REVIEW OF
MUNICIPAL WASTE TREATMENT
CONSTRUCTION GRANTS PROGRAM
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MAJOR PROGRAM PAPER
| REVIEW OF
MUNICIPAL HASTE TREATMENT
CONSTRUCTION GRANTS PROGRAM
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CONTENTS
Summary vi
Introduction 1
Investment Trends' 4
Development of Investment Needs 26
Federal Cost Sharing 63
Alternative Allocation Methods 115
Priority Systems 129
Public Treatment of Industrial Wastes 143
Regional Waste-Handling Systems 165
LIST OF FIGURES
1. States Classified According to Recent
Investment Behavior 9
2. Regional Definitions for Analysis of
Comparative Unit Investment for
Incremental Waste-Handling
Capabilities, 1962-1968 42
3. Growth of Public Waste-Handling Services 71
4. Public Investment in Waste-Handling Services
1952-1967 73
5. Relative Domestic and Industrial Loading Public
Waste Treatment Plants 150
6. Application of Economies of Scale Through 155
Consolidation of Waste Sources Producing
10 million gallons per day of sewage
1
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7. Unit Investment by Size of Place for Incremental
Waste-Handling Capabilities, 1962-68
8. Generalized Ranking of Unit Cost and Removal
Efficiencies of Conventional Waste Treatment
Processes
176
180
LIST OF TABLES
1. Comparative Investment Outlays for Waste-Handling
Purposes, 1967 & 1968
2. Estimated Annual Public Investment for Waste "
Treatment Plants and Ancillary Works, by State
3. Current Dollar Investment by States 1952-1968
4. Comparative Categorization of States by Recent
Investment Behavior
5. Declining Investment States: Relative Condition
and Past Performance
6. Per-capita Investment Associated with Attainment
of Water Quality Standards 1952-1969
7. Industrial Pollution Control Investments as
Reported by McGraw Hill
8. Summary of Data Reported for the Petroleum
Industries by the American Petroleum Institue
9. Summary of Data Reported for the Chemicals Industry
by the Manufacturing Chemists Association
10. Projected Cumulative Inorganic Chemical Industry
Capital Costs and Annual Operating Costs for
Waste Treatment
11. Evaluation of Capital in Place and of Defined Needs
1969
12. Normative Assessment of Annual Capital Needs
Generated in 1962 and 1968
4
6
7
It
14
16
18
20
22
24
28
30
11
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13. Computed Values Associated with Various Categories of
Investment Needs
14. Increase in State Government—Defined Waste Treatment
Needs Overtime
15. Frequency of Major Plant Revisions
16. Escalation of the Cost of a $1,000,000 Waste
Treatment Plant, 1950-1969
17. Constant Dollar Investment Per Unit of Capacity,
Activated Sludge Plant, 1961-63 and 1967-69
18. Normal Plant Size Related to Relative Regional Unit
Cost
19. Wage Rates Related to Comparative Unit Costs
20. Major Components of Construction Cost
21. Relative Urbanization Related to Unit Waste-Handling
Investments
22. Relative Construction Costs of an Activated Sludge
Plant
23. Investment and Demand, Northeastern States
24. Adjusted Investment Needs, Eight Northeastern States
25A. Optimizing Schedule, Water Quality Standards Related
Public Investments
25B. Stretchout Schedule, Water Quality Standards Related
Public Investments
25C. Deficiency Schedule, Water Quality Standards Related
Public Investments
26. Summary of Waste Treatment Facilities by Year Plant
Underwent Major Revision (or Began)
111
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27. Range of Five Year Investments (1970-74) Associated 60
v/ith Provisional Attainment of Water Quality
Standards, by States (Millions of Dollars)
28. Optimizing Schedule, Water Quality Standards Related 62
Manufacturers' Investment for Waste Treatment
(Values in Millions of Current Dollars)
29. Estimates of State and Local Governments' Needs 66
for Federal Financial Support
30. Relation of Federal Assistance to Total Estimated 68
Public Waste-Handling Expenditure
31. Dollars of Total Investment per Dollars of Federal 81
Construction Grants
32. Federal, State and Local Share of Financing the 90
Cost of Water Pollution Control Facilities in
New England
33. Per Capita Expenditures of State and Local Governments 91
for Sewerage services
34. State and Local Governments' Annual Expenditures 93
for'Npeded Public Water Pollution Control
Facili ties
35. Per Capita Expenditures of State and Local Governments 94
Fiscal Year 1968
36. Per Capita Personal Income 97
37. General Revenue of State and Local Governments 99
FiscaV Year 1968
38. Relationship of State and Local Governments' Annual 100
Expenditures for Needed Water Pollution Control
Facilities to Total General Revenue and Property
Tax Capabilities
39. Moody's Rating of New England States and 103
Selected Communities (December 1969)
iv
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40. Effect on Property Tax on a $20,000 Home in Financi-ng 106
Waste Treatment Facilities
41. Priority System Criteria 130
42. Numerical Rank of Criteria by General 131
43. Distribution' of FWPCA Grants by Size of Community 132
44. Metropolitan and Non-Metropolitan Distribution of 133
FWPCA Construction Grants, 1956-1963
45. National Summary - Elasped Time (mos.) Between.-Grant 136
Offer and Construction Start
46. National Summary of FWPCA Grants Approved'and Still 137
Pending as of 12/31/68
47. Unused Allotments by Fiscal Year 140
48. Pattern of Haste Discharges to Public Sewers by 145
Manufacturing Plants Using 20 Million Gallons
or More in 1964
49. Distribution of Industrial Loadings to a Sample Group 147
of Municipal Sewage Treatment Plants
50. Relative Domestic and Industrial Loading of Municipal 149
Waste Treatment Plants in 1968
51. Generalized Cost to Size Relationships of Basic 154
Waste Treatment Processes
52. Relative Prevalence of Industry-Provided and 158
Publicly Provided Waste Treatment by Major
Manufacturing Sectors, 1963
53. Distribution of Waste Treatment Processes by 179
Size of Plant
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SUMMARY
In retrospect, the Federal Waste Treatment Plant Construction
Grant Program has been effective in providing treatment facilities for
the nation's population. Almost S3% of the sewered population of the
United States is served by waste treatment; and more than 50% of that
service has been installed since the initiation of Federal grant
assistance. Moreover, a great amount of plant improvement and service
extension to industry has been conducted with the assistance of Federal
grants.
While local decisions have been the major source of grant utili-
zation demands, the availability of grants has influenced the form of
that demand. Capital intensive works and relative neglect cf sewers
have resulted from the limited scone of Federal financial assistance.
Federal assistance to local waste handling services may Lc
justified on the basis of equity-water quality improvement is an
imposed national priority, and investments to achieve it are rr.rely of
direct local benefit—and necessity. Demands or. State and local gov-
ernments both exceed and increase more rapidly than revenues directly
available to such governments.
Federal assistance for State and local waste handling services
has beer, rising steadily, taking the form of investment capital avail-
able from the Department of t^e Interior, Agriculture, and''lousing
and Urban Development. Sue!1, assistance nov amounts to about 1°°^ of
total annual expenditures for public waste-handlina. Because Federal
program requirements result in a multiplier effect en local revenue
requirements, ever, with Federal cost sharing they have added to the
financial distress of local governments.
Federal funds must nov/ be utilized very largely for caDital
maintenance. Without additional Federal inouts, it is unlikely that
significant incremental abatement capital will or can, be provided by
local government.
If the Federal share of spending for waste-handling were to be
increased (including HUD and Dept. of Aqr. grants) to around $360
million a year, the existing "backlog" of waste treatment needs might
be eliminated in five to eight years, given the structural reforms
necessary to shift funds to areas of need.
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Cost-sharing policies should bo based not on isolated events but
on aggregate events and aggregated accomplishments. Deficiencies of
current cost-sharim nolicies trace to a lack of responsiveness to
basic changes in the order of total events. Efficient cost-sharing
must be flexible enough Tn procedure to adaot with precision to varia-
tions in conditions.
These changing conditions are summarized. First grants should be
scaled and awarded to achieve two disparate ends. On the one hand,
routine system maintenance must be accommodated. On the other, there
should he seme principle of concentrated investment for use in reliev-
ing conditions of demonstrated pollution. Second, the Federal share
of costs should be- self-adjusting to demand. Moreover this response
should equate internal benefits with expenditures.
Institutional problems, includinq inadequate State responsiveness
the limited scope of Federal assistance, the absence of incentives .
to local government, and the fluctuating characteristics of Federal
financial assistance are at least as significant as relative shortage
of Federal grant funds in reducing the effective rate of Dolluuon
abatement orogress. Therefore, as one element of improvement, greater
stability and certainty must be provided to States, local communities
and economic sectors, in order to achieve better planning and con-
struction on a timely bases.
In general, it can be stated that the criteria v.'hich the States
apply arc most comprehensive, that is, they cover a broad range of
categories. These categories fall into three broad groupings, pollu-
tion abatement need, financial need, and status of planning. Unfortu-
nately the States apnly th&ir criteria to proiects on which applica-
tions for Federal assistance have been filed. Therefore, if a critical
pollution need exists it is the accident of readiness that causes such
a need to be fulfilled rather than the application of the State's
priority system.
Each investment in pollution control made under the existing
system may reduce tho discharge of untreated or unnronerly treated
v/astes, but there is no assurance that the critical problem affecting
the quality of the stream is attacked. If anything the existing
system discourages any State agency from refusing to certify a nar-
ticular application. Applications tend to be routinely certified
where the benefit from t^e investment may not be fully realized until
additional problems are brought under control.
vl 1
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To be effective and efficient priority systems must do more than
assist in shifting money between the States. They must insure that
whatever sums are available, the investments which flow are prudent
and will accomplish both the Agency's short and long-term objectives.
In order to make the priority systems more responsive to
pollution control and abatement and the achievement of the water
quality standards, the Agency must place itself in close coordination
with the States. Together they must focus on the priority systems as
the primary tool in identifying where the most pressing pollution
problems exist and which projects must be undertaken to maximize to
the extent possible the available federal assistance.
The propriety of awarding Federal grants for that portion of
public waste handling facilities that will treat industrial wastes has
been questioned, particularly in those cases where wastes from one or
a few industrial plants comprise a substantial portion of the waste
treated. There is a need for clarification of legislative intent iv,
this regard relative to conflicts with the predominant practice of
American local government.
The distinction between municipal and industrial wastes is
largely artificial. Public treatment of industrial wastes is
currently widely practiced, and is the source of improved treatment
efficiency and cost-effective-ness. Objections to public treatment of
industrial wastes tend to arise from the opportunity the practice may
afford industrial management to divert the costs of treatment largely
to the public sector. Initiation of rational user charge systems can
be relied upon to reduce the opportunities for this particular
inequity.
Efforts to develop in the United States systems of regional water
pollution control based upon the conditions of river basins have
proved to be less than satisfactory. On the other hand, most metropo-
litan areas have organized regional waste handling services that are
generally available to all residents of the metropolitan area; and
several States are beginning to view the municipal waste handling
system to be manaoed cooperatively by State and local governments, with
a high degree of State financial participation and operational
monitoring.
While the major econornic-s derived in the river basin system from
utilization of graduated waste treatment requirements, incentive fees,
and non-treatment abatement measures are not fully available in either
the metropolitan or State vari?r.t of regionalism, seme are potentially
available as management capabilities increase. Vorecver, such desir-
able end products as attainment of economies of scale, use of
equitable user charges, and operational effectiveness may all be fully
present in these kind of regional organizations.
v111
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It would appear to be tc the Federal interest to recognize the
social 1 imitations to use of river basin systems, and to fester the
development of the kinds of regional systems now found in the United
States. The construction grants mechanism can be adapted" to serve
these ends. Use of block grants to States that employ integrated
systems that include financial support, rather than Lying grants tc
specific projects, would strengthen the allocations! powers required
to implement such broad systems, and would conceivably encourage the
use of in-stream and other non-treatment methods. Requiring a system
of user charges would also contribute tc development of regional
systems because the development of an independent financial base tend
to regularize and broaden planning.
1 x
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INTRODUCTION
Major provisions of the Federal Vater Pollution Control Admin-
istration's construction grants lonislotion will expire in 1°71.
Controversy h?s becun to dcveloo ovor the structure of federal assis-
tance for wat®r no]1ution control activities. Some nf that controvors"
is related to the ami int. ef cr!fiorai ?<.51*s + anr_p^ nric! som® ef it to
nroc^dural or efficiency conditions annl*/inn in the conduct of the
program.
The purpose of this study is to evaluate the current form of the
major financial provisions of the Act in light of its performance,
conditions to which it applies and the underlying economic demand or,
Federal funds fcr pollution control purposes and. to examine in con-
sistent form possible alternative courses of action. The study was*
initiated by almost simultaneous directions from the Bureau of the.
Bureau of the Dudcet and the Department of the Interior. Issues
related to, or subsidiary to, the construction grants program are
considered as sc-narate but integral portions of the report. These
issues -- regionalism, public treatment of industrial wastes, anu the
State priority systems—are considered to be distinct matters at issue,
in that one or both of the directing authorities has expressed an
interest in exploring each in its own right, as well as in its relation
to formulation of appropriate procedures for Federal financial assis-
tance to State and local governments.
The study was conducted with an absence of policy or other
constraints exerted by current construction grants legislation or
procedures, although it is within the framework of other legislation
and policies which are not under review. An attemot v/as made to
examine each issue and each point exclusively on its merits. While
recognizing that the predominance of the value system neculiar to
economists may have introduced an internal institutional bias to the
study, an attempt has been made to deal in a pragmatic fashion with
substantive complications raised by non-economic but institutionalized
social values in the areas of management, politics, technology and
professionalism.
In method the report is expository and discursive rather than
mathematical. Documentation is to be found principally in FV.'PCA
reports to the Congress entitled The Cost of Clean Water and The Cost
of Clean Water and its Economic Impact, or in specific shources cited
in the body of the text. The presant~report with additional illustra-
tive material and formal quantitative analysis of data will constitute
the substance of F.JPCA's 1T70 report to the Congress on the subject of
municipal waste treatment.
1
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The policy issues in question—public treatment of industrial
wastes, appropriateness and application of State priority systems,
levels of cost sharing, nature and effect of regional waste handling
arrangements, alternative grant allocation strategies--arise out of a
very complex set of conditions, and nay become hopelessly confused by
the interposition of professional, regional and philosophic values.
This report attenets to reduce the area of available confusion by
examining each policy issue in terms of a consistent set of criteria:
effectiveness, efficiency, equity ana practicality.
Effectiveness is considered to be the ability of a course of
action to advance progress toward expeditious attainment of the water
quality standards, and the matters of degree and immediacy are con-
sidered critical components of effectiveness. For purposes of the
study, water quality standards are considered to be only those physical
and chemical conditions, and by implication the stated uses upon which
they rest, that annly to actual water bodies. Implementation plans,
an integral part of the standards in lav:, arc not considered to con-
stitute a test of effectiveness. To include plans of implementation
as an element to be effectuated would obviously 'be tautological, ar
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Efficiency refers to the relative level of resource irouts as-
sociated with liven output of effectiveness. Inputs are equated
with dollars in all cases. Therefore, when two cr more alternative
courses of action are considered to he eeually effective, as effective-
ness is defined above, that which is least costly is defined to he
nost effective. This is, then, a v»ry narrow view of efficiency,
since it does not include the all important institutional factors which
mediate between theory and attainment, nor does it nlace a value uoon
the external diseconomies associated with structurin" institutions to
achieve a consistency with efficient performance. Such external costs
--including the tine lest in attaining abatement of pollution—may be
extremely high in some cases.
Practicability refers to the association of a policy or course of
action with the existence of the institutions, toclinclcny am! social
values required to implement it. For the most part, these discussions
will be pragmatic in the extreme, occurring in the form of an exposi-
tion of relevant existing conditions. If a procedure exists in
practice, it will be assumed to be practical". Conversely, the failure
of a situation to occur, in combination with strong theoretical argu-
ments for that situation, will be taken to constitute prima facie
evidence of a lack of practicability.
3
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INVESTMENT TRENDS
Recent Levels of Spending
Total investment for liquid waste handling facilities was little
changed in 1968 from its 1967 level, due to pronounced declines in
indicated industrial waste treatment investments and in the rate of
installation of sewers.
Public investments amounted to $1,111.8 million, a more than $50
million increase over the previous year and a new high for the purpose.
That increase was concentrated in areas relating to waste treatment-
public investments for collecting sewers were about $44 million lower
than in 1967, while spending for waste treatment, transmission, and dis-
charge facilities rose about $102 million over the level of 1967. In-
flation, which exerted its pressures with increasing effect through the
course of the year, ate up most of the increase in public outlays. Over
$30 million of the $50 million increment in year to year public spending
is calculated to have been the consequence of higher prices.
Table 1
Comparative Investment Outlays for
Waste-Handling Purposes, 1967 & 1968
Investment Category Investment (millions of current dollars)
1967
1968
New Waste Treatment Plants
149
180
Expansion, Upgrading, Replacement
Interceptors ft Outfalls
213
189
188
284
Collecting Sewers
606
550
Industrial Waste Treatment
564
529
Total Capital Outlay
1,720
1,732
Although information for investment in 1969 is not fully avail-
able, preliminary indications are that it maintained its upward course.
Projections that were made in the first quarter of industrial outlays
indicated that over $700 million would be spent for waste-handling
4
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facilities in 1969. (The value must be presumed to be highly suspect,
in view of the wide divergence between projected and actual investment
in 1968, when first quarter nroiections derived from industrial sources
suggested outlays approaching $800 million for a year in which less
than $600 million was actually invested.) One may infer, too, that
expenditures for installation of sanitary sewers were little, if any,
greater than in 1968. There is a pronounced secular downtrend in in-
vestments for public sewers; and the steep decline in new housing
starts experienced during the year suggests another drop in the level
of privately funded sewer installation, which is directly related to sub-
division development. But the segment of the market made up of invest-
ments for waste treatment plants and ancillary works unquestionably
moved to a significantly higher level. The assessment is based on
projects receiving Federal construction grants that were actually
started through the first ten months of 1969. The value of those
projects—about $740 million—is consistent with an $380 million full
year investment. Table 2, that contrasts estimated 1969 investments
for waste treatment plants and ancillary works with those of other
recent years, may be distorted with respect to the interstate distrib-
ution of investment for 1969, in that it assumes.a constant relation-
ship between ten month and twelve month investment for every State,'but
the total may but be presumed to be approximately accurate.
Because of the acceleration of inflationary forces that went on
through 1969, a very significant portion of the year to year increase
in investment was dissioated in price increases. Assuming a constant
exertion of inflationary effects through the year, $47 million of the
$128 million rise in spending was accounted for by higher factor costs.
Influences in Public Investment
New influences on the course of public waste handling investment
whose shape began to be discernible in 1967 and 1968 took on sharper
outlines in 1969. The prime influence on the level of spending since
the Korean war has been the amount of Federal financing assistance that
has been made available to local governments. When Federal grants in
aid were initiated in 1956, the pace of public investment accelerated
noticeably. And as the amount of Federal assistance climbed in succes-
sive steps from $50 million a year to $200 million a year, total
spending kept pace, in terms of direction and amount if not of pro-
portion. (See Table 3 for a State by State comparison of expenditure
levels at periods marked by successive increases in the rate of Federal
financial assistance.)
In recent years, however, the impact of the amount of Federal
subsidies has been modified by other forces. The maturity of the
national investment program has resulted in a sharply altered config-
uration of capital needs. State financial assistance to local commu-
nities has complemented and redirected the force of Federal assistance.
5
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TABLE 2
Estimated Annual Public Investment
for Waste Treatment Plants and
Ancillary Works, by State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
111inois
Indiana
I owa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
Mew Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyomi ng
Puerto Rico
Totals
Average,
1967-69 Avqe
1962-66
1967
1968
1969 est.
1962-66 Avge
6.6
12.6
4.3
18.5
179?.
0.3
0.1
4.0
0.2
476"
5.8
5.4
2.9
5.9
825!
6.4
10.7
3.2
10.5
127%
34.0
43.0
34.9
41.1
117%
7.4
3.0
4.6
10.5
82%
8.2
17.7
7.9
71.5
395%
2.2
-
1.0
1.4
36%
6.8
13.6
3.2
6.4
114%
10.6
9.4
16.8
29.6
175%
8.7
13.2
4.5
22.7
155%
5.5
4.4
-
0.5
30%
0.9
1.3
0.7
1.9
144%
30.9
45.3
33.5
33.2
121%
16.8
24.4
27.1
10.3
123%
7.3
8.2
13.1
14.6
164%
5.3
5.2
11.1
4.5
13,1%
7.0
4.0
4.4
10.9
92%
11.2
7.6
4.5
11.0
69%
3.3
1.4
5.7
10.0
173%
7.7
20.2
17.3
31.0
297%
12.4
6.7
13.4
28.1
130%
21.1
7.6
30.4
5.7
G9%
10.4
8.6
13.3
13.3
113%
4.3
2.7
2.7
2.4
60%
21.1
15.2
26.5
12.8
86%
1.3
0.5
1.3
1.3
79%
4.8
4.5
2.0
3.0
66%
3.5
3.4
0.4
0.2
38%
3.1
2.0
6.0
1.9
106%
15.9
30.0
10.5
40.2
169%
3.4
4.0
0.4
3.5
77%
40.6
33.3
115.0
97.0
201%
14.8
18.7
10.8
17.3
105%
0.8
0.8
0.3
0.4
63%
23.5
26.1
35.1
41.9
146%
4.0
6.5
5.5
14.6
222%
5.5
3.2
.3.3
7.6
85%
23.8
42.6
65.3
90.2
277%
2.8
1.0
1.2
1.9
49%
5.2
4.6
10.5
26.0
263%
1.5
2.9
0.2
1.8
109%
10.5
5.1
19.9
18.6
138%
17.5
14.9
17.1
38.2
134%
2.8
1.9
0.1
1.2
38%
3.4
1.8
2.4
3.9
79%
10.7
20.9
10.4
25.0
175%
20.5
3.8
20.9
4.6
48%
6.2
1.2
3.0
4.0
44%
18.2
13.4
17.1
20.7
94%
0.2
•
-
0.8
133%
1.8
3.8
-
6.5
191%
508.9
542.4
652.1
880.8
136%
6
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TABLE 3
Current Dollar Investment by States 1952-1968
(Millions of Current Dollars)
1952-1955
Alabama
11.4
Alaska
-
Arizona
1.1
Arkansas
2.8
California
46.8
Colorado
3.6
Connecticut
4.6
Delaware
4.9
District of Columbia
2.0
Florida
39.2
Georgia
6.3
Hawai i
-
Idaho
0.7
Illinois
33.3
Indiana
59.3
Iowa
10.2
Kansas
15.1
Kentucky
12.9
Louisiana
4.2
Ma i ne
0.7
Maryland
6.7
Massachusetts
14.3
Michi gan
34.2
Minnesota
16.5
Mississippi
1.7
Missouri
8.6
Montana
0.8
Nebraska
1.4
Nevada
2.5
New Hampshire
0.9
New Jersey
81.1
New Mexico
3.0
New York
66.7
North Carolina
12.2
North Dakota
1.0
Ohio
61.5
Oklahoma
9.5
Oregon
10.5
Pennsylvania
51.1
Rhode Island
5.5
South Carolina
3.4
South Dakota
1.7
Tennessee
24.3
Texas
24.1
Utah
4.9
Vermont
0.7
Virginia
17.9
Washi ngton
6.6
West Virginia
8.2
Wisconsin
12.4
Wyomi ng
0.6
Puerto Rico
-
Totals 753.6
1956-1961
1962-1966
1967-19£
31.9
32.8
16.9
2.2
1.7
4.1
12.8
29.1
8.3
16.0
32.1
13.9
213.9
170.1
77.9
17.3
36.9
7.6
19.8
41.1
25.6
5.0
10.£
0.9
33.2
33.9
16.8
43.2
53.0
26.2
32.4
43.5
17.7
5.8
27.5
4.4
8.6
4.7
2.0
127.7
154.6
78.8
97.5
84.2
51.2
33.0
36.4
21.3
35.3
26.6
16.3
38.7
35.0
8.4
25.0
55.9
12.1
3.8
16.6'
7.1
28.4
38.7
37.5
31.6
62.0
20.1
83.4
105.6
38.0
36.3
52.2
21.9
11.1
21.5
5.4
26.2
105.6
41.7
8.2
6.4
1.8
26.0
24.1
6.5
6.0
17.7
3.8
4.6
15.5
8.0
75.6
79.7
40.5
12.2
17.0
4.4
171.0
203.2
148.3
51.5
74.2
29.5
8.8
4.1
1.1
166.0
117.5
61.2
19.7
20.0
12.0
20.1
27.6
6.5
208.4
119.2
107.9
7.3
13.8
2.2
9.9
25.8
15.1
5.3
7.3
3.1
36.0
52.3
25.0
60.8
87.6
32.0
17.9
14.2
2.0
6.2
17.0
4.2
37.0
53.3
31.3
37.5
102.5
24.7
32.7
30.8
4.2
52.0
90.9
30.5
6.5
1.2
0.5
9.3
3.8
2107.8
2544.3
1192.0
Total for
Period
93.0
8.0
51.3
64.8
508.7
65.4
91.1
21.6
85.9
161.6
99.9
37.7
16.0
394.4
292.5
100.9
93.3
95.0
97.2
.28.2
111.3
128.0
261.2
126.9
39.7
182.1
17.2
58.0
30.0
29.0
276.9
36.6
589.2
167.4
15.C
406.2
61.2
64.7
486.6
28.8
54.2
17.4
137.6
204.5
39.0
28.1
139.5
171.3
75.9
185.8
8.3
13.6
6597.7
7
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Public awareness of water quality problems (probably arising out of the
institution of Federal water quality standards) has develoned a sense
of urgency, a heightening of the investment effort in some cases. Out
of the inter-action of assistance programs, needs patterns, and local
preference, an alteration of the investment structure has emerged.
Where almost every State in the past moved its investment levels
uniformly upward from period to period (subject to year to year
lumpiness imparted by intermittent new starts on extremely large
projects), divergent trends have become evident over the last three
years. Some States continue to increase the amount of their investment--
some at fairly constant, some at accelerating rates—others appear
to have reached at"least an interim equilibrium level with respect
to public investments for water pollution control, and still a third
group appears to be deemphasizing public investment for protection of
the aquatic environment.
There is a rough correspondence between location and investment
behavior. If one considers the forty-eight contiguous States and the
District of Columbia (Alaska, Hawaii, and Puerto Rico are special
cases, quite different from the rest of the nation in the condition, of
their water pollution control programs), he finds that thirteen of the
twenty-two States west of the Mississippi have maintained stable or
declining investment levels over the last three years, and only two of
the western States fall into a category comoosed of States whose
spending has increased fifty percent or more. (cf. Figure 1.)
Conversely, seventeen of the twenty-seven eastern States have increased
their capital outlays for waste treatment facilities; and the class
of States with the largest proportional increases are concentrated in
the extreme northeast and deep south. (Four northeastern States-
Connecticut, Hew Jersey, Mew York, and Pennsylvania—account for almost
seventy percent of the increase in average annual investments for the
period 1967-69 as compared to 1962-66.)
That geographic pattern fits generally, though not invariably,
the pattern of distribution of waste treatment among the individual
States. That is to say, the more complete a State's waste treatment
services, the greater the probability that it is now reducing invest-
ment, relative to other States. The relationship is comforting, in
that it suggests that in some crude fashion—with, unfortunately, gaps
and overlays—investment has a configuration that matches the occur-
rence of needs, as well as in the implication that at some point of
attainment to be reached in the future, every State will be able to
relax the comparative intensity of its investment effort.
There are also disturbing elements in the distribution of invest-
ment intensity. On the one hand there are the cases of apparent
laxness, States that show a pronounced relative deficiency in waste
treatment services with no corresponding increase in investment effort.
On the other hand, there are indications of pronounced relative inef-
ficiency, in that the level of a State's past effort may be related
8
-------
. y w. s.
STATES CLASSIFIED ACCORDING
TO RECENT INVESTMENT
BEHAVIOR
B = STATES INCREASING INVESTMENT 50% OR MORE
E3 = STATES INCREASING INVESTMENT 11-49%
(S3 = STATES WITH STABLE INVESTMENTS
H = STATES WITH INVESTMENTS DECLINING 11-25%
~ = STATES WITH INVESTMENTS DECLINING 25% OR MORE
-------
only slightly to its current status. Harked increases in expenditures
have been initiated in cases where per-caoita spending v/as equal to or
greater than that of States whose relative needs are slighter and whose
spending has been controlled or reduced in recent years.
The broad outlines of the developing investment structure come
into sharper focus if v/e categorize groups of States according to their
recent investment behavior. Table 4 presents such a classification,
with all values reduced to relative terms—percentages or per-capita
values--to provide an element of comparability. It should be stressed
that what is true of a class of States, as they are distinguished in
the table, is not necessarily true of every State within the class.
The only distinction recognized in setting ud the groupings was invest-
ment behavior, and distinct differences may be found among units whose
investment behavior is similar. Thus in the group of States with
stable investment, we find that New Hampshire with only 4.5% of the
sewered population of the grouping includes 50.3% of its population
with untreated wastes, 7.1% of its population with wastes receiving
only primary treatment, and 27% of the amount of its investment
requirements. Similarly, in the group of States with modestly declin-
ing investments, the State of Vermont has only 2.9% of the group's
population, but contains 9.7% of its population without waste treat-
ment, 8.5% of its pooulation with only primary treatment, and 15.7%
of the value of the grouD's investment requirements. Obviously, each
group would comoare even more favorably with the other three groups
if the atypical component were removed. The intra-classification
discrepancy is acute in the case of the grouping of states whose
investments in the last three years have sunk below 75% of the rate of
the previous five years. That discrepancy is discussed below.
1) That grouo of States in which investments were being acceler-
ated most vigorously during the last three years—50% or more over the
average annual level of the five years before—includes more than a
third of the sewered population of the United States. Those States'
emphasis on waste-handling investment will, then, have a strong influence
on the level of total investment.
The sharp acceleration of investment by these particular States
would appear to be desirable, in that the group contains a relatively
large proportion of the waste treatment needs of the nation. No matter
how needs are viewed in comparison with the population base—propor-
tionate discharge of raw sewage, proportion of sewered population with
only primary waste treatment, prooortion of evaluated investment
needs—it would appear that these States, as a group, are behind the
rest of the nation and should be increasing their share of national
investment. That very general conclusion is supported by a review
of comparative investments: as a group, they have invested less,
on a per-capita basis, over most of the last fifteen years than most
other States.
