United States
Environmental Protection
Agency
Office of Water
Program Operations (WH-547)
Washington, D C 20460
December, 1978
Water
x-sEPA
Report to Congress
Industrial Cost Recovery
Volume IV — Transcripts of
Public Meetings
(ICR Advisory Group)
Coopers & Lybrand
1800 M Street, N.W.
Washington, D.C. 20036
-------
THIS PAGE INTENTIONALLY BLANK
-------
INDUSTRIAL COST RECOVERY STUDY ADVISORY GROUP
Environmental Protection Agency
East Wing - Waterside Complex
Washington, D. c.
Friday, July 14, 1978
The meeting was called to order at 1:55 o'clock p.m.,
Trui*an Price presiding.
STEPHEN B. MILLER A ASSOCIATES
748 THIRD STRUT. S. W.
WASHINGTON. D.C. 20024
(202) 554-9148
-------
2
Page
Call tc Orclpr
Introduction 3
tntr r1nr torr flp”, ir1. ‘ Mr. Pri(’ 4
fl1sru$ Fjr,n h ’ P.iri-icip.irt 12
-------
3
P R 0 C E E D I NG S
MR. PRICE: I first want to thank all of you for
turning out for the second meeting of the ICR Study.
The first thing we will do is just go around the•
table and introduce ourselves.
I am Truman Price, EPA Headquarters.
MR. HUELSMAN: Walt Huelsman, Coopers and Lybrand.
z
MR. PAl: John Pai, Project Officer for the Study,
EPA.
MR. DONAHUE: I am Ed Donahue, Project Manager for
Coopers and Lybrand.
MR. OLSTEIN: Myron Olstein, Coopers and Lybrand.
MR. GALL: John Gall, EPA.
U.,
L i i
MS. SAVAGE: Robbi Savage, National Association of
U
0
Manufacturers.
MR. BECKER: Bill Becker, National Association of
Manufacturers.
MR. ELICOTT: Andy Elicott from the Association
Li i
x
of Metropolitan Sewerage Agencies.
MR. COOPER: Jack Cooper with National Food
Processors Association.
MS. BURNS: Joan Burns, League of Women Voters.
MR. BURKE: George Burke, Water Pollution Control
-------
4
Federation.
MR. PIECUCH: I an’ Pete Piecuch, Water Pollution
Control Federation.
MR. PAWLUKIEWICZ: Mike Pawlukiewicz, National
Association of Regional Councils.
MS. REARDON: Mary Reardon, National Association
of Counties.
0
MR. TEITEL: Jeff Teitel, National Forest Products
Association. I am also here for the American Paper Insti—
• tute.
MS. BOOLUKOS: Susan Boolukos, American Frozen
• Food Institute.
I
MR. GERRISH: Don Gerrish, American Baking
Association.
MS. FELLER: Mimi Feller, from the office of
Senator Chafee.
MR. PRICE: There will be others coming in.
Thanks for attending the meeting. The format we
z
are going to have today is somewhat different from the last
one, inasmuch as we want to make s,ure that every person has
an opportunity to get whatever comments he might have on the
record.
We have a court reporter with us today that is
-------
- 5
that is taking down all the comments. So before making your
statement, please provide your name and try to speak as clear y
as possible so that we can have a complete record of what is
said.
I think instead of just sticking.to our basic agen a
of the four items that were sent out to the Advisory Group
before the meeting, we will go around and let every person
z
have an opportunity to give his comments and to discuss simul-
taneously all four agenda items.
Now, following that discussion, we do have the
contractor in a position to give us some of the initial re-
actions of the pilot data gathering effort that was conducted
in EPA Region 5.
John Pai is the Project Officer for the study, and
U
0
Walter Huelsman is the Managing Director for the Project for
Coopers and Lybrand.
Walt, if you want to comment on the four items and
how you arrived at what you did, following your introduction,
we will go around clockwise, starting with Robbi Savage.
MR. HUELSMAN: If I could, I would like to, for thE
record, just repeat two or three significant things that we
covered at our initial meeting. Then we can go into the work
that has been none.
-------
6
This is a repeat for a number of you. At our last
meeting wediscussed and agreed that the information gathered
from the various industry and source information could not be
retained as confidential information, and I think the responsE
we have had so far shows that that is not going to present
any significant problem, at least the response we have had to
date.
The second thing is the contract calls for a signil
icant group participation, and that is one reason why we have
this Advisory Council.
When we get into talking about the field study,
we will get into how many various businesses have been con-
tacted, but basically we have yet to receive some of the
special interest group information as tO who you would like
us to see throughout the United States. We have some of it,
but I think there is more.
I want to remind you that our people are going to
be scattered across the country in the next five or six weeks.
If we do not have that information, it is going to be very
difficult any way to be able to discuss some of the issues
with some of the people of your associations.
I guess the major thing that has happened since
our last meeting is that we have started the initial survey-
ing which was a pilot of Region 5, and what we were able to
-------
7
do was Jo contact all the grantees. We have not contacted al
of the industries in that Region yet, and we will have todo
some follow-up work in that Region.
I think at this point Truman wants to have covered
the four issues that were sent to you for your comments and
what have you. I think Ed and Myron can give you some back-
ground on how they were developed and why they were developed.
MR. OLSTEIN: One of the things that the study was
supposed to do is to analyze the impact of not only ICR, but
user charge and ICR on industry.
MR. PRICE: They are having trouble hearing you.
MR. OLSTEIN: One of the things that this study
was supposed to accomplish was to analyze the effect of ICR
and the combined effect of the user charge and ICR on industry.
In order to do that, and to do a reasonably detaile 1
analysis, we had to narrow our sights a little bit. We decidek
even before the contract was placed, to limit it to a detailed 1
investigation of five industry groups.
At a meeting that was held with Coopers and Lybrand
people, people from EPA, and two Regional people responsible
for UC/ICR within their regions, we went through a formal
process to arrive at the five industry groups we were going to
study. I believe all of you received a copy of describing
-------
8
that process. But basically we determined the criteria that
we wanted to see in the industry groups chosen, and based on
the combined experience and knowledge of the people we had
there, we developed a candidate industry list.
Then finally an analysis was done to indicate how
the industries ranked with respect to the criteria that had
been selected. On that basis, after that analysis was complet
0
the five groups they have before you were the ones that had
been selected with a detailed investigation.
I They were: meat packing, dairy products, paper and
allied products, secondary metal products, and canned fruits
and vegetables.
• To arrive at a degree of uniformity in the way they
were to be analyzed, we have cut all of them off at the third
digit of the SIC Code, which is a correction you should make
on your sheets.
U i
In the case of canned fruits and vegetables, it is
2
203X, so it is a little bit broader than it indicated here.
z
U i
That is basically the description of the process.
Ui
I .-
You see the numbers are here.
MR. DONAHUE: We also, in order to gather the
information, developed survey forms to be used with interviews
for inductrial plants.. and to be used with cities who operate
-------
9
municipal treatment systems. You received draft copies of
survey inst ?uments, and those forms basically are the same
questions -- well, we have revised those forms -- the same
questions are being asked. Sometimes they have been rephrased
a little bit, so the answers on the survey forms themselves
could be used for machine input so we can use some computer
analysis for statistical and data kind of manipulation purpose
z
Basically we have revised the questionnaires. They
are the same questions, maybe stated a little bit differently.
The answer is presented so you can read them into a machine
kind of thing. But those are the survey instruments we are
I basically going to use.
We are going to talk to alot of industry, not
just those five, but those are the five we are specifically
U
0
and particularly paying attention to. Those survey forms
have been modified in some cases by the trade association or
professional association representing that industry or that
industry group, to get more specific information that is just
unique to that industry, but basically all the industrial
people we are talking to are going to be asked the same kind
of information.
If you read through the survey instruments, I think
you can see what we are trying to get at. We are trying to
-------
10
find out what people are paying for sewage, not just user
charges, not just industrial cost recovery, but to find out
what their true sewage bill is. If it has increased dramatic-
ally in the past, we want to find out why it has gone up.
We are not just interested in the fact it has gone up. We
want to know why it went up. That is what those survey instrt
ments are going to attempt to do.
MR. HUELSMAN: The other two things that you receiv
as you requested were the initial list of the cities, so that
you would have four to six weeks advance notice where we are
going to be. The group also requested a description in lay-
man’s terms of what user charge, industrial cost recovery and
the EPA regulations entailed, and those have been provided and
are available for further distribution as needed.
I think that covers the four things, does it not?
U)
MR. PRICE: Yes. We have had basically two mailing
w
since our last meeting. We did send out a more extensive list
of tentative cities. This would be a broader list of the
z
w
cities that we will probably get and obtain data from, but we
Lii
will probably not visits. These are the ones we will actually
visit (Indicating sheet).
As we get into the various regions, wewillfind
that maybe for some valid reason we will want to either add or
-------
11
subtract from this list. If we find certain municipalities or
grantees have certain heavily impacted Industrial components,
we will want to go there, and maybe make some substitutions.
Now, in that regard, I think we would again like
to solicit from all of the national associations that have
g local constituencies, the names of their local groups, so tha 1
c - i
we can provide those to Coopers and Lybrand, so that when the
z
2
go into, say, a particular city, they will know whoi to con-
tact for the various local viewpoints as well as the national
viewpoints.
So if you could provide us even a directory of your
constituent memberships, that would help a lot, or else you
could go through yourself and pick out specifics for the citiE
U,
involved.
With that background, let us start going around
the group and getting the detailed comments and reactions of
-J
the various Advisory Group members to the materials that have
z been sent out today.
w
x
We are particularly wanting to focus in on the four
U,
categories of industries that we are going to study in detail,
because once we start getting information, we do not want to
be changing that later on. We have to start right from the
start.
-------
12
Robbi, if you want to give us some of your conunent
on all of the items submitted to you, then we will go right
around the table.
MS. SAVAGE: First off, I do not see any problem
with the industrial groups that you cited. I think it is a
fairly good range of the people that will be involved in the
program.
I would like to focus on the flexibility at the
local and municipal level for this program, and to reinforce
them that hopefully there will be flexibility for industry
I. ’
and for the local governments if in fact this program comes
to fruition.
We have a list of people that we would like to giv€
you. I will not bore you with them now. We have General
0
Mills, Campbell’s, Owens-Illinois, Warner-Lambert Pharma-
ceuticals, and another list of 25 people that we have identi-
-J
• fied as those who would like to be involved in your programs.
I would like to know more before I really say wherE
we are coming from, I would like to know more about what
happened at Region 5, and how your model went, and then I
will be able to respond in a little more detail.
MR. PI ICE: Let us get the initial comments first,
and then after we get those, Walter can discuss Regi9n 5, and
-------
13
if it has not been clarified at that point, then you can come
back with any follow—up inquiries or questions.
MR. HUELSMAN: When you say flexibility at the
local level, just so I understand that, what do you mean?
Do you mean one plant. versus another plant?
MR. DONAHUE: Do you mean flexibility to implement
ICR, or flexibility to do the study?’
MS. SAVAGE: Flexibility to implement ICR, how it
would be handled, if it does come to be a viable program.
‘MR. BECKER: That last, point was more of a conm ent
we made when the ICR provisions were being debated by Congress .
One of the problems with ICR in the past, and with user charge ,
was that the administrative burden instituting the program
U)
like this is not helping the program any, and it is really
running counter to the objectives.
We just wanted to see flexibility built into the
U i
Act, and we also wanted to see flexibility built into the
I regulations. ‘
Ui
MS. SAVAGE: I will dump it on my boss now, Bill
Becker.
MR. BECKER: I have not taken as close a look at
this - — I was not able to attend the last meeting. I was con-
cerned also with the identification of industries. I see that
-------
14
you have in the aggregate five industry groups wereselected
to make sure that they were well represented.
I heard one comment, and I really have not taken a
close look, but a lot of the cities that were identified, or
a lot of the municipalities identified with projects were
the smaller types. And even some of the larger ones were
identified with completely different types of problems. I
z
0
have not taken a close look, but I would hope that the full
sample is very well represented, large, small, energy—intensii
non-intensive, things like that.
MR. HUELSMAN: It really it.
MR. BECKER: We are very interested in that.
Seventy-five percent of NAM’s membership is small business,
and we obviously would like to make sure that their interests
are taken into consideration.
That is all I have to say right now.
w
MR. PAl: When you say 75 percent are small busines
are you talking in terms of employment, or sales volume, or
what?
I-
(I)
MR. BECKER: Based on employment. Seventy-five
percent of our membership is under 100, or 500.
MR. ELICOTT: I am Andy Elicott, with AMSA. I will
make my comments pretty brief.
-------
15
I am concerned about.the period of time that you
have got to complete this study. Looking Over the inforTnatior
request form for municipal treatment agencies, I think it is
going to take most of the mernbersof our Association quite a
while to answer as fully as it seems you would like.
If you plan to have people available at C&L to take
U questions over the phone from people, I think that would be
a good way to sneed the answering from our members who are
not blessed with a site visit.
On your list of tentative cities, you have got 22
cities that I know for sure has sewage treatment agencies tha
are in our Association. There may be more, but I cannot tell.
I have one other member who would like to be added
to your list. It is Western Lake Superior Sanitary District,
U
up in Duluth. I had one member who received the draft survey
U)
form. Before he received it he was very anxious to be in—
w
cluded on your list. After he received it, he gave me a call,
and he said he would like me to hold off before I put his name
z
w
in, so that may be a harbinger of the kind of reaction you
w
will get from sewage treatment agencies, not that we are
recalcitrant necessarily, but it seems like it is a rather
weighty form.
I can tell you -— and John Pai knows most of this -
-------
16
that we have an ICR Committee, and we are working on an ICR
implementation, and are in the midst of conducting our own
survey on where our members are in the ICR program develop-
ment.
This is by no means as comprehensive as the one yoi
have proposed; but if we can get information from it that
would be of any assistance, we will pass it on.
MR. HUELSMAN: When will that be completed?
MR. ELICOTT: It is difficult to tell. Hopefully
b the end of August, but I cannot uarantee it, that it will
be by that time.
Also, we are concerned about the impact of the new
definition of industrial user that is being proposed by EPA,
U)
and we hope that the study you conduct will take into account
the differences between existing definition and the new defin
ition.
We will have information available for you shortly
on our members’ best estimate of how much more ICR billing
z
they will have to do under the new definition, as compared
with the old one.
Again I would guess that that might be available
by the end of this month, and we would be happy to give it to
you.
-------
17
MR. DONAHUE: Andy, two comments. With that draft
survey instrument that you have, which we have since re-
fthed, every time one of those is sent out, the way we are
scheduling this, we are calling people obviously to set up an
appointment, and before we go see them we are sending them a
copy of this form saying do not fill it out, we are not askin
you to do that. But this is the kind of information we are
looking for. And the cover letter goes with it, and conflrms
dates, time, et cetera, and says if you have questions about
the questions, the data we are looking for, call us before
we show up, to save yourself time, and to save us time.
There is the name and phone number given to every—
body when they receive one of these forms.
Another thing is, one of the questions on this,
Part VI of the questionnaire, is looking at the impact of
alternative definitions of industry. How many people will
you have to bill for ICR under new definitions, and rank your
large order users so if we change the cutoff form, what it is
z
going to doto your number of ICR customers.
MR. HUELSMAN: The same’ procedure will also be
handled with the plants that will be visited, and in that we
will send the information out so that they understand what
it is we will be looking for, and then call prior, and when
-------
18
we get into Region 5, we will talk about how we see that we
will have to call back for missing data. We expect that we
will not be able to get 100 percent of this data on our first
visit on a lot of these places.
MR. ELICOTT: Can you tell me how much time you
anticipate putting into each of your detailed investigations?
0
In other words, if I am the Metropolitan Sanitary District of
Chicago, and you call on me, how much of your time. are you
going to give to try to get the information out of us?
MR. DONAHUE: We are planning to spend a day with
each city or each agency.
MR. HUELSMAN.: That is after examining the informat
in the Regional Office. A lot of that information will be
(I )
gathered from reports that the grantee has already sent to
U
EPA. So we are going to have some of the missing data, and
U)
also some of the things to back up the data that we have.
MR. DONAHUE: Before we go to CMSD in Chicago, we
will have gone through EPA’s files, correspondence, reports,
z
problems, agreements,• disagreements, as the case may be, with
MSD, to get what documentation we can so we can go in there
knowing something about the situation, and not going in there
(2) cold.
MS. SAVAGE: You are going to do that with industry
-------
19
too, back up information before you go?
MR. DONAHUE: We do not have access to detailed
information about given industrial plants before we go in the
We do have industry-wide data from the Commerce Department
that we are trying to assimilate before we go to talk to
specific industries so we know something about the kind of
problem the specific industry might have. We will.not have
advance detailed information about a plant.
MR. OLSTEIN: Unless they are in a target group
where we are working with the Association, and in that case we
will have information through the Association. .
MR. HUELSMAN: We also receive input from the
N grantee regarding the plants and the customers in his area,
C l )
and the sequencing of the interview is the grantee first
followed by the plants.
I might also comment that we are in the process
LU
right now, or Coopers and Lybrand is performing a user charge!
industrial ICR study for EPA, which has already brought us
LU
into the ten regions, and we have gone through a lot of
similar type information already I think on 40 or 60 -—
MR. DONAHUE: Eighty.
MR. HUELSMAN: Eighty different systems. We are in
the process of preparing that report. I think we know pretty
-------
20
much what information we can get from regional offices, and
what information we are really going to have to dig out at
the grantee.
MR. DONAHUE: That study though was more from the
viewpoint of municipalities and EPA -- it was a different
perspective. It was not really aimed at industry, whereas
u this study is.
2 MR. PRICE: Jack, may we have your comments?
MR. COOPER: I am Jack Cooper with the National
Food Processors Association. I want to compliment the Agency
and the contractor for the work you are doing with working
with industrial groups such as ours, as well as public interesb-
groups, to insure that all views and information available
is put into the record.
I am confident that information that is put in will
be analyzed, and I want to compliment you for that.
With respect to the four things that you sent out,
I will comment first on the tentative cities. I notice in
z
your letter you say you are going to begin on July 17 to 25
for your site visits.
I do not have a list of when you are going to any
of these. Do you have a timetable established?
MR. DONAHUE: Partially.
-------
21
MR. HUELSMAN: We do not have one for cities on thc
week of July 17. What we are doing, we. are using July 17 to
train our men in other parts of the country, to get to the
regions, and then we will really start the individual cities
the following week. During the week of July 17 we will have
a detailed City-by-city, day—by-day kind of thing.
MR. DONAHUE: We are in the process of developing
this. It is substantiallycomplete now. But where you have
a list of cities, and you call one city and they say, yes, we
will talk to you on August 1, and you call someone else and
they say we will talk to you on August 4, and they are 1,000
miles apart, everybody wants to talk on the same day -- it is
I-
a matter of juggling and rearranging so we can see everybody.
(1)
Also, while you are in the city, talk to pertinent
industrial organizations or plants.
MR. COOPER: I understand the problem of coordin-
w
ating it. I was wondering if we could get a list of the times
you will be going to them.
z
MR. DONAHUE: As soon as we have it finished, yes.
MR. HUELSMAN: Each grantee, and each one of the
industries in that city, Jack, are being contacted —— they
have been contacted over the last week or so, some of the
remaining ones are still being contacted. We just have not
-------
22
been able to get the logistIcs thing straightened out.
MR. DONAHUE: We will have one, and it will be avai
i able.
MR. COOPER: The second thing, I sent this out to
our Industrial Committee to look at, and they said, gee whiz,
many of the cities on here do not have strong industries
o
o
u there. They may have very small industrial cost-recovery pro-
gram.
I . ,
z
I was wondering if some of the other cities which
we recommended could not be substituted for some of those
that are on here, and what is the status of that with respect
to revisions of the list of cities that you are going to with
I recommendations that have been made from other groups?
U)
MR. DONAHUE: There is room for minor modifications
U
We basically have to stick with this list. We can add to it,
U)
or subtract from it, to a certain extent, but not drastically.
LU
Because we have to make sure we cover all geographic areas of
the country.
z
LU
If you read the legislative history, and the Act
LU
I-
U)
itself, it says you have got to pay, attention to urban versus
rural areas of high unemployment. So in order to get all
those •things in, it sort of starts putting limitations on what
we can do.
-------
23
MR. COOPER: I understand. The major point I want
to make is you should not just go to a city because it has
ICR program. There should be sort of major contribution of
industry there.
MR. DONAHUE: That is true. If you go to a city
that does not have an ICR system, it is hard to say what ICR
impact is going to be.
2 MR. COOPER: One of our major problems is not where
ICR programs have been set, it is those in the future.
MR. HUELSMAN: We would very much like to know
those cities where you see there being an ICR problem in the
future. One of the things that this study is intending to do
is to gather as much factual data as we Possibly can, to arri
at some conclusions, and going into a city that does not
address some of the issues yet, it is almost impossible to ge
the factual information.
As a matter of fact, we have some good case studie
that we could go to areas that have not gotten into it yet.
z
So if you know of some city - -
MR. COOPER: We have. We will give them to you.
MR. PAl: On those five major industry groups that
we selected, we will do some projections as to what are costs
on self-treatment, and costs anticipating UC/ICR system -—
-------
- 24
they may not have an ICR system now, but we are looking to•
1985.
MR. DONAHUE: We are also going to be talking to
industries and cities other than these. These are the cities
we are specifically going to visit. We are going to visit
some industries in other cities where they do not have ICR
system, but heavy industrial concentration, in addition to
talking to other people by telephone.
MR. HUELSMAN: There are another 200 cities that
we will be contacting, but we had to get our logistics
straightened out before the visit.
MR. COOPER: The final thing I had to say is we
are conducting survey cost of waste water treatment within
members’ companies, and we have to date 208 responses that
have come back.
MR. DONAHUE: We appreciate that. That informatior
is already, and continues to be very helpful for this study.
It does take some time for people to fill out those question—
z
naires that you mailed out.
MR. SILVERMAN: My name is Larry Silverman. I
would like to echo in part what Jack is saying about your
efforts to get diverse number of groups involved. I think in
comparison to other studies being done in EPA, this is very
-------
25
good.
For example, the Congressional study for what to
do about combined sewers, I think the first notice went out
about that yesterday, asking for comments by July 24. That
• is the kind of thing other parts of the Agency are doing. You
are doing much better than others in that respect.
I do think you can broaden some of the participa-
tion. The two areas that I think need special concern, and
I think which are reflected in Congressional history, is the
area of economics. I know you have great accounting expertise.
But I think we need some theoretical economists, or academic
economists who have expertise in the water area, such as
people at JOhns Hopkins, Professor Roberts at Harvard, a numbe:
of people -- not a lot really -- who have expertise in the
area.
I think in general EPA has developed regulations
LLZ
and programs in this area and other areas without help from
economists, and I think that is one of the reasons that this
z
study was commissioned, because it raised problems.
I think somebody has to look over the methodology,
and give some basic thoughts, kind of like NASA has to have a
physicist as well as an engineer.
MR. HTJELSMAN: We have a staff of eight Ph.D
-------
27
think you ought to bring in people in that industry, identify
them, and bring them into these deliberations. I think they
can make a major contribution.
MS. SAVAGE: After listening to the. hearings for
the last three days, I think he is probably correct. Monitor•
ing was a major focus.
u MR. PAl: What about including some of your member5
which are in what you call manufactures -- equipment manu-
facturing?
MR. COOPER: There is a separate trade association.
MR. BECKER: Waste Water Equipment Manufacturers
Association.
MR. SILVERMAN: I know there are people out there,
and I think they have to be identified and brought in. I
imagine there are not a lot of companies that make the kind
of equipment necessary to run good systems.
MS • SAVAGE: Good point.
MR. BECKER: We will be more than happy to talk to
z
our members, and maybe perhaps get some industrial economists,
modeling experts, and monitoring experts.
MR. SILVERMAN: The other thing that concerns me is
fluid process. Rules keep changing. As you are studying ICR,
there are new regulations on it proposed, beyond ICR, there is
-------
28
a whole new pretreatment program, and there’is a program with
regard to how you do analysis for industrial capacity, how
much reserve capacity you can have. These are very serious
changes.
I do not want to add to your burdens, it seems to
me if you are going to make your report relevant, by the time
it gets published, you have to at least begin soliciting views,
or presenting your own views on these proposed changes. I do
not think you can start working on that, too early, because it
will change the whole program.
If you do not do that, you will come up with some-
thing that is really not relevant.
MS. SAVAGE: Would you want someone on pretreatment
from EPA to sit on the Committee, or someone from outside?
I-
MR. SILVERMAN: I think the equipment manufacturing
industry, when they get into these situations, they do not
think ICR or pretreatment, they think if it is going to ‘cost
us X dollars -- they look at ICR, user charge, pretreatment,
and make the judgment. That is the way it is supposed to
work. ,
When you are talking to industry, and talking to
municipalities, you have to start thinking about the cost of
these things, and how they are going to fit in together.’ It
-------
29
is a little disturbing to the Agency because people writing
pretreatment regulations are not people who write constructior
grants programs. In part, any way.
I hope that does not inhibit you. I know it is
going to affect the Agency’s performance, but I hope it does
not inhibit the study --
MS. SAVAGE: At our very first meeting, the Inter-
agency Coordination of bringing some of these other people in,
the people who have been working on the pretreatment regs
within the Agency, as well as people who are going to be
affected -— it might be very helpful.
MR. PAl: They were notified of the meeting.
MR. OLSTEIN: If I could deal with the first thing
you covered.
Congressman Roberts’ questions 3 and 6 dealt with
economic issues, and we have separated that out. As of this
moment we are in the middle of an RFP process to select the
subcontractor. We hope to have one selected and negotiated
!,y the 28th of this month, to analyze that very question.
What is ICR’s effect on achieving cost-effective solutions to
water pollution?
The people who are going to be bidding on the
thing -— the people who have been doing the economic analysis,
-------
30
the people that have been doing cost industry studies, and in
fact, Tom A)exander, who was at our bidders’ conference ——
I must admit he is going to cooperate fully with this specific
study that is going to be done. There will be a subcontract
that we will place out of this study. Tom is a good choice,
because he is the one who is going to be a project officer for
the cost—effectiveness study which you referred to, so we will
be working together.
We will have full access to all his tapes, so we
are not going to be duplicating efforts in terms of any of the
data that already exists, and at the same time we will be
taking some excellent data that we are getting from Jack’s
Association, the Forest Products people, and we will be improv
ing Tom’s data base in the process.
So that is the way we are dealing with that issue.
In addition to economists, we need some very specific engineer
ing cost estimation expertise, which is why we have gone the
RFP route.
z
LU
As far as monitoring, that is one of the questions
LU
I-
U) .
we address when we visit the grantee. It is one of a large
number of questions. We have to be cognizant of how much time
we take up, and the effort involved. We are looking at that
issue right now with the people that have to spend that money.
-------
31
MR. SILVERMAN: Let me just say with regard to that
in the last three days, Congressman Ginn’s Subcommittee on
Investigations and Review, part of the Public Works Committee,
part of the people who asked for this study, were looking at
some of the AWT programs. And what you heard every day, and
five or six times an hour at least, from different Congress-
men, was what is wrong with our monitoring system.
Why aren’t we measuring better? It maybe only one
•in a list of 12 or 13, but if you have been hanging around
that Committee, you know it is foremost on their mind. The
same way the General Accounting Office has questioned the
monitoring system.
I do not think that the grantees are the experts on
monitoring. In fact, that is the problem. That is an area
where grantees, not necessarily all of them, but many grantees
are very weak for whatever reason. They may have good reason
to be weak in that area, but they are. I think that is one
of the things that needs careful scrutiny, and I think Congres
wants it, and I think it will be useful, not just for this
program, but many other things, too.
I would like to say something about planning. This
comes really in response to some of the comments received on
the proposed regulations.
-------
32
The question is when should the ICR system be imple
mented, and when should ICR and user charge plans be developed
And we are of the view that they should be developed as early
as possible, at the step 1 stage, if possible, or at least
they should be outlined so that people could estimate it best
if possible what their costs are going to be, so they can plan
0
for it. They can make their decisions at that time, and not
later when it is more expensive, or too late to make those
• decisions.
‘. MR. HUELSMAN: I couldn’t agree more.
MR. SILVERMAN: There are people who disagree. Som
of your colleagues -- I don’t know if you read the comments
received by EPA, I would hope you would answer the statement
made: You really can’t do this until you are 90 percent corn—
plete construction.
I think there have been comments made by profession 1
and consultants, and I hope that you will use your expertise
to deal directly with those comments.
z
w
I refer particularly to the comment received by
U,
Black and Veatch, in the docket of comments received in the
April 25 regulations.’ There were many others, but nobody with
that kind of expertise. I think that needs a response.
Also, in the area of planning, if you have read the
-------
33
law, it says.208 agencies are supposed to set up ICR user char
system. It says that right in the law. ‘There are not a lot
of 208 agencies that have got involved in this area. But I
think in making your visits you ought to look at what those
agencies are doing, because they are supposed to be the compre
hensive planners. They are supposed to look at financing
0
costs, and that is in the law.
I think that somebody ought to talk to them, in
addition.
The head of all 208 programs now at EPA is Merna
Hurd. She came from a 208 agency in Delaware, and one of the
few agencies to develop an ICR system. She did a real good
job there. ‘ I think she would be worth speaking with. Not
only because she is head to 208 here, but she has expertise
in this area. She might refer you to other people who you
U)
should speak with.
w
The importance of grantees -- and that is going to
0
become more important. Every once in a while you hear Mr.
z
IL l
Jorling say in the end there is not going to be any 201 fundinc
U) unless there is 208 plan.
In case this policy becomes the policy, which I
think it should be, you ought to anticipate that and look at
some of the 208 groups, and what they should do, and what they
-------
34
might be able to do.
And finally I want to encourage you, as you hold
your public meetings, to give as much notice as possible, and
to do whatever you can to bring the public out. I think the
effort in that direction really began -- it is hard to find a
good model in EPA, particularly recently, because everybody
was in such a rush that oftentimes things happened bef ore the
public could be involved, but I do hope you will make an attem t
for example, before you hold a meeting, to announce it to the
press, spend some time explaining it to local reporters, what
it is all about, and that you will prepare lists of industry
in communities, names of companies in municipalities in the
municipal system that say something about cost, what you are
doing, and begin working as hard as you can to bring in people
indiffe ent locations that you are visiting, the general
public.
w
If you will do that, we will help you in any way
that we can, with suggestions of names, and groups, and so
forth, who might be helpful in that area.
I think you certainly made a start by translating
some of your stuff into English, and I hope you keep that up.
I think you have to do a little more specific work.
I think it would be useful for you to sit down and write a
-------
35
little summary of the situation in Chicago as it exists for
people to use and understand it so they can figure out how
industry and municipalities can work together.
It is important to have that. To the extent that
there are people out there who understand these problems, and
know anything about sewage treatment, there is the suspicion
that industry should not be involved in the system at all, and
I do not share that view. I think it can be done properly.
I think there is a need to get to the public. They are going
to have an influence on this legislation.
MR. PAl: Pursuing your last point concerning
‘•,ritinq something in plain English, how did that work out?
MR. SILVERMAN: I think what you did was a good
general statement. I will be sending it out to people I deal
with, but I think that mostly if you go to Buffalo or Chicago,
there are folks out there who have an interest, what is the
local company doing, are they ripping us of f? Are they doing
agood job?
z
MR. PAl: If you think over any artic].es or issues
that we should continue that kind of effort, give us a subject
and we will try to continue to follow that kind of document
for public information purposes.
MR . SILVERMAN: Yes. We did acase history on
-------
36
Merrimack, New Hampshire, a brewery, Anheuser-Busch Company in
the community, which raises issues of how they share treatment
plantq with some of the problems that arose. It was not a
happy story. But we will send copies to some of you, and
we will send copies to the rest of you probably Monday.
z ‘Just as an example, one of the things I hope you
will do. in your final report is give us some examples, good
0
and bad, of communities.
MR. HUELSMAN: We have two case studies in every
region, a good one and a bad one, that are going to be written
up as a case study,. just to that point.
Larry, will you be able to give us that information’
pretty soon?
MR. SILVERMP 1 N: Yes. In general I want to thank yo
for being so open in suggestions and comments. I think again,
by agency standards, you are doing excellent. There is always
LU
room for improvements. But you are headed in the right direc—
tion.
z
LU
MS. BURNS: I am Joan Burns from the League of
LU
U,
Women Voters.
I want to echo Larry to the extent that I want to
thank Coopers and Lybrand for coming up with this layman’s
explanation. I think it will really help.
-------
37
I have several questions concerning public partici-
pation, though.
First of all, I need some clarification as to where
these meetings are going to be held. Do you intend to hold
them at each of the sites, or one per region, or what?
I am a little confused.
o
0
1 MR. DONAHUE: Which meetings are you talking about?
1 MS • BURNS: That is the second half of the question,
MR. DONAHUE: For this list of 100 citieswe are
going to be in each one of the cities, actually in those citie
In addition, there are going to be ten meetings in each of the
ten regional cities. We are not sure of the dates or places,
but we will know in late August, like a month before the meet—
U)
ing happens, and those meetings are to do two things. To
1 gather opinions and comments from people that we have not hearck
from before, plus relating some of what we found while we were
w
ii out talking to people in those areas.
th MS. BURNS: Are you planning to have a public meetir c
z
in each of the specific locations?
MR. DONAHUE: We are goi ng to Cleveland, Ohio, for
example. If we know that there are specific industries, or
public interest groups, either Chamber of Commerce, League of
Women Voters, or local chapter of whatever —— in NAZI — — anybod
-------
38
we will try to schedule a meeting with them.
MR. HUELSMAN: If you say that so and so in Clevel
would like to get involved in this, when we are setting this
up,we have a grantee identified, we will contact them, and in
all cases we are trying to ask the grantee to allow us to use
z an office, or a place at their site, and bring in the people al
that time.
MS. BURNS: At the time you intend to contact these
• groups, are you going to be sending out copies of this report?
I. MR. DONAHUE: Yes.
U,
MR. HUELSMAN: The layman’s description.
MR. DONAHUE: Yes.
I
MS. BURNS: I want to make sure they are being
U,
distributed in such fashion.
ii
MR . DONAHUE: If you have other people you want thc
U)
I,
I sent to, we will send them.
U i
MR. HUELSMAN: Where we are being requested of
additional information, someone mentioned news announcements
and what have you, each EPA Region has a -— you fellows have
to help me out here -—
MR. DONAHUE: Public Information Office.
MR. HUELSMAN: Public Information Officer has the
same information, and these people throughout the region will
-------
39
either be referred to them, or to the Regional EPA person
responsible fOr UC/ICR.
MS. BURNS: I was a little concerned when 1 read
through the paragraphs about tentative cities selected, and it
said something about meeting with the agencies responsible for
waste water treatment. It did not say anything else about the
N meetings. I was a little concerned.
MR. HUELSMAN: Once we lined up a meeting with the
agency, then if we have three groups that are interested in
discussing this, we will contact them, say this is the date
I we are going to be there. I mean we cannot try to get every—
body to agree on a date. We have to say this is the date we
will be there, we have time at four o’clock, or whatever it
is, and can we get together.
I ,
I !
MS. BURNS: Do you plan to do any other sort of
soliciting, education thing? Larry mentioned news releases,
things of that sort. Are you going to publicize?
MR. HUELSMAN: When we get to the public hearings,
I guess that is what they are called — —
MS. BURNS: The October meetings?
MR. HUELSMAN: It certainly will be done then.
Logistically it is almost impossible to do it as we are going
(3) along.
-------
40
MS. BURNS: The only concern I have with all of
this, I he&r all the talk about industry being involved, and
things of that sort, experts, engineers and things of that
sort. The public sort of gets pushed aside now and then.
MR. DONAHUE: We are looking for you to tell us who
to talk to. Who represents the public?
1 MS • BURNS: I can get you a directory.
MR. PAl: In addition to that, if you have any
particular questions, if we do not address them in public
I hearings, or in layman’s language, feel free to call either me
U,
or anyone else for specifics on what they want to know about
ICR. We are always available.
MS. BURNS: One last suggestion I had. For these
U)
public meetings that you will be having in October, will there
U
be some official publication, such as in the Federal Register,
U)
or something of that sort, about where they will be?
ii MR. PAl: It depends on how definitive we can be
to announce those dates. At this time we are running a very
z
tight schedule.
To the extent we want to be certain, once we publis1
that, it will be a binding situation. We would like to make
the announcement as early as we can. We would like to get mor4
involved.
-------
41
We are not trying to run away from the issue.
MS. SAVAGE: ,I would like to second Larry’s idea
that Merna address the group, if she feels like she wants to,
and definitely contact the 208 agencies in the field. If they
are left out in the cold, their contact with the public and
industry could be skipped entirely, and we already have the
o public and industrial and technical forms for you to use, so
if we could contact those people, not only from the EPA Agency
sense, but also from State and regional sense. -
MR. PAl: There are some internal administrative -—
well, not administrative -- UC/ICR has to be approved by the
region. I think the 208 agency should be consulted. To the
extent they were actually involved in UC/ICR system, my person i
—— I have a few reservations about what position there would
be with those review agencies and the region. -
MS. SAVAGE: Talking about 201 regional, EPA 208,
a conflict does not have anything to do with the public;
If in fact down the line 208 agencies have to deal
zi
with whatever you come up with, and they were not involved now,
you will probably find more conflict at a later date than if
you would have them involved at the beginning.
MR. PAl: I do not see any conflict, other than
where other people are going to take over. I do not think the
-------
42
208 agency per se wants to get into detailed questions of
UC/ICR. They are at the planning stage.
MR. SILVERMAJ : I think you are reflecting your
position in the Agency. You are working for EPA, and I hope
—- I usually agree with John, but I think, in my jud ent, he
has got a bias here. 208 people have a bias, too.
MR. PAl: I do not think ICR study, addressing
institution approach -— who should review ICR —-
MR. COOPER: What this study is supposed to address
is the impact of ICR on the industries, and not necessarily
who is involved in preparing it, and so forth.
MR. PAl: We are not addressing the institutional
issues, like the engineering firms preparing it -—
MS. SAVAGE: You are reacting on a much more tech-
nical basis than Larry or I indicated. Basically, that the
208 agencies know it is going on, very much the way you did
with this meeting, and tell them it is going on.
If they want to be there, fine, if they make the
decision it does not impact their particular plant, well, okays
MR. PAl: They have talked to me about it. They
know the meeting we had today.
