals
(10) 8- Fab. Metal Products
(8) 6-Machinery
(8) 6-Electr1cal Equipment
2-Transportat1on Equipment
1 -Instruments
3-M1sc. Manufacturing
V-102
-------
TABLE #3 (cont.)
Distribution of 50,000 gpd or equivalent Industries
In Wisconsin communities of 10.000 to 50.000 population
Industries
% Number
2
1
1
1
1
(5) 4 -
(100) 77
Number
SIC
395
399
491
514
721
806
Type
Industries
Pens, Office Material
M1sc. Manufacturing
Electric Services
Grocery Products
Laundry
Hospitals
% Industries Type
Number General Industry
l-M1sc. Manufacturing
l-Utilit1es Services
1 -Wholesale Trade
1-Personal Services
(5) 4-Health Services
(100)77
Y-103
-------
WISCONSIN
Municipality
Abbots ford
Adams
Allenton SDfH
Antlgo
Appl eton
Arcadia
Baldwin
Barron
Beaver Dam
^ Belolt
-------
o
in
WISCONSIN MUNICIPAL
Municipality
Cumberland
DePere
Delevan
Denmark
Dresser
Eau Claire
Edgar
Elroy
Fennlmore
Fond du Lac
Fort Atkinson
Germantown
Gillett
Graf ton
Green Bay Met
Greenwood
Hartford
Heart of the
Valley
Hlllsboro
Pop.
1970
1800
13300
5500
1400
500
44600
3500
1500
1900
35500
9200
7000
1300
6000
87800
1000
6500
3500
1200
Holland, Tn. of 3500
Horicon
Janesville
Jefferson
Kenosha
Kewaskum
3400
46400
5400
79200
1900
P.
fundl
befot
cut-c
Y
N
N
N
N
N
N
N
N
N
N
N
N
N
DISCHARGE INDUSTRIES IMPACTED BY
INDUSTRIAL COST EXCLUSION
Total
Estimated S.T.P.
L. Total Industrial Flows (MfiD) Total No, Industries/ construct- esist-
ng 50,000 gpd -50,000 gpd No .Industries
•e or equivalent 50,000 gpd or
iff flow
.226
.071
.075
.173
1.597
—
.060
--
1.397
.453
—
.055
.126
18.351
—
.613
.058
—
.190
.081
3.034
.304
6.106
.143
.05
.27
.07
.07
.17
1.64
.03
.06
.02
1.40
.45
.04
.06
.07
18.34
.07
.66
.06
.01
.19
.08
2.46
.30
6.11
.19
3/1
10/3
1/1
1/1
13/7
1/1
1/1
3/1
13/7
7/3
1/1
1/1
8/1
31/16
2/2
6/3
2/1
1/1
1/1
2/1
10/9
2/2
15/13
4/3
with tion grant flow
equiv. award(OOO) MGD
96
216
287
935
2475
472
5566
1147
305
552
60
1054
741
37
34993
.260
3.450
1.000
.230
.250
16.200
.200
.140
.620
11.100
2.700
1.000
.210
1.040
52.010
.150
3.000
2.550
.200
.200
.750
16.000
1.720
23.000
1.000
Number
SIC
2022
2011,
2631
3829
2021
2022
3011,
3679,
8062
2011
2022
2022
3519,
3111,
3694
2011,
2038
2026
3469
3519
2022,
3519,
3111
2611
2022
2022
3444
2869,
3951,
3951
2013,
2026,
3631
2021.1;
2013 ;
2026,
2036
3519
2011
2022
2033
2033
2026
2047
2083
-------
WISCONSIN MUNICIPAL DISCHARGE INDUSTRIES IMPACTED BY INDUSTRIAL COST EXCLUSION
Municipality
Kiel
Kohler
LaCrosse
Lake Mills
Lancaster
Little Chute
Lomlra
Madison Met.
Manltowoc
<;
.1 Marshflelo
o
o>
May v1 lie
Menasha, Tn
SOI4-East
Menasha, Tn
SDI4-West
Menomonee Falls
Menomonle
Merrill
Milan S.O.
Milwaukee NSC
Mlnong
Monroe
Mosinee
Mount Horeb
Pop.
1970
2800
1700
51000
3500
3800
5400
1100
173000
33400
15600
4100
7000
7100
31700
11300
9500
3500
685000
3500
8600
2400
2400
P.L.
funding
before
cut-off
Y
N
N
N
Y
N
N
N
N
N
N
Total Industrial Flows (Mfifl)
_50,000 gpd
.212
.210
5.563
.199
.087
—
-.
4.859
2.896
.333
.272
.060
.227
.107
.107
.096
—
56.995
.070
.230
.060
—
-50,000 gpd
or equivalent
.21
.21
5.61
.20
.09
.04
.03
4.92
2.98
.42
.27
.06
.23
.11
.11
.10
.04
58.00
.07
.35
.06
.06
Total
Estimated
Total No, Industries/ construct-
No .Industries with tlon grant
50,000 gpd or equiv. award(OOO)
flow
2/2
1/1
23/13
3/2
1/1
1/1
1/1
47/25
20/15
5/5
7/2
8/1
2/2
11/2
1/1
1/1
1/1
328/178
1/1
9/5
1/1
3/1
3000
1852
25357
6700
2990
5109
5109
21
1,068,312
980
5577
S.T.P.
eslst-
flow
MGD
.600
.630
20.000
.660
.380
.620
.490
50.000
15.500
3.500
1.000
1.500
1.000
2.900
2.880
2.100
.060
320.000
.160
2.200
.550
.600
Number
SIC
2022, 2023-
3431
3585, 3551
2022
2022
2083
20, 20,34,
20, 33
2083, 3732
2033, 3459
3429
8062,2022
2435,2026
2023
3444,2022
2649
2647,2647
3944,3713
2023
3496
2022
20, 34, 36
37, 31
2011
2083, 2099
2022, 2022
2066
2621
2022
-------
WISCONSIN MUNICIPAL DISCHARGE INDUSTRIES IMPACTED BY
Municipality
Neenah-Menasha
S.C.
Neilsville
Nekoosa
New London
Niagara
Norwalk
Oconomowoc
Oconto
„. Oshkosh
i Owen
° Peshtigo
Pewaukee
Platteville
Plymouth
Port
Washington
Portage
Prairie
Du Chien
Pulaski
Racine
Reedsburg
Rhinelander
Rice Lake
Richland Center
Ripon
Sauk-
Prairie SC
Seymour
Pop.
1970
23000
2800
2400
5800
2300
400
8700
4700
53100
1400
2800
3300
5600
5800
8800
7800
5500
1700
95200
4600
8200
7300
5100
7100
2400
2200
P.L.
funding
before
cut-off
N
N
N
N
N
N
N
N
N
Y
N
N
N
N
Total Industrial Flows(Mr,n)
50,000 gpd
2.276
.056
.081
.078
.075
_.
.110
.127
.509
.168
4.217
.058
..
.293
.065
.058
.630
.160
3.469
.350
-.
.128
.210
.185
.404
.060
-50,000 gpd
or equivalent
2.35
.06
.08
.08
.08
.03
.11
.13
.39
.17
4.24
.06
.03
.33
.06
.06
.63
..16
2.88
.35
.01
.15
.21
.23
.40
.06
INDUSTRIAL COST EXCLUSION
Total
Estimated
Total No, Industries/ construct-
No. industries with tion grant
50,000 gpd or equiv. award(OOO)
flow
17/8
3/1
2/1
2/1
1/1
1/1
5/1
1/1
24/4
1/1
2/2
3/1
1/1
5/3
2/1
5/1
2/2
1/1
39/15
4/1
4/1
4/3
5/1
3/3
2/2
2/1
2277
600
2197
1996
800
4438
6239
261
660
93
4280
498
2760
540
1513
S.T.P.
exist-
flow
MGD
13.000
.520
.500
.720
.390
.140
4.020
1.760
20.000
.750
4.650
.760
1.600
.630
1.250
1.300
2.000
.770
52.000
1.700
1.900
1.500
1.600
2.000
.750
.370
Number
SIC
2621,2621
2023,2631
7218
3714
2621
2022
2621
2022
2099
2036
2023
2621,2013
2022
2022,5143,
2022
3524
2251
3069,3291
2033
2023
2026
2023,2024
3429
2022
3633,2052
2035
2033,2023
2022,
-------
o
00
Municipality
Shawano Lake
S.D. 11
Sheboygan
SHnger
South
Milwaukee
Sparta
Spencer
Stevens Point
Sturgeon Bay
Superior
Thorp
Two Rivers
Waterloo
Watertown
Waukesha
Waupaca
Maupun
Mausau
West Bend
Ueyauwega
Pop.
1970
6500
48500
1000
23300
6300
1200
23500
6800
32200
1500
13100
2300
15600
45900
4300
7900
32800
16600
1400
WISCONSIN
P.L.
funding
before
cut-off
N
N
N
N
N
N
N
N
MUNICIPAL DISCHARGE INDUSTRIES IMPACTED BY
Total Industrial Flows(MGD)
_50,000 gpd
--
2.496
—
.970
.141
--
—
.104
.204
—
.373
_.
.381
1.537
.238
.210
.620
1.064
.050
-50,000 gpd
or equivalent
.05
2.53
.03
•?7
.14
.03
.03
.10
.20
.02
.37
.02
.38
1.54
.24
.21
.65
1.06
.05
INDUSTRIAL COST EXCLUSION
Total
Estimated
Total No, Industries/ construct-
No. Industries with tion grant
50,000 gpd or equlv. award(OOO)
flow
4/1
30/12
1/1
9/5
2/2
1/1
5/1
1/1
9/1
1/1
7/2
2/1
10/3
20/8
1/1
2/1
14/7
6/1
1/1
69
450
597
475
508
264
4856
799
S.T.P.
eslst-
flow
MGD
3.000
18.390
.140
6.000
1.300
.300
4.100
1.500
5.000
.350
4.400
.540
5.200
8.500
1.250
1.260
9.200
2.500
.510
Number
SIC
2023
3111,2821
3469,3361,
2252
2026
3532,3111
3699,3993
3111
2026,3479
2022
2033
2022
2022
3469,3469
2035
3822,3444
2086
3489,8062
2035,3519
2026
2649
3452
3621 ,8062
2651,2022
3531
3634
2022
-------
WISCONSIN MUNICIPAL DISCHARGE INDUSTRIES IMPACTED BY INDUSTRIAL COST EXCLUSION
Municipality
Whitehall
Whitewater
Wlnneconne
Wisconsin
Rapids
Wittenberg
Wright stown
Pop.
1970
1500
12000
1600
18600
900
1000
P.L.
funding
before
cut-off
N
Y
N
Total
50,000
.364
.154
.244
Industrial Flows (MGD)
gpd -50,000 gpd
or equivalent
.36
.20
.02
.24
.03
.01
Total No, Industries/
No. Industries with
50,000 gpd or equlv.
flow
1/1
3/2
1/1
4/1
1/1
2/1
Total
Estimated
construc-
tion grant
award (000)
629
2208
1200
S.T.P.
ex 1st-
flow
MGD
1.070
2.000
.350
4.000
.160
Number
SIC
2011
2022
3433
2022
2022
Totals
138.887
142.27
o
10
-------
STATE OF WYOMING
It has been reported that the communities and industries in
Wyoming will not be affected by the industrial cost exclusion.
V-110
-------
TERRITORY OF AMERICAN SAMOA
I. Short Term Effect (From Territory's Reported Data)
The Territory of American Samoa with a population of 35,000 will
be affected. The area POTW has a daily flow of 3 mgd of which 2.1 mgd
or 70 percent is contributed by 2 affected industries. The estimated
POTW cost is $9 million, of which the industrial portion is $2 million
or 22 percent. The only industrial group affected is Food and Kindred
Products, 2 mgd, $2 million.
Y-W
-------
DISTRICT OF COLUMBIA
It has been reported that the District of Columbia will not
be affected by the industrial cost exclusion.
Y-112
-------
GUAM
It has been reported that the communities and Industries In
Guam will not be affected by the Industrial cost exclusion.
V-l 1.3
-------
NORTHERN MARIANAS
It has been reported that the communities and Industries in
the Northern Marianas will not be affected by the Industrial cost
exclusion.
V-114
-------
PACIFIC TRUST TERRITORIES
It has been reported that the communities and Industries in
the Pacific Trust Territories will not be affected by the industrial cost
exclusion.
Y-115
-------
TERRITORY OF PUERTO RICO
I. Short Term Effect (From State Reported Data)
The treatment plant construction discussed below Is contingent upon
the requirement to meet secondary treatment standards.
San Juan, with a population of 450,000, may be required to design
and construct a PO.TW with a dally flow of 100 mgd of which 5 mgd, or 5
percent, will come from Industrial users. The estimated POTU construction
cost 1s $100 million of which the Industrial portion is $5 million.
Bayaman, with a population of 180,000, may also be required to
design and construct a POTW with a dally flow of 55 mgd of which 3 mgd,
or 5 percent, will come from Industrial users. The estimated POTW
construction cost is $60 million of which the industrial portion is $3
million.
II. Long Term Effect (From EPA Needs Survey)
The 1980 Needs Survey reported that 9 needed facilities (treatment
plants and interceptors) have substantial Industrial flows. That 1s
each has an Industrial flow over 100,000 gallons per day and more than
16 percent of the total POTW flow. The construction cost is estimated
to be $283 million of which the industrial portion would be $31 million,
or 11 percent. Of these 9 needed facilities, 7 will serve communities
with populations of less than 10,000.
Y-116
-------
VIRGIN ISLANDS
it has been reported that the communities and Industries 1n the
Virgin Islands will not be affected by the Industrial cost exclusion.
Y-117
-------
APPENDIX A
Analyses from industries affected
by the Industrial cost exclusion
-------
The letters 1n this appendix are from industries affected by
the industrial cost exclusion. Unlike the letters in Appendix B,
these letters contain data regarding industrial participation in
publicly owned treatment works.
The letters are from:
1. American Meat Institute
2. Association of Manufacturers
3. CIBA-GEIGY Corporation
4. J.M. Smucker Company
5. Kraft Inc.
6. Milk Industry Foundation . International
Association of Ice Cream Manufacturers
7. Miller Brewing Company
8. Nestle Enterprises, Inc.
-------
A I f I i AMERICAN
I \ I I \MEAT
im • f, I I I INSTITUTE
Serving The Meat Industry Since 1906
January 14, 1981
Mr. Thomas A. Whalen
Industrial Users Study
Municipal Construction Div.
(WH-547) Room 1217 A
401 M Street, S.W.
Washington, D.C. 20460
Dear Mr. Whaleri:
The American Meat Institute is a national trade associa-
tion representing the interests of over 300 meat packing and
processing firms. Since many of our member companies would
be affected, we are grateful for the opportunity to comment
on "Grants for Construction of Treatment Works, Exclusion of
Major Industrial Users; Impact Analyses".
We have reviewed the comments submitted by the National
Food Processors Association on this matter and fully concur
with the numerous concerns they have cited. Although our
members' plant operations are not seasonal in nature, our
problems with Section 3 of PL 96-483 are similar, in all other
respects, to those of NFPA member firms.
We have attempted to obtain some information on the
potential impact of this law on our members by conducting a
small sampling. Nine companies reported that 30 plants would
be adversely affected. Half of these plants are in rural
communities where the company's waste volume is a significant
portion of the POTW's current capacity. It was projected that
3 plants (10%) would be closed, 2 plants would build their own
treatment facility, 21 plants would try to secure their own
funds to pay off, proportionate to use, their share of bond
issues it was assumed the cities would float to pay the
industrial capacity funds required and 4 plants were undecided
about what they might be forced to do. All predicted much
higher costs which would ultimately have to be passed along to
the consumer.
We hope that this information will be useful to you in
preparation of the impact analysis for the Congress. We
strongly support repeal of Section 3 of PL 96-483.
Shn J. Birdsall, Ph.D.
Director, Scientific Affairs
JJB/mkw
P.O. Box 3556, Washington, D.C. 20007 • 1700 North Moore Street, Arlington, VA. 22209 • 703/841-2400
-------
MILK INDU6TRY FOUNDQTION - INTERNPTIONPL R66OCIRTION OF ICE CREPM MFR6.
December 30, 1980
Mr. Thomas Whalen
Industrial Users Study
Municipal Construction Division (WH-547)
Room 1217A
401 M Street, SW
Washington, DC 20460
Dear Mr. Whalen:
We are responding to your request for comments concerning
"Grants for Construction of Treatment Works, Exclusion of Major
Industrial Users; Impact Analysis" which appeared on page 79573
in the Federal Register December 1, 1980. We have not been able
to identify every milk processor or ice cream manufacturer that
will be affected by Section 3 of Public Law 96-483. Since most
of these processors are now discharging waste to a publicly
owned treatment works (POTWs) , we assume these POTWs will res-
pond to your request.
Several member plants, however, have been identified as
having difficulty in making final arrangements with munici-
palities and therefore would be affected if Section 3 becomes
a reality November 15, 1981. These are highlighted in the
attachment. Information for additional plants will be forth-
coming in the near future and we request that they be given
consideration in your analysis.
If you desire additional information regarding the attached
situations, please contact me.
Sincerely,
Austin T. Rhoads
Administrative Assistant
ATRrmap
Attachment
Suite H05 9D Seventeenth Si N.W. Washington. D.C 20006 (202) 296-4250
-------
- 2 -
Bennington, Vermont
We understand that Bennington has applied for a $10-15 million
grant. The Environmental Protection Agency (EPA) has notified the
town that they must hook-up with a closed sewer system. Bennington
has planned for an open sewer using gravity flow, rather than the
closed sewer which would require a pumping station. It has been
reported that EPA will not grant any funds unless the more elaborate
system is planned.
Fairdale Farms (a dairy processing plant) is involved with these
plans. They are negotiating with Bennington regarding the disposal
of the sludge from the up-graded municipal system. The original plans
called for Fairdale Farms to pay $12,000 a year. This will be greatly
changed if the closed system is mandated. This plant's waste exceeds
the exemption provided in Section 3 of Public Law 96-483 and would be
greatly hampered in November.
New Port, Maine
The H. P. Hood Company has a cottage cheese processing plant in
this community. This plant is working with the town in preparing the
paperwork requesting federal financial assistance to build a waste
treatment faciligy. The company signed the agreement a year ago.
If Section 3 is enforced, this plant would probably close since
they could not meet their financial obligations. The plant employs
50 persons.
Troy, Vermont
Dairy processors affected: Kraft cheddar cheese plant,
H. P. Hood and Yankee Milk.
The Kraft plant handles 400,000 pounds of milk a day or 1.5 million
pounds of milk per year. Kraft is leasing the buildings and grounds
from Yankee Milk. Hood and Yankee Milk also have receiving stations in
operation in Troy.
We understand that dairy processing is the only industry in Troy.
The small population uses septic tanks for sanitary sewage disposal.
The largest contributor of waste is through the generation of whey
in cheese processing. This whey is concentrated. The BOD load from
this waste is more than 100 pounds per day.
The preliminary design of the waste treatment plant is 80., 000
gallons per day. One industry would use 50,000 gallons of this capacity
The cost of the project is $1.75 million. Of this, industry will be
forced to pay $100,000 for sewers only.
-------
Step One Grant was established in 1977. It has been reported
that it is impossible to attain Step Three by November 1981.
Industry's obligation then would be an additional $600,000. With
Section 3 of P.L. 96-483, Kraft would be for-eed to pay $700^000,
which-is a large sum, especially with today's interest rates. Without
Section 3, the cost would be $100,000 and no interest payments.
In all probability, the dairy processing plants would not remain
in Troy if such a financial burden, were imposed.
-------
Kraft
INC
Howard B. Brown, P.E.
Director
Environmental and Energy Resources
December 31, 1980
Mr. Thomas A. Whalen
Industrial Users Study
Municipal Construction Division (WH-547)
U.S. Environmental Protection Agency
Room 1217A
401 M Street, S.W.
Washington, D.C. 20460
RE: (WH-FRL 1685-5)
Grants for Construction of Treatment
Works, Exclusion of Major Industrial
Users; Impact Analysis
Dear Mr. Whalen:
Kraft, Inc. is a major diversified food processor with some
ninety-six (96) manufacturing plants in the United States.
Eighty-nine of these plants discharge wastewater into publicly
owned wastewater treatment works (POTW) with industrial flows
above and below the 50,000 gallons per day cut-off. Thus
Kraft is both directly and indirectly affected by P.L. 96-483
provisions that grant assistance shall not be used for the
construction of any portion of a publicly owned treatment
works designed to serve industrial users.
We have by telephone provided you with some detail on the
potential effect of P.L. 96-483 on one of our plants, and at
your suggestion we relayed the same information to Mr. Austin
Rhoads, Secretary, Dairy Industry Committee (DIG) Task Group
on Environmental Matters. It is our understanding that the
DIG group has provided you with consolidated information
relative to impact on a segment of the dairy industry.
An incomplete analysis of P.L. 96-483 impact on Kraft facilities
shows that twelve or more POTW communities contemplate con-
struction for which grant monies would not be available. The
capital amounts for these range from $75,000 to $1,000,000
and may total about $6,000,000. In only one instance is a
new POTW involved. Estimates of capital funding requirements
for projects not yet in Step I consideration are not possible
at this time.
Kraft Court. Glenview. IL 60025 (312) 998-3085
-------
December 31, 1980
page 2
While the Agency is obligated to study and report to the
Congress not later than farch 15, 1981, it is obvious that a
study within that time frame will be less than complete and
the aggregate economic impact understated by a substantial
degree. Also it will not be possible to identify all specific
communities and accurately assess longer term impact on rural,
high unemployment and economically distressed areas.
The Congressional study requirement is fraught with a host of
uncertainties; multiple combinations of probabilities and
possibilities; and many unpredicatable events of significance.
The unfair and unsound burden placed upon the Agency suggests
that the concept of funding was not clearly fathomed by those
who drafted the legislation.
t
While the Agency is required to be specific, the EPA report
to the Congress should be qualified with a degree of rational
philosphy and set forth those generalities which might serve
to enhance Congressional understanding. The EPA report will
be incomplete without some elucidative dialogue on industrial
wastes, wastewater treatment, industry participation in com-
munity affairs, industrial capacity in municipal systems, 0§M
costs of POTWrs, design for industrial capacity, industrial
options - past and present, capital replacement factors,
funding alternatives, etc. Some examples follow:
(1) The 50,000 GPD cut-off is an arbitrary number capricious
in nature; it represents a sanitary sewage flow from
about 500 people; an insignificant 5,000 gallons or
less volume of industrial waste from a food processor;
a very significant and different waste load if from a
metal plater, etc., etc. To the layman Cor Congressman!
50,000 is a large number, to the industrial waste pro-
fessional it is a number which must be technically
qualified and relate to something if it is to be mean-
ingful. The legislation is broad brush., whereas case
studies and site specific considerations are a basic
requirement.
C2) Most industries now discharging into a POTW are locked
into that municipal sewer and the POTW. The day of
exercising the option of self treatment is gone. In
most cases a Business decision kept the industry in
the community or led the industry to join hands with.
the community of which, it is an integral part, and
which it supports via many1 tax revenue schemes. Elim-
ination of federal funding changes the rules after
the business decision.
-------
December 31, 198Q
Page 3
C3) Projects for future funding will in many instances
involve highly complex and expensive treatment systems..
The simple or relatively low cost base level treatment
facilities have been constructed. The relative economics
of AWT plants, which may or may not be caused by in-
dustry parameter contribution, are on an escalated scale,
and the attendant 0§M costs and capital replacement
demands may represent severe economic consequences
for the community.
(4) The considerations of energy and disposal of waste
residuals (sludges, etc.) are different today than in
the past. The auxiliary equipment requirements, capital
and operating costs and financing costs can combine to
bankrupt a community or encourage industry to abandon
operations in a given location. The assistance need
is greater today than in the past.
(5) While ICR imposed an unfair and duplicative burden, the
capital funds granted were interest-free. In today's
money market, inflated interest rates, and up-front
non-productive capital requirements can weigh heavy in
a local business decision.. The need for federal
subsidy is greater now than in the past.
(6) While legislative remedy is required, it is possible
that this will not come about within the required time
frame. In view of this likelihood and in order to
provide an equitable, orderly phase-in of P.L. 96-483,
the cut-off dates should apply to grant application
rather than grant award. The Step II-May 15, 1980, and
Step III-November 15, 1981, grant award cut-off dates
for industry participation in the Municipal Construction
Grants Program do not adequately provide for backlog and
delays encountered by municipalities currently having
grant applications in-process. In a number of instances,
these delays may not be the fault of the municipality.
The elimination of ICR was a fair and just undoing. However,
the elimination of federal funding of the industrial portion
of existing POTW sewerage systems and treatment works is even
more unfair than the previous ICR provisions. The law should
be further amended so that existing industries physically locked
into municipal systems would not be required to fund that which
is beyond their control and at a time when the only alternative
is to sever the community partnership it enjoys and supports
via its fair share contribution.