10
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TABLE 4
Comparative Categorization of States
by Recent Investment Behavior
Percent of National Total
States with major Increases (1505 or more of
1962-66 average) In Investment In 1967-69:
Alabama, Alaska, (Connecticut), Florida,
Georgia. Iowa, (Maine), (Maryland), (New
Jersey). (Hew York). Oklahoma, (Pennsylvania),
South Carolina, Virginia, Puerto kico 35.6
States with Increases (111-149* of 1962-66
average) in investment in 1967-69:
Arkansas, California. District of Colunfcla,
Idaho, Illinois, (Indiana). Kansas,
(Massachusetts), Minnesota, Ohio, Tennessee,
Texas. Wyoming 42.6
States with substantially unchanged (90-11OX
of 1962-66 average) Investment In 1967-69:
Kentucky. New Hampshire. North Carolina,
South Dakota, Wisconsin 5.1
States with declining {75-891 of 1962-66
average) Investment In 1967-69:
Arizona, Colorado. Missouri. Montana,
(New Mexico), (Oregon). (Vermont) 5.3
States with sharply declining (74* or less
than 1962-66 average) Investment 1n 1967-69:
(Delaware), Hawaii, Louisiana, (Michigan).
Mississippi, Nebraska. Nevada, North Dakota,
(Rhode Island), Utah, (Washington).
West Virginia 8 12.6
Current
Sewered Sewered Pop, Sewered Pop. Investment Investment
Population w/o Treatment w/Pr1mary Trtmt. 1952-66 1967-69 Requirements
42.1
30.2
3.3
4.8
United States Totals
100.0
20.0
100.0
38.0
38.1
3.3
3.9
17.5
100.0
32.9
7.7
6.9
14.3
48.9
39.4 33.9
6.4
5.8"
6.8
40.2
32.0
6.7
7.0
100.( 100.0
14.1
100.0
Average Annual Per-taplta Investment*
1952-55 1956-61 1962-66 1967-69
(1.95)
1.60
(1.34)
1.10
(1.67)
1.37
(2.40)
2.42
(2.88)
3.20
(1.64)
1.34
(1.77)
1.45
(2.57)
2.60
(3.63)
3.67
(2.56)
2.59
(2.54)
2.56
(4.50)
5.00
(3.33)
3.70
(5.37)
6.98
(2.85)
3.16
(5.82)
6.46
(3.11)
4.04
(4.91)
6.38
(1.21) (2.37) (6.02) (4.29)
0.99 2.39 6.68 5.58
(2.12)
2.76
(3.91)
5.08
• Per-cap1ta Investment based on 1968 sewered population. Constant (1957-59) Dollars In Parentheses
Mote: States which provide financial assistance are underlined and States with funded assistance programs are Indicated by parantheses.
-------
That investment deficiency may have been in part a result of
Federal policy. These are in many instances the high population, big
city states that, because of grant limitations, received effectively
less per-cam'ta Federal assistance under the terms of the Federal
Water Pollution Control Act as it was structured betv/een 1956 and 1966.
Though per-capita investment in these States showed a response to the
availability of Federal grants after 1956, the amounts of the increases
in per-capita exDenditures were well below that of other groups of
states before 1967. Those States now demonstrating the greatest
increase in investment are, however, the same group that provided the
highest per-capita.investment before Federal construction assistance
programs were initiated. In a sense, the major 1966 amendments of the
Federal Water Pollution Control Act tended to redress maldistribution
of Federally supplied resources and to allow these States to step up
their investments sufficiently to begin to close gaps that had opened
between them and others.
But increased amounts of Federal assistance and less discriminatory
Federal allocation procedures have probably been of lesser moment in
levering investments of at least some States within this group upward
than has the initiation of State financial assistance for construction
of waste treatment facilities. Most of these States provide si*ch
assistance, and have fully funded their assistance programs. In at
least two instances—New York and Maryland—State capital inputs over
the last three years have matched or exceeded the amount of Federal
assistance.
?.) Another group of States, one that contains over 40% of the
Nation's sewered population, is also undergoing a marked expansion of
capital emplacement rates. Almost four out of five Americans, then,
live in States that are still in the process of increasing public
expenditures for water pollution control.
The class of States in which investment is rising at rates that
approximate rather than exceed the degree of increase experienced in
the decade and a half before 1967 tend to have achieved far more
effective control of wastes than have the States that are undertaking
a more pronounced expansion of investment. The group of States under
consideration have invested less, on a total and on a per-capita basis,
than the class of States whose annual expenditures are registering
a more marked increase, yet they display lower than proportional shares
of population without waste treatment or only primary treatment; and
evaluation of their waste treatment deficiencies shows them to be less
than proportional to population.
Relatively efficient use of capital, then, distinguishes them, in
that their per-capita expenditures have been consistently lower than
those in the other investment categories, v/hile their indicated
deficiencies in level of service contrast favorably with the others. In
spite of those efficiencies, it has proved necessary for them to
12
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increase their level of investment continuously. These are, as a
group, States whose pooulation growth is distinctly above the national
average. They are also States that have consistently provided an above
average level of waste treatment services. It would appear that
pressures of growth, recapitalization, and upgrading will continue to
operate on these States, and that their expenditures may continue to
rise—perhaps ultimately attaining a oer-capita level somewhat closer
to the national average.'
It is notable in this regard that the group of States character-
ized by moderately rising investment has in the past shared, at least
in some cases, the disadvantaged oosition with respect to Federal
financial assistance of the States whose investments have been rising
most rapidly; and that—though some of the States involved provide
financial assistance to communities—their expenditures have generally
followed the regulator of investment intensity provided by Federal
grants.
3) Federal grants would seem to have served as the principal
regulator in the case of the small number of St&tes who have, on the
basis of investments during the last eight years, reached some sort
of equilibrium position for waste treatment investments.
They are States that have, as a group, achieved a high level
of control of public wastes. They are not, it would apoear,
extremely efficient as compared to others. Though they have achieved
an interim equilibrium level of per-canita investment, it is at a
rate that has been consistently higher than that of other groups of
States until very recently.
Low population, non-metronolitan States, they have been so
structured as to achieve maximum per-capita assistance from Federal
construction grants. With Federal assistance at $100 million a year,
these States achieved a level of per-capita spending close to twice
that of more heavily populated States, and the rise in amount of Federal
grant allotments to $200 million a year induced no investment response
on their part.
4) The group of States whose investments are declining moderately
but perceptibly is in many respects much like the group whose invest-
ments are stable. These, too, are States with a relatively small
metropolitan population component who were able to materially accel-
erate their investment under Federal assistance totalling $100 million
a year. Per-capita capital application in this group of States, too,
has been similar to that of States with stable investment—though their
investment 1s currently lower, it was somewhat higher in the previous
period; and over the eight year period 1962-69, the two groups of States
mounted constant dollar per-capita investment efforts that were within
2% of one another in amount. The parallel investment experience of
13
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these two groups of States that have largely overcome their waste treat-
ment deficiencies is, perhaps, indicative of what the nation as a whole
can anticipate in terms of sustained investment needs. If so, annual in-
vestments of more than five 1957-59 dollars for each person receiving
sewer services may be some sort of ah underlying investment base for
a mature waste treatment sector.
5) States whose investments have declined steeply in the last
three years do not fall into a single pattern. They are widely dis-
tributed with respect to location; they include both industrial and
agricultural economies; some include predominantly small town and rural
populations, others are metropolitan in character.
More significant with respect to this discussion of investment
behavior is the relative prevalence of waste treatment amonq the mem-
bers of the group. There are twelve States whose v/aste treatment invest-
ments have been cut back sharply over the last three years. Six of
these—Del aware, Nevada, North Dakota, Rhode Island, Utah, and Washington-
are much like the groups of States with stable or moderately declining
investments in terms of past performance. The other six combine a-
drop in investment with a high pronortion of untreated or inadequately
treated wastes and a low level of investment in the past. The.v arej
in short, much like the States who are now increasing investments most
sharply, (cf. Table 5.)
TABLE 5
Declining Investment States; Relative
Condition and Past Performance
I II
Delaware, Nevada, Hawaii, La.,
N. Dakota, Rhode Michigan,
Island, Utah, Nebr., West
Washington Virginia
Percent of nation's sewered population 3.6 9.0
Percent of nation's sewered population
without waste treatment 1.0 19.0
Percent of nation's sewered population
with only primary waste treatment 3.6 13.9
Percent of national investment: 1952-66 5.0 9.3
1967-69 2.1 4.7
Constant dollar per-capita investment:
1952-69 $64.34 $48.76
14
-------
The behavior of the first group is expectable in terms of their
situation and might have been predicted; the decline in their activity
comes after a period of intense investment, and occurs in situations
marked by a high level of waste control. The second grouo is an
anomaly. Investments in the past have been near or below the national
average on a pcr-canita basis; they contain an abnormally large proportion
of the nation's population without waste treatment or with only primary
treattment; and their investment needs—in terms of physical facility
needs defined by the States themselves--are disDroportionately great.
Yet in circumstances that include those indications of likely to be
rising or at least stable outlays, and in the face of a doubling of
the level of Federal grant assistance, they have cut back on investments.
One may assume, perhaps, that there are special local circumstances
in every case that help to explain the investment decline. And it is
not unreasonable to suppose that these particular States may simply
be demonstrating in extreme form the effects of high interest rates and
constraints on the supply of money, and may in fact prefigure similar
investment declines in other areas as such financial constraints become
extensively operative. Another mechanism, too, may be partially re-
sponsible for these States' declining investment. Removal of the '
dollar limitations on Federal grants have made them applicable to com-
munities of all sizes, and where State financial assistance becomes
available to communities, the major portion of the financial load is
removed from their shoulders. Under those conditions, the amount of
Federal and State grants would constitute the principal limiting factor
in determining level of investment. No community could be expected to
begin a project in the absence of a full share of Federal and State
assistance. Thus the potential availability of assistance may—when
it is inadequate to conditions-- serve to reduce rather than increase
the level of local effort. Inadequate Federal allocations, unfunded
State assistance programs, even the possibility of the introduction
in a State legislature of a bill to provide assistance, can have the
effect of limiting local investments; and such mechanisms may well be
operative in the cases of these six States. (Arguing for such a
phenomenon is the fact that those States whose outlays are increasing
most rapidly include several cases where State government has agreed
to pre-finance the Federal share of local projects, thus eliminating
the level of Federal allocations as a constraint on investment.)
Relative Efficiency and Public Investment
The data on per-capita investment by classes may offer some
Inconclusive but useful insights into the relative efficiency of the
various investment groupings, as well as into the level of investment
to be anticipated under a condition of complete treatment services.
15
-------
Table 6 summarizes the constant dollar per-capita investment of
each of the classes of States for the oeriod 1952 through 1969 and
contrasts that amount with the constant dollar value of current invest-
ment needs listed by each State, (cf. Chapter Tv/o: Development of
Investment Needs for derivation.) It may very reasonably be concluded
that the eighteen year investment plus the value of the investment
remaining to be made provides an accounting of the per-caDita burden
associated with attainment of water quality standards at this time.
TABLE 6
Per-capita Investment Associated with
Attainment of Water Duality Standards,
1952-1969
{All values in 1957-59 dollars)
Investment Status Per-capita investment Per-capita amount TOTAL
since 1952 of remaining needs
Sharply Increasing 49.23 32.25 81.43
Increasing 45.55 20.98 66.54
Stable 69.63 36.R8 106.51
Declining 62.03 37.10 99.13
Sharply Declining 49.5P 25.05 74.63
The values obtained by the exercise are extremely surprising. If
they are to be taken at face value, they suggest that there are extre-
mely wide variations in investment efficiency, that the least efficient
users of caoital have achieved the highest level of control of their
wastes, and that the less caDital a State has provided in the past, the
smaller the burden waste treatment will mean to its citizens in the
future.
Although there are known to be wide variations in investment
efficiency (the point is discussed later in this report), the
implications to be drawn from the values presented in the table seem
to be distorted, particularly when geography is taken into account.
Many of the States that are found in the investment groupings that
represent increasing investment,- as well as several among the six
poorer performing States in the category of sharply decreasing invest-
ments, are located in the regions where capital efficiency has been
demonstrated to be low. A more realistic analysis of the situation may
well be that there is a tendency for States whose deficiencies are
great to underestimate the extent of those deficiencies. Evaluation
of waste treatment deficiencies may depend to some degree on relative
accomplishment, so that States with effective and well advanced pol-
lution control programs may list as needed improvements situations that
16
-------
less effective States would find quite satisfactory. If this is in
fact the case, then those States who are now increasing their invest-
ments—not to mention those whose investments should be increasing
when they are in fact declining—may find the job that they have set
out to accomplish considerably more expensive than is indicated by
their view of current conditions.
Industrial Water Pollution Control Expenditures
In sharp contrast to 1968, v/hen the high degree of visibility
given to water pollution control by institution of water quality
standards caused a flurry of industrial analyses, information with
regard to industrial pollution abatement expenditures was scarce in
1969. The only available source of comprehensive data was the annual
McGraw Hill Survey of Business Plans for Plant and Equipment. According
to the Survey, industrial investments for pollution control in 1968
were well below first quarter projections. And the planned investment
level for 1969, though higher than actual 1968 expenditures, was
significantly lower than the rate of spending initially projected for
1968, as shown in Table 7.
The report may--though it is not certain—be reason for concerh.
Of the total 5776 million of manufacturing investment, 50 to bo% may
be consigned to water pollution control, on the basis of past invest-
ment relationships. That amount—$390 to $425 mill ion—represents a
sharp drop in the level of industrial water pollution control invest-
ment from the $500 to $600 million of 1967, during a year of record
capital spending. Strong inflationary pressures during the year may
be thought to have reduced the effectiveness of the investment. The
amount—even without adjustment for the greater than expected inflation
of construction costs that occurred—is well below the mean goal of
$502.6 million for industrial waste treatment investments in 1968 that
was established in the first report of this series.
Finally, the forty percent increase in investment planned for
1969 must be considered to be suspect, in view of the wide (49%)
difference between actual expenditures in 1968 and report plans.
Unfortunately, the area of certainty is so small with respect
to industrial water pollution control that is is impossible to
evaluate the real significance of the indicated drop in investment
during 1968. Certainly, deviation1 from the targeted goal is not in
itself enough to cause concern. The range of target expenditure
levels--$328 million to $677 million—is so great as to indicate
that, in spite of the drop in spending, industry may still be making
acceptable progress toward the goal. The gap between projected and
actual expenditures in 1968 may well be traceable to slow deliveries
and extended construction schedules, Droblems that plagued all types
of construction in the super-heated capital spending atmosphere of
17
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TABLE 7
Industrial Pollution Control Investments,
as Reported by McGraw Hill
(Millions of Dollars)
INDUSTRY
Projected
Actual
Planned
1968
1968
1969
Iron & Steel
$
144
$ 123
$ 184
Nonferrous metals
37
13
51
Electrical machinery
116
38
47
Machinery
41
58
83
Autos, trucks & parts
66
29
49
Aerospace
8
14
15
Other transp. equipment
(RR Equipnent., ships)
3
12
17
Fabricated metals & instruments
41
40
57
Stone, clay & glass
40
33
56
Other durables
89
28
93
TOTAL DURABLES
585
388
652
Chemicals
112
104
126
Paper & pulp';
91
91
104
Rubber
6
6
11
Petroleum
102
157
160
Food & beverages
32
15
31
Textiles
26
13
19
Other nondurables
40
2
10
TOTAL NONDURABLES
409
388
461
ALL MANUFACTURING
994
776
1,113
Mining
83
49
71
Electric & gas utilities
481
223
284
ALL INDUSTRY
$1
,558
$1,048
$1,468
18
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tho last two years, flor is it unlikely that a number of industrial
pollution control projects were revised to take advantage of public
waste handling facilities, a practice that appears to be increasingly
prevalent, (the practice could conceivably have reduced the level
of industrial investment in two ways: 1) substitution of public
facilities for planned treatment plants would cause a positive shift
of investment to the public sector; ?) delays encountered in public
investment would cause postponement of industrial investments for
connection and transmission facilities.)
The lack of reliable information on industrial water pollution
control activities might be considered to be intolerable, if the
nation had not become quite habituated to it. The guessing process
has gone on for so long that it is considered quite normal; and
every effort to initiate an industrial waste inventory has been
frustrated without noticeable public comment.
In an effort to reduce the area of uncertainty, a contract has
been entered into with the National Industrial Conference Board to
survey a substantial number of manufacturing firms during 1970 with'
respect to their water pollution control practices and expenditures..
It is the hope of the Federal Water Pollution Control Administration
that the use of a private contractor with an imneccable reputation
for discretion and accuracy will reduce mananement fears of disclosure-
fears based, apparently, on a desire to maintain integrity of proprie-
tary kinds of data as much as on the possibility of the use of such
data for enforcement purposes if Federally collected—and assure the
agency of reliable information of a breadth and point beyond anything
previously attained for the industrial v/aste treatment activity. Given
industrial cooperation with the proposed survey, FWPCA should be
able to report to the Congress in 1971 with authority beyond anything
previously attempted in connection with industrial waste treatment.
Special Studies
In late 1968 and early 1969, the American Petroleum Institute and
the Manufacturing Chemists Association published papers
on pollution control expenditures relating to broad surveys of their
memberships. Those reports, interesting in themselves, are also of
value for their corroborative properties. In general, they support
the findings of the 1968 report to Congress on The Cost of Clean Water,
as those findings relate to the specific industrial sectors; and the
investment rates indicated are of an order to magnitude that is compa-
tible with the estimates of capital emolacement rates presented in the
1969 report on The Cost of Clean Water and Its Economic Impact.
The petroleum industry data summarized in Table 8 is based on
responses to questionnaires submitted to 39 firms, 35 of whom respond-
ed. The respondents are credited with 972 of refinery throughput of
19
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Capital Expenditures
1966
1967
1968
Operating Charges
1966
1967
1968
TABLE 8
Summary of Rata Reported for the Petroleum Industries
by The American Petroleum Institute*
Thousands of Dollars
Total
r'anufacturinq
79,016 1/
133,72-°. 1/
122,67? 4/
45,797 2/
53,246 2/
56,800 4/
Administrative & Research Expenditures
1966 20,903
1967 23,842
1968 26,200 4/
Production Transportation Marketing
18,138 y
40,000 1/
18,339 2/
21,030 2/
12,759 3/
14,681 3/
57,963
70,318
25,423
30,103
6,833
7,757
786
1,017
1 ,419
1,377
82
101
2,124
2,3Q3
616
736
1,229
1,303
~Source: Report on Air & Water Conservation Expenditures of The Petroleum Industry
in the United States, Crossley S-D Survey, Inc., New York,- August 1968.
1/ Includes 51 ^l ,000 in 1°66 and $6,770,000 in 1967 at chemicals nlar.ts
7J Includes $3,375,^00 in 1966 and $3,609,000 in 1°67 at chemicals plants
3/ Includes environmental research and testino that cuts across functional lines.
4/ Estimated
-------
the industry, so results may be considered to include substantially
all of the manufacturing segment of the United States petroleum
industry. Given the predominant integration of the industry, it may
be inferred that a majority of crude oil and gas production is also
represented. The data is unsatisfying in some respects. It fails to
provide an assessment of total value of capital in olace, and it
provides no indication of the effectiveness of expenditures.
It does provide some very useful new insights into the total
industrial pollution abatement situation, however. Surprisingly,
expenditures in connection with petroleum extraction have exceeded
those in manufacturing activities. Another surprising relationship is
the high ratio of research and administrative charges to operating
charges. Even allowing for nublic relations motivated padding, it
would appear that hidden costs of pollution control are significant
enough to v/arrant considerable industrial interest.
The Manufacturing Chemists Association data summarized in
Table 9 are in several ways more useful than that available for the
petroleum industries. In addition to information' concerning recent
investment and operating charges, it provides a comprehensive look
at total investment, water use, and investment efficiency that is
based on 9P7 plants operated by 12° firms that represent 90£ of che
chemicals production capacity of the nation.
Interestingly, the industry's reduction of organic wastes—about
57%--is almost precisely the same as the *>9% calculated for the
aggregate public waste treatment plant of the nation. The report
also notes that of the industry's total surface water discharge,
38% required no treatment, met all regulatory treatment require-
ments, and only 17" involved some kind of waste treatment deficiency.
In this connection, it should be noted that the limited reduction of
inorganic wastes—only 27/'--does not take into account the effects
of neutralization, a widely used treatment technique that does not
involve actual materials- reduction.
A detailed report on waste disposal in the inorganic chemicals
industry was prepared for the F/JPCA under contract by Cyrus William
Rice Co. in cooperation with U. Wesley Eckenfelder, Jr., Resource
Engineering, Inc., and DatagraDhics, Inc., (separately printed as
Volume III of this report). It presents a description of the industry,
and the costs it would incur in attaining various levels of pollution
abatement over a five year period through 1074. The cost estimates
have been based upon published data, general data derived from, inform-
ation in the files of the Contractors' on industrial waste treatment
methods and costs, and specific data from 59. inorganic chemical plants,
some of which were supplied by the Manufacturing Chemists Association.
The inorganic chemical industry was defined to include establish-
ments producing alkalies and chlorine, industrial gases, inorganic
21
-------
TABLE 9
Summary of Data Reported for the Chemicals Industry
by the Manufacturing Chemists Association
Water Use (Gallons/Day)
Total 11,695,875,000
Cool inn water only 9,301,262,000
Hater Discharged (Gallons/day)
Total 11,192,385,P00
Through public sewers 191,735,000
Inorganic Wastes (Pounds/Day)
Total 205,038,000
Discharged to water 146,911,000
Discharged to public sewers 2,348,00°
Organic Wastes (Pounds/Day)
Total 11,481,000
Discharged to water 3,943,000
Discharged to public sewers 1,005,000
Water Pollution Control Expenditures
Capital investment through 1966 $ 385,268,000
Operating charges, 1966 $ 59,638,000
Average Annual investment, 1962-66 $ 28,128,000
Average Annual investment projected,
1967-71 $ 47,140,000
Source: Toward A Clean Environment, A 1967 Survey of the Members
of the Manufacturing Chemists Association.
22
-------
pigments, paints and allied products, fertilizers (excluding ammonia
and urea), inorganic insecticides and herbicides, explosives, and other
major industrial inorganic chemicals. The complex relationship which
exists between various products and industries, however, make it
extremely difficult to arbitrarily associate certain products with one
category. The overall output of the industry, since its oroducts
are used for a wide variety of purooses veil removed from the final
consumer, depends uoon the" level of total economic activity rather
than the economic activity in any one segment of the economy. Since
new mineral sources are discovered infrequently and usually involve
large development expenditures, wide fluctuations in the gap between
demand and readily available supply are auite common.
Total production in the inorganic chemical industry is estimated
to.be 328.7 billion oounds in 1969 and is projected to be 455.5 billion
pounds in 1974. While certain segments of the industry are growing
as rapidly as 18°' oer year, the historical growth is 1.5 to 2.0 tines
that of the gross national product. The overall price index of in-
organic chericals, however, has fallen 2.5 percent in the recent past.
Thus, expenditures for pollution control may be of greater relative*
significance than in other industries where rising prices more readily
absorb increased costs.
Regional growth rates reflect a continuing trend to move produc-
tion facilities closer to raw materials and markets. The industry,
as a whole, is tending to concentrate in the Midwest and Southwest.
Inorganic chemical plants vary greatly in size, level of tech-
nology, product mix, and age. The report presents in considerable
detail the description of the various production processes, the waste
treatment methods practiced, and the possible impact that changes in
processes might have on the volume and character of the wastes pro-
duced. A typical or average plant exists only in the statistical
sense. Total costs given in the report are for the construction and
operation of waste treatment facilities for the industry as a whole,
and cannot be used to determine costs for individual plants. The
costs given are for the. waste treatment facilities only, and do not
include costs entailed in process changes, restriction of plant
operations, or sever segregation. Treatment system construction and
operating costs for a particular plant can only be estimated by de-
tailed engineering studies.
Projections based upon the chemical industry data in the ln63
Census of Manufactures, the 1967 Manufacturing Chemists Association
survey, the 1968 FVJPCA study of the organic chemicals industry, and
the costs of treatment for the two levels of 21% (the current rate of
removal, according to the MCA) and 100% removal of contaminants show
the following projected operating costs and cumulative capital invest-
ment for wastewater treatment.
23
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TABLE 10
PROJECTED CUMULATIVE INORGANIC CHEMICAL INDUSTRY CAPITAL
COSTS FOR HASTE TREATMENT
Costs in Hill ions of Current Dollars 1/
Removal 1959 1970 1971 1972 1973 1974
27 299.3 325.4 359.9 400.1 445.4 494.7
100 180B.4 1964.0 2173.2 2415.3 2639.0 2970.0
PROJECTED INORGANIC CHEMICAL INDUSTRY ANNUAL OPERATING
COSTS FOR WASTE TREATMENT
Costs in Millions of Current Dollars 1/
%
Removal
1969
1970
1971
1972
1973
1974
27
82.0
89.1
98.6
109.6
122.0
.35.5
100
157.5
171.0
139.2
210.5
234.2
260.2
1/ Based on an average 3.6% annual increase in the price level.
Contaminated wastewater from the inorganic chemicals industry
comes primarily from electrolysis and crystallization brines, washings
from raw materials. These wastewaters are generally characterized by
dissolved solids and suspended solids. In addition to contaminated
waste streams, process cooling discharges occur, accounting for 40 to
80 %¦ of the total discharge on the average. Treatment practices
vary but involve in-plant segregation of contaminated wastes from
uncontaminated cooling waters.
Many waste treatment methods are available, depending on the
degree of treatment reguired. Equalization, neutralization, sedimen-
tation and laqooning processes are most widely used. Biological
treatment is not applicable, since the contaminants are primarily
dissolved or suspended inorganic materials. Plants with small dis-
charges tend to emDloy only equalization and neutralization, with
total discharge to municioal sewer systems for joint treatment. It is
estimated that between 10 and 20% of the process wastewater discharge
of the industry is to municipal systems (4.2?' of the total discharge).
No significant percentaqe changes in this regard are expected through
1974. The inorganic chemicals industry has generally found that in-
plant, separate treatment has economic advantages, particularly when
significant quantities of wastewater are involved.
24
-------
Data from 59 inorganic chemicals plants were obtained and for-
matted according to the Industrial Waste Treatment Practices Data
Form, which was developed for the study "The Cost of Clean Water and
Its Economic Impact, Volume IV," United States Department of the
Interior, January, 1969. The data obtained are given in some detail
in the report in terns of bar graphs and various calculated parameters
relating wastewater volumes, plant production, and costs.
Key parameters of interest regarding waste treatment costs are
the following:
Average capital cost
Average operating cost/yr.
Average wastewater flow
Average caoital cost
Average operating cost
$223/1000 gDd
$58.49/1 COO god
16.73 gpd/annual ton of production
$3.74/annual ton of production
$0.93 per year/annual ton of
production
An examination of the survey data shov/ed that the reported bases
of waste treatment decisions were generally least' cost, or minimum
compliance with pollution control regulations.
The costs of unit wastewater treatment methods were developed and
are presented in the renort as a series of mathematical models and cost
function graphs. These data were used to calculate capital costs of
waste- treatment facilities versus two levels of oollutant removal for
a series of typical plants. Treatment level I was chosen because it
represents the reported average treatment employed in the industry
at this time and is judged to be equivalent to 27 % removal of
suspended and dissolved solids. Treatment level II represents complete
removal of contaminants. Only two levels were selected, because the
industry's wastes are principally inorganic solids that respond only to
physical treatment processes. Because there are no intervening
technologies, intermediate levels of efficiency are not distinguished.
The two levels, then, may be viewed as a range bounded on the one
side by the current level of efficiency and on the other by universal
application of exotic treatment practices, An almost infinite number
of intermediate positions are oossible within the range, but only as
the conditions that apply to individual units of the population change.
Unlike the case of organic wastes, there is no series of technological
plateaus through which the whole population may progress.
The following summarizes the capital and onerating costs in
1969 dollars for the two levels of treatment chosen:
% Removal Contaminants
27 (SS and Acidity)
100 (TDS)
Capital Cost
$/l000 god
300
2185
Operating Cost
1/1000 gal
26.0
51.5
25
-------
DEVELOPMENT OF INVESTMENT MEEDS
It is widely recognized that the pollution control effort, in
spite of the advances made in the last fifteen years, is inadequately
funded, but there is a high level of uncertainty with respect to what
may be an appropriate amount of funding.
That uncertainty must be ascribed to two factors, an inadequate
grasp of the constituents of demand and failure to establish a time
frame. The question that is most often nosed is "how much must we
invest?" That question cannot be answered unless we establish finite
terms of accomplishment—including both a time schedule and a pre-
vailing level of control of public wastes. It must be recognized,
too, that the terms of accomplishment cannot be fixed indefinitely.
One time period is followed by another; and the necessities of control
levels will he dictated by successive economic an'd copulation situa-.
tions, by the dynamics of technological caoabilities, by the effective
public preference for unoolluted water: and these will—as they bear'
upon investment—be conditioned by price level changes.
Recognizing that problems of definition have tended to obscure
every assessment of investment need that has been made in the past, the
economic staff of the Federal Water Pollution Control Administration
devoted a major portion of its efforts during 1969 to isolating
and examining the major constituents of public waste-handling invest-
ment behavior. While subsidiary questions—notably the trend of real
construction costs over time and regional variation in unit costs-
forced themselves upon the analysts, the prime focus of their study
was the rate of formation of demand for waste-handling capital.
The result of that year of study—which depended heavily on the
previous analyses reoorted uDon in The Cost of Clean Water (January,
196P) and The Cost of Clean Water and its Economic Impact (January,
I960) as v/eTT as upon suopfernental studies conducted in the Federal
Water Pollution Control Administration and elsewhere—is the conclusion
that the nation is currently forming demands for nublic investment
capital at a rate very close to a billion dollars a year. That is to
say, under the existing set of technological competences and regulatory
conditions, the level of waste treatment required of local governments
implies the expenditure of about a billion dollars a year in addition
to any amount that must be invested to get the current stock of capital
up to the stipulated level of waste treatment.
26
-------
An Evaluation Model
The evaluation is significant enouqh to warrant a Generalized
description of the analysis uoon which its rests, even at the risk of
some tedium to the reader.
Two analytical procedures were conducted in narallel, one based
upon normative influences, the other uoon recorded situations. The
basic analytical tool was, in either instance, the sane, a mathematical
simulation of investment in public waste handling systems.
Extremely simple in concent, that mathematical modellinq of the
value of Dhysical canital has proved to be very complex in the con-
struction. Indeed, at this writing it remains a crude—but hopefully
reliable—evaluation technique that is still undergoing extensive
refinement. In its present form, the model correlates a series of
equations that define size to averaqe cost relationships (in constant
dollars) for basic waste-handlinq procedures and equipment with the'
current f'unicioal Waste Inventory¦ Two separate model linn programs
are employedT" One involves scanning the inventory and assessir.g
for each recorded"sewerage system the cost of constructing or installing
component elements--other than collecting sewers--of the size and
description of those included in the system,_ The second program
ignores—except for their sizinq qualities installed facilities.
It scans the inventory for the needs recorded hv the State governments
who are the nrime source of the funicinal Waste Inventory. For each
category of reed, the orenram calculates theaveraqe cost of installing
or constructing the particular facillties——sized according to a normal
statistical distribution of capacity to indicated load.
The aggregated results for the two programs are nresented in
both constant and Sentember, 1969 dollars in Table 11.
The Analytical Procedures
The fact that $4.4 billion worth of needed improvements were
listed in the most recent compilation of oubl 1c waste handling systems
is of less than conclusive importance, in that it does not reflect
the development of such needs. It does not nirror the formative
imperatives of time, change, economic growth, the fact t.iat as one
set of conditions is met, new problems anse-or are created by the
resolution of the old ones.