MR. COOPER: From the information standpoint I thinJ
it would be useful to add them on the mailing list, or somethir c
-------
43
MR. SILVERMAN: In terms of getting people involve
I would suspect 208 agencies would be more useful to you, be-
cause they do public pa rticipation very well.
MS. BURNS: Just in terms of the States that the
U,
League is involved with task forces currently, they have been
working very closely with 208 agencies in each individual Stat
There is a great deal of communication between a variety of
groups.
Q
Again, I would suggest that.
MR. PRICE: All right.
1
Let’s continue.
MR. SYMONS: My name is Hugh Symons. I am a Tech-
nical Consultant with xnerican Frozen Food Institute.
I would like to associate myself with the initial
remarks made by Larry Silverman and Jack Cooper, and not neces-r
sarily the final remark by Larry Silverman, insinuating faint
w I
praise -—
(Laughter.)
z
It MR. SYMONS: I would like to assure your study
of considerable cooperation from our member who are very
interested in it. There are two points we would like to make,
I will make one, and Ms. Susan Boolukos will make the second.
It seems to me it might be useful for at least two
-------
45
MR. OLSTEIN: You were not here when I explained we
have taken out SIC Codes to the third place, and not the fourt
MR. SYMONS: It is a point we ought to look at for
administrative convenience.
U,
MR. COOPER: We talked about this with the contractc
I recommended they drop the last digit so it would include
frozen and dehydrated, and so forth, so it would all go to—
gether.
MR. SYMONS: If you get on to things like potatoes,
substantial dehydration —- substantially dehydrated.
MR. COOPER: The intent of dropping that last digit
was to do that.
MR. HUELSMAN: We will check it out.
U,
MR. SYMONS: If I could put the point a little
better. You should not go for particular technology. You
U,
should consider the plant in that region, whether it is canninc
dehydrating, freezing, whatever it is. Because any particular
plant really, you are asking them to play with numbers --
z
MR. COOPER: In the surveys you are getting back,
II
you are getting both canned and frozen from us, so they are
intermingled, and you cannot separate them.
MR. SYMONS: It varies from day to day, and hour
to hour, and season to season. You are increasing the load
-------
46
enormously in making people hold their wet fingers up in the
air to see which way the wind is blowing to give you an answe
and your answer will be imperfect, to put it mildly.
Thank you, Mr. Chairman.
MR. BURKE: I am George Burke, Water Pollution
Control Federation. I was real pleased to hear you are going
to include the cost for municipalities for waste water treat-
ment, and I wonder if you would also include the cost of oper•
ating waste water collection system, because it is almost like
you were just talking about, it is hard to separate sometimes,
I feel many of the cost estimates for waste water
treatment has not included the collection system, and as a
consequence, has not really given a clear picture of what the
cost is to the municipality, because the collection system
1 has to be operated as well as the treatment system.
The Federation is just planning several studies
LiJ
that will be the basis for some new manuals of practice, havin
to do with management of waste water collection and treatment
z
systems.
One of the things we want to do first is study the
rate structures used by the municipalities to finance their
operation and maintenance -- evengoing into user charges, eve
going into cost recovery, and other various costs that they
-------
47
have.
We have seen costs going up rapidly. I.was just
sent some figures which indicate to me that by another two
years we may be spending $3 billion a year out of municipal
budget to operate waste water treatment and collection systems
So we do need to look closely at cost, and what the
rate structures are.
z
AWT is already causing some municipalities to raise
their rates so high and creating a feeling among customers
they are getting ripped off. We will not get our study starte
probably before the end of the calendar year, but we would
like to liaison with you, some of your contacts with municipal.
ities, and if we can be of any assistance to offer you names
of people who might be contacted, we will be glad to do so.
MR. HUELSMAN: The statistics that you mentioned
u
I that you already have, would that information be available?
MR. BURKE: These. data are being taken out of the
Bureau of Census publications. Yes, they are available. Some 1
of it has been presented to the latest hearings that the
J)
Congress has just gone through in the last few days.
I .
MR. PIECUCH: I have no additional comments.
MR. TEITEL: Good afternoon.
My name is Jeff Teitel. I am here on behalf of th&
i i
-------
48
National Forest Products Association and the American Paper
Institute.
I offer the following comments for the record.
The pulp and paper industry is making every effort
to cooperate with Coopers and Lybrand, to which I believe they
can attest.
o •The industry questionnaire is under review to locate
reliable data which the pulp and paper industry hopes will be
useful.
Many in the pulp and paper industry believe that
continued ICR costs will be burdensome in light of cost to
comply with new pretreatment regulations. The ICR study should
by all means, consider the consequences of increased costs to
domestic users if industries are encouraged to turn away from
POTWs and self-treatment.
Many in the pulp and paper industry donot have a
reliable idea as to what will be future ICR costs. We hope
that in the C&L study industry responses and participation will
z
not be affected by this void.
Again, many companies are not clear to what extent
/
user charges, vis—a-vis ICR charges, may be used for the same
POTW improvements.
We concur with the gentleman across the table. that
-------
49
time constraints will not adversely affect the quality of the
C&L study.
Finally, we shall continue to make every effort to
cooperate with C&L to gather the most reliable data base.
MR. DONAHUE: Jeff, I appreciate your cooperation.
Yes, you certainly have been cooperative. I think if you look
1 at the survey instrument, the draft one that got mailed out,
plus the revised one we have here, you see we are indeed lookii
at total cost, not just user charts, not just ICR, we are askii
for a lot of information.
It may make some industrial people stop and think
I what they are really paying, because some of the costs they ar
paying may. be buried in property tax, or something like that.
We are looking at pretreatment cost, as well as sel
treatment cost -- not everybody understands the difference.
We are trying to look at some of the issues you raise.
MR. TEI L: I would underscore one thing I stated.
The study you are undertaking, of course, addresses a pro-
jection. In order to come up with an accurateassessment, you
are going to have to make the best projections based on obviou3
costs that users are going to have to make. That is all the
costs.•
MR. PAl: As a general response to the question,
-------
50
you know the issue we have raised in here, we will look into
it. By all means it is riot limited to those issues.
If you feel there is anything we failed to cover,
and your members want to raise those issues,please raise them
on your own, and we will take them into consideration. We are
not trying to say these are the only things which we will look
into.
U
Instead of saying we did not do it, maybe you can
help us decide what we should be doing. In other words, we
do not know enough about it ourselves, just from my personal
opinion, I do not know about the major problems you have, and
if there are other things, mention them to us. Write them
down, and. we will consider them.
MR. COOPER: I want to echo what Jeff said about
future costs. As the surveys are coming back and showing
Ii clearly, many of our companies do not know what their future
costs are going to be. They have some projections.
As you know, industrial plants were way ahead of
cities in meeting the 1977 date, and maybe 40 percent are there
now. That means you have got 60 percent of them that between
now and 1983 are going to be upgrading, and the costs just are
not there.
It is important to take a look at some of these
-------
5].
cities that are in the process of developing their ICRs, I
have already made that point.
MS • BOOLUKOS: I am Susan Boolukog from the Ainericaj
Frozen Food Institute.
U.,
I would like to address the second point that Hugh
mentioned.
• We, as the representative of the Frozen Food indus—
try, are very interested in participating in the ICR study.
We have not sent out a questionnaire at this time. We will be
doing that within the next week.
.1 One thing I would like to clarify, and question you
about now, is what the final date is on data that you will
accept from our questionnaire.
MR. DONAHUE: August 31.
MS. BOOLUKOS: August 31. 1 think that is something
C l )
1 that can happen.
MR. DONAHUE: Good.
th MS. BOOLUKOS: We directed our questionnaire very
z
strongly toward the nine questions that Congressman Roberts
“ has put forth, and we are concerned, after having addressed
those questions, and looking at the tentative cities that have
been selected for site visits, that small cities with small
populations, yet large industrial users, are not perhaps
-------
52
represented on here.
At this time I have indication only with regard to
one more city we could add to Region 5. However, I would like
to provide you with further information.
MR. DONAHUE: We would appreciate that.
Since you got that list, we have added some cities
for a variety of reasons. Two of them that I can think of,
based on Congresswoman Smith’s questions, were the, City of
Ravenna, Nebraska, population 1,500, but with three or four
I. sizable industrial plants who are going to get hit with what
they expected to be sizable ICR bills, and the Town of Byron,
Nebraska, population 561, and there were some food processors
therewho were facing —- I cannot remember if it was annual or
U)
total ICR bill for about $20,000, and those two came from
U
reading some of the testimony. Those two have been added to
U)
the list of places we are going to visit.
w
If we can findmore cases like that, we willadd
them, and try to visit them, and get the information. Some-
z
times from testimony, both from legislative history, from what
ever reports were issued, whatever, we cannot always make clea
whether we are talking about total’cost, annual cost —- they
were not worrying about neat, nice accounting kinds of terms.
MR. OLSTEIN: Frozen fruits and vegetables, and
-------
53
frozen specialties are all included.
MR. GERRISH: I am Dan Gerrish with the American
Bakers Association. I cannot say that I am unhappy to see
that we are not included as one coming up for detailed study
here.
We have sent Jack’s form out with some modificatioru
1 for our industry, and a jot of explanatory information. Jack
II
got 208 returns. So far I think I have eight. Today was the
deadline. So I think you made a wise choice.
My question is does this mean no bakeries will be
contacted?
MR. DONAHUE: No, it does not.
MR. GERRISH: It does not mean that, okay.
(1)
MR. DONAHUE: As far as the baking industry is con-
cernèd, the present and potential impact of ICR, we would very
much like to talk to them.
MR. GERRISH: We would like to explain that to our
members. Up to this point the cost of,waste treatment has notj
been sufficient to disturb anybody.
U,
MR. BECKER: How large is your membership?
MR. GERRISH: We represent all of the major bakers
in the country. Our membership is about a thousand plants,
about 80 percent of the bread and cake production. We are
-------
- ‘54
members of NAM. You can represent us.
MR. OLSTEIN: There are a number of avenues that
get us to a given industrialpiant. One of them might be, for
example, through the grantee. I will give you one good
example.
If the District of Columbia happened to be a city
that we were to visit, which it is not, but if it were, I sin
sure that the Wonder Bread plant would be one of the ones the
grantee would identify.
MR. GERRISH: Many of the. cities you have listed
here do not have manufacturing bakers. They might have a
retail baker who bakes in the back and sells out front. There
are a lot of cities here that do not have a bakery.
MR. COOPER: Most of the cities on there are not
I-
representative of our industry at all. I can look through
here and I doubt if there is but one or two, maybe five cities
at the most, that has any food processing of our industry in
them. That concerns us. That is why we made a special effort
of giving you the additional cities that we did over the phone,
MR. GERRISH: That is not, true in Region 5, but the
other regions.
MR. PAl: I guess some work has to be done on this
list of cities. We will have to sit down with them and go
-------
•5 5
through the cities.
MR. DONAHUE: Obviously we have to talk to some of
your canners in California, Central Valley, San Joaquin Valley
Imperial Valley.
In
MR. GERRISH: We will be glad to cooperate in any
way we can. If you need a contact with a baker, we will cer-
tainly help you with it, or anything else, but so far as our
C
own study -- well, we will also send you the material we have,
if you are interested in it, but I expect that will get a
little better return.
MR. OLSTEIN: That is the problem that the dairy
neople are running into also. Sometimes it is hard to drum up
the interest.
MR. GERRISH: We have a Special Industry Committee
on this issue. Still it has not been sufficient. There have
U)
U)
not been sufficient costs yet, and we hope there never are, to
get them that disturbed.
-J
MR. PAl: If they do send that information, ask
z
them to send it in the form of raw data, the data we can
actually take some look at, and not just some description.
Raw data, pretty much in the form that we need here -—
MR. GEPRISH: As I say, we sent the form out that
Jack developed. I think, with your help, with some modificatiC
-------
- ‘56
it made more sense for the baking industry. That is what we
are getting back, but very slowly.
We will send those forms to you, because those who
sent them in understand, there is no confidentiality. That is
another problem with not getting forms in.
MR. PRICE: Michael?
MR. PAWLUKIEWICZ: I am Michael Pawlukiewicz with
the National Association of Regional Councils.
This is the first time I ever attended this Advisor’V
Group. Although I have looked over, the mailings I have gotten
I am not prepared to give any detailed comments at this time.
I would like to point out though that I agree with the people
we are talking about, getting in touch with 208 agencies,
especially with respect to public participation. They really
do have the system put together, and represent people in water
and in many cases manufacturers interested in water.
I can supply you with a Directory of Regional Coun-
ails, and I can also show you those which are 208 agencies.
There are only 135 Regional Councils that are 208 agencies.
So you probably have a lot of cities -- if you have a list of
100, I would guess many of them do not have a 2’08 agency aroun
Probably a non—designated area,’ there work is supposed to be
done by the State, or something to that effect. That is reall
-------
57
all I have to say.
I hope you will have more meetings, and I hope to
participate more fully at those.
MR. PRICE: Thank you.
Mary?
MS. REARDON: I am Mary Reardon from the National
Association of Counties.
I feel, for a change -— well, usually these meeting
are dominated, filled with public interest groups -- I am on
the other side today, and all of you people are basically in—
dustry people.
We represent the grantees, or many of the grantees.
What .1 would like to do is urge you to continue to focus your
efforts on the grantees and industries particularly. that they
o serve.
U)
U)
The reasons for this study are, I think, financial
and technical problems that occurred in the field. You are
only going to get answers by working specifically with the
grantees and the industries.
The only substantive question I have is one that
relates to the choice of the five industries that are involved.
I guess I would like to ask the question whether C&L and the
industry representatives here feel that this is an adequate
-------
58
choice in terms of addressing the toxic substances problem, as
well as the organics problem.
It appears to me that the majority of the industrie
chosen have been those whose waste treatment includes large
amounts of organic material, and we are a little concerned
about the toxic question as well.
0
0
o MR. PRICE: That, of course, is a very important
question, concerning the total treatment picture. As it
relates to municipal waste water treatment though, that proble
will be taken up primarily in the context of pretreatment
regulations.
If there is a significant toxics problem, that will
probably not get into UC/ICR, because it will have to be
U)
handled at plant sites.
U
MS. REARDON: I understand that. I think I am con-
U)
cerned about the number, particularly the number of smaller
counties and municipalities which have been concerned about
making their atmosphere as favorable as possible to industry,
z
Li
and keeping their industry in town, have the option of making
U)
agreement with industry to do all pretreatment themselves, at
the POTW. That becomes a question of industrial cost recovery
MR. DONAHUE: No decision was made. We did not
start with these. We started with what industries are going t
-------
59
be most impacted, large employers, lots of water, dirty sewage,
-- those kinds of things. There was no decision made to not
pay particular attention to, or to remove from consideration
industries with toxic substances..
One of the assumptions we are making, I do not know
if everybody will agree with the assumption, but industry is
going to eventually have to comply with pretreatment standards
whatever they are. That for the most part is going to pre-
dude you from discharging toxics into municipal treatment
systems.
One of the industries we are talking to here, secon
ary metal products, elctroplaters, they are people with toxics
That is going to be a problem.
MS. REARDON: I am not that clear about this. I
wanted to know whether it was the sense of people around here
that the toxics question had been adequately addressed by your
focus on these five industries.
MR. DONAHUE: We think it has. I do not know if
everybody else will agree.
MR. HUELSMAN: To the issue of the rural small corn—
rnunity, business moving out, in each of the regions we are
looking at the adjoining small communities in that type of a
situation, and we are attempting to measure what is the impact
-------
60
of that on the various costs.
MS • REARDON: The only ones I am concerned about --
I understand most of the toxic substances will be removed
through pretreatment -- but those municipalities or counties
that make agreements with industrial plants to do pretreatment
in fact, in the municipal plant, involved in ICR, and that is
the only point I wanted to make.
MR. PRICE: Tim Rugh of the Chocolate Manufacturers
Association came in late.
Do you have any comments- you would care to make?
MR. RUGH: No. This is my first meeting- as well.
I am new at the Association. I have nothing to say on the
issue, except to say that the Chocolate Manufacturers are not
one of the major users of water in the process.
MR. PRICE: We have two people from the Hill with
us. We have Joan Kovalic of the Public Works Committee, and
LU
- Mimi Feller of Senator Chafee’s office.
Do you have any comments or observations?
z -
U i
MS. KOVALIC: I came in a little bit late, and you
LU
I ; ;
may have already addressed what is, on my mind. My most irnmedi
ate concern is that the issues set out in the Congressional
Record of December 15. and Congressman Roberts’ statement are
indeed being addressed.
-------
61
If they are not, I want to know it, and I want to
know why. ,To the degree to which they are, I hope I can pick
up from this meeting, and I am sure some additional conversa-
tions. That is my paramount concern.
Also the timing of the study. i think it is critic
ally important that the issues be covered within the 12 month
period, simply because of the limitation on the moratorium.
I know that is a very difficult constraint on doing any sort
of regional data analysis, nutting together a good report.
I understand that.
It seems to me something has to be looked at pretty
seriously if Congress is going to have an opportunity to
address the study and evaluate legislative requirements before
the moratorium is lifted.
MR. PRICE: With respect to the specific questions
U)
posed by Congressman Roberts, those were incorporated in the
w
scope of the work and will be made a part of the study.
The December 27 deadline for completion of the stud’s
z
LU
we are going to still try to adhere to that, We have gone on
LU
U,
a very expedited schedule here. Wewere discussing the other
day how we are going to get from city to city. We had some
very unique suggestions thrown out on the table.
MS. KOVALIC: I can truly understand. From the
-------
62
legislative point of view, 12 months can be a lot of time for
a study to be done. I certainly understand, and we do want to
have a good job done. It is not going to do anybody any good
if the work has no validity.
MR. PRICE: If everything unfolds as planned, we
will make it.
MS. KOVALIC: You know it is okay if it does not
0
come in until the 31st.
(Laughter.)
MS. FELLER: The Senate concurs with that.
MR. PRICE: Mimi, do you have any coments?
o MS. FELLER: Just a few.
First of all, this is the first meeting that I have
been to of this group. it is the second meeting period of the
whole group, but I am really thankful for all of you being
willing to have the meetings open to people from the Hill. I
Lu
am enjoying finding out how diverse.a group is going to be in-
volved in this study. I will not presume to make detailed
z
Lu
comments. i have just been going over information here. I wil
Lu
probably have some ideas to suggest rt maybe a few more cities.
I am pleased to see the Electroplaters are going to
be under, I guess, that one industrial category. That is a
major problem around, parts of the Northeast.
-------
63
I might add that we might want to ask, or at. least
fcxthe Northeastern Region, that with the poultry proàessing
area, that some of the seafood industries, which are more of
offshoot, that that may be something that we would ask you to
look at, not in one of the five majors, but just one meeting,
a couple of meetings up there in that area.
I think also that some members of the Congress were
wondering if there was any dividing point or special effect
of ICR on an older industry, a much older industry. I think
that was mentioned, if not in the language, it may have been
hi
MR. OLSTEIN: Cities, new cities versus old cities.
You are saying industries now?
MS. FELLER: New industries versus old industries,
older marginal industries I think was the term.
(4) . MR. COOPER: That is a very good point.
La
-J
z
La
I
0
LU
U)
-------
64
(4) MS. FELLER: When this comes in, is this something
that is going to drive older industry out?
MR. PRICE: In terms of industry or individual
plants within an industry, that may be getting obsolete -—
MS. FELLER: Probably more individual plants.
Is this the one thing that is going to drop local
managers that have been there over the line, and he is going
to have to close down? Industry is going to move out of thai
city, build a new plant somewhere else, and just close that
down and do •their business from other locations?
MR. COOPER: I might add with respect to food pro-
cessing, the questions that we have specifically address that
whether ICR is causing some company to shift production or t
(4 ,
close and move. Those questions are addressed. There has
U
been some response, quite a bit of response.
(I )
M1 . SYMONS: This sort of question is also in the
minds of some of my members.
MR. LS T t? : One of the things we are trying to do
z
L i i
in the specific cost-effectiveness analysis that we are goin
U,
to do is to try to recognize that factor, and in the cost to
industry’s report that OPE prepares and presents to Congress
one.of the explicit assumptions they have for each industry
group is the same process is used. One of the requirements
-------
65
2 we have placed, and I am hoping that when we get the proposal
and they reflect that, is that we recognize in our industry
models that a range ofdifferent processes, you know, reflect
ing the age of the individual plants exist. We have speci-
fied that.
MS. FELLER: I think I noticed that in your questio u
the age.
MR. OLSTEIN: So far I have not had any indication
that is going to pose a problem.
MS. FELLER: I am very pleased to see the plan to
have public hearings. I think that is a great way of picking
up some areas where you are not sure where there was concern,
and they are going to be able to come in then, and it would
be perhaps impossible to try to meet with the world at your
individual meetings in these cities, but you will be able to
get some people maybe from smaller surrounding towns or what-
e rer to come in for public hearings.
Finally, I will not presume to speak for the House
z
on this, but I think some members on the Senate sidehad had
a-
separate feelings about user charges and ICR. If there is On
thing I would like to ask you to do in your comments and
final report that comes out, that you try to separate that
sometimes in what you are saying, because some members might
-------
66
3 ‘support user charges very strongly and yet feel that ICR is
just not the way to go. I am sure a lot of people around theL
table would either want to support both of them ry strongly
or cannot stand both of them together.
• As far as Congress goes, sometimes those views are
divided, and I would not want to see the study boxed in.
MR. COOPER: I think what they are doing is they ar
looking at the combined total cost on every one. I think it
would be appropriate to make some judgments, value judgments,
on it, what part of that is due to O&M and what part is due
to ICR. It is total cost that is really the driving force.
It is not just O&M and not just ICR. What is the total bill
‘that comes down to the Campbell’s Plant in Sacramento that is
going to make the decision. It is not just ICR. It is not
just O&M. It is both together.
MS. FELLER: That may be true for industries, Jack.
I have had some interest shown from some grantees though who
tend to feel, very strongly against ICR. Maybe not as much so
on user charges. I would mention that in your survey of your
grantees, you do divide that. In your plants, you, have com-
bined it. Maybe that clarifies why.
MR. DONAHUE: In our industrial survey form -- we
have got a revised one here —— we asked them, an industrial
-------
67
4 plant, if they tend to distinguish between what they are payi
in user charges and what they are paying in ICR.
MS. KOVALIC: We have no problems with looking at
separate issues, and that is fine, looking at user charge and
ICR. They are separate legislative requirements. But from
the House’s point of view, it is vital that the ultimate
analysis be in the combined impact. You may well come out
and say this is synergistic effect, you may say it is additiv
effect. If it is additive, hopefully if you have done your
analysis well, you can split up where the burden is coming
• from.
If you have an opportunity to review the questions
of Mr. Roberts’ statement, you will see we are talking con—
tinuously about combined effect. Additive and synergistic
impact may or may not be separable. If they can be separated
I think a good analysis would prove that.
MR. PAl: Both of your concerns will be addressed
in the report.
MS. FELLER: Thank you.
MR. PRICE: I passed around the list of advisory
group as we currently have it. If there are any, mistakes on
this, please bring it to our attention. We thoughtthis would
help you in contacting other people that might have similar •
-------
68
5 concerns or problems.
This pretty well completes the individual comments.
I think now, Walter, if you could cover the Region
.5 experience that you have had, then we will open up discus—
sion following that to the general concerns.
MR. HUELSM N: Let me let Ed do that since he has
first-hand experience.
a
MR. DONAHUE: We went and visited approximately 20
cities in the Midwest -- Illinois, Ohio, Minnesota, a few in
Michigan and Wisconsin, Indiana, not necessarily to come up
with conclusion of information, we know we are going to have
to go back and get some more. This is one of the things we
found out. But to try to test the draft survey instruments
that you all received copies of, to see if we were asking the
right questions, if they were phrased in the way people could
understand them, and if they were phrased in such way that
La
people could answer them.
We found out it is going to take more effort on the
z
La
part of industrial plants and grantees to come up with the•
information. It is hard in a muni,cipal environment to find
out what a city spent, what its costs were, two or three year
ago. Somebody switched from ad valorem or partial ad valorem
support for sewer costs to something that is completely user
-------
69
6 charge funded now. It is hard to go back and find out what
it cost them before. People might be able to tell, them what
their sewer bill was two years ago versus what it is now.
We are trying to find out why it increased. Did it
increase just because they used to pay their operating cost
on a sewer charge bill, but paid their debt service out of
property taxes, now they pay everything out of a user charge.
People perceive it is costing them more for sewage, and indee
z
they are getting higher bill for sewage. The community is
not spending any more for sewage. We are trying to get that
information. If there is a big increase in the bill, why?
We are finding it is hard to go back and coerce communities
to come up with that kind of information. It is also hard
to get it from industry although not as hard as it is from
municipal agencie what they spent two years ago, three years
ago, that kind of thing, although they are much more able to
do that than industries are -- excuse me, than municipalities
are, because industries are used to accumulating that for
financial reporting purposes and audit purposes.
We also found we had to ,make a lot of calibacks to
get data to complete the study, like asking for a list of
large water users in a community. We have found nobody that
we visited on the first visit who was able to provide that,
-------
- 70
7 even though they saw the draft questionnaire a week ahead of
time, because in many cases the agency that provides sewer
service is not necessarily the same agency that provides water
service. You have to go and talk to other people, the people
that you ask to provide information, say we do not have it anc
did not bother to go beyond that.
rI We also found we had to rephrase some of. the ques—
tions because they were not completely understandable by some
people. We did rephrase them also so that we could use the
survey instruments as some kind of data and coding formula,
either for keypunching, decoding on disc, whatever, to do some
statistical analysis.
MR. HUELSMAN: How about difficulties getting
detailed breakdowns of cost of operations and where the reve-
nues come from?
U)
U)
MR. DONAHUE: A lot of municipalities have a iard
time telling you what it cost them to do something. They can
tell you that we took in $400,000 in sewage service charges
three years ago. As far as finding out what it cost them to
U) operate their sewage plant, they have a hard time telling you,
particularly if they were financed out of ad valorem taxes,
they have a hard time telling you what their total revenues
were, what their rate of collection was —- all of this kind oir
-------
71
8 stuff.
There is very little uniformity in how they do
things. How rate structures are put together is a nightmare
to try to compare from one city to another. Did they charge
everybody so much a gallon, so much per pound for pollutants,
aid did they have declining block rates? If somebody had
declining block structure for sewage, and goes to a straight
3
out sewage charge, it is hard to compare the data, because it
is not very comparable kind of rate structure. People have
all kinds of strange -— I am not saying this in a derogatory
sense -- but unusual kinds of approaches charging people for
sewer services where they did in the past.
They are starting to work toward a cumulative, but
more or less standard approach to setting sewer rates now.
In the past there were an incredible variety of sewer rate
structures. So it is hard.
I d
d Also if you go back and ask an industrial plant wha
part of your property tax was used to pay for sewage, they
z
LU
cannot always tell you.
We are trying to get as,much of this information as
we can. We will take it at total level if we cannot get
detailed level. We are always asking detailed;. breakdown.
How much of your sewer bill is for this,. that or something
-------
72
9 else?
When we get into cases where people had special
assessments versus property tax versus pay as you go kind of
thing, a variety of data.
MR. HUELSMAN: Essentially when we get in and we
are trying to break down the rate in as small detail as we
can so we can analyze it and build it back up, we are an
U
0
industry here that does not have in quotes a standard chart
of accounts, it is not like some of the utilities that every-
thing must be recorded the same way, rate making is an art.
Okay? It is an art. You have great flexibility because we
have lots of different pieces of costs that we can build up
in this thing. In this environment, as Ed says, we definitell
are getting total, we are attempting whenever we can to break
I-
that down into smaller detail for analysis. But it is difficihi
If the grantees will bear with us, and believe me
they do not have the information, and we are trying our darn—
dest to work it out of them. It takes good cooperation. It
really does. If there is one issue that is the toughest of
a-
the whole darn study, that is really it.
MR. DONAHUE: One thing we have told people, too,
in a couple of cities, we went and talked to people from the
Chamber of Commerce and we are getting some strong philosophi
-------
73
10 kind of argument against ICR and user charge. We are getting
people of various persuasions saying it is a violation of the
tenth amendment, it is encouragement by the Federal Governmen
to state and local government, double taxation Or whatever.
We are trying to tell people firmly, but politely, that they
may have validity in their arguments, but. that is not the kin
of argument we are looking for. We are looking for hard data
Z as to what it is costing people or what it is likely to cost
people. We cannot really be the fairer of philosophical
arguments.
MR. HUELSMAN: One of the questions that you raised
(indicating), we are trying to give you a flavor of Region 5,
and the other one you posed was the flexibility to implement
ICR regulations.
I-
There is great flexibility.
MR. DONAHUE: There really is.
MR. HUELSMAN: In trying to get a handle on this an
analyze it on a comparable basis, it takes a lot of questions
detailed questions of grantees primarily. We are attempting
todothat.
MR. SILVERMAN: I just wanted to make a comment.
It always seemed to us that one of the reasons ther
was so much controversy about user charges and ICR was the
-------
74
11 level of accounting and billing and record keeping competence
of municipal grantees was very low: That is not their back-
ground, and when they hired people, they did not hire people
in this area.
I wonder if you would comment on that?
MR. HUELSMAN: On those agencies where they are
N tied in very heavily with the city, where the city is doing
U
their accounting, I think you will see a better change of a
budget and cost breakdown. Where we have the fund accounting
type thing and the agency is doing all of it itself, and this
• is a very general statement, I think you will find that they
do not have the same level of detail.
MR. DONAHUE: If somebody was in the habit of sendin
out water bills or sewer bills in the past and charging on
some kind of usa ge basis, even if it was the declining block
rate, it is much simpler for them, common sense, much simpler
for them to have user system and ICR system than somebody wit
ad valorem tax in the past and did not have a data base --
z
MR. SILVERMAN: Some do not know what their O&M
A.
costs are. I hope you would bring, that Out in the report.
Not to chastise them, but to point out the needs.
Are you going to make any recommendations, since yo
are experts, you not only know about the stuff, you know how
-------
- 75
12 to consult with other people -- are you going to make any
recommendations for the upgrading generally of municipal
billing and accounting systems?
0
MR. DONAHUE: It depends on what we find. We are
reluctant to make recommendations for the Federal Government
to do something like that, but if that data is the data we
find -- it depends.
MR. HUELSMAN: You raise two things.
The first thing relatès. primarilY to the way they
collect their costs, and display that, and really control and
run their business.
And the second thing is. how they just send out bill
and collect the money for it.
The first one is really the gut issue,and the gut
problem, okay? I think that is going to be addressed to some
extent in the UC/ICR evaluation that we are doing. We are
addressing part of it there. It will be brought out. You
will see the differences.
MR. SILVERM.AN: I think that that is the most usefu
thing you could do.
MR. PAl: A user charge and user base, ad valorem
tax, whatever you use, would require them to upgrade their
bookkeeping.
-------
76
MR. HUELSMAN: It should.
MR..TEITEL: I would like to get a clear characteri
zation of the study as it will be handed to Càngress. I sat
here a few moments ago chuckling at some of the ‘experiences
that you encountered, people advancing their own philosophies
on the subject.
The question that subsequently came to my mind was
3
C&L is going to submit to EPA some hard data. Now, I suspect
that they are going to be some thoughts, whether they are
I couched in the form of conclusions or recommendations that ar
going to be submitted and clear statements, full sentences,
not numbers, to Congress. And I would like to address this
question to EPA if I may to get an idea as to just what EPA
might do with these numbers. Perhaps they are going to try
to steer clear as best as possible, offering Congress an
U)
objective view of the findings, but the question I am really
LU
asking is will any conclusions accompany these numbers? Will
these conclusions reflect what one of these philosophies
z
LU
advocates?
LU
I -
U)
MR. PRICE: I think legislative history is pretty
explicit. They are looking for EPA to come up with reconunen-
dations, not just findings and conclusions. Now, we will be
looking at basically the contractor to develop, first of all,
-------
77
very detailed data base, and from that arriving at certain
findings, Conclusions, and we will be looking for Coopers and
Lybrand to draft some preliminary or tentative recommendatjon
Then there will probably be an iterative process by which thoE
are kicked around, not Only with the Advisory Group, but withi
EPA, but in the final analysis it will be EPA that has to sub-
mit its recommendations and any supporting information to the
U
Congress.
So I think there will be something very definitive
coming out of this effort to Congress.
MR. TEITEL: I would like to offer you the following
advice based on that scenario. That is, as you know, numbers
can be interpreted many different ways, and if and when you
approach a point in time when numbers you are in receipt of
I-
reflect the situation where you could go in one direction or
another, that you seek the advice and counsel of any intereste
parties as possible, and it may come at a point in time when
you have already fulfilled your obligation for notice and
z
comment, et cetera. I leave you with that thought.
MR. PAl: Let me answer that question.
I think we all have a chance to look t data, number
one. We will all have a chance to look at the way the data is
being analyzed and interpreted. We are looking for any of
-------
78
your proposed alternatives that will be part of the overall
alternative strategy we are going to look into. You may have
some idea of how ICR approach, user charge -- we will entertaijr
that kind, of proposal. We will take them and look at them and
even though the final recommendation will be iterative proces
but what I am saying is any alternative you propose, Congress
will have a chance to look at it. We are not trying to cut
down alternatives and, in any way, show prejudice about how
‘3
any group of people feel.
If you have any alternative that you think, based
on the data we have some day, and you have a chance to look at
it, or any other group may have an approach to the problem,.
we would like to have them.
As I point out, the final recommendation is not
going to be unilateral, it is going to be a group decision.
I hope that answers your question.
We will have another meeting like this in August,
in the latter part of August, and there will be an update.
Hopefully, in the latter part of September, we will have
another meeting in which we will present to you everything at
that point as a dry run before we take the report to each
Regional Office for the public hearings around the country.
We. will have two more meetings like this, one at th
-------
- 79
end of August, and another one at the end of September. By
the end of September, we should have most of the data analyzec
at that point.
MR. BECKER: Will you have recommendations at that
time?
MR. PAl: I do not think so.
( 1
0
0
MR. HUELSM.AN: We want to have part of public par-
ticipation —- S
MR. BECKER: I think that is backwards. But I would
like to second what you are saying, Jeff. It is very easy to
take some numbers, as he is saying, and make two completely
different recommendations.
A prime example of this is the National Commission
on Water Quality report.
MR. HUELSMAN: Maybe I did not say it right. We are
not just going to be summarizing and presenting numbers and
‘JJ
say, okay, here are the numbers we found -— that type of thing
We are going to be drawing the conclusions. They are going to
z
Li
be case tudy histories as part of this. This is not just
Li S
I. - .
statistical.
MR. PAl: We are going to interpret t ie data with
you and see if you agree with the interpretation.
MR. BECKER: I would like to recommend or stress to
-------
80
give as much time as possible to a discussion and analysis of
the actual recommendations that will be made to Congress. I
do not think it is a bad idea personally -— I think you would
probably get more data if you started off with the scenario
of various recommendations.
MR. PAl: You are suggesting we make the recorninenda
tion before we take the report out?
MR. BECKER: I definitely, think so. I just know
what happens to reports, in all due respect to Congress. I
know what happens to reports when the recommendations are mad
to Congress. Many times they are just ignored.
MR. PRICE: I think as far as the Regional hearings
are concerned, we would like to have that confined to the
data base, the findings and conclusions. If we presented the
recommendations at that time, we would find people getting so
bogged down on just recommendations, rather than the real
conclusions, and the data supporting them, and that is the
2
action we really want at that point.
MR. PAl: We want the recommendation to be public
U’ recommendation. In other words, Regional input will form the
base of our final recommendation.
MR. BECKER: I think the recommendation should be
public recommendation. That is why I think it should be
-------
81
gIven as much time as possible to have the recommendation dis-
cussed by the public.
MR. TEITEL: Let me offer a solution, if I might, tc
the dilemma we might be facing here. That is again numbers
can be interpreted in different ways, and I would not want to
unduly, influence the agency to accept a particular format for
completing this study. But certainly one approach that you
might consider would be a pro and con approach.
I.-
I. ,
_Z I leave you with that.
MR. PAl: We will do this, alternatives proposed,
we would like to have an additional list of pros and cons for
public comment --
MR. SILVERN : I would like to say something on
behalf of the intelligence of the Congress and how they use
reports, particularly with regard to National Water Quality
Commission report.
I think the Congress did not just read the ten-page
summary of the report,•which was a political document put out
by the political parties, but they read the staff work. That
Commission had excellent staff work. They looked at the data
and they looked at the recommendations and concr’usions of the
staff and the technical experts. That is what they relied on,
that is what they listened to. That is what they made judgmen
-------
82
on.
Consequently, you find in the 1977 legislation none
of the recommendations of the Commission was adopted. Howevé:
I think if you ask any of the Congressmen whether the Commis—
sion was worth the millions of dollars it cost, they would
say absolutely yes because it developed the data. I think
Congress is going to be looking to you, and I would not be
surprised if the contractor got calls, independent of EPA,
independent of Mr. Jorling and some others and s ywhat is you
opinion?
It seems like you fellows and the people you work
with will soon become among the foremost national experts in
this area, based not just on reading what other people have
done, but on your own work as well as reading what other peopi
have done.
U)
U)
I would expect you would earn your keep and make
your own recommendations to EPA. Not that EPA has to accept
theni, because they do not. They are subject to other pressur s
and so forth, and they have to answer to. But I would hope
you would honestly state your own opinions as to what needs
to be done.
I think also that will make it easier to interpret
and to judge the objectivity of your work. People do have
-------
- 83
ópinions and when they do not express them openly, they often
express them implicitly. That is not very helpful.
MR. PAl:. To answer your question, you do not havE
to worry about the recommendations of this study. As I said,
this is not going to be a decision that Truman or that I will
be making. It is going to be a decision we all are going to
make here. I think that speaks for itself.
MR. HUELSMAN: We are hoping to be able to come to
this group here in the latter part of September, basically
three months before, now that we have got our extension,
almost three months from the time that the first flush is out
so to speak, and then we will be able to get the impact from
around the country which happens to be the first part of
October, and we will be able to sift through all of that,
8 okay?
We will come to our conclusions and we can take it
from there. You can be assured of that. We have worked that
way in our present study, you can be assured of that. I thin}
with that much time and interaction from the group here that
is interested and knowledgeable, I think we will come up with
a good product. S /
I think the pro and con, I think there are a lot of
ways to describe it. We can draw conclusions from the facts.