-------
December 31, 198Q
Page 4
We appreciate the opportunity to respond to the Agency's
request for comments. We trust that the EPA report to the
Congress will include a specific recommendation on the
needed legislative modification*
Very truly yours,
Howard B. Brown
Director '
/bb
-------
POTENTIAL EFFECTS OF SECTION 3 OF PUBLIC LAW 96-483
ON THE WARREN COUNTY SEWER DISTRICT NUMBER 3 AND
CIBA-GEIGY CORPORATION. GLENS FALLS. NEW YORK
1. WARREN COUNTY REGIONAL SEWER PROTECT
This project resulted from many years of study and activity to determine the best
method to meet the established water quality standard for the Hudson River. Based
on these studies, EPA and the New York Department of Environmental Conservation
(NYSDEC) determined that the Hudson River can best be protected from pollution
by having the wastewater flows of Hercules (the predecessor of CIBA-GEIGY) and
now CIBA-GEIGY treated in a regional wastewater treatment system.
CIBA-GEIGY Corporation and the Warren County Sewer District Number 1 executed
a Facilities Agreement in October 1979.
2. COMPLIANCE SCHEDULES
CIBA-GEIGY and the City of Glens Falls are under compliance schedules imposed
by the Enforcement Division of USEPA, Region II, to (1) tie-in to an outfall diffuser
and (2) provide secondary treatment for their wastewaters. An inability to meet
the mandated compliance date also places the continued operation of our manu-
facturing facility in Jeopardy".
3. EFFECTS ON THE WCSD *1 PROTECT AND CIBA-GEIGY
3.1 The regional treatment plant's design capacity is based on CIBA-GEIGY1 s
participation in the project. CIBA-GEIGY represents approximately 20%
of the average flow and 28% of tlss BOD load.
3.2 Financing of the Warren County Project is Based on The Construction Grant
Program. Section 3 is disruptive to the entire financial base of the Warren
County Project:
- The entire financial basis for funding the project would be changed.
The District would have to find alternative funding sources for long-
term financing, if possible.
- The District would have to execute new agreements with industrial
users. No guidelines for establishing such agreements are available;
new approaches would have to be developed. This would also require
the reexamination of allocation provisions for capital costs which
have proven to be so administratively difficult under the ICR Program.
- Because of the change of the financial base, Warren County would
most likely have to return to the voters for approval of additional bonds
to cover the costs attributable to industrial users.
Additionally, since Section 3 would deprive industries of interest free
loans previously available through the industrial cost recovery system
for their share of capital costs over the useful life of the treatment works,
industries wishing to utilize POTW's would now have to provide their
-------
2.
entire share within a short time of POTW construction. This would divert
significant levels of capital dollars from new productive facilities which
are needed to maintain or improve employment levels.
3 .3 Agreements and Understandings
CIBA-GEIGY executed the agreement with the District fully expecting to
participate in industrial cost recovery and operating costs. The Section 3
prohibition at this late stage in the progress of the District's project is
onerous on CIBA-GEIGY and the WCSD.
Section 3 now discourages participation by industries in POTW's.
EPA and DEC have long encouraged the concept of industrial
participation in POTW's. This amendment could result in a
proliferation of point source discharges on the Hudson River
and the loss of benefits resulting from economy of scale,
simplified enforcement by reducing outfalls, greater treatment
efficiencies and lower management, maintenance and operating
costs.
CIBA-GEIGY is currently reexamining its continued participation in the
District Project. We have three alternatives:
- Provide WCSD funds for our industrial portion.
- Build our own facility.
- Close the Glens F?lls Plant and transfer production to other facilities
with available production capacity.
If CIBA-GEIGY is forced to relocate from Glens Falls, 700 employees
will be thrown into a job market where there are little or no job oppor-
tunities.
It should be noted that among the reasons CIBA-GEIGY acquired the
Hercules Pigments Division was that the Glens Falls site provided a
viable manufacturing site for its pigment products because of the exist-
ing on-site pretreatment facility and the understanding that the site
would tie-in to a regional system for secondary treatment.
In summary, at the urging of federal, state and local authorities, first
Hercules and later CIBA-GEIGY have been planning for several years to
meet EPA Clean Water Standards by joining in the County Project. By
changing the rules of the game at this late stage in the progress of this
project, the Congress has put the CIBA-GEIGY Glens Falls facility into
an operational crisis greater than anything we have faced in the competi-
tive marketplace.
We therefore urge that the Congress reconsider Section 3 of Public Law
96-483 and either drop the amendment or make appropriate changes that
would allow for situations such as CIBA-GEIGY's and the Warren County
District Number 1 Project that have been delayed through no fault of^the
grantee or the industrial participant.
-------
Nestle Enterprisesjnc.
!OC BIcorr.ingciGle 3caci VYh-e Pic;ns.
TC Call Writer C;r=ct
(514)632- 6709
December 31, 1980
Industrial Users Study
Municipal Construction Division
(WH-547)
Room 1217A
401 M Street, SW
Washington, D.C. 20460
Re: Stafford Amendment:
Grants for Construction of Treatment Plants,
Exclusion of Major Industrial Users
Gentlemen:
Pursuant to your request for comments on the above referenced
subject, we respectfully submit for your consideration a
description of the implications and impacts of the Stafford
amendment on the Nestle" Co., Inc.
Up to the time that the Industrial Cost Recovery (ICR) pro-
visions of the Clean Water Act were repealed on October 1, 1980,
the Nestle" Co. was prepared at a number of its manufacturing
plants to assume its fair share of the capital and operating
costs of new POTW upgradings and/or expansions. Although we
were not in total agreement with the ICR amendment, we did
concur with the Agency that our fair share of the construction
and operation costs of the POTW would be forthcoming in
situations where total self-treatment was not cost-effective.
The provisions of ICR which would allow a long-term period
(/-30 years) of repayment by industry at low interest rates
increased the palatability of ICR.
However, the ICR amendment has since been repealed with the
Stafford amendment as its replacement to take effect on
November 15, 1981. The Stafford amendment, will require the
Nestle" Co., inc. to secure their own funding to participate
in at least two municipal treatment plants. In both cases,
the City of Fulton, N.Y. and Marysville, Ohio, are likely not
to receive approval on their Step III Construction grant from
U.S. EPA by November 15, 1981, and as such the impacts of
-------
Grants for Construction of Treatment Plants
Page 2
December 31, 1980
the Stafford amendment will be felt in both cases. If we elect
to participate in joint treatment with the municipalities, sig-
nificant additional cost to Nestle" will result since_upfront
capital monies at prevailing borrowing rates~will have to be
provided directly to the municipalities.
Our review of the economic impacts at Fulton & Marysville
caused by the Stafford amendment is similar in many respects
and as such we have limited our comments here to the Marysville
plant although similar economic problems would pertain to Fulton.
With respect to Marysville, the City through its engineering
consultant (Burgess & Niple of Columbus, Ohio) is proceeding
along a course of action which will require a total capital
investment of $7.94 million to expand the secondary portion and
add tertiary treatment to its treatment plant. The total in-
vestment required for Nestle" to participate in the POTW ex-
pansion could be-as high as $1.12 million if the Step III grant
is not awarded prior to November 15, 1981. However, if the grant
is awarded prior to that date and we choose to participate the
required capital investment for us becomes $0.297 million. This
is where the problem lies. The amount of capital investment
required for Nestle" to participate in the POTW varies greatly
for the same level of treatment and is determined by factors
outside our control. To put the former capital investment in
its proper perspective, consider that this size investment made
with money borrowed at prevailing rates, would seriously
jeopardize the continued Nestle" operation in Marysville.
In situations where significant economic impact would result
through participation in POTW treatment, such as described
above, we would in all likelihood elect not to participate in
the treatment plant leaving an under-utilized POTW.
It is our opinion that the ^Stafford amendment will turn many
industries away from POTW's unless provisions are made to
make joint treatment cost competitive with self-treatment.
Thank you.
Very truly yours,
' Philfp A. Haderer, P.E.
Senior Environmental Engineer
PAH:lal
-------
Nestle Enterprises, Inc.
TO Coil Write' : ~c
'-i; 652-6 70 9
January 26,1981
Industrial Users Study
Municipal Construction Division (WH-547)
Room 1217A
401 M Street, SW
Washington, D.C. 20460
Attn: Mr. Thomas Whalen
Re: Stafford Amendment:
Grants for Construction of Treatment Plants,
Exclusion, of Major Industrial Users
Dear Mr. Whalen:
As requested, we are submitting additional economic data on
the effects of the Stafford Amendment on the Nestle plant
in Fulton, N.Y.
Based on a Step III project cost of $7.91 million (ENR index
of 3100) for the Fulton POTW, the capital cost allocated to
Nestle is $0.719 million. Expressed another way, if the Step
III grant is not awarded before November 15,1981, Nestle's
share of the total project cost will be about 9.1% of the
total project cost. The requested capital investment for
Nestle to participate in the expanded Fulton, N.Y. POTW does
not take into consideration that we are presently "in" the
system and receiving reasonably good treatment of our waste
now. The Nestle Co. is being treated as a new customer and
this is reflected in the magnitude of the capital investment.
Securing these funds through the currently high interest bond
market would severely affect the overall economic outlook of
the Nestle plant.
If Step II can be completed and Step III awarded prior to the
November 15,1981 date, then the capital investment required for
Nestle to participate would be significantly reduced as the
U.S. EPA would assume the full 75% of the total project cost.
This brings up another problem faced by Nestle with the
Stafford Amendment. The amount of capital investment required
for Nestle participate in the POTW varies greatly for the
same level of treatment and is determined by factors (U.S. EPA,
NYSDEC, City of Fulton and .their engineering consultant) outside
our control.
-------
Page 2 .
Stafford Amendment:
Grants for construction of Treatment Plants,
Exclusion of Major Industrial Users
We are making every attempt to have this project Step III grant
awarded before November 15, 1981 but we have not real assurances
that this will actually happen. The implications of Stafford are
clearly unfair to the Nestle operation in Fulton particularly if
the dealine is not met.
Thank you for your consideration of the above.
Very truly yours,
Philip Haderer
Senior Environmental Engineer, P.E.
PAH:ro
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December 29, 1980
Industrial Users Study
Municipal Construction Division (WH-547)
Room 1217A
401 M Street S. W.
Washington, D. C. 20460
Gentlemen:
Re: Public Law 96-483
to the Federal Water
Pollution Act
Our management in Orrville and I are greatly concerned
about the amendment, Public Law 96-483 to the Federal Water
Pollution Control Act, known as the Stafford Amendment, that
would make any industry with flows exceeding 50,000 gallons
per day ineligible for clear water grants.
We believe the removal of the Industrial Cost Recovery
provisions was advantageous. As amended, the Pollution
Control Act with the Stafford Amendment would defeat the
objectives of the Federal Water Pollution Control Act by
halting the work that has been started to improve waste
treatment and better the environment.
The cost impact on our Orrville Plant alone would be
in excess of $1,000,000. The fact that income tax incen-
tives exist if the funds are used by Smucker's as capital
expenditures for pollution abatement, but not for sewer
payments to the city, appears unjust. This seems to be
the situation at our Orrville facility (increased sewer
payments).
In addition, industries in communities where Step 2
grants were approved prior to March 15, 1980 or implementa-
tion of Step 3 grants occur before November 15, 1981, will
benefit from interest free federal grants. This may afford
some companies unfair profit advantages as a result of their
respective locations and/or the timing of Facility Plan
approvals.
THE J.M.SMUCKER COMPANY-STRAWBERRY LANE. ORRVILLE, OHIO 44667-TELEPHONE (216) 682-0015
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Industrial Users Study
Page 2
December 29, 1980
I am also concerned about the potential effect of the
Stafford Amendment on all of our plants throughout the
country. Therefore, I am requesting that you bring to
bear whatever authority you can to have the Stafford
Amendment, or any similar provision, removed from the
amended Federal Pollution Control Act.
Very sincerely,
M. SMUCKER COMPANY
Paul Smucker
Chairman/Pres ident
PS/nh
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January 30, 1981
COMMENTS OF MILLER BREWING COMPANY
ON SECTION 3 OP PUBLIC LAW 96-483
Miller Brewing Company, Milwaukee, Wisconsin
("Miller"), appreciates the opportunity to submit these
comments to the Environmental Protection Agency with
respect to the potential impact of Section 3 of Public Law
96-483 (the "Stafford Amendment"), as solicited by EPA
on December 1, 1980 (45 Fed. Reg. 79573). We understand
that EPA intends to use such comments in preparing a
report to Congress, as required by Section 4 of Public
Law 96-483, on the likely effects of the Stafford Amend-
ment.
Miller owns and operates brewing and container-
manufacturing facilities in Wisconsin, California, Texas,
New York, North Carolina, and Georgia. Our company
strongly supported repeal of the Industrial Cost Recovery
provisions of the Federal Water Pollution Control Act (as
amended by the Clean Water Act of 1977), believing that
Congress1 purposes in setting up the Industrial Cost Re-
covery provisions were not being achieved. Unfortunately,
the Stafford Amendment appears worse than the provisions
it replaced.
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- 2 -
The Stafford Amendment prohibits use of federal
construction money to treat industrial discharges in
excess of a flow equivalent of 50,000 gallons per day.
Miller believes .that the Stafford Amendment is an un-
sound piece of legislation for several reasons:
1. The Stafford Amendment will dis-
courage joint industrial/municipal sewage
treatment. Since Miller believes that
.4
joint-treatment facilities can often achieve
greater pollutant reduction than single in-
dustry plant treatment, the new law will
have a deleterious effect on the environ-
ment. It will also work against the Con-
gressional goal of controlling the number
of waste treatment facilities.
2. The 50,000 gallon per day cut-off
under the Amendment is a discriminatory
cut-off with no rational basis; federal
funds will continue to be available for
small industries, "dry" industries, and
residential users, but not for "wet" in-
dustries, such as Miller, or for other
industries with a waste flow in excess
of 50,000 gallons per day.
3. The Stafford Amendment is not
necessary to achieve parity between in-
dustries using publicly-owned treatment
works and those using self-treatment
facilities; various tax credits and
write-offs already achieve this result.
Although most of Miller's recently-constructed
facilities have their own waste-water treatment plants,
the impact of the Stafford Amendment on Miller's Milwaukee
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- 3 -
brewery, which does not self-treat, will be serious and
far-reaching. Preliminary appraisals received by Miller
from outside sources show that the Stafford Amendment
could cost Miller as much as $17 million, spread over a
five-year period. Miller is currently verifying these
figures and is now analyzing the economic impact of the
Stafford Amendment on its Milwaukee plant. It will sup-
ply these statistics to EPA when they become available.
The Milwaukee brewery is the oldest of Miller's
plants. It already has the highest production costs of
any Miller facility. The maintenance costs of this
facility are substantial and are expected to run into
the millions of dollars in the coming years. Moreover,
the City of Milwaukee is currently under a court order
to undertake substantial rehabilitation of its entire
sewage system. Miller, as a "wet" industry and one of
the larger users of the system, has been monitoring the
cost to the company of Milwaukee's implementation of the
court order. The court order will clearly result in
additional costs to Miller. These costs, however, will
be increased dramatically by the Stafford Amendment,
which would withhold federal assistance for treatment
capacity for facilities the size of Miller's.
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- 4 -
Currently, Miller is reappraising the viability
of maintaining current levels of production at its
Milwaukee brewery. The enormous potential costs of
the Stafford Amendment will be carefully analyzed in
this regard. An alteration in Miller's current levels
of production could adversely affect the work force at
Miller's Milwaukee brewery, which currently employs
2,500 workers.
Although Miller's calculations of the likely
costs of the Stafford Amendment are at best preliminary,
Miller can safely say at this time that the impact of
this legislation, on what is already the oldest and
least efficient of Miller's facilities, could well be
extremely adverse. For this reason, Miller strongly
urges that EPA recommend to the Congress that the
Stafford Amendment be repealed.
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APPENDIX B
Selected responses from Interested
parties to a notice published in the
Federal Register.
-------
Through a notice in the Federal Register on December 1, 1980, the
Environmental Protection Agency requested comments from municipalities, in-
dustries, and other interested parties regarding the potential effect of the
industrial cost exclusion. Contained in this Appendix are a copy of the
Federal Register notice, a list of those who provided comments, and copies
of some of the comments that we received.
A total of one-hundred and twenty-one comments were received. Of the
comments received, sixty-one were from public entities, forty-seven from
entities representing the interest of those affected by the industrial cost
exclusion in the private sector and thirteen professional engineering firms
that plan and design wastewater treatment works that are Federally financed.
Most of the comments that we received criticize or seek clarification
of perceived ambiguities in the industrial cost exclusion, rather than offer
substantive data on the economic effect. The eight letters that contain data
regarding industrial participation in publicly owned treatment works are con-
tained in Appendix A. Any data received from public entities have been
incorporated into the National Effect section.
Twenty-seven letters were selected for inclusion in Appendix B to repre-
sent the range of opinions regarding the effect of the industrial cost exclu-
sion. All but six of the comments received were against the implementation
of the industrial cost exclusion. The unanimous opinion expressed in the
majority of the letters is that the industrial cost exclusion may result in
increased construction costs because of a perceived need to re-negotiate with
participating industries and then replan and redesign the wastewater treat-
ment facility. Four public entities wrote in favor of restoring the indus-
trial cost recovery requirements, one industry supports the industrial cost
exclusion, and one trade association is divided on the issue.
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Federal Register / Vol. 45. No. 232 / Monday. December 1, 1980 / Notices
79573
[WH-FRL 1685-5)
Grants for Construction of Treatment
Works, Exclusion of Major Industrial
Users; Impact Analysis
November 24.1980.
AGENCY: Environmental Protection
Agency.
ACTION: Request for Comments.
SUMMARY: We are requesting comments
from municipalities, industries and other
Interested parties regarding the potential'
effect of a recent amendment, Pub. L
9&-4B3, to the Federal Water Pollution
Control Act. Section 3 of that
amendment provides that grant
assistance shall not be used after
November 15.1981, for the construction
of any portion of a publicly owned
wastewater treatment works designed
to serve a major industrial user. Your
comments will be considered during the
conduct of our study of the effect of that
provision. In accordance with section 4
of the new Law, we intend to report our
findings, both qualitative and
quantitative, to the Congress before
March 15.1981.
DATES: Comments must be submitted
before December 31,1980.
ADDRESS: Send comments to: Industrial
Users Study. Municipal Construction
Division (WH-547), Room 1217A, 401M
Street, S.W., Washington, D.C., 20460
FOR FURTHER INFORMATION CONTACT:
Thomas A. Whalen, (202) 428-8902.
SUPPLEMENTARY INFORMATION: Public
Law 96-483 is an Act to extend certain
authorizations in the Clean Water Act
and for other purposes. One of those
purposes was to repeal the Industrial
cost recovery, the so-called ICR.
requirement that was originally enacted
ns part of the 1972 Act. The original ICR
requirement, on which a moratorium
hud been Imposed in 1977, required that
cuch municipality recover without
interest, that portion of the Federal grant
used to construct the industrial portion
of a publicly owned treatment works.
However, section 3 of the new Law
states:
No grant made Hfter November 15,1981, for
a publicly owned treatment works, other Own
fur facility planning and the preparation of
construction plant and specifications, ihall
be used to treat, (tore, or convey, the flow of
any industrial user Into such treatment works
in excess of a flow per day equivalent to fifty
thousand gullons per day of sanitary waste.
This subsection shall not apply to any project
proposed by a grantee which is carrying out
an approved project to prepare construction
plans and specifications for a facility to treat
w.istewalur. which received its grant
approval before May 15.1980.
We are requesting your comments as
input to the study and report that is
required by section 4 of Pub. L 96-483:
The Administrator of the Environmental
Protection Agency shall study and report to
the Congress not later than March 15, 1981.
on the effect of the amendment made by
section 3 on the construction of publicly
owned treatment works. Industrial
participation In publicly owned treatment
works, treatment of industrial discharges,
and the appropriate degree of Federal and
rion-Fndoral participation In the funding of
publicly owned treatment works.
Depending upon the nature of your
comments and other sources of
information, the report to Congress may
also identify specific communities and
projects affected by the amendment,
especially those areas that are rural
have high unemployment or are
economically distressed. In addition, we
intend to develop information on the
amounts and capital costs impacts of
industrial flows .both above and below
the 50,000 gallon per day cut-off that are
proposed for treatment in municipal
plants. Therefore, your cooperation is
critical to this effort and your comments
will be appreciated.
Henry L Longest II,
Deputy Assistant Administrator for Water
Program Operations (WH-&46).
•ILUNO CODE MM-lt-M
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LIST OF COMMENTORS
PUBLIC SECTOR
The entities listed below, representing the interest of those affected
by the industrial cost exclusion in the public sector, provided comments in
response to the Federal Register notice. Those letters selected for inclusion
in this Appendix are noted (*).
Association of Metropolitan Sewage Agencies
*National Association of Counties
*National League of Cities
Alabama-Tombigbee Regional Commission, Alabama
Sumter County Commission, Alabama
Washington County Commission, Alabama
City of Fayetteville, Arkansas
*County Sanitation Districts of Los Angeles County, California
City and County of San Francisco, California
Denver Regional Council of Governments, Colorado
Metropolitan Denver Sewage Disposal District No.l, Colorado
City of Montrose, Colorado
Town of Suffield, Connecticut
Orange County, Florida
Atlanta Regional Commission, Georgia
Cobb County, Georgia
*City of LaGrange, Georgia
Sanitary District of Decatur, Illinois
*City of Kankakee, Illinois
City of Olathe, Kansas
City of Salisbury, Maryland
*Detroit, Michigan
Rochester, Michigan
City of Worthington, Minnesota
City of Laurel, Mississippi
City of Joplin, Missouri
City of Omaha, Nebraska
The Camden County Municipal Utilities Authority, New Jersey
New York State Department of Environmental Conservation
City of Gloversville, New York
County of Nassau, New York
City of New York, New York
*C1ty of Pittsburgh, New York
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PUBLIC SECTOR (continued)
*The Governor of the State of North Carolina
City of Charlotte, North Carolina
*City of Goldsboro, North Carolina
*Greenville Utilities Commission, North Carolina
City of Lumberton, North Carolina
City of Morganton, North Carolina
City of Mount Airy, North Carolina
City of Rocky Mount, North Carolina
Metropolitan Sewer District of Greater Cincinnati, Ohio
City of Defiance, Ohio
Village of Delta, Ohio
City of Lima, Ohio
Village of Montpelier, Ohio
Metropolitan Sewer District, Stark County, Ohio
Summit County Sanitary Engineers, Ohio
City of Sidney, Ohio
*City of Sylvania, Ohio
City of Wooster, Ohio
City of Philadelphia, Pennsylvania
Town of West Warwick, Rhode Island
City of Lancaster, South Carolina
City of Lewisburg, Tennessee
Town of Livingston, Tennessee
Town of Rogersville, Tennessee
*City of Houston, Texas
County of Henrico, Virginia
City of Everett, Washington
Milwaukee Metropolitan Sewerage District
PRIVATE SECTOR
The entities listed below, representing the interest of
those affected by the industrial cost exclusion in the private sector,
provided comments in response to the Federal Register notice. Those
letters selected for inclusion in this Appendix are noted (*).
*American Frozen Food Institute
American Meat Institute
*Chamber of Commerce of the United States
*Chemical Manufacturers Association
*Fibre Box Association
*National Association of Manufacturers
*National Food Processors Association
*Tanners' Council of America, Inc.
*Textile Rental Services Association of America
-------
PRIVATE SECTOR (continued)
*United States Brewers Association, Inc.
Milk Industry Foundation 9 International Association of Ice Cream Mfrs
*Hewlett-Packard, Palo Alto, California
General American Transportation Corporation, Chicago, Illinois
Masonite Corporation, Chicago, Illinois
*DeSoto, Des Plaines, Illinois
Kraft Inc., Glenview, Illinois
Deere & Company, Moline, Illinois
Inland Steel Company, East Chicago, Indiana
Railoc of Indiana, Inc., East Chicago, Indiana
Anheuser-Busch Companies, St. Louis, Missouri
Ralston Purina Company, St. Louis, Missouri
Muskegon Industrial Users Committee, Muskegon, Michigan
Geo. A. Hormel & Co., Austin, Minnesota
Chamber of Commerce, Worthington, Minnesota
Tanners Association of Fulton County, Inc., Gloversville, New York
F. Rulison & Sons, Inc., Johnstown, New York
CIBA-GEIGY Corporation, Glens Falls, New York
Eastman Kodak Company, Rochester, New York
Rochester Gas and Electric Corporation, Rochester, New York
Nestle Enterprises, Inc., White Plains, New York
Carolina Yarn Processors, Tryon, North Carolina
The Goodyear Tire & Rubber Company Akron, Ohio
*The Procter & Gamble Company, Cincinnati, Ohio
*Mead Corporation, Dayton, Ohio
ARPS Jersey Farm, Defiance, Ohio
Dinner Bell Foods, Inc., Defiance, Ohio
Zeller, Defiance, Ohio
The J.M. Smucker Company, Orville, Ohio
Copeland Corporation, Sidney, Ohio
Scott Paper Company, Philadelphia, Pennsylvania
Jones & Lavgalin Steel Corporation, Pittsburgh, Pennsylvania
Lancaster County Chamber of Commerce, Lancaster, South Carolina
Diamond Shamrock Corporation, Dallas, Texas
Frito-Lay, Inc., Dallas, Texas
Anderson-Clayton, Houston, Texas
Appleton Paper Inc., Appleton, Wisconson
Grede Foundries, Inc., Milwaukee, Wisconsin
Miller Brewing Company, Milwaukee, Wisconsin
Badger Paper Mills, Inc. Peshtigo, Wisconsin
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OTHER INTERESTED PARTIES
The parties listed below, although not directly affected by the industrial
cost exclusion, provided comments 1n response to the Federal Register notice.