The rate of formation of such needs must be understood if a pur-
poseful nrogram of investment in water pollution control is to be form-
ulated. The evaluation model, with the introduction of the element of
time, provides enough information to define at least an order of magni-
tude view of annual investment needs development.
27
-------
The first of the two procedures used to determine the rate of
formation of demand for investment capital consisted of a simple compar-
ision of recorded needs over time, applying the sane modelling pro-
cedures to the 1%2 f'unicinal '.-/asto Inventory that were used to evaluate
the I960 Inventory, and taking into account the investment that occurred
between inventories. The analysis took the form:
A = (X - Y) + I
Where: A= average annual investment demand develoned during the period,
X= investment demand, as defined by the Inventory at the begin-
ning of the period,
Y= investment demand at the end of the oeriod,
1= actual investment, adjusted to base period prices, over the
period,
T= number of years between inventories.
It is recognized that there is a measure of over-simplification
in the equation". It implies an effective identity of replacement with
depreciation, not at all a good assumption in a period like the present
when most of the Physical capital involved is of relatively recent
origin; and it neglects changes in real costs that have occurred be-
tween 1962 and 1968 by evaluating the earlier period's needs in terms
of current cost functions. The basic formula, however, is considered
to be logical; and adjustments are possible. Expressed numerically, it
provides"a value of about 500 million (1957-59) dollars a year for the
capital requirements posed by depreciation, growth, and system improve-
ment:
(3201.1 - 3001.7) + 2759.8 = 493.2
6
The second analytical procedure involved the use of normative
standards (rather than regulatory/enqineering determinations) in con-
junction with the evaluation model. Established rates of depreciation
were applied to the estimated replacement value of waste treatment
Plants'(42 based on a twenty-five year average life), and to the esti-
mated value of ancillary works such as interceptor sewers, outfalls,
pumping stations, and force mains (2%, based on a fifty year averaoe
Hfe—presumablv somewhat greater than fifty years for the sewer com-
ponent, somewhat less for other facilities). In similar fashion,
growth of demand was assessed by projecting a continuation of the rate
of increase in the hydraulic loading of municipal waste-handling systems
that took olace in the nericd 1957 to 196P, or 3.3% a year.
The exercise produced a set of values that were incredibly close
to those derived from point by point evaluation of recorded needs. As
presented in Table 12, they show a set of annual investment requirements
rising from $425 million in 1962 to $584 million in 1968. The average
28
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TABLE 11
Evaluation of Capital in
Value of Wor
1957-59
Dollars
Alabama
139.0
Alaska
1.1
Arizona
45.6
Arkansas
107.0
Cal i form" a
769.1
Colorado
165.9
Connecticut
89.0
Delaware
25.0
District of Columbia
33.6
Florida
312.4
Georgia
204.2
Hawaii
16.8
Idaho
58.0
111inois
497.2
Indiana
313.0
Iowa
206.5
Kansas
184.5
Kentucky
140.5
Louisiana
140.1
Ma i ne
17.9
Maryland
88.3
Massachusetts
102.2
Michigan
252.3
Minnesota
205.2
Mississippi
109.9
Missouri
229.0
Montana
54.7
Nebraska
124.0
Nevada
29.6
New Hampshire
16.3
New Jersey
304.4
New Mexico
71.6
New York
580.4
North Carolina
248.3
North Dakota
56.4
Ohio
484.7
Oklahoma
171.7
Oregon
124.4
Pennsylvania
424.2
Rhode Island
38.1
South Carolina
113.1
South Dakota
5C.7
Tennessee
168.5
Texas
639.1
Utah
87.5
Vermont
20.8
Virginia
166.2
Washington
143.2
West Virginia
73.9
Wisconsin
254.3
Wyoming
38.2
Puerto Rico
34.1
Virgin Islands
Totals 8979.7
ace and of Defined Needs, 1969
in Place Value of Needed Works
Current
1957-59
Current
Dollars
Dollars
Dollars
191.8
89.0
122.8
1.5
6.0
8.3
62.9
14.8
20.4
147.7
32.2
44.6
1061.4
273.3
377.2
228.9
. 31.3
43.2
122.8
53.2
73.4
34.5
2.5
3.5
46.4
20.4
28.2
431.1
35.1
48.4
281.8
89.7
123.8
23.2
18.8
25.9
80.0
24.3
33.5
686.1
141.2
194.9
431.9
100.9
139.2
285.9
32.1
44.3
254.6
59.8
82.5
153.9
11.8
16.3
193.3
57.4
79.2
24.7
66.5
91.8
121.9
20.5
C8.3
141.0
151.6
209.2
348.2
98.3
135.7
283.2
39.4
54.4
151.7
36.2
50.0
316.0
107.8
148.8
75.5
16.4
22.6
171.1
27.7
38.2
40.8
12.3
17.0
22.5
44.6
61.5
420.1
117.4
162.0
98.8
7.4
10.2
801.0
200.0
276.0
342.7
73.7
101.7
77.8
4.8
6.6
668.9
166.6
229.9
236.9
23.0
31.7
171.7
46.5
64.2
585.4
262.5
362.3
52.6
16.6
22.9
156.1
48.5
66.9
81.0
10.0
13.8
232.5
52.0
71.8
882.0
117.0
161.5
120.8
20.3
28.0
28.7
29.6
40.8
229.4
47.5
65.6
197.6
65.3
90.1
102.0
54.3
74.9
350.9
90.2
124.5
52.7
6.4
8.8
47.1
23.6
32.6
2.7
3.7
12392.0
3201.1
4417.5
29
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value for the period, $504 million, is within 2.3% of the mean value
developed by the first procedure, and well within the range lying
within one standard deviation about the mean.
Table 12
Normative Assessment of Annual Capital Needs
Generated in 1962 and 1968
Millions of 1957-59 Dollars
1962 1968
Replacement Value of Trtmt. Plants 2975.2 4132.7
depreciation at 4* 119.0 165.3
Replacement Value of Assctd. Works 3498.9 4847.0
depreciation at 2°{ 96.9
Loading growth at 3.3% 213.3 296.3
incremental depreciation 22.9* 25.5*
in plants to be upqraded at 4"'
Annual Heeds developed in year 425.0 584.0
*Value considered to be associated with primary treatment capacity
required to be upgraded to secondary treatment.
Elements of the Investment
Requirement
Table 13 summarizes. State by State, the computed value associated
with the various categories of investment needs, as these were listed
in the 196P Municipal 'Jaste Inventory and assessed by the evaluation
model.
The most obvious needs for investment are posed by those 1500
sewered communities that discharge raw wastes to waterways. Given the
existinq size distribution of those communities, normal design stand-
ards, and the assumption of treatment through the activated sludge
process, these plants pose a need for about $14 billion of investment--
about $250,000 per community, including the investment in transmission
facilities and in outfalls that is probably required for these commun-
ities, on the basis of their size distribution and the historical re-
lationship between plant and ancillary costs for communities of various
sizes.
A second fairly clearly defined category of need occurs in those
approximately 2500 situations in which only primarily 'waste treatment
exists. Although primary treatment is permitted by water quality
standards in some cases due to the capacity of receiving waters to
assimilate wastes, the prevailing policy in the United States has come
to be one that requires secondary treatment. The consequences of that
policy in terms of investment, then, can be calculated on the basis of
30
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TABLE 13
CorpwUd Values for Various Categories of Investment Needs by St»te
Millions Of 1957-59 Dollars
Plants Upgrading Enlargement Disinfection Connection to
Alabama
$75.35
$5.95
$7.62
Alaska
4.32
1.66
Arizona
10.80
0.20
3.76
Arkansas
9.29
10.54
6.89
California
16.40
61.44
181.47
Colorado
5.86
5.40
19.96
Connecticut
6.86
39.22
4.45
Delaware
0.32
2.18
District of Colunfcla
20.38
Florida
0.72
0.89
33.46
Georgia
36.41
21.59
22.81
Hawaii
12.62
1.20
0.61
Idtho
8.47
10.44
4.63
Illinois
22.67
56.88
49.52
Indiana
32.14
12.22
46.43
lowt
9.84
2.29
16,07
Kansas
40.19-
9.03
10.33
Kentucky
3.86
6.81
1.04
Louisiana
41.65
4.18
11.53
Maine
60,57
5.79
Maryland
2.29
2.97
12.37
Massachusetts
88.50
22.63
12.46
Ml chigan
19.83
61.44
12.30
Minnesota
7.21
26.92
2.44
Mississippi
28.00
1.09
7.13
yMissouri
' Montana
98.19
5.01
4.28
5.65
9.09
1.49
Nebraska
12.35
12.34
2.94
Nevada
3.62
4.65
4.06
New Hampshire
40.18
0.56
3.87
New Jersey
101.67
15.73
New Mexico
1.75
2.79
2.87
New York
103.19
92.17
4.65
North Carolina
49.37
13.10
9.94
North Dakota
4.09
0.73
Ohio
30.81
78.61
48.55
Oklahoma
4.35
11.09
6.05
Oregon
15.88
13.56
14.50
Pennsylvania
190.93
36.05
33.48
Rhode Island
4.35
3.14
2.55
South Carolina
42.84
4.08
1.61
South Dakota
6.50
2.52
0.32
Tennessee
21.89
28.54
1.56
Texas
3.06
20.97
93.01
Utah
11.46
1.77
7.04
Vermont
18.23
10.52
0.83
Virginia
5.80
21.97
2.51
Washington
7.82
17.40
14.21
West Virginia
37.99
16.26
Wisconsin
0.91
73.29
9 36
Wyoming
4.47
1.31
0.48
Puerto R1co
14.06
9.52
Virgin Islands
2.66
Totals
$1286.56
$965.67
$773.55
$0.09
0.51
2.82
6.39
3.93
0.14
0.12
0.11
0.01
0.02
0.01
3.58
0.29
0.24
0.66
0.02
0.43
0.53
0.16
$20.06
$5.59
13.96
2.64
8.06
4.34
9.25
3.68
0.13
2.76
26.30
3.90
2.74
1.17
5.07
1.50
2.01
1.80
0.15
17.18
25.32
6.13
$143.68
Other
Total
One Standard
irovements
Deviation
$0.12
$89.03
$13.44
5.98
1.40
0.05
14.81
1.99
32.32
7.77
273.27
17.41
31.30
5.14
53.16
6.45
2.51
0.43
20.38
11.37
35.07
4.94
0.31
87.70
10.20
18.78
2.86
0.78
24.32
3.18
0.03
141.lt
15.36
100.86
8.92
32.14
4.32
0.22
57.77
20.75
11,84
3.63
0.02
57.38
19.25
66.49
19.17
20.51
7.54
1.64
151.64
37.01
0.81
98.29
10.95
0.02
39.35
10.14
36.23
9.55
0.30
107.78
31.85
0.16
16.40
3.34
0.09
27.72
4.08
12.33
1.54
44.61
10.38
117.41
15.59
0.02
7.42
0.95
200.01
50.67
0.17
73.72
9.00
4.83
0,48
166.62
14.51
0.03
23.0'
3.08
0.23
46.46
5.63
0.04
262.52
57.25
6.37
16.57
2.33
0.01
48.54
5.77
10.00
1.04
0.02
52.01
11.97
117.04
7.62
20.27
1.84
29.58
4.94
0.02
47.51
6.24
0.12
65.30
9.85
54.25
8.81
90.23
7.76
6.42
2.14
23.59
6.10
2.66
1.2£
HI.60
$3201.12
$539.19
31
-------
historical cost factors to require an investment of about $900 million
of (1957-59) dollars, or an average of $360,000 per project.
Another $800 million worth of miscellaneous kinds of projects
comoletes the list of current needs. In total, they indicate a most
likely investment need of $3.1 billion in a ranqe of $2.6 billion to
$3.7 billion constant dollars—or, in current dollar terns, a most
likely investment need for 4.4 billion September, 1969 dollars in a
range of $3.6 billion to $5.0 billion.
But this fixed, presumably diminishing v/ith time, set of values
represents no more than a ooint on a scale. They are the current com-
bination of those dynamic elements that underlie basic demand for
capital in this economic sector. Those elements will persist; and ever,
a vigorous public effort to reduce the accumulation of investment re-
quirements will not end the continuing need for capital. Indeed, as
the waste-producing qualities of our growing economy assert themselves,
the annual capital reouirements of the waste-controlling activity may
be expected to increase.
It may seem paradoxical that requirements expand as our level of
controls expands, but it is not. Before a facility is constructed its
need represents a sort of fixed amount contingent liability: c,,ce
built, it must be kept in operating condition, modernized, expanded,
ungraded to meet conditions. Such investment requirements may be less
obvious and less dramatic than the need for a plant where none exists,
but they are no less real—and are often far less postponablc. It
follows, then, that as the level of waste control grows, so does the
magnitude of the annual investment associated with waste control.
There is no better means of demonstrating the compounding effect of
past investments on future needs than to review the recorded needs
associated with sewer systems at each of the last three municipal
waste inventories, (cf. Table 14.) While the number of persons at-
tached to sewers increased forty-two percent between 1957 and 1963,
the raw number of recorded investment needs increased ninety-two per-
cent. A different kind of investment requirement was engaged—various
major and minor ungrac'ing projects steadily replacing new plant needs
over time—but both the total number of needed projects and the number
of persons affected has risen.
Rising investment demand, then, is not only consistent with the
general rules for a growing economy, but equally consistent with the
pattern of events in the particular economic sector under consideration.
Horeover, it is possible to distinguish not only the fact of increasing
demand, but to postulate the influences that form that demand. They
may for purposes of discussion, be considered under four general cate-
gories: 1) recapitalization, 2) growth, 3) prices, and A) "changes in
the rules of the game."
32
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TABLE 14
Kind of Need
New Plants
Replacement
Enlargement
Additional Treatment
Chlorination
Improved Operation
Connection
Total Mo. Needs
Total Systems
% w needs
New Facilities 1/
Major Upgrading V
Minor Upgrading 2'
Increase in State Government-Defined
Waste Treatment Needs Over Time*
Number of Systems
Population Served
(000's)
*Source: Municipal Waste Inventory, 1957, 1962, 1968
1/ New Plant, replacement, connection
2/ Enlargement, additional treatment
3/ Chlorination, improved operation
1957
1962
1968
1957
1962
1968
2549
2143
1586
13,504.0
13,058.4
9,575.3
973
853
625
3,101.6
3,888.2
1,719.9
688 ¦
809
1003
15,315.9
24,849.0
27,861.6
753
821
2130
7,687.0
8,215.8
36,327.5
41
42
723
598.1
201.4
2,937.8
329
332
209
887.3
1 ,068.2
888.8
57
45
123
676.4
482.3
1,019.7
5390
5045
6399
41,770.3
51 ,763.3
80,330.6
10,511
11,0'J6
13,849
98,361.9
118,371.9
139,726.7
51.3
45.8
46.2
42.5
43.7
57.5
3579
3311
2334
17,282.0
17,428.9
12,314.9
1441
3071
3133
23,002.9
33,064.8
64,099.1
370
374
932
1 ,'485.4
1,259.6
3,826.6
-------
Recapitalization
Table 12 presents an effort to quantify and evaluate the dimensions
of annual recapitalization needs as they exist in mid-1969. The
constant dollar replacement value of all public waste transmission
and treatment facilities is calculated to be about billion.
In the real world, recapitalization needs tend to occur in staggered
fashion, so that investments for any particular system (except, perhaps,
for a few of the very largest) are characterized by a considerable
lumpiness. For the aqgreate system of the nation, however, it is
reasonable to assume that recapitalization needs will reflect in
fairly precise measure normal design standards. The analysis, then,
has assigned a replacement factor of four nercent for treatment plants
and two percent for ancillary works, adopting as points of departure
the twenty-five year and fifty year design lives that civil engineers
ascribe to such facilities. Hasic physical capital, then, is depreciating
at a combined rate of about a year. In 19F9, the. calculated
recapitalization need created amounted to about
-------
Last
Revision
Si nee
No. of
Plants
Identified
TABLE 15
Frequency of Major Treatment Plant Revisions
Plant Duilt
1528 or
1964-68 1959-63 1954-58 1S49-53 1944-48 1939-43 1934-38 1929-33 before
1963
775
78
153
118
67
21
119
103
54
62
1958
453
30
51
42
15
84
85
56
90
1953
133
9
11
4
32
27
23
26
1948
36
2
8
8
7
11
1943
3
1
2
1938
4
4
1933
2
1
1
TOTALS
1406
78
183
178
120
42
244
225
141
194
-------
It may be expected to moderate in the future. This paper, however,
relates only to needs to be anticipated over the next five to ten
years; and within that time frame, there is no reason to expect a de-
cline in the rate of qrowth. If anything, the trend toward broader
industrial connections may effectuate an interim increase in the
growth of demand.
With respect to growth, it is important to note the mechanisms by
which the increase in demand is expressed. There are three processes
of accommodatinn qrowth. f!ewly sewered communities or subdivisions—
wholl.y new sewer systems—are the least significant source of demand,
though they are also the easiest to quantify. On average, about 280
new sewer systems come into being in the United States every year. The
second, and more significant, growth orocess involves an expanded
demand on an existing system. In this case, newly sewered residential
areas or newly connected factories add their demands to those of a
system already in place. They can be accommodated in either of two
ways, either through the construction of new facilities or by taking
up previously unused canacity provided to accommodate just such growth.
In either of these last two conditions, growth will ultimately require
construction. Indeed, the first case, where additional caDacity must
be installed, is simply an extension in time of the second. Growth
can be accommodated in an existing plant to the point that all capacity
is token up; at that point, an investment need is created.
Because it is customary to design plants to provide for the
growth of service anticipated within the life of the pi ant—normally a
period of twenty-five years—most of the $300 million a year need for
expansion is currently being met out of existing capacity. Since the
age composition of the nation's stock of treatment Dlants is con-
ditioned by high investment in the last decade, the nation has been
able to continue to extend its total level of waste control over the
last few years. It should be noted, however, that not all of the
capacity now available for growth will be usable within the normal
life of the present stock of plants. Almost all waste treatment plants
are built to accommodate enlarged demands, but not all communities
grow. The naive oro.iection techniques employed by consulting engineers
have tended to create a pool of excess canacity that will never be used
in small, static communities. Conversely, treatment plants built to
conventional sizing standards in other places have proved entirely
inadequate to meet the demands of recent industrial connections. The
aggregate supply of treatment services Drobably exceeds the aggregate
demand for such services. Unfortunately, the supply is not entirely
located at the same places as is the demand; and with time, the dis-
location will become more significant. That fact is one of the
pressing reasons for increasing the level of investment in public waste
handling facilities at the earliest possible date.
36
-------
Prices
One of the central economic perceptions of the last five years
has been growing discomfort caused by orice increases. While more
critical problems have been stilled (or at least muffled), prices have
been rising at accelerating rates.
For municipalities, with their ultimate responsibility for instal-
ling and operating waste handling systems, increased Drices have en-
tailed a more direct constraint on pollution abatement activities than
have more substantive national economic Droblens. Business cycle
fluctuations, structural unemployment, and accommodation of a growing
labor force have imninged on the operations and finances of local
government, but only indirectly. Tut the resumption of the rate of
price increases experienced in the nineteen-fifties has had an enormous
impact on local government funding capacities. Even during the rela-
tive respite from inflationary pressures experienced from I960 through
1954, county and municipal governments were unable to meet out of rela-
tively inflexible tax bases increasing pressures of real demand for
social and environmental services. In that context of inadequacy, .
rising prices have had a serious effect. Throughout the economy,
the only sector that has suffered more from price increases than local
governments is probably the very poor; and even their difficulties
stem in part from State and local governments' losing struggle
to maintain their share of welfare services.
It is customary to consider the problem of rising prices rather
offhandedly as "inflation". Cut for local waste handling needs, the
problem has three aspects; and of these, inflation has probably not
been as serious in itself as though its effects on the cost and
availability of money. While the prices of labor and materials consumed
in constructing and ooerating a waste handling system have advanced
quite steeply, the advance in the cost of monies has had an even more
pronounced effect on expenditures, and the scarcity of funds-
even at advanced prices-^-has constrained capital outlays for treatment
and collection systems even where willingness to construct was strong.
Hot inflation so much as the money rationing procedures of financial
markets have reduced local government's ability to come speedily
to grips with its waste handling problems.
It is difficult to document the observation except by example,
since there is no register of bond issue cancellations or deferrals.
Examples are plentiful, however. At the close of its 1969 fiscal year,
the State of California reoorted deferral of a billion dollars of
voter-approved bond issues--8C% of them for financing of water resource
projects. Federal Water Pollution Control Administration regional
offices have reported a number of instances of postponement of munic-
ipal financing of treatment works in cases in which a Federal grant
has been solicited. The June 8, 1°69 issue of The flew York Times (1:2)
mentioned in a feature article on the effect of interest rates no less
than fifteen cases of municipal projects cancelled or delayed by
37
-------
financial constraints—and these apparently represented not an attempt
at comprehensive reporting, but simply random examples, probably chosen
for their dramatic nature. In many cases, the absolute shortage of
funds is reinforced in its impact on local financing by statutory
interest rate ceilings or limitations on indebtedness.
While reduction of the relative supply of funds may be the most
serious source of inflationary constraints on pollution abatement,
direct effects are not to be slighted. Over the last twenty years,
the cost of constructing a waste treatment plant--as measured by factor
costs—has almost doubled. Opportunity costs, as measured by interest
rates, have nearly quadrupled—which, working on the inflated construc-
tion cost base, has increased the cost of financing a plant more than
six-fold. In combination, these factors have caused it to cost three
times as much to finance and build a waste treatment plant today as the
same plant would have cost in 1950; and half of that increase in cost
has taken place in the last five years, (cf. Table .15),
TABLE 16
Escalation of the Cost of A $1,000,000
Waste Treatment Plant, 1950-1969
Year
Interest
Pate*
Const. Cost
Index**
Cost Rise over Previous Period
Interest Construction
Total Cost
(25 yrs.)
1950
1955
1960
1965
1967
196P
1969
1.56
2.IP-
3.26
3.16
3.74
4.28
5.91
69
P>9
105
113
120
124
132
148,350
276,050
23,400
165,650
149,550
418,000
$260,^oq
260,000
120,000
loo,noo
60,000
110,000
$1 ,195,000
1,603,350
2,139,400
2,237,800
2,553,450
2,753,000
3,321,000
Cumulative Cost Increases $1,216,000
$910,000
$2,126,000
* Moody's State and Local Aaa, June 30.
** Sewage Treatment Plant Cost Index, FWPCA
Those increases can be quantified and projected for our evaluation
model. The $3.2 billion evaluation of current year investment require-
ments amounts to $4.4 billion when base year costs are escalated to
September, 1969 price levels, and it is only reasonable to assume
further increases in nric°s. Over the last five years the annual in-
crease in factor costs has amounted to 3.2" to 3.7'>: and this paper
will proiect future costs to include a 3.5C/. annual cost increase co-
efficient.
Changes in The Pules of the Par»e
The area of evaluation that presents the greatest difficulty is
38
-------
the problem of definition. The evaluation model, and the proposed
investment schedule developed at a later point in this paper, rest
upon a given set of conditions, thr> rules of the name as it is general-
ly played today. But there is nothing sacred about those rules —today's
are very different than those of five years ano, for example—and any
basic change must have a fundamental effect on investment conditions.
Seme possible changes are almost predictable. There is, for
example, a very pronounced tendency to require treatment of sewage for
removal of phosphate. Mo price tag has been attached to that type of
treatment in this oaoer for two reasons: at this time, nhosnhate
removal is a specialized and localized kind of requirement; and there is
no preferred — or even accepted—technique of accomplishing it. The most
likely treatment methods appear to involve very slight incremental
investments, but extremely large increases in operating costs for pur-
chase of chemical additives. Should a capital-intensive method of treat-
ment become available, should phosphate removal become a universal
requirement, investment requirements might be expected to shift power-
fully upward. Conversely, if scan producers were to find an acceptable
alternative for phosphorus-based deterqents (and 'there is increasing-
pressure in western Europe to require such a course), then this partic-
ular influence on costs might disappear entirely.
An example of the way in which a shift in the rules of the game
has already influenced costs may be adduced by reference to Table 14.
Between 1C57 and 1062, the total number of needs associated with public
sewerage systems declined, in spite of an increase in the number of
systems. Between 1P62 and 1%C, however, needs increased sharoly,
even though investments were much greater between those years than in
the preceding period. Interposition of water quality standards and
application of the secondary waste treatment requirement, a major
change in the rules, created an entirely new definition of v/hat might
constitute a need, forcing required investment levels sharply upward.
Nor are changes always determined administratively, or applied
across the board. The internal pressures of engineering practice
condition the rules of cost; and local preference may dictate specialized
sets of rules.
Engineering practice has certainly been changing as money has be-
come increasingly available for water pollution control investments.
There has been a growing tendency to use the more expensive of the
secondary waste treatment processes, to construct plants of larger
size relative to current loading demand, and to utilize additional
mechanical operating components. Treatment plants that are being
built today are quite different from those of a decade acio in a number
of ways. The underlying technology is the same, including a mixture
of physical and biochemical reactions that take place in a series of
tanks connected by pining and Dumping; but there has been a strong
effort to improve the engineering of those reactions, to build into
39
-------
facilities greater reliability and longer life. More stages are auto-
mated. Monitoring has become more sophisticated, fore durable mater-
ials are being employed, f'uch more attention is beinq oaid to sludge
handling—incineration, the ultimate in sludqe handling methods with
today's techroloq.v, is beinq emoloyed in a growinci number of instances
As a result, the cost of treatment systems has been noinq uo, quite
apart from oric^ level increases. Indeed, the increase in real costs
has matched or exceeded the increase suffered as a result of inflation
over the last five or six years, judging from a statistical study of
comparative pricing patterns in lorl-f3 and in 1nF7-69. (R.L. Michels:
Construction Cos ts_" ojF Municipal '''astevater Treatment PI ants , 1PC7-^P.)
In terms of ccnstruction nut in nlaca between \°(2 and 1P6P, those in-
creases in real costs are estimated to have added about 5400 nil!ion
to the investment associated with waste treatment plant construction.
TABLE 17
Constant Dollar Investment Per Unit Capacity
Activated Sludge Plant, 1^61-63 and 1967-69
Capacity of Plant
(Pop. Fgvlts.)
i ,oon
10,000
100,000
Investment/P.E. Capacity ($1957-59)
1961-63 1Q67-69
66.00 87.50
29.50 13.00
13.00 21.50
The effects of local preference can result in substantial differ-
ences in waste treatment investment. The water quality standards adopt-
ed by the State of Indiana call for the construction of 45 advanced
waste treatment pi ants--renresent.inn the majority of the standards-
required advanced waste treatment needs for the entire United States.
In the western States, waste stabilization nonds are the most prevalent
treatment measure: and the low cost installations serve to reduce
unit costs to a fraction of the amount required bv mechanical treatment
slants. In the Uortheast, however, such facilities are almost unknown.
In the Southwest, the treatment of industrial wastes in municipal
facilities is a rarity: in the Pacific northwest, ard increasingly
in New Enoland, it is becoming standard practice, few York and New
Jersey, in connection with their extremely vigorous pollution control
programs, seem to be enaaned in maior rehabilitation of sewerage
systems already in olace, scheduline very larne sums for replacement
and integration of existino facilities. Mithout. casting ."judgements
on the relative effectiveness of these or other expressions of differinq
local interpretations of the rules of the game, one can conclude
that they have an oncrtvcus nnwor to influence investment totals.
40
-------
Locational Influences or, Plant Cost
Reported investment data, when related to municipal waste treat-
ment inventories, indicate that there are enormous discrepancies be-
tween regions of the United States in the efficiency of public
waste-hand!i ng.
Between !?S? and 1968, local governmental units invested, on
average, about SI20 for each person reported to be added to a public
sewer system. About Sle7 more was invested in waste treatment and
transmission for each additional population equivalent of biochemical
oxygen demand from domestic sources that was reduced in waste handling
systems. (The figures are not adjusted for additions or subtractions
from excess capacity. They were derived by dividing total investments
made in the oeriod !?£? to !%7 by the incremental waste collection
and reduction calculated to be achieved during the same period. To the
extent that total caoacity was increased beyond the level of actively
utilized capacity and to "the extent that wastes from industrial sources
were added to the system, unit investments are overstated. They do,
however, provide an adequate measure for comparison of regional expend-
itures, since they weigh on a consistent basis the investment assoc-
iated with an homoaeneous incremental product.) Application of the
technique to investments made by blocks of States thought to be
economically, politically, and geographically similar produced results
that point to wide regional variations in waste handling costs. At the
extremes, it cost "2.75 in the highest cost area to buy the incremental
waste handling effectiveness purchased for a dollar in the lowest.
The numerical results of the analysis are not reproduced here for
several reasons. It is recoqnized that the basic data are not in all
respects compatible or reliable. The analysis concerns itself with
total costs but incremental efficiencies in a situation where much
of the investment that was made is recognized to have been for purposes
of replacement rather than for new or upgraded facilities. Differing
regional propensities to treat industrial wastes have a distorting
effect on results. And by the very nature of the analysis, regions
with high rates of population growth tend to appear distinctly more
efficient, in that their more rapid uptake of excess capacity has the
effect of applying a lower apparent rate of discount. To describe
unit cost differences under these conditions might be thought to stig-
matize unfairly the regulatory or construction competencies of the
higher cost areas; and the results of the analyses are felt to be too
hazy in detail to be presented in quantitative forms. However, the
conclusion that unit costs vary substantially with location is too
firmly founded to be doubted, reaardless of definition difficulties.
Moreover, the pattern of difference is quite clear. Cost rises as one
moves eastward and northward: they tend to be highest in flew England
and States bordering the Great Lakes, lowest in the southwestern and
Gulf Coast States. (Crouns of States are ranked according to relative
costs at several points in the discussion that follows, and the com-
position of the various groupings is defined in Figure 2.)
41
-------
Fr^rrre 2
Regional Definitions for Analysis of
Comparative Unit Investment for Incremental
Waste-Handling Capabilities, 1962-1968
fSJ
*»oaT
PLAINS
"« i,
()ASl
WYO
COLO
SOUTHWEST
ArtlZ
1 hex
I S DAK
MINN
KAfS.