-------
84
There are a number of questions that we are gathering that ar
opinions, and we are telling the p ople what is your opinion,
and we are going to state that is an opinion, because there
are a lot of other issues here that we ought to be able to
get some basis of information, data base, for the agency. We
are going to do that.
MR. ELICOTT: What if, on some of the questions tha
you are going to consider, what if it happens that the opposi
case turns out to be true, in fact there is not a plethora of
numbers of graphs and charts, there is not enough information
at all?
MR. DONAHUE: Then we will report that.
MR. HUELSMP N: We have two alternatives. We can do
two things. One, we can see is there another way to address
that issue? All right. We know we can get total numbers.
That is why we did the pilot. We are pretty well satisfied
with that. But if we find there is not what we consider sub-
stantive information to draw conclusions, we are going to say
that. We never guaranteed we would be able to 100 percent
factually answer every one of these issues.
MR. ELICOTT: Following up on that point, I want to
ask Ed, what is it in the new questionnaire to grantees that
you think will make it a more successful survey or instrument
-------
85
I am concerned that you may find that grantees will
not be able to provide you with quite the depth of informatior
that you want for a nuznberc reasons, not all of them good,
you know. Sewage treatment agencies get their back up like
anybody else.
MR. DONAHUE: We did not really change the questions
so much. We changed the phrasing. I think some are clearer.
With some people it was a semantics problem more than data.
People interpreted terms differently. We tried to be more
specific and concise in commonly agreed upon definitions.
We tried to reduce it more to the kind of thing,
instead of open-ended question, some of the people had gone
and developed all kinds of pages and pages and spent hours
and hours writing long texts and narratives, and we did not
want to scare people by thinking they had to do stuff like
this.
We wanted them to spend as little time as they poss-
ibly could to answer these questions, but enough to answer
them as accurately as they can.
MR. ELICOTT: Were you satisfied on the basis of
field testing you did in Region 5 that the respànses you got
from the people you were talking to were adequate, and I
assume you feel they were representative of the kind of
-------
86
response you are going to get around the country?
MR. DONAHUE: The responses we got in Region 5
coupled with some additional questions we have since added to
the questionnaire and some rephrasing and restatement of thos
makes us feel that, yes, I am confident we will get accurate
enough data to come up with some decent findings, conclusions
o and recommendations.
MR. HUELSMAN: I will say one other thing, that we
also found out in Region 5 that there were a couple of other
pieces of information, one very difficult :to obtain, and we
have gone back, and looked at that and determined whether that
is a critical piece of information, and if it is, we are sticJ-
ing with it and we are trying to get it a couple different wa
(I )
We have also identified some of these -— there are
U
other ways to address that issue. We have identified that so
our people doing the work, knowing which are the critical
lu
pieces of information and what are the icing on the cake, so
to speak.
z
MR. BECKER: Have you analyzed any of the data yet?
U i
MR. HUELSMAN: No, summarized or anything like that
MR. BECKER: You know what my next question would
be, what recommendations would you make at this point?
MR. DONAHUE: None.
-------
87
MR. }IUELSMAN: Honestly, we cannot.
MR. PAl: You are in the process of continuing to
analyze this data, and can you send him a copy before the
August meeting comes?
MR. DONAHUE: If it is available.
MR. HUELSMAN: If it is available. We have a lot o±
U information that is supposed to be coming back in. We are
going to be continually following up on that.
MR. BECKER: That is a good point. I am not sure
how you are planning on developing all of this. But if we hac
data, if you showed us preliminary analyses of some of the
data you had, and if we felt there were not industries that
were discharging toxics that were included in this, and we
feel that the costs to them are going to be exorbitant, then
perhaps through the major trade associations we can seek out
members to supply your additional data, information, that mig t
w
change your ——
MR. DONAHUE: If we can do that, fine. You realize
z
it is a really tight schedule. Congress did not allow a lot
of time.
MR. BECKER: They give extensions.
MR. DONAHUE: We are going on the premise that we
have to meet the present Congressional deadline, and we intenc
-------
88
to do that.
MS. FELLER: The moratorium is 18 months, and the
study is 12 months. If you extend the study, you do not give,
Congress much chance to act.
2 MR. PAl: If you have anything or if your members
have anything to say, be sure -- not expecting that we will
1._i extend the date —- be sure to get everything they can think ci
a
as early as they can. We have every intent to meet the
December deadline. Unless there are some very extraordinary
conditions, we will try to meet that. We understand the dif-
ficulties you also run into.
MR. BECKER: I do not want to speak for Congress,
but I would think they would be the first to admit that if thE
U)
data is not accurate or adequate, then they would extend the
U
time period in order to gather data.
U)
MR. COOPER: Let us give it the effort, and we will
LU
see where we are.
MR. PAl: We have a schedule here. That is one
z
LU
reason we get you involved early. When you talk about exten—
LU
sion of time, I do not know how lo tg a period of time it would
be. At this time we will advise you that December 27 is the
deadline. Any data coming in before August 31 is the latest
time that we can put data into our process. That is as much
-------
89
as I can say at this time.
MS. SAVAGE: I know everybody wants to leave, and
there have been all these compliments you have been getting,
and at every meeting you are showered with compliments from
everybody. I think that is worth analyzing here, especially
from the EPA point of view.
First of all, you have NAM that is showering you
with compliments, Jack Cooper’s association, and we have the
environmental community, and we have Congress, the League of
Women Voters, and everyone is trying to tell EPA something in
saying you are doing a good lob. This is the kind of method,
the procedure that we would like to see instituted throughout
EPA. I do not know if it is going to work. But this is what
public interest groups and industry have been calling for for
a long time. I think that is worth reflecting on and seeing
how, in fact, it comes out in the end, bringing people togeth r
early on, and I thought that was significant, since so many
groups are giving you these compliments.
z
MR. PAl: We need your help to finish the report in
time.
MS. SAVAGE: When you said I do not know that much
about the paper and pulp industry, 1 was absolutely shocked,
because I have listened to EPA for a long time and have never
-------
90
heard anybody say that they do not know that much about an
industry. I thought that was very significant.
MR. PAl: I understand that there are some loose
issues that have to be tied up. The meeting is coming to a
conclusion.
Let me advise you that we are continuously availablE
for consultation with you. As far as public understanding of
the program, Joan, any time you fee]. there is some particular
issue you feel we should address, we will be happy to considei
that and do not feel that just because we meet every month is
the only time we can discuss the issues.
I want to thank all of you for helping us out, any
of you here, as part of an advisory group. As I said, without
you, we would not be where we are at this time. Let us con—
tinue this kind of effort.
MR. PRICE: I would like to have one last solicita—
tion for additional constituent groups in the various cities
that we will be visiting. It is important to try to get as
z
much of this kind of reaction and comment at the regional
I” level of local level as well as here.
MR. PAl: On the cities we are going to visit, if
anybody has any particular suggestions, let us have them.
MR. PRICE: Thank you.
-------
91
(Whereupon, at approximately 4:00 p.m., the
meeting was concluded.)
U,
U,
N
0
N
N
0
0
N
0
0
z
0
I . ,
I
U,
I-
‘U
‘U
U’
0
x
I-
U’
I-
I J
I-
U
0
U)
U )
w
-J
z
U i
I
0
L ii
I-
U)
-------
7 I
INDUSTRIAL COST RECOVERY STUDZ ADVISORY GROUP
Environmental Protection Agency
Room 1032 East Wing
• Washington, D. C.
Thursday, August 31, 1978
The meeting was called to order at 1:50 o’clock p.m.,
John Pai presiding.
STEPHEN B. MILLER & ASSOCIATES
745 THIRD STRUT. S. W.
WASHINGTON. D.C. 20024
202 554.9148
-------
2
CONTENTS
PAGE
Introductjo 3
Format outli 5
Dj$cu3gjofl of 4oc u’ ,n diatributhd
-- Ed Don hu 6
Economic Analysis
—— Bill Rule 10
U
Gsn.ral discussion 19
-------
3
PROCEEDINGS
MR. PAl: Good af rnoon. WelcOme, and thank you
all for coming to our Third Advisory Group 1 sting.
The first thing we wi]]. do is just. introduce our-
s.lves.
I.’1
i am John Paj. I ant the Project Officer for the
Study, EPA.
MR. RULE: I am Bill Rule, Project Economist from
Coopers & Lybrand.
MR. HUELSMAN: I am Walt Huelaman from Coopers &
Lybran&
• MR. DONAHUE: I am Ed Donahue from Coopers & Lybran
C&L’s Project Manager.
MR. OLSTEIN: Myron Olsthin ,cooperg & Lybrand.
MS. FELLER: Mimi Feller, Senator Chafso’s office.
MR. GALL: John Gall, EPA Region 1.
MR. HORN: I am Ted Horn, EPA Region 5.
w
MS. BAUER: Carol Bauer, Congresswoman Heckler’s
office.
z
MR. GERRISH: I am Don Gerrish, American Bakers
Association.
MR. ADAMS: John Adams, American Milk Producers
Federation.
-------
4
MR. MORRIS: Richard Morris, National Association o
Regional Councils.
MR. BUCKLEY: Steve Buckley, City of Fall River,
Massachusetts.
MR. GILDE: Lou Gilde, representing National
Association of Manufacturers.
• MR. SILVERMAN: Larry Silverman, with Clean Water
Action Project.
z
MR. KIRKs Don Kirk, National Food Proóssorg
Association.
MR. CROSBY: Ed Crosby, sitting in for Jack Cooper,
National Food Processors Association.
MS. BRYAN: Dot Bryan, National League of Cities.
MS. BOOLUKOS: Susan Boolukos, American Frozen Food
U.,
Institute.
MR. SNYDER: George Snyder, Greyhound Corporation.
MR. HARDAKER: Bob Hardakar, EPA 208 Program.
MR. BRODIE: Ed Brodie, Coopers & Lybrand.
MS. MLAY: Marian M].ay, EPA Program Evaluation.
MR. PERRY: Bob Perry, Water Pollution Control
Federation.
MR. McDERMOTT: Jerry McDermott, National Coffee
Association.
-------
5
MR. PAl: For those who have attended th. last
meeting, I do not have to go through it, but let me introduce
the format we are going to use today.
First, we will respond to some of the major commen
we had from ths last Advisory meeting. Then w• will have
our contractors brief you on the progress we have had up to
this date. Then we will go around the tabl• and hav, every-
one give comments on basically the presentation ws are making
z
today.
After that, we will go through what we call a gener 1
forum..CODhIflefl period, and any major issues you want to bring
up, we will take note of and see what we can do.
We have our court reporter with us today. He will
take down all the maj or comments.
Before making your statements, please provide your
U
name and try to speak as clearly as possible, or at least
better than me, so we can have a record of what has been
said.
Responding to the last monthly meeting we had, then
were three major comments brought up to us.
No. 1 was brought up by Larry, and that is, We
should have an economist on the staff or on the project, to
really analyze the economic impact. We have Bill with us
-------
6
hers today, and he will give aon introduction or presnta-
tion of what he will be doing for the project,
Then another comment was we should have some 208
people involved.
We talked to their Director, and they are very
gracious to send up Bob heretoday. He is with the 208
Planning Agency.
Another Comment we had was we should have some
z
equipment manufacturer, to know what is the technical
feasibility of monitoring the industrial waste, We have
contacted our friend Sebastian. I called him to let him
know of this meeting. I am not sure whether he will show up
today, but we are following through on this.
So that pretty much summarizes what the major
comments provided to us last time were, and the action we
have taken.
At this point I will turn it over to Ed Donahue,
Project Manager for Coopers & Lybrand.
MR. DONAHUE: We have three documents we would
w
like to distribute to the people.
The first is a statistical summary from cities that
we have visited. This represents data from 45 of the 110
cities we visited. At the time this was put together we had
-------
• 7
only completed and sorted out the data from 45 of the cities.
Ws have since then finished visiting the 110 cities.
A couple other comments on this: It is raw datae
It is pure statistics and pure data.
It is not really analyzed, not refined. In some
• cases, it needs to be verified, but we just want to give
people a feel for the kind of stuff we are getting.
It would be premature to try to draw any general
conclusions from this data. It is just part of th. raw
data. That is the first thing we have to distribute.
The second thing is a brief write-up on the economic
analysis that Bill is working with, which, hopefully, Mark
Roberts from Harvard is going to be doing.
Another thing is the proposed schedule of meetings
in the regional cities that we are going • to be having later
this fall.
I think most people who are on our mailing hit
LU
have already gotten copiss of one document, the findings to
date in the 45 cities. So maybe I should start with that.
I do not think we want to take the time to read
through all the stuff that is in here. I think if anybody
has taken the time to look through it, they will find some
apparently very interesting statistics.
-------
8
The first littl. piece of information we have got
there is that we really have not been able to find any plant
closings due to Industrial Cost Recovery.
Every time we visited a city or talked to someone
asking about plant closings, we found a couple of cases where
plants closed, but never could we find anybody who was willinc
to attribute it to ICR.
A couple places attributed plant closings to
z
increasad water bills, increased sewer bills, but certainly
partof the--
MR. HUELSMAN: Does everybody have the document
we are talking about? It just starts out, “The 45 cities
have not identified any plant closings due to ICR.”
MR. OLSTEIN: The date on the bottom says August
23, 1978.
MR. DONAHUE: Nobody was willing to attribute
plant closings to ICR.
w
In the cities we visited, we can get a feel down
at the bottom of the page for the numbers of plants of each
of these industries that we visited as of that date. Another
thing I ought to say is we talked early on about, five
industries that we were going to pay particularly close
attention to. We have since added a sixth one, textiles,
-------
9
because of some congressional urgings and *xhortatjons that
we do so. So that is not reflsctsd in that list of plants
d n at the bottom of th. first page.
One of th. other things that is interesting on that
first page of statistiCs is if you look at where the revenue
came from before User Charge/ICR was instituted, and after
User Charge/ICR was instituted, and this is residential versu
nonresidential -- well, I am not sure what this signifies,
z
but it is an interesting piec. of information.
We are going to take a look at this and try to
figure out h , why, and all that kind of stuff.
A lot of people said, on the second page, that they
had some costs that could be eliminated. Some of the costs
of sewage treatment in some cities could eliminate a lot of
their administrative costs or a portion of th. administrative
U
costs if they could do away with ICR and still keep the User
Charge.
w
The seine thing with monitoring and enforcement
coats.
w
At the time this data was compiled, we had only
gotten a few survey forms returned from industry.. We had
visited a lot of industries, but this is lacking in industria
data. It is more city kind of data. Since then, we have
-------
10
been getting industrial data in, and we will have survey data
from a whole bunch of industrial plants, which we will di .-
tribute to everybody when V. have it in sorn. other kind of
tabular form.
The other pages here just show th. distribution of
the kinds of rates we found in different places • You can see
that this is all raw data, and I do not mean to confuse or
bewilder people. We have not had a chance to analyze it.
z
It was only six weeks ago that we started collecting the
stuff. We really have not had time to look at it.
If anybody has questions about this, we would be
glad to answer them later. I would rather get down to the
two things which I think we can really put our hands around.
One is the little two-page document on Economic Analysis c
U)
L i i
have proposed to conduct, which we are going to let Bill
U
discuss and the other thing is the schedule of meetings in
the regional cities in October.
I would like to see if anybody has problems with
that suggested schedule or with the suggested format that
we have outlined for those meetings.
With that, I am going to ask Bill to tell us about
the Economic Analysis.
MR. RULE: The piece of paper I am going to be
-------
11
talking from is the b’o-page sh..t with absolutsly nothing
identifying it.
The major thrust of our economic analysis will be
to answer four basic and, to a certain extent, interre1ata
questions.
The first is to outline the economics of the
decision on the part of an industrial plant, on whether or
not to participate in a local POTW or to engage in self-
treatment?
Secondly, how that decision function is related to
the size of th. plant, the age of the plant, and other
factors that appear to be pertinent.
The third is to assess how extsnsive the economies
of scale in publicly owne4 works are, and what the impact of
any such economies of scale would be on ICR rates.
And, finally, to assess the degree to which an ICR
system would lead to a divergencs.bstween -— in •conomio
jargon —- what we would call th. private and social costs of
z treatment.
w
Perhaps I ought to go into that a littl, bit. The
private costs that I am referring to are basically those
direct and immediately observable costs of treatment. For
instance, it is the operating expenses and capital expenses
-------
12
of. PO . The costs or outlays on the part of firms, both
capital and operating outlays, to run pretreatment facilities
and self-treatment facilities, and, to the extent appropriate
conservation facilities. Wheras the social costs are the
total costs from the standpoint of society.
7 Now, the hitch in social costs is that, to a
certain extent, they inevitably are unobservable. The imp.tu
to sewage treatment in th. beginning is a social cost and one
that is not directly observed, one that the economist cal]..
an externality. That is, for instance, a plant generating
industrial waste, dumping it into a river, what he is actuall
doing is imposing costs on someone else down the river.
That cost is nothing that is reflected in the marketplace.
N The costs borne by the individual down the river cannot be
directly attributable to the person discharging.
U
But in doing an annlysis of a program of this type,
we want to try and nail down the private and social costs
U i
aspects of ICR. It is quite conceivable, for instance, that
without ICR the private costs, the apparent private costs,
Ui
of treatment would be lower than undr an ICR system. Yet
the social costs would be higher without ICR than with.
From the standpoint of government policy, as it is
enunciated, the intent is to try and minimize the social
-------
13
costs of cleaning up the water. So that is necessarily a
very relevant aepsct of our investigation.
N , the direct approach to anaw•ring all th.i.
quostiona would be simply to go out and get son data on the
way things were b•fore ICR, and then gst a set of data
describing h things were after ICR, and compare th. two,
and analyze the shifts in terms of cost burdna, prices, and
so forth.
z
Unfortunately, WO do not have a record of .xp.rienc
that is long enough to possibly capture the long-run •ffects
-- präbably not capture the intermediate-run effect of
imposing an ICR system.
It is my understanding that the rates have actually
been in place for less than two years in most localities,
and that certainly is insufficient time to obssrvs all of
the economic adjustments of all the parties involved. You
simply do not shut down an industrial plant on six weeks’
-J
-j
notice • It takes sometimes y.are b. fore a policy action,
z such as ICR, would be fully refl•cted through the adjusbunt
of the plants and industries involved.
So our alternative is going to proceed on basically
two levels, one of which is a qualitative assessment of the
impact of ICR, both in what we call partial equilibrium
-------
14
sense and general .quilibrium sense.
A partial equilibrium analysis basically is what
generally appears in the literature. It reflects the adjust-
ments of an individual economic unit without taking into
•ffect all the compensating adjustments throughout th. rest
of the economy.
General equilibrium analysis, on the other hand,
places those sam. adjustments within the context of all of
the counterveiling forces in th. economy.
Now, this sounds like a very elaborate undertaking.
I do not mean to imply that. What we are basically going to
I-
do in as simple language as possible is to describe the kind
of reactions an economist would expect to something like ICR,
in terms of price of the product, adjustments, proportion
IaJ
5 of ICR costs that would be borne by the industry, and the
proportions that would be borne by the consumer; the extent
to which a system like this would lead to favorable or un-
favorable impacts on the balance of trade, the employment
and output effects of ICR, th. impact on the cost of capital
for the firm, for the size of the capital plant for the typi al
firm, and so forth.
on a quantitative basis, our efforts are going to
be directed towards trying to find the thresholds in the
-------
15
relevant dimensions beyond which a typical plant would be
thrown over from use of PO to self-treatment.
Now, in order to arrive at those thresholdg, we
have contracted with an experienced engineering firm, Camp
Dresser, who will be providing us with cost equations for
all the various elements in the range of treatment altrna-
tives faced by firms in the six industries under study.
We are going to take that cost data in combination
with data that we are collecting in the survey and data
available from EPA and from the Commerce Department and
attempt to structure simulation models for a typical plant
in the six industries and for the major variants in terms of
the kinds of plants that you observe.
Those models also will then be used to structure
La
the array of cost alternatives that a plant facs • There
C .)
0
is a certain amount of cost associated with pretreatment, a
certain amount of incremental costs for self-treatment, to
reach a level where you could discharge directly. There are
certain costs associated with conservation to a given extent.
These costs will be computed and compared to ICR rates.
In essence, what we are going to do is transform
these costs into what I would call simply an ICR threshold
rate, that is, the rate above which, if the firm faced an
-------
16
ICR charge, the firm would opt out of POTW and into son.
form of self-treatment.
Th*t is basically our approach.
By having these types of models constructed, we can
go to the survey data, to th. commerce data, assess the range
7 of plants actually in existenc, in terms of age, in terms of
size, and, for each major segment within an industry, calcula
our ICR threshold rates • Those rates can then be compared
with those ICR rates currently in existence, and those that
could be reasonably projected to be implemented in the future
and by comparing the o I think we can get quite an accurate
assessment of the impact of ICR on these six industries,
MR. DONAHUE: Thank you, Bill.
Up until now in our previous meetings and in convr
U.,
sations we individually have had with people here, we have
been able to talk about pretty simply kinds of things, cities
we were visiting and data we were finding. Once you start
LU
getting into the analytic end of things, it becomes more
difficult to keep things on a level where people can under-
LU
stand them.
Bill made an effort today, and we hav to keep that
effort going in any reports, or whatever, so that when we
issue a draft report or a final report that people can under-
-------
stand what is in it.
You get to some pret ’ sophisticated sngiu.ring
and economic analysis, .quatiorie kind of stuff, and we are
going to have problema communicating to our avrags citizen,
average industrial customer, of a swage plant, about what
is going on.
If we issue a final report full of engineering
equations, we are dead in the water, nobody will understand
z
it. One of our biggest problems is taking all the data and
all analyses and putting it in some kind of format that th.
people will understand.
Next I would uk . to talk about our schedule of
meetings. I hope you all have a copy of the proposed
schedule of regional meetings.
We think at this point we will have information on
a regional level for the States in each of those regions as
to what we found, and a little bit of analysis of it, much
more so than the kind of raw data you were handed here today.
W. will have completed all our visits, all our interviews, in
U i
all 300 cities. We will have all industrial survey forms
received and analyzed to some extant and be able to come up
with some kind of findings -- what you hay, got here today
is just findings, raw data -- we will have some conclusions
-------
i.e
as well 58 to what it means.
we probably will, not have any. recommendations to
make at those regional meeting., because we are looking at
those regional meetings to be a bo-way kind of thing. We
want to communicate to peOple who are interested, or people
that we were not able to visit or people who were not .atis-
fied with our visit, what we found and what we think it means
we also want to get from people that we did not
talk to in the past their comments, their statements, what-
ever, that they would like, and enter them into the record,
from which we will try to use them in analyzing and
I-
formulating recommendations that we are going to make to EPA
for EPA to transmit tq the Congress.
So we have meetings s cheduled tentatively for the
ten federal regional cities, and the dates for each of them.
Some of the cities we only scheduled for one day, because of
the nature of the industry in that region, the number of
industrial establishments in that region, and we do not think
In
we need more than one day.
x
In some cities, particularly in the Northeast and
Midwest, where you have heavy industrial concentration, you
are going to need more than one day.
The format that we suggested for these regional
-------
19
msetinga, if anybody has any ideas al,out how that could be
changed or improved, we would be glad to have them. That is
just initially how we think things will happ.n at the regiona
xn.stinge.
So I do not know that we have anything more to say.
We would like to go around and get everyone’ a preliminary
ideas, if you have anything right now.
O we would lik, to go around the room and get people’
reactions to what we hay, given them, answer questions, what-
ever people would like to do. ma only thing we do .sk is
you do identify yourself and do speak clearly so our reporter
I-
can capture what you have said.
MS. FELLER* I just had on. question. When you
were talking about the Economic Analysis, has any thought bee
given to setting a threshold figure for the municipal
administration coats of th. system, where it costs more than
what you are actually collecting in dollars to administer the
-J
whole thing?
MR. DONAHUE: This may be prejudicing the. study,
but one of the things I am sure we are going to recommend is
if a city can show it costs more to administer ICR system
than they are going to collect from ICR, that son. considera-
tion. should be given to discontinuing ICR in that case.
-------
20
You have to be pretty careful that the city, or whoever is
running the sanitary district, does not blow everything into
that administrative cost. Th. burden of proof is really going
to be on them. That probably going to be one of the
recommendations, that some consideration will be given to
doing that.
If it is costing you $20,000 a year to take in
$1,000 a year in ICR payments, there is something wrong.
Do you have anything else?
=
MS. FELLER: Not right now. 1 will maybe mak. some
comments after everyone else.
I-
MR. GALL: I will defer.
MR. HORN: Who is going to set up the regional
meetings?
U)
I J
MR. DONAHUE $ We are going to do it in conj unction
0
U)
with the regional -- well, whoever John tells us to deal
with.
MR. HUELSMAN: I sin not sure that the logistics
and all have been worked out yet, to be quite frank.
MR. GERRISH: I think you ought to be publicizing
the regional meetings.
MR. DONAHUE: We are going to work with EPA’S
regional information or public information officer, whatever
-------
21
title they have currently in the regional office, and try
to generate some press releases or whatever in th. local
media a couple of weeks beforehand,
MR. HUELSMAN: It will be EPA’s responsibility, to
select the site, make th• necessary announcements, and we
will be working to give them any help we can.
MR. DONAHUE $ We will work with them.
MR. HUELSMAN: And select the location,’ and take
z
care of all those arrangements.
MR. HORN: I am th. local Region 5 expert. I am
already committed to another meeting in San Francisco on the
26th and the 27th. Our time is so heavily scheduled for
so many months in advance.
MR. DONAHUE: That is why we tried’.to circulate
this now.
U
MR. HUELSMAN: We went through the logistics of
dealing with the o to three hundred cities, and you
certainly were involved with that, Ted. You know what is
involved. We are open for some changeS. The tim, is pretty
well locked in the study. Last time we were talking about th
criticality of having the report ready in tim. for December,
the end of December, and we got an extension, as I recall,
last time -- she is not hare -- of a week or so. But this tim
-------
22
period is critical, If we can work things out within the timi
period, fine.
MR. HORNS One other comment on th. economic etudje
No. 1, it sayss “What are th. economics of the
decision on the part of a plant” -- I prss nne of private
7 industry -- M participat. in a local POTW or self-treat?”
Of course, ther. is tremendous influence n with
pretreatment regulations.
Secondly, it isn’t private decision. Itis not
industry’s decision. Thsre is a myriad of things th rs.
It is the way it is phrased. It would be like it is an
industrial decision.
MR. HUELSM N: It is not a total economic decision,
either. That is the point. That is correct, we are going to
U)
be addressing or getting our hands around the economic
aspect of the thing, which was th. intent of the study,
• MS • BAUER: I an Carol Bauer, from Congresswoman
LU
Heckler’s office. I have a couple of questions,
First of all, to Bill, the ecónom.tst: You mentions ,
LU
Bill, that one of the components, economic components, that
you would take into consideration would be the cost to the
firms of pretreatment, as to whether or not they should tie
into the city system before pretreat. In one of th. cities
-------
23
in. Congresswoman Heckler’s district, Charibem, Massachusette,
the one I am aware of, Electroplatiag industry is the major
industry for the city, and for those induatx i.s it is not an
either-or situation. They have to pretreat before they can
tie into the city system.
How will you take that into considration? It is
a secondary economic factor, but it i v a factor.
MR. RULE: I had hoped, when I wrote this thing up,
z
that it would be general enough to imply that that’ kind of
decision in economic jargon is a marginal decision, in using
• a. POTW. or self-treating. You have a range of alternatives.
Some plants hav to pretreat, and therefore they have a
certain block of tr.atm ent capital in place, in facing an
ICR, than they may be faced with relatively, well, smaller
or larger capital costs, depending on whether or not they
U
do have pretreatment facilities in place.
That may very much affect their reaction to an ICR.
For instance, a firm that has no pretreatment whats
ever may face a million dollars’ worth of capital outlays,
LU
if they were to self-treat to the extent they could directly
discharge. If they had statutorily dictated pretreatment in
place, the incremented costs to achieve the direct discharge
standards might only be $100,000.
-------
24
Obviously, the ICR rate that you could impose on
th. second type of plant would be much lower than on the
first, before you throw him over into withdrawing from the
POTW.
In
Now, thos, kinds of things would be taken into
account, yes.
MS • BAU’ER: They ar. heavy •xpenditur.g for thlss.
I know in a coupis of cases we are talking about sSveral
hundred percent differences from one year to the next on
pretreatment.
MR. DONAHUE: Reed andBa Zt.0xi is a case in point.
I think they said they spent about three-quarters of a millio
dollars for treatment facilities • Now they are going to be
hit with a sewer rate of 21 cente a thousand gallons, which
IJJ
is about tie most expensive I have heard of anywhere.
MS. BAUER: I am glad you are as ovezwhelm.d as
we are.
-J
MR. DONAHUE: That is a pretty phenomenal sewer
rate.
z
a.
MS • BAUER: One other thing on the economic q s-
tiort.
I know from working on legislation from Day One tha
one of the major factors that Congress had in mind in this
-------
25
study was not only the-costs of ICR, domestically, internally
St cetera, for a company, but also the potential cost to
goVernment with ICR.
Let in. explain myself a minut.. If we are talking
about a city that has a high unemployment rate, a labor
force that is moderate or lw-paid, well, I am giving you the
picture, if we have in that city severalpiante that are
marginal as far as will they be able to remain open, ICR is
something that is being imposed on them, ICR is a major
factor in whether or not they will remain open in that
location, and whether they will close down entirely, whether
they will move elsewhere. If they would, we are talking
about unemployment compensation, v i are talking about food
stamps, and we are talking about CETA, and we are talking
about numerous other federal programs that would have to come
into play, which would cost the federal government.
• The Congress had in mind a balancing of factors
here. Which really costs more? I did not hear you touch on
that. I know it gets back to the question of, is ICR. the
straw that breaks the camel’s back? That is the real ques-
tion.
MR. HUELSMANI I think what we wanted to do, first
of all, was really address the issue of: Are plan being
-------
26
iCalsd back? A businesses shutting down because of ICR
coining in right no rI? We wantd to get a factual handle and
documentation Ofl what is the extent.
0
The second thing, if we saw it was a major extent,
tjten I think we have to go and address those exact issues
that you raise.
If, on the other hand, we do not see, a major
impact, we do not see any proof of that, I guess I sin really
asking the question: Does it make much sense to do that type
of analysis? Or what would what type of analysis provide?
MS. BAUER: A case in Fall River, and I believe
this is about’ a year and a half ago, a major company, in
finding that ICR was coming a few years down the road, though
not in the immediate future, decided, even though they did
LU
not know the exact cost for them at this point, that for
them it was the straw that broke the camel’s back.
For them, that was several hundred jobs. That is
not something that would come in your study, but the plant is
already closed.
It was a factor a coupl• of years ago in proj.ctin
what the costa would be.
MR. OTTMAR: Plant expansions have been cancelled
because of ICR. That should be taken into consideration, toc
-------
27
MR. DOAHUE* We wi ii. take as many of thos. things
as we can into consid.ratj . At spms point you hav, to drai
limits as to what you are going to consider in a study like
this. We could end up studying th. whol• economy and all the
things that go into it. We could spend a lot of money and I
ant not sure we could cane up with anything very aoncr ,
We would corns up with very pro found a tatsn*nts, but
I am not sure how useful they would be.
We would take as much of that into consideration as
we can in analyzing the stuff. I do not know if we could
consider what ICR is going to do as far as level of CETA
I-
funding in Fall River. I cannot promise that.
First of all I do not know if we could detormine
it.
MS. BAUER: You could detsrmin. pothntial unemploy-
ment and factors like that, and we do have figures on how
many of thoese people would be food stamp recipi.nta, and BO
-J
-J
on. So that portion of the study would not really be for you
z -- I mean, the work is don, is my point, It is in the
Agriculture Department, or it is in the Labor Department, as
to what percentage of those people, or what employment figure
triggers X number of CETA jobs.
MR. PAZ: You are referring to social costs.
-------
28
MR. RULE: Certainly one of the social costs.
MS. BADER: You also did not address - will, you
referred b, plant closings, but, as was m.ntion.d in this
case, we are talking about a cancellation of a plant expan-
sion. Will that be addressed?
MR. HUELSMAN s W• are obtaining that information.
MR. DONAHUE * on. of the things we ask for in a
meeting in Fall River, and Steve Buckley, down at. the other
end of the room, was there, on. of the union reprgentatives
who spoke talked about thre or four plants that did not
carry through expansions that they were planning because of
increased sewer costs, which, of course, ICR is a part.
I-
But he did not want to publicly digcuas that kind
of thing. The comment we made there was, Please give us
that information. If you will not tell us about who they
are and what they are, we cannot really investigate them.
That is part of it, too.
MR. OTTMAR: Some factories have decided not to
expand. I remembsr Aluminum Processing.
MR. BUCKLEY t Aluminum Processing.
MR. HUELSMAN: Get some facts and figures. That is
the whole thing, we want to get facts and figures on what has
been done in the past and what is going to happen, We are
-------
29
Liking: Ar. you going to curtail expans ion? Or are you not
going to expand hers, but you are going to expand Born. place
else? That type of thing.
we wanted to try to address that issu., once w•
saw how big an issue it is.
If we are talking about -- I will be ridiculous --
if we are talking about 500 jobs across the United States,
if it proj.cta out lik, that, it is certainly not a big
national issu. that has to sse the ripple sf fect, the effects
that you mentioned.
If, on the other hand, it is 50,000 or 100,000 or
whatever, a significant number, then it needs to be
addressed. The thrust w• are taking is: L•t us get our
hands around how big that ii, but l•t us make sure we can
support that with facts and figures, not “I think” or “I
wonder” and that sort of thing.
2 MR. DONAHUE: Carol, I realize you have a
responsibility to your cons titu•nts, to the Congresswoman’ s
constituents, and we will emphasize as much as we can those
z
things that are regional or local. But --
MS. BAUER: That was the next question.
MR. DONAHUE: But the thrust of our study has to
be national kind of problems. You have a fairly unique
-------
30
uttuation. I am not belittling it or demeaning it. It is
very crucial for that part of New England. But really the
thrust of our study is a national kind of thing. We will
dvote as much attention as we can, and identify as much as
we can, to regional kinds of problems and try to formulate
some representations as to how to address them.
MS. BAUERI When you study them as a regional
problem, will you study not only the particular ICR problem,
but also the economic situation of the area, i.e., New
England has a higher unemployment rate than nationally.
• Will you take the social factors and apply them to
the region? That is really my question. Because what we do
not want to do is be in a position of encouraging New England
industry to move elsewhere, to be perfectly frank.
U)
LU
MR. BUCKLEY: Industrial Cost Recovery to, let us
say, Fall River is not a national thing. It is regional.
It is specifics. That is important to us. We cannot deal on
a national basis. We have a very unique situation, social
and economic specifics.
MR. PAl: John?
MR. GALL: This is a question to Bill,which hope-
fully will explain.a little bit to Carol.
In the initial outlay of the specific regional
-------
31
Htings that we now have tentative achedu1e for, there were
indications that there were going to be regional analyses
done.
MR. HUELSMANI That’ i all we are going to have.
MR. GALL $ At that tim..
MR. HUELSMAN s At that time.
MR. GALL: I presume that your model takes ths
form of some kind of, like an analog, with certain s•t of
variables on a national level, where you plug in average
values for this, Is it possible to modify that, or is it
reasonably or economically theoretically practical to modify
it on a regional level?
MR. RULE: I do not know about the eoonoinic
practicality, but I think I can state with some certainty thai
the time constraint will rule out a lot of possible modifica-
tions to regionali ze the models that we coins up with.
Certainly we will try.
But we are talking about a very tight time cons trair
and it is going to be difficult enough to get something work-
z
able on a national level here.
MR. HUELSMAN: One other thing, and that is, if
you tried to look at an impact on industry, strictly on a
regional basis, it will be the number of businesses we have
-------
32
• within that particular Stats, and if we are trying to draw
some conclusions based on five or eighty specific plants in
that particular industry, and in one particular region, and
we only have three, it is pretty difficult to try to draw so,ti
sic!nificant conclusions.
N
So, when we talk about some of the industrial thins
at these meetings, I think we probably have to combine all of
our sample.
MR. DONAHUE: Carol, we will do as much as we can,
is all I can say.
MS • BAUER: If you regionalize one area, may I
recommend the Northeast?
MR. DONAHUE: I expected you would recommend the
Northeast.
C o
LU
MS. FELLER: The Senate concurs.
MR. GERRISH: I would like to emphasiz. what is
being said about social costs, the type of social costs ihe
is talking about, not about what Bill mentioned earlier.
I do not think they are unique. I do not think th
are regional. I think more than New England can be involved
I-
in that kind of problem. Any kind of community can be
involved in that.
To go back to something that is nit-picking maybe,
-------
33
when Bill was talking about th. social costs, he didn’t talk
about this kind of social cost which I think is possible,
He is talking about dumping th. sewage in the river, or sorna
SUCh remark, I do not se how this ICR gets itself involved
in that.
N
We are talking about th. cost to treat it, not
whether or not it is treated, So maybe you have some
explanation for what you said there.
MR. RULE: I was trying toex plain whatsocial coal
are. Obviously, social costs cover a very broad spectrum fro
employment impact, wage impact, and secondary and tertiary
impact, not only through commodity produced, but through the
impact on other markets.
Social costs can also be manifest in international
I J
trade impacts. They are typically what are called political
U
issues: employment, interest rates, things like that.
MR. GERRISH: I think you are getting pretty far
out in some of that.
MR. DONAHUE: If you compare the law with the legi -
lative history, statements by Congressmen Roberts and Heckler,
you see some of th. reasons we ar. looking at other kinds of
stuff, social-cost kind of stuff.
MR. OLSTEIN: The legislative history is reason-
-------
34
ably specific about what it is interested in in terms of the
economic issues and relatively narrc .
One question was v.ry specific. It *aka: If ICR
forces an industry out of the POW, does that make that plant
lee, cost-effective? And I think with the method of analysi
that Bill developed, that is on. of the things that will be
determined.
Although acme of ths issues relating to unmploymen
the ripple effect -- well, if one place shuts down, affecting
rates, and others follow, I do not think it was anywhere in
the legislative history to get that far, not to mention the
fact that it would be very difficut, if not impossible, to do
in the timaframe we have.
MR. ADAMS: My name is John Adams • I am with
National Milk Producers Federation.
U
I noticed in your raw data summary here you are
visiting basic industry groups, and dairies is certainly on.
of them. Dairies, to us, has a certain connotation. It means
z a fluid milk plant operation.
Now, the dairy industry, as you might know, is
uniqu. in terms of the mix of products that are produced in
any given plant.