Those letters selected for inclusion in this appendix are noted (*).
Lloyd R. Robinson, Professional Engineer, Birmingham, Alabama
Crawford, Murphy & Tilly, Inc., Consulting Engineers, Lincoln, Illinois
Jones & Henry Engineers, Limited, Toledo, Ohio.
*Camp Dresser & McKee Inc., Engineers, Boston, Massachusetts
Morrison-Maierle, Inc., Consulting Engineers, Helena, Montana
Allgeier, Martin & Associates, Inc. Consulting Engineers, Joplin, Missouri
Stearns & Wheler, Civil and Sanitary Engineers, Cayenovia, New York
Jan A. Kern, Professional Engineer, Newark, New York
Harry Hendon and Associates, Inc., Engineers, Asheville, North Carolina
*CH2M-H111, Engineers, Portland, Oregon
Gerald C. Allender, Professional Engineer, Erie, Pennsylvania
J.R. Wanford & Company, Consulting Engineer, Nashville, Tennessee
Davy Engineering Co., LaCrosse, Wisconsin
-------
National Association of Counties
Offices • 1735 New York Avenue N.W., Washington, D.C. 20006 • Telephone 202/783-5113
January 26, 1981
Thomas A. Whalen
Industrial Users Study
Municipal Construction Division
WH 547
Environmental Protection Agency
Room 1217 A
401 M Street, S. W.
Washington, D. C. 20460
Dear Mr. Whalen:
The National Association of Counties (NACo) has adopted a policy regarding
the now-defunct industrial cost recovery requirements (ICR): NACo opposes the
imposition of ICR as an across-the-board mandate.
In arriving at this position, NACo's Environment and Energy Steering Commit-
tee, which is composed of county elected officials from around the country, con-
sidered several larger financial questions and their impact on both Federal and
local fiscal resources. Some of these issues relate to the problem of the prob-
able impact of the Stafford Amendment which precludes financing of industrial
participation in the construction of publicly owned treatment works through the
Section 201 program.
First, the major challenge facing the country with respect to the wastewater
treatment facilities construction program is one of achieving the greatest improve-
ment in water quality given limited financial resources. Therefore, it is appro-
priate for consideration to be given to the most efficient and effective ways to
spend these monies. However, the ultimate decision about the need for a particu-
lar facility is best made through the cooperative state/local water quality man-
agement planning process. In point of face, many of the failures of the present
system may be attributed to Federal mandates, either Congressionally or Adminis-
tratively devised, which make it difficult to get the real job done.
Second, it is well understood that the Federal government must assure itself
that, in the future, local governments will be able to operate, maintain, and re-
place those wastewater treatment facilities which are being constructed with
Federal support to meet state water quality standards. Therefore, NACo's Steering
Committee has discussed the industrial cost recovery requirements as a component
of a local financial management plan. For example, if a local government can
successfully document to EPA that it has a financial management plan fully cover-
ing all aspects of capital accumulation, debt retirement, and operations and main-
-------
- 2 -
tenance costs without using industrial cost recovery charges, the local govern-
ment should not be required to collect the funds. By the same token, where the
necessary financial wherewithall appears lacking, ICR would seem to be an appro-
priate remedy.
The Stafford amendment would appear to raise complex problems for water qual-
ity managers:
0 It will probably result in a proliferation of smaller privately owned
facilities at a time when most states find themselves unable to ade-
quately monitor and ensure the performance of existing plants.
0 More private construction means more borrowing by the private sector and
in many rural areas this borrowing could potentially compete with local
governments.
0 Complex issues over the control of wastewater treatment capacity paid
for by private industry could harm the ability of local governments to
manage their resources in an efficient manner. For example, what if a
private industry paid for twenty percent of the treatment capacity in a
newly constructed facility, but then determined that it would not require
the use of the added capacity until some time in the future? It seems
unlikely that the capacity could be allocated to other private users by
the local government which, in the mean time, would be paying the oper-
ating and maintenance charges on a system-wide basis which would not
be assigned to the industrial customer.
We hope that your Agency's study will identify the relative magnitude of the
industrial subsidy which seems to have prompted so much concern. Perhaps it is
•mailer than commonly thought. However, at bottom, the National Association of
Counties would probably endorse a reduced Federal share of wastewater construction
grants before it would concur with the intent of the Stafford amendment. The criti-
cal issue remains one of allowing that level of government closest to the problem to
retain the authority, as well as the responsibility, for the most effective means of
solving the problem.
Sincerely,
Larry Naake
Associate Director
-------
National 1620 Eye Street. N.W.
League Washington, D. C.
of 20006
CWes (202)293-7310
Cable: NLCITIES
December 23, 1980
OFFICERS:
Prtnaent
f'tyt Viet Pr
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Industrial Users Study
December 23, 1980
Page 2
Finally/ irrespective of the administrative mechanisms which
EPA uses to implement Section 3, the amendment will result in
inequitable treatment between and among classes of users. In
addition to the differing treatment given to old vs new systems,
and large vs smaller systems, the amendment can create disparate
treatment of systems within the borders of a single community.
From a local government perspective, it is both unfair and
harmful to local planning and growth management efforts to
grandfather in a treatment plant in an older industrialized
section of the city and not provide the same assistance to a
newer area which has been identified by the local government as
an economic development target district.
Because of the potential hardships and inequitable treatment
imposed on municipalities by the elimination of assistance to
that portion of a POTW designed to serve major industrial users,
the National League of Cities opposes the Section 3 provision,
and will advocate its repeal in the next session of Congress.
Failing repeal, we believe that modifications to the provision
should be made which will satisfy the needs of industrial users
and municipalities which provide wastewater treatment services,
lessen the inequitable treatment among users and reduce the
paperwork burdens associated with the previous ICR program. NLC
is willing to assist EPA in structuring this modified program.
Enclosed for your information is a resolution on the Section 3
amendment which was adopted by the NLC membership at its annual
business meeting on December 3, 1980 in Atlanta, Georgia. We
appreciate the opportunity to comment on this important issue.
Sincerely
Alan Seals
Executive Director
Enclosure
-------
PROPOSED RESOLUTION - RC #15
ON THE STAFFORD AMENDMENT TO THE CLEAN WATER ACT
WHEREAS, many cities have consistently advocated the elimination of
industrial cost recovery (ICR) provisions from the Clean Water
Act because carrying out an ICR program contributes nothing to
water pollution control and simply diverts time and effort away
from that end; and
WHEREAS, in advocating the elimination of industrial cost recovery
requirements from the Clean Water Act, these cities are in full
support of the first recommendation in the Coopers & Lybrand
feasibility study presented to EPA in December 1978; and
WHEREAS, Congress decided to reexamine the need for ICR programs when it
modified PL to include an ICR feasibility study and a
moratorium on the collection of ICR revenues by those treatment
authorities that had already put a recovery program into
operation. The study has been completed and submitted to Congress
for consideration. Its primary conclusion is that ICR has met
the objectives for which it was created; and
WHEREAS, on October 1, 1980, the Congress repealed the Industrial Cost
Recovery Act provision from the Clean Water Act and replaced
it with the Stafford Amendment; and
•WHEREAS, the Stafford Amendment will affect municipalities more adversely
than the ICR by requiring cities to absorb all costs for
processing industrial wastes in excess of 50,000 gallons per
day;
HOW, THEREFORE, BE IT RESOLVED that the National League of Cities goes
on record to repeal the Stafford Amendment of the Clean Water
Act of 1977, as amended.
Submitted by: Resolutions Committee
Date Received: December 1, 1980
Approved: December 3, 1980
Annual Congress of Cities
Atlanta, Georgia
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JTY SANITATION DI5"r.iC'i
GF LOS - .-GELE.T; r:c'.::-i"
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Decentier 29, 1980
Industrial Users Study
Municipal Construction Division (WH-547)
Room 1217A
401 M St.' S.W.
Washington, D. C. 20460
Attention: Thomas A. Whalen
Gentlemen:
The Federal Register of December 1, 1980 requested comments on the
potential effect of Section 3 (the Stafford Amendment) of Public Law 96-483.
The Sanitation Districts believe that the Stafford Amendment will have a much
more profound adverse impact on municipal agencies than the ICR program that
it replaces. This impact will be felt by local agencies in both the area of
administration and financing.
A major reason for the repeal of ICR by Congress was the wide-spread
conviction that administration of the ICR program by municipal agencies would
be more costly than the corresponding revenue derived from its enforcement.
While, on the surface, the Stafford Amendment would appear simple to administer,
a more thorough examination indicates that its implementation could be more
complex than ICR and have the added disadvantage of not generating any revenue
to offset the administration cost. This is especially true for large sanitation
agencies such as the Districts which have a complex system of sewers and treat-
ment facilities and accept the wastes from over 8000 industries. Among the
specific administrative problems envisioned by the Districts are the following:
1. When a system is expanded or upgraded, existing industries would
have to pay the total industrial portion of the facilities under the Stafford
Amendment. However, sound engineering practices dictate that all facilities be
designed to handle future flow. Therefore, a system must be devised to enable
new industries to reimburse existing industries for their capacity in the system.
With 8000 industries on the system, this would present significant administrative
problems. In like manner, when an expansion to a facilitiy is designed, the
future flow from residential or industrial contributors is never completely
defined. Under these circumstances, it would be difficult to determine what
portion of a POTW is not eligible for grant funds.
2. A question of ownership rights of industrial companies to sewerage
capacity may exist under the Stafford Amendment. As each company will be charged
to finance construction of facilities according to its waste characteristics, a
closure of the company (or a significant increase or decrease in wastewater
flows) could create an administrative problem as to what sewerage capacity rights
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Industrial Users Study 12/29/80
EPA Page 2
are vested in a company. Would a company be able to transfer or sell its
capacity rights to other companies? A continuing complex and costly administrative
problem could be created.
3. Using an arbitrary 50,000 gpd criteria to determine the requirement
for grant funding of industrial capacity will result in a significant inequity
between those companies slightly below and those slightly above the flow criteria.
Clearly, this will present a problem in accurately assessing flow for each
industry since the tendency for a given industry to represent their flow as less
than 50,000 gpd will be great. In addition, it is not clear how to deal with a
situation-where an industry's flow is less than 50,000 gpd at the time a POTW
facility is built and then has an increase in flow to greater than 50,000 gpd.
As a corollary to this problem, there are industries who, because of the nature
of their operation, discharge less than 50,000 gpd on some days and more than
50,000 gpd on other days. In a large system, it would be extremely costly to
monitor all industries impacted by this cogdition to determine whether or not they
fall under the Stafford Amendment.
From the financial aspect, the Stafford Amendment appears to be more
disadvantageous to sewerage agencies than the ICR program that it replaces.
While both programs were aimed at insuring that industry does not benefit from
the construction grant program, ICR provided a setting in which industry could
pay their obligation over a 30-year period, whereas the Stafford Amendment
requires Industry to pay their obligation prior to the initiation of construction
of new facilities (unless the taxpayers are willing to subsidize industry ~
an unlikely situation in post-Proposition 13 California). Because of this major
change 1n direction by Congress, and the imminent implementation of the Stafford
Amendment, many municipal construction projects may be delayed for several years
until municipalities implement ordinances, policies, etc. to enable large sums
of money to be collected from industry. For other agencies, such as the
Sanitation Districts, which do have the authority to collect money from industry,
the impact will still be profound.
•For example, the Districts' construction program for fiscal years 1981-82
and 1982-83 calls for construction of facilities that are estimated to cost
$112 million. Prior to the Stafford Amendment, the Districts would have received
75 percent of these funds ($84 million) from the EPA. Using the best available
assumptions, it appears that industry represents approximately 18 percent of the
Districts' system, and therefore, under the Stafford Amendment, an additional
$15 minion would have to be collected from industry during that two-year period
for their non-grant eligible share of capital projects. To put this number in
perspective, the expected income from the Districts' industrial waste surcharge
program (which represents industry's share of both net capital and O&M costs of
the Districts' system) for the same two-year period is approximately $20 million.
Therefore, the short-term impact of the Stafford Amendment on the industries
within the Districts' system would be an approximate doubling of their cost. For
some industries, especially those with high suspended solids discharges,
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Industrial Users Study i?/?q/Rn
pfge 3
the impact would be even more severe since the bulk of the planned construction
is aimed at sludge removal. Table 1 illustrates the impact of the Stafford
Amendment on several of the larger industrial dischargers to the Districts'
system.
Based on the above, implementation of the Stafford Amendment should, as
a minimum, be delayed beyond November 15, 1981. It is suggested that an implemen-
tation period of five years be allowed. Obtaining the required large amounts of
money to replace federal grant funds requires planning and orderly implementation.
Industrial companies, as well as sewerage agencies, unless very strongly financed,
may not be able to develop such funds by November 1981. At the current high rate
of interest, an amendment that requires sewerage agencies and/or industrial
companies to drastically modify their financial program in such a short time
frame in order to finance large construction projects will be difficult to implement.
Such a requirement could severely delay or indefinitely postpone the construction
of needed sewerage facilities. In this regard, the effects of inflation on the
costs of sewerage facility construction should be considered. Postponements in
the construction of sewerage facilites which will likely result from the Stafford
Amendment will necessarily cause increased overall costs for such construction.
For an annual construction cost inflation rate of 15 percent, the 18 percent
share of construction costs to be obtained from industry within the Sanitation
Districts could be negated with slightly over a one-year delay.
Alternatively, the interpretation of the Stafford Amendment by EPA could
be modified. The modified interpretation would provide that, where a sewerage
agency has prepared and obtained EPA approval for a facility plan, if any aspect
of the plan had been given a Step 2 grant approval by May 15, 1980, then all
portions of the facility plan would be eligible for full grant funding without
a deduction for industrial capacity. This would appear to be appropriate as
existing facility plans have been prepared with the understanding that grant
funding of industrial sewerage capacity would be made available.
In summary, implementation of the Stafford Amendment could result in
considerably more administrative and financial problems for municipal sewerage
agencies than the ICR program that it replaces. The Sanitation Districts,
therefore, strongly recommend that EPA's report to Congress summarizing the impacts
of the amendment concludes by recommending the elimination of the Stafford Amendment
from the Federal Water Pollution Control Act. If you wish additional information
from the Districts relative to the matter, please contact this office.
Very truly yours,
Walter E. Garrison
By
Robert P. Miele
Department Head
Technical Services Department
RPM:iw
Attachment
-------
Table 1. Comparison of Surcharge Increases/for Selected
Industrial Companies due to Stafford Amendment
Company
A
B '
C
D
E
w/o
$
$1
$
$
$
Totals for FY
FY 1982-83
Stafford
834,000
,793,000
936,000
139,000
314,000
1981-82 and
Surcharges
w/ Stafford
$1,111,000
$5,296,000
$1,442,000
$ 254,000
$ 796,000
i
Companies A and C are large petroleum refineries.
Company B is a large secondary fiber paper mill.
Company D is a large meat packer.
Company E is a large detergent manufacturer.
-------
Cttg of
ge, (Georgia 30241
©fftce of % City ^lanager ?1i°»« 404 884-7386
December 16, 1980 *-'•'•'••'-
Industrial Users Survey
Municipal Construction Division
WH-54 - Room 1217A
401 M Street, S. W.
Washington, D. C. 20460
RE: Public Law 96-483 to Federal Water Pollution Control Act
Dear Sir (Madam) :
The City of LaGrange is strongly opposed to Public Law 96-483 which
prohibits grant assistance for the construction of publicly owned
waste water treatment works (P.O.T.W.) to serve industries contributing
over 50,000 gallons per day of industrial wastes. The long-range
economic consequences to LaGrange are potentially disasterous if this
law is not changed.
The City of LaGrange has been dominated by the textile industry for
several decades. As the textile industry has become more capital
intensive through mechanization, the LaGrange area has suffered high
unemployment rates and declining population. The various aspects of
urban decay though purely a phenomenon of northern cities are abundant
in LaGrange. Keeping our people working is a priority that has dominated
our efforts and policies for a long time.
The textile plants of LaGrange have been contributing wastes to City
treatment plants for over 30 years. As these plants have modernized with
new machinery and the latest technologies, the City has expanded facilities
to the present 7.125 MGD capacity in four sewage treatment plants. At
present, two of the four facilities treat the effluent of ten industrial
plants having discharges in excess of 50,000 gallons of waste water per
day. The LaGrange "201 Plan Study" shows that the wastes from these plants
can be accommodated in a centralized new facility. In many cases, there
is no way that the textile plants can convert to individual treatment
because of physical, environmental, and economic considerations.
We also feel somewhat cheated by Public Law 96-483 because completion of
our Wastewater Facilities Planning Study was originally scheduled for four
and one-half (4%) years ago. The grant was awarded in 1974 and many un-
reasonable delays in responses from State and Federal agencies, indecisivenoss
-------
-2-
in those agencies, the reversal of several previous decisions about our
study and periodic suggestions for further studies of uneconomical
alternatives have all caused the Step I study to drag on over six years.
We should have completed construction of the facility by now. Inflation
and the wasted time has drastically increased the cost of construction.
The result of Public Law 96-483 is that our major industries will either
have to construct their own treatment facilities (which is in several
cases impossible) or put up front end money for a P.O.T.W. We estimate
that this new law would cost LaGrange four to six million dollars. Some
of our local industries may be forced to close operations in LaGrange,
and unemployment in LaGrange would quickly become unmanageable.
We feel that separation of existing dual treatment facilities developed
over several decades of requiring large amounts of capita] nioney will
have a devastating effect on LaGrange industry, economic balance, and
unemployment rate. We do not oppose close regulation of industrial
effluent and prudent selection of future discharges, and users should
bear fair share of the cost of treatment, but not in the devastating
method now imposed by Section 3 of Public Law 96-483.
Hoping this mistake can be corrected, I am
Yours^ery truly,
J. G. Ne
Mayor
CITY OF LAGRANGE
JGNcegh
cc: Senator Sam Nunn
Senator Elect Matt Mattingly
Congressman Jack Brinkley
-------
TOM RYAN. JT-
GENE GLENZiNSKl
SAM AFR1CA1MO
Treasurer
Cii
L:J °f
: \ i : . •'•
•* •* -J -" "J •* -t 1* -s 1 « »
815-933-0500
- ..XXXXXXXXXX
December 30, 1980
Industrial Users Study
Municipal Construction Division (WH-547)
U.S. Environmental Protection Agency
401 M. Street, S.W. Room 1217A
Washington, D.C. 20460
Subject:
Sewage Treatment Construction Grants
Exclusion of Major Industrial Users
Gentlemen:
The purpose of this letter is to express the concern of the City of
Kankakee toward the proposed implementation of Section 3 of Public
Law 96-483 next year and to request that the U.S. Environmental
Protection Agency recommend that Congress repeal same.
As a result of the signing of an Intergovernmental Agreement on
October 4, 1979, the Department of Water Pollution Control of the
City of Kankakee became responsible for the design, construction and
operation of a Regional Wastewater Treatment Facility to serve the
City of Kankakee and three surrounding villages. The present popu-
lation which will be served by the proposed facilities is 67,000 and
the 1990 and 2000 projected populations will exceed 75,000 and 83,000
respectively. In addition, the proposed facilities will serve approx-
imately twenty eight (28) existing industries of which eighteen (18)
presently discharge in excess of 50,000 gallons per day or may within
the twenty year planning period of the project. Thirteen (13) of the
major industries and several of the minor ones currently provide pre-
treatment at their industrial sites.
The Department of Water Pollution Control is currently in early stages
of design of major improvements and expansion of the Regional Wastewater
Treatment Facility estimated to cost $18,000,000.00. This proposed work
will provide primary and secondary treatment for an average dry weather
flow of approximately 22 million 'gallons per day. In addition, two
small municipal and two privately owned wastewater treatment plants will
eventually be abandoned as a result of the proposed regionalization.
Approximately $30,000,000.00 will also be spent on sewer system expansion
and rehabilitation within the four communities. All of the above work
was recommended in the Step 1 Facilities Plan Report for the Kankakee
Planning Area.
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815-933-0500
XXXXXXXXXX
SAM A F ^ IC ••• ^i C-
December 30, 1980
Industrial Users Study
Municipal Construction Division (WH-547)
U.S. Environmental Protection Agency
401 M. Street, S.W. Room 1217A
Washington, D.C. 20460
Subject:
Sewage Treatment Construction Grants
Exclusion of Major Industrial Users
Gentlemen:
The purpose of this letter is to express the concern of the City of
Kankakee toward the proposed implementation of Section 3 of Public
Law 96-483 next year and to request that the U.S. Environmental
Protection Agency recommend that Congress repeal same.
As a result of the signing of an Intergovernmental Agreement on
October 4, 1979, the Department of Water Pollution Control of the
City of Kankakee became responsible for the design, construction and
operation of a Regional Wastewater Treatment Facility to serve the
City of Kankakee and three surrounding villages. The present popu-
lation which will be served by the proposed facilities is 67,000 and
the 1990 and 2000 projected populations will exceed 75,000 and 83,000
respectively. In addition, the proposed facilities will serve approx-
imately twenty eight (28) existing industries of which eighteen (18)
presently discharge in excess of 50,000 gallons per day or may within
the twenty year planning period of the project. Thirteen (13) of the
major industries and several of the minor ones currently provide pre-
treatment at their industrial sites.
The Department of Water Pollution Control is currently in early stages
of design of major improvements and expansion of the Regional Wastewater
Treatment Facility estimated to cost $18,000,000,00. This proposed work
will provide primary and secondary treatment for an average dry weather
flow of approximately 22 million gallons per day. In addition, two
small municipal and two privately owned wastewater treatment plants will
eventually be abandoned as a result of the proposed regionalization.
Approximately $30,000,000.00 will also be spent on sewer system expansion
and rehabilitation within the four communities. All of the above work
was recommended in the Step 1 Facilities Plan Report for the Kankakee
Planning Area.
-------
Sewage Treatment Construction Grants
Exclusion of Major Industrial Users
Page Two
There is no doubt that Section 3 of Public Law 96-483 will, if implemented,
dramatically shift the burden of financing the improvements to the tax-
payers and industry in the Kankakee metropolitan area. Depending on the
interpretation of the final regulations, the professional staff of the
Kankakee Department of Water Pollution Control has determined that the
maximum grant for construction of the Regional Wastewater Treatment Facil-
ity could be reduced from 75% of the total cost or $13,500,000.00 to as
little as $7,860,000.00. This would increase the local funds necessary
to complete the treatment portion of the project by 225% or $5,640,000.00.
A detailed determination of the impact of this law on the sewer system
has not been completed; however, substantial additional local funds would
also be necessary for most segments of the sewerage improvements.
The rate of unemployment in Kankakee County has exceeded both the national
and the Illinois average rates of unemployment continually since 1974.
The most recent county unemployment rate, as determined by the Job Services
Division of the State of Illinois, was 11.77% for the month of November,
1980. The Economic Development Administration of the U.S. Dept. of Commerce
has declared the entire county to be an Economic Redevelopment Area due
to its excessive unemployment.
The City of Kankakee believes that implementation of Section 3 of Public
Law 96-483 will (1) create undue hardship in the ability of the City
to sell the bonds necessary to finance and construct the presently proposed
project, (2) place an unreasonable high cost to all users in the system
thru the user charge system which must be developed, and (3) place an
additional financial strain on the existing local industry. Therefore, the
City of Kankakee requests that the U.S. Environmental Protection Agency
recommend in its report to Congress that Section 3 of Public Law 96-493
be repealed.
The report to Congress may also identify specific communities and projects
which will be affected by the amendment. The City of Kankakee would be
happy to cooperate with the U.S. and the Illinois Environmental Protection
Agencies in providing additional information regarding the effect of this
amendment on our current project.
If you have further questions or require more information, please feel free
to contact Mr. James R. Clarno, P.E. of the Kankakee Department of Water
Pollution Control at the above address. Thanking you for your time, I am,
Very truly yours,
TJRjrw
cc: Kankakee Area Chamber of Commerce
Illinois Municipal League
National League of Cities
Illinois Environmental Protection Agency
Donohue & Associates, Inc.