TEX
OKLA
WIS
fJi f*c*
great lakes
mo
NEW ENGLAND
yK
OHIO
GULF
A.RK
LA
K*
rTt**
NORTH ATLANTIC
\\)^
Q
MIDDLE ATLANTIC
s. C
MISS
M-V
GV
SOUTHEAST ^
-------
Examination of investment programs on an aggregate basis has
failed to produce satisfactory explanations of cost differentials of
the magnitude indicated. A number of possible explanations have been
adduced by the analytical staff and by observers in Federal Hater
Pollution Control Administration regional offices, State g.overnmcnt,
and the consulting engineering industry. In some cases, information
was available to allov: a proposed explanation to be tested in broad
fashion. In some cases, the reason proposed for cost differences v/as
so intanqible or so illogical (e.g., criminal domination of construc-
tion activities) as to allow it to be discarded, even when investi-
gation coulc! not be attempted. A number of very reasonable propositions
remained after preliminary consideration eliminated the obviously mis-
directed and the intangible; but whether any of these, or any combin-
ation of them, accounts fully for the spread in observable returns on
investment remained a problem. The array of proposed explanations of
unit investment differences oresented from various sources included
all of the following:
(1) Data deficiencies. Information on the prevalence and methods
of waste treatment and on population connected to public sewers is re-
ported individually by the States. Although a common format is utilized,
there is great variation in estimating techniques employed and in the
completeness of reports. Similarly, investment data is gathere-u direct-
ly from State agencies, as well as from various economic reporting
services, so variation in reporting practices may influence results. It
should be noted, however, that unit cost variation within any of the
groups of States considered was consistently found to be less than
between the various qrouns, so that anomalies attributable to data
variability must be presumed to include regionally consistent reporting
deviations.
There is, in addition, independent analytical work that suggests
that regional cost differences are a very real phenomenon, and not the
result of reporting freaks. The State of New York, through the operations
of its grant programs, has compiled a great deal of information on the
capital cost of waste treatment facilities. The State's analysis of that
information indicates that construction costs in !!ew York State are con-
sistently above national costs--and in the same general magnitude indic-
ated by FWPCA's investigation of regional cost variation.
(2) Institutional constraints. It has been suggested that design
practices that result either from administrative requirements or local
habit strongly influence the relative cost of facilities in some loca-
tions. The concept must certainly receive some credence. Those States
adhering to the "Ten State Stand?rds"--i.e., States bordering the Great
Lakes, Iowa, and the New England States--do include the groups that
account for high unit investment requirements.
Unfortunately, it is not possible to come to any meaningful judge-
ment as to the ultimate affect of such procedures on cost. V/hile those
43
-------
responsible for their development will defend the long term economy of
"high standards", the economist will generally deplore rigid standards
in any field as being conducive to formalism and a barrier to innovation
or improvement.
If one can conclude that institutional constraints do in fact add
to costs in States of the Northeast, it is nonetheless impossible to
assign more than a contributory effect to them. The effective range of*
technical alternatives is simply not so great as to account for the
gross disparity found in regional unit costs.
(3) Industrial Loadings. Authorities in'New England have suggested
that one of the principal factors influencing per-capita construction
costs in their region is the high incidence of public agency responsi-
bility for treating wastes of industrial origin.
There is certainly a rough logic to the explanation, and the figures
tend to bear out the assertion that industrial requirements tend to in-
flate per-capita costs in some areas more than in others. Hecause the
capital requirement associated with industrial wastes is influenced £y
the quantity of wastewater involved more than by qualitative differences
in treatment procedures, the major impact of addition of manufacturing
wastes to the system can be measured through its impact on pi an v. size.
Table in bears out the fact that treatment plants tend to bo larger
with respect to nooulation serve*"' in New England than in other areas,
and to be smaller in the Gulf anc! Southwest areas, where unit investments
have been lowest. However, the tabic also indicates that greater cap-
acity per unit of ocpulnticn served can by no merns be considered the
only--or even a princinal — scurce of higher costs. While the smallest
capacity to population served ratios occur in the areas of lowest
per-capita costs, the Pacific Coast and Southeastern States combine lew
unit costs with a large median capacity; moreover, these States have
a very significant component of plants in the largest size to pooulatien
served categories. In fact, half of the regional groupings (Pacific
Coast, Southeast, Middle Atlantic, north Atlantic and Ohio-Tennessee)
demonstrate a precisely inverse correlation in a plotting of unit
capacity ranking vs. unit cost ranking. It is clear, then, that larger
construction costs per person can be only partially explained on the
basis of construction of greater caoacit.y per nerson.
(4) Wage Rates. It has also been suggested that regional labor
cost differentials have a strona impact on unit costs. The proposal
has a certain attraction that is dispelled pretty thoroughly
by a review of relative costs and of wage rate differentials. About
18% of the cost of the average sewer project is attributable to direct
labor (Sewer and Sewanc Treatment Plant Construction Cost Index,
Table VI, p. and for the hypothetical waste treatment Dlant, the
labor cost component amounts to about 25.3% (p. 12). From the region
of highest labor wage rate to that of lowest wage rate, there is
44
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TADLE 18
Normal Plant Size Related to
Regional Unit Costs
Relative
Regions, Ranked in
Median Design Size
Percent
of Plants
Order of Ascending
Unit Cost
to Population Served
Multiple
2.5 X Pop.
Requirement
4 X Pop.
Reouirement
1 Southwest
1.0 - 1.2
14.3
6.8
2 Gulf
1.0-1.2
6.2
3.2
3 Pacific Coast
1.8 - 2.0
38.5
13.4
4 Southeast
1.8 - 2.0
36.3
14.1
5 Middle Atlantic
1.6 - 1.8
31.9
9.5
6 Plains
1.4 - 1.6
15.2
4.5
7 North Atlantic
1.4 - 1.6
26.5
7.3
8 Ohio-Tennessee
1.4 - 1.6
22.0
4.6
9 Great Lakes
1.6 - 1.8
24.3
4.9
10 New England
2.0 - 2.5
41.3
8.5
-------
a variation of some 50% in unit charges, or enough to explain about
a nine to twelve percent variation in final costs, assuming equal
productivity in all parts of the nation. Not. only is the variation
in labor compensation rates of several orders of magnitude less than
the variation in unit costs, the relative ranking of high wage and
low wage regions has only a slight correlation with high and low
unit investment rankings, (cf. Table 19). At any rate, it is impossible
to ascribe to wage scale differentials the kinds of cost variation
that exist among the various parts of the nation unless there are
also differences in labor productivity and labor application rates
far more profound than has been imagined.
(5) Climate and neology. One of the more likely explanations of a
part of the cost differences centers uoon the basic physical conditions
found in the several regions of the nation. High unit costs cluster in
areas where severe winters reduce the effective period of construction.
Furthermore, grade and soil tyne may be expected to exert a heavy impact
on ultimate costs--certainly there can be no rarity between excavation
requirements in the flat, sandy soils of the Southwest and in the granite
hills of Nov/ England.
(G) Industry Diseconomies. It is, perhaps, not surnrisinJ5 but
explanations for unfavorable relative cost position advanced from the
northeastern cluster of States have in no case included engineering
or contractor deficiences. Rigid administration, political corruption,
and union wane scales have all been indicated by engineers; but no one
has seen fit tc supoose that unfavorable cost ccmoarisons may trace to
the groups ultimately responsible for system design and construction.
Yet design and overhead charoes make uo a significant portion of the
total cost of any project (cf. Table 20). Moreover, sharp increases
in national allocation of resources to waste handling — in 1957, in
1961, in 1963, in 1967—havc in every case resulted in a marked inflation
of project costs that most authorities agree to be traceable to con-
straints on the supply of engineering and construction services. Profes-
sional qualification standards, trade groups, and other mechanisms in-
tended to restrain supply—either for the purpose of controlling the
quality of services or with the deliberate (if unstated) intent to re-
duce competitive market operations—may conceivably be regionalized to
a degree that costs are affected.
46
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TABLE 19
Wage Rates Related to Comparative Unit Costs
Reqlon
Index, Total 1/
Cost Per
Unit Reduction
City Measured
Bldg.
Labor
City Rate/20 Cltv Averace Rate
Cstcn. Strctl. Elec-
Labor Iron trical
V.'orkers Workers
y
Steam-
Fitters
Power
Shovel
Mean Wage ^
Cost Index
(Rank)
Southwest
43.1
Denver
.881
.868
.837
.879
.509
.767
.865 (3)
Gulf
58.1
Dallas
.674
.684
.807
.696
.828
.750
.784 (1)
New Orleans
.811
.718
.878
.830
.865
.864
Pacific Coast
68.8
Los Angeles
1.176
1.195
1.172
1.067
1.209
1.139
1.183 (10)
San Francisco
1.316
1.336
1.176
1.228
1.453
1.220
Seattle
1.236
1.255
1.010
.987
1.026
1.093
Southeast
72.2
Atlanta
.751
.763
.885
.906
.883
.855
.825 (2)
Birmingham
.764
.776
.854
.831
.878
.758
Middle Atlantic
81.9
Baltimore
.868
.805
1.003
.889
.869
.965
.899 (4)
Plains
102.6
Kansas City
.951
.968
.857
.968
.919
.838
1.018 (5)
St. Louis
1.231
1.250
1.000
1.094
1.138
1.005
North Atlantic
132.9
New York
1.503
1.526
1.362
1.221
1.170
1.362
1.137 (9)
Pi ttsburgh
1.070
1.055
1.016
1.039
.920
1.035
Philadelphia
.997
1.000
1.087
1.008
.994
1.109
Ohio-Tennessee
141.1
Cincinnati
1.101
1.087
1.031
.943
.899
.944
1.073 (7)
Cleveland
1.321
1.303
1.123 •
1.050
1.016
1.060
Great Lakes
159.3
Chicago
1.166
1.184
1.122
1.034
.981
1.102
1.078 (8)
Detroit
1.238
1.258
1.157
1.077
1.081
1.090
Minneapolis
1.075
1.105
.913
.955
.903
.963
New England
455.2
Boston
1.075
1.013
1.043
1.092
1.057
1.055
1.056 (6)
2/ Base Hourly Rate and Fringe Benefits for Indicated Classification as Reported In Enq1neer1nq News Record, 2-29-68:
$3.86 $3.80 $l.7T 55756 $6.16 $5.67
1/ U.S. - 100
?/ Subsidiary Indices/No. values Included
-------
TABLE ?0
Major Components of Construction Cost
PERCENT OF TOTAL COST
Contractors
Material Labor Plant
Overhead
and Profit
Sewane Treatment Plants
Sowers
54.5
35.5
25.3
IP,.5
6.5
31.3
13.7
14.7
(Source: Sewer and Spy.'ane Treatment ?lant Construction Cost Index p. 32)
(7) Urban Crrol"xity. Urbanisation and cons^nuent concentration
of nooulation have been proposed as explanations of both hiqh relative
reqional costs and low unit costs. On the one hand, population concen-
tration is presumed to Provide economies of scale that diminish unit
investment ne^ds. On the other, it has been asserted that urbanization's
effect--in creating transmission difficulties and reouirinq higher
denrees of treatment—is to push unit costs upward.
There is qeod Ionic on either side of the argument; but r^nkir.o rela-
tive costs against relative urbanization suqnests that the actual
effect is neutral--see Table 21. One night conjecture that the arqu-
ments for the effect of urbanization rest in laroe measure cn mis-
apprehension. The simplistic contrast of vast western areas of small
population with the mass of persons concentrated alonn the Atlantic
Coast and Oreat Lakes Hives a distorted viev; of the nature of population
concentrations. Constraints on development imposed by land forms and
water availability reduce western utilization of land for urban purposes
and make the effective rate of copulation concentration in the
western United States much like that of the northeast and srmev/hat
more pronounced than that of the South and the plains; so that the
actual effects of urbanization on waste handling costs are probably
quite similar through the Nation.
Enqineerinn studies confirm without explairinn the hiqher rela-
tive cost of Northeastern sev/aqe treatment plant construction. Examination
of specifications forwarded in connection with applications for Federal
grants produces—almost invariabl.y--an unfavorable comparison of
estimated nlant costs in New Enoland, New York, and Pennsylvania with
similar facilities in other parts of the Nation. Sufficient samples
v/ere not available over the last three years to provide statistically
valid cost correlations for all waste treatment processes on a reqional
basis, but enouqh examples of the most common waste treatment method
in the Forthoast--that is, the activated sludqe nrocess--occur to provide
comparative construction cost tn size statistics. The analysis (cf.
Table 22) revealed a sharply adverse cost situation in the area through
the range of sizes, with costs becominq progressively less representative
as size of plant increased.
48
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TABLE 21
Relative Urbanization Related to
Unit Waste-Handling Investments
4k
vo
Regions, Ranked in
Order of Ascending
Urban Population
Rank, Degree
Rural Population
Unit Cost
Number
Percent
of Urbanization
Number
Percent
1
Southwest
3,757,000
72.5
4
1,426,000
27.5
2
Gulf
11,479,000
67.7
6
5,474,000
32.3
3
Pacific Coast
16,937,000
80.6
2
4,072,000
19.4
4
Southeast
9,440,000
56.4
10
7,284,000
43.6
5
Middle Atlantic
7,318,000
57.1
9
5,504,000
42.9
6
Plains
7,452,000
57.4
8
5,534,000
42.6
7
North Atlantic
27,810,000
81.4
1
6,361,000
18.6
8
Ohio-Tennessee
11,053,000
60.8
7
7,121,000
39.2
9
Great Lakes
21 ,436,000
71.6
5
8,501,000
28.4
10
New. England
8,033,000
76.4
3
2,478,000
23.6
-------
TABLE 22
Relative Construction Costs of
an Activated Sludge Plant
northeast
Million
$1957-5? Investment Per Million Gals/Day
as a
Gals/Pay
Capacity
Percent of
Capacity
Northeast* U. S. (Including Northeast) U. S.
0.5
$393,000 $515,000
173
1.0
75H.000 404,000
182
2.5
611,000 205,000
2K
5.0
519,000 229,000
227
10.0
441,000 179,000
245
* Six New England States, Pennsylvania, [lev.' York.
Whatever the reasons, the high capital cost of waste handling in
the northeast would sccm to be documented adequately enough to be
accepted as a fact. And the fact that real costs arc significantly
higher in the Northeast has serious implications for Federal policy.'
Quite apart fro" the obvious questions of equity and efficiency, mo.jcr
allocational problems are inherent in the particular composition
of regional cost differences that exist in the nation.
The
(1) Investment needs are strongly concentrated in the Northeast,
six New England States, 'lew York and Pennsylvania contain just over
201 of the Nation's population but S?% of the sewered Dooulation that is
not provided with waste treatment services. Moreover, the
region s
per-capita investment in waste handling facilities has—at least in
recent years—been well below that of the rest of the nation. As a
result, the estimates of investment need presented earlier in this re-
port are not weighted to reflect the concentration of actual needs that
is found in the eight State area.
(2) Although the normalized rate of annual depreciation accruals
is lower on a per-capita basis than in other parts of the nation, as a
result of the region's deficient capital base, many of the physical
facilities found'in the northeast are quite old and command a high
effective rate of recapitalization. This, together with a relatively
low rate of capital formation in the area, indicates that the Northeast
has been borrowing against its real replacement and growth requirements
in recent years.
(3) The rate of local investment in waste handling facilities is
strongly conditioned by the level of Federal assistance. The allocation
formula that has been used has not reflected the particular difficulties
of the Northeastern situation: and the failure of appropriated Federal
funds to meet promised authorizations has effected a mechanism that has,
50
-------
perhaps, made matters worse. In Northeastern States, pollution abate-
ment programs have been conducted in keepinq with a logic that would
have the community needing a work proceed to finance that facility and
to construct it in anticioation of future Federal (and sometimes State)
assistance payments. The process might have been successful had all
other things been equal; but there is a vast differences between the
ability of communities and of the nation to command funds in financial
markets. As money has become progressively tighter over the past five
years, the ability of local government to finance needed projects has
become weaker, so that the pace of construction has not kept up with
growth of demand. As a result, the Northeast—in spite of a declining
share of total population—has sustained a constant share of the national
need for waste handling facilities, even without adjustment for the high
prices that prevail in the area.
TABLE 23
Investment and Demand, Northeastern States
(Pillions of Dollars)
State
"Needs"
Investment
"Needs"
"Needs" Developed
1962*
1962-67
I960*
1962-67
Connecti cut
29.9
52.6
53.2
75.9
Maine
77.3
16.2
66.5
5.4
Massachusetts
145.4
61.3
151.6
67.5
New Hampshire
49.1
15.6
44.6
11.1
New York
215.1
211.2
200.0
196.1
Pennsylvania
239.5
144.6
262.5
167.6
Rhode Island
6.0
13.1
16.6
23.7
Vermont
28.9
16.9
29. C
17.6
Northeast Total
791.2
515.9
824.6
549.3
(Percent of National
Total)
(26)
(is)
(26)
(19)
*Based on national average unit costs
Although the use of average costs in modelling investment require-
ments may be an acceptable technique for evaluating most of the nation,
dimensions of the Northeastern States' deviation from the mean in the
past suqqest the need for adjustment. The range of variation elsewhere
is relatively slight, and the samole structure on which costs were
determined is well distributed. It is entirely conceivable, for example,
that use of mean costs overstates South Dakota's or Mississippi's
needs, in effect shifting the accounting of investments that take place
in Michigan or Tennessee. Hut the shift involved is not believed to
be highly significant and—more important—to be such that offsetting
effects produce a reliable national total..
51
-------
The situation is otherwise for the highest cost States. Not only
is the difference in investment that may be involved cf potentially
radical significance, but the inadequate sample of Northeastern plants
going into the calculation cf mean costs suggests that total costs may
be understated.
Though an entirely reliable set of calculations is not attainable
until a complete set of regional cost coefficients is derived, a partial
adjustment to reflect the added burden of the northeastern States is
possible. The adjustment presented in Table 24 utilizes the relation-
ship between costs of an activated sludge plant in the Northeastern
States and in the United States as its base. Sewered populations of
the eight Northeastern States, distributed by community size, were
divided by total sewered population to obtain the segment affected by
a particular cost relationship. The decimal values obtained were
weighted by the indicated cost relationship for the particular size of
community, and the product applied to the value of the State's need,
as that value had been determined by the evaluation model.
TAELE 24
Adjusted Investment Needs
Eight Northeastern States
Mi 11iens of 1957-59 Pol 1ars
State
Unadjusted
Adjusted
Increase
Connecti cut
53.2
97.6
44.4
Maine
66.5
97.1
30.6
Massachusetts
151.6
254.9
103.3
New Hampshire
44.6
68.8
24.2
Hew York
200.0
374.4
174.4
Pennsylvania
262.5
457.9
195.4
Rhode Island
16.6
31.2
14.6
Vermont
29.6
41.8
12.2
Total
824.6
1423.7
599.1
The effect of the adjustment is to increase the scale of indicated
national needs by 599 million base year dollars, or 327 million current
dollars--tv:enty-six percent. For the eight State region concerned,
it amounts to a 73T* escalation of costs. Even that amount falls well
short of the dimensions of the cost increase that might be anticipated
on the basis of unit investment differences encountered during the
1962-57 period. The adjustment method is consistent with the modelling
process, however: so the technique may be considered valid. Uhile a
larger incremental investment may actually be necessary in the North-
east, it is possible that the uncalculated amount may be accounted for
by the inter-regional displacements known to occur as a consequence
52
-------
of avorage cost modelling. In any event, no bettor procedure of adjust-
ment has been suggested. In consequence, the regional investment incre-
ment presented here has been used in scheduling analyses that follow.
An Optimum Investment Schedule
For the period ir;mediately ahead it is possible to determine with
some precision, by application of the evaluation models, the investment
that will be required on a national scale to obtain the level of treat-
ment of public wastes that lias been determined to match in a general
fashion the requirements initially associated with water quality stand-
ards. lie know the 'approximate rate at which investment requirements are
accumulating, and we know the amount of the current accumulation of
needs. The matter, then, resolves to a simple scheduling problem: to
find the annual rate of investment that will sustain existing physical
capital, meet expansion requirements, offset inflation, and eliminate
the accumulation of investment requirements that currently exists.
To simply project past rates of need accumulation would be the
simplest method of determining an acceptable rate of investment. It
is unlikely, however, that the bulge in rate of development of needs
caused by imposition of the secondary waste treatment standard will be
repeated. For that reason, the projection process might be expected
to overstate the rate of development of investment needs to be antic-
ipated during the early 1970's. *
A more reasonable projection procedure is thought to be one which
takes into account both the existing capital base and prevailing rates
of demand formation for constituent elements of the investment complex--
i.e. growth, r,.capitalization, and the backlog of accumulated demands—
under a series of capital suoply assumptions.
* ¦ For those who wish to review the general dimensions of requirements
under such a procedure, the elements are:
1) base current needs, in millions of 19*57-59 dollars = 3201.1
2) incremental needs associated with higher costs in Northeastern
States = 599.1
3) Rate of development of needs, 1962-68 =
(X + I) - Y
Y = R = 12.1% per year
T
4) projected rate of inflation = 3.5" per year
5) current construction cost index = 133% of 1957-59 (Over a five
year period, needs would amount to $11,031.3 current dollars,
indicating an annual investment requirement of $2.2 billion.)
53
-------
To effectuate the procedure, a computer program was developed to
apply varying amount of capital against combinations of demand constit-
uents. The program assumed a constant 3.5% rate of inflation, and a
constant 3.35- rate of growth. Recapitalization, capital in pi ace,and
backlog were derivatives of investment. The program dealt with recap-
italization as a crime element that had no effect on other elements of
the model. (The condition in which total outlays failed to match
recapitalization requirements was not programmed.) Growth needs were
calculated to amount in any year to 3.3°' of capital in Dlace, and were
allotted the second segment of a postulated investment: to the extent
that the investment covered growth requirements, the value was trans-
ferred to capital in place to serve as an element to calculate the
following year's recapitalization requirement, and values exceeding
available investment were accumulated as additions to the backlog of
unmet needs. The backlog itself was reduced by any amount that avail-
able investment exceeded recapitalization and growth elements, or
increased as prior demands on a hypothesized investment exceeded the
amount of the investment.
Repetitions of the exercise, applying a schedule of investments
increasing in $ln9 million increments from SI billion to $2 billion a
year, indicated that a $2 billion annual outlay is required to reduce
accumulated needs within a five year period, (cf. Table 25A). cesser
outlays, of course, increase the time required to attain control con-
ditions that approximate current interpretations of water quality stand-
ards requirements. Investments of less than $1.5 billion a year not
only postpone attainment, they are insufficient to keep pace with the
requirements of recapitalization, growth* and inflation, so that, after
an interim period of reduction, the backlog increases rather than de-
clines. (cf. Tables 255 and 25C.
TABLE 25
A-Optimizing Schedule, Water Quality
Standards Related Public Investments
(Values in Millions of Current Dollars)
Year "Backlog" at
year end
" at Growth Recapitalization Investment
1°69 443S.4
1970 3*41.P
1971 24W.5
1972 15SA.5
1973 730.0
1974 0
437.2
^67.4
499.7
534.3
571.2
610.7
410.9
459.9
508.1
555.7
602.5
648.4
2000.0
2000.0
2000.0
2000.0
1923.3
1259.1
1975
Total Indicated Investment, 1970-1974:
"Backlog"
Growth
Recapitalizatien
~Includes an Inflation Component of: 928.8
oqoq r*
4882 .*3
2509.8
2537.1
54
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TABLE 25 Continued
*B-Stretchout Schedule, Water Quality
Standards Related Public Investments
(Values in Millions of Current Dollars)
Year
"Backlog" at
year end
Growth
Recapi tali zation
Investment
1969
4438.4
1970
3741.8
437.2
410.9
1700.0
1971
3091.0
467.4
450.8
1700.0
1972
2489.0
499.7
490.1
1700.0
1973
1939.0
534.3
528.6
1700.0
1974
1444.3
571.2
566.2
1700.0
1975
1008.5
610.7
602.9
1700.0
1976
635.3
653.0
638.6
1700.0
1977
328.9
698.1
673.2
1700.0
1978
93.4
746.4
706.6
1700.0
1979
0
798.0
738.8
1630.2
1980
0
853.2
769.5
1622./
*C-Deficiency Schedule, Water Quality
Standards Related Public Investments
(Values in Millions of Current Dollars)
Year
"Backlog" at
year end
Growth
Recapitalization
Investment
1969
4438.4
1970
4041.8
437.2
410.9
1400.0
1971
3692.5
467.4
441.8
1400.0
1972
3393.5
499.7
472.0
1400.0
1973
3148.0
534.3
501.4
1400.0
1974
2959.3
571.2
529.9
1400.0
1975
2831.0
610.7
557.4
1400.0
1976
2767.0
653.0
583.9
1400.0
1977
2847.9
698.1
609.2
1400.0
1978
2847.9
746.4
633.3
1400.0
*Not.e: Due to the inescapable pressures of growth and recapitaliza-
tion the investment results achieved with $2 billion a year in five
years can only be attained in ten years with a reduction in spending
to $1.7 billion a year and at that level no decrease in investment
pressure is experienced; indeed by 1981, demand again reaches the
$1.7 billion a year level and a backlog begins to accumulate by 1982.
At a level of $1.5 billion a year or less, the backlog, is never elim-
inated.
55
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Within the terms of the analysis—which approximates reality, in
that any failure to maintain physical capital or to meet new demand will
Inescapably add to the accumulation of unmet requirements—a critical
relationship may be found between the current level of investment, $500
to $900 million a year, and the rate of formation of requirements under
the pressures of growth and recapitalization.
We are already borrowing heavily against the future when we install
new plants today. The immediate effects of that borrowing are probably
not too serious, given the age composition of plants in place, most of
which were built fairly recently, (cf. Table 25, that lists by periods
the approximate date of most recent major improvement or of initial
operation of all known municipal waste treatment plants. Of these for
which information is available, over seventy-five percent were construct-
ed or reworked within the last ten years, more than eighty-eight percent
within the last fifteen years.) But with each passing year, the poten-
tial seriousness of the current undercapitalization..of oublic waste
handling becomes greater. Twenty percent of the sewered population
of the United States is now served by over-loaded plants, and another
twenty-six percent of the sewered population is 'served by plants that
need major upgrading.
A point must be made here. There is nothing precise about any of
the numbers relating to investment. They are presented to the nearest
hundred thousand dollars only to preserve mathematical integrity, not
because they are felt to quantify reality with the exactness that such
a level of detail might be thought to imply. The evaluations presented
in this tv.ngr are to be viewed on_lv; as_ order of mannituc'G extranolations
of existino conditions. In particular, it should be recognized that
there are ooocrtunities to reduce the weight of the burden by enlight-
ened planning and administrative policies. Though technological
innovations may be expected to have slight, if any, impact on costs
over so short a planning horizon as five years, the existing technology
does offer capital-saving expedients. If the design and construction
industry of the northeast could reduce its costs to national average
levels, well over half a billion dollars might be saved within the
projection period. If the rate of inflation could be rolled back to
that obtaining in the first half of the last decade, another three
quarters of a billion dollars might be saved within the period. Use of
more dependable sizing techniqu.es, optimal design engineering, and more
intensive application of regional concepts might all save hundreds of
millions of dollars. Conversely, if inflation accelerates, design
standards become more rigid, and local jealousies intensify, the nation
can expect an even larger bill to be delivered.
Comparison cf the investment schedules indicates the powerful
influence of time. :.'ot needs as such, but the rate at which needs
develop and are met becomes the prime question in evaluating national
progress in providing facilities to control water pollution. The
point is as true for each State as for the United States. To provide
56
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TABLE 26
1968 Municipal Waste Inventory
Sutrmary of Haste Treatment Facilities by Year Plant Underwent Major Revision (or Began)
Date
1900 and
1901-
1911-
1921-
1931 -
1941 -
1951-
1958-
1963-
State
Unknown
prior
1910
1920
1930
1940
1950
1957
1962
1968
Totals
Alabama
95
0
0
0 .
2
5
4
2
33
63
204
Alaska
7
0
0
0
0
0
0
¦ 0
0
0
7
Arizona
35
0
0
0
0
0
0
4
8
22
69
Arkansas
28
0
0
0
0
0
0
2
57
116
203
Cal1forni a
541
0
0
0
0
0
0
1
4
0
546
Colorado
30
0
0
1
0
5
5
25
48
90
204
Connecticut
17
0
1
1
3
13
9
10
14
15
83
Delaware
4
0
0
0
0
0
0
0
3
11
18
District of Columbia
0
0
0
0
0
0
0
0
0
1
1
Florida
420
0
0
0
0
1
1
1
31
55
509
Georgia
31
0
0
0
0
21
17
34
36
168
307
Hawai1
2
0
0
0
0
0
0
0
5
14
21
Idaho
25
0
0
0
0
2
1
12
22
31
93
Illinois
79
0
1
0
7
30
35
64
167
246
629
Indiana
75
0
0
1
2
7
10
47
66
94
302
Iowa
37
0
0
19
20
32
27
62
109
193
499
Kansas
23
0
0
1
6
25
38
107
116
119
435
Kentucky
56
0
0
0
1
4
5
21
34
118
239
Louisiana
85
0
0
0
1
0
0
3
35
49
173
Maine
8
0
0
0
0
1
0
1
6
17
33
Maryland
4
0
0
2
0
9
3
6
17
49
90
Massachusetts
68
0
0
0
0
0
1
1
9
15
94
Michigan
79
0
0
1
4
10
5
20
51
98
268
Minnesota
224
0
.0
0
0
0
0
0
55
132
411
Mississippi
40
0
0
0
0
0
2
13
61
99
215
Mi ssourl
289
0
0
0
0
1
0
9
96
95
490
Montana
6
0
0
3
1
2
8
25
45
35
125
Nebraska
15
0
0
0
6
26
20
44
93
180
384
Nevada
8
0
0
0
0
2
3
3
2
11
29
New Hampshire
10
0
0
0
0
0
0
0
7
10
27
New Jersey
184
1
0
1
12
5
3
14
24
74
318
New Mexico
27
0
0
0
0
0
0
4
16
33
80
New York
47
0
3
11
21
79
20
55
99
172
507
North Carolina
96
0
0
0
1
9
5
20
58
160
349
North Dakota
5
0
0
4
3
5
16
52
86
40
211
Ohio
92
0
0
1
3
26
13
99
134
169
537
Oklahoma
168
0
0
0
0
0
0
2
86
114
370
Oregon
3
0
0
2
2
5
11
31
47
66
167
Pennsylvania
480
0
0
0
0
0
0
0
1
6
487
Puerto Rico
74
0
r
0
0
0
0
0
6
11
91
Rhode Island
3
0
0
0
0
0
1
4
2
6
16
South Carolina
123
0
0
0
0
0
0
18
31
52
224
South Dakota
14
0
0
1
4
9
16
35
56
55
190
Tennessee
79
0
0
0
0
0
1
12
46
62
200
Texas
628
0
0
0
0
0
0
2
105
176
911
Utah
12
0
0
0
0
1
4
9
12
26
64
Vermont
4
0
0
0
0
0
0
1
12
21
38 '
Virginia
44
0
0
0
7
7
12
27
65
91
253
Virgin Islands
0
0
0
0
0
0
0
0
0
0
0
Washington
208
0
0
0
0
0
0
0
0
0
208
West Virginia
29
0
0
0
0
7
3
C
25
54
118
Wisconsin
26
0
0
0
0-
40
46
95
103
130
440
Wyoming
25
0
0
0
0
0
0
5
30
18
78
U.S. Totals
4,712
1
5
49
106
389
345
1,002
2,274
3.682
12,565
57
-------
a broad estimate of the magnitude of investment facing individual
States if indicator! treatment standards are to be mot, the scheduling
process has been applied. Recognizing that variations in design
practice, growth rates, and effective recapitalization rates may
be distorted by the application of nationally derived coefficients,
decision-makers at the State level may nevertheless find the values
useful in formulating financial plans in the field of water pollution
control.