I guess my question is: Have you made sure that yo
-------
35
are covering the entire mix end structure of plants in the
d..iry industry?
In this gentleman’s region, Region 5, for example,
if you are in Chicago, you are going to be talking about a
fluid milk plant operation. If you get upcountry into
Wisconsin, you are going to be talking about chess plants,
and most likely those cheese plants might b• located in a
very small rural town, wher. we have had unique problems.
My question is: Are these types of problems within
th. dairy industry being accounted for?
MR. OLSTEIN: Our definition of dairies, we
selected the first three digits, I believe 202, which, as you
know, covers, I think, a fair range of dairy products, from
butter to cheese, end we reviewed this with Fred Greiner.
MR. HUELSMAN: We also stratified and tried to get
some in every State where they exist. It is not all in
Chicago, when we are looking at Region 5. We are going to
try to get plants in all the States, if it were possible.
MR. ADAMS: We have specific case examples,
particular problems we have had in certain plants, and we
U,
would like to make those available to you.
MR. DONAHUE: We would appreciate them. The more
examples and the more data we have the better we are.
-------
36
- MR. ADAMS * One example ycu wr* talking &out,
residential versus nonresidential charges, and we have a
plant in Los Bonos, California, where th. estimated oost,
their estimated coat of the systsm per month is going to
increase from $300 to $14,000. If you would like some more
information on that plant, we would be glad to giv, it to you 1
MR. DONAHUE: We would, We hav, already visited
° Los Banos. We have met with the dairy. there. Th•rs was a
meat packer we were suppoa•d to met with, and he did not
show up for the meeting.
MR. ADAMS You have met with the Los Angeles
I-
Dairymen?
MR. OLSTEIN: Representatives of the dairy associa-
tion.
U)
LU
I-
5 MR. DONAHUE: We did that at the request of Senator
Hayakawa. We had somebody there about a week and a half ago,
I believe.
LU
-J
MR. HUELSMAN: Just to make sure that nothing falls
through the crack, if you have got some very specific
.xamples of that, please l.t us know and send it in writing
and we will contact people and get specific data.
MR. MORRIS * I am Richard Morris, National Associa-
tion of Regional Councils.
-------
37
am sitting in for our Water Quality Specialist,
who was here at previous meetings. I hay, no questions.
The only thing I would like to coimnent on is that perhaps in
publicizing thes. regional meetings, that 208 Planning
Agencies could play a significant role in getting th. word
out.
You may have discussed that last time.
MR. HUELSMAN: It was discussed.
MR.DONAHUE: We do plan to rely on 208 Agencies to
help us publicize the regional meetings..
MR. GALL: Do you represent such groups as, for
example, Connecticut Conference of Municipalities, the
Massachusetts League of Cities and Towns?
U) MR. MORRIS: Not as such.
LU
MR. BUCKLEY: I am Steve Buckley, Fall River,
Massachusetts.
I would just lik, to echo all of Ms. Bauar’s
sentiments and everything sh. discussed I was going to discus
I should have anticipated that, knowing Margaret
I
Heckler.
The only thing I would like to say is, I think up
until, this point, so far, I think you have done an excellent
job, especially from the standpoint of the City of Fall River 1
-------
-- 38
You have really been very available to us, and you have
addressed all our requests and desires. Whether th.!y will be
happy from this point, only the future can tell.
[ Laughter.]
MR. GILDE: Lou Gilde, NAN.
I would like to continue on the sams track as Carol
going ba k to the basic law, 92-500, ICR seems to have been
instituted to bring about parity on sewage charges , and I am
not sure the data coming out so far is really emphasizing
that. I think there is a need for greater stress of looking
at some programs that were done on grant programs prior to
‘73 versus those done after ‘73, and I am not sure that you
can always get what you want on the job situation.
I am afraid the model study is going to tend to
show too much along the lines that 45 cities have been
identified, that there are no shutdowns because of ICR.
It is very difficult to a president of a company or plant
manager -- to pin him down that because of ICR and increased
sewage charges you are not going to add jobs, you are not
going to add additions to the plant, and so forth. There
may be another way of tackling it, and a comment, that Carol
made raises the issue.
How many new p]. ants, how many new operations are
-------
39
going to be located in Fall River or Camden, New Jersey,
becaus. of sewage charges? Not only because of sewage
charges, but there will be a whole range of things, certainly
the Mayor of the City of Camden wrote in at the’ time of the
hsarings on this isaus and conui nted to the fact that his
proposed sewage charges for a new plant that has not been
built yet are going to be about a thousand dollars per
million gallons, and the very next adjoining community the
sewage charges, which has, a plant built on prior grant
programs, is only $150 per million gallons.
MR. DONAHUE: We are trying to get comparative kind
of data. Any time somebody even alleges that a plantdid. ’not
locate or did not expand or closed down because of ICR, or
U) sewer costs generally, we are looking at’that.
Lu
Usually the ;place we are asking that information
U)
is the local Chamber of Commerce. If somebody is going to
have a feel for plants they are talking about opening, that
is the place to find it.
MR. GILDE: There is still a subtlety here that is
hard to evaluate. My company will not tell you why it didn’t
locate some place, because that is difficult. But there is a
whole industry built up on locating plants. Maybe we should
be relying more on information from them, and h z would th.y
-------
40
get somebody to go to Fall River or Camden?
MR. PAl: I would lik, to answer that.
There are too many things we can contributs to why
a plant is not built in some certain area. We would like to
limit this. to the rats differenos in different areas, and use
this as an indication.
In other words, if your area is particularly high,
then, more or less, we. could say, well, th. rate uld b. a
problem. So that is the only thing we can say.
But to go beyond that, s just do not have any data
to go beyond that.
I-
MR. HUELSMAN: I would lik, to just comment a little
bit on that.
You have to go a littl, bit beyond the rats, becausa
you have two communities doing the same thing. One puts all
of th. front-end costs in the rats, and they are going to
recover it that way • The other community puts a front-end
charge of $1,000 or $1,500 or $2,000 for your up—front
development money, and therefore has a lower resulting rats.
So, the rate, the art of setting rates -— and it is
an art right now, at least in wastewater treatment -- the art
of setting rates allows a great deal of flexibility, and so
you have to really go beyond what is the bottom line number ol
-------
41
the rats to rally take a look and se what is really happen-
ing, when you have a comparison uk . that.’ That is just
another comment.
MR. GILDE* Some of yourdata hers indicate.
conditions the year before ICR, and thsn ths first year of
ICR.
!‘leny communities around th. country, once they get
involvsd in the program, No. 1, a program ii at least three
years on-going, quits frequently five or more, they do not
stay at the old rate up to the day the new plant goes into
operation. They normally scale it, and so really you should
I-
go back to when they started planning their program, rather
than the year before.
MR. HUELSMAN: That is a good point.
5 MR. SILVERMAN $ Larry Silverman.
0
U)
I would like to start with the first bio sentences
of your fact sheet, which said you have looked at 45 cities
and talked to quite a few people, including Chainbsrs of
Commerce, and the only thing you could find was there were
no plant closings attributable to ICR, and that the only
jobs lost in any way that you could trace were 45t 30 in
one city and 15 in another.
Now, if the data you get in continues to show that,
-------
42
dO you think you will be able to conclude that there is no
significant impact from ICR?
MR. DONAHUE: I do not know if I can make a state-
ment like that right now. We really have to think th. thing
through and do a lot of analysis before I could say yes or
no to that. We will not w*ff is. If something like that oome
out of our analysis, we will say it in those words.
MR. sILVERNAN: Even if a lot of people tll you
you are wrong, you will stand by that.
MR. DONAHUE: We are going to make our represents-
tion based on data. People may not like our recommendation..
I-
I cannot guarantee you will like the recommending.
MR. HUELSMAN: Draw conclusions based on data..
MR. SILVERMAN: With regard to social costs and
so forth, it seems to me there are o social costs: one
is conservation, that is, social gain, and I know that
American industry has made tremendous strides in both water
and energy conservation over the. last seven or eight. years.
I think at least in the water area part of that is attribut-
able to the Clean Water Act, both the effluent limitations
and also for indirect discharges, ICR and User Charges.
I think that American industries have a lot to be
proud of. I wish they would brag about their gains in
-------
43
c.nservation. They are quit. substantial.
I think that if youare measuring’ a social value
of an ICR system, one of the things you would want to look
for is conservatiO . To think about conservation at the
moment, in terme of the economic impact of that, it aema tha
in many areas where’ there is a shortage of water, there is a
very favorable economic impact in having industries conserve,
because it leaves mor . room for new industry to come in.
MR. DONJ JflJEs Two points there. One of the questio a
we are asking each industry we talk to, each industrial’
plant, is What levels of conservation they have attained?
I-
What reductions in water? What reductions in pollutants?
That kind of stuff.
Water conservation by industry can be attributable
to a bunch of things. One ‘of which is ICR. I think probably
everybody will tell you that we are cutting back an water
consumption, but there are increased water rates, sewer rates
including ICR, and it is a double-edged sword. If you build
a sewage treatment plant designed to handle a whole bunch of
I
industrial water and people start saving water, you are not
using the capacity of the sewage treatment plant, and every-
body’s sewer rates are going to go up.
You have to look at both sideB of it.
-------
44
- MR. SILVERMANz Let m. say on. other thing about
conservation. Dr. Blackwsld*r has don. a review of some of
the literature on industrial water conservation. I will try
to get you a copy of hi. paper, but it looked at the
Dspartmant of Commerce studies and other things which are vet-
useful, and really show, I must say, a very impressive
record. Certainly industry is way ahead of government and
ahead of the private sector, when it. comes. to conservation.
• MR. RUELSMAN: I think on some of our industry, I
know from the canners, we are having extremely -- there is an
awful. lot of hard data there to support what you are saying.
I-
MR. DONAHUE: Not uncommon to see 30 to 40 percent
reduction in water --
MR. HUELSMAN: Whether that can be attributed to
ICR or what-have-you, these will be facts and statistics we
will be bringing up.
MR. SILVERMAN: Another area which is extremely
_J
-J
important and, in a way, is the most valuable thing you can
z do, and one of the great values of ICR, in my judgment, is
that it encourages cost-effective decision-making, that
when people have to pay for what they us., they find the
most inexpensive way, so the cost to society in general is
reduced.
-------
45
Now, of osurse, the problem ii when em. understands
the system or when they werry about ICR •nly after they
planned the whale plant, and they do not make those decisions
early enough, than thoss b.nsfite do not resuit.
But I hop. in terms of putting your conclusions
into laymen’s language, I would hope that you would try to
teach people or instruct people, giv, them some guidlinos,
both in industry and government, as to how to make COB t-
effective decisions.
I think that both th. systm allows for that, that
is one of the advantages of ICR, and it, is nev.r going to wor
right unleSs people use Industrial Cost Recovery and User
charges as an incentive for coming up wjth the least
expensive kind of solution.
MR. HUELSMAN: I think what EPA has done in re-
quiring a User ci arge, whether or not that includes
Industrial Cost Recovery or not, has been a first step to
make that happen. The rcent regulations rquiring that
that analysis, that economic analysis, that cost analysis
be done before you start your construction, or at the end of
a Step II grant, as opposed to when you are almost ready
to turn the faucet on on your Step III, is another definite
step in that direction.
-------
46
We talked about this at the last meeting, that
mayb• it should be up into Step I and Step II, and we will
address that issue.
MR. SILVERMAN: On this question, I think you have,
around this tabl•, some outstanding .xpertis.. I am sure a
person like Lou Gild. or J.rry McDermott could t.ll you how,
give you some advice, and I think they ought to be int .rvi.w.
they could give you and the nation and other industriee a
good deal of advice on how to evaluate cost effectiveness, of
whether or not to go into municipal systems, wh•th•r or not
bostay out.
I think that same kind of expertise ought to be
sought from people who design municipal systems, so that
wh.th.r the city should encourage industry to come in, or
encourage it to stay out, that really is the question.
That is the practical question that people face, when all of
this is said and done: Should we go in or should w• stay out
-J
I think that ought to b• a factor of cost, because
that is going to make life easier for all of us.
One other thing: I think you are doing an
excellent job.
MR. DONAHUE: Thank you. Appreciate that.
MR. KIRK: I am Donald Kirk. I am with H. 7. Hsinz
-------
47
Company, representing National Food Processors Association
today.
I would lik, to echo th. fact that I think you are
doing a good job, too.
MR. DONAHUE s’ Thank you.
MR. KIRK: I would like to express appreciation of
some of our West Coast food processors, who had your psopl•,
I think, go to a good deal of extr& trouble to meet with a
couple of industry groups in two different municipalitiee,
and we do appreciate the stop in Sacramento particularly,
and we appreciate your efforts in that behalf.
MR. DONAHUE: The other way around: the
processors have gone out oftheir way to inundate us in a
very positiv, way with survey forms from their members.
We have gotten much more participation on a voluntary basis
from Jack Cooper and his group of peopl. than anybody .1g.
I guess we have data, at this point, of between 300 and 350
food processors, canners, of what their costs to sewage
treatment are; and their questionnaire is more complicated -
MR. KIRK: As long as you brought that up, I
notic, you have not apparently had a chanc, to wade through
those.
MR. DONAHUE: We hay, skimmed through them. We are
-------
48
just beginning the detailed analysis.
MR. KIRKi Will you make nor. detailed analysis of
that block of data?
MR. DONAHUE: Yes, sir.
MR. KIRK: Try to use it to show up some things that
are g.nsra] --
MR. DONAHUE: Yes, sir.
MR. KIRK: I have a couple of other things.
In speaking of plant closings, it iems everybody
comes back to harp about this, and I want to first make the
point that my company has in fact closed a plant rather than
sign an ICR agreemsnt. We did not tell everybody that that
was the only reason we closed the plant.
I do not think you will ever find a plant that was
closed for no other reason than ICR agreement; but because
the plant simply was not particularly profitable as a plant
• in the first place, the plant was old, and sooner or later
would wear out, and we had considered closing it several
times in past years, but. had rejected the idea.
Then, when someone presented us with a 20-year
agreement for ICR and local capital share, we decided, all
right, it is now or never. The deciSion came about.
Whether you call that an ICR cost closing or not --
-------
49
MR. DONAHUEt W would like to get the details
about that. I would like to ask one question. That 20-year
agreement, was that in terme of a letter of intent or a
contractual agreement?
MR. KIRX: That was a contractual agreement. Of
course the contractual agreement is not for ICR, the
contractual agreement is for local capital share, which
o normally is shared in the same formula used for ICR. We
had gone through the letter of intent stage.
MR. DONAHUE: We would like to talk to you about
this.
MR. KIRK: We have gone through that, and I am
sitting here, and you have picked a number of conununjtjes to
go visit and make telephone contacts with, and so forth, and
in doing that you apparently have not uncovered any of these
situations.
MR. DONAHUE: No, we have not.
MR. KIRK: I sit here wondering that there are so
few, that they are not important, or whether you should bias
your study by going out on a wjtch-hunt looking for them.
MR. DONAHUE: We are looking.
MR. KIRK: I am not sure how to advis, you to con-
duct your study. I would like for you to be darn sure you
-------
50
have covered that ground v.ry carefully.
MR. DONAHUE: We are looking at those kinds of
cases.
MR. KIRK: I am afraid there is a reluctance on
the part of industry to say we closed a plant because of
sewer charges.
I can relate one after-affect that happened in this
particular community, from reading the newspapers. I believe
the Director of Utilities came pretty close to getting fired
ov*r it, and we had to turn around and make several press
releas$s supporting him, and pointing out that it was the
bunch of federal regulations that led to this thing, it was
not anything that the city was trying to do deliberately, to
singl. us out; because I think the public rose up on its
hind legs and said: “What is the matter with the city
administration? Can’ t you handle this thing?”
We had to come to their defense.
—I
-j
For that reason, you might find a little reluctance
to talk about the situation.
I would like to ask one other question. You have a
lot of data here, data as far as you have gone h•re on User
Charges and data on ICR. At the same time you have coll•cted
a lot of data on local capital share costs. My question is:
What are you going to do with that data?
-------
- 5].
3) MR. DONAHUE: We are trying to take local capital
cost data nd. factor that into the economic analysis because
we are really looking at the total cost of sewage to industry
and the reason we are asking those questions is in some local
your basic sewer rate includes debt service, so many cents pe
gallon to pay for debt service.
Other places, your debt service is paid in property
U
z taxes or in special assessments. We are trying to collect
0
I-
that data.
We want to look at all the cost of sewage treatment
cost for self treatment, cost for pretreatment, cost for user
charge, ICR, or debt service. We intend to factor.that into
our economic analysis.
MR. KIRK: In all the cases I have been involved
w
I-
with, local capital share has been shared with same formula
that ICR has. In California it is law. In other places it i
sort of taking place automatically. I wanted to be sure that
in fact was factored into your total economics.
MR. CROSBY: I am Ed Crosby with the National Food
x
a.
Producers Association.
I want to make just a couple of comments. You have
already answered a few questions, and that is what you are
doing with all of the material we have sent you. Apparently
-------
52
2 you are looking at it and have not quite analyzed it yet. A
couple of questions were raised by some of our people, and yoi
have probably considered it, will you be differentiating betweer
types of treatment in these various cities in terms of secon-
dary treatment and so forth?
MR. DONAHUE: Yes.
N
One of the questions we are asking municipalities
is the level of treatment at the treatment process. You have
I-
activated sludge secondary treatment versus AWT somewhere thai
is going to factor heavily in sewer rates.
MR. HUELSMAN: In one of the handouts, second to
the last page, there is a little distribution of the treatmen
level by the various sizes. We want to show you we are gettii
a smattering across, which was one of the objectives.
MR. CROSBY: Will you be weighing geographical dif-
ferences, say from north to south, as regards treatment effic•
iency and costs?
MR. DONAHUE: We are gathering data at the state
level essentially.
MR. IIUELSMAN: Right.
MR. DONAHUE: We are going to present findings at
the state level, that is our intent. It depends on what the
data says when we get it all and sort through it and analyze
-------
53
3 it in different ways. Our intention is to aggregate the inf 6
mation and data at the state level and show the differences
from state to state. I am not sure if that answers your
question or not.
MR. CROSBY.:: I am sure we are so preliminary at
this stage it is difficult, and I am asking questions which
I am sure you have already considered and probably will do in
the final document.
When you get to the regional meetings in October,
will you be dealing with any of the data that we have provided?
MR. DONAHUE: Yes.
MR. CROSBY: You will be?
MR. DONAHUE: Yes. We will have analyzed the data
by then. We may not have finished the analysis. We will hay
summarized and tabulated it, and come up with something like
U)
what does it mean? We may not have formulated recommendation
MR. LIUELSMP N: Another comment.
-J
The schedule that was set up and the reason we want
to have these meetings in October is to allow us time, if
needed, on anything else that comes, up at this point, to
properly address itself so that all issues will be properly.
addressed in our final report. I hope we are going to be 95
percentthere , but we have allowed time for. thatother5 percen
-------
54.
4 MR. CROSBY: I am sure our people will show up in
the regions.
Thank you.
MS. BRYAN: I am Dot Bryan from the National League
of Cities. I have no questions, but I did want to second
Mimi’s statement of concern about the administrative cost to
N
communities, particularly the small ones who simply do not
z have the resources or staff to administer.
MR. DONAHUE: We have two questionnaires, one- for
cities and one for industries. One of the sections on the
questionnaires f or cities is what is it costing the city to
implement and administer on an ongoing basis user charge and
ICR systems, and also what their monitoring and enforcement
costs are on an ongoing basis. And what ones could they
I.-
eliminate if you did away with ICR? S
MS. BOOLUKOS: Susan Boolukos, American Frozen Food
Institute.
-J
The first thing I would like to ask —- and you will
have to refresh my memory a little bit from the last meeting
-- we discussed the fact that the frozen food industry was
going to be included under the same -— well, whatever that
number, is -- and although we have gotten back what I consider
to be a reasonable number of responses from the quesionnaire
-------
55
5 that we sent out, I have had no indication from you people
as to the specific .plants that perhaps you have already
arranged to meet with or even the specific cities that you
are involved with, with the canners and the freezers, and I
would ask that we talk about this a little bit further, maybe
at another time.
I would like to be able to go to these people and
explain the situation in perhaps more detail and have them
work together with you because I think that is •an important
aspect.
The other aspect that enters into the freezing plan
situation is the size of the cities in which we are located,
and as you recall, you did get a list of cities that I con—
sidered to be small cities in which we were involved. Whethe
I-
they included ICR or not; I cannot tell you because I was not
U.’
familiar with the municipality situation.
But going to Robert’s questions, that he addressed,
I think that was one of his concerns, the demonstration of
z
inequity between small city and large city. I would like to
see that demonstrated a little bit, more. If we can help you,
I will strongly suggest that you contact us.
MR. DONAHUE: Fine.
MS.I300LUI(OS: Another thing I would like to say is
-------
56
6 this, it is something I have kind of heard of third and fourt
hand, and again I am not able to give you any specific cities
and that is that in a few situations where canners and
freezers were involved, the industry feels that there was no
attempt to contact them specifically with regard to the meet-
ings that you were having with the cities on those particular
days.
As a matter of fact, there is at least one city tha
I-
industry contacted and was told, sorry, it is our meeting wit
EPA--
MR. DONAHUE: This is back in the State of Washing-
ton?
MS. BOOLUKOS: I think that may have been it.
MR. HUELSMAN: Let me comment on that.
La
I.-
u MS. BOOLUKOS: It was a little bit confusing to us.
0
U)
U)
MR. HUELSMAN: Let me try to comment on that.
I believe there was a misunderstanding that there
were to be two meetings in every city we went to. The first
meeting was to be -- the way we tried to schedule it -- with
the grantee where we were really trying to dig out a lot of
the information. In the particular case I think you are
referring to, the industry wanted to s t in on that meeting,
— and that was not ever meant to be an ‘ open meeting,” because
-------
57
7 you can’t try to interview a person with everybody sitting
around like this. We just could not;
MS. BOOLtJKOS: ‘Sure.
• MR. HUELSMAN: But there was to be a follow—up meet
ing, hopefully at the same location with industry’s, and this
is what we have tried to do in the cities is say we are going
to be here, we will be at 10 o’clock or 4 o’clock or wherever
it is, let us come in and let us talk, and most of the busine
ses prefer to say, now, look, we know the kind of information
‘ e will get it to you,” type, of thing, instead of spending th
time to come in.
That, I believe, was the misunderstanding.
MR. DONAHUE: In most cases, the first meeting is
to find out the administrative cost to the city, monitoring
w
and enforcement costs, et cetera.
In most cases, the city has no objection to indus-
trial people sitting in on the meeting, although we, did not pa
ticularly invite industrial people to sit in on these meet-
ings because we did not think they were interested i i doing
LU
it.
In most cases, cities don’t care if industrial
people sit in.
We have had two or maybe three occasions where city
-------
58
8 people have not wanted industrial people present at those
meetings, and since that was the only way we could get city
officials’ cooperation, we agreed to that.
We are not trying to keep anything secret or hide
anything.
MS. BOOLUKOS: It was not the problem from the poin
2 of EPA region nor the contractor, but I think it was more of
z something I had interpreted to be more Of - a misunderstanding
on the part of the municipality that was involved.
MR. DONAHUE: It is not to the city’s advantage to
exclude industry from any kind of meetings. That is short-
sighted.
MR. SNYDER: My name is George Snyder. I am with
the Greyhound Corporation and representing, let us say, Armou:
and Armour Dial as well as Greyhound.
I have two things.
First, on July 13th, we were contacted by Mr. Brown
of C&L who stated that they were going to conduct some
studies at Omaha, Sioux City, Minneapolis, Louisville, Kansas
City, and Green Bay, and it was to be done by September 1.
To date, we have never seen those people nor ha’Ve we had
someone come out there as of August 24th.
MR. HUELSMAN: We have a fellow in the back that wa
-------
59
9 at Green Bay.
MR. BRODIE: I was at Green Bay.
MR. SNYDER: At Armour?
MR. BRODIE: Not at the plant.
MR. SNYDER: Mr. Brown contacted us and said that
we would be advised, and we have never heard since.
MR. DONAHUE: Let me find out about the logistics
g of that. There could have been a mix-up.
I-
In many cases, a lot .of the corporations we wanted
to visit in a given city did not want. us to talk to their
local people, and they referred us to their headquarters.
Like DelMonte, we got infdrmation from 20 odd DelMonte plants
and none of those places did we set foot in those plants
because DelMonte people in San Francisco wanted us to get
u everything frorc them, which is what we did.
MR. SNYDER: We have over 30 facilities presently
covered.
Do you expect us to testify or have someone testify
locally on each one to show us it is national issue as opposei
to not just a Fall River issue? In other words, let me just
take one minute of your time to read this.
St. Paul is served by a seven county POTW, and the
annual UC charge is 330,000, the anticipated Id charge will
-------
60
10 approximate 20,000 annually and it is expected to reach 30,00
for 30 years thereafter. At Worthington, with a population
of only 13,000, with two industries, the current annual UC
billing to Armour for everything approximates $100,000 at thi
time. If the city proceeds with the least cost compliance
program developed by its consultants, which is $7.5 million
in 1976, the ICR charge will be $48,000 per year for 30
years. And inasmuch as pretreatment system, treating Armour
0
waste, is used solely for industrial waste, it is ineligible
for Federal grants. So, therefore, it would also be required
to pay approximately $103,000 per year for 20 years, and it
is estimated that the Armour share of the UC charge will
increase from its present $100,000 then to $215,000 annually.
At. Green Bay, which is more highly industrialized,
w
which would be our third example, the UC charge currently is
U)
$125,000 annually, and it is estimated the ICR will add a
minimum of $15,000 annually for 30 years. It is based on cur•
rent knowledge of the POTW projects of these municipalities
serving Armour and Greyhound facilities that total ICR pay—
ments will approach $150,000 annually beginning in July of
‘79 should ICR be reimposed and increase approximately to
$400,000 annually for 30 years thereafter, and beginning in
1983 as more POTWs are completed, total payments would approa
-------
- 61
the $10 million to $12 million figure as a minimum.
MR. DONAHUE: Can we get a copy of some of this
stuff?
MR. SNYDER: Yes. You are going to have th se ten
regional meetings. How about something on the national --
what is it going to do to a national company?
MR. DONAHUE: The impact of ICR is at a plant level
z It varies from one city to another as you just pointed out.
Your rates per gallon for user charges or ICR vary all over
the 1st. That is the function of the size and location and
cost and all of that. .1 am not sure what EPA intends to do
a national level.
MR. l-IUELSMAN: On the industries that have been
p.
selected by EPA, the cost to those industries are going to be
projected on a national level all right because we are going
to take from our sample and be able to project what the total
cost is. Now, we are not breaking it down by individual larg
corporations. 1e were not planning to do that. We are plan-
ning to do it by industry on a national basis.
MR. DONAHUE: The final report will talk about
industrial totals.
MR. SNYDER: We should have this expert or whoever
becomes the expert in this area show up at all these ten
-------
62
regions to talk about those plants that we had in each of
those ten regions, to give you their specific data that you
need.
MR. HUELSMAN: I believe we would like to get the
specific data from you right now or as soon as we can so that
can be incorporated in our findings.
MR. DONAHUE: If you feel it is to your advantage
to testify at public hearings, fine. The information is just
as valuable to us if we can sit down with one guy and get the
stuff rather than have him go all over the country.
MR. SNYDER: e can contact you to set up that
appointment.
MR. DONAHUE: One plant I am particularly curious o
Is St. Cloud, Minnesota. You have a poultry processing plantL’
I-
You moved it from town to a location ten miles outside of tow.
U)
and went to self treatment, direct discharge, and the people
in the city were not very clear when Italked to them as to
whether it was because of sewer bills or water bills or avail -
ability of water. There seems to be a lot of controversy on
why you wanted to double the size of y ur facility, when you
doubled it, you moved from town to ten miles outside of town.
MR. SNYDER: We will get somebody in touch with you
MR. DONAHUE: Thank you.
-------
63
MR. McDERMOTT: My name is Jerry McDermott. I am
Chairman of the Environmental Quality Committee of the
National Coffee Association.
We have prepared a form similar to that of the
National Food Processors Association for submission to you.
We expect any day to submit the data on a few plants.
I am a little disturbed that the tone of the whole
procedure is that you are going to find.a great many industr es
that have gone out of business because of ICR. I think that
is an extreme view, and from the start I didn’t anticipate y u
wouldn’t find some. I wanted to call to your attention that
the Cormnittee on Eankirig, Finance and Urban Affairs of Con-
gress investigated the problem of central cities and their
unemployed, and they came to the conclusion that there are
I-
barriers to retaining or expanding operations in these loca—
tions. T1 e included limited availability of land, poor
public services, overregulation, perceived anti—business
_1
attitude of local governments, high taxes. And we could ver
zt
well add to that list Industrial Cost Recovery.
w
So I think in the extreme we should take the atti—
tude, is this directionally wrong? Not that it is putting
people out of business. Because there are many, many reasons
why the central cities have to he saved. So we should look
-------
65
reserved capacity to particular industry.
So I think we should take ICR off of reserve capac-
ity. It is inhibition to 0W4 and good planning.
The second place that we should take ICR off from,
if we are not going to abolish it completely, is on what corn-
ponents of the facility it is applied to. Now, the law actu-
ally says that industry will pay their fair share of the cost
of treatment.
0
Now, I understand that the law defines treatment
works as including the treatment facilities, the interceptor
sewers, and even collecting sewers. But the word in the law
is “treatment.” So ICR should only be applied to treatment
facilities and. not to the interceptor sewers and particularl
not to collection system.
There is logic in that. I am not saying that
industry shouldn’t pay their fair share of local cost of the
system. There is logic in not paying ICR because it is a
benefit to society to regionalize these systems, to ?U±.1
z
these large interceptor sewers, and sometimes as much as half
the costs are going into interceptor sewers, and now that the
last Congress authorized grants for the collecting systems,
there will be increased amount going into collecting system.
This is a society benefit and not particularly a benefit to
-------
66
industry..
So we should not be forced to pay ICR charges on
interceptor sewers or collecting systems.
Now, we talk about pati ybetween urban located
industries and rural located industries. Where is the p..rity
between the rural citizen and the urban citizen? Nothing is
being done to subsidize the rural citizen.
U
Why do we take this view about having to have p*ri*
between the rural industry and urban industry?
We should take not’ parity ’as:.arr hie of .reeaçn’, but
what is good for the country and what is right, what is direc
tionally right.
I believe it is right to keep our urban cities via—
ble. We look at air pollution. The only solution that looks
I-
viable forour air quality problems is that which takes care
of the transportation problem. If we are going to.use mass
transportation, we are going to restrict the automobile, we
are going to need congested urban places -- we are going to
need them viable.
Thank you.
MR. PAl: There is one comment I want to make on
reserved capacity.
Number one, reserved capacity is not mandatory.
-------
67
Industries do not have to sign reserve capacity agreement.
The fact that we allow industry to sign reserve
capacity agreementj actually trying to eliminate any future
additional costs. If the plant goes to expansion, that indus
try does not have to pay additional costs any more because
the increase was not due to the increased use of a certain
N
industry.
MR. MCDERMOTT: I did not get the first part of wha
0
I-
you said. You said they are not being required to sign
letters of Commitment?
MR. PAl: They are signing letters of intent which
is not a contract.
0
MR. MCDERMOTT: I said letter of commitment. I did ‘t
use the words “letter of intent.” Cost—effective guidelines
said letter of commitment.
0
MR. HUELSMAN: At the first part of John’s statemen
he said that industry does not have to reserve capacity, that
is not a requirement --
MR. MCDERMOTT: I did not say they were.
LU
MR. PAl:. The first statement was they are not
tosign .
required /r serve capacity commitment.
Reserve capacity, by all means, is to the advantage
of the industry. If you are reasonably sure what your capaci y
-------
68
is going to be using, you sign that reserve capacity. If the
plant is undersizeand they have to buird additional plant,
you do not have to pay any more ICR, you pay ICR based on the
first size of the plaht. Reserve capacity is to the
industry’s advantage. You did not get that clear?
MR. McDERMOTT: I understand if you actually need
capacity, know you are going to need it, then you are better
off having committed to it.
0
I-
I think the best system is to build reserve capacit
use it on first come—first serve basis, and then when the corn
munity needs more, they do not force industry to go out and
build more, they join as a community to expand the system jus
like any other utility.
MR. PAl. Fine. Then do not sign reserve :capacity
agreement. It is not required.
(I )
MR. MCDERMOTT: I know.
MR. PAl: You sign it for your advantage, okay?
You sign that for your advantage.
MR. McDERMOTT: If everybody else signs up for
capacity, there is not any for you.
MR. PAl: There is another reason. Sometimes when
we encourage you on reserve capacity, it is to do better plan-
ning. Everybody knows what you are going to use so they can
-------
69
size their plant better instead of going five years and they
are going to upgrade or it is undersized, they get a better
feel of how much you are going to use. They get all major
industry to come in to a certain amount that they live with
that amount so you do not have excess capacity. Somebody is
paying for it. The citizens are paying for it Reserve
capacity, Istill think, gives you a better judgment of the
local planners, how to size up their plant. It gives corpora
tion headquarters a definitive thing about how to expand thei
production money and things like that...
I just cannot agree that throwing away reserve
capacity would help ICR anyway. The rest of the comments you
make on the collection system -- I am not talking about direc
tion in the future -- but just based on your logic that
industrial users only pay for the treatment plant itself, I
think a similar argument would be as long as industry can
shift their waste into treatment work for treatment itself,
they do not have to pay collection system. But again I’m not
favoring ICR or not favoring -- I am not taking the positon
one way or the other. I want to tell you the way ICR is
implemented is exactly the way Congress intended. What direc-
tion Isee IC taking is based on this study and what Congres
will decide to do.
-------
70
MR. PERRY: Bob Perry, Water Pollution Control Fed-
eration.
I have just two questions or comments. One is in
the legislative history. I do not know whether it was Mr.
Roberts or somebody was talking about a GAO report, which was
underway at that time and expected to be completed soon, and
that that report would also be used as a basis for this stud
Where does the GAO report stand? Does anybody kno
MR. PAl: I have that report. I can make a copy
available to you, Bob.
MR. PERRY: It has been completed then?
MR. HUELSMAN: Yes.
MR. PAl: Yes, they have completed what they intenc
to complete. Originally, they wanted to go the full extent
and submit the report to Congress. After amendment, they
Cr ,
decided to submit it to us as a base for the ICR study. I
can make a copy of that available to you.
MR. PERRY: The second point is on page 2 of your
z
data that you passed out.
I recognize the fact that ICR and User Charge is a
burden on small communities, considerable burden, ’ but I woul
really question that 25.7 percent figure, if you eliminated
ICR, if it is still kept in User Charge. It just seemed to
-------
71
me off the top of my head that should be closer to the one uç
above, the 9 percent.
MR. HUELSMAN: They are two different things.
MR. DONAHUE: You are talking about monitoring and
enforcement costs, and apparently the communities in this of
the 45 that are included in here say they will be able to eli
mate 25 percent of their monitoring and enforcement costs.
U
z I said some of this data has to be verified and validated.
I-
My gut feeling is I am not sure what you can eliminate when
you eliminate ICR as far as monitoring and enforcement -—
MR. PERRY: You have to have user charges and all
monitoring that goes along with that. In any way, I would
question that 25 percent.
MR. DONAHUE: This is raw data.
I-
MR. PERRY: That is all I have.
U)
MR. ELLICOTT: Andr Ellicott with the Association of
Metropolitan Sewerage Agencies.
-J
• I want to thank you for keeping everybody posted on
z
how you are coining so far. I really appreciate that. I am
a.
glad we have another meeting be ore you go into preliminary
recommendations.
I want to ask you a couple of questions on your
monitoring system. The first one is, I think I can understan
-------
72
wha€ you are trying to do in the quantitative approach, but I
am concerned bout the verification of the results of the
model and, in particular, everyone seems to be concerned abou
plant closings.
While I am not convinced that you are going to find
many plant closings, there seems to be a lot of other people
here who feel the same thing may be true, I am concerned that
z if you do find any, or that since your model is concerned wit
projecting thresholds at which people will theoretically deci e
to pull out of a system, in other words, close a plant
MR. HtJELSMAN: Or self-treatment.
MR. ELLICOTT: Or self-treatment, i assume you mean
by self—treatment, pretreating to domestic treatment --
MR. DONAHUE: No. Total self-treatment, not use
I-
POTW at all.
MR. ELLICOTT: -- to municipal treatment persoi
thati5 pulling out of the system. Assuming that is the alteri
ative that you are looking at, and also assuming you may not
find too many plants that close, how will you test your theo-
retical threshold so if you do not hav.e a group of industries
or plants that have actually closed because of alleged ICR
charges?
MR. RULE: That is why we have to go to modeling,
-------
73
frankly. If we had any experience on plant closings, plants
switching, employment cut back and so forth, we would go and
measure it directly. We cannot.
What we have to do is structure our economic models
to capture as best we can the economics of the cost, decision
on -
making process,/the part of the individual firms, and draw
conclusions on the thresholds, at which they will take vario s
U
actions.
I am not saying necessarily that what I have said
here captures all of the possible actions that a firm could
take. Obviously pulling out entirely is one. But there are
others. There are others that were not discussed directly th
would be taken into account.
Changing the scale of the plant up or down;changing
I-
the level of unemployment; the rate of output. Those are all
U•)
possible effects that we hope to capture through these models.
It is not strictly a closing or not closing decision. It is ot
strictly a pullout or not pullout decision.
z
You can proceed in several different directions at
one time, reducing a level of discharge and cutting back on
employment in the plant, changing the annual production of
the plant, all at the same time.
Those are the things we have to be able to capture
-------
74
in these models.
MR. DONAHUE: And models are going to be based on a
much actual data as we have got. If we had a lot of actual
data, we would not need models. We are trying to make some
projections.
MR. ELLICOTT: I understand that, and I am not par-
( ‘I
ticularly worried about it. What I am concerned about is not
that you are considering a range of different strategies that
a plant owner or operator might consider that is faced with
sky high ICR bill, what I am concerned about is whether or
not you will be able to test in any subjective or quantitativ
way whether or not real plant managers behave the way you
think they will when they get the threshold.
Now, the reason I ask this is because although
L U
Jerry may have been a little strident in what he was saying a
few minutes ago about different alternatives to coping with
ICR, let us say, I think it is far more likely that you will
find most industries trying to cope rather than pull out or
self treat. It would be good if there was a way to try and
x
deal with that in the study, I am not, sure that there is, if
we come up with an expanded or perhaps more detail’ëd version
than the first two sentences on the fact sheet -- does” what I
am saying make sense?