Dept. of Water Pollution Control
-------
Page 1 of 5
POSITION PAPER
STAFFORD AMENDMENT
Detroit Water and Sewerage Department (DWSD) has one 'all in-
clusive grant project for the purpose of compliance with EPA
& MDNR Effluent Limitations. This project is made up of three
grants: one Step 1, one Step 2, and one Step 3. All of these
three grants are segmented. The Step 1 work'was applied for
and awarded in 1976, the Step 2 in 1978 & the Step 3 in 1979.
Most regulations are written with the small P.O.T.W.s in mind
where the entire process from planning to completion of con-
struction is handled by single, non-segmented grants. Detroit
does not fit in with this concept. If EPA agrees with the view-
point DWSD has only three, segmented grants, then the Stafford
Amendment is not applicable to Detroit. A firm decision of
interpretation by EPA is required.
If there should be any doubt that this would be applicable to
Detroit, DWSD could request a waiver of its applicability to
Detroit.
Sine 2/3 or more of the plant has had full grant participation,
^V
plus the fact the work is compulsory under the Amended Consent
Judgement, there should be cause to waive the Stafford Amendment
for the remainder of the work at the Plant.
If none of the above are deemed acceptable, then the following
are necessary considerations.
1. Only the amount in excess of 50,000 gpd for each user should
be impacted by the Amendment. Further the excess should
be calculated on an annual average basis.
2. Since Detroit is so severely economically impacted through-
out the Automobile Industry, it makes little practical
sense to charge Chrysler extra for treatment at the same time
they receive Federal financial assistance. Ford appears
to be on the verge of a similar situation as are many support-
ing industries. The Stafford Amendment is not in the best
interest of Detroit.
-------
Page 2 of 5
Position Paper
Stafford Amendment (continued)
3. DWSD contends that the Stafford Amendment should impact only
the peak design flow. This may appear incongruous with
#1 where only the annual average excess is the applicable
factor, but this is a large system and the peaks of the flow
from each large industry do not coincide with each other and
their individual or conglomerate peak flows do not arrive
at the plant coincident with its peak flow.
4. Plant capacity should not be reserved for particular user
class. By utilizing the criteria in 13 above/ using peak
design flow, one does not get muddled up in reserve capacity,
future growth and the like. ^
5. It is doubtful that DWSD would encounter a purely domestic or
a purely industrial expansion. The approximate propor-
tionate use by "over 50,000 gal/day" dischargers should
be the determinant of what portion of the cost should be
impacted by the Stafford Amendment. If concurrent with the
expansion there are no "over 50,000 gpd" users added, then
none of the cost would be affected.
Here, the question of billing arises. All existing users
would either have been "grandfathered" or would have al-
ready paid for services.
The picture changes however, if we had to go to a higher
degree of treatment with no capacity expansion. Then all
the "over 50,000 gpd" users would have to pay for their
shares.
Another issue not raised concerns the situation where a
POTW plant does not expand and a new "over 50,000 gpd"
industry is established requesting service (i.e. mid-town
GM Cadillac). For discussion purposes assume all the
"charter members" have bought into the system. Do we then
-------
Page 3 of 5
Position Paper
Stafford Amendment (continued)
charge the new user and give the charter members a rebate?
Or do you charge the new user and turn the money back in to
the Federal Government? Or do you forget the whole thing?
The inappropriate part about the Stafford Amendment is that
it appears not to be equitable. Inequitability encouraged
defeat of Industrial Cost Recovery.
6. The biggest question that comes to mind regarding this
Amendment is what or who are "Industrial Users"? The
statutes and the EPA Regulations are vague on this subject.
40 CFR 35.905, "definitions" provides a definition based
on quantity or quality but still leaves many questions.
Does "Industrial User" include all plants under one owner-
ship as a single entity? This question is paramount when
considering a limiting factor such as "50,000 gallons per
day". A single plant might not be in excess, but adding
two plants together, even though they may be miles apart,
would exceed the limit. The EPA internal paper enclosed
with AMSA Bulletin TB 80-37 raises this question also
(IV.6.), since it makes the remark, "...where and through
how many sewer connections a user connects to the system."
(emphasis added).
Considering all plants under one corporate structure, such
as GM or Ford, as a single "Industrial User" could have
a very serious effect on the financing of further work at
the Detroit WWTP, considering that many such plants are in
our service area.
It would appear from this Amendment that the Federal govern-
ment has found another way to impose an "Industrial Cost
Recovery" system; one in which the Federal government will
not have to provide any front monies. Under the ICR, the
-------
Page 4 of 5
Position Paper
Stafford Amendment (continued)
POTW would be grant funded including industrial capacity,
with a payback from industry, over a period of time, to
both the municipality and the Federal government. Under
this Amendment, the municipality has to provide its own
financing for the industrial capacity and where is this
to come from? One way or another it has to come from the
industry since to charge for it in the rates to all customers
sould be in violation of the EPA regulations.
This Amendment could force industry to look to alternatives.
They could: 4
1. build their own treatment facilities
2. buy capacity in a POTW (provide front monies)
3. further separate their plants (no two in the same POTW
area) or
4. not expand or even lessen their capital investment.
Just about any alternative that industry could look at will
mean added cost to the consumer.
DWSD would recommend that the word industry be discarded
and concentrate on "Industrial User". We would advocate
defining an "Industrial User" as being the enterprise which
occupies one contiguous piece of property.
Existing enterprises could not do much about their fate,
but if the law were to stay in effect it could lead some
industries to disperse their plants to stay under the
50,000 gpd discharge limit. That would not necessarily
be negative. It could possibly drive up the cost of con-
sumer products a bit more though if the economy of scale
were defeated.
Prom the viewpoint of Rates and Budget, the effect of the
-------
Page 5 of 5
Position Paper
Stafford Amendment (continued)
Stafford Amendment will be to require DWSD to raise a
larger local share of grant eligible construction costs.
Local rates in the future will cover 20% of non-industrial
capacity and 100% of industrial capacity. Presumably this
added cost burden will fall on industry. It is therefore
in DWSD's interest, and industry's, that the industrial pro-
portion of our total burdens be kept as small as possible.
Aside from ASMA, we would advocate that the Mayor and
Detroit's U.S. Representative and U.S. Senators from Michigan
convene a conference with the largest Detroit dischargers
to plan strategy for the overturn of paragraph(k) of the
Stafford Amendment. We believe the drive to accomplish
such an action will have to come from large POTWs since
they are the most heavily hit. We need an amendment to the
Stafford Amendment to accomplish this goal.
-------
Office of the Mayor
City Hall
Pittsburgh, New York
12901
John L lanelli
Mavor
December 23, 1980
Telephone 563-7701
(At«> Code 518)
Industrial Users Study
Municipal Construction Division (WH-547)
Room 1217A
401 M. Street S.W.
Washington, D.C.- 20460
Re: Exclusion of Major Industrial Users
from Construction Grants for Wastewater
Treatment
Gentlemen:
In 1967 the City of Plattsburqh, N.Y. and three (3) paper-
mills, (Georgia-Pacific Corp., Diamond International Corp.
and Imperial Wallpaper Co.) decided to construct a combined
Municipal-Industrial Wastewater Treatment Facility. This
facility was built and placed in service in November, 1973.
Federal and New York State funds were utilized in financina
the construction of the facilities. At present approximately
sixty-five (65%) percent of the waste load on the treatment
plant is from the industrial sources.
The operation of this wastewater treatment plant has effect-
ively cleaned up the waters of Cumberland Bay on Lake
Champlain and the lower reaches of the Saranac River. However,
some design deficiencies in the original plant desiqn have
been established from plant operations. These deficiencies
are currently being addressed in a Wastewater Facilities Plans
(Step 1, 201 Study) for Plattsburqh and Environs. In addition
a Sludge Management Study (Step 1, 201 Study) for Clinton
County, New York is currently in progress. This study is
principally for disposal of the two hundred (200 c.y.) cubic
yards per day of sludge from the Plattsburgh Water Pollution
Control Plant. The long range, area-wide waste treatment and
disposal strategy for Plattsburgh and surrounding Clinton
County is founded on combined municipal and industrial waste
treatment. The existing combined treatment facilities make
it economically unfeasable for either the municipal or
industrial users to operate separate facilities in the future.
-------
— 2 —
Clinton County is located in the northeast corner of New
York State. It is principally a rural, forested area with
very little basic industry. The Economic Development
Administration, U.S. Dept. of Commerce has designated
Clinton County as a area of chronic un-employment and under-
employment. It is the view of the City of Plattsburgh
Administration that the effect of the proposed exclusion
of industrial waste from the grant program for construction
of waste treatment facilities is termination of effective
waste treatment in the Plattsburgh, New York area. Thirteen
(13) years of planning and construction have been and are now,
based upon combined treatment following the federal guide-
lines set forth by the E.P.A. and its predecessors. A
change in the rules at this time would be counter-productive
to the ultimate goal of effective waste treatment and an
unreasonable burden for the local economy.
JLI/mj
cc: Metcalf & Eddy
Cl. Co. Planner
Georgia-Pacific Corp.
Diamond International Corp,
Imperial Paper Co.
\ I »
\ Very truly yours,
V'f
i . V^-X'<
1 John L. lanelri
j Mayor
-------
JAMCS B. HUNT. JR.
GOVERNOR
STATE OF NORTH CAROLINA
OFFICE OF THE GOVERNOR
RALEIGH 27611
December 31, 1980
Industrial Users Study
Municipal Construction Division (WH-547)
U. S. Environmental Protection Agency
401 M Street, S. W. - Room 1217A
Washington, D. C. 20460
The State of North Carolina appreciates the opportunity to
comment on Section 3 of Public Law 96-483, which provides that
after November 15, 1981 no grant assistance shall be used for
the construction of any portion of a publicly-owned wastewater
treatment works designed to serve a major industrial user.
North Carolina is unusual among states in that it has an abundance
of natural resources coupled with a large population dispersed
primarily in small towns. In 1978 half of the population lived
in those areas with less than 10,000 people. Traditionally,
these small towns and rural areas have not been able to provide
employment opportunities for their citizens largely because
adequate public services were not available. Encouraging more
and better jobs in rural North Carolina as well as in our rapidly
growing metropolitan areas continues to be a top priority. We
1n North Carolina interpret the most recently imposed restrictions
on the use of federal construction grant funds for capacity to
treat industrial wastewater in publicly-owned wastewater treatment
facilities to be a serious threat to our progress.
Throughout North Carolina wet industries form the backbone of the
economy and are the source of jobs for large numbers of our citizens.
Many of these major industrial users are located in small towns
and rural areas which are least likely to absorb costly delays
and reductions 1n grant assistance. Efforts to attract industry
which can benefit from the state's water resources while working
for water clean-up will be seriously hampered.
In many instances, communities may have already invested substantial
funds in planning as well as water and sewer lines and water facilities
in anticipation of demand related to growth. In addition to the
serious financial problems posed to our smaller communities, two
-------
Industrial Users Study
December 31, 1980
Page two
other issues related to Section 3 have emerged. The first is
confusion over whether or not EPA will cost share on any portion
of the capacity needed to serve major industrial users. To assist
one community serving several smaller (less than 50,000gpd) wastewater
producers and deny a second community assistance with industrial
capacity to serve a single major industrial producer (more than
50,000gpd) is inequitable. Community wastewater treatment facilities
should be eligible for federal participation for any industrial
user on the first 50,000 gpd if any limit is to be imposed.
The second issue which may arise from the implementation of this
section is that industries, both new and existing located in
communities with restricted capacity, may choose to build their
own on-site waste treatment facilities. All of this will tend to
increase the number of point source discharges, thereby increasing
the number of permits that must be issued and monitor. Assuming
no adverse environmental impact, at a minimum the result is higher
administrative overhead without any corresponding water quality
benefit.
North Carolina's preference is to support EPA grant eligibility
for industrial capacity. In a state experiencing rapid growth,
communities need to serve existing industrial dischargers and
provide limited capacity for industrial growth. We support the
efforts of our municipal officials who have voiced their objections
to the amendment at a recent Congress of Cities and expect to
work closely with them for the repeal of the Section 3 provisions
in favor of a less damaging alternative.
Paul Essex of my office and the staff of the Division of Environmental
Management, Department of Natural Resources and Community Development,
will be following this issue closely. I encourage you to contact them
for any additional information that might be of assistance in preparing
the response to Congress.
James B. Hunt, Jr.
Governor
-------
Olttg of
;NoriIj Carolina
27530
December 23, 1980
Industrial Users Study
Municipal Construction Division (SH-547)
Room 1217A
401 M Street, S.W.
Washington, D. C. 20460
Gentlemen:
As requested in the Federal Register of December 1, 1980,
I am writing to comment on the effect of Section 3 of Public
Law 96-483. This section repeals the ICR program and prohibits
funding of treatment capacity for major industrial users.
The effect of this section of law is extremely arbitrary
and unfair. Some municipal treatment works and contributing
industries will obtain full funding of industrial capacity while
other municipalities and contributing industries will not. These
effects of the law are to be applied completely at random by the
use of the arbitrary cut-off date set forth in the law. The City
of Goldsboro will not be able to meet the deadline and will thus
not be eligible for funding for a significant portion of the
required treatment capacity.
Our City has budgeted funds for its share of construction cost
very carefully and conscientious over the past few years. The
sudden enactment of this law has thrown all our plans into disarray.
We are now faced with a significant increase in local cost for
which we had no warning and no opportunity to budget. We will have
great difficulty financing the necessary capacity because of this
situation.
The alternative to municipal financing is to collect the
required funds from the contributing industries. This approach
could be devastating to the economic health of the Goldsboro area.
There is great risk that large, but marginally profitable, employers
will be forced out of business by a sudden and unanticipated
requirement to pay for treatment capacity.
In summary, we strongly suggest that Federal funding of
industrial treatment be reinstated without industrial cost recovery.
We would, however, prefer the former ICR program to the difficult
situation in which we have been placed by Public Law 96-483.
-------
Industrial Users Study
December 23, 1980
Page 2
Thank you very much for your solicitation and consideration
of our opinion.
Very truly yours,
K. L. Colling
City Manager
jed
-------
pobox1B47 greenville north carolioa 27834
tilejkm I52-71BB
December 23, 1980
Industrial Users Study
Municipal Construction Division (SH-547)
Room 1217A
401 M Street, S.W.
Washington, D.C. 20640
Att: Mr. Henry L. Longest, II
RE: Comments On Public Law 96-483, Section 3, Amendment
/•
Dear Sir:
This letter is written in response to your request for comments on
the amendment to Public Law 96-483, Section 3, which rescinded the
industrial cost recovery (ICR) requirements to the Federal Water
Pollution Control Act, and we offer the following for your consider-
ation:
1. By amending the FWPC Act to rescind the ICR require-
ments, you have shifted a tremendous burden onto the
municipalities in this nation who are responsible for
treatment of all wastewater generated in their community,
including industrial, commercial and residential. This
amendment, if left in tact, will increase the City of
Greenville's share cost of our project by an additional
$1,210,000. Our plant facility project is estimated
to cost approximately $9.2 million.
2. The principle of the amendment is wrong. If you intend
to penalize industry, then you are doing so at the ex-
pense of the communities who are obligated to serve
these industries as a part of our total community
services. The industrial cost recovery section of the
Act may not have been perfect, but why abolish it to the
detriment of the municipalities that must pick up the
burden.
3. It seems "incongruous" that the federal government would
participate in 75% of the cost of wastewater facilities
electric-gas-water-sewerage
-------
Industrial Users Study December 23, 1980
Municipal Construction Division Page 2
Att: Mr. Henry L. Longest, II
for our municipality, but exclude the industrial waste
contribution. Our user charges will collect from
industry their fair share of treating their particular
waste. And the original ICR method, though cumbersome,
seems to be a more logical method of funding capital
costs.
4. But, if it is Congress1 desire to eliminate the ICR,
then you should not change the rules "in the bottom
of the 8th inning." Greenville, like many other com-
munities, has struggled for years to complete our 201
Sewer Facilities planning process under changing
Environmental Protection Agency requirements. We are
now close to the threshold of a Step II grant (design
phase). With your cut-off date of November 15, 1981
for Step III grants (construction phase), we are simply
"left holding the bag." In Greenville's case, we have
been working for six (6) years to get the 201 Plan
acceptable to EPA. Time and money have been wasted
(federal, state and local) trying to accommodate the
desires of EPA. Now, inrthe llth hour, you completely
change the rules, such that all of our financial
planning goes down the drain. A brief summary of our
efforts to achieve construction of a new wastewater
treatment facility is attached.
5. If Congress elects to change the rules, it should ex-
tend the cut-off date to November 1983, at the
earliest. This would give communities that have re-
ceived Step I grants (planning phase), and are in the
process of planning their waste treatment requirements,
time to complete their projects in accordance with their
planning concept. Congress should recognize that the
planning and development process for sewer treatment
facilities under the EPA program is an extremely long
and arduous task. It cannot be completed in twelve (12)
months, and therefore, any change in the law should
recognize this long planning process and.give us ade-
quate time to adjust.
In summary, we recommend that the ICR requirements re-
main as before the amendment, but if the ICR requirements
are to be rescinded/ then they should not be rescinded
for any community which has begun its planning process
with a Step I grant, or certainly not earlier than
November 1983.
-------
Industrial Users study December 23, 1980
Municipal Cons :ruction Division Page 3
Att: Mr. Henr ' L. Longest, II
Thank you for considering our situation.
Sincerely,
Charles OITI. Home, Jr.
Director of Utilities
CO'HHjr/jv
Attachment
CCS: Mr. Wadie Lewis, GUC
Mr. Orman Whichard, Olsen Associates
Mr. Robert Helms, DEM
Hon . Jesse Helms , U.S. Senator
Hon. John East, Senator-Elect
Congr. Walter Ek Jones
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C335 MAPLEWOOO AVENUE
SVLVANIA. OHIO 43860
OFFICE OF THE MAYOR
December 18, 1980
Industrial Users Study
Municipal Construction Division (WH-547)
Room 1217A
401 M Street, S. W.
Washington, D.C. 20460
Re: Amendment, P.L. 96-483
to Federal Water Polution Control Act
Gentlemen:
It was noticed in the December 1, 1980 Federal Register that comments
are being solicited regarding the potential effect of a recent amendment
to the Federal Water Polution Control Act, and that Section 3 of the
amendment provides that grant assistance shall not be used after
November 15, 1981 for construction of any portion of a publicly-owned
wastewater treatment works designed to serve a major industrial user.
It is our view that this amendment, which eliminates Industrial Cost Recovery
of Federal grants for sewage treatment construction, will unduly complicate
the grant process and will create serious problems for all grant recipients.
Sincerely,
•James £. Seney,
Mayor
RSC/til
<\. ~
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City of Houston Health Department
1115 North MacGregor Drive
HOUSTON
JIM McCONN, MAYOR
HOUSTON. TEXAS 770SO
December 24, 1980
CITY COUNCIL MEMBERS
LARKY MCKASXLE
ERNEST McfowEN. SR.
LANCE LALOR
ANTHONY W. HALL, JR.
FRANK O. MANCUSO
JOHN G. GOODMER
CHRISTIN HARTUNG
DALE M. CORCZYNSKI
BEN T. REYES
JIM WESTMORELAND
ELEANOR TINSLEY
JOHNNY GOYEN
HOMER L. FORD
JUDSON ROBINSON. JR.
CITY CONTROLLER
KATHRYN J. WHITMIRE
Environmental Protection Agency
Industrial Users Study
Municipal Construction Division (WH-547)
401 M Street SW, Room 1217A
Washington, DC 20460
Gentlemen:
The City of Houston Health Department would like to
submit comments on the potential effects of the recent
amendment to public law 96-483, the Federal Water Pollution
Control Act, and specifically Section 3 of that amendment
that would prohibit the use of grant assistance after Nov-
ember 15, 1981 for the construction of any portion of a
publicly owned wastewater treatment works designed to serve
a major industrial user. This is in response to the request
for comments published in the Federal Register, Vol. 45, No.
232, Monday, December 1, 1980, p. 79573.
Since 1974, the City of Houston Health and Public Works
Departments have carried out the provisions of a city ordinance
designed to comply with the Industrial Cost Recovery (ICR)
provisions of the Federal Water Pollution Control Act. This
ordinance places restrictive limits on the discharge into the
city sewer system of heavy metals, toxic materials, oil and
grease, or other constituents which would impair the operation
of the city sewage treatment plants or create a health hazard
in any way. Pretreatment is required if necessary to meet the
limits imposed. A surcharge is also levied for wastes contain-
ing either BOD or suspended solids or both in excess of the
usual concentration of sanitary sewage, in order to provide an
appropriate mechanism for cost recovery. Approximately 2,000
industrial waste permits have been issued or are being processed
under this system. Periodic sampling by city enforcement personnel
JAM-6
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Page 2
EPA
is carried, out to maintain compliance. As a result of this
program, no significant upsets have occurred in any of the
larger city sewage treatment plants which can be attributed
to toxic industrial waste discharges. In addition, the
restrictive state limits applicable to heavy metal discharges
have been met in the effluent discharges from these plants.
We consider this program to be a significant success in help-
ing to alleviate water pollution problems in the Houston area
as well as in meeting the federal requirements for cost recovery,
This does not mean, of course, that the city of Houston
has no problems with regard to wastewater treatment. The
largest city plant is seriously overloaded, a condition that
will not be alleviated for another two years or so when a
large new facility will go into operation. The rapid growth of
the city has placed a severe strain on the sewer system in some
areas. However, we do not feel that these problems have been
aggravated by accepting industrial waste under the conditions
imposed by the present ordinance. Likewise, refusing to accept
industrial waste in the future will not help in solving these
problems; rather, we feel that our problems would be increased
under the changes presently scheduled.
Of the permits issued, approximately 100 have been issued
to facilities which discharge in excess of 50,000 gallons per
day. These include rice mills, other food processing plants,
a brewery, metal finishing plants, and others. These permits
also cover facilities that would be hard to classify as in-
dustrial or non-industrial such as hospitals, amusement parks
and others that discharge sanitary waste that may contain other
constituents that need to be controlled. If these waste streams
cannot be discharged into the city sewer, each facility would
have to build and operate a treatment plant and discharge the
effluent under a permit from the Texas Department of Water
Resources. This proliferation of small plants would be undesir-
able Ior the following reasons:
1. Operating efficiency and cost are both more favor-
able due to the economies of scale. As a general
philosophy, a city's wastewater problems can be
managed more effectively by using a few large plants
than by using a large number of small plants.
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Page 3
EPA
2. Small wastewater treatment units are more subject
to upset conditions, temporary overloading, or
other conditions causing accidental or short term
discharges which would be detrimental to water
quality. Discharge into a large sewer system
provides a method to minimize the impact on both
the treatment facility and the receiving environ-
ment of any unique or unusual problems. Under
our present system, the operating efficiencies of
our larger treatment plants are not disturbed by
short term changes in the industrial discharges
received.
3. Enforcement and surveillance costs borne by state
and local control agencies would be increased due
to the necessity to maintain surveillance of a
larger number of plarits. If the current change had
been in effect for some time, the addition of 100
plants would increase by about one-third the number
of plants to be checked periodically. Due to
the intermittent nature of many industrial operations,
the actual work load would increase proportionately
much more than the number of facilities included,
since effective control for some processes requires
a very high frequency of sampling.
4. An industrial facility presently discharging waste-
water into the city sewer system could continue to do so,
since the amendment only affects facilities constructed
with grant funds received after November 15, 1981.
However, if the city later re-routed the same discharge
to a new treatment plant built after that date, the
discharge would no longer be allowable. Also, new
industries served by treatment plants built after the
same date could not discharge into the city sewer
system. This unequal treatment of different industries
based on which city sewage treatment plant might receive
wastewater would create inequities. The only way to
avoid such inequities is for the city to treat all
industrial discharges alike, without regard for which
city- operated treatment plant might happen to process
the wastewater that is discharged.
-------
Page 4
EPA
Finally, the language of the amendment contains a source
of confusion with the wording ". . .in excess of a flow per
day equivalent to 50,000 gallons per day of sanitary waste."
This equivalence might be determined by hydraulic flow, BOD,
suspended solids, COD, or other measurements. These various
determinations usually will not be consistent with each other
and confusion would arise in interpreting this language.
In summary, the City of Houston has an excellent plan
under the present city ordinance, which was developed to meet
water quality and cost recovery requirements established by
federal law and EPA. It is working well to minimize water
pollution from industrial sources and to provide an equitable
basis for distributing the costs between the general public and
private interests. The recent amendment would adversely affect
the success we have had under this plan, and we hope that it will
not be implemented. There may very well need to be some limita-
tions on the use of city sewers to dispose of industrial waste,
based on some maximum amount which could not be handled satis-
factorily in a city sewer system. However, such matters should
be decided by the city or other local government on the basis
of local conditions and should not be subject to legislative
or administrative decisions in Washington.