Because the reliability of the assessment of investment
requirements declines with the size of the element evaluated (a single
atypical project will have a more pronounced effect on results for a
smaller than for a larger element), five year requirements for States
are presented in terms of a range—ere standard deviation about the
rcean—rather than an expected value. The principal variable affecting
the breadth of the ranne is riant size, so it would be unwise to infer
that a State's ultimate investment need will be to the low or high side
of the range on the basis of the generalized influence of location
on cost discussed earlier in this paper. Rather, five year investment
requirements would be expected to occuny a mid-noint in the range, .
deviating to one sice or the other according to the size of particular
projects that must be scheduled within the period.
A similar problem of disaggregation is responsible for use of
five year lump sums rather than annual schedules. Where the total
system of the nation might be expected to sustain a constant annual
rate of investment under any given level of funding, subsytems may
be expected to demonstrate a certain lumpiness in allocation, according
to scheduling of particular projects. (An exception to the rule might
be anticipated in trie case of the six to ten most populous States.)
The exigencies of scheduling will, of course, affect gross investment
over the period, due to the varying effects of inflation, replacement,
and growth factors under different sets of time conditions.
These projections of investment levels are considered to be
compatible with existing definitions of requirements, current unit
costs, a moderating inflationary influence, a five year time period,
and a situation in which financial or resource constraints permit
achievement. A number of other estimates for the individual States
exist, and these may be very different in their details than those
presented in this report.
Most of the States have compiled lists of needed works. In
particular, the Fl.'PCA requires that such a list be a part of the
description of the State program in submission of applications for
program grants. Independent estimates of needed or apt to be needed
works—some with, and some without a specific time horizon—are often
maintained for use in documenting applications for Federal Waste
Treatment Plant Construction Grants. F'.JPCA regional offices also
maintain estimates of existing and future requirements, again uncon-
ditioned by time. Such estimates differ from the values assessed here
58
-------
in that they are situation-dependent, time-independent, and are in many
cases frankly intended to be used to lobby for additional funds or
other program alterations, nevertheless, they have tremendous value and
pertinence, in that they are compiled by men on the scene and represent
the influence of both subjective and objective local factors.
Recognizing those values, one must nevertheless approach at least-
some such estimates with reservations. In some cases they must be
interpreted to be saying either 'this is what we should like to do in
the absence of any constraints,' or the direct ooposite -- 'this is all
we think we can do, given existing constraints.' In distinction, the
assessment provided in this report says substantially that 'if we are
to achieve presently defined national goals in a five year time span,
the conditions that exist today indicate that we must invest about
$2 billion a year.' Unlike the other evaluations, the one presented
here is stringently constrained by time and observed conditions.
Table 21 presents the range of required five year investments
computed for each State, and contrasts it with the various localized
estimates of needs. In comparing the values, the reader may obtain'
some grasp of the plasticity of the situation, the extraordinary variety
of conclusions that may be reached where the rules of the game .re
largely unsoecified.
The rules of the game, as it is ultimately to be clayed, are
all imnortant. There are sizeable dimensions of uncertainty relating
to plant scale, regional cost differences and timing of investment.
Actual treatment needs to meet water quality standards may vary markedly
in many situations from preliminary assumntions because of local con-
ditions. Changes in the rate of industrial connections to municipal
plants, improvements in technology, greater use of regional treatment
facilities will all have an impact on actual costs, and these can only
be accommodated !y the analytical method with a set of projection
assumptions that may finally prove to diverge in several resnects from
the eventuatien of conditions. Perversely, ev^n Federal policy and
legislation based on a level of need will tend to make any estimate
self-fulfilling by imposing external stimuli on local decision making.
An Optimum Industrial Schedule
Because the same elements an^l.v to the industrial sector--i.e.
investment rates represent the interaction of technological requirements,
capitalization, growth, replacement, and price levels over tino—the
same scheduling techniques may be utilized to determine investment norms
for manufacturers.
We have a fairly gced gras^ of the dimensions of those elements in
terms of the definitions presented in the first report of this series.
59
-------
TABLE 27
Range of Five Year Investments (1970-74) Associated with Provisional Attainment
of Water Quality Standards, by States
(Millions of Dollars)
Cost Estimate
Model
Low
State Program
Plans
Grants & Engineering
Estimate
Regional Office
Estimates
High
Value
224.3
12.2
46.1
118.6
838.5
143.7
187.7
17.7
68.2
209.5
250.5
44.0
75.5
493.7
337.6
160.3
250.9
102.6
206.3
206.6
63.7
586.7
311.7
193.3
141.0
359.1
63.7
119.0
38.6
150.4
343.4
50.1
1323.6
254.5
38.9
511.8
123.0
146.1
1122.8
96.7
121.8
48.2
184.9
502.9
82.4
117.5
152.8
198.5
140.3
275.0
38.3
61.3
4.4
(a)
Val ue
165.5
7.6
35.1
72.6 (a)
738.1
103.1
147.1
12.5
19.4
157.7
198.3
32.4
58.1
396.9
282.8
122.3
118.3
54.4
104.1
114.2
29.5 (a)
356.5
249.3
114.1
82.2
195.3
42.1
88.4
30.0
93.6
262.8
38.7
788.6
199.1
31.9
429.8
94.0
114.5
720.8
72.9
96.0
39.2
115.7
441.5
68.6
83.9
117.4
146.5
101.1
231.4
19.1
36.1
2.6
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawai1
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklamo
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyomi ng
Guam
Puerto R1co
Virgin Islands
(a) Values materially below indicated longer term levels as a result of accelerated level of starts
in recent years.
(b) 1969 submission same as 1968.
28.2
137.0
n.a.
22.9
n.a.
66.0
32.7
48.5
530.0 (b)
1015.8
35.0
34.8
n.a.
188.3
275.0
30.4
35.3
218.0
66.9
355.3
n.a.
126.0
7.9
137.4
67.8
45.0
n.a.
8.1
186.0
456.2
123.4
176.1
200.0
19.2
23.7
n.a.
61.8
29.6
86.3
20.0
57.0
70.3
150.2
173.8
17Q.0
n.a.
159.7
159.8
49.0
198.8
400-500
135.4
420.4
143.3
109.5
7.2
366.6
10.7
137.6
17.9
16.2
16.8
30.5
26.2
37.5
115.1
38.7
120.0
727.7
568.5
9.9
10.1
1199.0
2400.0
3000.0
71.3
101.5
86.9
3.8
13.0
240.8
590.1
451.0
60.9
111.5
43.3
145.3
66.9
331.6
431.7
33.7
31.7
48.0
39.3
31.2
74.4
9.5
16.1
179.9
154.6
249.3
312.4
12.6
9.2
73.2
33.2
60.0
150.3
206.6
294.0
21.7
173.3
10.4
58.7
50-60
71.6
218.1
1.6
9.7
61.
6.2
39.4
26.4
8.3
15.7
60
-------
It is recognizer! that there are significant weaknesses in that assess-
ment, weaknesses that derive principally frcm data deficiencies.
Because no significant new information has come to light in the two
years since trie issuance of that report (and because such information
as industrial sources have provided tends to corroborate the values
reported), no attempt has been made to refine the estimates presented.
In the absence of information that might alter the earlier estimates
in some substantive fashion, they have been fitted into the scheduling"
equation.
Because the input variables were originally presented as a range
(whose bounds may be thought to represent technological possibilities
frontiers) a mid-point value is used to present the results of the
scheduling effort in Table 2T. The elements of the table include 1)
the mid-point investment requirement increased by two years1 estimated
normal growth anc! recapitalization requirements and decreased by reported
1968 investment and projected 1?CC investment; 2) annual growth assessed
at 4.5^; 3) annual recaoitalization assessed at **!% -I) annual inflation
assessed at 3.5''. It should be noted that the dynamics of industrial
waste treatment arc considered to include significantly higher grcv;t!i
and recapitalization functions than is true of municipal waste treatment,
so that industrial investment requirements are climbing faster than are
municipal. This traces to the fact that the major part of the public
investment is for transmission facilities that are replaced at a
slower rate than waste treatment plants, and that industrial production
is increasing at distinctly more pronounced rates than copulation.
Given the data set and the assumptions that underlie it, the
situation that emerges is one in which manufacturing industries must
invest about million a year over the next five years to achieve an
equilibrium level of capitalization, one in which investments are re-
quired only to meet the exigencies of annual recapitalization and
growth. The current level of investment appears to be comfortingly
close to the target amount. Unless some significant changes in the
rules of the game become necessary, industrial facilities may be
expected to come on stream according to the hypothetical schedule
that reflects current national policy.
61
-------
TABLE. 23
Optimizing Schedule, 'later Quality
Standards Related Manufacturers1 Investment
For Haste Treatment
(Values in Mil lions of Current Dollars)
Year "Backlog"-at
Year End
Prov/th
Recaoitalization
Investrent
1969
1970
1971
1972
1973
1974
1975
1513..?
1129.5
317.3
526.4
258.0
139.4
150. R
163.1
176. A
1«0.R
206.3
119.5
138.0
156.9
175.2
19-2. 8
209.7
650.7
650.7
650.7
650.7
650.7
*16.0
Total
indicated Investment * =
"Backlon"
Crov/th
Reol ac°ment
* Includes an Inflation Corr^on^rt of
3253.5
1651.6
820.5
781J
330.0
62
-------
FEDERAL COST-SHARK!G
Nature of Grant Pronrams anc' the Reasons for Cost-Sharing
To properly evaluate Federal cost-sharinn it is necessary to
trace the recent history of how cost-sharinn developed, and to
define the concept with respect to the Federal Water Pollution
Control Act.
Intergovernmental fiscal relations have increased since the
1930's. There are several reasons for this increased activity.
Increased urbanization and a faster pace of economic growth have
created more demands for services provided by local governments.
While the demands have Leon felt at the local level, the availability
of increased revenues has been at the State and particularly at the
Federal level. Through fiscal participation an 'equilibrium of simply
and demand for public funds can be obtained often. This amounts to
a direct pass-through of Federal funds to strapped local coffers.
Another reason for the growth of oavments from Federal to
State and local Governments lias been the desire of groins to
influence both the level and nature of public expenditures. The
rationale for these intergovernmental extenditurcs is that the
quality of activity of one area '/ill affect outside areas. Further-
more , the higher levels of Government will be bettor able to direct
a uniform oerformance as cemnared v/ith local governments v/orkino
toward their o"n particular ends. Financial participation serves
as an incentive to local governments and as a means of adjusting
financial inequities that might develop.
Another rationale for intergovernmental financial cooperation is
provision of relief to poorer regions and to lover income levels. The
justification for this financial aid rests upon the belief that this
can best be accomplished by larger rather than by smaller units of
government. For if income redistribution wore accomplished on a local
basis, some communities would have a greater burden per capita than
others. The justification for this type of financial aid rests on the
given national objective concerning income equi lization, and on the
many benefits which do not accrue solely to the individuals in those
economic conditions but which accrue also to the nation.
In light of these considerations Federal financial architects
have designed numerous methods of cost-sharinn. Included among the
methods are: income equi1ization--a11 ocating relatively more grants
63
-------
to poor areas than tn prosperous ones; optimizinq--usir.n functional
or categorical grants to increase efficiency in performing specific
objectives-, and block grants--passing via unconditional grants Fed-
eral monies to State and local governments. For each alternative
the impact of fiscal Federalism varies. What alternative or combin-
ation of alternatives should be chosen depends on the pirnose of the
grant and the social w'elfare function, the objectives of the decision
maker.
To establish the nature and level of Fl'PCA cost-sharing pronrams,
the objectives and .rationale for the progran first must be considered.
Is the progran a means of redistri buting income and/or a means of
collecting and distributing tax dollars? Does the program have a
specific optimizing function? The basis for distributing the grants
allocation formulas can be established only after those questions
are answered.
The stated purpose of the construction grant program is to prevent
untreated or inadequately treated socage and waste from being dis-
charged into water (Federal Water Pollution Control Act as amended •
Section 8a). The desirability of the grant is based on the prooriety
of the Federal aid, the public necessity for the work, the relation-
ship of total system costs to benefits, the benefits received from
the work, and the ability to maintain physical capital (Section 3c).
Judging from these provisions in the Act, it appears that the grant
program is directed to accomplish a specific objective, and may be
classified an optimizing grant.
Level of Federal Grant Support
There are a number of persuasive reasons why Federal financial
support for State and local pollution abatement efforts may be con-
sidered to be appropriate. Ultimately, these devolve upon two consid-
erations, equity and financial necessity.
The equity arnument may be set foirard very briefly. It holds
that pollution control is an expression of a national priority (which
may often conflict with local priorities that would put industrial
development, lower taxes, or alternative use of public funds well
ahead of pollution control); and that the benefits of improved water
quality extend in time and place well beyond the point of the action
that results in improvement', so that they are most often regional or
national in nature. Thus the community should in equity bear the
cost of reducing the damages it creates, but there is equal equity
in requirinn that the beneficiaries of such actions--in essence,
the nation at larre--bear some costs. Cost-sharino between Federal
and local novernments, then, represents a rough and ready accomod-
ation to the principles of levyino charges anainst both the occa-
sioned of damage and the recipients of benefits. (The sane
64
-------
cortsic'erations of equity argue strongly for St?.to particiration in
costs, since State government has a more proximate relation to damages
than does Federal government, and more directly represents benefitted
population than does local government).
The financial necessity argument extends far beyond the area
of pollution control. It is directed to the fact that fiscal demands
on State and local governments are increasing faster than the growth
of their revenues—at least as these are derived frcr traditional
sources—or faster than gross national product. Cut while State and
local governments face a responsibility to provide an increasing share
of the goods and services produced in the national economy, the
Federal government holds the most efficient taxinn median isms in its
powers. Further, the disparity between State and local means and
requirements is increased in practice by the fact that those services
provided by such governments are most needed in precisely the places
where financial resources are most limited. Under such conditions,
Federal financial assistance becomes a necessary precondition to the
conduct of the expanding program requirements of State and local
government.
The situation has been too adequately analyzed and documented
elsewhere to require further discussion in this place, (cf.
especially Pc venue Sharing and Its A! tern at i vqsj ''hat Future for
Fiscal Federalism, Subcoriirttec on Fiseal PoTicy of the Jo'int
Fcbrib'mic' Co: An ttee, 90t!i Congress, July 1957, and Fiscal r-a lance in
the_ American Federal System, Advisory Commission on Interoo'verriior'ntal
Relations ,~Vas!iihnton, L). C., October 19C7). The question is not
the necessity of Federal financial assistance, but the amount of
such assistance that is required to achieve particular national goals.
Some guidelines as to amount are offered in the form of studies
by specialists in governmental fiscal matters, (detailed citations
may be found in sources cited above). Joseph Pechmsn, Richard
tletzer, and Selma 'lushkin and Gabrielle Luno have provided some very
generalized assessments of an appropriate overall mix of Federal
and local financial efforts, based on the fiscal gao created by the
difference between the rate of growth of State and local revenues
and their outlays. The estimates agree fairly closely, suggesting
the need for a 17 percent to 21 percent Federal financial particina-
tion in local government programs by 1270. The developing situation
is one in which expansion of local government services can only take
place with a substantial increase in the Federal share of the cost
of such services. (See Table 29).
Significantly, Josenh Pechman's estimate of the situation
assumes that financial constraints will cause a reduction in the rate
of increase in production of State and local governmental services.
Mere the other authorities assume that economic growth, new revenue
sources, and increased borrowing can sustain growth of local govern-
ment services, Pechman projects a revenue supply that has a low
65
-------
TALLE 2?
Estimates of State- and Local ^overnrients
fJeeds for Federal Financial Support
(Fi Hi oris of Hollars )
Pedrnan
Netzer
'lush kin
^Luno
Demands on St?.to f: Local
Governments, IP 05
Local Taxes .0'. Porrovinn
Federally Supplied
Demands of State S Local
Governments, 1970
Local Taxes 5 Oorrov.'inp
10C5 Level of Federal Support
Fiscal Ciop
Percent Federal Participation, 10GG
Percent if Cap is to he
Federally Closed, 1970
Indicated Federal Participation
in Incremental Outlaws
74
63
11
74
' 63
11
74
63
11
1Q3
80
11
12
121
100
11
10
T on
1 LL
100
11
11
1 ro/
I %;,j
is::
15%
21 %
17%
18%
41%
21%
23%
66
-------
elasticity, and a slowing in the growth of this sector of the economy
even with a relatively larger input to the Federal share of total
revenue. In view of the events of the past two years—when markets
for State and local bond issues have consistently failed to meet
needs, even at constantly increasing.price levels, and when taxpayer
revolt lias stifled now revenue measures at the polls--the Pechman
view of the world seems to have been the more accurate one.
At any rate, the sources seen to agree that we are in a
situation where continuation and extension of pollution control
efforts will rerun re that of every five dollars expended by some
level of government, at least one dollar must core from Federal
sources. Given the fact that the national priority system probably
holds water pollution control somewhat hioher in its ordinal rank-
ing than do at least those communities which have failed to provide
needed treatment works, a higher level of Federal financial assis-
tance may actually be required to achieve needed controls.
At this time the Federal input to public waste handling
activities approximates the relative share projected by the autho-
rities on governmental finance who have been cited. Currently, the'
combination of grants through the Department of the Interior,
Housing and Mrban Development, and Agriculture amounts to something
over a quarter of a billion dollars a year:, while total State and
local spending for waste handlinn is estimated to exceed $1.4 billion
annually. (See Table 30). Federal spending in tin's are? lias in-
creased tremendously, both in absolute terms and relatively to the
outlays of local governs-ent. /et constraints upon local finances
have forced many States to provide supplemental assistance to local
government in the waste handling area.
The reason is not difficult to determine. Although Federal
outlays have increased at aaiuch greater rate than those of local
government, the amount of the Federal increase has been well below
that which local government has had to meet. Federal outlays for
capital investment purposes have been about $170 million greater
this year than they were in the first five years of the Federal waste
treatment construction grants program. Cut total canital outlays
are almost $400 million a year higher, indicating a $230 million a
year incremental burden on local governments. Indeed, annual
replacement costs for the systems constructed since initiation of
the grant program are estimated to have increased by about $235
million a year, which combined with about 5105 million a year increase
in operating costs, means that one of the effects of the level and
nature of Federal assistance in the pollution control effort has been
to directly add a third of a billion dollars a year to the financial
burden of American local governments.
The fact, taken in the context of the continuing financial
crisis of local government, does much to explain the very slow
67
-------
TACLF. 30
Relation of Federal Assistance to Total [Istinted
Public Waste-Kancilin/; Expenc'itures
(Millions of i/Oliars)
Annual Averaoe
Outlay for _Pcri_or!
1956-61, Total
Federal Share
Investments Operating Charges
Treatment Collection Treatment Collection Total
"dorks
339
45
or'cs
317
'dorks
oq
J xJ
1,'orks
170
921
45
1962-06, Total
Federal Share
1967, Total
Federal Share
Percent Federal in
Peri od
51b
15
105
551
203
375
504
50
135
170
195
200
1219
105
253
1956-61
1962-CC
1967
13
20
37
10
5
9
1 °
I u
68
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incremental reduction of pollution abatement needs in recent years.
Local government must spend as much today to hold its own in terns
of pollution abatement activities as it was spending to increase
those capabilities a few years ago. Overhead expenditures for onera-
tion, maintenance, and replacement larnel/ cancel the effects of
Federal grant assistance. Larger Federal fundi no is necessary to
extend the reach of pub lit: waste handling and pollution abatement
capabi1i ti es.
The appropriate level of fundi no over the short run depends
upon several factors, specifically, the decree of cost-sharino on
each project, the method of allocating funds among States and the
tire period in v.'hich all untreated wastes from sewered con-munities
are to be treated and an upgrading and replacement posture is to be
reached.
The impact of the degree of Federal participation must be
appraised. The rate at which a stable investment posture is to be
attained is a function of the" residual funds available after
existino facilities are expanded, maintained or replaced. The
concept expressed here is that failure to adequately sustain exis-
ting capital automatically creates an investment need, and adds to
the national backloo. Thus, the sooner it is desired to achieve a
zero "backloo" level the higher the amount of total and Federal
investment shares. But the increase is by no means likely to be
greater than the marginal limits of expansion and contraction around
the historical level of investment. Accel era tine construction too
steeply will tend to increase costs more than prooortionately
through sector-1 inflation caused by bottlenecks in design capacity,
construction industry capacity and equipment manufacturing capability.
In addition, significant changes in investment levels may conceiv-
ably drive uo interest costs' in the already himunicipal bond
market. Another impact may well be poorer quality works, in terms
of both design and construction, resulting from less stringent
quality control and the attraction of engineers and contractors
with lesser skills in the waste treatment field.
While a program is considered more effective if it results in
more pollution control in a shorter time than another, the time
shrinking may cause that program to be less efficient. The tradeoff
between these two factors is difficult to predict.
A Retrospective View
1,'hether viewed as an urban development program or as an invest-
ment in natural resource protection, the wave of treatment systems
construction that has taken place since the end of the Korean war-
most of it with the assistance of Federal grants—has profoundly
changed the conditions and the attitudes that characterize waste
handlinn procedures in American urban areas. And it is those changes,
69
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the result of the program's operation, which have made the present
alignment of grants unsuitable for today's conditions.
The dimensions of change are illustrated in Figure 3. In
19-10 just before the United States entry into World !Jar II, one
American in t"o was served by a sewer system and little better than
one in four--or about half of those connected to sewers--' 'as served
by a waste treatrx-iit foci-lity. A decade later, the relationships
had scarcely changed. The exigencies of war, of industrial restruc-
turing, of recovery fro:- the after effects of the Crest repression,
had shaeed a set of national priorities in which the cor "lexities of
waste disposal "ere relegated, to a. low position. The proportion
of the national perflation connected to severs was still 53 percent--
just what it had been in 1040. "aste treatment was provided to 60
percent of the sewered population, as compared to 53 percent in l
-------
140
130
120
110
100
90
80
70
60
50
40
30
20
10
0
Figure 3
GROWTH OF PUBLIC
WASTE HANDLING
1940 1950 1960 1968
71
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been spent to extend, exnand, replace, and upgrade facilities than
has been spent for initial installation, As a result we may pre suns
that treatment facilities in operation in 1959 were more efficient
than those in operation a decade before.
V.'s knov: that there is a great deal more capacity for expansion
in today's plants, so that a good portion of population increase
that occurs in the future can be included in currently operating
systems for minimal additional investment. Perhaps most significant,
expansion of treatment capabilities has induced a great chance in
treatnent procedures. '.'here plants in place in 1D 40 and 1950 v/e re
intended to tr^at sanitary wastes, current thinkinn dictates that in
most cases the municipal v/aste treatment plant treats all of the
wastes generated within the municipal jurisdiction, so that public
waste handling services are far more comprehensive: and their exten-
sion has been a n-a jor neans of mediating the polluting effects of
industrial waste discharges, as these have been progressively in-
corporated in municipal systems.
Figure 4 which graphs public expenditures since 1952 for
liquid waste handling capital demonstrates fairly clearly that
each increase in the level of Federal appropriations for waste
treatment plant construction grants has roved total public spending
to an irregular, new plateau. Particularly sham peaks in 1963 and
1967 reflect the effects of complementary Federal assistance
programs, the Accelerated Public ','orks Program in 1953 and initiation
of Department of Housing and Urban Development sewer grants in 190C-C7.
The overall shape of the expenditures line is not, however,
as significant in mirroring the impact of Federal financial assistance
as is the configuration of its constituents. Investments in collec-
tion sewers, which ascended at roughly the same slope as others types
of v/aste handling capital expenditures prior to the initiation of
the grants program, tended to flatten at the time that the grant
provision (which does not include collection sewers) was enacted.
Availability of Federal assistance, combined with a certain decree of
substitutability between collection seers and other types of v/aste
handling, investment, acted to channel funds into the treatment plants
and ancillary works that do qualify for Fl.'PCA grants.
Just as the emphasis on treatment-related investments to the
relative disadvantage of collection facilities demonstrates the
ability of Federal policy to influence local decisions, the rela-
tively minor investments made for new treatment plants indicates the
ability of local recipients to utilize Federal funds in ways that
relate to local needs. Less than a third of the total monies ex-
pended for purposes that qualify for the grant assistance has been
used in the construction of new plants. The less dramatic, but very
real, need to equip, expand, improve, automate, and replace plants
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Figure 4
1500
1350
PUBLIC INVESTMENT IN
WASTE-HANDLING SERVICES,
1952-1967
1200
T3
0
t)
s
c
i
IQ
C
0
10501
900
750
600
450
Waste Transmission, System Expansion,
Replacement & Upgrading
New Waste
Treatment Plants y
In
"t.
V*
150
Accelerated Public Works,
1952
1956
Fed'l Construction Grant Appropriations
I960 1965 1969
73
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has been the source of the principal portion of local government's
demands on the grants program. Each expansion of Federal funding
has been translated into an increase in exnenditures of the miscel-
laneous sorts required for system rationalization: and the level
of new plant exnenditures for previously untreated wastes has scarcely
changed over more than a decade of experience.
Federal intention and local need, then, have interacted to
shape the instrument, the Federal grant for construction of waste
treatment works. Application of that instrument has taken forms
that neither level of government might have foreseen.
The Construction Grants Program - A Current Assessment
The construction grants program was tailored to the needs which
v/ere manifest at the time of its conception and served this purpose
well. However, given the changing physical conditions, how well
situated is the current program for future continuation and how does
it fare with respect to the several criteria already defined? Does
the method of allocation best match funds to needs? Is it effective
in reducing pollution? Does it provide the necessary incentives
to encourage communities to build treatment works, particularly those
which are currently sewered but still without treatment?
The existing grant procran should, perhaps be re-evaluated, in
the light of current conditions. Since the program is definitively
stated in the Act it will not he presented in detail; only the main
guidelines will be outlined.
basically there are two aspects of the current status of
Federal cost-sharing. The first is allocation methods (rection 8a).
1. A grant cannot be made unless it is approved by both State
government and the Secretary of the Interior.
2. Grants are closed ended, with the grantor willing to pay
33 percent and the grantee the remainder.
3. The amount of the grant can be increased to 40 per-
cent if the State is will inn to pay no less than 30
percent.
4. The Federal share may be upped to 50 percent if a State
pays 25 percent and has enforceable water quality standards.
5. no grant shall be made unless there are provisions for
operation and maintenance of the facility.
6. The allocation criteria for distributing the grants among
the States is on a per capita basis for 50 percent of the
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first $100 million, arid on per capita income for the
remaining SO percent of the first $100 million. There-
after the grants are allocated on a per capita basis. If
the monies arc not demanded six months after the year
in which they are allocated, the Secretary shaM use his
discretion in re-allocatino funds.
7. Over and above'any of other provisions, a bonus of 10
percent may be given where a regional or metropolitan
area comprehensive plan exists to which the project
conforms..
The second aspect of Federal cost-sharing under the existing
program pertains to State allocation of monies.
G. Grants "shall be made in accordance with Section 7 of the
Act, v/hich directs the States to set forth-the priority
of projects to receive construction grants, ho grant
can be given unless a State official certifies that the
project has priority over other projects based on financial
and pollution needs.
How does this program fare in light of the evaluation criteria?
The grant program is not directly related to water quality. Directive
1 (above) indicates that State and Federal approval must exist before
a grant is made. Since the water quality standards are mutually
acceptable to both State and Federal positions, Federal and State
approval for projects based on their compliance with standards is
logical and realistic, birective 4 does encourage standards to be
established,"'by'granting extra monies if the project discharges into
a stream which has standards. Cut direct relationship of the grant
for a facility and the effect of this facility on the quality of
the water is not required. One can argue, as is often done, that any
project which reduces wastes will eventually have to improve water
quality, '.;hile in the long run such an argument might be correct,,
in the short run the notion that construction of facilities without
due attention to other constraints will produce good water quality
represents at best an inefficient method of attacking the pollution
problem at the current levels of investment.
The grant pronram is closed-ended, i.e., the portion of the
Federal share is limited. Considering the externalities involved in
pollution exponditures, the procram cannot be viewed as equitable,
i.e., as equating the incidence of expenditures with benefits received
or damages occasioned. The artificial unit of 30 percent, increased
to 40 percent with State cooperation, is not conducive to equatinn
internal and external benefits with costs. A flexible systOm
equating cost and benefits may better serve equity. The present
closed-ended grant system can discourage many communities faced with
the construction of pollution abatement facilities which do not
75
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produce benefits equal to the costs from making these expenditures.
Closed-ended grants can be an impediment rather than an incentive for
pollution abatement under such conditions.
Directive 5 states that no grant should be made unless opera-
tion and maintenance of the facility will be provided. However, nc
provision has been made for the externalities involved in these costs.
Efficient operation is as important as the construction of the
facility in obtaining the water quality standard; and in the long run,
operation and maintenance costs can be more burdensome than the
initial capital expenditure.
The allocation mechanism itself is a source of inefficiency.
Per capita allocation of grants that are aimed at sol vino a particular
problem (which has locational disparities) creates an imbalance in
the allocation of funds because, as previously noted, the critical
pollution problems are unevenly distributed among different regions.
A universal allocation does not account for these environmental
differences. Variations in physical stream conditions, changes in
biological cencitions, and differing behavioral •patterns of the
communities (e.g., willingness to proceed) are not reflected in
allocations based on population. If the existing program is intended
to be an optimizing scheme, income equi 1 ization or financial n,.ed
should not, perhaps, be considered in the allocation process. Among
States, grants are, however, partially established on per capita in-
come which is a form of equi 1 i za ti en • while within the State, grants
are based partially on financial needs, a duplicate application of
a criterion unrelated to the problems of pollution.
Initially, it may be concluded, the program provided adequate
financial assistance, when couoled with legal and moral suasion, to
stimulate construction of treatment works for relatively wealthy
communities. Mo*--', however, while the "stick" has gotten larger,
the "carrot'1 is relatively less effective in reducing the burden to
many cities, particularly the older central city with its myriad
social problems and dwindling financial base. In these situations,
perhaps, the cost sharing ratios may need to be increased to
encourage more applications or competition for these funds.
During the past decade, numerous suggestions have been made
as to alternative concepts on which to base allocations of the Federal
share of construction funds. Several of these are discussed briefly
below:
1. The State share should be a constant percentage, i.e., a 30
percent allocation with no incentive effects. This proposal
is subject to the same cri ticisms as the oxisti ng' programs ;
viz if the grants are optimizing, such allocations would not
direct the monies to the problems.
76
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2. Grants should be allocated on a constant per capita basis.
Again, this mechanism fails for the sane reason as noted above--
if the grants are optimizing.
3. Small tovns should receive larger grants than larger cities.
This concent seems to be based on the fact that small tovns
arc not able to take advantage of economies of scale, therefore
they should receive larger grants.
This technique has been criticized because it is not an effoctive
method of allocating funds. The quality of water bodies is in most
cases not as sensitive to waste discharges of smaller communities:
therefore, improvement in quality will be slirht --or non-existent
if larger communities do not act. Optimizing grants are based on
externalities. Larnor cities are likely to have larger externalities
because the assimilative caoacity for a given stream is less for a
larger than waste source. If the larger cities produce more dar-ienes,
grants to reimburse these externalities should be larner--not smaller,
and if the economies of scale are greater for la'reer plants, there .
will be a larger marginal amount of pollution removal per grant dollar.