-------
75
MR. DONAHUE: Yes, it does. I am not sure how we
can answer it.
MR. OLSTEIN: Can I try at least a little bit?
We are not going to be able to do any kind of pos
hoc test after the modeling is finished, but what we will be
doing is that the equations that are developed will, to a
large extent, be based on actual data that we have received,
and I have had a gentleman in charge of that decision for a
very large company tell me that east of the Mississippi, if
there is ICR charge, their plants will always self treat beca s
is
:- that/the way the economics are and that is how close they are
being at that marginal point.
MR.. ELLICOTT: I would say that if they have a
plant and they are called Anheuser-Busch, and they are in St.
I-
Louis, there is no way they are going to close that plant.
U,
What they are going to do is go outside of St. Louis and buil
a new plant. This does not concern, as far as ICR is concern
this does not concern anybody outside of St. Louis, but it
z
concerns a hell of a lot of people in St. Louis.
Now, from the treatment agency standpoint, in the
same example, one of the possible effects —— and I do not
expect you all to take this into account in your report becau
I know time is limited and brainpower is limited -— my God, y
-------
76
can’t work with people 24 hours a day -- the particular sewex
line that Anheuser-Busch is on has another discharger of
almost equal volume. AB discharges basically an acidtc*ó’
waste. The other discharger discharges a basic waste. To—
gether they are a great combination in a sewer. But if one
of them pulls out, there is going to be hell to pay on the
inside of that sewer. These are just small examples of thing
that are impossible to really take into account on a national
0
I-
level, but they are important. -
MR. HUELSMAN: You can do the same thing from a
plant standpoint.
MR. ELLICOTT: Indeed you can.
MR. HUELSMAN: If a plant shuts down, that is put-
ting all suspended solids in there, then that plant doesn’t
w
I-
work.
0
U)
U)
MR. ELLICOTT: One final point because I thinkS
everybody is anxious to leave, and it may be addressed to EPA
as much as •C&L.. I think that you do have to try and con-
sider coping strategies for ICR.
Jerry McDermott’s argument about reserve capacity
is essentially a policy decision. It is not something you ca
decide on the basis of the law.
Now, I understand, John, that industry does not hav
-------
77
to contract for reserve capacity. That is perfectly accept-
able. Is it a possibility that either the conclusions or the
evaluation of the conclusions in your study can look at the
alternative of not charging ICR on reserve capacity if indust,
wants it, or take it off the cost of the interceptors when
calculating ICR charges, or do you feel that that is beyond
the scope and purpose of the study as it is being done now?
MR. PAl: You’re talking about not charging ICR if
industry reserve capacity —-
MR. ELLICOTT: In other words, the study that it se
up now, there are two alternatives. Either industry stays in
or pulls out. That is basically it. It may be impossible to
prove that ICR is a real burden as presently constituted or
at least enough of a burden that somebody will pull out and
enough people will pull out on a national level that ICR is
a “national” problem, but it may be quite true that ICR is
big enough problem that it really makes life hell for people.
I think that if there was some way to show whether or not thai
was the case, it would be very useful.
I will not take any more time because I have not
thought this out any more carefully.
MR. PAl: We will have to think more about it, indeE
MR. ELLICOTT: I think it is something that is
If )
N
0
N
N
0
0
N
L I
0
z
0
I-
I .,
z
In
U )
I-
I d
I d
I-
U’
a
I-
U’
P.
U)
LU
I-
U
0
U)
U)
LU
-J
-J
z
LU
I
0.
‘U
-------
78
important.
MR. PAl: I guess we did not mention this point,
but for those who have been in our meetings all the time,
they may have in their mind what some of the options are that
we should consider, and either contact me or Ed and we will
use it as sort of a laundry list. Maybe we will have another
Opportunity to look through some of them, consult with some o
them and pick everybody’s brain and hopefully we can, come out
with some agreement that everybody can commit to.
If you have a suggestion on ICR as how to handle
this recommendation wise, recommendation to Congress, just se
in a laundry list. You do not need anything more than a list
ing’ of what you think the alternatives are, nd a few brief
explanations, and we will put them in a;iaundry list and
then we can sit down and look it over orally.
U)
U)
MR. SILVERM : I just want to say this, that
because there has been a tremendous amount of waste in this
program, and that is being documented more and more each day,
in terms of plants that are too big, that are unnecessary, in
terms of type of treatment or degree of treatment needed, and
it seems like there is a tremendous lobby that is always ther
of . ngineers and other people who profit from this five or
six billion dollar program who like to see it expanded and se
-------
79
more and more money put into it, but it seems like what the
taxpayers are telling us and what public interest groups are
saying, and I’m happy to see what industries are saying, we
have to put some brakes on this. We have to be a little more
economical,
I for one would be very sad, and I am very happy to
hear industry people saying that this is expensive, or from
0
their own experiences, pinpointing systems which may bea P00
system because they are too expensive -- I would be very, sad
to see those industrial people taken off the hook so they do
not have to worry about cost, and they can pass it on to the
taxpayer. I think that would hurt us all.
MR. HUELSMAN: Taxpayers are saying that, too, and
they are looking at their sewage bill.
MR. DONAHUE: If anybody has any other comments or
questions, we would like to get them.
The other thing is that we will have a transcript
in two weeks or so from this meeting, and everybàdy, assuming
we have the names and addresses of everybody who are here, we
will send them a transcript. If anybody wants more transcrip
they should let us know.
MR. HUELSMAN: I would like to make one request.
Seve 1 of you have indicated you have got some
-------
- - 80
information, and we have said, gee whiz, we would like to get
it. Folks, the time is getting to the point that we are
going to start entering an awful lot of data into our compute
files shortly after the holidays. So if you could get it in
as soon as possible, we would certainly appreciate it.
MR. DONAHUE: Thank you very much.
N MR. PAl: Thank’ you.
U
(Whereupon, at 3:35 p.m., the meeting was,
concluded.)
I I )
Ui
I -
hi
hi
I-
In
I-
In
P.
U .,
w
U
0
U )
U)
-J
-J
z
w
w
-------
INDUSTRIAL COST RECOVERY STUDY ADVISORY GROUP
Room 1032
Environmental Protection Agency
Washington, D. C.
Wednesday, October 11, 1978
The Advisory Group was convened at 1:50 p.m.,
John Gall presiding.
STEPHEN B. MILLER & ASSOCIATES
745 THIRD STREET. 5. W.
WASHINGTON. D.C. 20024
i202 554.9148
-------
2
CONTENTS
Page
1 fltroductjon of Attendees 3
Itineraries
Remarks by Mike Townsley 6
Remarks by Myron Olstein 10
Questions and Answers 16
-------
3
PROCEEDINGS
MR. GALL: My name is John Gall. I am User Charge
and Indust±ial Cost Recovery Specialist in Region I, Boston.
I have been here the last three meetings of the
Advisory Group, kind of sitting in the corner not saying
anything. As you probably all know, we will be going out
th the next two weeks on an extended public participation
effort. We have conveniently split the country up into the
z
eastern and western sector.
The reason I am here today is I will be attending
all hearings in the eastern half, while John Pai will be
attending in Regions VI and X.
I think it might behoove us if we started to go
around the table, so that everybody would have some idea
to whom they are talking.
If we could start over here, I would like everyone
U)
to introduce themselves.
MR. TOWNSLEY: I am Mike Townsley from Coopers &
Lybrand.
z
LU
• MR. BROWN: I am Alan Brown from Coopers & Lybrand.
MR. }{USELSMAN: Walter Huelsman, Coopers & Lybrand.
MR. DONAHUE: Ed Donahue, Coopers & Lybrand.
MR. OLSTEIN: Myron Olstein, Coopers & Lybrand.
-------
4
MR. ROGSTAD: Barry Rogstad, Coopers & Lybrand.
MR. RULE: Bill Rule, Coopers & Lybrand.
MR. ELLICOTT: I am not from Cbopers & Lybrand.
(Laughter)
MR. ELLICOTT: Mdy.Ellicott, and I am from the
Association of Metropolitan Sewerage Agencies.
MS. BOOLUKOS: Susan Boolukos, American Frozen Food
0
0
‘1
o Institute.
0
MR. KIRK: Don Kirk, with H.J. Heinz Company,
with National Food Processors Association.
MR. COOPER: I am Jack Cooper, National Food
Processors Association.
MS. MCCLURE: I am DeirdreM Cj.ure from Congressman
Studds’ office.
MS. SAVAGE: Robbi Savage, National Association of
Manufacturers.
MS. QUILLIAN: Tony Quillian with U.S. Brewers
w
Association.
MR. PA l: I am John Pal with EPA.
z
L i i
MS. FINCH: I am Carol Finch with EPA.
MR. WHITTINGTON: I am Bill Whittington with EPA.
MR. GALL: For anybody who hasn’t yet availed
theinsei .ve.a of it, there are several copies of handouts
thatCoopers & Lybrand has put together for today’s meeting
-------
5
that probably will be almost necessary.
For any of you who don’t know the schedule
for the next couple of weeks, I would like to briefly run
it down.
Starting with the eastern half, we will be in
Chicago on the 16th and 17th; and then on the 18th in
New York. The 19th will be an open day. On the 20th we willS
be in Philadelphia.
Also there is a possibility that if necessary, we
will carry over the Philadelphia meetings until the 23rd.
On the 24th and 25th we will again be in Boston.
• Then on the 26th in Atlanta.
For the western sector, we will start with Dallas
on the 16th and 17th; Kansas City on the 18th; Denver on the
19th; San Francisco on the -23td and 24th, and Seattle on the
25th.
U)
U)
If anybody has any specific questions about where
or why, when and any particulars on the meetings,, i would
suggest you talk to us afterwards.
One of the things we are going to attempt to do today
is to have, if you will, a dry run 9 f the presentation we will
be giving in the next couple of weeks. That is to provide
some introductory remarks from the EPA, both at the RA’s
-------
6
level and UC/ICR Specialist, to have Coopers & Lybraz d
t’hQdO1Og : ’ that they utilized in conducting the study, and
to discuss some of the recommendattons, and as you are
probably all aware by now, to discuss some of the alternatives
they are going to put forward in the draft document dated
October 10, which you all have a copy of.
For the sake .of brevity in today’s meeting,
I would like to dispense with RZ ’s opening statement, which
would generally lay out the format for the meeting,
welcome everybody, express his or her desire to have the thing
conducted in a full and open format, and go forward.
I would also like to dispense with the UC/ICR
Specialist presentation, because that essentially provides
background, for the general public of which you are all aware.
The next step in any regional meeting is going
I-
to have a representative from Coopers & Lybrand present the
(n
scope and methodology and today since I am here, I guess
we are going to be using the eastern half, so Mike Townsley
will provide you with an overview of the methodology that
z
they used.
MR. TOWNSLEY: All right, I am Mike Townsley, and I
was working with the field group that was collecting the data
in basically the eastern half of the country.
I am going to abbreviate some of the things we will
-------
7
be spelling out in more detail at the regional meetings.
When we first started, one of the first things we
did was look at 1972 legislative history to find out what
ICR was supposed to accomplish, and basically there were
two major objectives: equity and capacity.
A third was to encourage water conservation.
After looking at the background material, along
o with the legislative history, and especially Congressman
Roberts’ questions and Congresswoman Heckler’s statements
on ICR,we developed a frame f reference for us to plan
this study.
Our first step in late May was to meet with the
EPA people, including John Gall, John Pai, and Ted Horn,
a nd put together a shopping list of all of the data that
we wanted to collect in our surveys.
We took this •list of data requirements or data ele-
ments and converted it into two draft survey questionnaires,
one to be used fo grantees and the second to be used for
industries.
z
We took these draft questionnaires and reviewed
them with some of the industry groups here.
After refining our questionnaire some more,
we developed a list of people to be surveyed. With EPA
assistance we developed a list of approximately 100 cities
-------
8
that we planned to visit and they ranged in size from Ravenna,
Nebraska, with a population of 561, to New York City and
Chicago. We eventually visited over 120 cities, some of them
more than once, in order to meet with industry people.
We mailed our survey questionnaires out in advance
to the grantees so they would have a chance to begin collect-
Z ing data before we arrived.
u Let me back up a little bit. In addition to the
100 cities that we visited directly, we called another 200
cities and sent them questionnaires, the same questionnaires
that we used in our visits.
In our industry area we selected five industries
that we specifically wanted to look at. We have subsequently
a,dded more. The criteria for selecting industries were
U,
several.
U
First of all,each industry had to be labor-intensivE
with a low operating margin and a high water use.
And after that, we looked at the effect of season-
ality and any pre—treatment requirements.
z
The industries selected were meat packing, dairy
products, paper and allied products, secondary metal pro-
ducts, canned and frozen fruits and vegetables, Subsequently
we have added textiles to that. I think we will probably
-------
9
add the bakery since we have a good series of bakery’r reports
coming in, too.
The second step in our study was to develop a
mechanism for public participation, and that is why I think
you people are here as the advisory group.
We have held the monthly meetings and we will explaii
about them in more detail when we get to the regional cities.
A third step in the project was to summarize and
analyze the data collected.
We are in the middle of this right now. We are
through collecting and we are analyzing.
We have some reports, and we have a lot of detail
to look at.
We have developed some possible alternatives that
we have passed out today, and what we are really trying to
do now is to take a look at very briefly what we have
found and get your reaction to it.
After we have completed air regional meetings
during the next two weeks, we will put together a draft final
report which we will circulate very widely.
I-
U)
We think this will be in, mid-November because by
December we will begin writing our final report so that
it can be delivered to Congress by late December. The final
-------
10
report will contain the recommendations to Congress.
We don’t know whether they will accept them, reject
them or whftt they will do with them.
Now at this point, if we had in our regional
meetings, we would introduce a Congresgjo speaker. I
don’t think we have one today.
So we can go on and talk about our Preliminary find-
N ings, conclusions and the possible alternatives.
Myron Olstein is doing it for today.
MR. OLSTEIN: My name is Myron Olstein. I am here
to tell you what we found during the course of the study,
what we think it means, and then to present some Possible
alternatives.
The data and statistics I will be using az e based
on our study and are currently being studied, validated and
I —
refined in our Washington office. RAther than hand out raw
U)
data, computer print-outs that will be understandable to very
few people, we have summarized our data in a handout entitled
ICR Study Data. It looks like this (indicating),
z
dated October 10.
0.
You should have received cppies of this handout
sarlier. The final version of this analysis will be appended
to and included in our final report.
Remember, as you look at the data, that it is mostly
-------
11
average data and requires careful thought before it is used.
We received data from 241 g antees, the best data obviously
coming from places where we were able to actually visit
with the grantee.
The data that we obtained through telephone surveys
was not as complete or precise.
In addition, we also obtained data from 397 indus-
trial facilities, most of it throUgh the efforts of trade
associations; industrial data is at the plant level, other
than at the company level.
Looking at the major issues before we look at
the specific data, the first thing that we would like to
address is the issue of equity, for the assumed economic
advantage, that is lower sewerage cost, for industries using
U.,
Lii . .
• OTW’s as opposed to those treating and discharging their own
U
0
wastes. We used a computerized model which we developed
for industrial clients and modified it to reflect user charge
and ICR situations. Basically the model incorporated
equations which reflect the cost of doing business, and enab1e
a company to evaluate alternatives--in essence, a “make or buy
•decision: should we use a POTW or treat our own sewage?
We: .fou d:. by.Use ..of:the’ model that..for othe medium
or large companies having compatible wastes, it is cheaper
-------
12
in the long run to se1f-tr at even without including ICR.
This is just due to user charges. That is in our mind a
very significant finding. What it means is that even without
ICR or pre-treatment costs, large industries should from a
purely economic viewpoint treat their own sewage.
Now this is based on a number of tax changes that
were not known to the Public Works Committee and have been
0
0
Li enacted after the passge of P.L. 92-500. These include
accelerated epreciationfor pollution control equipment,
investment tax credits for capital equipment and the use
of tax-free IDE ’s, industrial development bonds; financiñ L.
self-treatment facilities.
There are a number of proposed taxable changes
now pending before Congress, which will, if enacted, make
U)
it even more attractive for industries to self-treat,
U
because of the increased investment tax credits.
U)
Basically what this finding says is that for many
w
industries, it really is cheaper to self-treat than to use
POTW.
z
La
Now if this is the cae, the obvious question is
why don’t more industries self-treat? We had a number of dis-
cussions with decision makers, and we arrived a€ a number
of potential reasons.
In some cases they may not be located on or near
-------
a--river or stream and are forced to use POTW.
Many companies dontt want the hassle of self-treat-
ment, going through NPDES permit, sewage plant operations and
that sort of thing.
Finally, UC/ICR has not really been in. ffe t:.1ong
enough for people to deafly see its impact.
The significant.thing to bear in mind is if ICR and
u pre-treatment costs are added on top of user pharges,. they
could be the final straw that drives industries ou,t of POTW’s,
thus making it more exPensive for remaining POTW customers to
use in a POTW.
In particular, EPA ’s application of pre-treatment
standards is likely to make many industries consider self—
treatment.
U)
The second major issue that we looked at was that
U
of POTW capacity. Based on the survey of 241 waste water
In
treatment facilities for which we obtained data, the average
LU
OTW uses only 68 percent of its design capacity. We are
looking at a range that goes from a low of;. 4L percëñt:.to a high
z
LU
of 120 percent.
It appears that ICR, as presently formulated, has nol
acted to put a cap on the construction of excess future
capacity in POTW’s.
-------
14
-: The final issue that we looked at, that of water
‘conservation, is ‘not as clear as the first two. Based on the
industries that we surveyed, ‘water consumption has dropped an
average of 29 percent. The industties with whom we talked
attributed the water conservation to a variety of factors,
including higher water charges, and to user charges, rather
than to ICR because ICR, as a percentage average of the water
cost and user charges, is not very significant at this time.
The economic impact of ICR is not significant in man
cases, either, to date, because for one thing ICR has not been
in effect for more than-’a year or two, and most grantees have
suspended ICR building ,, while a moritorium is in effect.
The exceptions to the insignificance of ICR is in
those cases where there are highly seasonal users and/or AWT
requirements.
In most cases, total sewage costs for industries
U)
have increased, by several times.
The incremental impact ot ICR above user charges is
generally not great with the exception of the two cases just
z
mentioned; the combined impact of UC/ICR can be very significa
We can find only a few scattered instances of plant
closings due to sewage costs, and none attributable solely to
ICR. The total jobs lost in the plants that did close was les
than 1,000.
-------
15
Inevery case, there were other factores such as plant age
which affected the plant closing also.
The impact of ICR appears to be greatest in cIder
cities, particularly in the Northeast, and Particularly in
small to medium sized cities, and in agricultural communities.
There does not appear to be any impact of ICR on the industrial
growth to date. We were not able to differentiate the impact
of ICR on small versus larqe businesses, because very few
industrial plants were wi11i g to disclose production or sales
data. The cost tó industry of sewage treatment is greate $
than AWT plants as compared with secondary plants.
The incremental cost to grantees to maintain and
“eliminatable,”
operate lRc, that is thbselcos;ts/.’ if we were to eliminate
a
ICR, is very small when compared to the total costs of operati g
the plant averagiiig around $15,000 per grantee per year.
Average ICR revenues per grantee per year are approximately
$88,000, of which $8,800 is retained purely for discretionary
use by the grantee.
—I
• There is more data which might be of interest to you
that is included in the handout. Later on in the meeting we
x
would be pleased to discuss specific date during the question
and answer period.
To surrunarize our findings and qO 1C1 $jQfl5 very
briefly:
-------
16
First, ICR is not doing what it was supposed to do.
Relatively few cities have implemented ICR.
Most of those who have implemented ICR have suspende
collections.
ICR to date has had no significant impact on. employ-
ment, plant closings, industrial growth, import/export balance
or local tax bases.
ICR is not proving cost-effective, in producing
revenues for local or federal governments, at least in I iost
cities.
Now, given all that, that the Clean Water Act, P.L.
92-500, had some societal,as well,as opposed.-to purely economic
objectives.
MR. GALL: Can we stop at this point?
I think I would like to take a cut right here. In
ILl
our regional meetings, what Myron will be doing will be to go
on and discuss the alternatives, and to give all the various
• parties there about 30 minutes to sit down and digest what the ’
1
-J
in essence have not seen before. I would prefer not to go
through that exercise right now, basically because you have
already seen this, and I have a feeling you may have some
reactions to the 1ternatives presented. What I’would like to
do is open the floor to discussion, if you would like, to the
comments that Myron has just made, because I think the summariels
-------
17
of the conclusions is probably the most important thing that
you have not seen today.
I would like to start talking about it while it is
still fresh in your mind, if at all possible.
I know that historically we have gone around the
table where everybody got five seconds to speak or forever
hold their peace. However, I would like to digress from that
practice a little bit today, and just open it up for specific
comments, if anybody has any.
Carol.
MS BAUER The part we Just covered in regional
meetings, will that be the same presentation in each regionái
meeting, and it will not be at all geared to any specific
region?
MR. GALL: That’s correct. We obviously may refine
it a little bit as we go from Chicago to New York to Phi1adelp i
As I understand, there will be no regional emphasis
provided in the general public hearing.
MS. BAUER: The reason I ask..is at one point you
z
IJJ
mention the difference in the Northeast, the older cities, and
w
I know there will naturally be questions that would come as a
result of, well, if we are different, how are we different, and
so forth? Will those be addressed is my follow-up question.
MR. DONAHUE: We don’t plan specifically to discuss
-------
18
differences from one region to another, except to say ‘that what
we have just said.IfH eppl ’have questions about specifid
cities or specific data, we would be glad to discuss them in t1
question and answer period. But based upon what we just aid,
we don’t really see the need. We have information abbut sped
cities, almost 300 of them.
What kind of data are you talking about?
0
o MS. BAUER: You are opening yourselveS: up for specifi
2 questions when you say “the hardest hit area is the Northeast,
older cities,” and so forth. You are opening yourself up for
questions and yet you don’t seem to be willing to address them.
You are saying you are not g ±r to. any further than that.
MR. GALL: No, after that presentation, we will go
: through the alternatives, and then we will take whatever pre-
pared statements have been scheduled, and we will be unàble:..to
avoid obviously a little bit of give and take as we go along.
U)
There will be a general question and answer session toward the
end of each day. What Ed is indicating--I won’t put words in
his mouth-—is, they will be ab1e .to discuss the specific
z
w
numbers on a regional basis. What we dontt want to do is
w
(I ,
discuss specific cities, I don’t tIu.nk. In other words, that
would be my perspective.
MR. DONAHUE: We are planning to include in our
final report suirunaritzed data at the state level, carrying it
-------
19
one level below the regional leve ,the region as defined by
federal government.
The problem is if you go too low in your data, the
sample size becomes so small that it is no longer significan
and it is very distorted. it can be very misleading to people
MR. GALL: Mr. Paj would like to make a comment.
MR. PAl: Maybe there can be a profile, for instance
just the Northeast corner, maybe three or five states there,
maybe run a profile for those five states and come out with a
summary sheet in that case.
‘MR. DONAHE7E. We will eventually be able to do that.
We have data summarized at the state level, refining those
reports. We can add several statements together and give a
more representative kind of thing. That kind of data will be
in our final report. We weren’t planning to go into all kinds
of specific discussions at these meetings.
C l )
MR. HUELSMAN: We discussed this and kicked this
LU
around quite a bit. We said what makes sense to EPA, in other
words, you define a region, nice and neat, but for the people
z
LU
attending these meetings, you take your Region IV, for example.
You are going to find the Caro1inas maybe dàn’t associate with
Missip 1ppj and Alabama. You get your people that are going t
be in Dallas, and they are not associating with some of the
other states possibly.
-------
20
So the question is, how do you group to make it
effective to the audience? If we do as you suggest, and just
break it down to the 10 federal regions, that can be done,
and we plan to present that follow-up. But we are wondering
if that would really address the type of regional questions
or local area questions that are going to be brought up. We°
didn’t think it would solve those or answer those questions.
N MR. DONAHUE: I guess the question is how do you
define region .1.’.Re iOflàl toa federal agency meansolie’thing.
Regional to a local government means something else.
MS. BAUER: I see the point you are making. I don’t
know how to address it rny eIf, either.
MR. GALL: John.
MR. PAl: Maybe you want to solicit opinion to the
advisory group as to any alternative in grouping them togetherl
If anybody on the floor has any suggestione, we would like to
hear them.
MR. COOPER: I am Jack Cooper. This sheet here, th€
one that has costs on it, when you look at the design flow,
I find it very difficult to compare these costs, because we
are not looking at equivalent size sy tems__secOfldary , advancE
secondary and tertiary. It is •very difficult when you look
at numbers. It looks like you are comparing apples and orang
because you are not comparing the same size systems.
-------
21
MR. GALL: The costs are reduced to a common.
denominator, cost per million gallons per day of design flow.
MR. HUELSMAN;: What Jack is saying, and we haye got
statistics broken down, more of frequency based on, let us
say, a one-to-ten million gallons per day plant, and what
have you. What we are trying to do, and that is going to be
Z presented in our report, but the question is how much to
u present at these regional meetings.
z
2 I think what you are suggesting is that we probably
should have some backup data by size of plant. That is a good
point, -whi hwe have. We have backup data by size of plant.
MR. KIRX: What does “before” and “after” mean?
MR. DONAHUE: Before and after implementation of us x
charge, Industrial Cost Recovery.
tl)
MR. KIRK: Could you explain that a little more full
U
MR. DONAHUE: What people were spending, what a cit
Sn
was spending, what they were charging people for s?wa etreatmE
before they adopted an EPA ;approvable user charge/ICR system,
the first year after they adopted a user charge/ICR system.
z
w
MR. KIRK: The plant was essentially in place and
functioning?
MR. DONAHUE: In some cases it was, and some not.
In most every case you upgraded or expanded the plant or you
-------
22
wouldn’t have an EPA grant to start with--
MR. KIRK; I think I understand what “after “ is.
guess I don’t understand what “before” is.
MR. DONAHUE: Whatever their condition was before.
MR. KIRK: Before new construction began or--
MR. DONAHUE: No, not before new construction began.
Before the new rate, structure was imposed.
MR. KIRK: Rate structures were usually imposed in
financing
z two or three levels, at least two levels, interim’/Y: •“ lekrel
0
9-
and a final adopted ICR plan.
MR. DONAHUE: Data we asked for was for those rates
and those costs that were muse, in effect, the last year
before they went to an EPA approvable user charge/ICR system.
MR. KIRK: I woihld guess most of those would have
financing
reflected some interim/I level, and in some cases interim
financing
/1: ‘ “ level was just as high as the approved ICR plan, becaus
they were looking ahead to have to meet those circumstances.
MR. DONAHUE: Could be. ,
MR. GALL: I would like to respond to that from
the regional perspective. .
That type of approach has not been common in Region
I, Just as an observation. The first year that,user charges
are implemented, typically that is when the problem starts,
-------
23
and generally not before.
MR. DONAHUE: I think you may be talking about
California. I know the state has encouraged people, like
Sacramento, one-two-three step kind of Situation, where they
eased into a user charge system.
MR. KIRK: What I am talking about is the necessity
for the municipality to maintain cash flow during the’
construction period, and they usually went through some kind oJ
short-term borrowing mechanism, and put through some kind of
rate increase to cover that. In some cases that was just a
small increase toward what the ultimate ICR plan was, and in
some cases it practically foresaw the entire cost. In fact it
is possible it could even be higher than the ultimate ICR--
I haven’t seen one that was that way.
Our company has participated in two of those, two of
I - .
those that we were a large enough part of the plant to be able,
to see the detail of, and in both cases I think the increase
during the construction period was probably about half-way
between the pre—construction sewer rates to the ultimate
approved ICR sewer rates.
MR. BROWN: One of the problems you run into here is
oftentimes if you go more than two or three year,s back from
the present time when you are talking to a grantee, he is
unable to really give you accurate information. And the way
-------
24
the question was phrased when we asked it in the field was,
give us the most accurate information you can concerning the
period prior to implementation of the User Charge/Industrial
Cost Recovery System, and some cities had information that
went back to, say, 1970 or 1971, when they first foresaw the
1 need to increase capacity or upgrade the treatment plant, and
that is the information we asked for and ma lot of cases that
N
0
was the information we got. What we tried to do was to break
it into two very discernible periods, and that is awfully hard
to do. So the point before, wherever possible shows most
significant impact between change to a user charge system.
MR. I-IUELSMAN: I think the observation is correct,
I-
I .
U I r
that this number tends to be a conservative assessment of that
chan e because of a number of factors and I think that is
g
1 something that we should note that this is the best informatio
we could gather, but basically it is fairly conservative.
MR. KIRK: I guess my problem is coming from an
industry where tenfold increases have been common, and I look
ii
at your ten percent and 20 percent increases here. I wonder
if we are both talking about the same thing.
MR. BROWN: You have to remember also this is averag
data. You have some plants out there that didn ’t increase muo
at all
-------
25
MR. KIRK: I understand, I am not trying to run
down our study. I am just expressing surprise, I guess, at
the results.
MR. BROWN: There is something else in the data that
0
we are currently working on to get out of there, that some
people were able to give us “before” information but had as
yet done no real studies to determine what their costs are goii
to be under a user charge system. They couldn’t give us an
0
“after” period. Some people had dons the study but, they didn’i
have accurate data before for whatever reason. The figures
you see here are every one lumped together, whoever responded.
We are in the process of taking out those cases where we can
make comparative estimates. I think you are gOing to see a
more linear type of relationship when we can get everything
sorted out that way.
MR. COOPER; On your cost per million dollars per da
for the three types of systems, I notice that it goes down fro
secondary to advanced to tertiary. Our experience has been th
other way. I wonder how did you define secondary, advanced
z
secondary, and tertiary? Näy e. this is part of the problem.
What is secondary, advanced secondar,y and tertiary?
MR. DONAHUE: We used definitions that P4 used.
MR. COOPER: What is that--30-30, 30--John, do you
-------
26
know what definitions were used? I think that should be on th
page.. as to the treatment level of what you are talking about
for each of these-—is secondary 45-45, 30-30, 30, is advanced
secondary and 12 and 12? Is tertiary 10 and 10? What treat—
ment levels are you talking about for these? Some people migh
consider chlorination to be tertiary treatment.
MR. DONAHUE: The classification was done by the
o city. We asked the city to indicate what level of treatment i
z
was providing as a result of their grant. If they weren’t
consistent in defining it--
I. MR. OLSTEIN: I believe we had 20 different processe
tertiary
certain ones placing in the/ . category. We were consis-
the
tent with/breakdown EPA uses.
If I could, could I respond to something that Don
U)
mentioned? Don said in his industry tenfold increases are
U
common. There are a number of companies that did in fact
U)
experience tenfold increases, and it wasn’t just in canning.
There was one in paper that did it.
What you are talking about is tenfold rate increases
z
L U
or tenfold total cost increases.
U i
I-
LI)
What we have here on “before” and “after” is total
expenses of the grantee. Now in a lot of cases, where you
had the declining block rates or any rate of that sort, the
-------
27
sudden change from that sort of rate structure or subsidized
rate structure to straightforward user charge, even if expense
had been identical before and after would have caused some
tremendously large increases for certain industries. i think
what we have to do is try to seperate UC and what we ar
reporting. They are not exactly the same.
MR. KIRX: I guess the revenue item here is probably
essentially a reflection of the total situation to the treatmen
plant, correct?
MR. OLSTEIN: Yes.
MR. KIRK Based on my experience where we have seen
perhaps five to tenfold rate increases, I think total revenue
required for the plant would probably have done something more
than doubled.
MR. OLSTEIN: I have given you an example, that I
know John is familiar with in Boston, the revenue requirement
increased less than 20 percent. When we went to user charge,
purely proportion of the rate structure, Boston Edison went up
four times, went up fourfold. it was because they were getting
everything at that lowest step.
There is something that had absolutely nothing to do
with the treatment plant, just change in the rate structure.
MR. GALL: Robbi.
-------
28
MS. SAVAGE: I guess I have some criticism, which is
unusual for me on this study. My understanding of this from
the very beginning was it was an opportunity for people to wor
hand in hand, industry with public interest groups, and public
and whatever. And if I understand this correctly, you are
going out to the public, and I tried to place myself as maybe
a meat packer in Nevada, who goes in and looks at this materia
o and says what is MGD, what is BOD--I would be so overwhelmed
2 by this kind of material, I would either fall asleep or turn
off completely. I don’t know that someone who hadn’t sat at
this table for the last six months would even understand what
is in this material.
You don’t have any definitions of even ICR, what it
means, what is AWT, what is BOD. I think for the general
public this is going to be overwhelming, even for some
U
industrial folks ‘that have been working with it for a number
of years.
w
MR. DONAHUE: That is a good point, Robbi.
MS. SAVAGE: I find it a little overwhelming, and
z
don’t know what it means.
IL l
MR. HUELSMAN: What if we were to, during the sessic
go down this, and basically explain this, because the stuff ha
already gone out, trying to get it out ahead of time.
-------
29
MR. PAl: EPA has published glossary items,. common
termsof what is advanced treatment, what is BOD, and suspendec
solids.
MR. DONAHUE: We have a suggestion from Myron and
Bill Rule. What we do is prepare a one-or two-page glossary
of terms so that people understand what these terms refer to.
MR. PAl: I am saying, EPA has prepared a glossary
publication already. Maybe we can get some copies or bring it
to meetings, or extract from it.
0
MR. HUELSMAN: Comment on it.
x
U,
MS. SAVAGE: Let people know you understand these
terms are foreign. I have been at too many public meetings
at small towns, and they say Washingtonians come in here and
don’t know a damn thing about what I am trying to do and lay
all this stuff on me, and that is the fastest way to turn them
off.
MR. HUELSMAN: If we were to explain the terms from
the glossary to people up front that would probably solve it,
it would address that issue. Is that okay?
MS. SAVAGE: It would, I am sure, certainly help.
MR. HUELSMAN: Let’s put that in our agenda of
what to do.
MS. SAVAGE: I also suspect you should introduce
them to Congressman. Roberts, whom most of them probably have
-------
30
never heard of, the impact of Heckler and Roberts, why these
questions have been addressed, why you feel they are importani
and why we all spend time working with them 1 :mi4ht heip,too.
MR. TOWNSLEY: Those were covered in one of the
sections that John skipped over today, when he went through
the background, and he would actually discuss each one of the
nine questions and what it means, so that will be covered at
the regional meetings.
MR. DONAHUE: It is in one of the prepared statement-
0
I-
we did not read today.
MS. SAVAGE: Are you all going to be available to
I
these people as they come in so they will see you? You are no
going to be sitting up there away and detached, so they feel
they can come talk to you afterwards?
MR. DONAHUE: We hope so.
IaJ
MR. HUELSMAN: Each region is. setting up each meeting 1
MR. DONAHUE: Some of the meetings--like in Chicago-
Ted Horn said, he anticipated 809 to 1,000 people. It can’t be
a small intimate meeting when you have that many people.
MS. SAVAGE: How many do you anticipate will know
anything about this material?
MR. COOPER: I don’t think you are going to get that
many.
MR. DONAHUE: When they had pre-treatment regulationa
-------
32
MR. COOPER: Could I bring up a procedural question?
In the announcement I got of this advisory group meeting, it
was stated this wàuld be the last one. I hope it is not the
last meeting of the advisory group. I hope there will be at
least one more where this group can have an opportunity to
review and comment on the draft report when it is written.
0
N
I MR. GALL: John indicated to me this morning that
“yes t ’ we would af€er the publication of the draft report have
U
at least one more.
z
0
Carol.
MS. BAUER: John, you mentioned yesterday that membe
of Congress from the Northeast were being advised of the
I-
meeting in the Northeast, and I just wanted to make sure that
that holds true nationwide, that individual regional offices
are advising members of Congress by letter or however the ICR
meeting in their region. This is a very, very busy time •for
Congress. I just dontt want something like .that to f all
through the cracks.
-J
-j
MR. GALL: I think it would be difficult for us to
a
comment on that directly, because/publicity campaign, if you
would, was conducted by each region individually.
MS. BAUER: Does anybody from C&L know?
MR. HUELSMAN: Some regions were questioning whether
they could even have a meeting because of conflicts and a whol
I
-------
33
bunch of other things.
MR. DONAHUE: All EPA regions are having public meet-
ings, okay?
MS. BAUER: Can’t we just make sure that the press
release is sent to members of Congress?
S MR. GALL: Do we have a national press release?
MR. DONAHUE: Yes, that has gone out, September 29.
u I don’t know who is on the mailing list of the national press
z
release that EPA has.
MS. FINCH: You might want to know that in all
the regional offices, except for two regional offices, they
have combined their Congressional, intergovernmental and
public affairs work into one office. That is the office
John has been working through. That means it will include that
notification to all groups, including Congressional.
MR. GALL: How many people are we going to get?
U)
MR. COOPER: I know from our association we will
Lu
have at least one representative who will either speak on
behalf of their individual company and their problems or on
Lu
behalf of the association in those areas where there is sig-
Lu
nificant food processing operations. That doesn’t mean we will
be at all of them. We are making the information about the
meetings known to our membership, encouraging them to attend;
how many are going to go I can’t tell you. We are making
-------
34
plans to have at least the one representative in each of the
‘regions where we have.signifjcant food processing operations.
MR. GALL; Are there any other comments related to
Myron’s presentation?
MR. ELLtCOTT; Yes. Are these three attachments
that we got today the material that will be handed out at each
of the public meetings?
MR. DONAHUE: It has already gone out into the
regional offices.
MR. ELLICOTT: Anything else?
MR. DONAHUE: The alternatives.
MR. ELLICOTT: The purpose of the public meetings is
to, get this material out, to receive whatever comments people
have and to invite people to respond with written comments
after they return home and cool off.
MR DONAHUE: We also want their comments at the
meeting.
w
MR. HUELSMAN: Whoever wants to make a statement at
the meeting.
z
‘MR. DONAHUE: The material is all available before
the meeting. In some regions it is not going to be more than
several days before the meeting, in other regions it will be
two weeks before the meeting; and hopefully people will have
-------
time to look at it beforehand.
We intend to sta j. at the meeting and talk for as
long as anybody wants to talk, if people are interested in
talking at the meetings. People who would.:rather sit down and
put something in writing, fine, that would be great, too. Bu
it is an open forum. Anybody who wants to say anything has a
opportunity to talk, and we will try to answer as many questioi
as we can.