We hope these comments will be helpful in your evaluation
of this legislation. Please let me know if we can furnish
additional information that would be useful .
Very truly yours,
<• -. ??-'«=- A - --
Herbert C. McKee, Ph.D.
Assistant Health Director
for Environmental Control
HCM/cf
Approved:
Judith Craven, M.D.
Director of Public Health
-------
AMERICAN FROZEN FOOD INSTITUTE
(703) 821-0770
1700 OLD MEAUO\V ROAD. Sl'ITE 100
McLEAN. ViKlii:-,;.-. :•_;:;_
Chnirmoji
IOHN E GOMENA
Lamb-Weston
Por;land. Oregon
Vice Chairmen
JOHN IELMINI
Patterson Frn/pn Fnods. !ur..
P.iMerson. '~aiif.irr.:.i
LEONARD). Df.LiCilANTY
Stokeiv-Van Oircp. Inc.
Indianapolis. Indianft
President
THOMAS P. HOUSE
McLean. Vireinta
Dirprtors
HERB BAIA!
Naturipe Berrv Growers
Watsunville. California
EL'GENF. BOONE
lohn Inillis Frozen Funds i^i.
Modesto. California
ROBERT XV. BRACKEN
Morton Frozen Foods
Charlotlesville. Virsinia
JAMES H. BRIAN. IR.
Srr.i'ltzer Orchard (jjmpanv
Frankfort. Michigan
CLARICE R. CEDEKCREEN
O't'.i!ri;reea Foods (lorponimn
Snuhnmish. Wnshinxtnn
PAUL I. CORDDRY
Ore-Ida Fouds. !nr
Boise. Idaho
JOHN F. HOEY
Orchard Hill Farms. Inc.
Red Hook. New York
HOWARD E. LEMON
Daljptv Foods. Inc.
Salinas. Californin
ROGER 0. LERVICK
Twin City Foods. Inc.
Stanwood. Washington
C. ALAN MarDONALD
Stouffer Foods Corporation
Solon. Ohio
WILLIAM P. MAHONEY
Kitchens of Sara Lee
Dmrfield. Illinois
ALBERT G. MUNKELT
The Coca-Ojla Company
Foods Division
Houston. Texas
CHARLES RIZZUTO
Southiiind Frozen Foods. Inc.
Greet Neck. New York
FLOYD F. SMILEY
Banquet Foods Corporation
St. Louis. Missouri
|. M. STAFFORD
The Plllsbury Company
Minneapolis. Minnesota
ROBERT THOMPSON
Yaluma X'alley Crape Producers. Inc.
Grandview. Washmslon
EDWARD TOBIN
C-B Foods
Rochester. New York
THOMAS C. TODD
Stilwell Foods, Inc.
Stilwell. Oklahoma
IACK YOUNG
The Quaker Oats Company
Chicago. Illinois
January 13, 1981
Mr. Henry Longest, II
Industrial Users Study
Municipal Construction Division (WH-547)
Room 1217A
Environmental Protection Agency
401 M Street, S.W.
Washington, D.C. 20460
Dear Mr. Longest:
The American Frozen Food Institute (AFFI) welcomes this
opportunity to submit preliminary comments to EPA regarding
the Industrial Users Study in response to the request for such
in the December 1, 1980 Federal Register. AFFI has actively
participated in various meetings with the EPA staff responsible
for completing the Industrial Users Study as mandated by section
4 of Public Law 96-483, (otherwise known as the Stafford Amend-
ment) and intends that these comments be part of the public
record in addition to any other information we may submit in
the future for inclusion in the study.
AFFI believes that when the construction grants program
was developed, the intent of Congress was to encourage joint
industrial/municipal wastewater treatment. The Stafford
Amendment discourages such a practice since it would require
the industrial users of a POTW to provide the additional
capital to construct that portion of the municipal facility
which would treat industrial wastewater. This means an in-
dustry plant would be forced to provide "up front" money for
construction of a municipal facility. Such an expenditure
cannot be treated as an investment due to current tax laws,
and many industry plants will look at other options for waste-
water treatment, forcing the municipality to change the
facility plan. For practical purposes, municipalities must
have a grant request approved by July 1, 1981 in order to
meet the November 15, 1981 Stafford Amendment cutoff date.
It takes at least three months for each step of a funding
request to be approved by EPA. The Agency should consider
expediting this process.
There are a number of options available to a company
when faced with local implementation of the Stafford Amendment:
the company could decide to close the plant if it cannot be
shown to be cost effective; the company could transfer produc-
tion of heavy wasteload products to another location in the
THE NATIONAL ASSOCIATION OF FROZEN FOOD PROCESSORS
-------
-2-
United States; the company could build its own treatment
system; or the company could work with the municipality to
develop a plan to upgrade the POTW through expense dollars
in order for the POTW to meet present effluent limitations.
In all but the last situation, AFFI believes the local-
ity would lose valuable participation by industry in the
community.
Congress, in passing the Stafford Amendment, recognized
that there is a limited amount of construction grant funds
available to the states for fiscal year 1981. A priority
system of funding allocation to states-and localities makes
sense, therefore, so that construction grants money is
utilized depending upon the need for water pollution control
in any given municipality. These needs should be identified
on the basis of water quality rather than technology.
A clarifying point we would like to make regarding local
user charges is that there are no uniform rates or charges
for BOD, suspended solids or flow across the nation. Charges
for these limitations must be developed by the local adminis-
tration to meet the needs of the community.
The real issue to be addressed in the Stafford Amendment
study, we believe, is how do we - the federal government,
state government, municipalities and users of publicly owned
treatment works - sustain POTW's for the long run? There
must be a means to raise capital and operation and mainte-
nance dollars so the POTW can remain viable. The Stafford
Amendment confuses this issue significantly by excluding
industrial users of a municipal system from the community
of users of the POTW.
AFFI supports the construction grants program and believes
the federal government should continue to grant federal money
to municipalities for pollution control programs.
Sincerely,
U4*t\/v£v
-------
1615 H STREET N w
Chamber of Commerce of the United States
WASHINGTON D C 2OO62
RESOURCES AND ENVIRONMENTAL QUALITY DIVISION 202-659-6172
DR. HARVEY ALTER. MANAGER
December 31, 1980
U.S. Environmental Protection Agency
Municipal Construction Division (WH-547)
Room 1217-A
401 M Street, S.W.
Washington, D.C. 20460
ATTENTION: Mr. Thomas A. Whalen
Gentlemen:
On behalf of the more than 102,000 members of the Chamber of Commerce of
the United States, we appreciate this opportunity to present our views on
the subject of the Industrial Cost Exclusion (ICE) provisions of P.L. 96-483.
The U.S. Chamber actively supported the repeal of the Industrial Cost
Recovery (ICR) provision in P.L. 92-500, largely on the basis of a study by
an EPA contractor (Coopers & Lybrand) which showed that the ICR concept
failed to meet the objectives set out for it by the Congress in 1972. The
U.S. Chamber likewise did not support Senator Stafford's amendment to S-2725
which resulted in the ICE concept. We do not have sufficient time to
collect data on the impacts of ICE because of the deadlines imposed upon EPA
by Congress in the 'ICE study mandate in P.L. 96-483. The U.S. Chamber
would, however, like to share its concerns with respect to ICE, particularly
as they relate to the plight of businesses located in our older cities.
The U.S. Chamber strongly believes that ICE will frustrate our national
water quality improvement goals as expressed in the Clean Water Act. Our
reasons for this are as follows:
The 1972 Act clearly encouraged the construction and operation of
municipal waste treatment systems which would handle both household
and industrial wastes, provided the wastes were compatible and did
not contain toxic substances. Congress recognized that joint
industrial/municipal treatment is a practical and effective method
of dealing with the wastewater treatment problem in urban areas.
It was the clear intent of Congress in 1972 to avoid the
unnecessary proliferation of waste treatment facilities.
Having every industry treat its own wastes, particularly
in large urban areas, wastes resources, increases energy
consumption and multiplies the serious problem of sludge
disposal.
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- 2 -
The ICE singles out one class of industry — those plants
discharging more than 50,000 gallons of wastewater per
day — and treats them as second-class citizens. In contrast
to all other users of municipal treatment plants — homeowners,
commercial establishments, and small industries — these larger
dischargers would be singled out for a "negative subsidy" in
that federal appropriations could not be used for their share
of the treatment facility. In effect, the tax dollars which
this single class of industry contributes are not as good as
the tax dollars contributed by other classes. ICE singles out
one characteristic — volume of wastewater effluent — and makes
some industries pay twice for their wastewater treatment
facilities. The arbitrary classification of certain industrial
users as second-class citizens is not based on criteria of
profitability, ability to pay, or contribution to the nation's
economy, etc. A large and profitable enterprise which has a waste
flow under 50,000 gallons per day is allowed to benefit from federal
support of POTW construction; a marginal industry whose contribution
is above 50,000 gallons must pay separately for its capacity
allocation. This makes little sense and will create additional
examples that pollution control laws drive companies out of
business and decrease employment.
The effect of ICE can only be to seriously impair the continued
existence of many businesses which operate old facilities in
urban areas and which will be hard-pressed to come up with the
large sums of money required to fund their share of local
treatment projects. Those businesses which are profitable may
find it even more tempting to leave urban areas for new facilities
in rural areas where cheaper, independent treatment is possible.
The economic impacts of such an exodus would be devastating.
The U.S. Chamber recognizes the pressures to contain the cost of
the federal construction grants program. We recognize that EPA in
the past few months has been evaluating alternatives for reducing
costs of the Construction Grants Program (the 1990 strategy).
EPA's own analyses show that ICE would eliminate only eight percent
of construction grant fund requirements while several other
alternatives exist for achieving much greater savings without the
economic and employment impacts of ICE.
ICE frustrates the objectives of other federal programs
designed to encourage industries to remain in urban areas.
Examples are HDD's Urban Development Action Grant Program
and the Department of Commerce's Economic Development
Administration Grant Program. These frequently provide
funds for sewers, water lines, and other public improve-
ments in order to help keep industry in urban, high-unemployment
areas. The ICE will have precisely the opposite effect.
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- 3 -
Finally, we see ICE creating an administrative nightmare.
Most urban POTWs, for example, serve many large industrial
dischargers. For those POTWs proceeding with major upgrading
projects, achieving agreement as to the cost-sharing among
all users contributing more than 50,000 gallons per day would
be a major task. If one or more industres could not afford
to pay their calculated share of the new treatment plant, those
firms would have to shut down and the remaining users would
have to pay more. Consideration should also be given to the
time lags resulting from the need to carry out complex
negotiations with each affected business.
In conclusion, the U.S. Chamber believes ICE will frustrate — rather
than advance — our nation's clean water goals. While having only a minor
impact on reducing federal grant outlays, ICE will most assuredly create
major negative environmental, economic and employment impacts and will add
to the problems of older cities. A balance must be struck. All users of
POTWs should be able to benefit equally from support of POTW construction so
our goals of clean water do not unnecessarily conflict with those of
increasing employment and reindustrializing our nation.
Sincerely,
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CHEMICAL MANUFACTURERS ASSOCIATION
January 26, 1981
Mr. Thomas A. Whalen
Industrial User Study
Municipal Construction Division (WH-547)
.Room 1217A
401 M Street, S.W.
Washington, D. C. 20460
Dear Mr. Whalen:
The Chemical Manufacturers Association (formerly the
Manufacturing Chemists Association) submits the following comments
on EPA's recent amendment to Subsection (k) of Public Law 96-483,
Industrial Cost Exclusion (ICE), announced in the Federal Register,
45 Fed. Reg. 79573 (December 1, 1980), and titled, "Grants for
Construction of Treatment Works; Exclusion of Major Industrial
Users; Impact Analysis." These comments were prepared after deliber-
ation and consultation among CMA members.
The Chemical Manufacturers Association (CMA) is a nonprofit
trade association having approximately 190 member companies in the
United States, representing more than 90 percent of the production
capacity of basic industrial chemicals within this country. CMA
is currently surveying its members to get detailed information on
the effect of ICE on those companies. When the survey is complete,
we will forward a summary of our findings. However, we did want
Formerly Manufacturing Chemists Association—Serving the Chemical Industry Since 1872.
2501 M Street, NW • Washington, DC 20037 • Telephone 202/887-1100 • Telex 89617 (CMA WSH)
-------
Thomas A. Whalen
January 26, 1981
Page 2
to submit a statement for inclusion as part of the administrative
record expressing our concern with the disruptive effect of ICE on
many companies and municipalities.
The ICE provision represents a significant policy change from
the 1972 Clean Water Act amendments which encouraged industrial par-
ticipation in-publicly owned treatment works (POTWs). Just as the
Industrial Cost Recovery Program discouraged industrial partici-
pation in POTWs, the ICE provision also will completely eliminate
any incentive for industrial participation thereby resulting in an
t
increase in point source discharges that must be regulated.
During the limited congressional debate on ICE, the argument
was made that continuance of industrial participation in a POTW
without a requirement for pay back through some mechanism such as
Industrial Cost Recovery would unfairly disadvantage companies which
build their own treatment systems. This argument, however, does not
hold up to close scrutiny when one considers the federal and many
state tax benefits accruing to companies that build their own systems
Such tax relief measures are at public expense just as is industrial
participation in a POTW.
If the ICE prohibition on the use of federal construction grant
money for facilities to handle industrial flow causes many companies
to withdraw their plans to cooperate with municipalities in use of
POTWs, the POTWs will be faced with excess capacity requiring increased
operating and maintenance costs for remaining participants. On the
other hand, withdrawal of industrial users may warrant redesigning
of the POTWs to a smaller scale. Such a delay will result in con-
-------
Thomas A. Whalen
January 26, 1981
Page 3
tinued unabated discharges, expenditure of additional funds for
design and engineering studies, and an increase in construction
costs through inflation.
Lack of a more thorough debate and corresponding legislative
history providing greater understanding of congressional intent in
the passage of ICE leaves open to broad interpretation the obli-
gations of industrial users who are already tied into POTWs which
also need to expand. For example, if a POTW operating at full
capacity applies for a construction grant to expand its facility,
there are no guidelines in the legislation to interpret the final
financial obligation of existing industrial users. Without such
guidelines, any new financial burden imposed on industrial partici-
pants may result in litigation, delay, stifled economic growth, and
possible withdrawal, if feasible, from the POTW system.
In the congressional hearings and debate on repeal of Industrial
Cost Recovery, the point was made time and again that it was extremely
difficult to deal with any degree of certainty the financial obli-
gation of industrial users. Very simply, it was difficult to determine
what percentage of a POTW was dedicated to the treatment of effluent
from a particular industrial participant.
The difficulty that has been experienced in determining financial
obligations through Industrial Cost Recovery will also be faced in
trying to determine the exclusionary costs of the federal construc-
tion grant mandated by ICE.
-------
Thomas A. Whalen
January 26, 1981
Page 4
Thank you for the opportunity to express our views. We would
be pleased to discuss our comments with the Agency's personnel or
furnish further data should you believe such data are necessary.
For additional information, please contact Dr. Robert R. Romano
at (202) 887-1178.
Sincerely yours,
Geraldine V. Cox, Ph.D.
Vice President and
Technical Director
-------
FIBRE BOX ASSOCIATION
5725 EAST RIVER ROAD
CHICAGO. ILLINOIS 60631
(AREA 312) 693-9600 January 6, 1981
U. S. Environmental Protection Agency
Industrial Users Study
Municipal Construction Division (WA-5^7)
Room 1217-A
U01-M Street, S. W.
Washington, DC 20460
Ref: WH-FRL 1685-5
kS FR 232 P 79573
Gentlemen:
The Federal Register of December 1, 1980 requested comment on Section
3 and *», provisions of recently enacted PL 96-483.
The Fibre Box Association (FBA) is the trade Association of the corrugated
and solid fibre box industry (SIC 2653)* We represent 110 member companies
engaged In the manufacture of corrugated boxes. They produce 67% of the
national total. Our Association Is keenly Interested in this matter since
about 95% of the 1,M)0 establishments Involved In making boxes discharge into
Municipal Treatment systems.
We feel that the improvements to the Act Introducted by the repeal of the
ICR provisions, are nullified by the Stafford Amendment which Introduces
a complicated and perhaps unworkable mechanism In the determining of the
cost apportioning of an industrial user. We also feel that the "equivalence"
of an Industrial discharge into a sanitary sewage should be clarified by
EPA to reflect the latest state of the art. This is Important because, other-
wise, the industrial user will be penalized for its water conservation efforts,
In commenting as requested, we wish to reiterate that we approve of the re-
peal of the Industrial Cost Recovery provisions of the Act. We are in agree-
ment with the following comments from the Senate Congressional Record of
June 25, 1980, specifically from Senator Chaffee's summary of the ICR genesis
and failures.
ICR was first enacted in the 1972 version of the Clean Water Act intending
to require industrial users to pay for that portion of the Federal grant to
the municipality construction cost of wastewater treatment systems and
facilities. There were specific proposals to be fulfilled by the ICR scheme,
among them, parity, water conservation, avoiding costly excess capacity and
the insuring of self-sufficiency of constructed systems.
Because of the unpopularity and questionable justification of the ICR pro-
vision, Congress in 1977 mandated an 18-month moratorium on ICR and a 12-
month study by the Agency. Due to the inadequacy of the initial study by
EPA and the continued unpopularity of the ICR provision, the moratorium was
extended through June 30, 1980.
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- 2-
U. S. Environmental Protection Agency
The final EPA report concluded, after reviewing 227 sanitary districts and
39^ industrial plants, that ICR failed to accomplish the purposes for which
it was enacted. The study revealed that the'grant program did not provide
subsidies to the industrial users; that ICR did not encourage water conserva-
tion; and that ICR did not deter construction of excess capacity nor did it
affect decisions on siting. Finally, on the Act's objective to insure self-
sufficiency of municipalities, the EPA study concluded that ICR failed to
make any significant contribution towards their financial independence.
In the House Congressional Record of October 1, 1980, Rep. Clausen expressed
misgivings about the Stafford Amendment and reflected EPA's doubts about the
administrative workability of the Stafford Amendment.
It Is because of this previous history that we question the usefulness of the
Stafford Amendment as expressed in Section 3. The Senate Congressional Record
previously mentioned, gives an example of what to expect regarding the unwork-
ability of fairly-proportioning costs! In responding to Senator Mathias, on
the matter of the proportional costs (Senate Congressional Record - S-8187),
Senator Stafford indicated he expects the Agency to carefully evaluate the
actual cost of treating industrial wastewaters. We respectfully believe that
after the recently recognized failure of ICR and the EPA study, no workable
and equitable proportioning mechanism could be established,
Two of the four initial objectives of the Act, in providing for the ICR^program,
remained intact ofter Congressional review. They are water conservation and
pollution control and they are very much meshed. Water conservation is an
area in which our general industry (SIC 26) has accomplished remarkable
achievements. Hydraulic and pollution loads are the two critical parameters
In the design of treatment facilities. Excess capacity and water conservation
go together hand in glove. Credible regulations which encourage water con-
servation would insure thafthe designers confidently factor in proper, and
not excessive, hydraulic factors.
It is important that in the March, 1981 report to Congress, EPA reflect
the overall Congressional water conservation goals. They may be jeopardized
If there Is no clarification of the Stafford Amendment's term "flow per day
equivalent to fifty-thousand gallons per day of sanitary waste." The report
must factor in the latest available information which indicates how water
conservation would Impact on sanitary waste characteristics. The equivalent
sanitary waste of the 80's will be different from the 70's and 60's. A case
In point was the study you sponsored in the Bay Area as published in the
Journal of Water Pollution Control Federation of April, 1980 (Vol. 52,
No. *», Pg. 730)t This study factually reveals the change in conventional
sanitary waste characteristics which result from a change In sewage flow
due to water conservation efforts. Conventional BOD and TSS concentrations
in the 250-300mg/l range increased to the kQO-k5Qmg/\ range. This occurred
while there was a simultaneous observable improvement in wastewater treat-
ment facility operating performance.
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- 3 -
U. S. Environmental Protection Agency
It also must be remembered that our industrial category, as many others,
presents neither a significant pollution problem, nor do our wastes interfere
with the efficient operation of public owned treatment waterplants. The
Environmental Protection Agency on two previous occasions has indicated its
agreement with this fact. First, in January 1975, you filed a Brief in the
U. S. District of Columbia excluding our industrial sector (section F)
from pretreatment guidelines. More recently, in May, 1979. and on the
matter of priority pollutants and at the same court, the Agency again
requested similar exclusion.
We respectfully request that the EPA in responding to the Congressional
mandate, reflect, among other things, the practical and technically-
sound details on sanitary wastes characteristics which encourage water
conservation.
Sincerely,
Thomas "D. Muldoon S. F. Galeano Ph. 0 P. E.
Executive Vice President VIce-Chairman
Fibre Box Association Environmental Committee
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NAAV
National Association
of Manufacturers
Resources and Technology Department
Energy
Environmental Affairs
'Natural Resources
Science & Technology
December 31/ 1980
Industrial Users Study
Municipal Construction Division (WH-547)
Room 1217A
U.S. Environmental Protection Agency
401 M Street, S.W.
Washington, D.C. 20640
Re: Grants for Construction of Treatment
Works, Exclusion of Major Industrial
Users; Impact Analysis. 45 FR
79573, December 1, 1980.
Sirs:
On December 1, 1980, the Environmental Protection Agency (EPA)
published a "request for comments" regarding the potential effect
of a recent amendment, Public Law 96-483, to the Federal Water
Pollution Control Act. Section 3 of that amendment provides that
grant assistance shall not be used after November 15, 1981, for
the construction of any portion of a publicly owned wastewater
treatment works designed to serve a major industrial user.
Section 4 of the amendment directs EPA to:
. . . study and report to the Congress no later than March 15,
1981, on the effect of the amendment made by section 3 on the
construction of publicly owned treatment works, industrial
participation in publicly, owned treatment works, treatment
of industrial discharges, and the appropriate degree of
Federal and non-Federal participation in the funding of
publicly owned treatment works.
The National Association of Manufacturers (NAM) is a
voluntary membership organization of some 12,000 companies engaged
in manufacturing in the United States. Together, these companies
employ approximately 75 per cent of the employees producing
manufactured goods in this country and account for approximately
the same percentage of manufactured goods produced. NAM is
affiliated with an additional 158,000 firms through the National
Industrial Council and NAM's Associations Department. Approximately
80 per cent of NAM members and affiliates are classified as small
businesses that would, we believe, be deeply affected by Section
3 of P.L.96-483 ("amendment").
1776 F Street. N.W.
Washington, O.C. 20006
(202)626-3700
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Industrial Users Study
Page Two
Major Industrial Users
A "major industrial user" of a publicly owned treatment:
works (POTW) is defined by the amendment as one whose wastewater
flow is "in excess of a flow per day equivalent to fifty thousand
gallons per day of sanitary waste." While this may sound like
a generous exemption, in reality 50,000 gallons per day is a
rather minimal amount for companies large and small. This is
especially true for industries characterized as water-intensive—
pulp and paper/ food processing, textiles, chemicals and others.
^He amendment would, in effect, discourage companies that are
planning to join a POTW from doing so by excluding them from the
benefits of the national construction grants program. This
appears to NAM to signal a major and undesirable shift in national
pericy away from the> "objectives' of (1) encouraging industrial
participation in municipal waste treatment systems and
(2) -encouraging regional approaches to wastewater treatment and
disposal.
The City of Watsonville, California, conducted an analysis of
the impact of the amendment on its local industrial users:
Of the 19 industries involved in our project, 17 (90%)
have a capacity requirement greater than 50,000 gallons
per day and would be ineligible for grant funding. These
17 industries, located in the City of Watsonville and in
the community of Pajaro in Monterey County, would be
required to provide independent financing for approximately
$8.3 million of the total estimated cost of $20 million.
(This estimate assumes that private funds would be substituted
for the 75 per cent federal grant, but that State funding
at 12% per cent would still be available).
. . . certain individual companies would be required to
provide as much as $1.8 million at the initiation of the
project from an independent financing source. This initial
cost would be in addition to a projected average increase in
annual costs of approximately 340 per cent above current
charges. Certainly many, if not all, of our industries will
refuse to participate in this project because of the
unacceptable financial burden. At a minimum, the City
would be required to re-study the situation to determine
which industries might close down, re-evaluate the required
capacity for the treatment plant, and assist the local
industries in evaluating alternative financing sources.
If our project could be revised and continued in some form,
a minimum delay of at least one year would probably be
required for further study. Furthermore, six years of
planning and $1.5 million in consulting contracts would
become obsolete.
ILetter trom W. Johnston, City ot Watsonville, cai., to the
Honorable Leon Panetta, U.S. House of Representatives, July 23, 1980,
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Industrial Users Study
Page Three
There are doubtless many other municipalities throughout the
country with problems similar to those of Watsonville, California.