4. Another proposal that has been suggested is equalizing the per
capita costs of abatement facilities. This is a variation of
the preceding allocation method; if ccrr.unitics could not take
advantage of economies of scale their costs won!d be higher, the
communities should thus receive a larger grant. The proposal is
subject to the sans criticises as its variant. Cut the proposal
is susceptible to more pitfalls. If per capita costs .are
equalized, there would be no incentive to install the least *
costly facility, nor would there be any reason to develop the
most efficient pollution abatement system.
Institutional Constraints
There arc also significant institutional constraints unon the
profitable use of Federal funds, such that a higher level of Federal
funding would probably prove only partially useful in continuing
progress toward pollution control. If national monies are to-be
used to better effect, some serious difficulties must be recognized
and perhaps remedied.
Utilization of Federal funds is limited by the project-
orientation of the grants program. Only canital funds are provided
and only waste treatment plants and ancillary works are eligible for
assistance. At current levels of assistance, less than 40 percent of
all State and local spendinq for waste handlin" comes under the
provisions of the Federal Water Pollution Control Act. There is a
definite incentive, then, for the community to take advantage of Feden
77
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funds to substitute capital for operation expenses, and a proportion
of total spencilnn goes not to directly increase tie level Oi pollution
control but to use Federal subsidies to install automated processes
that reduce operational charnes. Again, because the program is
proiect-orientsd and the effective denand for Federal funds is less
than their sunply in the case of sons states, there is an. incentive
for States to adopt process stancaros, entirely unrelatec to per-
formance, and thus to force up the cost of waste treatment.. Since
the existence of a project becomes sufficient justi ricacion for a
grant, the looic of administration focuses upon the project and
not its purpose.
Central to the focus upon projects rather^than accomplishments
is the couivocal position of State government in t,ie pollution control
effort In '^ost cases, the State pollution control authority has no
power to dictate what a community should do, thounh its review of
spocifications cil"lov;s t'iG Stscs to GGtonriins ho*./ it s.'icll do it.
Local nornr?pnt makes the decision*, Feceral, jxate and local govtrn-
ments oro^ifundsI'hilc State lav? installs the administration of
matters r^latinn'to water pollution in an arm of State government (in
some cases senarato jurisdictions are applied to sanitary and other
kinds of oollutiir' "discharges), and Federal lav racoqni zes the primacy
of the State in matters relating to water quality, actual decision
making is fixed in City Hall, nou in the State House.
Effects of the limited powers of State government are accen-
tuated by the nature of communities remaining without waste treatment.
With almost 93 percent of the sewered population of the nation now
provided with waste treatment, we are trying to reach the most
difficult situations. Extreme financial weaknesses and domination
by marginal industries tend to mark sucii communities. Included, too,
are large metropolitan areas, facing a myriad of social and financial
problems, yet needinn to make large expenditures for extending, up-
ciradinn and replacinn their waste treatment facilities. Incentives
available to date have failed to move them to action; and there is
no reason to anticipate a change in their response to presently
structured oroorams. Perhaps the matter at issue is the real lack
of incentives in existing grant programs. From the point of view
of the Federal authority, there is a substantial subsidy. Cut from
the point of view of the economically distressed community, the
situation is quite otherwise. In effect, the Federal authority is
saying: "I'e'll give you thirty dollars, if you'll agree to spend
another seventy dollars, plus five dollars a year into perpetuity,
plus another hundred dollars every twenty-five years into pernetuity."
It's a good deal if you had planned to spend the first hundred dollars
anyway but a very dubious one if you're not aMe to meet the bills
coming due each month. One must conclude that more generous subsidies
or more direct Federal ability to influence decisions must be provided
if financially distressed communities are to be persuaded to provide
necessary facilities.
78
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Uncertainties surrounding the nature and level of Federal
financial assistance have acted as disincentives in some cases,
have been the source of diseconomies in others. A stable program
would do much to crystallize State and local attitudes, to provide
a solid base for needed actions and sound capital budget planning.
The Federal Share
It is, of course, difficult to say just how much money the Federal
government should provide to achieve "adequate" waste treatment. The
amount would be a function of the cost-sharinr; formula (assuming local
ability to provide'necessary matching funds) and of time.
Economic theory provides no real insight into some ootimum level
of Federal funds, leaving the political process to decide-upon that
level which reflects national interests and values. But economic
theory can provide insights into the potential for matching by State
and local governments, the time to eliminate non-current unmet needs
and the potential success in mustering necessary resources at various
dollar levels of Federal pro?ran. The potential' inflationary impact
and incentive effects can also be evaluated for these alternative
levels.
Ignoring for the moment inflationary side-effects and the more
difficult problem of incentives, let us consider the natter of ootir"uni
Federal particination in financim facilities: There is a pressing
need to elicit an average annual investment rising from a current value
of about a billion dollars a year, plus a need to eliminate a "backlog
of about $4.4 billion worth of required verbs. There is a definite re-
sistance on the part of some of the local governments who must finance
this investment, a resistance due to expression of local priorities and
to financial constraints, concomitant with a very stronq Federal in-
terest in maintaining and increasing the rate of investment. All com-
ponents of the investment deficiency are not of equal immediacy: Some
facilities needs arc quite pressing, in terms of alleviating stresses on
the aquatic environrent*. some are little more than administrative re-
quirenents. It must be reccgnized that each dollar invested creates an
immediate charge on local government to exnend additional dollars to
operate and maintain the function created by the investment. Finally—
and a most significant consideration in determining moaninnful Federal
policies—the need wi 11 never be fully r^t: its nature './ill change, its
geographic distribution will shift, the means of dealinn with it will
fluctuate; but human activities will always create wastes, and society
will always be forced to ameliorate the environmental stresses implicit
in waste disposal. The task is a continuing social and technolonical
imperative, and society can only redistribute financial stress over
time, not eliminate the task by any massive, short term investment
program.
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The task will be viewed in light of several alternative levels of
Federal funding. It has been demonstrated that Federal qrants will
draw forth non-Federal matching funds but at a decreasing marninal rate.
(See b'ater-Sjjpj^lj/_ and Sanitation Expenditures of State and Local
Governments: f^rpjj?£ticn to 1T70. R. W. Rafuse, Jr. the Council of
State Governments, Chicago, March 1966, for a discussion of multipliers.)
The historical multiplier effect is shown in Taf le 31. The recent his -
tory shows a decrease in the multiplier, which may be partially a result
of increased cost sharinn ratios be^inm'nn with the 1965 legislation
and the institution of lil'P grants for sewers in 1S66.
A $214 ¦ 'ij 1 i on Federal Program.
This level of Federal assistance represents a minimum le^el for
analytical purposes. reflecting the most recent historical past.
Consideration of recent Congressional activity shc-s this level to be
low for practical consideration. This level of Federal assistance
will draw after it just about enouoh State and local resources to
maintain the existing levels of control—and in a growing economy'that
means that residual waste loads are actually increasing, so that v/e•
may be beginning to lose ground.
The current level of Federal assistance is capable of elicitim
an invest!lent of :;43G million to b5':0 million a year, sc-e-het short
of the amount reovired to maintain and extend the Nation's public waste
handling capabilities. If this level of funding is to be maintained,
decision-makers will have to accept one of three consequences:
1) reversal of the existing progressive trend: 2) reduction of the re-
lative Federal contributicn to pollution control by some restructuring
of the Act aimed at increasing the decree of State and local funding of
construction; or 3) concentrating investments in some fashion or another
to borrow acainst depreciation and improvement expenditures fore"one--
in effect, letting the physical capital currently in place deteriorate,
at least on an interim basis, in order to extend control capabilities.
These choices appear to be unacceptable and the level inadequate in
light of national needs.
A $600 Mi 11 ion Federal Program
This level represents that initially proposed by the House of
Representatives for FY 1970. Consideration here, however, will rest not
with 1970 but with the adequacy of this program in years following In
terms of a one-year incremental step, the $600 million Federal program
represents perhaps the maximum increase that could be accommodated,
yet, while that amount would accelerate and extend pollution control
capabilities, two somewhat offsetting sources of concern are implicit
ir, tin's level as a future annual rate. On the one hand, it is unlikely
80
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Year
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
TABLE 31
Dollars of Total Investment
Per Dollar of Federal Construction Grants
Total Sewer Trtmt. Plant
Investment Investment Investment
. U.54 4.94 6.60
13.40 6.20 7.20
13.24 6.72 6.52
13.78 . 7.18 6.60
9.54 4.75 4.79
8.92 3.55 5.37
10.04 4.05 5.99
8.62 3.96 4.66
6.40 2.74 3.66
6.13 2.66 3.47
5.20 2.49 2.71
81
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that this rate nf Federal assistance will stipulate a threefold level
of total investment, resultinn in a less effective us of Federal Tune's.
On the other, it May be questionable that construction and design ser-
vices can be made immediately available to deal v/ith so substantial a
stimulus excetn in an at'^osniWe of heightened inflation, relaxed
quality controls and other consequent diseconomies.
There is little historical experience unon which to base judooment,
but durinq the accelerated public works program, total investment
increased' fron approximately >180 million in 1°62 to $600 million in
1962 on an increase in Federal funds of $106 million. It is unknown
how much additional investment \/oulcJ have been elicited at levels of
API.' cost sharinn less than the actual 755'. but the designers of that
program evidently felt that a high level of cost sharing would be re-
quired to expend these funds.
Too, the failure of States to install meaningful priority systems
with significantly lesser amounts of Federal assistance suggests that
it is questionable that the economy could effectively use such sums
under the current structure of the program. If hinh priority pollution
abatement needs could not bo serviced in an atmosphere of competition
for funds , so that many marginal projects have been built with the assis-
tance of Federal monies, one may doubt that such a large extension of
fundinn could be accommodated in an;' circumstances. 1iver. the apparent
financial difficulties of jurisdictions that .have not responded to a
hinh indicated need fcr works construction, there is little reason to
anticipate that there "ould 're a highly meaningful response to a large
increase in the amount of Federal fundi nf unless there were to ho an
increase in the Federal share and an increase in allocation flexibility
as well. The practical result of anprooriatiens at such elevated levels
might well be to simply tie up a large amount of public monies for
purposes for which there is no effective demand.
It appears that merely increasing the Ff 71 and beyond Federal
funding level without significant structural modifications in the orants
program would be neither efficient nor effective. Priority systems
must be based on a problem oriented basis rather than an applications
received basis, and allotment methods must channel funds to those areas
where the pollution abatement needs exist. The current system does not
do this.
A $1 ,250 'ij 11 icn Federal Program
The amount authorized for fiscal year 1071 in the current form of
the Federal ;:ater Pollution Control Act suggests a Federal effort of
$1,250 million be considered. Although tin's level annears excessive
as a single year increment, it might feasibly be assimilated follcwirr
a 5600 million year. However, the problems of allocation and incentive
effects on local governments resulting from the current cost sharinn
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levels and allocation procedures discussed for the $m million preww
remain. Reallocation provisions nay serve to soften tfiese effects, puc
it aonoars that significant c'.anres villj-e renuired if tins level of
fundi no is to be utilized effectively, lotal need for abatement expen-
ditures must be explicitly considered in allocating tnese monies if
they are to be used effectively, and some provision vnll be neeeed tc
provide a true incentive related to pollution nceo i/itiiin the otates as
well.
A Maximum_Effsctivencss_ProTrap.
juQ cipcr°asinr' rate at v.'hich State and local governments can be
induced to^atch nroatl-/ increased Federal grants retires that an
•vasip.nl'f higher Ted ,-.-¦'.¦/cost share must a cayman* increased grants,
-h tends'to couptprc ¦ ¦ expansionary effects intended in ter^s
or total invest-^nt. '!nce V:ie need for ne- plant and unnradln* are
eliminated t'^e apparent rate at v.'hich State and local governments
will spendwith a' 30-592 Federal cost siiarim may be adequate to meet
the nends of nrowth, expansion ant- replacement.. /et, allocation*!!
problem will^'sin. biohcr Federal anpropriatinns nado within t*c
current construction grants framework will shorten tine rrquirer to
r-ach ?n -ouili!riir< somewhat, but not at a rate proportional to tie
increase because of the decreased, multiplier effect and a sul.sbi tuti cn
: •,"r--'2^1 v^.^,^:-:l dollars.
This effect arises from the fact that those communities v.'hich have
already undertaken the initial investment in v.'aste treatment generally
tend to uo-radn exeand and maintain those facilities, thus, funds tend
to be allocated'first, on the readiness to proceed basis, for these
purposes. Continuation of current cost sharing appears unlikely to
give incentives to hard core polluters and financially distressed
communi ti es.
If effectiveness is translated to mean the reduction of v:ater
quality problems~iri a shorter tine frame, it appears that the program
m ;st ! ' reoriented to provide a passive incentive to those places,
naHicularlv the hard pressed urban areas, to encourage the construc-
. V" - - -n of needed y.'orks. As discussed in other parts of the report, a
gran \/hich does not provide an incentive v/ill not induce comnetition
for'grants nor efficient priority systems which will induce effective
abatement v/orks. Nor v/i 11 communities voluntarily commit themselves to
undertake the expenditures v/hich come v/ith the grant acceptance. This
feature becomes most pertinent when one considers that the pronram has
induced the most pliable communities to construct plants, that these
communities v/ill continue to take uo funds v/ith replacement, mainte-
nance and expansion of works v/hi 1 e the hard core polluters remain
untouched.
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Enforcement action may be effective in moving communities to
action, but effectiveness can be greatly enhanced if coupled with a
strong economic incentive.
In addition, levels of Federal funding have fallen short of needs
for the past several years leading to a less than effective program.
Although many communities have built plants, the effect on pollution
is not as great as it might have been because of the difficulty in
achieving the most cost effective mix of investments. In some cases,
lack of action by one community has negated the benefits of action by
others.
A concerted program of sufficient magnitude and incentive value
seems to be required'to complete the initial requirements of water
quality standards implementation. As illustrated by Tables 25A to 25C,
the temporal reduction of the backlog is such that the maximum benefits
may not be achieved in some cases for many years at inadequate levels
of investment. The most effective stimulus to increasing that invest-
ment is a highly stimulative Federal program.
The foregoing suggests a program of 100^ Federal funding for re-
maining new plant and upgrading needs if the Federal interest to
eliminate these needs in the shortest possible time. To provide an
appropriate incentive effect, such a proaram must be funded at a high
enough level to provide the needed funds within a specific time frame
and must terminate or drop back to a reduced level at the end of that
period to discourage waiting. However, the levels required would loom
so large that adjustment by those economic sectors which design,
construct, and provide capital and equipment for treatment works may
well be delayed. Therefore, the actual rate of expenditure must remain
flexible. This can be accomplished by terminating new applications,
but allowing funds to be expended for some years beyond, and allowing
carryover of unappropriated funds over years when applications are
being accepted.
The practicability of such a program may be hampered by political
reactions of communities and States which have already constructed a
large proportion of needed works at a significantly lower level of
assistance, thus, extension of the 100% grant to all capital construc-
tion may be a necessary feature.
The provision of a 100% capital grant extending over a specific
period of time does not remove all responsibility from State and local
governments by any means. The plants must be operated and maintained
at an annual cost whose present value approximates the amortization of
capital cost, and which with improved operation may exceed the capital
cost. Thus a 100% capital share represents a 50% grant on the total
cost of providing waste treatment. Curently available State funds
84
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could be channeled into operating grants to municipalities to upgrade
the operating efficiency of waste treatments works. State funds could
also be directed to non-treatment management measures, including
problems of land drainage from urban areas and construction sites, to
the construction of flow regulation structures, instream aeration
devices, and similar measures, or toward systematic planning to provide
for more efficient and effective pollution control than has been
practiced in the past.
Experience indicates that States are, in the main, unlikely to do
any of these things without Federal guidance—particularly if all the
funds required to eliminate current construction needs come from the
Federal level. Therefore, any Federal program, particularly one of
this magnitude, must include incentives or sanctions to States to:
(1) develop meaningful priority systems based on problems not projects;
(2) assure nroper operation and maintenance of plant in place; (3)
develop a system to cope with water quality problems in a timely
fashion, before they manifest themselves in an obvious and destructive
way. Finally, the need for massive investments must be precluded from
occurring again in the future by requiring waste treatment replacement,
maintenance, upgrading and expansion to be placed on a self-supporting
basis, preferably through the institution of a user charge system.
(Vol. Ill of The Cost of Clean Water, 1969, discusses the question of
user charges and demonstrates their desirability in terms of erficiency
and equi ty.)
The chief merit in a program of this type is effectiveness in pro-
viding treatment works for all sewered population in the nation in the
shortest possible time, indeed a large plus. But a maximum effective-
ness program has several serious potential drawbacks which must be
clearly understood.
In the shortrun it may defeat itself by finding insufficient takers
for the funds, simply because the local and State governments cannot
gear up to the task. Adequate and timely staffing for review at all
levels will be required. Too,more thorough inspections will be needed
since more contractors and engineers from other fields may be drawn '
into a new area. Thought, too, should be given to direct Federal-
municipal negotiations with major metropolitan areas to expedite grant
processing. Such cities often have better skilled staffs than State
governments, and the process might well be hampered or delayed by mak-
ing the State the middleman in negotiations. (This feature may well be
advantageously considered for any other future grant program as well.)
The expenditure generated by a program of this magnitude, as with
the $1,250 million program, may tend to be inflationary, at least in
particular sectors. The extent to which this would be undesirable will
depend upon conditions when the program is under way, and which cannot
be forecasted at this tine. Although the Administration is currently
combatting a general inflationary trend, this does not mean these
conditions will prevail in 1971 and beyond.
85
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To some extent, inflationary effects will be minimized if funds
are obligated over a five-year period, but construction allowed to
begin at later dates, perhaps letting the contractors set to some
extent the nace of construction. By employing labor on a counter
cyclical tine schedule, inflationary'impacts might be minimized. Such
a scheme would be a tradeoff against program effectiveness, however.
Too, funds released to the States and municipalities may either be
absorbed in the form of relatively lower taxes, or through alternative
capital expenditure programs for housing, roads, etc. Given the needs
of major urban areas, the latter possibility loons largest, a course
of action that will further serve inflation.
A special sector of the economy--the municipal bond market--
deserves further attention. Since it is unlikely, with current fiscal
policy and Federal expenditures, that cash grants from the Federal
coffers will be the source of construction funds, other alternatives
must be assumed. Perhaps the most obvious is the often proposed program
of reimbursing municipalities on an annual basis to pay off bonds sold
to finance the construction. Such Federal payments nay or may not
include an interest subsidy and nay result in payouts periods rangi.no
from 20 to 30 years. This means that communities must raise the
capital in the bend markets.
A Federal program aimed, for illustrative purposes, at a total
municipal wastewater treatment investment of $10 billion over five
years would on the average increase a current demand for municipal
borrowing for waste disposal facilities from $0.5 billion to $2 billion
per year~-a 400^ increase. And it v/ould directly raise the demand for
municpal borrowing for all purposes by some 1.5£ over current levels.
Further exploration must be given to the impact on the money markets.
An alternative which may be considered is to borrow on the State
or Federal level, making cash for construction available to the munici-
pality. The broader base of bond buyers available, the lesser con-
strains t of debt ceilings and voter response and potential economies
1n brokerage appear to make this attractive.
In terms of eguity, the program would manifest little hope of re-
lating cost to benefits gained or damages occasioned. The level of
support previously given, and which is likely to be forthcoming from
the Federal government after such a massive short term program,
guarantees that intertemporal equity will be violated. Citizens who
contributed a relatively large share toward construction of waste
handling facilities will now pay again to build them for other com-
munities who have lagged along the way. Future citizens will be paying
for capacity to serve them, as well as larger taxes to pay off bonds on
plants whose excess capacity is unavailable to then by reason of growth
or location.
86
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A system of user charges related to plant costs and aimed toward
a self-supporting system will help to reduce inequities by charging
those damagers aided by the program to offset costs of replacing the
capital equi orient as needed, thus, charging the future user only the
cost of his increment of service rather than that plus the cost of re-
placing others' units of service.
The program raises many practical questions and problers.
Review and approval procedures must be streamlined and adequate person-
nel must be put on at all levels of government to provide for program
administration. This is apt to be critical in a program of this mag-
nitude, since ennineers and contractors new to the field are apt to be
drawn in, necessitating close review and inspection. These manpower
requirements need to be carefully assessed early enough to devise
solutions to problem.
V.'hatever the level of Federal participation and the method of
allocation their impact will be felt at the State and local level. The
effects of possible strategies have been examined for Mew England and
they are presented in the following case study.
CASE STUDY
Financial Impact of Constructing Water Pollution Control
Facilities in New England
Introduction
The purpose of this case study is to investigate and evaluate the
financial aspects, arrangements and impact of constructing water pol-
lution control facilities in New England. For illustrative purnoses
only, it considers two of the several proposed Federal aid programs
(discussed previously) to evaluate the financial impact a range of
Federal aid might have on each of the New England States. Other aspects
considered in the study are: (1) past sewerage expenditures relative to
needs; (2) expenditures of State and local governments for education,
highways, public welfare, etc.; (3) the fiscal capacity and tax effort
of State and local governments; and (4) alternative financial arranne-
ments.
The case study first considers the impact at the State level then
the impact at the community and homeowner levels. Alternative means
of financing the program at the local community level are evaluated in
Examples I & II.
Cost of Hater Pollution Control Facilities
The cost of providing treatment facilities and interception (exclu-
sive of collection systems) for municipal and some industrial wastes in
New England is estimated to be approximately $1.25 billion for the next
87
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five years. Such cost estimates establish an order of maqnitude of the
required financial investment needed to abate pollution in New Enqlanc!,
but actual costs may vary from those developed as a result of later
detailed design studies.
Estimated Cost*
State ($ Million)
Connecticut Jp 238.9
Massachusetts 530.G
Rhode Island 103.7
Maine 157.S
New Hampshire 126.0
Vermont 94.7
New England $1,251.5
Impact at the State Level
The financial impact that construction of water pollution control
facilities will have on the New England area will vary from State to
State and from community to community. Individual communities within
each State will have varying decrees of financial difficulties depend-
ing on such factors as present waste treatment facilities, per capita
income of the community, the property tax base, competing claims on
community resources, and credit rating.
In general, the financial impact of water pollution control facil-
ity costs on the States as a whole will depend largely on: (1) the
amounts of Federal aid available to communities within each State for
the construction of water pollution control facilities, (2) past sewerage
expenditures relative to needs, (3) expenditures of State and local
governments for education, highways, public welfare, etc., and (4) the
fiscal capacity and tax effort of State and local governments.
Availability of Federal Funds: The two assumptions, as to the
availabi 1 ity of Federal funiIs , represent the minimum amounts likely to
be appropriated and the-maximum amount possible based on providing 100
percent Federal aid to all projects.
First, assuming at a minimum, a sum of $600 million
annually would be appropriated nationally for fiscal
years 1970 through 1974 and that the State allocations
would be based on the current formula.
* The cost estimates utilized in thiscase study were developed using
the scheduling program described earlier, without adjustment for inter-
vening investment. They are intended to be descriptive in gross terms
rather than to exact evaluation of requirements.
88
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Second, assuming a new method of financing that would
provide TOO percent Federal aid for all projects to be
paid equally over a period of 25 years with no provi-
sions for interest costs.
The Federal, State and local shares of financing are*shown in
Table 32 for the two assumed levels of Federal aid. Depending on the
assumption selected, Federal aid to Hew England could vary from
$133.2 to $1,251.5 million. The Federal share would range from 11.2
to 17.4 percent of the total cost under the first assumption compared
to 100 percent under the second assumption. Taken together, the State
and local governments of New England will bear approximately 85 percent
of the cost if $600 million were appropriated nationally for fiscal years
1 ¦l??'1-. However, the actual Federal share to the New England States
. • greater if reallocation of funds were taken into account since
the needs in many States is considerably less then the funds they would
receive based on the current allocation formula.
The second assumption of 100 percent capital grants extending over
25 years does not remove all "responsibility from. State and local govern-
ments. The costs of operating, maintaining and financing the facilities
may be shared by both State and local governments. The State funds
(?H six Keu England States provide^State aid) could be channeled into
¦a-. v-'r. ,nd financing the facilities.
Past Seworaoe Expendituresj Another important factor that has
signifTcant Bearing en The financial impact is past expenditures of
State and local governments for sewerage systems to meet needs. In
other words, has past construction of water pollution control facili-
ties of each ;!ew England State kept pace with needs? In general, the
States have not constructed the needed facilities in the past. How-
ever, some of the flew England States have kept pace with their needs
more than the other States,' as indicated by the per capita expendi-
tures in Table 33.
If- e 33 shows the per capita expenditures for capital outlay,
^¦ration and maintenance for sewerage services of State and local
i rents for 1957, 1252, 19GS and 1968. Although the figures include
; , ; iitures other than those for treatment and interceptor sewers,
they serve to indicate the approximate and relative level of past spend-
ing for water pollution control facilities for each New England State.
For example, in 1957 the per capita capital expenditures varied greatly
from one State to another with a high of $4.65 for Rhode Island compar-
ed to a low of $0.91 for Vermont. The data further indicate that in
1957 the northern States (Maine, New Hampshire and Vermont) spent con-
siderably less than the southern States (Connecticut, Massachusetts
and Rhode Island). However, in 1560 the capital investment of the
89
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TABLE 32
FEDERAL, STATE AND LOCAL SHARE OF FINANCING
THE COST OF WATER POLLUTION CONTROL FACILITIES IN NEW ENGLAND
State
$600 Million Program
(FY 1970 - 1974)
Maximum Effectiveness
Program •
Percent
Amt. in
Percent
Amt. i n
Share
$Millions
Share
$Mi11i ons
Connecticut
Total Cost
100.0
$238.9
100.0
$238.9
Federal
17.4
41.6
100.0
238.9
State ,
Local
67.6
161.5
0.0
0.0
15.0
35.8
0.0
0.0
rr.chr ¦_
100.0
530.6
100.0
530.6
Federal
15.4
81.6
100.0
530.6
State
64.6
342.9
0.0
. 0.0
Local
20.0
106.1
0.0
0.0
Rhode Island
Total Cost
100.0
103.7
100.0
103.7
Federal
16.4
17.0
100.0
103.7
State
63.6
66.0
0.0
0.0
J "Cpf
20.0
20.7
0.0
0.0
Total Cost 100.0 157.0 100.0 157.6
Federal 12.4 19.6 100.0 157.6
State 67.6 106.5 0.0 0.0
Local 20.0 31.5 0.0 0.0
New Hampshire ^
total Cost 100.0 126.0 100,0 126.0
Federal 10.7 13.5 100.0 126.0
State 79.3 99.9 0.0 0.0
Loral 10.0 12.6 0.0 0.0
'v>n
i. ¦ JSt
100.0 94.7 100,0 94.7
Federal"" 11.2 .10.6 100.0 94.7
State 73.8 69.9 0.0 0.0
Local 15.0 14.2 0.0 0.0
New
New Enqland
Total Cost 100.0 1,251.5 00.0 ,25.5
Federal 14.7 183.9 100.0 1 .251 .5
State 67.6 846.7 0.0 0.0
local 17.7 220.9 0.0 0.0
1 Refers throughout to local government, metropolitan or
regional districts.
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TABLE 33
PER CAPITA
EXPENDITURES OF STATE AND LOCAL GOVERNMENTS
FOR SEWERAGE SERVICES
Total Expenditures
Capital Expenditures (Capital, Operation and Maintenance)
State 1957 1S62 1966 1968 1957 1962 1966 1968
Connecticut
$4.39
$8.40
$8.84
$9.97
$6.01
$10.8C
$11.35
$13.13
Massachusetts
2.25
3.83
3.61
2.88
3.65
5.38
5.27
4.98
Rhode Island
4.65
2.08
5.92
3.41
6.33
4.72
8.68
6.37
Maine
1.36
2.80
2.76
6.33
2.11
3.76
4.25
7.71
New Hampshire
1.89
1.65
4.08
5.71
2.53
2.65
5.18
. 7.56
Vermont
0.91
3.72
5.14
11.70
1.59
4.86
6.88
14.08
New England
2.57
3.75
5.06
6.67
3.70
5.36
6.94
8.97
Source: "Census of Governments, 1957 and 1962",Bureau of the Census, Washington, D.C.
"Governmental Finances in 1965-1966", Bureau of the Census, Washington, D.C.
"Governmental Finances in 1967-68", Bureauof the Census, Washington, D.C.
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northern States was on the average 50 percent more then the southern
States. In 1968, all the flew England States, except Rhode Island,
spent rrore on capital outlay than in 1957 with Vermont having spent
the most of the six States.
Needed Expenditures: Even more significant than past expenditures
for sewerage' services are the exnenditures needed in the near future
to construct water pollution control facilities in each of the six
"Jew England States. Cy way of comparison, the needed investments on
a per capita basis for constructinn water pollution control facilities
for each Hew England State are:
Connecticut $109 Maine $161
Massachusetts $ 93 New Hampshire $179
Rhode Island $114 Vermont $224
The above figures are based on the cost estimates presented in
Table 32 and 1958 population.
On the average, the per capita costs of needed facilities in the
northern States are double those of the southern States. The cost of
needed investment in Vermont and f'ew Hampshire are the highest, on *a
per capita basis, of all New England States.
A further analysis of the needed investments of each flew England
State is presented in Table 34 to evaluate the impact that financinq of
water pollution control facilities would have on State and local gov-
ernments, based on availability of federal funds. This table presents
the annual equivalent expenditures that would be required by State and
local governments to finance the costs of needed facilities based on
the availability of Federal funds under the two conditions stated in
a previous section. The annual per capita amounts are based on capital
costs estimates amortized for 25 years at 5.0 percent and 19Co ponula-
tion. Also included are the per capita amounts as a percent of total
per capita expenditures of State arid local governments (19G3). (The
total per capita expenditures of State and local governments are shewn
in Table 35.) In addition, an estimate of the annual per capita amounts
and percentages for operation and maintenance are given iri Table 34
for each i.'ew England State.
With Federal aid amounting to 100 percent, all of the new England
States will be required to commit {based uoon 1968 expenditures rates)
less than 1.2 percent of their funds to such facilities. With a $500
million program, the three southern States would still require less
than 1.2 percent commitment while Maine, New Hampshire, and Vermont
would require 2.1 to 2.5 percent. Annual expenditure required for the
operation and maintenance of such facilities could amount to 0.3
to 2.0 percent of 19CC expenditures of State and local governments.
In summary, Table 34 shows that the burden will be relatively
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TABLE 34
STATE AND LOCAL GOVERNMENTS' ANNUAL EXPENDITURES
FOR NEEDED PU5LIC WATER POLLUTION CONTROL FACILITIES
(Based on Availability of Federal Funds)'
Annual Equivalent Capital Outlay? Annual ODeration anH
Maintenance
$600 Million Program Maximum Effectiveness Program •
State
Per
Capita
Amounts
Percent
of 1968
Expend.
Per
Capita
Amounts
Percent
of 1968
Expend.
Per
Capita
Amounts
Percent
of 1968
Expend.