MR. ELLICOTT: Then my next question is, do you
expect much discussion of the different alternatives in the
package at the public meetings? My initial guess would be
there won t t be a lot of discussions. People will either be
prepared to say that they like 1 or 2 or 3, and they don’t lik€
all the reèt, or they will be prepared to say they don’t like
ny of it. But they may not help you develop any other
alternatives and they may not give you any real feeling for
U,
what the best one is. Alternatively, somebody will probably
w
ask you what you are going to conclude, and will you be prepai
to answer that at any of these meetings?
z
w
MR. DONAHUE: No. We have preliminary conclusions
U i
U) which we have voiced today. We will repeat those preliminary
conclusions at the regional meetings. We are really there to
gather more data to give everybody the alternative, the
-------
36
opportunity to speak.
MR. HUELSMAN: We are giving conclusions. We are
not prepared to make our recommendations yet, because ‘we won’t
have completely analyzed the data that is sitting over here
(indicating); and until we do that, I think it is a bit pre-
mature.
0
N
MR. COOPER: Will your statements be written and
will they be in the packet so that everybody can take them
back and study them, your conclusions? In other 4ords, I took
notes here, but I don’t know how accurate my notes are. I
think your statement should be written and should be included
in the packet of materials that will be handed out at the
meeting.
MR. DONAHUE: We can make copies of those statements
available, and if people want copies of them, we can work with
EPA regional offices tor jive copies to them.
MR. COOPER: When you get them typed up, I would lik
to have copies of them. I think just to get up and state whati
-J
your conclusions are, without somebody there to have them in
front to be sure he has got them right, I think you need that.
MR. HUELSM : What you are saying is you would like
a prepared statement of conclusions available at the meetings?
MR. COOPER: Yes, ora statement of prepared remarks
-------
37
MR. OLSTETN: How about a summary of the key points,
would that be all right?
MR. COOPER: Something tha t has your key points in
it.
MS. SAVAGE: When your final recommendations are
formulated, just before you turn them into Congress, will they
have any way, the public, of knowing what you finally concludeô-
If they come to a public meeting and get involved; will they
have any way of knowing what it was deciddd to pre ent to
Congress through EPA or will they have to go through the
Federal ègister or some other way?
MR. GALL: I really have to defer to John on that.
Because their recommendations will be to us, and it will be ou
job to make recommendations to Congress, as I understand it.
But in terms of what we will be doing with our final recommend -
tions prior to su1 .. ittal to Congresz, John is the only one who
can answer that right now.
MS. SAVAGE: If those recommendations could be sent
-J
-A
out, I know paper work is a big thing, if they could be sent
out to regional offices and distributed’to people who were
I
interested, even if they just ‘requested them, I am sure it wou d
be helpful to them to know they came and participated and they
would know what the results were at the end.
-------
38
MR. DONAHUE: I think that is a decision that EPA
has to make, how they want to disseminate the results of the
study. We are going to prepare our report for EPA, including
recommendations, and I dont know what EPA wants to do as far
as distributing that, or sunimarizing it.
In
MR. HIJELSMAN: I think the question she is referring
to, there will be someone out at the public meeting saying how
will I find out the results.
0
0
MS. SAVAGE: How will I know anything I said to you
is important and it is incorporated in your final study?
MR. PAl: The statement of-—
MS. SAVAGE: Of anybody, of anybody out in San
Francisco, for instance, will they be able to call Region IX
and say that the final study that Coopers&Lybrand did for
Congress, can I have a copy, or’ will you tell them it will be
available after a certain date or will you send it to everyone
cn
who came to the public meeting? How will they know what
happened?
MR. AI: You are talking about a transcript?
z
MR. COOPER: Final report. She is asking what will
Q.
be the distribution of the final report? Will it just go to
Congress and go to the National Technical Information Service,
and if somebody wants it,there will be a press release, nation 1
press release saying EPA filed its report to Congress on the
-------
39
Congressionally mandated ICR study?
MR. WHITTINGTON: Ye8
MR . COOPER: And if you are interested, you can get
a copy.
MR. WHITTINGTON: There will be a lag in that to
U,
Congress, and we simultaneously get some printed. It takes
time to get it back from printing.
MR. PAl: Maybe we can provide a summary of the
recommendations.
MR. HUELSMAN: Not the whole study.
MS. SAVAGE: We could pass it on to our membership.
MR. DONAHUE: Robbi, so you have an idea, and this
I.’
is preliminary, but our proposal at this point is the final
report is going to include an appendix of the transcripts of
ten regional meetings, plus our transcripts from these meetincjs
So the final rep”t is liable to be a foot thick. Most peopl
don’t want to wade through all of that. They are probably.
interested in a couple .of pages of summary. I don’t think yoi4
-I
would advocate that.
MS. SAVAGE: Not at all. If I took the time as a
I
citizen to come, I would want to know it is worthwhile, and
that it wasn’ t just another meeting.
MR. COOPER: While we are on the subject of public
-------
40
participation, this advisory group was established under an
EPA proposed public participation proposal and under that
proposal there is a requir ntent that advisory groups consist
of 50 percent non-financially interested servants of the
public, such as the Environmental Defense Fund and so forth,
and this advisory group is made up in fact of 50 percent of
these types of people. I would like for this, the governing
people, EPA peopilé here, to make known to the people who are
writing these public participation regulations how extensively
these people participated in this advisory group, and whether
or not the proposal works.
I think this is an experiment to see how well it
works, : or does not work,. and I think someone should
inform the people who are writing those public participation
regulations how well this experiment worked.
MR. ELLICOTT: You are a hard man, Cooper. You are
asking them to wash their laundry right in public. I agree
LU
with you. I am no lover of regs, God knows.
MR. COOPER: I think it is something that should be
z
L i i
brought to the attention of the people writing these public
LU
participation regulations.
MR. DONAHUE: Everyone in the advisory group, what-
ever their viewpoint, was given the same notification, the sam
-------
opportunities for participation.
MR. WHITTINGTON; Without belaboring the point,
perhaps the conclusion we might draw from your observation is
that there is still some further refinement needed in our pul
participation.
MR. COOPER: Yes.
MR. WHITTINGTON: Obviously we are able to get the
information to those who have a financial interest in it, and
0
S
2 they are able to respond, but those who come from, other
directions may not be able to respond in some way. ‘Maybe we
need to in fact increase our dealing with them, rather than
decrease.
w
2 MR. COOPER: I would like to comment. Fifty percent
have had all the notices, they have known about all the
U) -
meetings, and they are welcome to come and join us. The poin
U
I am making is they have not participated.
U)
MS. SAVAGE: Does that make this group illegal?
w
MR. COOPER: They have had the opportunity to parti
pate.
z
LQ
MR. WHITTINGTON: My,point is, the kind of thing I
Li
was thinking of, for instance, perhaps the meetings ought to
be held in the evening, or at least alternately.
It is interesting when financial involvement falls
-------
42
away, the reaction you get.
MS. SAVAGE: Walt a minute.
MR. GALL: With that note, I would like to try to go
on.
MR. ELLICOTT: Just a clarification from John. Did
I understand you to say, John, that once C&L turns the report
over to you, you will make it available to the steering
0
0
u committee, and that there will be some time during which we ca
respond or react?
MR. PAl: We will probably have another meeting like
I thisto save yourself writing.
MR. ELLICOTT: Tentative: agenda for the next meeting
will include our reactions to the final recommendations. Okay
All right.
U)
Do you all want comments on these (indicafing)?
U
MR. DONAHUE: Any comments you had.
U)
MR. GALL: What I want to do right now, if anybody
LU
has had the opportunity to digest the alternatives proposed by
Coopers, I would like to throw it out to open discussion, as
z
LU
opposed to going out one by one.
MR. OLSTEIN: In this statement, before we were to
get into the discussion of these alternatives, I won’t read
the exact wording, but the point that was going to be made
-------
43
briefly, I hope, is that ICR had a purpose outside of the
economic types of things. Basically I think we called it
societal objectives, which was to try to avoid the appearance
of using public money to subsidize industries that happened to
be located in cities receiving grant funds. While we were abL
to analyze;..the .ecônoth±C aspect of what they were trying to do,
the societal aspects might still remain.
So it was with that in mind that we developed some
of these alternatives that retain some sort of ICR, and I think
0
I-
we have to recognize that when this goes up to the Hill, that
whatever those types of objectives they had in mind back then,
they may still have them now.
MR. PAl; I want to make another comment on this
0
reviewing of alternatives. The final decision to make recommerl
tions is in the hands of EPA. Of course final legislative
action is in the Longress.
The meeting purpose is to let everybody know, not
only for EPA to know where you stand, but everybody participa-
ting in the meeting, to know how each other stands. The point
I am trying to make is that final recommendation may not make
everybody happy, and it is not for ,that purpose, to make
everybody happy. But sure, you get your cornment . That is how
we are going to present it to the Congress. What I am trying
to say is decision is not going to be made by vote of the
-------
44
majority, it will just be gathering your thoughts aboutit, an
we will make the final decision. I don’t want to give any
illusionsif five of you vote for this one way.
MR. WHITTINGTON: Just to add to that, there is a
legislative process beyond that, however.
MR. PAl: Oh, yes.
MR. ELLICOTT: Are you ready?
MR. GALL: Right.
MR. ELLICOTT: You will no doubt hear from several
AMSA members and private industry in the Sacramento area when
you go out to the public meeting in California. They have
talked at length with us, and in our last organization meeting
in Anaheim, the membership of AMSA passed a resolution support
the elimination of ICR.
So right up front I can tell you that most of our
members would rather do without it than with any other hybrid
variant or version that might come out of the final recommenda
tions. But let me just give you five general concerns that
our members have expressed after seeing the preliminary result
that you passed out at the August meeting last time.
Some of them--I am sure you have heard from other
people—-but I just want to get them on the recàrd and see if
there won’t be some concern of them in your final recornmenda-
tions.
-------
45
The first one is the question of whether or not ICR
affects the movement of industrial sites, either from an
established treatment area into an unestabljshed area or some
other move. Many of our members who have thought about this
question feel that it is unlikely that an industr ,.. qill ever
tell you that they are moving because of a high ICR payment.
It is more likely that in fact what will happen is that they
will choose not to expand an existing facility because of
ICR payments. It is also unlikely they will tell you that is
why they are not expanding it. We would like to see some
attention given to the question of expansion versus completel
: moving out of an area, if you feel that the information you
have allows you to make any kind of generalizations about that
That is number one.
Number two, the members feel that the number of
I-
operating ICR systems in the country today is very small. On
(I)
U)
the one hand this allows our members to feel that whatever
conclusions you may draw from that universe of operating
systems could be weak in the sense that it might not be a trul
z
representative sample.
If you could also include, some discussion of existin
systems and the possible number of systems, once:’!CR is
implemented, and perhaps make some conclusions about your samp
-------
46
that would be appreciated, too.
A third and related point to the seôond one is that
one or two of the members have told methat their initial ICR
payments in the first five years of the program are going to
be very low, and that there will be a sudden, at least to them 4
a sudden and dramatic use after a certain initial period. Can
your information either count for that or acknowledge that th
is something that will happen? And could you say anything
about the possible impact of’ that kind of rise’ in rates?
MR, COOPER: This is the point Don Kirk was talking
about earlier.,
MR. PAl: Bill Rule may want to answer that question.
MR. KIRK: It sounds like my question backwards.
MR. ELLICOTT: It cuts the other way. There are somE
members’ initial IC1 recovery will be very low and charges wil]
be very low. They have large projects moving in segments, and
the initial segment can be very small, which they’::,st4rt;pickinc
ICR charge on. It is like a snowball it gets bigger and
bigger.
z
w
MR. KIRK: Multiple funded project.,
MR. HUELSMAN: We recognize that, and I think your
point is well taken. It should be commented on.
MR. ELLICQTT; The .fburth point is our understanding
-------
47
of the original rationale for ICR was basically what you have
described as a societal rationale. Can you, on the basis of
your material, evaluate the contention that federal funding fo
municipal treatment agencies gives industrial dischargers a
competitive advantage over their non-sewered competitors?
There are some people who believe in fact this is not only not
true, but it may even be true that people who are not connecte i
0
0
to a municipal system may have a competitive advantage. And
if you can address that, I think that would answer many of thE
questions we would have.
MR. RULE: I don’t think you can generalize it. Yot
have got all sizes of OTWs and all sizes of industrial users.
Md eor certain combinations of big POTW5 and little users,
maybe he has got an advantage for the large user and small
public works, it may be just the opposite. And trying to come
up with a generalization is very difficult given the kind of
data that .s available.
You may be able to say, well, if this is true, then
there is this tendency toward an advantage, and the opposite
holds true if these conditions are applicable.
MR. OLSTE N:. What we will do is present a series
o curves showing results of the model, which will show you
those cases where it is true and those cases where it isn’t.
-------
48
And the very small impact, pushing it on one side or the other
that ICR has.
MR. ELLICOTT: Okay. There is a second half to that.
fourth question. Given that we can’t make many, generalizations
of that sort, there was a second rationale for ICR, and that
was that in small co unities a treatment plant is built
essentially for industry and not for domestic customers. Can I
you evaluate that as a subset of ICR situations, so that
Congress will have a chance to see whether or not its original
0
assumptions were well taken?
MR. HUELSMAN: I think so.
MR. ELLICOTT: The fifth point is kind of hard to
deal with, at least it would be for me to, if I had to respond I
to it. You acknowledge the relationship between ICR on one
hand and user charges on the other. That is great.
• One of your alternatives takes into account the
connection between ICR and pre-treatment, which is also good.
I think it would be very helpful if the final report includes
some mention of the other programs that ICR relates to, so
that a member of the public who isn’t ‘particularly familiar
with what industries have to cope with, or what a treatment
agency deals with, in terms of federal programs, might have
an ’ .idea of the universe of regulatory programs that a discharg
-------
49
has to deal with.
If you can put it in the context of other federal
requirements and programs, I think that would be helpful, too.
It would at least answer the objectionS that would arise from
people who feel you are taking ICR out of context if you do n’t
consider the other programs that also have some effect or have
some impact on how an agency or industrial discharger responds
to an ICR charge or the fact that he is going to have an ‘ICR
program on top of everything else.
MR. DONAHUE: If I may respond,Andy, to the five
concerns you have voiced. I think all of them one way or
another will ‘be addressed in our final report. I am not sure
they will be addressed as specifically or in the detail as you
would like to see. For example, talking about industrial
growth patterns, and cutting out plant expansions and closings—
and so forth. We just have not been able to get data.
U)
Nobody is willing to tell us. One of the transcripts of the
public meeting we had in Fall River, the guy who is head of tli
local council labor union stood up and said we know four p1ant
z
L U
that did not expand because of increased sewage cost. They
won’t tell us who they were--
MR. BROWN; Same thing happened to Sacramento and
Stockton both. They said we either can’t give you that
information or we are not privy to it.
-------
50
MR. ELLICOTT: I’m not asking that you try and dig
it out of them in some way. Just acknowledge that it is.very
difficult to get practically, and that this may be a question
which you cannot answer with the data, and that it is somethin
that EPA might want to consider, and the current Congress woul
want to consider as well.
0
• MR. OLSTEIN: One thing I might add in that respect.
I spoke to a group of forest products people, and basically
what they say with respect to expansion issues, moving out,
whatever, is that this whole thing really ought to be done ove
again after pre—treatment standards are se xtdown from industry
Because everyone is putting things on hold until they find out
what to do there. It makes it much more difficult to break
0
through everything that is going on, and address that question
A lot of these industry groups, whenyu look at it, you cannot
answer.
0
MR. ELLICOTT: I agree.
MR. GALL: I had a question, the second half of four
Could you explain that a little bit to me? I am not sure I
understand what you are talking about, and what you would like
0.
LI
us to get at.
MR. ELLICOTT: When ICR originally came up, it was
the concern of some of the members of the Senate Committee tha
dealt with the legislation that federal tax dollars would be
-------
sent in some communities primarily to provide sewage treatmei
services for industrial plants, not for the domestic populati
With that in mind, I think that it would be a good idea to f r
out if in fact there are very many communities in which that
was the case. Now Larry Silverman, who is not here today, fi
the Clean Water Action Project, put out an article on a situa-
tion in the Northeast where that in fact did happen, where
local industry was in bed with the treatment agency and they
essentially built a plant for the industry, and there was one
industry in the city.
I think that is the kind of thing that the legislat
had in mind as the situation that ICR should deal with.
MR. HtJELSMAN: We comment on that, yes.
MR. DONAHUE: I think all the concerns that you
raised on behalf of your members and their associates I think
LU
are all things we are going to address in our report. As I
U)
said, I can’t promise you we will address them in exactly the
format, in detail or specifically as you would like them
.1
-J
addressed. We are sort of on a fine line ourselves, because
while it would be nice to give a very specific kind of state-
ment and conclusions and recommendations, you have got to
remember that recommendations potentially anyway are going to
be looked at from a legislative viewpoint, and when you write
-------
52
something like that, it has to b3 something that is applied
nationally. It has to be something that the management side o:
us says we can’t possibly come up with something that is going
to be an administrative nightmare. It has to be something
practical to do.. It has to be fairly simple.
MR. ELLICOTT: I can appreciate your position.
MR. DONAHUE: The more detailed we make our report
or our statements, the less people are going to read it.
MR. KIRK: In discussing alternatives and discussing
recommendations at some point, this whole area I think can be
broken into two separable items in which you people can make
recommendations.
One is: Do we need to pay back the grant money?
And the second is: Does the government continue to dictate in
any wa y, shape or form how costs should be shared?
I. think those can be separated, one from the other,
U)
in certain cases. I would like to point that out.
There is a cost sharing mandate that covers ICR and
also covers user charges, and tends to spread without being
z . .
dictated, spreads also into sharing the locally financed
C , ’ portion. And just how that framework continues at all, and
if so, how, I think is one independent question. I am not su
if you are putting enough stress on that.
-------
53
MR. OLSTEIN: One of the things we did, we went back
through 1972 legislative history, to make sure--as a matter of
fact we even had discussion with some of the Committee members
to find out what they were trying to accomplish. What you are
talking about is what they were trying to accomplish through
user charge provisions, and that is really just a completely
different set of objectives than they.ever had in ntind relative:
N to ICR.
And it would have to be a separate study to take a
look at that.
I MR. KIRK: Let me phrase it a little differently.
ICR consists of two things to me, and that is the need to pay
back some of the money and also being told who should pay, how
much to the municipality in order to recover that money, and
how it should be done.
In my mind the user charge system is a direct spin-oft
from that. Even though it addresses different costs, different
set of revenues, it is still based on the same kind of basic
charges.
z
MR. OLSTEIN: I would have to disagree with you. I
think the flow of legislation went the other way.
MR. KIRK: The user charge was the principal--
MR. OLSTEIN: Absolutely. One of the main things
that they went 1 iQ the legislation was if we are going to put
-------
54
up the money, we want those plants to be properly maintained
and the method of paying for proper maintenance is ‘soñiathiñg
that date hack to 1956, I think. There has been emphasis
and desire for proportionate charges for a long time, that had
absolutely nothing to do with the introduction of ICR, nothingi
N
whatsoever.
z I think we are really dealing with two separate thinc
Proportionality flowed out of the user charge into ICR.
MR. GALL: I think there is one salient point to his
observation. If you go to some of the alternatives,’ they in
essence drop pay back requirement, but then they impose the
cost sharing requirement.
We don’t want to talk about user charges, but clearl
that is one of the alternatives put out.
MR. KIRK: I don’t know enough about legislative
history to argue with you on that, and I will be glad to accept
the fact that the chi ’cken came before the egg or whatever.
But nevertheless in the process of dictating ICR, there are
those two facets to it. One is do you pay back the money and
z
second is how do you share the cost of collecting the money
U’ to be paid back?
MR. HUELSNAN: The second one is not really an issue
that has been addressed nor will be addressed in this study.
-------
1 55
MR. KIRK: If ICR is retained, if the requirement
to repay back money is retained, then I think you ought to
comment on whether it should be done in the same manner thati,
being done or some other way.
MR. HUELSMAN: You are trying to break it down into
a basic issue of proportionality type of thing, in other words,
should costs be shared proportionally?
MR. KIRK: I think it is hard to completely get away
z
0 from that.
MR. OLSTEIN: I see what you are driving at. I think
to a certain extent 95-217 departed from proportionality anyway
by setting up a floor; I •think that is why we no longer feel
constrained by developing alternatives. Is that the kind of
I’, thing you were getting at?
MR. BROWN: Some of the alternatives do address, for
example, incremental ICR based on an incremental portion
of the plant rather than proportional cost sharing for total
II
w
cost. - -
As far as ICR, how money should be paid back, over
what period, that is addressed int1 alternatives we have now.
MR. KIRK: I can accept that. However, any decisions
made on sharing any residual ICR many wind u having some
influence or some consideration later on, in user charge, or
-------
56
low capital sharing or some other format..
And I think we all ought to have that in mind when we
are putting this together.
You are making a study that shows the totalimpact of
sewer charges on industries and others, industries under the
ICR program, and that total impact includes the user charge
ystem. You can separate it, but yet you really don’t. The
nfluence is still there, and we shouldn’t lose sight of it.
MR. OLSTEIN; I think what Don is getting, at, if we
ecommend something that gets adopted that goes to an alternativ
n the cost distribution method, say, that it may eventually
:- reek back into the user charge sometime in the future. I guess
hat is a possibility.
MR. HUELSMAN: Could happen.
MR. OLSTEIN: Congress has already departed from
roportionality anyway in ICR, which makes us a little bit less
esitant to deviate from it.
MR. GALL; Is it going to be beneficial for us to go
hrough these alternatives?
z
Carol.
0.
MS. BAUER: We can still c,ornment on them.
MR. GALL: Sure.
MS. BAUER: Throughout the list of alternatives in the
ighthand column on disadvantages, there are comments on differe
-------
57
ones that a certain alternative would eliminate ICR revenues
or decrease ICR reveneues, whatever. Is there any way, I feed
when I am looking at different alternatives, and I look at thE
righthand column that says it will decrease the revenue, that
it is hard to differentiate how much would any. of them--I knos
it is impossible to assign a dollar figure—-is there any way
we can get any proportionality feeling as to how tnuch better o
worse any of them are for the federal government?
0 MR. DONAHUE: If you eliminate ICR alto ether, and
this is taking some selected data and projecting it to a
national basis, it appears that federal government or total
ICR revenues appear to be one to two billion dollars over 30
years.
MS. BAUER: Over 30 years, beginning--
MR. DONAHUE: Beginning now, you know, cumulative.
LU
1975 or whenever.
I doubt that more than a million dollars in ICR
revenues has been collected to date nationally. It appears
-J
_J
one to two million, cumulatively is the figure for ICR revenues
collected. .
I
Depending on how much you trim back ICR, or how maz y
people you exempt from it, or how many cities you exempt from
it, the more people you exempt from it, the lower you make the
— rate, whatever, the less you are going to collect.
-------
58
-. MS. BAUER: Now we know total cost if it were imple-
mented; and also we know the one alternative is to eliminate
itenti±ely. For all other alternatives we have no idea where
they fall.
MR. HUELSMAN: We haven’t costed them out. To get
to this number Ed gave you, one to two billion dollars--had
a whole bunch of “if” this, “if” that, and all these other
0
0
things and to try then to refine that into subsets gets to be
2 a little ridiculous.
MS. BAUER: What I am lookin for is a point if you
had a graph where societal benefits and size of government, at
a point would cross, at that point--
MR. DONAHUE: You are trying to quantify a social
goal. I don’t know how to do that.
MR., OLSTEIN: There is not a little box in the
0
federal budget for 1990 that says you really have to get this
much money in from ICR, because we got this thing we are going
w
to spend it on. It is an excess fund of some sort. I think
the original purpose was to go into an emergency disaster fund
z
U i
or something--
U i
I-
U)
MR. DONAHUE: Original legislative history is disast r
relief.
MR. OLSTEIN: There is not an associated expenditure
-------
59
with that revenue source.
MR. HUELSMAN: It is with the total, the part that
comes back. The part that is retained, though--
MR. OLSTEIN Yes, the idea was that was going to be
sort of a renewal and rehabilitation type of thing. So at
local level it does have some use. The part that goes back to
the government was just--federal government--
u MS. BAUER: There is no way to estimate on any of th
z
alternatives where this alternative IS going to decrease revern
how much more or how much? There IS no way between the two
extremes?
MR. DONAHUE: Some of the alternatives could happen
concurrentlY. You could take bits and pieces and combine them
MR. HUELSMATh She is saying for each one. I don’t
think you can--off the top of my head--I don’t think you can
cost out basically each one of these to any level of accuracy
that we would like to even make a guess at. We will look, at i
MR. ELLICOTT: Do you want some more co irimentS?
MR. GALL: Sure.
z
Lii
MR. ELI LCOTT: Under Udjsadvafltages,” get rid of thE
Lii
I-
one that says here on No. 1, “without some control over the
design parameters,” and so forth, it is a veryweak argument.
There are so man & other ways in which EPA, can regulate .
-------
60
capacity during design stages of a treatment plant, that’s
really a strawman for that kind of argument.
MR. DONAHUE: It was assumed ICR would help put a
cap on excess capacity. That was the assumption. Now what we
have seen so far, it hasn’t done that..
N
MR. ELLICOTT: So I think you ought to eliminate it.
It is not needed to control excess capacity, whether or not
it does. Wayne County, Detroit, they don’t have a plant yet,
and they are not going to have excess capacity. It’s solely
on the basis of EIS. It has nothing to do with ICR. .
MR. GALL: Could I interrupt and play a little bit
of devil’s advocate. Except for the extreme of EIS, how would
an agency approach, given it is an issue, that we don’t want
to build these gargantuan monsters, either for the domestic
sec or,t p g inflated population p ojections, increasing
per capita water consumption,new cost effective guidelines
attempt to control that through disaggregation procedures and
the like--how can we effectively address this issue specifical y
as it relates to the industrial sector? Is thei a way?
z
MR. ELLICOTT: The strongest point for the industria
I-
U,
discharger to the municipal system is whether or not he has
to sign an enforceable contract to make good on his projection
for capacity. That is something you can deal with, whether or
not you have an ICR program. And frankly I think unless you ha e
that kind of a contract, like understanding between the
-------
61
grantee, discharger, and 201 Authority, whether it is state or
EPA ultimately, whatever industry says about capacity is goin
to be subject to change. If they want to pull out, they will
pull out.
MR. DONAHUE: That is Alternative 16.
MR. ELLICOTT: All right. No. 14 and 16 can be
combined with several of the other choices here.
0
0
MR. DONAHUE: Right. Very few of them are mutuallyr
exclusive.
MR. ELLICOTT: That was my feeling, too.
MR. DONAHUE: Very few of them are mutually exc1usi
They can be combined or modified.
MR, ELLICOTT: That is my only comment on No. 1. I
think that is a weak argument. If it makes people feel good,
you can leave it in. It doesn t t make any difference to us.
No. 2, I assume that the description under the
alternata.ve there is the present system. Am I wrong?
MR. DONAHUE: No. EPA right now will pay for 75
percent of eligible costs for your project, including future
capacity, and how you determine that future capacity right nc
is subject to flux, but EPA will pay for some future capacity
MR. ELLICOTT: I see. Current needs,’ I understand
now..
-------
62
MR. DONAHUE: Same on No. 3.
MR. ELLICOTT: Under Alternative No. 8, I think the
circuit breaker concept is an interesting one, and there are
several other alternatives--or other circuits that I would add
to that. But I am going to go back and huddle with my people
on that.
MR. DONAHUE: Okay.
0
0
U MR. ELLICOTT: Is there a tax expert in the room?
Alternative 9. Allow tax credit for ICR payments.
God knows, I am no expert. But as I understand it,
an industry can deduct ICR payments now.
MR. DONAHUE: That is expense, and you only get 0
percent of the benefit. If he allows tax credit, you get 100
percent.
MR. ELLICOTT: One hundred percent write-off. That
is interesting, you know. Fifty percent they can declare,
which means in reality federal government is only getting half
w
of the half that they are going to get.
Alternative 11, you might want to have something on
z
86-660 that explains what that means, if you can. It doesn’t
have to be very detailed. Most people can’t remember their
name back in 1956.
MR. KIRK: What funding level?
-------
63
MR. DONAHUE: Well, I don’t know.
MR. KIRK: Seventy-five or--
MR. BROWN: Thisdoes i’t address’.a.funding level.
This just addresses paying back the local share of capital
costs. That is all they are talking about.
MR. KIRK: You have to make that clear.
MR. BROWN: I am glad you brought that up.
MR. ELLICOTT: That is really it. I think you did
a good job on trying to consider a range of possible choices,
and I give you full credit for your ingenuity. I still like
No. 1.
MR. COOPER: John, I would like to just go back and
review our industry’s concern with Industrial Cost Recovery.
You can’t really separate out user charges. It is the total
cost for waste water treatment.
We have had our members come to us over the past
several years stating that their cost for participating in
their;
cities being upgraded with these 92-500 funds are more than/
competitors that are in cities not being upgraded or are more
than their competitors that have their own waste water treat—
ment systems. We worked with the Congress to get this study
into the law. We are happy with the way that you and EPA have,
taken hold and are implementing the study.
-------
64
I think the list of alternatives you have here is
good for discussion. We favor No. 1 also. But what we are
after is a .way of bringing competitiveness back to the industry
however we can do that.
Alternative No. 1 we think would do it. We are
certainly not opposed to discussing with you other alternatives
to elminate this disparity in cost that we have. This is where
o we are.
0
z
2 MR. DONAHUE: One of the alternatives, and it is in
I here very subtly in Alternatives 2 and 3, is a possible•
consideration-—this is really a variation on the alternative,
of EPA paying for present needs, present capacity ‘bo meet
present effluent standards, national standards. This would
effectively, if you took that variation on this alternative,
would effectively say that EPA wouldn’t quite so readily pay
for AWT, and if the local government or the state wanted AWT,
U)
.
then it would come from local sources.
MR. COOPER: We would support that.
MR. DONAHUE: I am not saying we are supporting it.
z
L i i
I am saying that is one of the variations on this thing. It
appears that ICR and user charge are, very high, noticeably
higher in places where you have AWT..
MR. COOPER: That is why I am confused about your
-------
65
costs on this ICR study data, October 10, here. You look at
the tertiary over here, and it doesn’t come up that way. We
know that it is true.
MR. BROWN: Let me say One thing about these statisti
This is the first very, very rough cut of what we have got. w
realize that they don’t run the way everyone expects them to
run, and we have got sOmé explanations for that. It is the
things I tried to talk to you about earlier. People gave us
z half a questionnaire back. What do we do with that informatlo:
We throw it out. Here it is all in here.
MR. GALL: The other thing, I haven’t talked to Alan
about this at all. ‘irst of all,. the average size of the plant
surprises me as being large, but the other thing is, the
tertiaries may be a lot of add on’s to existing secondaries.
U) don’t know how that would be reflected in data. They may have
had secondaries and had to go to phosphorus..
MR. COOPER: We are willing to work with you and
va1uate all your alternatives to a solution to our problem..
MR. DONAHUE: Jack, we do appreciate your cooperat1on
so r. It has been really great.
MR. COOPER: Thank you.
MR. ELLICOTT: You might want to have ‘something from’
the National Food Processors there to explain this to people a
-------
66
a public meeting, Jack.
MR. COOPER: We haven’t done that, Ed. Why don’t y
take a minute to run through self—treatment, POTW(indicating)
MR. DONAHUE: This second 3-page handout, titled
“NFPA Self-Truatment”--that’s the title of the first page.
It’s a 3-sheet summary of surveys gathered by the National
Food Processors Association of their own members, and using
their data which we assume is accurate—-we didn’t verify their
data. When they said they spent so much, they had so many
gallons capacity, or so much discharge, we accepted that as
accurate data.
What we did was run through a couple calculations
averaging cut some costs to show what it cost a food processor
who is a member of the National Food Processors Association,
and who responded to the survey, to treat “X”. gallons of
sewage, whether they treat it themselves, use a public sewer
system, and so on. It would appear from the data we were giver
that it is less expensive for them to treat their own sewage.
It depends on the makeup of the sample--if people who respondec
really represented a cross—section of the food processors, i
U’ can’t vouch for that, but ur statistics are based on people
who responded.
It is a pretty good size sample.
-------
67
MR. COOPER: Run through the results.
MR. DONAHUE: Let me ask Alan and Mike since they d i
this, to explain how they got these numbers.
MR. TOWNSLEY: What we did was make accumulatiôn :by
self-treatment, by land application, by POTW, and listed what
they had listed as their annual contact flow as some sort of
sizing. I realize that the annual amount and peak daily is
something different, but there was no way we could add peak
dailies for a 30-day period and 6-month period.
MR. COOPER: Most of the surveys that you probably
got back are on seasonal industries.
MR. TOWNSLEY: Almost 95 percent seasonal.
MR. COOPER: High peak in August and September, and
go off into nothing in December, January and February.
MR TOWNSLEY: There is a difference between annual
contact flow and what you have to gea 1 r up for. There was no
way we could take those peaks and do anything to quantify it.
U i
It is a gross average. It was dollars and gallons, and these
were the figures that came out from it. If we had another
z
LU -
300, maybe, it might change, but I rather doubt it,really.
MR. OLSTEIN: What statistics would say is we had a
pretty good sample size. The only problem is that when you
have got a free response type of survey,iñ. a situation like
-------
68
this, that there might be a bias in forcing certain people to
respond and others not to. That is a possibility that you have
in a situation like this, that we couldn’t handle in our
statistics.
a )
I think in what you have here really relates back to
what you were asking about. If you listen to the arguments
that were made in 1972, they are really cogent. It was all
very rational in 1972, but as soon as the tax laws started
changing, you didn’t have the same ball game any more. Arid
when you talk about equity or parity, whatever those things
mean, we have a lot of things that have taken place since
92—500 got passed, and they really confused that issue a great
deal.
MR., KIRK: I have a question. Under self-treatment
replacement cost, those are one-time,one-shot capital costs?
MR. TOWNSLEY: That was estimated replacement value
of treatment facility.
MR. KIRK: You last line, on those sheets should read
“average cost per thousand gallons per year capacity.” It
took me a while to decipher what you meant.
MR. TOWNSLEY; Yes.
MR., GALL: Robbi.
MS SAVAGE: E think it would be out of order for me
-------
69
to really comment on these until I huddle back with members a
little bit, but I think we have written comments for you. Anc
I would like to know: Are you going to have the list of the
industries and grantees available, the ones you went to visit?
Is that an available kind of list we could see or are you keeF
that under wraps?
MR. HUELSMAN: No reason.
N
0
N MS. SAVAGE: It might be helpful to have some of our
members participate in those meetings if they knew, who--
MR. HUELSMAN: Grantees and industries.
MR. BROWN: We can tell you what cities, it would be
fairly easy, but telling you which industries-—
MS. SAVAGE: My last point is going back to the
public participation thing. I think it is incumbent on EPA
that rather than having us comment on participation In these
8 final days, and having our own opinions about it, it might be
worthwhile for EPA to go back and find out why, as study pro-
gressed, the membership of the Advisory Committee changed and
what were the reasons for people attending and not attending,
z
so that if they are truly looking for meaningful public
participation, I think is the word that they will be able to
analyze from this model project what the problems were, and
maybe how it could be improved in the future.
-------
70
MS. BAUER: One quick thing. On page 3, under
dvantages for No. 11, the first one is that it would “elimina
complaints of inequitable charges to industries discharging to
POTWs funded under different prdgrams.” I think that is some-
thing that could be given under some alternatives, too. It is
only mentioned that one time. It is a basic point for the
whole study that we are dealing with ICR now, and I know this
0
has been brought up before, but I feel that point should be
2 listed as an advantage or disadvantage in some of the other
alternatives, other than that one.
MR. GALL: You are--addressing about elimination of
inequitable charges?
MS. BAUER: Right. We hear this from our own stand-
I
point about industries in the Northeast that are coming in now
and having to pay ICR, and how there are industries in other
parts of the country that built plants eight years ago or what
ever, and did not have to and getting back to the whole questi n
of our companies do not have the competitive edge. That is on
of the reasons they say they don’t, because of this. I feel
z -
that point maybe should be brought out. It is a factor in som
of the alternatives, but it is only mentioned that one time.
MR. GALL: That goes both ways of course.
-------
71
MS. BAUER: Right.
MR. PAl: I want to solicit some comment from the
advisory group: Why would ICR be excessive.Qr would the user
charge be excessive, what would be certain things that we
should improve under our construction grants program In gener
For those of you who go through this process, you may quanti-
tatively say why user charges are so high or in certain cases
why user charges are so low in certain cases, and what
a contruction grant program does in general to meet both of 01
demands of growth, and in the meantime pose a regional fee
that would not cause a hardship.
Those are the things. Maybe you dontt want to see
ICR so much, but get to the fundamental problem of why the
cost’is there. The basic issues, if cost is there, somebody
U)
is going to pay for it. Maybe it will shift that burden to
.
U
one or another.
U)
One of the things you may. want to look at is why th
LiJ
costs are there. Is there any way we can reduce the total
cost, and in that way everybody will get a benefit, not only
z .
U i
one group, or any other groups. So those are the things that
U’ I think can come from the advisory group.
The key point is why are the costs in your judgment
too high?
-------
72
That is the real issue in my judgment.
- I think with John’s summary statement we will wrap
up for the day. I presume that the next meeting we have will
be announced via the same format that this one was.
MR. DONAHUE: I think we should agree when such a
meeting will take place. I am sounding out people here. I
would think that the time for such a meeting would be after
a draft final report has been written.
MR. HUELSMAN: That’s right.
0
MR. COOPER: Before it is submitted to the agency.
MR. ELLICOTT: It won’t make any difference.
MR COOPER: It should be available to this advisory
group to review and comment on before it is finalized.
MR. DONAHUE: We are going to have a draft final
report, and then we thought that was the document we were
going to circulate; and based on the comments or reaction to
that, expanded, whatever, and issued in final form.
MR. HUELSMAN; A draft of not all the stuff that goe
into the final report, but the one that says here is our
conclusions, here are the facts, here are the recommendations
type of thing.
MR. COOPER: That is what we would went to look at
before our next meeting, that is what Ed is saying?
-------
73
MR. DONAHUE: We would have the report to you before
the next meeting. But the report would also have been given
to EPA.
MR. COOPER: Not the final report, but just a draft.
MR. DONAHUE: That’s right. The draft final report
is supposed to be ready in mid-November.