NAM therefore urges EPA to give close attention and special con-
sideration to the difficulties that will be encountered by small
municipalities and their local industries. EPA should also
attempt to verify the assertion that the 50/000 gpd exemption
will exclude a large majority of industrial POTW participants.
Industrial Cost Recovery and the Amendment
In addition to the cutoff of federal funding of POTW capacity
used by "major industrial users," P.L.96-483 repealed the industrial
cost recovery (ICR) provisions of the Federal Water Pollution Control
Act. As originally enacted in 1972, ICR required larger industrial
users of POTWs to repay the federal portion of the construction
grant devoted to the POTW capacity used by these companies. The
objectives of ICR included: elimination of the perceived competitive
advantage of industries using POTWs over those who treated their
own waste water; provision of adequate, but not excess capacity for
planned future growth; water conservation; and, promotion of local
self-sufficiency for financing future capacity expansions.
NAM and others argued at that time and in the ensuing years
that ICR unfairly imposed a double burden on industrial POTW
participants, because it ignored the fact that industry, through
federal, state and local taxation, already contributed to the
general revenues from which the construction grants program
received its sustenance. Congress agreed in October 1980, and
repealed the ICR program for a number of reasons, not the least
of which was the failure of ICR to meet its objectives.
The repeal of ICR, therefore, removed the double taxation
burden. In the absence of the amendment, industrial participants
in POTWs would be treated in the same manner as commercial and
residential users. Like commercial and residential users who
are billed for their water and sewer usage, industrial POTW
participants would be billed a "user charge," based on their
daily waste water flow into the POTW. NAM believes that this
is equitable and reasonable.
The amendment, however, is not, becasue it-removes the
benefits conferred by tax payment. Payment of local, state and
federal taxes by future industrial POTW participants will not
benefit them in the least when the time comes for them to hook into
the POTW. Instead, federal funding derived from general revenues
made up in part from the taxes paid by the prospective participant,
will be denied for the POTW's industrial capacity. The prospective
participant, perhaps in conjunction with the municipality, will
be forced to provide his own financing for that capacity. Some
other likely outcomes include:
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Industrial Users Study
Page Four
—Where possible, prospective participants will opt not to
join the POTW and will self-treat their waste water. This
could lead to a proliferation of treatment facilities and
costly, wasteful excess capacity.
—Presently operating POTWs, although not now subject to the
amendment, will be in the future if industrial growth requires
expansion of the facility. Many industrial POTW participants,
when faced with the prospect of financing this expansion,
will decide to withdraw from the POTW, leaving costly and
inefficient excess capacity behind.
—Most POTWs have an optimum operating capacity at which
their operations are the most efficient and effective.
Unused capacity could adversely affect the operations
of these POTWs.
NAM understands and appreciates the rigid time schedule within
which EPA is conducting this study, and stands ready to assist the
Agency in carrying out its mandate. We also realize that this
compressed schedule precludes EPA from studying all the aspects
and ramifications of P.L.96-483. We do urge, however, that EPA
give special attention to the difficulties created by P.L.96-483
for small municipalities and their local industries, especially
those smaller companies with water usage in excess of 50,000
gallons per day.
Respectfully submitted,
Mark N. Griffiths
Associate Director
Environmental Affairs
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National FdOd Processors Association Environmental Affairs
1133 Twentieth Street N.W.. Washington, D.C. 20036 _. , . _ , _. _
Telephone 202/331 -5900 |dvyin A: Crosby Ph.D.
Senior Vice President
202/331-5967
T n T r> o i Jack L. Cooper
January 9, 1981 Director
202/331-5925
Mary E. Losikoff
Assistant Director
Mr. Thomas A. Whalen 202/331-5926
Industrial Users Study
Municipal Construction Division (WH-547)
U. S. Environmental Protection Agency
Washington, D. C. 20460
Regarding: Response to EPA's December 1, 1980 Request for Comments
on the Effects of Section 3 of PL 96-483.
Dear Mr. Whalen:
The National Food Processors Association is a nonprofit trade
association with about 550 processing members who pack approximately
90% of the total U. S. production of canned foods for human consumption,
primarily fruits, vegetables, seafoods, meats, soups, baby and ethnic
foods. Approximately 40% of our members' plants currently participate
with publicly-owned treatment works (POTWs) for joint treatment of food
processing wastewaters and domestic sewage. The majority of these plants
discharge more than 50,000 gallons per day of sanitary waste equivalent.
Therefore, plants that are in POTWs that did not receive a Step II grant by
May 15, 1980, or that will not receive a Step III grant by November 15, 1981,
will be adversely affected by Section 3 of PL 96-483 when the POTW applies
for federal financial construction assistance. We are therefore pleased to
provide the following comments on the effects of the Stafford Amendment
on our members who use POTWs.
GENERAL STATEMENT
Without a strong industrial base, local economies suffer, goods and
services become scarcer, and higher costs lower the standard of living of
each individual. However, both the industrial cost recovery (ICR) requirement
and Section 3 of PL 96-483 weaken the industrial base of communities. Both
of these amendments consider industrial plants as a separate part of communities.
The following facts are ignored by both concepts: 1) food processing plants
provide jobs not only for the community residents who work at the plants but
also for support services such as carton and can manufacturers,-local farmers,
farm labor, farm suppliers, truckers and distributors; 2) food processing and
other industrial plants provide consumers with the goods and services that all
of us have become accustomed to and now require to maintain and improve our
standard of living; 3) food processing plants pay federal, state and local taxes
and accordingly should be allowed to benefit from any federal grant the same
as any other community member would benefit, no more and no less.
-------
Mr. Thomas A. Whalen - 2 - January 9, 1981
When considering whether a construction grant should be awarded to a
particular POTW, all sources of pollutants discharged into the local community's
waterways should be evaluated. If construction of a POTW is the most cost-
effective method of achieving necessary pollutant reductions, then all users of
the POTW should benefit equally from the award of a federal grant for its
construction. This is not to say that every POTW should receive a federal
grant, but that if a federal grant is awarded, then all users should benefit.
The members of this Association see no reason why industrial users should
be prevented from receiving the benefits of grants for their share of the construc-
tion costs on the same basis as other community members.
As will be explained below, most food processing plants which discharge
process wastewaters into POTWs have much higher costs than their competitors
which practice self-treatment. Because most plants using POTWs have little
available land and no access to receiving waters, they have no choice but to stay
with the POTW and pay the higher treatment costs. If the cost is so high as to
be prohibitive, these plants must either cut back on production, expend capital
in the plant to reduce pollutant loads and flows, relocate, or close down.
The ultimate effect of Section 3 of PL 96-483 will be to force many
marginal food processing plants out of business. These will be plants that
cannot justify or secure funding for POTW participation and that do not have
the option of providing self-treatment. Many of these plants will be in econom-
ically distressed areas. Results from such shut-downs are increased community
unemployment, a shrunken tax base, and loss of income to support services such
as farming, trucking, and can manufacturing.
Where the effects are not so severe as to cause shut-downs, the effects
will nevertheless be felt by the entire community. In some cases the plant may
curtail operations, resulting in job losses. In other instances, the plant will
have insufficient available capital or insufficient potential return on capital to
allow normal company growth, thus creating stagnation in a normally growing
community. Any time that industrial capital resources are diverted to a project
providing no financial return, less money is available to the citizens of the
community, either because of direct reductions in payrolls, taxes, purchased
goods and services, and profit distributions, or because of indirect effects of
future business decisions prompted by lower profits.
Conclusion
We believe that both ICR and Section 3 of PL 96-483 were mistakes.
Immediate repeal of Section 3 of PL 96-483 is needed to allow our communities
to proceed toward the goals of the Clean Water Act in an equitable manner and
without further delays.
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Mr. Thomas A. Whalen - 3 -
EFFECTS ON THE CONSTRUCTION GRANT PROCESS
January 9, 1981
Probably the greatest effect of Section 3 of PL 96-483 will be an
increase in the delay in the award of grants and subsequent delay in meeting
the objectives of the Clean Water Act. While some communities are far
enough along in their Step Il/Step III planning process that with an increased
effort on their part and a willingness on the part of states and EPA to speed
the grants along, they will be able to receive a Step III grant before November
15, 1981.
For those communities unable to obtain a Step III grant by November 15,
all work on their grant has effectively halted and cannot begin in earnest again
until POTW officials can obtain adequate assurance from their major industrial
users that they are or will be willing to provide up-front capital for the construc-
tion of industrial capacity. Where the industrial users are unable or unwilling
to provide such up-front capital, the community must determine if it wishes to
include the cost of industrial capacity in its own municipal bonds. A considerable
delay will occur while the community takes the necessary steps to secure voter
approval for the new bonds.
Another option would be for industrial users to join together and issue
industrial development bonds. This activity will also take a considerable amount
of time, probably about two years.
Such delays will have significant effects not only on meeting the objectives
of the Clean Water Act, but also on the cost of the treatment system. With
inflation running at least 10% a year, a two-year delay would result in a
significant increase in the total cost of the project to the entire community,
the state, and to the EPA construction grant program.
EFFECT ON COMMUNITIES WHICH RECEIVED STEP II GRANTS BEFORE
MAY 15, 1980
Communities which received Step II grants before May 15, 1980 and have
reserve capacity will be able to offer such capacity to new industrial plants at
no cost, other than for operation and maintenance. These communities will be
in a position to attract industries.
Communities that did not receive the Step II grant by May 15, 1980 and
that will not be able to secure their Step III grant by November 15, will not be
in a competitive position to attract such industrial growth.
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Mr. Thomas A. Whale i - 4 - January 9, 1981
POTW TREATMENT COSTS VS. SELF TREATMENT COSTS
The greatest problem faced by food processors participating with POTWs
for joint treatment is the fact that treatment in a POTW is generally 2 to 10
times more expensive than self-treatment. The vast majority of POTWs up-
graded or built since 1972 were constructed to provide treatment by the activated
sludge process. Activated sludge is a high construction cost technology built
on a minimum of land with more back-up equipment and more expensive equip-
ment than would otherwise be required. The back-up equipment is required
by EPA's construction grant regulations and these regulations also require the
equipment to have a longer life and is therefore more expensive. The process
is capable of reducing pollutants to acceptable discharge limits within a
maximum of eight hours.
The vast majority of food processing plants that provide self-treatment
are located in areas where the wastewaters can be held for long periods of time;
thereby allowing the utilization of low construction cost technology such as land
application (spray irrigation) or lagoons which require seven days or longer
to reduce the pollutants to acceptable discharge levels.
i
Also, the activated sludge process requires considerably more energy
and operator attention and expertise than does land application or lagoon systems.
Accordingly, the operation and maintenance costs are considerably higher for
activated sludge systems. Thus, food processing plants participating in POTWs
find the costs for wastewater treatment system construction, operation and
maintenance significantly higher than for competing plants which self-treat.
A major factor contributing to the higher cost of treatment provided by
POTWs is the many additional equipment and procedural requirements imposed
by EPA's grant regulations that self-treatment plants do not have to meet.
Also, the availability of the 75% Federal grant promotes "gold-plating" with
its attendant higher costs.
The current POTW user charges (operation and maintenance), excluding
construction costs, paid by industry now approximates the total cost of self-
treatment. If an industrial user of a POTW is required to pay the construction
cost as well, its total cost will be much higher than the cost faced by plants
which provide self-treatment. Only if industry is not forced to absorb the
construction cost will comparable costs exist between plants in POTWs and
those which self-treat.
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Mr. Thomas A. Whalen - 5 - January 9, 1981
EFFECT OF PLANT LOCATION ON POTW USE
Urban Location
Food processing plants located in urban surroundings generally have no
available land for self-treatment and must discharge into a POTW. Plants
that are unable to secure funding for their share of POTW construction costs
will be forced to move or close unless the community is in an economic position
to raise the capital required to build the industrial capacity.
In spite of this factor, we believe that plants located in urban areas will
be affected less by Section 3 of PL 96-483 than plants located in suburban or
rural areas. Municipal officials in urban areas are generally more aware of
environmental laws and regulations and how to comply with them than are
municipal officials in suburban or rural areas. Because of this greater expertise,
most urban communities have progressed on the state priority lists and have
already obtained at least a Step II grant by May 15, 1980; thus, leaving many
suburban and rural communities at the bottom of state priority lists where they
could not obtain their Step II grants.
Industrial plants in urban areas that already have received their Step II
grants will not be affected by Section 3 of PL 96-483. However, there are
plants in urban areas where the POTWs have not obtained their Step II grants.
These plants will be adversely affected. Many will be forced to reduce produc-
tion or close, contributing to decay of the community, just because it did not
obtain its Step II grant by an arbitrary date set after the POTW planning process
had already begun.
Suburban and Rural Location
Plants located in suburban and rural areas may be able to disengage from
the POTW and secure land to build a self-treatment facility; however, land
surrounding food processing plants is currently too expensive to justify its use
for wastewater treatment purposes. Another problem has been zoning. Many
local officials are unwilling to zone land so that it can be used for industrial
waste treatment even when all the pollutants are conventional.
Many rural communities have not progressed high enough on the state
priority list to have already received a Step II grant. This is a procedure over
which they have no control. These communities must accept their order on the
priority list as determined by state officials. These suburban and rural
communities have limited employment opportunities and will be the hardest hit
by Section 3 of PL 96-483.
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Mr. Thomas A. Whalen - 6 - January 9, 1981
MANY FOOD PROCESSING PLANTS CANNOT AFFORD POTW CONSTRUCTION
COSTS
With Section 3 of PL 96-483 in effect, each industrial plant must provide
its share of capital funds for POTW construction in one of two basic ways.
The municipality could finance the whole system and charge the industry for
its share, plus financing costs, over a period of several years. A firm contract
for the entire sum will probably be required. More often, however, the
municipality will be unwilling or unable to finance such an amount, leaving
the industry to raise its own capital.
Many food processing plants will not be able to remain with a POTW
because 1) they will be unable to obtain required funds; 2) they will not
commit capital to projects over which they have no control; or 3) the required
investment in the POTW would not be justified by the expected profitability of
the plant.
Inability to Secure Needed Funds
Many companies wishing to remain in business and within the POTW will
be unable to secure needed funds on their own. Most of our members are seasonal.
They generally borrow heavily in the spring to pay for the raw agricultural
products, containers, labor, freight, etc. They then pay the borrowed money
back in the fall and winter after they sell the products produced in the summer.
In the current economic situation, most plants have already reached their credit
limits and would be unable to secure a long-term loan to purchase capacity in
a POTW. If the federal government guaranteed the loans, many food processors
still could not afford the interest cost.
Unwillingness to Commit Capital to a POTW
*
Section 3 of PL 96-483 requires industrial users of municipal wastewater
treatment systems to enter into a joint venture with a municipality and other
industrial users for wastewater treatment. However, the industrial users will
have no decision-making authority over how the municipal officials allocate
the money invested by the industrial users. Entering into a joint venture of
this type is not characteristic of how industrial companies allocate their
scarce resources.
Companies investing in self-treatment systems negotiate their treatment
requirements with state or EPA permit issuing officials. They do have substantial
influence, including legal remedies, over the requirements that will have to be
met. However, in the case of joint treatment with a POTW, it is the municipal
officials who must negotiate the permit effluent limitations. Thus, the industrial
users, while they may comment on the draft permit, will have no direct influence
on the effluent limitations ultimately required to be met.
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Mr. Thomas A. Whalen - 7 - January 9, 1981
Food processing plants providing self-treatment have control over the
design of the treatment facility. Industrial users of publicly-owned treatment
works do not have this control. It is the municipal officials who determine
the type of treatment system required, its design, and the contractor. Often
times POTW officials build fancy (gold-plated) headquarters buildings with
fancy landscapes to impress local residents. Industrial self-treatment
facilities do not incorporate such features.
Food processing plants providing self-treatment have tangible assets.
If production is discontinued, the company can sell the pumps, land, and other
salvageable assets. In the case of industrial users of municipal wastewater
treatment facilities, the company would have no asset if it were to discontinue
operations and may even have a continuing liability to pay for POTW capacity
constructed for its use. Also, food processing plants practicing self-treatment
need not comply with the time consuming multitude of EPA regulations required
by the construction grant program and are able to construct their facility in a
much shorter time frame and at a significantly reduced cost.
Required Investment in POTW Capacity Would be More Than Could Be
Justified by the Plant's Profit Projections
In many cases, the cost of participation in a POTW will be greater than
the profit realized by the plant. The decision of company officials in such
cases is obvious. In cases where the cost of POTW participation is less than
the profit produced by the plant, company officials may still decide to move
or close the facility. This is because the projected cost of POTW participation
will reduce the profit margin of the operation to a level that cannot justify the
expense. Most food processing plants operate on a two to five year projection.
It is impossible for food processors to project 30 years into the future to
determine if it will continue to be able to produce products economically.
ADVERSELY AFFECTED COMMUNITIES
In November, we conducted a survey of our membership to determine
communities likely to be adversely affected by Section 3 of PL 96-483. The
following is a list of such communities:
Arkansas California Georgia Illinois Kentucky
Fayetteville Modesto Douglas Galena Lawrenceburg
San Jose
Santa Cruz
Watsonville
Buena Park
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M . Thomas A. Whalen
- 8 -
January 9, 1981
Massachusetts
IT raining ham
Minnesota
Owatonna
Perham
St. James
Albany
Melrose
Missouri
St. Louis
New Jersey
Camden
New York
Horseheads
Walton
North Carolina
Asheville
Ohio
Bryan
Fremont
Defiance
Oregon
Salem
Pennsylvania
Fleetwood
Texas
Nacogdoches
Vermont
Troy
Virginia
Winchester
Independence
West Virginia
Martinsburg
Wisconsin
Beaver Dam
Bloomer
While this list is indicative of the widespread nature of the communities
affected, it is'not air inclusive. We know that many of the communities in
which our members are located are unaware that Section 3 of PL 96-483 is
in effect.
Twenty-two of our members responded to our questionnaire that 43
plants will be affected by Section 3 of PL 96-483. Most were undecided about
how they will react. If the POTW offers to obtain the capital, many would
accept. However, if the community does not obtain the needed capital, many
would close, or seek to self-treat; a few would seek industrial development
bonds.
We appreciate this opportunity to submit these comments on behalf of
our members.
Sincerely,
. Cooper
cc: POTW Subcommittee
-------
N?R
National Food Processors Association Environmental Affairs
11 33 Twentieth Street N.W.. Washington, D.C. 20036
Telephone 202/331-5900 gjjjn
202/331-5967
Jack L. Cooper
Director
202/331-5925
January 19, 1981 Mary E. Losikoff
Assistant Director
202/331-5926
Mr. Thomas A. Whalen
Industrial Users Study
Municipal Construction Division (WH-547)
U. S. Environmental Protection Agency
Washington, D. C. 20460
Re: Reasons Why Many NFPA Members Have Not Provided Financial
Data to EPA on the Effect of the Stafford Amendment _
Dear Mr. Whalen:
At your request, National Food Processors Association hereby supplements
its January 9, 1981 response to EPA's December 1, 1980 request for comments
on the effects of Section 3 of P.L. 96-483, by providing the following reasons
why many NFPA members have not submitted financial data on the effects of the
Stafford Amendment specific to their operations:
0 In its December 1, 1980 request for comments on the effects of the
Stafford Amendment , the agency did not stipulate that submitted financial data
would be treated confidentially. Most companies consider financial data on
plant operations as proprietary and strictly confidential and would be reluctant
to enter such information into the public record. This is especially true when
such information might indicate future financial difficulties. Rumors of
production cut-backs or plant closures could lead to the loss of key employees
to competitive plants. Competitors learning of an adverse situation might
initiate competitive practices such as price reductions to squeeze a firm's
profitability and thereby drive it out of business or pressure it to sell out
or merge on unfavorable terms.
0 The time allowed for documentation of the adverse effect of the amend-
ment was too short. The request for comments was published in the December I/
1980 Federal Register, with comments due to EPA on December 31, 1980. With
the time delay in mailing, and with the non-productive Christmas/New Year
holiday period, companies did not have sufficient time to document with
satisfactory detail the economic effect of the amendment. Additionally, most
of the smaller companies — the ones least likely to be able to afford POTW
financing — do not have employees with the qualifications or expertise to
prepare such documentation.
0 Companies operating in communities that have not completed their
Step II design work do not know how expensive the POTW in their community
will be. While such companies can estimate the percentage of total POTW
capacity for which they may be liable, specific dollar figures are not now
available to them.
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Mr.Thomas A. Whalen - 2 - January 19, 1981
We trust that this information will be useful to you. Please call
me if you have any further questions.
Sincerely,
Jack L. Cooper
cc: POTW Subcommittee
Tom Moran
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TANNERS' COUNCIL OF AMERICA, INC.
2501 M Street, N.W.* Washington, D.C. 20037 • (202) 785-9400
December 29, 1980
Douglas M. Costle, Administrator
Environmental Protection Agency
401 M Street, S.W., Room W1200
Washington, D.C. 20460
Dear Mr. Costle:
Fm writing to bring to your attention the impact study one of your staffers is
preparing regarding Senator Stafford's amendment to the Clean Water Act. As currently
devised, we feel the study is most prejudicial against the amendment and totally
misrepresents the U.S. tanning industry.
Since the tanning industry is divided in its support of the Stafford amendment,
the Tanners' Council has remained neutral on this legislation. Direct dischargers favor
the amendment; small indirect dischargers are indifferent and the major indirect
dischargers are opposed. We feel any analysis which includes the tanning industry must
take this division into account. Last week, following a disconcerting telephone
conversation, the Tanners' Council of America President Eugene Kilik and I met with
Tom Whelan, your staff member responsible for the analysis. Mr. Whelan intends to visit
only the Gloversville, New York and possibly the Milwaukee, Wisconsin areas where most
of the tanners are strongly opposed to or not affected by the amendment. We suggested
then, as I had in my earlier phone call, that Mr. Whelan contact Massachusetts and New
Hampshire industry representatives for a more balanced view. He persisted that he was
interested only in an "attitudinal case study".
We are quite certain the congressional intent in the request for an economic
impact study was for an objective approach. We don't care whether U.S. tanners are a
part of the study, however if they are, we insist that the report fairly reflect the
competing views within the industry. Mr. Whelan's admitted bias precludes a helpful,
disinterested review of the amendment.
We would be happy to cooperate in a fair study of the amendment's impact on
the industry but we feel we can't encourage our members to participate in the current
analysis.
We hope this matter merits your prompt attention.
Elinor D. Talmadge
Vice President
cc: Senator Robert Stafford
Senator James McClure
Senator Jennings Randolph
Representative Nicholas Mavroules
American Leather-Hallmark of Quality
-------
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January 28, 1981
Industrial Users Study
Municipal Construction Division
(WH-547) Room 1217A
401 M Street, S.W.
Washington, D.C. 20460
Attention: Mr. Thomas A. Whalen
Re: Comments of Textile Rental
Services Association of America
in WH-FRL1685-5
Dear Sirs:
Section 3 of the Clean Water Act Amendments of 1980
(P.L. 96-483)states in pertinent part the following:
"No grant made after November 15, 1981, for a
publicly owned treatment works, other than for
facility planning and the preparation of con-
struction plans and specifications, shall be
used to treat, store, or convey the flow of any
industrial user into such treatment works in
excess of a flow per day equivalent to 50,000
gallons per day of sanitary waste."
Section 4 of P.L. 96-483 requires EPA to report to Congress
by March 15, 1981 on the effect of Section 3 upon, among other
things, industrial participation in publicly owned treatment
works, treatment of industrial discharges and the appropriate
degree of federal and non-federal participation in the funding
of publicly owned treatment works.
We are filing these comments as counsel to the Textile
Rental Services Association of America (TRSA) in order to
assist EPA in its preparation of this report.
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Industrial Users Study Page two
January 28, 1981
TRSA is concerned that Section 3 of P.L. 96-483 will have
an extremely adverse effect upon TRSA members and their employees
and customers. In these comments, TRSA identifies the major
shortcomings of Section 3 and the adverse effects which it will
have on the TRSA member companies and their employees and cus-
tomers . TRSA also requests an opportunity to meet with EPA
prior to its release of the report required under Section 4 of
the amendments.
I. TRSA and the Textile Rental Supply Industry
TRSA is a non-profit trade association whose members
represent over 60% of the textile rental supply industry in
the United States. This industry consists of linen supply
(SIC 7213) and industrial laundering (SIC 7218). According
to the U. S. Census Bureau figures in 1977 linen supply estab-
lishments in the United States grossed approximately $1.25
billion and industrial laundry establishments in the United
States grossed approximately $1.5 billion. The linen supply
and industrial laundering concerns in the United States employ
well over 100,000 employees, the majority of whom are non-skilled.
U. S. Census Bureau figures indicate that the number of
linen supply establishments in the United States has been
steadily decreasing since 1963. U. S. Census: Bureau figures
also indicate that as of 1977 the sales trend for linen supply
was down 2% per year and the sales trend for industrial launder-
ing was stagnant.