Connecticut
$4.73
0.9
$2.50
0.5
$4.03
0.8
Massachusetts
5.85
1.1
3.02
0.6
4.88
1.0
Rhode Island
6.79
1.2
3.50
0.6
5.68
1.0
Maine
10.00
2.1
5.00
1.1
8.05
1.7
New Hampshire
11.37
2.5
5.56
1.2
8.97
2.0
Vermont
14.15
2.2
6.87
• 1.1
11.22
1.7
Notes: 1 See text for explanation of availability of Federal funds.
2 These columns indicate the per capita amounts (based on capital cost estimates
amortized for 25 years at 5.0 percent and 1968 populations) and the percent
of 1968 expenditures (based on the per capita amounts and the total 1968
per capita expenditures for State and lo~al governments in Table 4).
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TABLE 35
PER CAPITA EXPENDITURES OF STATE AND LOCAL GOVERNMENTS
FISCAL YEAR 1968
State
Total
Expendi-
tures
Education
Highways
Pub!ic
Welfare
Local
Parks and
Recreation
Sanitation
Other than
Sewage
Sewerage
All
Other
Connecticut
$531
$1S8
$73
$46
$8
$5
$13
$188
Massachusetts
510
163
58
65
5
6
5
208
Rhode Island
555
187
110
70
4
4
6
174
Maine
467
206
89
39
2
2
8
121
New Hampsnire
446
178
100
30
4
2
8
124
Vermont
649
260
182
55
2
1
14
135
New England
526
199
102
51
4
3
9
158
United States
512
206
72
49
7
5
9
164
Partial Source: "Governmental Finances in 1967-68"
Bureau of the Census, Washington, D. C.
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greater for Jlaine, New Hampshire and Vermont than for the other fiev
England States under the two assumptions concerning availability of
Federal funds.
Comparison of Other State and Local Government Expenditures; The
financial impact that the construction of water pollution control faci-
lities will have on the States as a whole will depend to a degree on
expenditures of each State for other public functions, such as educa-
tion and highways, relative to the capacity of States to meet these
requirements.
A comparison o^ per capita sewerage expenditures and other State
" ¦T government expenditures for fiscal year 1968 is shown in
' ' • "hown are per capita total expenditures, as well as those
highways, public welfare, local parks and recreation,
itation other than sewerage and sewerage for each ,\:ew England Stats
us well as the United States averages. [Jew England 'sewerage expendi-
tures for fiscal 1°C3 amounted to $5-14 per capita, or 1-3 percent of
the total expenditures for State_and local governments. In contrast,
education, highways, and sanitation amounted to $162-206, $58-1C2,'and
$1-6 per capita or 32-40, 11-23, and less than 1 percent of the total
expenditures, respectively. The United States average expenditures
¦fr-i 'v amounted to approximately 2 percent of the total, compared
tr- pdfir;r! " .md highway expenditures at 40 and 14 percent of total
is, respectively. In 10CC, over 50 percent of all expendi-
. ^ State and local governments was for education and highways,
wuile sanitation and sewerage amounted to less than 3 percent.
The past expenditures for sewerage services in relation to the
total expenditures of State and local governments_have not been appre-
ciable in comparison to those for education and highways. Futhermore,
the amount under the two assumptions concerning the availability of
Federal funds which the throe southern States may be required to spend
annually for the needed facilities (on a per capita basis) is about the
();•* ire than in the past, while the three northern States will need
to uuiibiderably more annually for capital outlay than they did in
tistal Capacity of State and Local Governments^ A factor that is
equally or perhaps more "important tFan those already mentioned is the
fiscal capacity of State and local governments. The Advisory Commis-
sion on Intergovernmental Relations defines fiscal capacity as folic*,-s:
"... a quantitative measure intended to reflect the
resources which taxing jurisdiction can tax to raise
revenue for purposes. There are many factors that,
determine the capacity of a community or State to Day
for public services including the population's income,
95
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wealth, business activity, etc., the demands made on
these resources, and the quantity of governmental
servi ces."1
The economic indicator of most general applicability.is income.
Therefore, the economic indicator that will be used here as a treasure
of fiscal capacity is th? per capita personal income of each of the
New England States. Since taxes are generally paid out of current
income, a community's income is a measure of its capacity to meet both
public and nrivate needs. As fiscal capacity is difficult to evaluate
in absolute terns,.only a relative measure will be considered in com-
paring one State with another.
Th-? per n^!«';I'-..v:.ersonal income of each of the Nev/ England States
¦ •¦1'.,:/;, IjGL '57, as well as New England and the United States
averages are shown in Table 35. In 1SG7, Connecticut had the second
highest per capita personal income of the 50 States and the District
of Columbia. In 1967, the States of Connecticut, Massachusetts and
Rhode Island ranked above the median income State of the Nation while
the other three Hew England States ranked below.' Maine's per capita
personal income, which was the lowest of all the New England States
in 1957, amounted to only G7 percent of the per capita personal income
c" ^oru...c^zr'^ ,:y ¦....
' it is evlaerix mat the financial _impact of constructing waste
treatment facilities will be greater in the northern New England States
based on the following two factors: (1) the per canita personal
income is less and is projected to be less in the future for the three
northern States than for the southern States^, and (2) the estimated
per capita cost of needed water pollution control facilities in the
northern New England States is considerably greater than in the south-
ern Mew England States. M
Tax Effort: The extent to which a State makes use of its fiscal
o . te.rf>T*:3 defined as tax effort. For example, if State
v.-and V ¦ihe same fiscal capacity, but State X collects more
taxes than State V, then State X is maki'ng a greater tax effort than
State Y.
A comparison of revenue of State and local governments for each
of the six States is used as a relative measure of the tax effort in
1 "Measures of State and Local Fiscal Capacity and Tax Effort," The
Advisory Commission on Intergovernmental Relations, p.3.
2 "Projective Economic Studies of New England," Corp of Engineers,
Waltham, Massachusetts, Part II, Appendix G.
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TABLE 36
PER CAPITA PERSONAL INCOME
State 1950 1960 1967
Connecticut
1,875
2,807
3,969
Massachusetts
1,633
2,459
3,541
Rhode Island
1,606
2,211
3,328
Maine
1,185
1,844
2.657
Nev Hampshire
1,323
2,143
3,053
Vermont
1,121
1,841
2,825
New England
1,601
2,425
3,229
United States
1,496
2,215
3,159
Source: Statistical Abstract of the United States, 1967
Bureau of the Census, Washington, D. C., p. 327.
"Governrc;intal Finances in 1967-68", Bureau of the
Census, riashington, D. C., p. 52.
97
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Hew England. Table 37 indicates the per capita general revenue, of
State and local governments for fiscal 1963, including total general
revenue, revenue from the Federal government, all revenue from own
sources, and revenue from property taxes.
The per capita total general revenue in fiscal 1963 ranged from
a low of $400 for Maine to a high of $579 for Vermont. However, the
per capita revenue fron the Federal government was $74 for Paine com-
pared to $159 for Vemont. A more realistic economic indicator in
evaluatinq tax effort is the revenue^collected from State and local
governmental sources. For example, in 1963, Massachusetts collected
the highest per capita revenue ($49)6) of all six States and Maine the
lowest ($326). The United States average for the same year was $420.
The State of Connecticut and Massachusetts were the same or above the
United States average while the other four States were below. Per
capita revenue collected from property taxes ranged from a high of
$204 in Massachusetts to a low of $129 in Maine compared to a United
States average of $139.
The relation of State and local governments.' revenue per $1,011
of per capita personal income is also included in Table 37. On this
basis, Rhode Island and Vermont had the highest tax effort of the six
States in fiscal 1963, being greater than the United States average.
Table 33 presents the relationship of State and local governments'
annual expenditures for needed water pollution control facilities to
total general revenue and property tax capabilities based en availabi-
lity of Federal funds. Trie annual per capita capital amounts are shown
for the needed water pollution control facilities under the two assump-
tions on Federal fund availability. Also shown in Table 33 are the per
capita amounts as percent of total general revenue and property tax
revenue of State and local governments for 1963.
With Federal aid amounting to 100 percent of construction cost,
all of the Mew England States will be required to commit (based upon
1953 revenue rates) 1.3 percent or less of their total general revenue
to such facilities. Kith Federal funds at the $600 million level the
three southern States would require a 1.4 percent or less commitment,
and the throe northern States would require between 2.4 to 2.3 percent
commitment.
With 100 percent Federal aid, the annual capital expenditures for
needed water pollution control facilities as a percent of property tax
revenue would amount to 2.4 percent or less for the southern States
compared to over 3.14 percent for the northern States. With Federal
funds at the $500 million level, the percentage for the northern States
would be considerably higher than for the southern States. The addi-
tional percentages for annual operation and maintenance for the needed
facilities range from 0.9 to 2.2 percent of total general revenue com-
pared to 2.2 to 8.2 percent of property tax revenue.
98
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TABLE 37
GENERAL REVENUE OF STATE AND LOCAL GOVERNMENTS
FISCAL YEAR 1968
:onn.
Massachusetts
Rhode Island
.i .nr..
Vermont
Total
General
Revenue
$502
534
492
400
New Hampshire 412
579
United States 506
From
Federal
Gov't.
$81
78
103
74
79
158
86
Per Capita
All Revenue
From Own
Sources
Including
Property
Taxes
$421
186*
456
204*
389
146*
326
129*
333
165*
421
138*
420
139*
Relation of
State & Local
Gov't. Revenue
Per $1 ,000 of
Personal
Income
$126
151
164
151
135
205
160
'artial Source: "Governmental Finances in 1967-68," Bureau
of the Census, Washington, D. C., p.31-33.
~Figures represent revenue from property taxes.
99
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TABLE 38
RELATIONSHIP OF STATE AND LOCAL GOVERNMENTS' ANNUAL EXPENDITURES
FOR NEEDED WATER POLLUTION CONTROL FACILITIES TO TOTAL GENERAL
REVENUE AND PROPERTY TAX CAPABILITIES
(Based on Availability of Federal Funds)'
Annual Equivalent Capital Outlay2 Annual Operation & Maintenance
$600 Million Program Maximum Effectiveness Program
Percent
Percent
Percent
Percent
of 1968
Percent
of 1968
Percent
of 1958
of 1968
Revenue
of 1968
Revenue
of 1968
Revenue
Per
Total
from
Per
Total
from
Per
Total
from
Capita
General
Property
Capita
General
Property
Capita
General
Property
State
Amounts
Revenue
Taxes
Amounts
Revenue
Taxes
Amounts
Revenue
Taxes
Connecticut
$4. 73
0.9
2.5
$2. 50
C. 5
1.3
$4. 03
0.8
2.2
Massachusetts
5.85
1.1
2.9
3.02
0.6
1.5
4.88
0.9
2.4
Rhode Island
6.79
1.4
4.6
3.50
0.7
2.4
5.68
1.1
3.9
Maine
10.00
2.5
7.7
5.00
1.3
3.9
8.05
2.0
6.2
New Hampshire
mm*
•
CO
-vl
2.8
6.9
5.56
1.3
. 3.4
8.97
2.2
5.4
Vermont
14.15
2.4
10.3
6.87
1.2
5.0
11.22
1.9
8.2
Note: 1. See text for explanation of availability of Federal funds.
2. These columns indicate per capita amounts (based on capital costs amortized for
25 years at 5.0 percent and 1968 populations) and percentages (based on the per
capita amounts and total general revenue and'property tax revenue of State and
local governments for 1968, Table 6).
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In summary, the financial impact of constructing water pollution
control facilities certainly will be relatively greater for the States
of Maine, f!e»- Hampshire and Vermont, than for Connecticut, ^assnchusetts
and P.hods Island, based on per capita construction costs of waste treat-
nent facilities, per capita personal income, State and local government-
al expenditures and revenues, and the availability of Federal funds.
Impact at the Co'-munity and Homeowner Levels
Quite apart from any assumptions with resnect to the availability
of Federal and State aid, local comunities in Mew Ennland will face
varying degrees of-difficulties in financinn their share of the total
cost of waste treatment and collection facilities. Once they know
what their share of the cost is and proceed with bond issues to
finance it, they face alternative means of recaoturing these costs,
i.e., repayment of bond issues. These problems may Irs intensified
by the fact that, in many i.ew England comniunities, an industry domi-
nates the local economy, thus raising the very important question of
whether repayment should be in the form of a sewer service charge or by
means of general taxation, or a combination of both..
In general, the financial impact of water pollution control
facilities at the community level will depend largely on the existence
of present water pollution control facilities, per capita income of
the comninity, property tax base, competing claims on community
resources and credit ratings.
The percentage of the local share that will be shouldered directly
by homeowners will depend on the alternative means of repayment of bond
issues used by a community, i.e., whether repayment is in the form of
a sower service charge or by means of general property taxation. It
is important to realize that, in the final analysis, the cost of water
pollution control facilities is paid for directly and indirectly by all
taxpayers, but the impact on property owners will vary with the method
of financing.
In order to evaluate the financial impact at the community and
homeowner levels, a number of alternative financial arrangements will
be considered.
Alternative Financial Arrangements:
The Funding Problem: Although Federal and State grants are
available tFTocal~commurrfTies~ for water pollution control facilities,
the communities must finance their share of the cost. In general,
nost of the cities and towns in New F.ngland will depend on municipal
bend issues to finence the local share, but they will have varying
degrees of difficulties in financing, due to municipal credit ratings,
legal bonded debt liirits and market conditions.
101
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Bond Issues and Municipal Credit natijrv- The tv.!o typos of
bonds most widely used to finance water poYFution control facilities
are general obligation and revenue bonds. In the esse of general obii-
bonds, the torn or city pledges its full credit for renayment of the
debt from the general tax fund or service charnos. Such bonds in effect
constitute a tax lien on all assessable property in the cornunity. In
contrast, a revenue bond is an obligation issued to finance a revenue
producing enterprises, payable exclusively fro^ esrninns of the enter-
prise, in this case service charges. Since the repayment of revenue
bends is dependent on the earnings of the enternrise, thes^ bonds usual-
ly carry an interest rate that is 1/2 to 1 percent higher than general
obligation bonds.
An important factor in determining the interest rate a connunity
must pay for municipal bonds is the credit ratinn of the community.
Credit ratings are determined by such national finis as Moody's Inves-
tors Service, Inc. and Standard C< Poor's Corporation and indicate the
community's ability and willingness to repay the bonds. Investors
charge communities interest rates that are commensurate with their
credit ratings.
Moody's rates the bonds of communities that 'nave $500,000 or more
of debt. Their credit ratings are as follows:
/Via - Best Quality
Aa - High Quality (generally known as high grade bonds)
A-l - Upper Medium Grade
A - Upper Medium Grade (elements exist that suggest suscepti-
bility to inpairment)
Baa-1 - Lover Medium Grand
Baa - Lower Medium Grade (neither highly protected nor poorly
secured)
Ba - Some Speculative Elements
3 - Speculative
Caa - Poor Standi ng
Ca - Very poor Prospects of Payment
C - Lowest nated Class
Many characteristics of a community are evaluated to arrive at a
credit rating. The most important elements used by Moody's in deter-
mining a rating for a coraunity are, (1) management (the policies of
the community in regard to fiscal natters), (2) the economy of the com-
munity (the presence of industry and commercial establishments within
the municipality as well as its capital program), and (3)the bonded
debt. Several other tangibles and intangibles influence a rating..
Moody's rating for the hew England States and a number of selected
communities are given in Table 39. The State of Rhode Island has an
A-l rating, Massachusetts, an Aa rating and the other four States, Aaa
102
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TABLE 39
MOODY'S RATINGS
OF
NEW ENGLAND STATES AND SELECTED COMMUNITIES
(December 1969)
State and Community Rating
Connecticut Aaa
Groton A-l
Hartford Aaa
Plain-field A
Maine Aaa
Bangor Aa
Caribou Baa-1
Massachusetts Aa
Amesbury A
New Bedford A
New Hampshire Aaa
Concord Aaa
Hudson A
Rhode Island A-l
Barrington Aa
Warwick Baa-1
Woonsocket Baa
Vermont Aaa
Brattleboro Aa
Montpelier Aaa
103
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ratings. In general, the communities in New England have a lower rat-
ing than their respective States.
In November 1969, the interest rates for Aaa, Aa, A and Haa ratinns
v/ere 6.05, 6.31, 6.65 and 6.83 percent., respectively. In general, a
difference of 0.1 percent in the interest rate on a SI nil lion bond
issue (20 year maturity) would cost the taxpayers $23,000 more. For
instance, t;ie State "s share of the cost of v/aste treatment facili ti es
for Massachusetts is estimated to be $3^-3 million at the 3500 million
level of Federal funding. Cased on the present trend in interest
rates and 20 year maturity, it would cost the taxpayers approximately
$20 Million less to repay the State's share if the State of Massachusetts
had a credit rating of Aaa instead of Aa.
Legal bonded rebt: Another factor that may create a
funding problem for~TocaT communities in financing v/ater pollution
control facilities is their legal bended debt Unit. All comrunitios
have a legal debt lir.it for public works construction, but in all bev
England States, except Maine, water pollution control facilities a/.d
school construction are not included under the debt lir.it specified by
1 aw.
Although water pollution control facilities nay be exempt fror the
legal debt limit there is a question as to what extent a conirunity
should exceed its legal debt limit. As a general guide, the Interna-
tional City Manager's Association suggests that (1) the ratio of in-
debtedness to full taxable value should not exceed 10 percent, and
(2) debt retirement should be so scheduled that at least 25 percent
of the principal is always due for amortization within a five year
period. Moddy's Investors Service, Inc. suggests that a total debt
service requirement (interest and retirement of principal) which is
more^than 15 percent of the cormunity1s normal annual budget may be
considered high, but also points out that no strict rule of thumb can
be applied since in communities with financial difficulties, even 10
percent may be too high.
In sur,nary, the funding problem will vary from community to com-
munity as reflected by the type of bond issues, credit ratings and
legal bonded debt limits of each community.
The Repayment Problem:
General Property Taxation: Many comunities in Mew
England are repaying municipal bonds, including those issued for water
pollution control facilities out of revenue collected from property
taxes. To evaluate the impact of financing waste systems on the local
community, the increase in property taxes on a S20.0C0 hone (market
value) under various conditions of aid availability will be considered
for several comunities in each of the New England States. Each
community was selected to represent various magnitudes of investment.
104
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It was assumed that the method of financing v:ould he general obli-
gation bonds (25 year maturity). An interest rate of 5.0 percent was
used for all communities although the actual interest rate each commu-
nity will pay depends upon its credit rating and market conditions.
The capital costs used are preliminary estimates and nay "not reflect
the actual costs to each community.
Table <10 indicates the effect on property taxes for a $20,000 home
(market value) for each of the selected municipalities under conditions
of (1) 50 or 55 percent Federal aid and 25-^0 percent State aid, (2) no
Federal aid. and 25-40 percent State aid, and (3) nn Federal and State
aid. The annual tax increase is attributable to the cost of water
pc?lutinn control facilitir~.; i.e.. annual amortized capital cost plus
estimated amr n" cost.¦/vtcperation and maintenance. The three
act on the saluted nuMiti?s under extreme conditions (full
'aid and no aid) and under an intermediate condi ti on (State aid only).
Even though the second and third assumptions may not-be realistic, they
serve to measure the financial impact.
The total 1°63 property taxes on a $20,000 home for the selected
communities ranged between $360 and $1061. The new annual property
taxes ranned between 5413 and $10?5 under conditions of raxi^'P aid
pv*ileMe: .r:r' ,5J to aid only and $453 and 511', no aid.
se f"' .. .• 'vfc&v ... ¦¦ ul capital, operation and naintanonco
is' of waste treatment iiu.nities and are based on TOGO assessed
. " jatioris, assessment ratios and tax rates.
The annual increase in property taxes needed to finance tho
facilities ranged between $11 and $75 under naxmun aid:, $20 and $125,
State aid only; and 52C and $160, no aid. Of the 16 selected commu-
nities, all had an annual tax increase of $75 or less under conditions
of maximum aid compared to 11 cor-munitics with State aid only, and S
communities without Federal or State aid.
It is impuL.iit to e- ;' asize that these figures do not include
'¦ e ; of a collection and, to estimate more accurately
th'1 impact on a homeowner not served by a sewer system, an annual
a. for a collection system must be added to the above figures. An
.r..: rage annual cost of $5D-$75 per household for a collection system
would result in a total annual cost of $611 to $150 under rnaximupi aid
for a $20,000 home for the collection and treatment of sewage. The
total annual cost of collection and treatment per $20,000 home would
range between $70 and $210 under State aid only, and between $78 and
$235 under conditions of no aid for the selected communities.
Service Charges: A number of Nev: England Ceimuni ti cs
use a sewer service charge, also called a rental charge, use' charge or
sewer use tax as a source of revenue to repay general obligation, or
revenue bends used to finance vraste treatment facilities and/or to pay
105
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TABLE 40
EFFECT ON PROPERTY TAX ON A $20,000 HOME IN FINANCING WASTE TREATMENT FACILITIES
(MARKET VALUE)
Increase
in Annual
Taxes
New Annual
Taxes
1968
Max.
State
No
Max.
State
No
State and Community
Taxes
Aid
Aid
Aid
Aid
Aid
Aid
Connecticut
Groton
$570
$25
$48
$ 60
$595
$618
$630
Canton
564
20
40
49
584
604
613
Plainfield
360
53
96
120
413
456
480
Maine
Bangor
668
36
60
76
704
728
744
Caribou
609
49
81
101
658
690
710
Fanrvingdale
388
49
80
100
437
468
488
Massachusetts
Amesbury
1020
75
126
148
1095
1146
1168
New Bedford
1061
16
34
39
1077
1095
1100
Rockport
455
16
30
36
471
485
491
New Hampshire
Concord
877
54
94
128
931
971
1005
Conway
440
21
30
37
461
470
477
Dover
691
11
20
28
702
711
719
Hudson
620
68
120
160
688
740
780
Rhode Island
Jamestown 380 34 60 73 414 440 453
Woonsocket 737 21 38 45 758 775 782
Vermont
Brattleboro 747 26 46 58 773 793 805
Windsor 721 33 59 76 754 780 797
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for the cost of operation and maintenance of the system. Other commu-
nities use a combination of service charges, general taxes and better-
ments. For example, in f, roc!', ton, Massachusetts, 50 percent of several
revenue is from service charges, 25 percent from betterments and 25
percent frc,r' general taxation.
The sever service charges can be based on one or a combination of
factors such as the folic,'inn: metered volume of water used, flat
rates, sev.'aoe flo" and/or strength, property frontane or area, value
of property or number of rooms.
Basing the service ciierne on the metered volume of water use is
one of the most frequently selected methods, since C5 percent of the
water distributed in the llaticn is metered. With this method, the
charge can be based on a uniform metered volume of v/ater used, slidir.q
scale of metered water used, block ratio of v/ater used, percentage of
water bill or by the size of the water meter.
Flat rates, which are used in areas where metered water service
is not available, can be based on the number of equivalent dwelling,
units, number of persons residing or working on the premises, number
of plumbing fixtures, and/or the number of sewer connections. The
disadvantage of the flat rate basis is the users are not chargeu in
terms of quantity or quality discharged into the system.
The metered sewage charge is usually limited to industry and
commercial establishments and some inter-municipal arrangements be-
cause of the cost and technical difficulty in metering the quantity
and quality if it were feasible to meter on a widespread basis.
Example I which is presented later compares a service charge with
general taxation for a large industry with in a small community.
The Problem of Joint or Separate Facilities
Explanation of Distinction: For the purpose of this report, a
separate facility is defined as one where the wastes are from municipal
sources which include domestic, commercial, and a small amcunt of in-
dustrial wastes while a joint facility is one that receives domestic,
commercial, and a large amount of industrial wastes, However, in both
cases, the facilities arc constructed as well as ov
-------
By lav/, the industry is required to treat its waste, but it ray c!c
this by (1) building its own treatment facility, or {2) he.vino the
comnunity build a treatment facility which the industry and the cc;ipun-
ity can use jointly. However, the latter alternative has prompted some
to question whether the amount of Federal and State assistance to a
community constructing a joint facility serving a dominant industry
should be reduced. AT Associates in their report to the F'/PCA, sub-
sequently transmitted to the Congress, on incentives to industry
recommended:
"...it does not seem desirable to continue to give grants
to municipalities to construct industrial treatment faci-
lities. Instead, the current practice should he changed
so that grants are only given for the percentage of
capacity which is actually used to trsat domestic wastes.
Towns should be required to allocate costs between indus-
trial and other wastes according to standarizod procedures."1
The report further mentions that:
"The present value to the firm of the tax savings for
pollution control spending under the current tax law is
30:: to 4DS of the cost of the capital investment and
of any operating costs. The very substantial size of
this aid should be kept in mind when considering the
argument often made for additional tax assistance, na-ely,
that the corwunlty as a whole ought to assume part of the
costs for abating pollution. Vhether it should or not,
the coir-'unity is already in fact assuming much of the
burden to industrial pollution control." 2
Example I illustrates the costs to both the industry and the town
is a joint facility is constructed compared to separate facilities.
Example I
A small community with a large paper company located in the town
is used for tin's example. It is estimated that the cost of required
water pollution control facilities, including collection and treatment,
for the town alone is $500,0C0 while a system that could accommodate
both the industry and the to<>n is estimated to cost $C million. Tor
the purpose of this analysis, the following assumptions were made:
1 AHT Associates Inc., "Incentives to industry for ''ater Pollution
Control: Policy consideration," December 1257, p. 54.
2 Ibid., p. 41
108
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Federal aid 50 percent end State aid 30 percent of construction costs,
25 year amortization period, 5.0 percent interest rate on general obli-
gation bends, aric! annual costs of operation and maintenance a? 5 percent
of capital costs. Total costs eligible for State and Federal assistanc
are approximately $5.° million for the joint facility..
The waste characteristics for the town and the industry are as
fol 1 ov/s:
Waste Characteristics
Flow-rr.gd.
Cinch-""''en'' r ,.:n Hemand ("CD)*
Tov/n
0.25
r:no
Juy
Industry
10.7
63,100
Suspended Solids - l!:s/cay
500
202,4000
This raeans that the industry's average daily flow is approximately
43 times that of the tov/n, 5-day LTO is 12C times, suspended solids is
505 times and the cost approximately 11 tir.es. '..'hat financial arrange-
ment would be most equitable for the industry and the tomn? Should the
town pay 1/42, or 1/125, or 1/585 of the annual cost of the jci :t
far?' J5and t' "-1' "'"rtry the remainder? Tiie following analysis will
:cnr::i~'-• tv, • 1 ;;e town and to the industry based on general pron-
' : -"iitriuution, flow, LCD and suspended solids. It is
. , of this stud/ to develop a scheme for equitably distri-
buting costs of a joint facility between the tov/n and industry, but
to present a number of possible alternatives that can be used in deter-
mining an equitable cost-sharing arrangement. The financial
arrangement is shown as follows:
"iyJoint Facility
Total Cost of Joint Facility
Eligible bi,.>Ls
' ¦ ¦ e - 50«
State Share - 30 ?!
$ 0,000,000
5,900,000
2,950,000
1 ,770,000
Local Share - 20^
1 ,100,000
* Biochemical Oxygen Demand - The amount of oxygen required by living
micro organisms in the decomposition of organic matter in water.
109
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Total Local Share (includes
$100,000 ineliniMe costs for
collection system) -
Annual Capital Cost (arortized
25 yrs. 05.0?)
($1 ,280,000 X 0.07095)
Annual Operation and
Maintenance Costs -
Total Annual Cost -
Cost Sharini
$ 1,20,0,000
90,800
300,000
300.800
General Proncirt'/ Tny$x'
¦ ¦ —— J 1 •
If the annual cost of 03-0,000 v/ere to bo financed fror property
tax revenue?, then an increase in tho tax rats would necessary:
Total assessed value of all property (1050)
Total assessed taxes (1000)
Tax rate (par $1,00'iivr"'/ en)
Mew Taxes ($1 ,005,7: -- ...0,000)
Mew Tax rata (per 01,000 valuation)
Increase in Tax "ate
Industry's Share of Joint .'Facility
(1007 industry's assessed valuation,
$12 >135,400)
Town's Annual Share ''int Facility
(1207 assessed valuaiV:.., conrnf rci al
and residential 0.3,707,COO
Service Charne
$1 P.,94 3, CG0
1,000 ,730
53
1,3^7,533
71
21
$251,700 G4.4X
130,ICO 35.a:
1 • If tho cost-sharing vrern to be based on flov, then:
Town's Annual Share - $ 9,000
Industry's Annual Share - $ 301,800
If the cost-sharing were to !.e hased on 5 day GOD, then:
Town's Annual Shore - $ 3,100 0.0%
o r>v
Cm • \J tO
97.7%
no
-------
Industry's Annual Share - $ 307,700 90.2%
3. If the cost-sharing were to be based on suspended solids, then:
Town's Annual Share - $ 300 0.2%,
Industry's Annual Share - v 393,00 S9.££
The cost to the town will vary greatly depending on whether or no
general taxation or a service charge based on flow, SOD or suspended
solids is used to repay the general o'-l inn tier, bonds for a joint faci-
lity. A s unary of the total annual costs (capital, operation and
maintenance) to the cor^iunity and the industry is tabUiated below:
Joint Facility
(Total Annual Costs)
General Taxes Service Charne Oased On
Flov P.''"! -Suspended Solids
Cost Percent Cost Percent Cost Percent Cost Percent
in in i n i n
$1,000 $1 ,000 $1 ,000 $1,000
Tovn
$139.1 25.G $ 0.0 2.3 $3.1 O.G $0.00 0.2
Industry
$251.7 C4.4 $381,3 07.7 $307,7 90.2 $300.0 99.3
It 1s evident v.'ith a joint facility that the tovn would pay a
higher percentage of the total annual cost if goner?. 1 taxation were
used to raise revenue than if a service charge vsre used based on flov
POD or suspended solids. However, a nore reasonable financial arrange
picnt vould be one in which the total annual cost to the industry and
the tovn is determined by construction and operating costs that are
attributable directly to each. A detailed analysis of these costs con
then be required to arrive at a nore accurate and equitable service
charge for each.
Senarate Fncilit-/: A further comparison is considered in this
example to evaluat.f the total annual costs to the tovn if a separate
facility were constructed instead of a joint systen.
Separate Faci1ity
Total Cost of Tovn Facility $ 500,000
Eligible Costs 400,000
111
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Federal Share CO': 200,000
State Share 30£ 120,000
Local Share 20% 80,000
Total Local Share 180,000
Annual Capital Cost
(25 yr. 0 5.0::) 12,000
Annual Operation and Maintenance Cost 20,000
Total Annual Cost 32,000
General Taxes
Town's assessed valuation exclusive
of industry - 1907 $ 2,330,720
Taxes assessed - 195,000'
Tax rate (per $1,000 valuation) - 82
I Jew taxes (^105,00.n + $33,000) - 220,000
Kew tax rate for town only - 9C
Increase in tax rate - 1G
The total annual cost for the town would arount to $32,000 if
the town constructed and maintained a separate facility. On the other
hand, if the industry constructed and maintained its own facility,
then its total annual cost would be $6'12,000 based on no Federal or
State financial assistance.