MR. COOPER: Are you going to make it?
0
N
o MR. DONAHUE: We are going to try. We will make it.
0
MR. ELLICOTT: You have done pretty well so far.
MR. DONAHUE: What I would like to send out is a
letter,like two weeks.. before the meeting. Is two weeks
reasonable?
MR. HUELSMAN: If you are going to have a meeting
in November, we have to realize that we are talking about the
Cl )
last week of November probably when we could have the next
U
meeting, and we are not going to have that draft report probabiI
U )
very far in front of that thing.
LU
MR. COOPER; Why not have the meeting on December 4?
MR. HUELSMAN: That pushes the final deadline down.
z
LU
MR, DONAHUE: The final report is supposed to be--
LU
I-.
U)
the law says by December 31, that s when EPA has to have it
for Congress. It has to be to EPA before that. We were plannijn
to have the final report to EPA by December 20.
-------
74
MR. ELLICOTT: How does Monday, the 20th of November
sound?
MR. PAl: Why don’t we have a meeting the last week
of November, and if we don’t have the final report, at least
they can take a look at the recommendations. We can’t go much
later than the last week in November,
MR. HUELSMAN: We will get it out to you.
MR. COOPER: What about the 29th, Wednesday?
Thanksgiving is the 23rd.
MR. HUELSMAIq: This is the week after Thanksgiving,
the 29th.
MR. DONAHUE: The 29th is fine.
John, is that okay with you?
MR. P41: Fine.
MR. ELLICOTT: We are talking about minimal conclusio
and recommendations?
U)
U)
MR, DONAHUE: Yes.
MS. SAVAGE: If it is too much for you, maybe we
could call and find out if drafts are available and we could
z
pick them up if we want to review them.
MR. DONAHUE: Let’s work out the logistics later.
We may have them available and can mail them out’.
MR. PAl: When you review alternatives, you may want
-------
75
to pick more than one, and more or less state your preference,
because your :first wishes may not always be the one that is
going to be used. You may want to go maybe three or five
alternatives.
MR. DONAHUE: Or come up with some new alternatives
altogether.
ought
MR. HUELSMAN: Alternatives to be considered/c :: to
u be coming in pretty quick, not wait for the 29th.
MR. PAl: In the meantime, if they want to comment
tomorrow, they may say I like one 100 percent, and the next
one 90 percent, and so on.
MR. GALL: I think that will conclude our meeting
for today.
(Whereupon, at 3:50 o’clock, p.m., the meeting was
adjourned).
-------
INDUSTRIAL COST RECOVERY ADVISORY GROUP
Wednesday, November 29, 1978
Environmental Protection Agency
Room 1032, East Tower, 401 M Street, SW
•Washington, D. C.
The meeting was convened at 1:45 p.m., John Pai
presiding.
STEPHEN B. MILLER & ASSOCIATES
741 THIRD STRUT. S. W.
WASHINGTON. D.C. 20024
(202) 554.9148
-------
2
INDEX
Page
Presentation by Mr. Donahue 4
Open DiscussiOn 7
N
0
0
N
U
d
z
0
I . ,
z
I
U)
I-
hi
hi
Ui
S
I-
U i
U)
LU
I-
U
0
LA
U)
LU
-J
-J
z
w
Q.
LU
-------
.3
PROCEEDINGS
MR. PAl: Good afternoon. I want to thank you all
for coming. This is the last scheduled advisory group meeting
on the industrial cost recovery study.
I am John Pai. I am the project officer for EPA on
the study. I would like each of us to introduce and identify
himself or herself so we can.get the meeting under way.
MR. BROWN: I am Alan Brown of Coopers & Lybrand.
z
MR. DONAHUE: lam Ed Donahue from Coopers & Lybrand.
• I am project manager for C&L for the study.
MR. GALL: I am John Gall. I am from EPA Region I
in Boston.
MR. HORN: I am Ted Horn. I am from EPA Region V
in Chicago.
U)
w
MR. COOPER: I am Jack Cooper with the National Food
U
0
Processors Association.
MR. KIRK: Don Kirk, H.J. Heinz Company and National
Food Processors. ..
MR. PERRY: Bob Perry, Water Pollution Control
Federation.
MR. GILDE: Lou Gilde, Campbell’s Soup Company,
representing NAM.
MR. SILVERMAN: Larry Silverman, Clean Water Action
-------
4
Project.
MR. BUCKLEY: Steve Buckley, Massachusetts.
rls. BOOLUKOS: Susan Boolukos, American Frozen Food
Institute.
S MR; GASPAR: Lewis Gaspar, CongresswomanHeckler’s
office.
MR. KRZEMINSKI: I am John Krzeminskj. I am with
Air/Water Pollution Report.
MR. PAl: Since this is our last scheduled meeting,
I want to use this opportunity to thank you all for the help
you have provided to us throughout this study. I hope we made
our best effort to your satisfaction, that we made our best
effort trying to do a study to address all the issues that
have been raised by the Congress and by each of you.
C l )
LU
The agenda today, briefly, is that I will ask Ed
U
Donahue to brief you a little bit about the ten public meeting
we had in the latter part of October. Then we will ask you
LU
to review the summary and findings of the report that C&L
submitted to us. Then we will solicit comments from every one
L&J
of you. Then we will go to open discussion.
MR. DONAHUE: The ten public meetings that were held
in the ten EPA regional offices in the latter part of October
had attendance ranging from one in San Francisco. But we
-------
5
felt, since he had ridden two and a half hours to see us,
obliged to go through the whole presentation. It was an
evening session. He drove up from Modesto. The largest
number of people was in Boston, where we had about a hundred
people at one of our sessions.
At those sessions, in addition to making a presenta-
tion on findings, conclusions, and possible alternatives, we
asked for written comments from anybody who would like to
z
comment on alternatives or who would like to suggest possible
additional alternatives or variations on the alternatives.
guess we got about 60 to 70 comments which we are going to
reproduce and include in the data and exhibit section of the
final report. We are going to sort them by region.
We tried to sort them by the sense of the comments.
Out of the 60-odd comments, all but nine or ten suggested
simply eliminating industrial cost recovery. Maybe a half
dozen of the nine or ten suggested some alternative to ICR as
now formulated. Three suggested keeping ICR. That was the
town of Templeton, Massachusetts; Rupert, Idaho; and I can’t
z
remember the town in Colorado. They are small towns that use
the 10 percent that they get from ICR to hold down their
property taxes and operate the town budget. They are all
towns that have a large share of the town’s sewerage system
-------
6
being used by industry.
That is about the total of the comments :.’we received
from the public meetings. Based on those comments and a lot
of discussion among ourselves, we put together the draft of
the volume one summary of the final report that you all have
0
received. In it we set forth pretty much what we had said at
the ten public meetings plus made specific recommendations.
The report is supposed to have been received by everybody last
Tuesday or Wednesday. Apparently not everybody go L it then.
Some people on Capitol Hill received copies last Monday. To
date, we received no comments in writing or orally from
anyone about the report.
What we are going to do is, based on the comments
received on this draft report, working with EPA, we will
revise this report and the detailed reports to support it.
What we plan to do is circulate the summary report which you
have in draft form. When it is in final form, we plan to
circulate that very widely to anybody who wants it. Anybody
z who asks will get copies of the volumes two and three, the
detailed methodology, findings, alternatives, recommendations,
data and exhibits kind of stuff. The transcripts, which total
about 2,000 pages, we really are not going to encourage people
to ask for copies of those; I don’t really see it would serve
-------
7
much purpose.
We are going to give EPA the required number of
copies of the transcripts of the whole seven volumes for them
to use, plus some copies people on the hill have requested,
and a couple of other copies. But we do not. really see a
whole lot of sense in reproducing all the transcripts in great
quantity.
That is pretty much where we stand now..
z
MR. PERRY: What is your timing on the final?
MR. DONAHUE: We have asked for comments in writing
by the 6th of December. We plan to have a final version of
the report by the 15th of December to EPA. We will start
writing the thing right away. We plan to have it printed and
to EPA by the 15th of December. EPA will have to review it
internally They will have to transmit it to the hill with
whatever reservations or qualifications or endorsements or
comments they want to make about the report.
LU
MR. COOPER: Will EPA be issuing their own report,
or will they be sending your report with, what you said,
LU
modifications or with supplementary comments?
MR. PAl: This report, wiien it is in final form,
will be an EPA report.
MR. COOPER: In other words, when it goes through
-------
8
the internal review? processes at EPA, it will not be changed?
MR. PAl: At this time I have circulated within EPA
for internal review already in its present form.. So, they
will send a written comment to me by December 6th. So, on
December 8, we will have agency review. Everybody will sit
around a table as we are here today. Any comment received
from you or any other public body which has received this
draft report will be put on the table. We will try to respond
z
0
to all the comment we have. Based on that discussion,
z
hopefully, Coopers & Lybrand will go back and draft a report
which will be an EPA report.
MR. COOPER: I see.
MR. PAl: Are there any more questions on the pro-
cedures or on the public meetings? If not, we want to go
into discussion of the executive summary report itself.
MR. SILVERMAN: Do you feel you have gotten the full
range of opinion that the public holds - various sections of
the public hold? .
MR. PAl: Can you repeat the question?
MR. SILVERMAN: Do you think you have, in fact,
solicited and received most of the opinions that people have
on this subject?
MR. PAl: I think we solicited opinion from as wide
-------
9
‘and diversified group as we can. Evidently their interest is
showing in the way they provided response to us.
I hope that answers your question. In other words,
we can only solicit a comment from them to the best’ we can.
But we cannot force them to send us comments. I guess,, in a
way, you can take the, lack of comment - I took it as at least
not offensive.
MR. BUCKLEY: What is your opinion of the overall
z
response that you received?
MR. PAl: I think those who are really interested
and who are really impacted by the ICR did respond. ‘ To the
public at large, I think generally they are still a little
understanding of what ICR is. Of course, many of them do not
impact by ICR as much as some other industrial group or
municipality. By that, I mean that is why we do not receive a
U
lot of comment from the public at large, even though we very
much solicit their comment. But there really is not as much
Lii
direct impact on them.
For the cities that are impacted by ICR - by that, I
Lii
x
mean there is not a lot of industry in their cities — the
public does comment. ‘ ‘
MR. DONAHUE: I would like to briefly discuss the
four recommendations we made based on what we saw and what we
-------
10
heard during the study --
MR. PAl: Excuse me. Have all of you had a chance to
read the summary report?
You may not want to go into details, and thus open
up more time for discussion.
MR. GILDE: The summary report has a handout that wa
given at the different meetings around the country. I have no
studied it in enough detail to see if you really changed it,
but I ascertained at least one place where you have not
changed it. Have you been able to crank in what was fed to
you at these various hearings to revise those answers to the
nine questions of Congressman Roberts?
MR. DONAHUE: We got very little information at the
ten public meetings which wou1d cause us to change answers to
cn
Congressman Roberts’ questions.
U
Do you think there is any one in particular that we
have not answered properly?
MR. GILDE: Yes. Question 2 says whether the ICR
program and resulting user charges cause some communities to
U I
charge much higher costs for waste water treatment than other
communities in the same geographical, area. That’s on page 20.
Camden specifically raised that question. I thought a lot of
the data that was sent in by the National Food Processors
-------
12
both operating costs of the sewer plant and debt service
through user charge then there was a difference. But the
total cost of sewage treatment that you were paying for was
not different from one place to another.
We didn’t begin to try and analyze differences in
property taxes.
MR. GILDE: The letter that the mayor of Camden
turned in said specifically another community boardering right
next to them had their adequate secondary treatment billed
prior to Public Law 92-500. He is still waiting to hear the
final cost on his. He knows it is going to be five times or
I-
more than what that community has to charge.
MR. BROWN: One of the problems we ran into here was
attempting to compare a before-and-after situation. There is a
(I )
community out in California thai volunteered to participate in’
the study called Los Banos, California. They have basically
two large industries. One is a dairy processing plant, and
-J
the other is a meat packer. Because of Public Law 92-500
z and their interpretation of how they set up their user charg
and industrial cost recovery,, they were receiving threats from
the two large industries that the industry was either going to
move Out of town or close down.
I have spent about a week on the telephone and out
-------
13
there in person interviewing these people and talking to the
industry, to California state representatives. Everybody you
talk to you get four different stories. Eventually what
happened after the interview last August was the fact that
Los Banos said that one of their large industries was going
to move out of town. It was a cheese processing company that
bought raw milk from the dairy cooperative. This was going to
be roughly 50 jobs. It was about 30 percent of the total flow
z
and loadings from the dairy. It was a significant user on
the system.
Depending upon who you talked to, it was going to
have either zero impact or a tremendous impact on the corn—
munity. The basic reason, when we talked to the people from
the dairy, they left was that charges for waste water treatmeni
U)
cost is going from about $300 a month to an estimated $5,000
U
a month. The dairy wanted to expand production. They felt
that they could move about 17 miles and pick up an abandoned
w
dairy plant. With the reduced waste water treatment costs,
they could go ahead and fund the purchase of the new building.
I talked to the dairy people, and then I talked to
the State of California. I said, when the dairy moves from
one location to another, will the new town meet effluent
guidelines; are they going to meet the requirement? And the
-------
( 1
0
N
N
0
0
N
U
0
z
0
z
I
U)
I-
w
I.’
I
UI
0
I
=
I-
U I
p.
(n
LaJ
I-
U
0
U)
U)
LU
-4
-I
z
LU
x
LU
14
state said they’re not sure. Yes, in fact, the cost that the
new location will charge will be about $300 a month. But the
state cannot guarantee that they are not going to have to
require them to get a 92-500 grant to upgrade their treatment
because they are not sure that they are going to be able to
meet permit standards once the dairy moves into the town. The
diary tells me that they have investigated this and talked to
the state, and they don’t think there is going to be any
problem. But the state says that they are not sure.
Just to complicate the whole matter, when the
grantee set up its user charge industrial cost recovery
system, there was some disagreement with the state on how
costs had to be allocated and what industry’s share was going
to be. Industry made all its decisions based on estimated
cost of $160,000 or $170,000 a year. Once the final system
came back approved from Sacramento, industry share was down to
about $70,000 a year.
So, for us it has been very, very difficult to ever
make any kind of a comparison from one geographic locality to
another. The case I have just told you about has been written
up as a case study and will be referenced here in this
section in the detailed findings saying this is the kind of
sttuation that can exist and that we feel is out there. But,
-------
15
as yet, the data doesn’t exist for us to really document it.
MR. PAl: Maybe what you want to do, if you do know
of any specific area where this does exist, and referring
back to Ed, you can share your data, Lou, and go through the
data again to see if there is anyplace where this showed up.
MR. DONAHUE: Lou, you are really looking at two
8 things in your question. Our study and our report says that
U
ICR is not doing what it should be doing. It should be
z
eliminated and some other things should be done instead, of it.
I
U)
What you are trying to get us to say is that proportional
user charges should be eliminated. Am I correct?
MR. COOPER: No.
MR. GILDE: I am trying to add in the other thing
that is there besides ICR. That is user charges has to be
U.,
L&i
addressed. User charges can be a problem. In order to
adequately answer Congressman Roberts’ questions, if you have
identified where user charges are a problem, then should
_j
-L
Congress address greater flexibility in user charges: yes.
MR. DONAHUE: We cannot find’ that as a problem. Yot
cited an instance. We really cannot find any pattern o’f that
kind of thing happening. I am not trying to adopt a kind of
adversary role; I am trying to be helpful. But I really cannc
I will not be comfortable standing up in front of a
-------
16
congressional committee saying that that’s a problem because
I do not have enough data to say that.
MR. PAl: One of the concerns about ICR in essence
is ICR has to be paid only by industrial users. That is why
we get into the double taxation problem, whether it would give
them more problems than the ordinary residential users. But
user charge is a cost that everybody pays. It is not really
impacting industrial users as much as it impacts residential
users.
z
I
Any flexibility, the way I look at it, is either
shift the burden from the residential user to the industrial
users or shift from ir dustria1 users to the residential user.
In either case, it does not fulfill the intent of proportional
charge as stated either in 92-500 or in 95-217. That is why
we are not going to address the flexibility of user charges in
U
the study.
MR. DONAHUE: Lou, one of the. issues that you are
alluding to -- and I guess this is one of the things that we
noticed. The assumption was made when 92-500 was enacted,
with this country’s fondness for technology, that the unit
costs of treatment were bound to be’lower in these big, new,
modern sewage treatment plants than they were in Older ones.
That is not turning out to be true at all. So, people using
-------
17
older sewage treatment plants can indeed be paying a lower
unit cost -—
MR. GILDE: The other misconception that came about,
too, was that somebody that conserved water, reused, recycled,
reclaimed the maximum therefore ended up with a high strain,
that he would get the maximum benefit out of entering into a
combined system. This does not prove out mathematically. The
benefit of taking a strong waste and putting it in with a
weak waste accrued to the people with the weak waste. If you
turn the problem around and told the people with the weak
waste to concentrate, recycle, reclaim and conserve, your
cost reduction would be far greater.
MR. DONAHUE: Except that, by reducing your con-
sumptionof water, you are being billed for a lower volume of
U)
I &i
water.
U
A fair portion of the total relates to flow. So, if
you can cut down on your flow. The O&M costs of the average
-I
-J
sewage treatment plant may be fixed, but the number of units
z over which it is being spread are smaller; and you have the
smaller percentage of the total, so you have less.
MR. GILDE: When you get to specific cases and
identify the values gained by either being in a joint
maintenance system or being out, the benefits always accrue
-------
18
in most cases to people with the weakest sewage.
MR. DONAHUE: Yes, sir.
MR. PAl: If you do not derive any benefit from
water conservation and water reuse, why do you do it?
MR. COOPER: You derive internal benefits, but --
MR. GILDE: I am talking about the benefits -- the
industry for the most part, particularly the food industry and
other industries like that, have made a sincere effort at
z
water conservation and so forth. Okay, now you end up with a
strong waste. It goes into the rest of the community system,
which is very weak. There is a benefit of the joint treatment
system cost-wise. But most of that benefit accrues to the
people with the weaker waste.
MR. PAl: Why do you say that?
MR. GILDE: Well, we can give you examples of the
cost to treat alone versus the cost of being in a bigger
system. It always comes out that all those benefits of unit
_J
cost move to the community as a whole.
MR. PAl: Let me interpret.that a little further.
I think you can also - relating that to the volume discount
you usually have for larger users, that the way you are talkinç
about really is incremental cost or the incremental benefit.
It is data on the user charge system at least that the benefit
-------
19
should be shared by everybody.
You can also argue about volume discount. The fact
that you use more water doesn’t increase the capacity of the
sewer that much Or that the deliverer of water to you is much
less.
N
a
MR. GILDE: I wasn’t arguing for volume discount.
MR. PAl: I am justsaying that you are arguing
about the same point. Any benefit from the joint agreement
z
should be shared by everybody, not only to the people who
benefit, the residential user.
MR. HORN: I think what he is driving at is that
in some communities the domestic, if you will, other than th
nonindustrjal is weaker. However, in those communities where
N it is cost-effective there are efforts to study the sewer
system and rehabilitate to get rid of this infiltration inflow
U
problem. I believe you are right. The more concentrated is
the waste, the cheaper it is per pound to remove. We found
LU
the converse of what you are saying. Many dischargers of a
weak strength feel as though it is cheaper to treat. Yet, in
LU
allocating costs they average the cost. It. cost so much per
thousand gallons because the identit of the source of the
sewage or waste or pollutant is lost in the collector system.
So, it äomes out to be an average cost per pound. And that
-------
20
is generally lower where it is more concentrated.
I guess part of the problem -- and if I. may address
the questioi. Is this a direct quote from the congressman’s
question?: Whether the ICR program and resultant user charge --
Well, the user charge system does not result from
the ICR program. As John tried to point out, there will be a
user charge system in each municipality funded with a 92-500
or a 95-217 grant, completely independent of industrial cost
recovery. In Region V 1 we have 300 approved systems of which
only 170 have also an industrial cost recovery.system. So,
approximately, only one out of every two systems has a corn—
panion industrial cost recovery system to it.
MR. DONAHUE: The user charge and industrial cost
recovery rnare two separate issues. You know that, and I know
that. When the congressman asked those questions, he had the
U
prerogative to mix apples., and oranges; and he did.
MR. HORN: That’s why I asked whether it was a
Lu
direct quote.
MR. DONAHUE: Yes, this is a direct quote from his --
Lu
MR. HORN: Again, much higher costs - some charge
much higher costs. They can’t charg!e a cost; they can levy
a rate, I guess, to cover it. I didn’t know whether it was a
typo.
-------
21
MR. DONAHUE: No. The questions are verbatim from
his questions entered into the Congressional Record. They are
not condensed or edited. They are verbatim quotes of the
questions he put in the Congressional Record.
I ” MR. HORN: I see.
C.’
0
MR. PAl: Jack, you have a comment?
MR. COOPER: Yes, I do. In the municipalities that
o you went to -— you went to 200, I believe -— were all of these
z
with established ICR programs? Or most of them?
MR. DONAHUE: No.
MR. COOPER: They were just communities picked at
random?
MR. DONAHUE:. No.
MR. COOPER: What criteria did you use to select
U)
communities?
U
The point I am trying to drive at is, perhaps you
didn’t go to communities that didn’t have an ICR program in thE
works. Therefore, you would have missed communities where
z they had lower costs because you didn’t go to them.
MR. GALL: Let me try to answer that for you, Jack.
At least in my region, the Coopers & Lybrand asked us who we
should visit. One of the basic criteria was that we had to
visit communities that had information on ICR rates. Whether
-------
22
the system was approved or whether it was a good document so
that there was a fair assessment of what the impacts were
going to be was really immaterial. So, the communities that
were selected, for example, in Region I almost without
exception either had an ICR progr m that had been approved or
had a fairly detailed engineering document that they could
pick out specific rates and, in more instances than not,
specific charges for specific industries.
There were a couple, I believe, that were 84-660
projects which provided for kind of a historical perspective.
MR. COOPER: That is the kind of information, I
believe, that the congressman was addressing here in capital A
whether the ICR and the user charges for some communities were
higher than waste water treatment in other communities in the
same geographical area, implying those areas where they didn’t
U
have ICR user charges because they had adequate systems that
were either built with their own money or under prior grant
w
-J
programs.
I believe that the answer that you have given here
Lu
isn’t reflective of the existing situation. Yes, indeed,
there are communities where this exists. Our people are
telling us that it exists. I believe that the data that we
have provided you in our questionnaires will show that. W
-------
23
may have to go back and dig into them ourselves in order to
find it, but we know it exists.
MR. BROWN: What we did to answer this question was
specifically to ask EPA whenever we drew up our list of cities,
can you come up with a situation where there is a disparity
from one town to another. Nothing was identified specifically
for us.
What we were talking about here was the same
geographic area we pictured as roughly 50 miles.
I got all kinds of quotes in California from the
canners out there about the differences in rates from Northern
California to Southern California, the difference between
Wisconsin and California. I got a lot of that kind of
information. We get some from Campbell’s Soup and other
5 places.
0
As far as the same geographic area and the disparate
rates in the same geographic area, the only specific case I
LaJ
-I
can think of is the Los Banos thing I just told you about.
MR. COOPER: Maybe what we need to discuss is the
L&i
50 mile radius. Maybe that is too limited. Certainly,
U,
competitors are •not necessarily in ‘a 50 mile radius in the
canning industry. They may be within 500 miles of each other.
MR. BROWN: But is that the same geographic area?
-------
24
MR. COOPER: I don’t know.
MR. BROWN: The problem we had is we didn’t define
it but we felt the same geographic area had to be fairly
0
close.
rn MR. PAl: You all have received the 200 cities that
N
0
Coopers & Lybrand proposed. We have made some changes because
of some comments you have made. In addition to that, we also
defined what the geographic area is: either S.A. area or
within a 50 mile radius. That is the ground rule we set up
before we go out into cities and determine what is in the same
geographic area.
MR. GILDE: It would be interesting to know what
Congressman Roberts’ interpretation of geographic area is.
He might have been thinking in terms of the East, the Midwest,
U,
the West, or in terms of the regional EPA area. But 50 miles
does not enable you to compare like things.
For instance, you take Sacramento, which is a case
UJ
_J
—I
you studied so thoroughly. There is no other community within
z 50 miles of Sacramento the same size which gives you some kind
of comparison.
MR. PAl: The reason is, of course, when you pick a
50 mile radius, basically you have all the homogeneous factors,
industries. Outside that, you may have different labor
-------
25
conditions, different utility rate conditions,, different
transportation conditions. Even if they are given a little
different radius, it doesn’t reflect the actual economic
burdens.
MR. GILDE: In the case of Sacramento, from the
standpoint of both where the state itself is concerned and
food processors, food processors, given a choice now to locate
or expand their operations either in Sacramento or Modesto,
are all going to opt for Modesto. Is that what we. want out of
this whole program?
MR. DONAHUE: Our approach in the study was to
identify the situation. We did not see it as our function to
recommend to try to equalize nationally.
MR. BROWN: There is one thing we can do. Wedo
have information, at least in California, on 10 or 15 cities.
I am particularly thinking of the Sacramento case because they
went into a lot of detail. They can compare the rates for a
large industrial user - Campbell Soup particularly - and apply
the rates for Modesto, Stockton, eight or ten different places
LU
=
in California. That is part of the case study that we did on
Sacramento.
When we answered this question, we felt that we had
to be fairly specific. The information that’you are talking
-------
26
about is in the report. But I think we interpreted it in two
different ways.
MR. COOPER: That is correct. We have interpreted
it in two —-
MR. PAl: My question is this. We have asked
industrial users whether they would relocate because of ICR.
In answering Lou’.s question about people making decisions to
0 go to one area or move to another area, if that was the con—
z
cern, then the question should be answered in the question-
naires .that they would consider relocating because of ICR.
Our answer to this was that nobody confirmed that they would
relocate because of ICR charges.
So, the question you raise was not really there. You
ask whether people would go to these areas because the rate is
U)
cheaper; they would have responded in the questionnaire.
MR. GILDE: Maybe I should redefine my problem from:
the beginning. My problem from the beginning was I though
-J
you had data and you have identified data that answers this
z question. Now, in answering the question, instead of saying,
we have not been able to identify any such cases, would say,
we have been able to identify some ‘cases or how many cases and
so forth, fine. But to say you haven’t been able to identify
any such cases I don’t think is answering the question.
-------
27
MR. DONAHUE: Also, you have got to read the whole
question. I am not trying to be difficult. The whole
question, particularly the parenthesis - some communities
have indicated disparities in ICR and user charges affecting
employment opportunities. We really considered that employ—
ment should be one of the gut issues in the study. And we
just can’t find any impact on employment.
U
MR. GILDE: Camden gave you a comment; even if it’s
z
0
the only comment you have, it’s at least an answer.
MR. DONAHUE: We said somewhere in the body of the
report that we found fewer than a thousand jobs had been lost
I-
because of plant closing due to sewage treatment costs. We
could not find anybody who really said the only reason they
closed the plant was ICR. People said that that. may have been
one of the reasons. But nobody would blame a plant closing on
ICR.
MR. COOPER: It’s a part of the whole picture.
MR. DONAHUE: That’s right. It is a part of the
total cost of doing business.
MR. ELLICOTT: I’m Andy EllicOtt with the
Association of Metropolitan Sewerage Agencies.
I think this is a worthwhile point to go, into. But
I think that we have kind of exhausted the ability of people
-------
28
here to talk about it. Lou, if I could suggest it, I would
say that you get together with the C&L people and work out
whatever kind of addendum you think is necessary to highlight
• those particular cases and bring them to the attention of
people who are going to read this report. I don’t think that
there is anything else that can really be done.
MR. PAl: That is a good point.
0 MR. SILVERMAN: We have a lot of questions. I think
z
you have to read all the questions as a whole. The first
question deals with this business of geographical areas,. It
deals with whether small towns do better than big cities and
whether one region, of the country is worse off. I think that
deals with a broader scope. The second question deals
with smaller geographical areas, and it has to be read
together.
I think the answers to the first question are very
interesting. It reflects the fact that the industries suffer
Lu
from the inefficiencies of the systems that are being built.
z It is well-known now that the kinds of’ systems designed for
small communities are not very efficient, and it is not such a
great idea to use conventional secondary treatment in small
towns because you have a lot of problems. Industries in small
towns suffer from that. I think that is what you’ indicate.
-------
29
It is pretty well-known now that the AWT is often a
questionable investment and very expensive. Congress has been
holding hearings on that subject. You indicate that
industries that are tied to AWT plans also suffer from that.
I think it is not as well-known but probably true that the
Northeast communities have allowed their systemsto degrade
to such an extent that the cost of building sewage treatment
in the Northeast is higher than in other parts of the country.
Again, industries in that area suffer from that. They just
•suffer from whatever problems systems themselves suffer from.
I think that is reflected in this.
I do not think ICR has much to do with it one way
or the other. So long as they are paying some portion of
their share, when the total pie is bigger, they are going to
U)
pay more; when it is smaller, they are going to pay less.
MR. PAl: Andy had a good point. I think Louis
should get together with either Alan or Ed and go through the
I L l
- I
data and •see what matters you may have.
z MR. KIRK: I agree with that.
L i i
My impression upon reading the finding, second
question A, is that there is practically no variation in
treatment cost from community to community. Just having read
that, without reading the rest of the report and so forth.
-------
30
I. would hate to have an important statement in this report
that would pass that kind of finding on to the public or
Congress c$r whatever. So, I would hope, after you get
together with LOU, instead of passing it off as a statement
like that, you can state what you have found. The things that
you don’t know anything about, simply state that you have not
been able to proceed far enough in your study to answer those
things, rather than give someone the impression that the
z
differences really don’t exist.
MR. DONAHUE: Fine. We do not want to put
misleading statements in the report.
MR. KIRK: That was my reaction in reading it: What
are we going through all that study for? If this statement is;
true, what are we all wasting, our time sitting here for?
MR. PAl: Also, I want to endorse Larry’s opinion
that the industries do have such problem in the area where
they are situated.. ICR, of course, is a consequence of it,
_J
and not a reason for it. I guess that is what you are trying
z to say.
L&i
MR.’ SILVERMAN: Also, I do not think that, if you
footnote it or mention that it is a problem in Camden or a
problem somewhere else, that necessarily changes the whole
point. I think that, if there are isolated problems, it is
-------
31
good to identify them.
I take it what this means is that, by and large,
this is not a problem in the small geographical area or that
maybe sometimes there are. I do not think it takes away from
the point. I think that any policy that is national is going
to have that kind of isolated difficulty.
MR. COOPER: I would like to add something. I think
it would be helpful if, in your answer to question A, you
could add the geographical area that you, are talking about
here. That would certainly clarify the situation.
MR. DONAHUE: That is a good point.
•MR. SILVERMAN’: I take it between the first question
and the second question you. covered all geographical’ areas.
Right?
U)
MR. PAl: The’larger scale and the smaller scale,
yes. I think that s a good point.
MR. DONAHUE: Our recommendations are really pretty
ILl
-J
simple. They are not really radical. Our recommendations are
z four. It is page 6 of the report.
The first recommendation isto eliminate the
industrial cost recovery ‘provisions’, Public Law 92—500. The
reason for that is basically pretty simple. ICR is not doing
what it is supposed to do and doesn’t show any promise of
-------
32
doing wha.t it was intended to do.
Basically, the main reason is the changes in tax
laws. It seems to be an insignificant factor in water con—
servatjon and in plant sizing. So, there really is no reason
to have ICR as it is presently constituted.
However, we are practical enough to realize that,
just making that recommendation, there is not a whole lot of
likelihood of its being acted upon on the hill. So, we said,
z
okay, what is it that ICR was trying to do? Arethere some
other ways of doing the same thing that ICR was attempting to
do? And are they practical and simple and generally acceptable
ways of doing it?
Since the three intentions behind ICR were parity -
what we concluded is that you do not need a parity creator
because there is no advantage economically for our medium to
C.)
large industry to use a public sewer system. There is no
economic advantage.
LU
-J
-J
The other two issues, the issues of plant sizing and
z water conservation.— our recommendations were framed from the
LU
point of view of what practical and simple kind of things
could we suggest to encourage water conservation by industry
and to encourage more appropriate sizing of sewage treatment
plants.
-------
33
That departure point resulted in the three other
alternatives, to changing the Federal participation in a waste
water treatment plant so that, as communities build more
capacity than they really need, EPA’s contribution, both in
absolute dollars and in percentages, will drop off. Basically,
0
all the second recommendation says is that EPA - we are
suggesting that EPA not pay for speculative industrial
capacity and that EPA pay for present and projected residentia
z
and commercial capacity, existing industrial capacity,
industrial capacity for which industry can be identified and
is willing to sign a contractually binding letter of commit-
I-
ment. Any capacity that a community wants to build on
speculation beyond that, let the community pay for it.
So, if you build it and it is not used, everybody
in the community - industry, residential people, everybody -
pays for it.
MR. PERRY: Isn’t that fairly close to the existing -
-J
MR. DONAHUE: Except that EPA pays three-quarters of
the cost now and will pay three-quarters of what you need if
you want to buIld more - they will still pay three-quarters of
the cost of what you now need and not pay anything more.
What we are suggesting is that, if you build more
than what you now need - what we just defined - that EPA’s
-------
34
share drops from 75 percent to less than that. So, you are
going to get fewer dollars for the current needs.
MR. HORN: You are approaching here on’ some, ‘first
of all, basic planning’ concepts.
U ’ MR. DONAHUE: Yes, sir.
N
0
MR. HORN: In 201, you know, they are designing for
the year 2000.
Secondly, the needs survey is predicated ,on -- and
this is project priority list and eve,rything —- for the year
2000 the whole planning concept is --
MR. DONAHUE: Yes, sir.
I-
MR. HORN: Maybe the summary doesn’t have it. But
how -- what is causing this’ tremendous design for the future?
MR. DONAHUE: You have ‘to ‘stop and examine how much
U)
capacity you want to build. By “you” I mean everybody, not
just EPA.
You are building a plant now for some future use.
U i
-J
_j
You cannot identify all the use. One of the things that we
z think is significant is the industries we talked to have
reduced their water consumption by almost a third.
MR. HORN: But there has l een -- okay, a semantic
problem —— reserve capacity. “Reserve capacity” to many
people’rneans like you reserve troops or something; they are
-------
35
held in abeyance. But, really, there is another concept that
is reserved for somebody by ordinance, contract, or something
or other - the difference between reserve capacity and excess
capacity or unused capacity. All of those things mean
different things to different people. That is part of the
problem. S
You have introduced another term like immediate
capacity, what is required by the people, who are there, and
will pay for or have paid for, when the plant goes’ on line -
with a very limited amount for expansion.
MR. PERRY: I guess my concern primarily is that
there has been an awful lot of effort. already expended in EPA
and the Congress on this whole reserve capacity business:
201 planning, 208 planning is all involved in this. Everybody
is aware Of the problem. To muddy the ICR water with it is
just doing that, I think. It is going to make the whole
study, the whole IC R problem more difficult to deal with.
w
-
-J
MR. DONAHUE: If people are really doing a good job
z of planning, then this thing should not cause any problem.
MR. PERRY: The other point, I think, is that what
cfl
you have said about 227 plants - Ic R certainly has not had any
impact, or very small impact, on the sizing of those plants.
When were those plants built? When were those plants designed
-------
36
Long before ICR had anything to do with it.
MR. DONAHUE: Most of them are under 92-500. So,
they had to be --
MR. GALL: Yes, but they were sized back in the earl
seventies or sixties, before ICR was a concept.
MR. PERRY: So, it is difficult for me to believe
g ICR had any impact, or very negligible impact, on those 227
U
plants.
z
•0
I -
MR. DONAHUE: It didn’t. That is why we are saying
=
we should do something else instead of it.
MR. PERRY: But ICR wasn’t even in effect then.
I-
MR. DONAHUE: But ICR was intended. Even the plants
you are designing now, ICR -- the intention of ICR, if you go
I’
back and read the legislative history, one of the things it
was supposed to do was hold down excess capacity. Go back
and read the legislative history in ‘72. It doesn’t look like
it has done that, and it doesn’t show any promise of doing
that.
th
We are trying to suggest some other alternative
which isn’t too complicated, which shouldn’t cause too many
people too much of a problem, to try and accomplish the same
thing.
MR. PAl: What we are talking about is that
-------
37
industries are. more.•or less paying for their share under ICR
now with little flexibility. So, what this does is the
industrial can still reserve as much capacity as they want
except that there is a relationship, between him and the
grantee. They work it out without Federal intervention or
without Federal funding. Under the case of Federal funding,
still the industrial user pays back under ICR anyhow. So,
d this is just saying we allow the grantee to negotiate that
portion of ICR.
MR. PERRY: As I understand what you are saying,
John, .that pretty much is in agreement with present EPA
policy.
MR. SILVERMAN: I was going to say, with regard to
this reserve capacity, I agree that it is a very controversial
thing. The difference between some of the other people who
are speaking to this problem and this report is that you folks
seem to have some facts. I was very, very impressed by the
factual content when you were talking about you know what
z the average usage of plants is.
You indicated that there is a community that is
(n
using only 4 percent of its plant’s capacity. You privately
told me that Springfield, Vermont is using 34 percent of its
capacity. So, you evidently have assembled some data which
-------
38
no one else has ever had.
• I think that data is extremely valuable. I hope you
will highlight it. It think it will enlighten the entire
debate on this reserve capacity issue.
MR. DONAHUE: Obviously, when you are building a
sewage treatment plant, you are building for now and for some
period in the future. we are not about to get ourselves
embroiled in how far in the future you should build for. What
z
we are saying is that, whatever you use as your basis for
projections, residential and commercial, fine. Whatever your
present industry uses, fine. Whatever industries you can
identify and are willing to sign on the dotted line that they
are going to use that capacity, fine. Suggest the feds
contribute three—forths of the cost of that.
But, if you are building speculative industrial
capacity, we are suggesting that you ought to think twice
about it, because industry you have now is cutting down on its
water consumption because of a high water rate and high sewer
z rates, freeing up some capacity. The question boils down to
how much growth, how’much future growth should present—day
people pay for it. ,
I do not pretend to have the answer for that. I am
just saying you ought to do something to address it. On the
-------
39
average, of all the plants we looked at, there is 68 percent
usage of designed capacity. It is down to 4 percent down at
Blacksburg, Virginia because they have a secondary plant that
they claim they cannot afford to operate. It is 120 percent
in Akron, where they are trying to build another plant.