II. Section 3 of P.L. 96-483 May Have an Extremely Adverse
Effect upon the Textile Rental Supply Industry
TRSA is unable at this time to calculate the full effect
of Section 3 of P.L. 96-483 upon TRSA members. This is due
largely to the fact that Section 3 does not set forth a clear
and specific test for determining who is a large industrial
user subject to Section 3 (i.e. what is "equivalent to 50,000
gpd of sanitary waste?"). For example, Section 3 fails to
clarify whether pretreatment by a large industrial user will
be considered in determining whether the flow of such user is
"equivalent to 50,000 gpd of sanitary waste". Nevertheless,
it appears that many TRSA members will be treated as large
industrial users under Section 3, and that a significant number
of TRSA members will be effectively cut off from new, upgraded
and expanded POTW facilities which have been developed with use
of federal grants.
TRSA is concerned that where Section 3 does apply to a
TRSA member, municipalities may choose not to work with the
member by offering municipal bonds to finance that portion
of new, upgraded and expanded POTW facilities attributable to
large industrial users. Where this is the case, Section 3
will result in the closing of linen supply and industrial
laundering plants.
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Industrial Users Study Page three
January 28, 1981
A) Section 3 Fails to Incorporate Clear and Specific
Criteria for Determining When Industrial Discharge
Flow Exceeds 50,000 gpd of Sanitary Waste
We have been informed on an informal basis by EPA officials
that under Section 3 of P.L. 96-483 the issue of whether an in-
dustrial user has a flow equivalent to 50,000 gallons per day of
sanitary waste will be determined by the same test as that set
forth at 40 CFR §35.905 for "industrial users", substituting
50,000 gpd where 25,000 gpd appears therein. If this test were
incorporated into Section 3, every industrial user with a flow
of more than 50,000 gpd or with a flow having a weight of
biochemical oxygen demand (BOD) or suspended solids (SS) in
excess of the weight of BOD or SS found in 50,000 gpd of
sanitary waste would be adversely affected by Section 3.
One of the major shortcomings of the above test is that
an industrial user is not given credit for pretreatment. Under
the test an industrial user with a flow of less than 50,000 gpd
may still exceed the limit due to a high concentration of BOD
or SS. However, an industrial user with a flow of over 50,000
gpd is automatically deemed to have exceeded the limit, even
though he may pretreat that flow so that the weight of BOD or
SS in the flow is less than the equivalent weight of BOD or SS
present in 50,000 gallons of sanitary waste.
In addition to taking into account pretreatment by indus-
trial users, any test incorporated in Section 3 of P.L. 96-483
should set forth specific criteria which will enable industrial
users to determine whether they are affected by Section 3.
The existence of such specific criteria will encourage indus-
trial users to pretreat their flows to avoid the limitations
of Section 3.
B) Section 3 Provides No Guarantee that Municipalities
Will Assist Large Industrial Users in Financing
Costs Attributable to Such Users
Speaking to the problem of financing that portion of a
POTW attributable to large industrial users, the Senate Report
behind P.L. 96-483 states the following:
"The Committee does not intend to prohibit the
joint treatment of industrial and municipal
waste waters in a publicly owned treatment works
where the option is financially or otherwise
attractive to a community. The grantee and
industrial users would be free to arrange alter-
natives to federal financing under this program
for that portion of the treatment works attribu-
table to'industry's use. The same tax advantages
enjoyed by direct discharges could also be avail-
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Industrial Users Study Page four
January 28, 1981
able to those industries which participate in
joint municipal-industrial treatment systems in
the future. These include tax exempt municipal
bonds for pollution control." S. Rep. No. 96-744,
96th Cong., 2d Sess. Reprinted in [1980] U.S.
Code Cong. & Ad. News 8693 at 8703, 8704.
However, Section 3 of P.L. 96-483 provides no guarantee
that municipalities will work with large industrial users by
offering municipal bonds to fund the portion of new, upgraded
and expanding POTWs servicing large industrial users. TRSA
believes that many municipalities may choose not to do so.
Therefore, the effect of Section 3 upon various TRSA members
will differ largely depending upon the inclinations or arbi-
trary actions of the numerous municipalities. Another dis-
criminatory result of Section 3 will be the fact that those
TRSA members which happen to be located near new, upgraded
or expanded POTWs will be adversely affected, while those
TRSA members located near existing POTWs with adequate
facilities will not be.
It is also important that EPA take note of the fact that,
in reality, Small Business Administration loans are simply not
available for the great number of TRSA members who would
qualify as small businesses. Therefore, financing assistance
from the municipalities is essential if TRSA members are to
have any assurance that they will be able to have access to
new, upgraded or expanded POTW facilities.
C) Application of Section 3 to TRSA Members Who Are
Unable to Obtain Financing Will Result in Closing
Down of Operations
Assuming that EPA does incorporate into Section 3 the test
of 40 CPR §35.905 (See Title II. A) herein), TRSA estimates
that approximately one-half of its members would be immediately
affected by Section 3 simply on the basis that their total flow
would exceed 50,000 gpd. Furthermore, an additional 25% of
TRSA members could be affected by Section 3 even though their
flow would be less than 50,000 gpd, since the BOD or SS of their
flow would exceed the equivalent amount of BOD or SS present
in 50,000 gallons of sanitary waste.
This fact, coupled with the lack of guarantee of municipal
financing and the lack of availability of SBA loans means that
a significant number of TRSA members will be effectively denied
access to new, upgraded and expanded POTW facilities. This
will be particularly true of the smaller operations which will
have nowhere near the necessary financing resources to procure
financing for their share of such POTW facilities.
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Industrial Users Study Page five
Jc .iuary 28, 1981
Since contract hauling of such large volumes of discharge
would also be economically infeasible, particularly in light of
RCRA, such TRSA members would have to literally close down their
operations. This in turn will result in loss of jobs for a
significant number of unskilled workers. In addition, compe-
tition within the industry can be expected to drop significantly,
It is evident that the adverse effects of such plant closings
would spread across the board, covering the TRSA member com-
panies themselves, their employees and their customers.
, D) Section 3 of P.L. 96-483 as Currently Drafted Will
Not Result in Significant Reduction of the Level
of Pollutants Discharged to POTWs by Textile
Laundering Operations
Although the current version of Section 3 of P.L. 96-483
could result in plant closings for numerous TRSA members, such
closings would not reduce the amount of pollutants discharged
to the various POTWs. The operations formerly performed by
such TRSA members would be performed either by larger linen
supply and industrial laundering companies or would be per-
formed by on-premise laundries (OPLs) established by the
former customers of the closed company.
Where a larger linen supply or industrial laundering
company is able to finance its share of essential POTW
facilities and takes over the operations of a smaller com-
pany which has shut down its operations, the larger company
will be discharging to the POTW the same pollutants which the
small company would have had it stayed in operation. Where
the operations of a closed company are performed by several
OPLs, each individual OPL is likely to have a small enough
discharge volume to be able to discharge to the POTW without
providing financing under Section 3. However, the total of
pollutants which all of the OPLs discharge to the POTW on a
combined basis would approximate the level of pollutants which
would have been discharged to the POTW by the closed plant had
it been provided with access to the POTW facilities. Indeed,
the OPL activities would have an overall negative effect since
the OPLs would consume and discharge more water due to the
inefficiencies of their smaller operations. In short, regard-
less of whether a company can provide financing required by
Section 3, the pollutants inherent in the operations of that
company will be discharged to the POTW, if not by that company,
then by the larger company or by the numerous OPLs which per-
form the operations formerly performed by that company.
In summary, while the application of Section 3 of
P.L. 96-483 to TRSA members is not likely to reduce in any
significant fashion the level of pollutants discharged by
linen supply and industrial laundering operations to new,
upgraded and expanded POTW facilities, such application is
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Industrial Users Study
Page six
January 28, 1981
likely to cause a significant number of TRSA members to shut
down their operations, which in turn will result in a decrease
in competition in the industry and loss of jobs for numerous
non-skilled employees.
III. Request for Opportunity to Meet with EPA Prior to
Submission of March 15, 1981 Report
As noted above, TRSA is extremely concerned that the
application of Section 3 of P.L. 96-483 to the textile rental
services industry will have a severely adverse impact on the
industry, and TRSA requests that prior to the final preparation
of the EPA report to be filed with Congress, TRSA be given an*
opportunity to meet with EPA officials to further discuss the
concerns of TRSA in this matter. TRSA is also most interested
in discussing with the congressional committees who will be
considering the EPA report and taking appropriate action
thereon, the particular problems which Section 3 presents
to TRSA members.
Very/ttrul^y^urs,
// / V7/M
LOOMlSx QWEN, FELLMAN & HOWE
'
oiwr'Fellman
nera]? Counsel to Textile Rental
ervices Association of America
Henry Ashton Hart
Counsel to Textile Rental Services
Association of America
ekn
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United States Brewers Association, Inc.
175O K STREET. N. \V. WASHINGTON. D C. coooe
(202) 466-2400
HENRY B. KI^OEI(T TWX 710-822-9208
December 29, 19'80
Mr. Thomas A. Whalen
Industrial Users Study
Municipal Construction Division (WH-547)
Environmental Protection Agency
Room 1217-A
401 M Street, S.W.
Washington, D.C. 20460
Dear Mr. Whalen:
The United States Brewers Association, Inc. (USBA) appreciates this
opportunity to submit comments regarding the potential effects of Section 3 of
Public Law (PL) 96-483, the so-called "Stafford Amendment." USBA is a not-for-
profit trade association of malt beverage producers and suppliers to the industry
whose brewer members account for approximately 75 percent of total U.S. malt
beverage production. USBA member companies employ almost 40,000 persons directly;
over 500,000 persons in the U.S. are involved in beer production and distribu-
tion, and other related industries.
In 1972, the Congress passed PL 92-500, the Clean Water Act. This
law greatly expanded the Federal construction grants program for publicly owned
treatment works (POTW's). The law also mandated for the first time a new con-
cept known as "industrial cost recovery (ICR)." Under this concept, treatment
agencies could receive grant funds for the treatment of industrial wastes only
if those industries affected agreed to pay back the amount of the Federal grants
related to their contribution of wastes to the municipal treatment system. By
1977, the wisdom of this approach was increasingly being called into question.
Congress, in passing amendments to the Clean Water Act (specifically, PL 95-217),
directed that a study be made of the advantages and disadvantages of ICR and,
at the same time, put into effect a moratorium on all ICR collections.
In order to carry out Congress1 directive, the U.S. Environmental
Protection Agency (EPA) engaged the public accounting firm of Coopers and Lybrand
to analyze the impacts of ICR. Coopers and Lybrand, after conducting a compre-
hensive study, reported that ICR was not producing the desired results. As an
example, ICR did not lead to an equalization of costs between those industries
treating their own wastes and those industries discharging into POTW's. It was
found that industries treating their own wastes could take advantage of industrial
revenue bonds and rapid tax write-offs to build independent facilities, which re-
sulted in lower overall waste treatment costs. Coopers and Lybrand also found
THIS .PAPER IS MADE OF IOO •/«> RECLAIMED WASTE
-------
Mr. Thomas A. Whalen
December 29, 1980
Page 2
that water conservation and waste reduction were not being brought about by ICR,
but by skyrocketing water and wastewater utility costs.
The Coopers and Lybrand report sparked efforts by treatment agencies,
industries and others to eliminate the ICR provisions from the Clean Water Act.
The 96th Congress passed PL 96-483 which repealed ICR, but which also contained
the Stafford Amendment. This Amendment created new problems, in that it pro-
hibited any Federal grants for the treatment of wastes from industries discharg-
ing more than 50,000 gallons per day of sanitary waste after November 15, 1981.
USBA believes that the Stafford Amendment will not advance the goals
of the Clean Water Act and should be repealed for the following reasons:
a. It was the clear intent of Congress in 1972 to avoid unnecessary
proliferation of waste treatment facilities. Having every industry
treat its own wastes, particularly in large metropolitan areas,
diverts needed resources, increases energy consumption and
multiplies the serious problems relating to sludge disposal.
b. The 1972 Act clearly encouraged the construction and operation of
municipal waste treatment systems which would handle both house-
hold and industrial wastes, provided that the wastes were com-
patible and did not contain toxic substances. Congress recognized
at that time that joint industrial--municipal treatment is a
practical and effective method of dealing with the wastewater
treatment problem in our metropolitan areas.
c. The Stafford Amendment singles out one class of industry -- those
plants discharging more than 50,000 gallons of wastewater per day--
and treats them as second-class citizens. In contrast to all
other users of municipal treatment plants -- homeowners, commer-
cial establishments and small industries -- these larger dis-
chargers would be singled out for a "negative subsidy." Federal
appropriations could not be used for their share of the treatment
facility. In effect, the tax dollars which this single class of
industry contributes are not determined to be as good as the tax
dollars contributed by all other classes. In essence, it singles
out one characteristic -- volume of wastewater effluent -- and makes
those industries, and no others, ineligible for Federal grants.
d. This arbitrary classification of certain industrial users as
second-class citizens is not based on any criteria of profitability.
ability to pay, or contribution to the nation's economy, etc.
A large and profitable enterprise which has a waste flow under
50,000 gallons per day is allowed to benefit from Federal grants;
a marginal industry whose contribution is above 50,000 gallons must
pay for its capacity allocation. This is manifestly unfair and
discriminatory. It should also be noted that this arbitrary classi-
fication can also adversely impact companies on a plant-by-plant
THIS PAPER IS MADE OF IOO % RECLAIMED WASTE
-------
Mr. Thomas A. Whalen
December 20, 1980
Page 3 -
basis. Even large profitable corporations frequently have
marginal facilities in older urban areas which cannot compete
with new, more modern plants which are located elsewhere and
owned by the same corporation or by its competitors.
e. The Stafford Amendment also works in direct controvention of
other Federal programs designed to encourage industries to re-
main in urban areas. Examples are HDD's Urban Development Action
Grant Program and the Department of Commerce's Economic Develop-
ment Administration Grant Program. These programs frequently
provide grant funds for sewers, water lines, and other public
improvements in order to help keep industry in urban, high-unemploy-
ment areas. The Stafford Amendment will have precisely the opposite
effect.
f. The effect of the Stafford Amendment will be to seriously impair
the continued existence of many old and inefficient industrial
facilities in urban areas. Marginal industries can ill-afford
the large sums of money required to fund local treatment capacity.
Those industries which are profitable may find it even more
tempting to leave urban areas for new facilities in rural areas
where cheaper, independent treatment is possible. Economic impacts
of such an exodus would be substantial.
g. The situation of the small brewer vis-a-vis the Stafford Amendment
is instructive. Small brewers may be unable to raise the necessary
capital to finance their own treatment facilities, and the reality
of plant closings, dislocation, and the related economic hardship
may be expected to occur. Consideration of historical trends in
the brewing industry bears out this possibility. According to
records compiled by the Department of Treasury's Bureau of Alcohol
Tobacco and Firearms, in 1935 there were 750 breweries in the
United States. Since that time, the number of brewing companies
has declined to 43 which operate a total of 85 plants. Decline
in the number of breweries doing business has been steady over the
years, and among the reasons for the decline is that small brewers
are often unable to build modern efficient plants and, therefore,
cannot produce malt beverages as cheaply as larger operations.
Small brewers are encumbered by the high cost of distribution and
are hard-pressed to provide a product at a competitive price with
larger companies. The inflation experienced in agricultural and
packaging costs has added to the profit squeeze and accelerated the
demise of the small brewer. Add to this already heavy burden, the
need to raise capital to participate in POTW improvement projects,
and one can easily forsee even more plant closings. Small brewing
companies are typically located in older muncipalities and discharge
to antiquated POTW's which require extensive upgrading. In addition,
it is likely that the brewing company will represent the major
discharger to that municipal system. As a consequence, since
THIS PAPER IS MADE OF IOO % RECLAIMED WASTE
-------
Mr. Thomas A. Whalen
December 29, 1980
Page 4
financial participation is based upon proportionate loading of
BOD, suspended solids and flow, the brewer in that situation will
be the most heavily impacted by the upgrading of a municipal plant.
h. The Federal construction grants program of POTW's has been
criticized as being far too costly. In the past few months, EPA
has been evaluating several alternatives for reducing the costs
of this program. These analyses show that the Stafford Amendment
would eliminate only eight percent of the construction grant
funding requirements. While eight percent sounds like a small
enough component not to matter, it disguises the fact that there
are many marginal industrial operations which would be adversely
affected if government funding were not available, and that there
would be substantial increases in user charges to non-industrial
POIW customers if industrial users reduced or eliminated their
waste load contribution. EPA also recognizes that other alterna-
tives exist for achieving greater savings without reducing con-
struction grant funding, and without creating the negative economic
and employment impacts of the Stafford Amendment.
i. Lastly, industry sees that Stafford Amendment as resulting in an
adminstrative nightmare, even if one agrees with its goals. Most
urban POTW's, for example, serve many large industrial dischargers.
If those POIW's must proceed with major upgrading projects, how
would agreement be reached as to the cost-sharing among all users
contributing over 50,000 gallons per day? What would happen if
one or more industries could not afford to pay their calculated
share of the new treatment plant -- would they have to close
their doors? Also, USBA believes that there will be serious time
lags due to the need to carry out complex negotiations with each
of the affected industries.
In summary, USBA feels that the Stafford Amendment represents poor
public policy. It will have only a nominal effect in reducing Federal expendi-
tures for treatment works. It will most certainly have negative environmental,
economic and employment impacts, and will hasten the de-industrialization of
urban areas. As such, USBA supports a construction grants program designed to
address the most pressing environmental needs consistent with sound economic
policy. Such a grants program should treat all users of POTW's, whether they be
residences, commercial establishments, small industries, or large industries,
on an equal footing.
HBKrcam
THIS PAPER IS MADE OF IOO •/• RECLAIMED WASTE
-------
HEWLETT
PACKARD
1501 Page Mill Road, Palo Alto, California 94304, Telephone 415 857-1501, TWX 910 373 1267
December 24, 1980
Mr. Henry L. Longest II
Industrial Users Study
Municipal Construction Division (WH-547)
Room 1217A
401 M Street S.W.
Washington, D.C. 20460
Dear Sir:
The following comments are submitted on the recent amendment to
section 3 of the Federal Water Pollution Control Act, Public Law
96-483.
Nearly all of Hewlett-Packard facilities discharge to publicly owned
treatment works. Initially, our discharges are less than 50,000
gallons per day but later exceed this figure as we develop a given
site. We don't object to paying our fair share of the cost of
sewage treatment.
We support in principal the amendment to Public Law 96-483 which
disallows federal grant funds for use "to treat, store or convey
the flow of any industrial user into such treatment works in ex-
cess of" 50,000 gallons per day. The administrative and monitoring
burden to calculate and collect construction costs from industry
should be minimized. This was not the case with proposed industrial
capitol cost recovery which required special monitoring systems of
industry and a new staff of inspectors and accountants for each
public owed treatment works to properly allocate costs.
Yours truly,
Glenn Affleck
Technical Regulation Manager
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ADMINISTRATIVE AND RESEARCH CENTER
1700 SOUTH MOUNT PROSPECT ROAD, DES PUAINES, ILLINOIS 60018 TELEPHONE 312-391-9000
WILLIAM L. LAMEY. JR.
Vic* President - Rranct
312-301-0020
December 31, 1980
Mr. Henry L. Longest II
Deputy Assistant Administrator for Water
Program Operations (WH-546)
Industrial Users Study
Municipal Construction Division, Room 1217A
U. S. Environmental Protection Agency
401 M Street SW
Washington, DC 20460
Re: Grants for Construction of Treatment Works,
Exclusion of Major Industrial Users
Dear Mr. Longest:
DeSoto, Inc. is a diversified manufacturer of consumer and
industrial paints, furniture, fireplace furnishings and house-
hold detergent products. Many of our manufacturing facilities
would be considered "major" industrial users under the federal
criteria. As such, we wish to comment on Section 3 of the
recent amendment to P.L. 96-483, The Federal Water Pollution
Control Act (FWPCA), which would prohibit after November 15,
1981 the use of federal grant assistance for construction of
any portion of a publically owned waste water treatment works
designed to serve a major industrial user.
It is our understanding that the amendment is intended to
correct the longstanding problem of excessive costs associated
with the recovery of industry's share of federally funded
construction of sewage treatment plants. In the past, federal
grant money was available for construction of industrial capacity
at publically owned treatment works, but had to be paid back
over many years by user industries. Later it was discovered
that the administrative costs of collecting the money far
exceeded the cost of constructing the portion of the facility
used by industry.
We sympathize with the problem. However, we strongly
believe the present solution—that is, prohibiting after
November 15, 1981 the use of any federal grant funds for
-------
Mr. Henry L. Longest II
U. S. Environmental Protection Agency
Page Two December 31, 1980
construction of treatment capacity for industries which dis-
charge more than 50,000 gallons per day—may have a serious
negative impact. Communities receiving federal grants after
November 15, 1981 will be at a distinct disadvantage in holding
existing industry and attracting new industry.
Many communities have already used federal grant funds to
construct sewage treatment plants which have a portion of their
capacity dedicated to major industrial users. These communities
have also built larger sewage treatment plants than they cur-
rently need. This excess capacity will serve as a'reserve for
both future domestic and industrial users. Neither existing
major industrial users or industries twhich may choose to locate
in these communities in the future would bear any of the cost
of construction of these sewage treatment plants.
Contrast this favorable situation with that of a community
which has waited eight years to be eligible for federal grant
funds to build sewage plants that meet federal requirements.
Such a community must now give industrial users a costly choice.
Either immediately provide funds for constructing the portion
of the sewage treatment plant which treats the industrial waste
water, or .cease to discharge more than 50,000 gallons per day.
Many existing businesses will not be able to afford the cost of
construction. Disposing of waste water by other means also may
prove too costly.
Thus, the new amendment will divide this country into
communities which provided "free" industrial waste water treatment
capacity and those which require payment. This does not appear
to us to be an equitable method of solving the industrial cost
recovery problem. Furthermore, the amendment appears to provide
a large roadblock to getting U.S. industry on its feet and
providing new jobs.
Very truly yours,
William L. Lamey, Jr.
Vice President - Finance
WLL:cr
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THE PROCTER & GAMBLE COMPANY
f
HILLCREST TOWER C.NCINNATI. OHIO 45222
7162 READING ROAD
December 29, 1980
United States
Environmental Protection Agency
Industrial Users Study
Municipal Construction Division
(WH-547) Room 1217A
U01 "M" Street, S.W.
Washington, D.C. 20460
Gentlemen:
The Procter & Gamble Company appreciates the opportunity to comment to the
U.S. E.P.A. on the affect of the Stafford Amendment both on industries which
discharge into publicly owned treatment works (POTW) and on the POTW's them-
selves which receive the industrial waste for treatment.
Procter & Gamble is a diversified company which produces synthetic detergents,
paper products for the consumer, food products, toilet goods, and industrial
chemicals. Many of our facilities are located in urban areas where we dis-
charge our biodegradable, compatible wastes into POTW's for treatment. We pay
our proportional and fair share of the cost of treatment of these wastes,
including O&M costs as well as retirement of the local debt. We have had much
experience in the joint treatment of industrial and domestic wastes in large,
centrally located waste treatment systems operated by the municipality or
other waste treatment authority.
We are aware of the many benefits of a regional system which can accrue to the
general public. Perhaps the chief benefit of the regional system is that of
reduced costs because of economies of scale-up.
Other advantages of a joint or combined treatment of industrial and domestic
wastes in a regional system are outlined in the attached discussions written
by the consulting firm of Malcolm Pirnie.
The Stafford Amendment would tend to discourage regional treatment of waste
waters, that is joint treatment of industrial, commerical, and domestic wastes
in a regional system and therefore lessen the benefits of regionalization. To
elaborate further on why we feel the Stafford Amendment should be repealed, we
wish to offer the following discussion.
The repeal of the requirements of industrial cost recovery (ICR) was a benefit
not only to the industries served by POTW's but to the entire population
served by the POTW's and to the cities involved. The objectives which lead to
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THE PROCTER & GAMBLE COMPANY
United States E.P.A.
December 29, 1980
Page 2
the inclusion of ICR in the Clean Water Act were most laudable, but the prag-
matic results of the requirements were far from laudable. A requirement which
was intended to produce equity instead produced inequity; a requirement which
was supposed to lead to conservation produced no conservation; a requirement
which was supposed to be administratively acceptable resulted in administra-
tive chaos. Virtually all parties agreed that ICR, which in theory was
reasonable, in actual practice was almost totally unreasonable.
The Stafford Amendment, which accompanied the ICR repeal like the ICR provi-
sions which it replaced, has objectives which also are most laudable, but
unfortunately we believe this amendment will result in the same types of prob-
lems as ICR. In fact, the potential problems in some instances appear to be
worse than those that resulted from ICR. '
The principle problem is that the Stafford Amendment requirements, like those
of ICR, will be almost impossible to administer. One problem clearly will be
to determine what portion of a POTW is required for public and commercial
needs, and thus is eligible for a federal grant, and what portion is for
industrial use, and thus is not eligible. While this may seem simple in the
case of a small city with a single industry, particularly where a new POTW is
involved, it becomes almost indescribably complex in a larger city with hun-
dreds and even thousands of industries, particularly where it involves the
expansion and upgrading of existing facilities.
For example, let's assume a POTW requires a total of five new aerators for a
new aeration basin for the entire needs of the community (that is industrial,
commercial, and domestic waste). Let's say the industrial load represents 10%
of the total load. Therefore, one half of an aerator is needed for the indus-
try load. A POTW must purchase four aerators, then set aside money for half
an aerator, and await industry payment for the other half. And how about the
basin itself? How can a basin be built partially by federal grant money and
partially by industry money? How is the bookkeeping managed? The potential
for procedural complications, red tape, and delay is very large with the
Stafford Amendment. It should be noted that the repealed ICR approach did not
present these complicated problems of who finances what portions of a new
construction.
Delay has been the chief flaw in the construction grant program for municipal
waste water treatment facilities. Since 1972, the time of the passage of the
original Clean Water Act, something over $30 billion has been approved for
specific projects, and yet only slightly less than $3 billion worth of facili-
ties are on the line actually treating waste. Very commendably, the U.S.
E.P.A. is studying ways to cut the red tape and expedite the construction of
these waste treatment facilities. Congress, too, has addressed itself to this
problem. But on the other hand, the Stafford Amendment while not intending to
do so will further exacerbate this unacceptable situation.
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THE PROCTER & GAMBLE COMPANY
United States E.P.A.
December 29, 1980
Page 3
The problems involved in determining a precise portion of a POTW facility to
be used by industry will be exceeded only by the difficulties financing the
industrial portion of that facility. Because industry will have no equity in
the facility involved, it will be almost impossible for industry to use any of
the commonly available methods of commerical financing. For example, the
industry will find it totally impossible to borrow or sell bonds to build a
facility in which it will have no equity. On the other hand, financing a new
facility may be even more difficult for the city involved. With no federal
financing, the industrial portion would have to be 100$ financed locally by
industrial capital. Many cities, which currently have significant problems in
raising money in the capital market because of their credit standing, would
find it essentially impossible to raise money for the industry portion of a
new or expanded POTW. In some cases neither industry nor the city would be
able to finance the industrial portion, and the result could be chaos. While
one intent of repealing ICR was to eliminate the administrative nightmare
which it caused, the Stafford Amendment requirement would appear to cause many
of the same or worse administrative problems, and place the cities and the
POTW's right back where they started prior to the repeal of ICR.
The rationale for inclusion of the Stafford Amendment was two-fold:
1. A concern that federal funding of joint municipal industrial POTW's
systems resulted in an unacceptable subsidy to the industry involved.
2. The inability of the federal government to meet anticipated funding
requirements for the construction of a grants program.
The question of subsidization was a principle focus in the arguments to elimi-
nate ICR and the same reasoning that lead to the repeal of ICR applies to the
Stafford Amendment.
A cost to industry for waste treatment in POTW's is in a number of cases
appreciably higher than self treatment and constitutes a major disincentive to
remain in or to locate in an urbanized area. Federal funding often serves to
do no more than reduce or eliminate this disincentive. (This problem was
extensively analyzed in a report "factors contributing to cost differences
between public owned and industrial waste treatment facilties" prepared by
Malcolm Pirnie, Incorporated, consulting environmental engineers for the
National Council for Air and Stream Improvement. A copy of this report is
attached.)
The total community, not just industry, benefits from the joint treatment
concept. Joint treatment, another form of regionalization, results in major
economic advantages to the community resulting from the economies of
scale-up. There are also additional benefits in aesthetics from centraliza-
tion of waste treatment, and benefits in increased control of potential
adverse environmental factors resulting from a multiplicity of waste treatment
facilities scattered all over an urban area. (There factors are also covered
in the attached report.)
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THE PROCTER & GAMBLE COMPANY
United States E.P.A.
December 29> 1980
Page t
To the degree that a subsidy does exist, more often than not it is a subsidy
that supports the economic health of the community involved. The community
benefits from its ability to retain industry which otherwise might be forced
to relocate. Providing facilities which make it economically feasible for new
industry to locate in the area also benefits the community.
In terms of. equity, the imposition of either ICR or the Stafford Amendment
produces the opposite affect; it tends to punish those industries which have
located in an urban when there' was available waste treatment. These indus-
tries now may, in affect, be locked by economics into the urban area and may
find that due to the requirements of the Clean Water Act they now face excess
costs for waste treatment which are substantially more than those of their
competition who have located in urban areas. <
The question of government's inability to meet the anticipated funding needs
of the construction grants program for sewage treatment plants is less clear.
However, it can be postulated that the Stafford Amendment can well have the
affect of increasing the government's costs. While there clearly would be
some short term reductions in the federal funds required for the waste treat-
ment program itself by the imposition of the Stafford Amendment, the fact that
the Stafford Amendment can inhibit industry from continuing in or locating in
an urban area could have a negative impact on the health of those areas. This
could result in demand for far more costly subsidies for the urban area than
would be involved in the federal grants program. In addition, in terms of
fairness, it can be pointed out that the industrial user is as much or more of
a tax payer, both to the federal government and to the local area, as the
individual citizen.
Thus, where it has been determined to be in the national interest to provide
funding for waste treatment, it should be equally in the national interest to
provide funding which serves to maintain the economic health of the community
involved which includes, of course, industry. If in fact federal funding for
POTW's must be restricted, it would appear to make far more sense to reduce
the percentage of federal funds for POTW projects, to reduce the degree of
future capacity which could be funded, or to restrict the types of facilities
which could be funded by the grants than it would be to eliminate one class of
user, a class of user whose continued presence is critical to the success of
the urban areas involved. This appears to be an area where it is clearly in
the country's best interest to take the long term view.
It has been suggested by a number of people, including administrators at the
E.P.A., that the real concern of the federal government in terms of funding
POTW's is not initial cost, which will occur over the next five to ten years,
but rather is the continued economic viability of the POTW's and, in particu-
lar, their ability in the future to operate, maintain, replace, and expand the
facilities that are being constructed now at the present time with federal
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THE PROCTER & GAMBLE COMPANY
United States E.P.A.
December 29, 1980
Page 5
funds. By revising the Stafford Amendment to focus on this need, it appears
to be possible to remove many of the potential problems and inequities which
could result from the Stafford Amendment while retaining the most desirable,
laudable objective of the amendment, the long term financial viability of
waste treatment in our urban areas. It is suggested that this can best be
accomplished by revising the Stafford Amendment to state the following: After
November 1, 1981, federal funding will not be provided for capacity required
for industrial waste unless the POTW has the authority to pass revenue bonds
and levy sewer service charges on all users of the facilities to pay for the
bonds. This suggested change in the law eliminates the disincentive to remain
or to locate in the urban area and in fact increases the incentive to stay in
the urban area. This version of a "Stafford Amendment11 helps to assure the
economic viability for the waste treatment facility and eliminates or at least
reduces the likelihood that such facilities will require federal assistance in
some future time.
In summary, while we agree that the intents of the Stafford Amendment are com-
mendable, we are certain that the Stafford Amendment as now written is not in
the best interest of society. It can harm economic growth in the urban areas
where such economic growth is vital. There are other better ways to insure
funds for the proper operation, maintenance, and expansion of POTW's. We will
certainly be glad to discuss this further with the appropriate people and the
E.P.A.
THE PROCTER & GAMBLE COMPANY
R. C. Glover -j. F. Byrd
Leader, Environmental Manager - Engineering
Control Section Government Relations for
Energy and Environment
Attachments
dt/2715E
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World Headquarters
— ^ , .^ ., Courthouse Plaza Northeast
.jr T" ^ jac* JSSK, £?> ', Dayton, Ohio 45463
'1 " '-sarJi V
-Wil 'S8»/ Telephone: 513-222-6323
December 30, 1980
Industrial Users Study
Municipal Construction Division
(WH-547)
Room 1217A
401 M Street, S.W.
Washington, D.C. 20460
Dear Sir:
The purpose of this letter is to offer comments of the
Mead Corporation ("Mead") on the potential effect of recent
amendments (P.L. 96-483) to the Federal Water Pollution Control
Act concerning industrial cost recovery, as requested at 45 Fed.
Reg. 79573.
Mead owns and operates paper mills in several cities
that discharge their wastewaters to publicly-owned treatment
works ("POTW's"); namely, Cincinnati, Ohio; Lynchburg, Virginia;
and Menasha, Wisconsin. The experience in each city is different
with respect to industrial cost recovery but certain general
observations may be made when considering the application of the
new law.
As a result of the amendments to the Clean Water Act,
existing industrial users of POTW's will be adversely affected.
Users such as Mead will be forced to raise significant amounts of
capital without federal assistance if and when POTW's upgrade
existing treatment facilities. Furthermore, the existing industrial
contributor to a POTW will be unfairly burdened if the POTW expands
treatment capacity to serve a larger population, in effect presenting
the user with a no-win choice: either raise the necessary capital
to pay for the expansion (which may not benefit the existing user
at all) or withdraw from the system.
The fair cost to the industry where a POTW upgrades existing
facilities is the true incremental cost; the difference in cost
between upgrading just for the community portion and upgrading the
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j
i'
Letter to Industrial Users Study
December 30, 1980
Page Two
facility for the total flow from the industry and community portions.
Any amount in addition to such an incremental cost results in an
unfair burden on industry. Where a POTW adds treatment capacity to
serve a larger area than was being served when the industry first
tied into the POTW, the fair cost to existing industrial users is
zero.
If industry is required to pay for a portion of a POTW,
then any portion of a POTW that has been directly financed by an
industry should be the legal property of that industry, and as
such, could be sold to others by the industry without involvement
of the POTW.
Based on past history, grants to state and local governments
for construction of POTW's after May 15, 1980 will probably include
excess capacity for later use and/or infiltration. Such excess
capacity might, in fact, be available after construction for new
large industrial contributors. An existing industrial discharger's
contribution should be based on its portion of total design flow,
rather than its portion of existing flow. For example, a user
discharging one million gallons into a POTW designed to treat 20
million gallons, but presently receiving only 10 million gallons,
should be required to contribute based on a five percent of capacity
figure, as opposed to a ten percent figure. Additionally, it would
not be fair if the new industrial source were not required to pay a
fair share where the discharge begins after the POTW is already
funded and completed, while an existing industrial source would have
to pay. Any system requiring industrial users to pay for a portion
of a POTW should avoid this inequity.
The 50/000 gallons per day exemption in the amendments is
an arbitrary figure. In large POTW's, 50,000 gallons per day may
be a relatively insignificant discharge. A more equitable system
would have the 50,000 gallons per day exemption be one of two
criteria. The second criterion would be a set percentage (e.g.
ten percent) of the total facility. Industrial users would then
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.1 J
j J
Letter to Industrial Users Study
December 30, 198
Page Three
be exempt if they discharge less than 50/000 gallons per day or
if their discharge represents less than the specified percentage
of the total POTW flow.
Mead believes that the new amendments will considerably
slow the construction grant program because of the lack of a
fair process to deal with industry that is already discharging
to POTW's. This conclusion is shared by the American Paper
Institute (API) , and they have developed further information which
is being submitted under separate cover. Mead endorses and joins
with the API position.
Mead appreciates the opportunity to comment on this
important issue, and we hope that these thoughts can be included
in EPA's report to Congress and considered in the development of
any regulations arising out of the 1980 amendments. We also
reserve the right to comment in more detail when specific regulations
are proposed.
Very truly yours,
'Russell E. Kross
Director
Human and Environmental Protection
Department
REK/rlr
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COM
CAMP DRESSER &. McKEE INC.
environmental engineers, scientists, r>rv* «• One Center Plaza
planners, & management consultants C£C I 5 %*QQrv Boston, Massachusetts 02108
80 617742'5151
December 8, 1980
Industrial Users Study DEC ' /
Municipal Construction Division (WH-547) ; lf
Room 1217A I-' --.L
401 M Street S.W. I
Washington, DC 20460 -
Catments on December 1, 1980
Federal Register Notice Titled
"Grants for Construction of
Treatment Works, Exclusion of
Major Industrial Users; Impact
Analysis
Gentlemen:
As has been requested in the above Federal Register notice, the
purpose of this letter is to submit contents on the above.
The question of retroactive application of regulations by EPA has
been of considerable concern for the past several years. Although
the subject is not an EPA regulation, according to this notice the
recent Congressional amendment to Public Law 96-483 in effect is
at least partially retroactive because it indicates that any "project
proposed by a grantee which is carrying out an approved project to
prepare construction plans and specifications for a facility to treat
wastewater, which received a grant approval after May 15, 1980" will
not receive a Federal grant after November 15, 1981 for construc-
tion of that portion of the plant which is constructed to serve
major industry's flows (over 50,000 gpd).
This amendment, for all practical purposes, simply redirects the ICR
program but does not repeal its philosophy. In fact, it makes it
worse! Does this affect large interceptor projects? How does this
affect on-going work in, say, a large city? How will anyone know
whether some "major" industrial flows are, or are not, included?
Between now and November 15, 1981 (a period of only eleven months)
it will be practically impossible for anyone to complete the design
of a wastewater treatment plant which contains industrial flow
capacity and get all the approvals necessary for and receive a
construction grant offer and award.
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CAMP DRESSER & McKEE INC.
Industrial Users Study
8, 1980 -2-
If this amendment stands, a municipality will not know whether to
spend funds for design of a wastewater treatment facility with or
without capacity for industry. Logic would say that municipalities
should get industrial agreements signed up before the design starts.
logic would also indicate that industry would not be willing to sign
agreements until it had a new study completed as to whether it would
now be cheaper to go it alone.
Consequently, this amendment will do nothing positive to the program.
It will, at best, cause a considerable delay which will be needed
by conmunities to attempt to re-decide what to do with industrial
wastewaters. At worst, it may result in many industries deciding
to go it alone with the requirement of more EPA enforcement and the
possible proliferation of individually-treated "discharge to the
wastewaters of the nation.
Recognizing that water pollution control is a national effort, it
appears that the Federal government should let the grantee decide
who pays for what on its treatment plants, letting EPA pay its
usual percentage of the entire needed plant. It has been proven
in the last several years since efforts have been made to enforce
an ICR philosophy that nothing but confusion and delays results.
Industry serves the people, and people along with industry, pay
Federal taxes. This amendment will only cause more problems for
the nation's water pollution control efforts and it should be
Very truly yours,
CAMP DRESSER & McKEE INC.
Charles A. Parthum
Senior Vice President
CAP/cmp
cc: Henry L. Longest II
David Lucma
Joseph Eranzmathes
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CH2M
8SHILL
engineers
planners
economists
scientists
December 30, 1980
P101.20
Mr. Henry L. Longest II
Deputy Assistant Administrator for
Water Program Operations (WH-546)
Industrial Users Study
Municipal Construction Division (WH-547)
Environmental Protection Agency
Room 1217A, 401 M Street, S.W.
Washington, D.C. 20460
Dear Sir:
Subject: Request for Comments Regarding PL96-483
Section 3 Federal Water Pollution Control Act
As requested per the Federal Register of Monday, December 1,
1980, I am happy to enclose some comments regarding the recent
amendment to Public Law 92-500, which was issued as Section 3
of the PL96-483 Federal Water Pollution Control Act. My com-
ments are based on my personal knowledge of numerous municipal
wastewater management programs, many of which relied on
PL92-500 funding. As you may know, CH2M HILL is one of the
largest engineering and economics consultants for POTW's. I
serve as Director of Water and Wastewater Economics and am
responsible, among other assignments, for directing all the
firm's wastewater projects' work related to cost effectiveness
analyses and financial management programs (including user
charges and industrial cost recovery studies).
In addition to comments addressing requested topics listed
in Section 4 of PL96-483, I have added a few additional
remarks in Section 7:
1. Effects on construction of POTW's
2. Effects on industrial participation in POTW's
3. Treatment of industrial discharges
4. Proper degree of Federal and non-Federal
participation in POTW's
5. Effects on rural, high unemployment, or economi-
cally distressed areas, and
Portland Office
200 S.W. Market Street, 12th Floor, Portland, Oregon 97201 503/224-9190 Cable: CH2M HILL
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Mr. Henry L. Longest II
Page 2
December 30, 1980
P101.20
6. The 50,000 gallons a day cutoff criterion
7. Additional remarks.
1. EFFECTS ON CONSTRUCTION OF POTW' S
Industries served by'POTW1 s relying on future Federal
Water Pollution Control Act grant funds will no longer
be eligible to receive interest-free loans provided under
previous PL92-500 financial arrangements. These indus-
tries now face the problem of securing and financing
industrial wastewater treatment for their facilities.
This may result in delays in POTW construction since many
industries will not be capable of quickly selecting the
most cost-effective solution or arrange for financing.
Our experience has shown it to be extremely difficult
to get industries to commit themselves to a costly long-
term financial obligation related to sewer services, let
alone a lump-sum amount to prefinance their respective
reserved capacity. Existing regulations such as the
Letters of Intent to be signed by significant industrial
customers are insufficient instruments to serve as bind-
ing legal documents addressing the needed financial
commitment.
The issue of prefinancing industrial capacity or obtain-
ing long-term financial commitments will be more signifi-
cant in small to medium-sized communities where such
individual industrial users might amount to significant
users in terms of their percentage use of the design
capacity. Metropolitan POTW's probably need fewer long-
term financial agreements with industries than small to
medium-sized POTW's. It is reasonable to conclude that
more delays and problems associated with the planning
and construction of facilities will occur in small to
medium-sized communities than in large communities.
2. EFFECTS ON INDUSTRIAL PARTICIPATION IN POTW's
Many large industries no longer able to use Federal
interest-free loan financing might now obtain their own
treatment facilities and discharge permits if this
represents their most cost-effective option. For indus-
tries of large size and strong financial capability,
this might be possible. Industries which cannot afford
to provide in-house treatment facilities will probably
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Mr. Henry L. Longest II
Page 3
December 30, 1980
P101.20
consider various forms of pretreatment to minimize the
total cost of sewage treatment, including capital cost
and operation and maintenance charges. The degree of
pretreatment provided will depend mainly on the rate
structure and rate level adopted by the POTW serving
these customers. In order for such industries to make
rational decisions, it will be important that rates used
by POTW's are predictable so industries do not have to
assume a high degree of risk associated with the POTW
rates.
3. TREATMENT OF INDUSTRIAL DISCHARGES
For reasons described in the two preceding sections, it
appears likely that less industrial waste will be treated
by POTW's in the future compared with what would have
been treated without the change in the ICR regulations.
Consequently, more industrial waste will be treated or
pretreated by industries themselves. The resulting pub-
lic policy questions of private sector discharge permits
remains to be analyzed. It is likely that a high degree
of public concern will develop regarding proper disposal
methods of residual toxic and nontoxic wastes when a
large number of industries switch to internal treatment
and discharge of wastewater.
4. PROPER DEGREE OF FEDERAL AND NONFEDERAL PARTICIPATION IN
THE FUNDING OF PUBLICLY-OWNED TREATMENT WORKS
The controversy surrounding the initial ICR regulations
will not cease with the recent amendments to PL92-500.
On the contrary, some of the issues still remain to be
satisfactorily solved; for example, the relative competi-
tive position of industries currently served by grant-
financed POTW's. Such industries in essence are the
beneficiaries of interest-free loans provided by the
Federal government. Other industries not served by
federally-funded treatment works are facing higher rela-
tive production costs since they will have to secure
industrial waste treatment from private, more expensive
financial sources. Combined annual capital and interest
costs of privately-financed capacity will be higher com-
pared with the industries already being served by grant
financed POTW's.
The argument that industries should not become recipients
of Federal funds still exists. In my opinion, the proper
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Mr. He. iry L. Longest II
Page 4
December 30, 1980
P101.20
question is why should any user class be excluded from
grant funding? With regard to the industrial users, it
can be argued that they contribute taxes similar to
residential and commercial customers.
In terms of equity between customer classes, it seems
imperative that the grant funding level be based on the
financial capability of the Federal (and nonfederal)
authorities and that such funding levels be uniform for
all user classes. For example, if financial resources
are too constrained to continue 75 percent grant funding,
then this participation rate should be lowered to a level
consistent with Federal financial resources.
In addition, Federal law should require that only cost
of service-based user charges be used. Only then will
user charges become more predictable and fair for all
user classes. User rate norms should apply to capital
as well as O&M costs. Such rate reform will minimize
the chances that industries are lured away by subsidies
offered by other utilities. This will lower the finan-
cial risk to the remaining users or bond holders of a
POTW.
5. EFFECTS ON RURAL, HIGH UNEMPLOYMENT OR ECONOMIC DISTRESS
AREAS
For some of the reasons discussed above, it appears likely
that rural, small and medium sized communities will face
serious planning problems under the current financial
recovery legislation. Restated, this is mainly caused
by the fact that only large urban POTW's, where indi-
vidual industrial users constitute a small percentage
of total usage, will be able to allow industrial users
to utilize their facilities without making elaborate
financial arrangements to secure long-term payments for
industrial capacity. Since most industries are not able
nor willing to commit themselves to long-term financial
commitments to provide wastewater treatment facilities,
it stands to reason that many industrial users will con-
sider moving towards the larger metropolitan areas in
order to take advantage of the lower cost of securing
treatment facilities use. Consequently, many rural
areas, small cities and medium-sized cities will have
to face situations where they might lose industries,
especially "wet" industries. Obviously, this will
negatively affect the economic base of the area and
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Mr. Henry L. Longest II
Page 5
December 30, 1980
P101.20
worsen unemployment: conditions and the general economic
well-being of such areas. Since economically distressed
areas quite often include rural areas, the existing law
might exacerbate their economic distress.
6. 50,000 GALLONS PER DAY CUTOFF CRITERION
Our staff has performed many sewer rate studies which
incorporated financing and user charge-related problems.
We find it quite likely that the enforcement of the
50,000 gallons per day equivalent domestic strength will
become even more difficult to administer in the future.
Already instances exist where industries have made
arrangements to separate their sewer services to reduce
their equivalent flow to less than 50,000 gallons per
day.
In addition, the cutoff point itself is arbitrary and
might result in situations where an industry discharging
just over 50,000 gallons per day is forced into an uncom-
petitive situation versus a similar industry whose dis-
charge is somewhat less than 50,000 gallons per day.
The criterion is arbitrary and should be eliminated. I
doubt that it would survive a serious legal challenge.
We see no merit in any arbitrary cut-off ppints. As
argued above in Section 4, our best solution to the grant
funding question is to let all user classes benefit to
the same extent. However, if Congress were to maintain
that grants may not be utilized by industry but are only
meant for private citizens, it would be less arbitrary,
and therefore preferable, to only allow residential cus-
tomers to benefit from the grant. Most user charge sys-
tems could accommodate such a change. An added benefit
would be that more communities could receive federal
grants since grant funds per average community would
decrease. This would be our recommended "second best"
solution.
7. ADDITIONAL REMARKS
Since projects for private industry must typically be
capitalized over a shorter period and higher interest
rates must be paid compared with public agencies, annual
cost of treatment will be substantially higher for many
industries. Large industries with good potential for
reasonable cost-effective (pre)treatment arrangements
will most probably secure their own treatment facilities.
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Mr. Henry L. Longest II
Page 6
December 30, 1980
P101.20
For marginally sized industries or industries that cannot
afford the cost of in-house treatment, more time will be
needed to determine how they can continue to be served
by the POTW. For example, some form of pretreatment
could be implemented in order to fall under the 50,000
gallons per day cut-off point. The combined effects on
POTW construction schedules may be significant. When
large industries drop out, the previously targeted design
capacity will be too high. At this point, a smaller
facility will have to be designed. Since economies of
scale usually, result when design capacity increases, it
is clear that when capacity decreases, diseconomies of
scale occur. The implication is that the unit rates to
the remaining users in a POTW will be more expensive
compared with the larger scale utility.
Inequities will develop between industries which were
previously grant funded for their waste treatment versus
new similar industries that will not be grant funded
under the current legislation. These inequities have
increased now that ICR payments no longer need to be
made. New industries are thus in an inferior competitive
position. Since the acclaimed economic policy of the
United States is to promote fair competition, it seems
ironic that the current grant funding rules negate this
goal.
Again, I do not advocate excluding any given user class from
grant eligibility but find that the "second best" solution
discussed in the previous paragraph would be easier to admin-
ister than the current program.
I sincerely hope that these comments will help formulate and
enact a more equitable and manageable Federal Water Pollution
Control Act.
Sincerely yours,
C. Kees Corssmit, Ph.D.
Director
Water and Wastewater Economics
CC:tb:118K
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