But this thing in Springfield, Vermont is a typical
kind of thing. They are using 34 percent of a plant because
they got sold a bill of goods on how big the plantshould be.
Nàw everybody who. lives in the town -industry, re idential,
everybody - is being stuck with high sewer bills to pay for
the thing.
I-
MR. PAl: We have a case coming out to us today of
a community with 2,000 people. They built a 0.6 mgd plant.
The result of that is that they pay three dollars per thousand
U)
gallons for a sewer bill. If you translate that, just on the
sewer alone you would pay close to thirty dollars a month.
MR. PERRY: I wouldn’t argue that it is not a
LU•
-J
_J
problem; it certainly is a problem. But my argument is that
z ICR is not necessarily a factor in that problem.
LU
MR. DONAHUE: It is not, but the intent of ICR was
to control capacity. What we are saying is that it doesn’t
look as though ICR will ever be a significant factor in con-
trolling capacity. So, we are trying to suggest something
-------
40
else.
If Congress’ intentions are sti].1 valid, are still
in existence -- and we have no reason to assume that they are
not valid and not still in existence --
MR. COOPER: Shouldn’t the Congress make that
determination?
MR. PAl: They will make the determination.
U
0 MR. DONAHUE: They will make it. These are only
suggestions.
x
MR. PAl: Let me say this. Basically, the number
2, 3, 4 items are trying ‘to fulfill the intent of Congress on
I-
the following aspects. Number one is more reasonable sizing
which the existing user can afford to pay. Number four is
that, while the intent of ICR is that they retain 50 percent
for future expansion, based on the study we find that ICR
will not serve that purpose. So, that is why we say on number
4 Congress will have the local community self-sufficient in
the future. When the Federal funding is stopped, they be
able to continue upgrading and expanding for their future
x
needs, that they will, have a reserve fund.
Getting back to your question, ICR is not doing
number 4. It is not affecting number 4. But what we tried
to do is have something which would become effective. For the
-------
41
same reason, we proposed number 2, which means that ICR has no
effect at the present time to limit unjustified future growth.
It is not a fact based on ICR. So, we say maybe this would.
And these—-
MR. COOPER: Future total growth or only future
industrial growth?
MR. PAl: Well, you know the existing projection
now would allow you to have a water use projection, population
z
projection, and industrial growth which is either 5 percent
of the total future growth or 25 percent abov .existing
industrial uses. This is what we are talking about. On this
portion we fund 75 percent. Above and beyond that, we will
have a declining rate.
• The fact is we want to be sure that when people
U)
commit something for the foreseeable future growth that they
think twice.
MR. COOPER: You are talking about the total
L i i
-J
..1
community growth?
z MR. PAl: Yes.
L i i
MR. COOPER: Maybe this wouldn’t be so bad if it
were just limited to industrial growth because that is really
what we are studying, the cost on industrial users, that the
total ICR user charge is having, and not monkey this up with
-------
42
how thecominunity is going to expand and all that sort of
stuff.
MR. PAl: I can.see the rationale for that. The
residential user now is reasonably under control. It’s the
industrial growth portion that we need -- I can see the merit
of that suggestion. We can think that one over.
MR. COOPER: I never thought that through. I am
U
d just bringing it up.
z
MR. DONAHUE: I am sure that a lot of people would
just prefer us to say eliminate industrial cost recovery and
not say, anything more. But, from a practical viewpoint, we
are supposed to be management consultants; I think we are, and
I think we do a decent job. We realize that, if we make
that suggestion, three things could happen.
5 Congress could say, gee, that’s a really good idea
and el:iminate.indust±jäl cost recovery. More likely, one of
two other things would happen. They would say, well, if we
don’t do that, what should we do instead of it because we have
these intentions and assumptions when we enacted ICR.
I
The third thing is they just might say, no, that
just won’t do; we just won’t do that.
So, our approach would say, okay, if you eliminate
industrial cost recovery, what else do you have to do to
-------
43
sa€isfy congressional intent.
MR. PAl: If Congress wanted -—
MR. DONAHUE: If Congress wants tá eliminate, you
know..
MR. GALL: If I could make a suggestion. I.think it
may be a matter of semantics, much like we were talking about
before. If you, in laying out the recommendations, took the
last sentence of the recommendation and put it in front to
z
explain that these are alternatives to do the things that ICR
was originally intended to do but didn’t do, I thinkthat
would clarify.
MR. COOPER: This is one of the points that we were
going to make when we got to the open discussion. I might as
well bring it up now. That is that you make the statement
(n.
back on page 27 when you say, “Realizing, however, that the
Federal Water Pollution Control Act has economic and social
objectives which are assumed to be still valid and which
Lu
-J
-
should be met, eliminating ICR in and by itself is not
z sufficient. Therefore, additional recommendations are
I
0 .
Lu proposed.”
I think it would be helpful if you could say what
the economic and social objections were and then say how this
recommendation would achieve that objective for each of the
-------
44
other three.
NR.. KIRK: Also, on page 5 the same thing and
follow it there —-
MR. PAl: I think those are worthwhile to consider.
‘MR. ELLICOTT: I have some comments here from AMSA
members on the four alternatives. I will give you a couple
of copies of those, about ten of those..
,Most of the people, as you probably would expect,
are in favor of eliminating ICR - with a note of caution from
more than one member saying, okay, if you eliminate ICR, what
are you going to give us instead. Basically, they want to
make sure that the cure is not worse than the disease.,
MR. COOPER: We have the same concern.
MR. ELLICOTT: I think that we will be a little bit
U)
concerned if you simply say that ICR was intended to control
the problem of excess capacity. It does not deal with that
problem. There is still a problem, and there is nothing else
LU
around today that EPA or anybody else is doing that really
deals effectively with the problem. I think our members --
LU
MR. DONAHUE: We didn’t say that, Andy. We said --
MR. ELLICOTT: Okay, I”ll’check the statement that
we were talking about a few minutes ago. Maybe I didn’t
understand it completely.
-------
45
I believe our members feel that, ICR aside, there
are plenty of levers on holding down excess capacity in progra
that exist now at the Federal and the State level. The grant
regs, the 201 facility planning regs, at least we feel, deal
Successfully with the problems of excess capacity, at least
for our members. Perhaps we are not a representative sample
of POTW performance on the excess capacity issue.
I think it would be worthwhile to see whether or
z
not you really want to pass a national law or create a new
national policy that deals with the problem of excess capacity
in a lot of little towns all across the United States that is
also going to affect a lot of big towns that don’t have a
problem of excess capacity.
MR. PAl: If you don’t have a problem, I don’t think
this will affect you.
MR. ELLICQTT: I think it will. What you will be
doing is creating a new policy which, a, will have to be
14
-J
-3
explained and, b, will have to be followed whether or not our
z members have anything at all wrong with the projections and
the capacity figures that we are using. They still have to
take it into account. They still have to spend time trying to
understand it. They may even have to take time to explain it
to their own constituents who may feel that there is a
-------
46
problem. I don’t know whether you want to cut butter with a
meat cleaver.
MR. BROWN: The thing we were trying to address
here -- and we felt this fairly innocuous; obviously it’s not.
The thing that we were trying to address is we saw instances
out there, for instance in the Sacramento area, where there is
a large industrial user that signed a letter of intent and is
now, because of increased sewage costs, seriously considering
z
getting out of the system and going to self-treatment. When
that happens, the costs are going to go up for everybody else
who remains on the system.
MR. ELLICOTT: Sue them.
MR. BROWN; You can’t sue them.
MR. ELLICOTT: Why?
U,
LU
MR. BROWN: Because the letter of intent has no
U
contractually binding --
MR. ELLICOTT: Then rewrite the grant rates to
LU
-J
_J
require something a little bit more forceful.
z MR. BROWN: That’s what we thought this was: a
LU
rather innocuous way to be sort of forceful.
MR. ELLICOTT: A sliding scale is not innocuous.
MR. PAl: We are supporting to 75 percent of what-
ever we consider with reasonable assurance that it will
-------
47
eventually be used at. Above and beyond that, we try to
eliminate the speculative purpose.
MR. ELLICOTT: That’s what you do now; right?
MR. PAl: Not on the data I show us.
The only reason this was brought to our attention
was because someplace there is 4 percent being used. In some
places there is 34 percent being used. So, by and large --
MR. COOPER: That is not a problem with industry.
MR. DONAHUE: That is a pràblem with industry. If
they build a plant that is too big, you end up -paying for part
of it.
MR. HORN: But how much of the 102 systems that you
studied was actually used by industry? Does your backup data
reveal that?
U)
Yesterday at the National Water Conservation
Congress, of all the potable water that is sold, power plants
use 34 percent, industry uses 30 percent. The commercial and
-J
residential each have 4 percent.
z We are talking about excess capacity reserve in
industry. I am lust wondering, of all those that you studied
and, since we are dealing with industrial cost recovery, how
much of the flow or the utilization was industrial?
MR. BROWN: We are not really sure.
-------
48
MR. HORN: That is a significant point.
MR. BROWN: The only thing it could do is hold down
the size, which would tend to hold down the cost to industry.
I don’t see how, unless I am totally misinterpreting -—
“ MR. COOPER: It raises a whole new question within
the Congress that would muddy the waters with respect to the
abolition of ICR.
MR. PAl: Larry?
z -
MR. SILVERMAN: First of all, there are new regula-
tions now on this capacity business.
I would hope that in your final report that you
would -- it may be that they are adequate; it may be that they
can be corrected. But I would hope that, before you talk
about a sliding scale, you just take a look at the regulations
U)
$ and see what can be done in a regulatory way without new
legislation.
I think the idea that you have had here is excellent.
U i
-I
-J
I think the sliding scale thing troubles me a bit. I think
z it should be a sliding scale from 75 percent and then you drop
to zero.
MR. PAl: Yes.
MR. SILVERMAN: That’s a quick slide.
MR. KIRK: It says total eligible costs.
-------
49
MR. PAl: It’s not total project cost. it is just
the cost above that 75 percent which we would pay which would
be declining.
S MR. KIRK: It says total eligible cost here. I did
not realize that until someone had raised the first question
about it. You had better clarify exactly what you mean when
it comes Out in final draft.
MR. PAl: There are some comments very similar to
z
Larry’s coming out from some of the reviewers in the agencies
that we should stop at 75 percent and go to zero.
MR. SILVERMAN: That avoids legislation.
MR. PERRY: That’s what it is right now.
MR. PAl: No. We allow you to go beyond 5 percent of
the total capacity or 25 percent of existing industrial. Now
U)
you can justify further growth above and beyond that capacity
U)
now.
MR. PERRY: Not with the new guidelines.
_J.
MR. PAl: The new guidelines say, if you go beyond
z that, you need a letter of commitment, which is not a contract
agreement. If we go through that, we still go to the question
of whether industrial users are getting a free ride or not.
I am not saying they are or are not. But the question of ICR
remains there.
-------
50
So what we say is, now you can grant its use to
provide capacity above and beyond either the 5 percent or the
25 percent that he negotiated with the industrial users
separately, and somebody has to be responsible to pay for
that speculative capacity. It is not existing industrial
0
users that would have to pay for that. It is not existing
residential users that would have to pay for that. Whoever
0
wants that speculative capacity there, he pays for. it.
z
0
MR. GILDE: Are you saying that, for instance,
within the two regions that are here today, that any of
those situations that you describe could actually occur? I
have the feeling that this is more a factor of different time
frames. Certainly anything that has been approved within the
past six months or a year and from now on would not allow the
great discrepancies that you have been able to identify as a
U,
result of either 92-500 or combinations of 92-500 and 660 and
so forth which did permit that to occur and that, if under
the present program — in your region, for instance - it is
not possible to get away with that kind of wild speculation,
I
then we-should not be directing Congress to come back to
control something that is already reasonably under control.
MR. DONAHUE: We are not trying to add another layer
of anything. The idea was just out-and—out recommendation to
-------
51
Congress eliminating ICR we don’t think has much of a chance
being passed by Congress.
MR. PAl: Again, this is the recommendation that we
are considering. There already are comments coming back, some
of them similar to what, Larry said. But, in all fairness,
even if Congress adopted the final recommendation we will put
out, I can reasonably assure that this will not be additional
bureaucratic burden to any people who would have to implement
z
these things.
MR. DONAHUE: One of the intentions of ICR was to
address, the capacity issue. It was not the Only thing to
address the capacity issue but one of them. We are proposing
this as a substitute for ICR. It really should not affect
very many people because most people now are doing a better
job of planning. It is. designed to be something that is not
U
going to hurt very many people.
MR. SILVERMAN: I think, with regard to the political
w
aspects, you should keep in mind that last year all the public
z interest groups very strongly supported ICR as it is. That
LU
position really has not changed. It hasn’t been considered.
: S0i Congress went through a great’ deal of trouble to enact
some very complex provisions of the law, aside from the study,
to amend the ICR system to make it workable. You don’t
-------
52
address those provisions.
What that suggests is that there really is some
‘support for the whole concept. Congress is willing to go to
trouble, particularly on the Senate side, and there are other
organizations that would support it.
I think that your original statement, that you
really have to come up with something, a substitute, in my
own judgment, for what it’s worth, is absolutely correct.
z
We did not talk yet about the 2 cents on the gallon
reserve amount. I would like to say that. I think that is an
excellent idea. I think that gets people into a planning
frame of mind in inflationary times, and it adds some
integrity, and some long life to this program that it does not
now have. I think that is very much on point.
U)
LaJ
I- .
I think that your discussion of these reserve
U
things also -- I think you should recognize that anytime you
mention reserve capacity to inform people, you have a con-
troversy. I would suggest the way you deal with that is
marshal your facts, which are just so good, and display them
neatly so that people, whether they agree with you or disagree
with you, will be very happy to- see information that you have
set forward and come up with your own recommendations.
Just one little historical note. Before 1972, the
-------
53
ICR system was kind of reversed. It wasn’t ICR, but the
local share had to be paid. That resulted in sizing plants,
the problem that we have today. So that in itself did not
seem to me an adequate answer based on experience.
MR. DONAHUE: What we tried to do was propose some
I substitute for industrial cost recovery that would not harm
anyone and not really cause a problem for anyone. Most people
U
are already complying with them in one way or another. But we
z
felt we had to offer some alternative, some substitute for
ICR if elimination of ICR were to be given serious considera—
tion by anyone.
MR. KIRK: If a substitute is necessary -- which it
very well may be -— then I think your recommendation - from an
industry point of view, I think your recommendation number 2.
is probably the least painful thing that I have seen put on
0
U)
the board yet.
MR. DONAHUE: Absolutely.
(&1
-J
_J
MR. KIRK: I would certainly support you to that
extent.
I am not entirely convinced that the substitute is
needed, but I understand what you are saying and why.
MR. PAl: I think that the purpose of number 2
reflects a currentproblem that we uncovered. It is not
-------
54
whether the future growth will be justified or not. It is thE
fact that people who are using the plan now can’t hack it; it
is just too, much cost for them. The same thing would go for
industrial users.
If you are not using it but still are paying for it,
eventually you are going to attract your competitors to come
into your area. So, the whole thing is geared toward people
who are coming into the system in the future,, that they pay
for it, not the people who are in the system who have already
I
paid a significant portion.
MR. HORN: To. pay what? When you say “pay for” --
MR. PAl:. That additional speculative capacity.
o
MR. HORN: But, if it is constructed, it has got to
be either operated -- if it’s not needed in operation, it
certainly has to be maintained in place.
MR. PAl: We are talking about in the future - not
anything that has been constructed yet.
MR. DONAHUE: We are talking about building capacity
that you do not need now and how much excess capacity you
I should build.
I1
MR. HORN: I guess the point I am trying to make is
the sense of timing. If it is constructed, then somebody is
going to have to operate and maintain it in place.
-------
55
MR. PAl: That is clear. Whatever is constructed,
industrials don’t pay them anymore. What we are talking about
is, if we are going to build a plant now, we are going to say
what you should build is reasonable growth. Anything above
and beyond that, we wouldn’t pay anything.
MR. ELLICOTT: The light dawns. Okay, you are
saying that everybody that goes on now, if there is no ICR,
that’s it; they don’t ever have to worry about this program.
MR. PAl: Right.
MR. ELLICOTT: They also don’t have to worry about
2, 3, and 4. Right?
MR. PAl: Four they would.
MR. ELLICOTT: I’ll get to 4 in a minute.
MR. PAl: Three they would. Three and 4 they would.
MR. ELLICOTT: All right. Number 2 would not apply?
MR. PAl: Number 2 was for future expansion.
MR. DONAHUE: We are not suggesting going back and
1
-J
reducing EPA grant.
MR. ELLICOTT: Okay. Let me suggest that you do
x
take a look at other administrative ways to deal with excess
capacity as a problem, not just Congress pass a law.
MR. DONAHUE: Give us those suggestions in writing.
MR. ELLICOTT: Okay, I will.
-------
57
it was going to be spent.
Some of our members think this might be a political
liability. If you have a trust fund, people can easily think
that it is a slush fund.
m
U’ MR. DONAHUE: RecommendatiOn number 4 is a good poin1
for discussion. It brings to the forefront some philosophical
kinds of differences. One, is the Federal Government going to
d be in the business forever of awarding grants to build sewage
treatment plants?
Two, is the political climate, right now appropriate
for really conservative financial kind of approaches to things
like this? This is an era of cutting down on property taxes
and financial austerity and things like that.
The’ fourth one is really is fairly significant
U)
I-
departure from existing practice.
MR. ELLICOTT: Agreed.
MR. DONAHUE: It is a good point for discussion.
-J
MR. ELLICOTT: I think you will get a healthy dis-
z cuSsiOn on that.
L i i
One of the suggestions a member made was that, if
U)
you like the trust fund idea, if it is politically attractive
if Congress likes the trust fund idea - which 1 guess is more
important than what anybody here cares about — maybe it
-------
58
should be a Federal trust fund.
I am not saying I like the idea, but it will be
suggested.
MR. PERRY: Paying over to the Federal Government?
MR. ELLICOTT: I m not sure. They just said have
EPA keep ahold of the purse strings in the Federal level
trust fund and let them disburse the monies.
MR. PAl: Let me just give you the magnitude of
number 4. We are talking about two things. Mr. Donahue just
informed me that the average cost is 40 cents per thousand
gallons. So, what we are talking about is approximately 5
percent additional cost, which would insure forever funding
for the sewage treatment plant.
Basically, politically you can analyze these things
two ways. If you are looking at a political situation, by
U
way of looking at it, one possibility is that raising revenues
will become a more and more difficult problem, not easier and
Lu
easier, if California is any indication of the future. So,
in talking about whether you have a short-term problem or a
Lu
long-term problem, my point is that you do have these two
things. Then you never have to worry about raising money
even for matching funds for that purpose. Even for the 25
percent local, even if the Federal program does not continue,
-------
59
you don’t have to worry about that 25 percent ever anymore.
MR. PERRY: The amount of money you were talking
about raising is not going to provide all their needs.
MR. DONAHUE: It does not come close to all you
need. You are making an assumption -— it is a significant
amount of money. And I doubt that you are ever going to build
a sewage treatment plant from scratch. You are going to
improve it. You are going to repair it. You are going to
z
rehabilitate it. If everybody meets secondary disàharge
standards now, you are not going to have to build a whole lot
of brand new sewage treatment plants in the future.
• MR. PAl: I think in the study we show that, if we
collect 2 cents and invest it --
MR. DONAHUE: -- invest it in state, local, or
Federal kinds of bonds --
MR. PAl: You get about between 20 to $30 billion
over a 30-year period.
MR. PERRY: At the end of 30 years, you will have
20 to $30 billion?
MR. DONAHUE: Yes.
MR. ELLICQTT: What do yo’u do with the interest?
Let’s take the interest and spend it on present O&M.
MR. PAl: That’s fine with us.
-------
60
MR. ELLICOTT: It is? It’s not fine with me.
MR. DONAHUE: It’s fine as a proposal. I’m not
saying --
MR. ELLICOTT: I don’t need to go into number 4.
In am just saying that you are going to get a healthy discussion.
I commend you for your creativity.
MR. KIRK: I would like to raise one question. How
o. are you going to keep somebody from slipping the decimal
point and putting us right back into the same ICR disparity
burden and so forth that we now have?
MR. PAl: This goes to everybody.
MR. KIRK: How are you going to keep it at 2 cents?
You’ve got the thing on the board now. Two cents is just a
for-instance number. What’s to keep someone from making it
20 cents? Twenty cents will put us back about where we were.
MR. DONAHUE: If we made it 20 cents, I suspect
there would be a lot of reaction from people like you and from
UJ
-I
_J
residential people as well.
z MR. KIRK: I have no objection to paying the 2 cents.
In fact, we will hardly notice it in our sewer bill, to be
frank. It is almost negligible. If we have to raise some
money ahead of time, I cannot think of a more painless way to
do it.
-------
61
• The general open suggestion just plain scares me
that, if not in its initial inception, maybe a few years
later down the pike somebody will just jack it on up.
MR. PAl: Maybe we can justify that number. Maybe
we’ll say in the 2 cents neighborhood it would not have a
tremendous impact.
MR. KIRK: It has to be defined very carefully what
U
the limitations on it should be.
z
2
MR. COOPER: Maybe a percentage basis - you said
=
75 percent.
MR. PAl: Okay - or 5 percent. That’s a good idea.
I-
MR. SILVERMAN: The whOle idea of this trust fund
goes against human nature, and human nature is to live for
the day. This one says think about it tomorrow. Whenever I
get my water bill, I wish somebody 30 years ago had set up a
(I )
trust fund because maybe it wouldn’t be so high as it is
right now.
L J
-J
-J
I think it is prudent, very sensible, and a good
suggestion; and it has a special weight in my mind because it
comes from a distinguished accounting firm.
MR. PAl: Why don’t we just say attach no more than
5 percent of the existing sewer bill?
MR. PERRY: I would simply give the concept and
-------
62
maybe some examples.
MR. PAl: Okay. Well, that was his concern. Maybe
the example would give too much encoura.gement to raise ——
MR. KIRK: I would like to get an end on it
somehow.
0
MR. BUCKLEY: If you don’t define it, I can see it
becoming another form of industrial cost recovery eventually.
Secondly, sinking funds like that are illegal in certain
z
0
states.
z
I
MR. DONAHUE: Most every state that I am aware of
has a state law which says that, notwithstanding.any other
statutes of this state, no state law shall be enforced which
precludes the local government from accepting Federal funds
for this, that, or whatever. Massachusetts has a law like
that, a grandfather kind of law, which says that, if there is
some provision of a Federal program which is in contradiction
to the state law and abiding by the state law would preclude
LU
_J
-I
the state or municipality from accepting Federal funds, then
the state law shall become inoperative.
LU
I am not trying to force something down somebody’s
throat.
MR. BUCKLEY: Like Lou just said, they are not
Federal funds.
-------
63
MR. DONAHUE: Right.
MR. PAl: It is a concept that we hope will not put
a limitation --
MR. BUCKLEY: It’s going to mean meeting with a lot
of state legislatures.
MR. SILVERMAN: You have an analogy here with the
interstate highway system. Could you elaborate on that,
because I think that’s a very good example. We can look at
z
the problems that that system has had and learn a lot.
MR. DONAHUE: In our detailed report we are going
to talk about that a little bit. The Federal Government put
an awful lot of money, 90 percent of the cost of building
interstate highways, which still is nowhere close to being
finished. The states never were able politically or
U)
I - .
economically or whatever to put aside enough money to maintain
U
0
the thing, and the interstate highways are falling apart. You
go through certain states like Michigan and Pennsylvania, and
-J
there they are falling apart.
z The states do not have the money to maintain them.
That means more Federal grants. They are attempting to
enlarge the highway trust fund to pay for reconstruction and
maintenance. That means an unending Federal grant program.
MR. GALL: The highway trust fund has been
-------
64
successful in supporting capital --
MR. DONAHUE: Yes, it has been.
MR. GALL: And it’s supported out of user fees.
MR. DONAHUE: Yes, and taxes, gasoline taxes. And
there’s not enough money in the Federal highway trust fund to
do that.
MR. ELLICOTT: I may not understand number 4 very
well. How does number 4 deal with the problem of excess
capacity?
MR. PAl: The intent of ICR was that they were to
be paying 50 percent of ICR for future expansion upgrading.
MR. DONAHUE: The other thing is that it is a
relatively painless thing but it adds a little bit to sewage
bill and should encourage people to conserve water and say
they need some more sewage treatmentplants. We think it’s a
relatively painless way to encourage water conservation.
MR. ELLICOTT: Well, I don’t know. Some of our
-I
members say yes. Some of our members say they just don’t
want another charge on top of user charge.
I
MR. DONAHUE: Even if that would enable them to get
rid of industrial cost recovery.
MR. ELLICOTT: Well, I don’t know. Again, is the
cure worse than the disease and would you rather have a trust
-------
65
fund or would you rather have ICR.
MR. DONAHUE: That’s a political decision.
MR. ELLICOTT: Some agencies would say, well, I
don’t like ICR but it has taken me five years and at least I
understand it; we’ll do what we can. Cleveland, for example,
says they don’t care; they are happy with ICR. They have no
problem with it. They are not making any money of f it, but
they will do it.
z
MR. PAl: I didn’t hear him say that two’months ago
when I met him.
MR. DONAHUE: If anyone has any other comments that
we can address now. If somebody has some ideas like Andy
has, some ideas that might be done by regulatory action rather
than by legislative action, we would really like to get them
in writing.
U
We are sitting here discussing some philosophic kind
of things now.
LU
MR. PAl: I think one of the things we do today is
we solicit official comment on behalf of your associations.
LU
Many of them have already been gone through. So, whoever has
not gone through them, this is the i ime to do it.
MR. DONAHUE: We would like written comments by the
6th of December. We cannot guarantee that we are going to
-------
66
Satisfy everyone, but we try.
MR. PERRY: I would have one suggestion for you.
That is on page 4, the first full paragraph. When you talk
about the two situations, the AWT and the seasonal users. You
really need to point out the ICR implication in all that.
You don’t. You talk about total sewage costs. Sure, we
would expect the O&M costs for AWT or total cost for AWT
might be twice what it is for secondary treatment, but what
z
0
does that have to do with ICR.
z
I
MR. DONAHUE: You mean the demand, the peak.
MR. PERRY: Right. Well, tie ICR into both of those
I-
situations. You have not done that.
MR. DONAHUE: That is a good point.
Really, if we could get written suggestions from
(I )
L I
I.-
people, that is what we are looking for.
MR. COOPER: What about the incremental cost con-
H
cept for number 3? Communities have certain costs whether
Li
there is any industries there or not. Letting the community
pay for those costs and then looking at. what are the addi-
L i
tional costs that are there because the industry is there and
then assessing the industry those cOsts. Did you look at
that?
MR. PAl: That is in language number 2. That is in
-------
67
recommendation number 2. We almost say the same thing -—
MR. DONAHUE: What Jack is say is that we are not
using proportionality for debt service. I think that is what
he is saying.
I0 MR. KIRK: Not using proportionality but using the
difference, making industry pay the cost which it only
incurred. In other words, the difference between the cost
U
it would be to the municipality if the industry were not
z
there.
MR. PAl: Which is a variation of recommendation
number .2.
p.
MR. KIRK: And the total cost because the industry
is there. This is different than proportionality. It is con-
UI
siderably less money to the industry than proportionality.
MR. HORN: If you take a look at most domestic
U
0
U,
populations,. a little town in Illinois had an adequate treat—
ment plant in ‘56 for 10,000 people. it now has 5,000 people
but yet has been asked to contribute five times to plant
expansion because of this sausage plant and that other kind
of thing. This can backfire on them. Incremental costs can
U)
backfire on industry. Domestic population can say my needs
were satisfied 30 years ago. If you want to come in and want
more, you pay for it all. Industry goes somewhere else.
-------
68
Quite frankly, I would like to keep the Federal
Government out of this local capital cost bit completely. As
you know, we now make a disclaimer of it. It is not part of
the user charge system. It is not connected with operation,
maintenance, and replacement.
There are so many fixed bond issue type things --
MR. PAl: The reason for number 3 is for water
conservation. That is the intent of ICR.
z
MR. HORN: Right. But when you say require repay-
ment of local debt. Who is going to require it? Certainly
not the Federal Government.
U,
U.
w
MR. DONAHUE: Yes.
I-
U,
MR. HORN: We were in there before 660 —-
MR. PAl: It will be part of user charge.
MR. HORN: Well, then user charge has to be
U
expanded beyond operation.
MR. PM: That’s right.
MR. HORN: You are going to get us into the total
sewer bIll. Then, when people want discounts for the aged,
w
the widows and the orphans and so on, you are getting into
one big problem area.
MR. PAl: User charge is a problem. I think
proportional share of the local share is a very effective way
-------
69
and has been implemented.
MR. HORN: Then, you see, you negate ad valorem
taxes for bond issues. You have got to take a look at the
funding mechanisms for the local share.
MR. DONAHUE: Ted, if you read the report, we said
those areas which qualify for and use ad valorem taxes. We
said in the detail of this report, let alone in the detail of
a the other report, if somebody decides to use ad valorem taxes
instead of user charges, you could develop a proxy for this
surcharge, this user charge through taxes.
MR. ELLICOTT: Can we get a clearer explanation of
I-
the proxy idea, either in this executive --
MR. DONAHUE: Something similar to the way they are
trying to figure a substitute for O&M costs - by class or by
IaJ
I-
whatever.
0
U)
MR. PAl: Just add an item on to user charge. I
think that’s the easiest way to say it.
-J
MR. HORN: So, get proportionality out of that --
MR. ELLICOTT: I think I agree with the gentleman
over here about keeping the feds out of local financing. I
think that will come up no matter what, how you structure it.
I don’t want to talk about it because I am not an expert
but --
-------
70
MR. DONAHUE: Seventy percent of the cities we have
talked to are already doing it.
MR. ELLICOTT: But the other ones -—
MR. HORN: Fine. But to require it for approval of
revenue —-
I MR. ELLICOTT: It really should be a local choice.
That is my thinking on it. If they want to rip off industry,
U
• let them rip off industry, and if —-
z
0
I-
MR. DONAHUE: Andy, every recommendation we make is
I
going to make somebody unhappy.
MR. ELLICOTT: I understand.
p.
MR. DONAHUE: You can’t keep everybody happy. The
question is, what things are people willing to accept as a
V P
quid pro quo for recommending, for getting Congress to agree
that they can indeed eliminate industrial cost recovery.
0
u J
MR. PAl: Just as a curiosity, how many of your
members are going to use ad valorem taxes?
MR. ELLICOTT: About 18 or. 20.
Z MR. PAl: How many is the total members?
LU
MR. ELLICOTT: Sixty-seven.
MR. PAl: So, 30 percent will go to ad, valorem.
How many of them have approved by region to be
dedicated —-
-------
71
MR. ELLICOTT: We don’t know.
MR. PAl: They intend to use it?
MR. ELLICOTT: It is their intent to use it if they
can get ded --
MR. HORN: Have you got that many that don’t already
have an approved revenue system under 92-500 or --
MR. ELLICOTT: Yes, because they aren’t at the point
where they have to show that they have gotten approval of
this system, in many cases. They are holding out to the 90
percent completion point.
MR. DONAHUE: Eighty percent completion point.
MR. ELLICOTT: And that’s a local tactical decision.
They just take a risk of not getting any more checks.
MR. COOPER: On 3 and 4 we think that it should be
specifically limited to apply to the treatment plant only and
that this fund that would be created and so forth would not
apply -- at least, they would not take the industrial money and
apply it to the building of sewers. We need to limit that to
the treatment plant.
At least the industrial part of the money. The
money that you get from citizens, of course, you can use for
building your sewers. But the money from the industry
should not go for that - is what we are saying.
C l
W I
In
N
0
N
N
0
0
N
U
0
z
0
I-
I. ,
z
I-
hi
hi
I-
I-
I -
U)
uJ
I-
U
0
U)
U,
IL l
-J
-J
z
L i i
Lii
-------
73
problems. I think we are much closer to it now.
I do think that the recolnmendatj.ons, except for the
one about the local shares which I kind of agree that we
shouldn’t mess with too much T the one about the trust fund,
the one about the tight rules and reserve capacity and other
steps that encourage conservation, I think that it is possible
to —- this is only my judgment now -- build a consensus so
there really was no disagreement about this thing and you
z
could get something passed that most people agreed with. I
think we could actually do something with it.
I think it would be especially easy to do something
with it if you make the factual materials available both
through displaying them and properly summarizing them and
putting them in the index. Something like that would be very
U)
helpful.
Another thing which I would hope you would do is
this. You say this 29 percent reduction - 29 percent
1
substantial conservation.. Why?
z MR. DONAHUE: Water rates and user charges.
w
x
MR. COOPER: And water availability, in some cases.
MR. SILVERMAN: I think thee Congress needs to know
the fact, these water rates having user charges: the idea of
paying somehow for what you get and how much you use
-------
74
encourages people to conserve water. It is a very simple con-
cept, but I think you have documented it. You have done what
many economists and others have only speculated about. You
have actually put it together. I think that is a very key
point in the debate. I think it ought to be a starting point.
think it ought to be stated very clearly. I think generally
you are. doing a real good job.
MR. DONAHUE: Thank you.
z
0
I -.
MR. PAl: Did you think we addressed the congression
question adequately?
MR. SILVERMAN: Yes, I do. I think probably you
should talk a little more about how to make it work if nothing
happens. I think you should have about three or four pages
about that commenting on the new regulations and new legisla—
tion. Say, if nothing happens, we found that the following
0
cities, seem to have the best idea of how it works and they are
doing the best and we ought to follow this model.
I think otherwise Congress is going to find itself a
little boxed in in a way it does not want to be.
MR. PAl: Let’s hear from Susan. Susan, do you have
anything to say?
MS. BOOLUKOS: I am trying to grasp this whole
thing. I am pretty well understanding it. I appreciate being
-------
75
here. I prefer not to make any specific comments at this time
MR. PAl: You know the comment due date is December
6th, so you have time.
MS. BOOLUKOS: The people I deal with most
specifically in our industry have gotten back to me with a
very kind of general everything looks okay. However, I am
going to transmit this information to them and see if they
U
have anything more specific, especially on number 2.
MR. PAl: We do appreciate comment.
• MR. DONAHUE: If anybody would like to talk with any
of us, please feel free to call us. We will come see you.
You may come and dig through our files - whatever you want.
We will be glad to do whatever we can to help. But we cannot
guarantee that the final recommendations are going to please
everybody or even anybody. We are trying to sort out all the
approaches and document what we can.
MS. BOOLUKOS: I do have one question. Have you
-J
been in contact - with the exception of Congresswoman
Heckler’s representative today - with any of the staff people
on the hill who are responsible for writing this in the first.
place?
MR. DONAHUE: No, because there is nobody left on
the Public Works Committee staff who was on the staff at the
-------
76
time the legislation was passed. Leon Billings was there.
Of course, he is now with Senator Muskee. We tried to get
him. He isin the People’s Republic of China and will not be
back until mid-December.
V.,
We talked to Mimi Feller. We talked to Carol Bauer.
N
0
We talked with a bunch of other people up there.
MS. BOOLUKOS: Do you have any indication whatsoever
o as to how they are going to look at these recommendations?
z
MR. PAl: We sent them 20 copies.
MR. DONAHUE: We sent more than 20. You sent 20 and
we sent some more.
The reactions generally were, well, you’re not
suggesting anything very radical or drastic. And we are not
sure just where on our legislative agenda consideration of
U)
this will fall. Nobody was jumping up and down saying we
can’t wait to have hearings on it or enact it or not enact it
or whatever.
w
_J
1
MR. PAl: One thing I would like to point out is
z we all know that December 27 is our submission date. Congress
La
gives themselves six months to act upon it. From the EPA
point of view, we are trying to ge a report to Congress by
that date so that Congress has as much time as they give
themselves to consider the issue. So, any extension of or
-------
77
submission of our report, either by their agreement or not,
I think there is limited time for them to consider the issue.
So, that is one thing you will have to keep in mind.
MR. DONAHUE: We will meet the deadline for sub-
mitting the report to Congress.
MR. ELLICOTT: What is the state of final prepara-
tion on other documents that are referred to in the executive
report?
MR. DONAHUE: You came in after we started.
We are going to -- volumes 2 and 3, the detailed
methodology, findings, alternatives, recommendations in
I-
volume 2, volume 3, data and exhibits -- we are going to
circulate those fairly widely to just about anybody who wants
them. Volume 1 we are going to give out; we are going to
stand out on the corners and give away.
Volumes 2 and 3 we will give to anybody who is
really interested.
Volumes 4 through 7, which are the transcripts, we
are not really in any big hurry to --
x
MR. ELLICOTT: That I understand. I understandwhat
you are going to do as far as dissemination. Will any of it
be available to look at before December 6, before December 15?
If my members come to me and say, I want to see it which only
-------
78
has 4 percent of capacity. Do I come back to your office and
dig in your file?
MR. DONAHUE: Sure.
MR. PAl: I should have a copy in my office by that
time.
MR. DONAHUE: We are typing drafts of all our stuff
now. Any changes we make in this will have to be reflected ir
U
o the detailed kind of stuff. But it is going to be available.
I am not sure how far —— the data is available now. The
report is in the process of being prepared.
• MR. ELLICOTT: I will take it upon myself to try to
get specific enough questions from our members that I can
fruitfully dig through the files. If I don’t really know what
I want, it is going to take me a while.
MR. DONAHUE: We have many cubic feet of files and
documents. You are welcome. We have them indexed.
MR. ELLICOTT: I appreciate it.
-J
-J
MR. PERRY: Do you expect to have volume 2 and 3 by
December 15, something like that?
MR. DONAHUE: Yes.
MR. PERRY: Certainly by December 15th?
MR. DONAHUE: Yes.
MR. COOPER: Will it be mailed, or will we have to
-------
80
public interest groups. are going to read this and not under-
stand all the terms. So, we are going to try and have a
layman’s definition of these terms. As you look in the table
of contents, we refer to a glossary which we do not have yet.
But total sewage cost is user charge, ICR, and
local debt service - which may or may not be part of a user
charge.
U
MR. GILDE: I think there are also cases where you
z
0
just say ICR. And there should be the word “and user
charges.”
MR. DONAHUE: Fine.
Thank you very much.
MR. PAl: I again thank you for all your help. •Who
knows, maybe we will get another chance to get together.
(Whereupon, at 3:30 p.m., the proceedings were
concluded.)
w
-J
-J
z
w
0 .
LU
------- |