1'ith a joint facility, the town's annual share would range fron
$000 to $130,100 or from 0.2 to 35.6 percent respectively depending on
the method of financing. In contrast, the industry's annual reduction
of profits for a joint"facility would range fron 1.0 to 2.0£ pc-r share
before taxes depending on the nethod of financing and based on full
Federal and State financial assistance.
If general taxation were used to raise revenue to finance the
annual cost of a joint facility, then the town would pay more than if
the town had its own separate facility, liowever, if a service charge
v.'ere used, based on flow, B00, suspended solids or a corMration of
these for a joint facility, the town would pay less annually than having
its own facility. The reduction in profits to stockholders would not
be that significant if the. industry i/ere to construct and naintnin its
112
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own facility. However, t!ic amount of Floral and State aid for a joint
feci lit/ would amount to approximately $4.7 inillicn compared to £320,-0?
for a separate municipal plant.
Exannlo II
In tlie final analysis, part of the cost of financing <-ater
pollution control facilities is borne directly by hcmecwrcrs and the
remainder, namely the Federal and State share, is borne indirectly by
all taxpayers. The impact on the homeowner can be evaluated, but the
impact on t!io taxpayers in general cannot.. To illustrate the i^nect
on the average homeowner, the fol 1 o-;ing example is presented.
A particular ccm.nunity in "ev Hampshire ht.s selector' because
there is virtually no industry in the town, and the cost of water
pollution control facilities "'ill he borne directly by the ho^eovrers.
A1 though the 1PH0 Population of the tovn war 3.6F0, it !v»s nearly
tripled in the past nine years to a present estimated population of
10,JO:). The biri 1 diik; boom \i 11 not continue. however, because of the
town's new zoning regulations. Presently. only a snail percentage
of the population is severed, and there are no treatment facilities'.
The estimated cost of interceptors and water pollution control
facilities is V1 .S million and the cost of lateral sewers is $1.(\?>
niliion. The Federal and State aid programs can provide SO percent
of the cost of treetr.ant facilities and interceptors, leaving approx-
imately $3.13 mi 11 i on p 1 us 31.40 mi 11 i on or a tota 1 of $1. Co r.ii 11 i on
to be financed by the comiunity.
In the analysis to follow, the estinated cost of water pollution
control facilities for the average hereowner in this town will be
cor.perec! to the average cost of other utilities such as water,
electricity and telephones.
The cost of water pollution control facilities to the average
homeowner will vary depending on the funds available and method of
financing used, i.e., general taxes or service charge. Fased on 5j
percent Federal aid and AO percent State aid, the cost to the average
homeowner ($20,300 ;nar!:et value) would arount to approximately $25 per
year compared to $50 per year if only State aid were available. If a
service charge were used, based on a percentage of the water bill,
then the cost for waste treat!.ent facilities for a family of 4 would
amount to appro/irately $50 per year with full aid and $100 per year
with State aid and no Federal aid.
In addition, hemes that are net presently sewered will have an
additional betterment charge that may amount to $30-75 per year for
2G years. For these ho:ieowners, the annual cost of a collection and
treatment system nay range from 373 to $175 depending on available-
funds and the method of financing.
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By way of comparison, the monthly averanc utility charts for
a family of four arc electricity, *>lf, water; $7; and t^lerlone,
(with toll charts $11.50). These compare to C>7 to $15 for waste
treatment and collection, depending on the availability of funds.
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ALTERNATIVE ALLOCATION METHODS
Havinn reached tho basic conclusion that Federal financial assis-
tance is indeed proper, remaining questions ultimately revolve
unon specific allocation-formulae and procedures. A number of
allocation methods have been proposed by governmental bodies
and by planning groups, and others that are well-founded in
economic theory are nuite plausible for application to the pollution
control area even 'though they have not been advanced in that connection
to this tire. Certain basic principles underlie each variation on
the assistance the^e^t-'d an infinite number of combinations of desirable
features are oossib'- ously, it becomes iniorectical to analyze
every plausible combination. This section, than, will evaluate kinds
of distribution procedures. The examples illustrate and examine salient
principles, allov,'inn informed judgements as to the probable effects
of combinations of basic strategies.
Each of the alternative allocation procedures is examined in the
light of the criteria used elsewhere in this report: effectiveness,
efficiency, rjouity, *nd practicability. In addition, alternative
allocation formats hm. <*rr*iderod in terms of a set of Independent
values. These arn: -tflicies consistent with the promotion of regionalism,
ability to extend the independent regulatory position of State pollution
control authorities, contribution to the extension of pollution control
capabilities, compatibility with the imposition of standards based
on performance, and two economically desirable side-effects, contra-
cyclical flexibility and price level maintenance.
The degree to which 'allocation methods are essential to the effec-
tive application of construction grants to pollution abatement problems
is importantly related to the total level of Federal funds available
relative to need. MKen the level of funds is low relative to need, the
means by which they are allocated become critical, in that the limited
resources must be directed to the areas-in which they produce maximum
effectiveness. At a relatively high funding level these considerations
become loss important, since both cost effective and marginal investments
will be made in a shorter period of time, decreasing the effective
loss incurred by the nation in foregoing for a period the most cost
effective set of investments.
It is emphasized that the discussion of alternative allocation
methods in this section deals with each in its pure form and from a
theoretical point of view. Finer tuninq of the allocation method best
suited to the actual situation must await determination of-the levels
and rate at which federal resources will be applied to municipal con-
struction grants. A mix of two or more of the strategies discussed,
may best suit actual circumstance.
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The Existing Ferr.'iln
Description. The nrosc-nt allocation of construct.ion "rant calls,
in substance, T"or the division of ^50 nil 1 ion among the States on the
basis of per caoita in cone, with the remainder distributed among the
States according to population. (A stipulation that reserves a portion
of the funds to communities of 12!".,one persons or loss has no effect
on interstate distribution of funds). Funds are allotted in blocks to
the States, hut. must be justified nn the basis of specific projects which
must be approved by the RJPCA. Each State must rate nrojects in a pri-
ority system. Incentives are provided for renionalism and for State
financial participation, but these are in the fom of an increased
Federal share of the cost of a project, and do rot affect the total
allotment of funds to the State that enacts them.
effectiveness. At an earlier stage of the effort to control water
pollution, when broad prevalence of untreated waste discharges provided
a variety of potentially profitable investments, undifferentiated allot-
ments to States was an effective technique. But as the number of invest-
ment opportunities has been reduced, some States are unable to utilize
their full allotment of funds. Each year the list of uncenstructed
projects for which Federal grants have beer, awarded grows longer. And
each year sore States bypass a majority of the high-ranking n, ejects
on their priority lists or assign high priorities to projects of low
marginal utility to certify then for Federal assistance.
F_quit4V. Inequities of the existing grant allocation formula trace
to the lack of mechanisms to insure the effective use of funds. Increas-
ingly, it has been unable to draw matching investments from the prin-
cipal sources of marginal damages. This failure on the oart of those
who cause damage has, in consequence, meant that nationally supplied
contributions have not returned proportional benefits to their contribu-
tors. A subsidiary inequity is fairly common vnth resoect to local
contributions of funds. Treatment plants built or expanded out of
general revenues Plus Federal grants have in seme cases served largely
to treat industrial wastes. From the national point of view, equity is
served by the practice, since the broad beneficiaries receive full value
for their input of canital. Locally, however, the source of damage
largely evades costs under this fund-sharino arrangement. Since the
Water Dollution Control contains no provisions aimed at extending the
equity off results through the range of financing groups, remedies
are not now available at the Federal level.
Efficiency. Effective projects may not be constructed, while the
system permits the continuing construction of less necessary works cut
of the inertia of events or the good will of orouns of local citizens;
the works that are constructed may in many cases provide no practical
benefits, since the precondition fcr their effective functioning is the
existence of those works that are not being tuilt. A plant that is
quite efficient in its own operations may still produce no tangible
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benefits—as when it discharges to a watercourse so polluted by an up-
stream discharne that its presence or absence is immaterial to stream
quality. In these cases, the losses take the form of the discounted
value of sunk caoital tooether with operating charges that occur over
the period between the construction cf the works and the emergence of
the situation in which the oneration of the works can actually produce
an improvement in stream quality.
The amounts involved are not sliqht, in spite of the qeneral exis-
tence of waste treatment. Drawing upon knowledqe of specific water-
bodies and making only very rounh kinds of estimates leads to the
judgement that there were as late as 1967 a ouarter of a billion dollars
worth of works net nroducino tangible water quality chances in the
f'errimack, l.'illamette, and Lake Erie watersheds alon*5. fhe disutility
in these cases is not ascribed to any deficiencies of the works them-
selves, but to lack of urgently needed works of other kinds or at other
places, iior were the watersheds chosen because of some spectacular
deficiency, but only because some knowledqe of their conditions was
readily available.
But the externally caused ineffectiveness that makes a lares share
of the works built with Federal grants a subontimum investment is not
the only source of inefficiencies in the conduct of the grant program.
Others trace to the project orientation of the program.
There are few incentives at either the federal or at the State
level to use money efficiently and very, few local governments can
connand the engineering skills, to know how well their monies are
being used. The fact is that State renulatory authorities in many
cases show more concern for adherence to ricn'd desiqn standards than
fcr the aonrooriateness of a facility; and Federal inspectors ratify
whatever desior prejudices the State may have. OverdesigreJ plants
with excessive capacity push the average oer capita cost of a facility
in some States to very hiqh levels. There is no authority in the Act
for establishing federal performance or cost-effectiveness standards.
State agencies have no responsibility for the efficient use of funds,
since these are provided onlv by lecM and Federal qovernrents in
most cases. So wasteful design ma}' be habitually enforced. Moreover,
the desiqn standards employed in many States cannot be depended uoon
to nrovide effective operation of facilities. The State of California —
so often in the vanguard in the area of environmental protection—
provides a commendable exception, in that its nroqrams are based on
required standards of performance.
Project lim'tpd nrants also enforce w^ste throuqh their very nature.
Federal construction nrants may be awarded for waste treatment plants,
for interceptor sewers, for outfalls, and for components of these three
elements of the waste handling system. They do not extend to collecting
sewers. In many cases municipal sewer systems are in very bad repair
or have become out-of-date. Sewer system rehabilitation is expensive,
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and there in little F^'-r^l asoistance f^r t!:e activity. It is not at
all uncommon, then, to substantially ovordesiqn treatment plants to com-
pensate for deficiencies of the collection sv sten. oven with full !t.cvi-
ieda? tint infiltration or storm drainage will, in fact, short-circuit
the treatment phase of the system, (cf., Honnigan, Robert D., "Urban
(Municipal) 'Jater ['ananementnapor ^resented at the 4th American Water
Resources Conference of the American Water Resources Association, 'lev/
York, November T^.P, for some examples of this phenomenon. Off the
record reinforcement of his examples can be obtained from the junior
associates of any good-sized consulting engineering firm.) There should
be nothing surprising a!out the fact. Since Federal assistance has been
concentrated on particular elements of a broad system, v/e might expect
that those elrrnont-s would be overbuilt relative to the unsubsidized
portion of the system.
Practicability. The current nrocedures for allocating Federal
assistance to construction of waste treatment works have one tremendous
merit. As a mechanism, they have come to be veil understood by everyone
concerned. Interlockinc administrative procedures have been developed
at every level of government concerned to ensure the smooth process inn
of applications; and the critical link vith the -private sector has-been
firmly made as consulting engineerinn firms have become familiar over
the years vith all of the details of grants management. As a means-for
distributing money, the current form of grant must rate very high.
Implementation frants
Description. It has been proposed that the most rapid approach to
total p'olTutTon abatement cculd be mane by award inn Federal Construction
grants only for purpose of building secondary vaste treatment plants
(includino the upgrading of primary Plants). Under this decision pro-
cedure, allocations among States would be based entirely on: 1) number
of persons attached to sewer systems but not served by waste treatment,
2) number of persons served only by primary waste treatment, and 3)
persons living in communities that are newly severed during the life
of the grant program.
Effectiveness. The effectiveness of such a strategy is debatable.
Presuming that some means could be developed to brim grant applications
in from the communities who would be eligible for assistance on such
terms, a very rapid improvement of abatement capability would result,
whether this would be sufficient to offset deterioration of systems
requiring improvements but no longer qualified to receive Federal assis-
tance would depend largely on whether local and State government could
be induced to increase their shares of the financing burden. There can
be no Question but that there would be an immediate short term improve-
ment in water quality, due to the critical nature of the need for treat-
ment to be installed in sci-? places that would be affected. The total
increase in effectiveness that would result is, again questionable. A
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generalized renin repent such as secondary waste treatment has no parti-
cular relevance to the real needs of any particular water body, so over-
investment would result in son* cases, but underinvestment in others.
Equity. The proposed allocation formula could scarcely be consider-
ed to have any substantial advantages or disadvantages of equity relative
to the existing formula. Trie .judgement that new plant needs are inher-
ently more pressing than improvement or expansion needs is the basis for
the suggested formula. The validity of that judgment would provide the
test of its eguitv.
Efficiency. On grounds of efficiency, the implementation forniula
must rani: even lover than the existinq qrant allotment fomula. In
terms of real world needs, maintenance a no' improvement of systems are
at least as important in the long run as new abatement capabilities.
If systems were allowed to depreciate as a result of a sudden cessation of
Federal r,unPort ,¦ there could only be a drop in total system performancs--
thounh norhges not immediately. There is no reason to suppose that
further restriction of the application of orants would be any more suc-
cessful in eliciting necessary natchir.n funds from deliquent communities
than has hern the case in the east, so losses in the for" of unutilised
capital m>l,t be expected to n^unt. Finally, the weaknesses inherent in
project /justification and limited application of funds within a total
system would be even mere prevalent under circumstances that farther-
limited the range of uses to which Federal funds could be applied.
Practicability. The practical failings of such an allotment method
should be obvious/ There v/ould be extremely complicated nroblems of
definition. Very detailed decision rules v/ould have to be adopted: for
example, to rule out expansion applications from new connection appli-
cations, or to determine what portion of the cost of upgrading a primary
treatment plant to secondary treatment was actually an upgrading invest-
ment and what nortion a replacement investment. Further, it would be
extremely unlikely that thrtse States whose annual investment is now
larcjest--and, as a result, now have a relatively small share of
the untreated oeoulation--wo'ild accede to a formula that sharply reduced
their Federal assistance, without regard to the fact that their main-
tenance needs are createst. The whole concent of restricting grant
allocations in the suggested fashion must be dismissed as politically
and administratively impractical, even without regard to effec-
tiveness or efficiency standards.
Cost Equalization Parts
It has been proposed that Federal construction grants be awarded
in a fashion that tends to equalize per-canit?. costs, so that persons
in all sizes of communities and all portions of the country pay the
same amount of local funds for waste treatment.
Quite apart from the fact that any scheme that reduces natural
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advantaoes is innately abhorrent to economists, tho proposal is ineffi-
cient, ineffective, and inequitable. Its basic effect would be to chan-
nel Federal assistance av:ay fron large cities where, because of
economies of scale, unit costs tend to l.e slightest, and into snail
communities. I.'ot only would this deny assistance to the places that —
because of the concentration of waste discharges at a single point—most
need waste treatment, it would also provide most assistance to those
places where total per-caoita governmental costs are least. (Tax effort
correlates positively with size of nlace in the U. S.). The proposal
would discourage regionalism. It would also provide incentives to
inefficiency and overbuilding. In effect, institution of such a pro-
vision would set a ceil inn cn the amount, local taxpayers would have to
raise in connection with waste treatment, pushing any excess costs onto
the nation as a whole. At this time, one region of the nation builds
facilities at a cost almost three tires the national average, another at
costs two-thirds the national averane. These differences in cost dc not
reflect improvements in efficiency—quite the contrary, in fact; it
would ssen that tho hi oh cost area may suffer from poor Quality regula-
tory and engineering services. Yet the effect of equalizing grants
would be to concentrate the rederal investment in the high cost and in-
efficient regions in a fashion that perpetuated inefficiency.
At least one State has until recently attempted in a roup'-- and ready
fashion to carry out a Policy similar to equalizing grants, the proce-
dure in this case was to refuse to provide a priority for entitlement to
Federal funds to the largest city in the State; and the results have been
disastrous. The river that flows nast the city that was denied Federal
assistance has continued to be one of the most polluted, if not the most
polluted, in the nation, and to empty into the most polluted large lake
in the nation. Federal funds allocated to that State went entirely into
rural communities end affluent suburbs, to build waste treatment plants
whose ultimate effect on water quality v/as relatively slight.
Inefficiencies and inequities are not the only reason to cause the
equalizing grant proposal to be dismissed. Problems of administration
are also enormous. To define the population base, to compare the cost
of a new lift station with the cost of a new plant, to account for
excess capacity and for industrial loads, to decide the cost base--is
it to be done on tho basis of the entire project? On the basis of
the cost of components? For a State? For a region? For a project?
For the nation as a whole? Such questions would take on the dimen-
sions of a nightmare. It is simply not possible to define a nractical
formula to equalize costs.
Participation Grants
Description. Fairly recently, Congressional sources have pro-
posed^'Trifustrrent—of those provisions of the Act that call for a larger
Federal share of cost in circumstances v/here State acvernment contri-
butes to the cost of a project. The adjustment calls for a fixed
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rederal share of project costs, regardless of the status of State
financial assistance, but would increase assisting States' allocation
if Federal funds, relative tn those received by States not narticipett-
ing in the financinn of projects.
Effectiveness. Participation nrants would he at least, as effec-
tive as the current allocation scheme under almost any circumstances,
and von!c! nrchably result in an increase in effectiveness, since
funds would he channeled te those States in which the conbine-d State/
Federal fundira, \y reducing financial constraints that impinge on
communities, would most conveniently be translated into construction
projects.
• ¦ : louit'. . ;\atinn grants appear to have an equity advantage
.),* ••• t;- formlae, in that all communities would have
'in'uci 1" eta 1 i.'it'o'o assistance without regard to the actions of
Suite governments, over which communities have no control. The present
formula tends to penalize local government for the program deficiencies
of State government.
EjTi^ciency. Participation nrants mi ah t he expected to contribute
to offlcTohTy in several ways. Sy reducing the financing (as well as
the financial) burden on communities, the procedure would almo't
unguestior"/!..¦ v: :• - ' r. the flow of funds into needed projects
trr'amarket conditions. By directing funds to
.1 . nstraMy more aggressive programs, the procedure
probably c«cceinrate the rate of utilization of Federal funds,
thus reducine maintenance charges on unused anpropriations. It is
probable that regionalism with its documented efficiencies would be
facilitated, if one mab.es the obvious assumption that a larger portion
of total activity would tahe place under circumstances where State
governments, because 0* the use of State funds, would have an interest
in the effective utilization of those funds. And because State fund-
ing presumes a "legislative overview and a legislative interest in the
use of funds, there is reason to hone that the application of legisla-
tive ovf?rsir;'vt --'inns would reduce the administrative disecono-
mies thai tor' •• t( L'xur in situations where design standards are
•Tr; " ' ' '" ¦•.•fc, ; once to performance. tJot the least contribution
~ be exr-'Ct.Qd to result from the fact that the
Federal sharped winding would be fixed in all cases, reducing both
administrative demands and the tendency of communities to defer con-
struction in the ho-** of ottainino a larger amount of Federal assist-
ance v/ith a change in circumstances.
The fact that almost half of the States
currently possess" at" least, the legislative authority to conduct
assistance prc-oryis is undeniable proof of the underlying practica-
bility of the proposal. It should be noted, however, that not all
States that have enacted financi-il assistance programs have proceeded
to fund them. Furthermore, there may be cxnectod opposition frcn
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those States that have not seen fit to er.net assistance programs to
a reduction in their shnre of total Federal assistance. It would
bo honed, ono assumes, that the long tern effect of the enactment, of
sore form of particiration grants would be to cause every State to
provide financial assistance, thus insuring its relative share of
Federal funds, and also drawing it into more intimate sharing of
the 'tot-il problem of water pollution control.
Block Grants
Description. It has been demonstrated that there is a needed
chanqe~f^tTf^Vcfture and level of existing Federal cost-sharing.
Several methods have been discussed in the context of cost-sharing
principles. These methods do not adequately solve the pollution
problems as they now exist.
On* asnect of the dual nature of the pollution nroMem is ensur-
ing the "crfnrrancr of existing systems. A type of -grant is suggested
vhic'*i «'euid us° penies to aid States and local jut isdic-
tinns *o co-ic 1 r'ict an^ n^-jntsin do!Tution abatement system. The
current'act does stimulate thet the systens he maintained and oner*ted
once constructed, in order for the grant to be allocated. The 1irtont
of tl-is tyne of nrant is to allow as much latituoe as possible Wmlc
tl-.r. existing vste^ pust actually be operated and maintained, treatment
s^Vnust h'nwo tie resources that will enable then to expand to and
to adiusi to r-w water quality conditions. Therefore, the interpretation
ef these orants should he flexible enough to permit en.v type of pollution
contVo 'nS Jfty by the system e.o. construction of higher
levrls of treatmon* interr.eetors, collection lines, numemg stations,
in-strer.m aerators,' cha-1c"H for chlorinntion and nhosehate removal,
system (hasin/St^tp) elanninn and operation, training of pet sonnel.
Essentially, the activities warranted under these tyoes o. grants
include any'activity that is needed to sustain viable abatement systens.
Of distribution criteria for block brants, population is tie
most accurate simulator of wastes Droduccd. Population measurement
docs hav* t!ie bias that not all the population is sewered, but tms
bias in loss nisrenresentative of wastes produced than other bases
for allocation such as *cr canita income ano/or rederal taxes collected.
FurtherroV^ this bias could be adjusted by usinn a combination of
population ^nd nonulation sewered, obtainable on an annual basis from ^
the PTO v.-1 inventories. Industrial wastes have less of an isomorphic
roUtionshin't:^
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An essontill element of the 31 ock Crant is that the Stato have
discretionary us° funds. Cost sharing ratio? with communities are
not prospocified a 11 o\'ino un to 100 percent grants in extreme cases,
to attack problems which night not yield to lesser levels because
of nenative voter attitudes affecting bond issues or similar reasons.
ELliLctjvM!?SJL• block nrants could be no less effective
than construction" grants, for the simple reason that they could be
employed in precisely the sane fashion. It would be hoped, however,
that regulatory agencies within the States could in many cases
improve the effectiveness of their use of Federal funds of project
.justification was "removed. In this connection, it should be
noted that effectiveness would rest in sore measure uoon the
scrutiny accorded by F'IPCA to the proposed State program.
In desieninn these grants, the philosophy of the administration
should also be considered. The .justification cf this type of grant
lies in the fact that communities are hard pressed for funds; once
their systems are semi-adequate they are will inn to spend funds on
other public demands, rather than on preventive-abatement needs where
the short run marginal return on dollars snent will be low. These'
grants could be considered as block grants qiven to States for the .
purpose of alleviating some of the financial pressures on locr? com-
nuni ti es.
Since Block qrnnts are not: desinnod to provide directly any
regional reimbursements for externalities nor to en co lira as uniform
behavior en the nart of local level of government, the need for direct
Federal control on a nroiect basis is minimal. States would have
the prerogative of estaMishinn their priorities according to whatever
criteria are most applicable to conditions. This would permit flexible
use of qrant funds according to local needs and not uniform notional
practices. A grant program such as this would move the aeency toward
the pattern of "creative federalism" outlined by President "ixon.
Federal control would be exerted through review of progress in
pollution abatement and system upgradinq and maintenance. Broad
review of concepts, State program emphasis and policies should be
made through the mechanism of the State Program Plan submission under
the Stato Program Grants.
Equity. Satisfaction of the equity requirement would rest
largely unon the Performance of the several States. It might be
assured that Federal surveillance could be depended uoon to maintain
some measure of equity in the conduct of Federally assisted State
programs, though the evidence of similar grant mechanisms in other
kinds of Federal/State relations is not reassuring o'n this count.
One might, however, soy with little expectation of contravention that
it is unlikely that block grants would be less equitable than
construction grants.
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Efficioncy. It is very probable that a seme over-all
03.in in efficiency would result from employment of Clock grants.
The diseconomies inherent in prc/jcct-orienterl grants would no longer
be invariable. The effective regional aspects of State programs could
be potentiated. And resources could flow to the places where need
existed, rather than to projects initiated at local option. Again,
there is no assurance that any of these desirable features would exist
—but they would become potentially available. To the extent that
States retain the current project oriented system of allocating funds,
within the State and restrict the range of alternative quality manage-
ment tools eligible for grants, the block grant approach will fail to
provide these improvements in efficiency.
Practical jty. Special purpose block grants that allow a high
measure of discretion to the recipient are sanctioned by use in a
number of applications. One would assume that State governments would
favor such a system o^ assistance, though the ability to supply match-
ing funds mioht reduce enthusiasm in some instances. The major
problem could probably be expected in the Federal bureaucracy, which
would Lave to substitute rather exacting evaluation and negotiation
skills for the routine tasks now performed in processing applications.
A desirable asnect of any new grant urogram is that ager-y
implementation of the new grant would not reeuire any major
organizational changes. On a limited scale, many of the functions
are now being performs'4 by program nrants. By extending the amounts
of these grants, by moving the restrictions on the existing program
grants ant' by permitting flexible usage of the money by the States,
the Bloc!-, grant program could !e easily implemented. Also, those
grants would require a minimal allocation mechanism, eliminating
any increase in agency staffing for the program.
Selective Abatement Grants
Description. Another aspect of existing pollution problems is
extence of isolated rockets of pollution. To eliminate these
problems a classification of ''enforcement" grants is suggested.
Their use is commensurate with the original intent of the grant
program vi_z, use of optimizing grants to solve a particular problem.
The main diTference between the proposed grant and the existing
program is the location of the allocations. Today's problems
require funnelling aid to needs which are isolated and concentrated,
not diluting the allocation process via some universal allocation
method.
A selective abatement grant system is the oure form of optimiz-
ing grant. Optimizing grants should provide or cncodrage the solution
the solution to a problem in the most efficient manner. Because problems
vary in each pocket of pollution, the use of the funds should be different.
For example, the I!ew England and Hudson oroblcns--due to lack of
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treatment faci 1 ities —are intrinsically different from the eutronbica-
tion problems of Lake Eric nnc! the south San Francisco Say. Therefore,
the granting agency should insist upon a scientific approach to the
problem and not upon uniform solution for diverse oroblems. Only by
doing this can the program adhere to the efficiency criteria of any
optimizing grant.
The justification for these grants is the externalities that are
produced by pollution abatement systems. The main benefactors from
these systems are the residents of the region defined by the water
body, and not necessarily the residents of the /jurisdiction who pay
the cost for the system. Many, if not most, waterways are inter-
? !-ete; therefore, benefits are multi-State. In an indirect way,
: nefits are national ... " ' :¦. There is, at the least, an aesthetic
• psychic national . ifcuted to elimination of pollution—there
may v;ell be an ocolonicai 'imperative. In addition, if a waterway
is free from pollution, increased income, recreational use and cirowth
results, nreducing benefits that will directly raise the regional
standard of living and indirectly raise the national standard.
Since benefits are important in justifying the grant
orogran, a critical view of these benefits is requisite. The grant
nepies are national pvmiec and the opportunity cost of expending money
un'.^Cr8 \.«ry i'"": *. inefficient \>;
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arc provide! ty the water quality standards, since the standards are
derived with Federal and Stat'? approval. The actual in-water data to
be compared with the standards can be obtained from the STORET system and
surveillance. Another method of identifyinn pollution needs is through
enforcement conferences initiated at State request
Allocation of funds to specific projects night be based on a
schedule of deviations frer, accepted water quality critiera. Those
with the largest deviations will receive the highest priorities.
Ideally, the deviations should be weighted by benefits, number of
people benefitted .or similar indicator, but the construction of a
quantitative indicator of this sort is difficult and is perhaps not
feasible at the tine.Standards compliance costs, which could
vary from source to source, (net a uniform fiat of activity costs,
e.g., secondary treatment) should serve as the basis for the percentage
of abatement grants. Such a basis would insure that the abatement
grants produce the greatest marginal effectiveness oc-r grant dollar.
If the Federal Government is to exercise control over abatement grants
because this lev°l of government is able to coordinate the allocation
more efficiently, the principles of allocation should reflect this*
res ponsibi1 i ty.
The amount appropriated by Congress could vary from year to
year. The Federal rovomPxint and States should survey the pollution
needs throughout the country arid ran!; need priorities. Simultaneously,
the Federal ^evernnent *nd States could cost out the solutions to these
needs and could establish expenditures levels for a graduated schedule
of pollution ahaten:ent. From those expenditure levels Congress could
decide or, the pertinence of indicated expenditures in light of other
fiscal needs. Through such a mechanism Congress would net go on record
as over premising: instead, the body could allocate these funds on
the basis of need.
The ouestion of implementing the program without anency disruption
should also be considered. As previously noted. STOHET, standards,
and enforcement are critical inputs in idontifyinn the needs. Pollution
surveillance would have a positive input in identifying needs and
priority. Because of the increased responsibility of the Federal
Government, construction grants activities would constitute a primary
means of exercising all agency responsibility.
In sum, such grants would be allocated on the basis of problems.
It is impossible to say what the actual distribution of grants would
be under such a formula; though their use would undoubtedly be far
more concentrated, and would ta.he place in those portions of those
watersheds in which' stream pollution had been determined to exist as
a result of a legal proceeding.
Effectiveness. There can be no question that the short term
effectiveness of'such a strategy would be extremely powerful. Federal
126
-------
monies would bp allotted precisely where they wore needed, while
adherence to the findings nf an enforcement conference or to the terms
of a court order could be depended unon to brine forth required local
matching funds. As in the case of implementation grants, however,
effectiveness relative to the coercions of the total oiiblic waste
handl inn system would dooend on the '-.'ill ingress and ability of State
and local government to assume the full cost of replacement, expansion,
and improvement of systems not affected by Federal grants.
Equity. There is a serious inequity associated with the enforce-
ment formula. nnly major occasions of damaoa would receive Federal
assistance under such a scheme, thus ability tn reduce pollution abate-
ment costs would be directly related to the seriousness of pollution
encountered. Civcn the situation, there would be an unouestionahle
incentive to ollow systems to deteriorate and to create pollution, that
becoming the only cause for rederal assistance.
Efficiency. Short run efficiencies attributable to precise
capital allocation and to reduction of n^er! for funds could only Lrt
sustained ever the lee" run ! y assurance that cspital r;>euir^P'onts
for system maint.enar.ee could be transferred to State and local novern-
inent. It would appear, in vie1.; of the resources avail r"!. 11) to State
and local governments and in view of the whole history of the /ollulion
control efforts, that the allocations! .'-fficienoies of abatement grants
would be too costly to pur si; a, unless combined with some broader
system, of financial assistance to the sustaininq pollution control
proqram of the States, '.'here a guarantee of system maintenance could
be secured, there is little question that the amount of grant assist-
ance reouired under the enforcement strategy would--though "it v/oulc!
fluctuate from year to year—pursue a steady downward course as the
number of legally defined pollution situations were reduced.
Practicability. It is scarcely likely that the States v/ould view
favoraTly arfv""frlt'Tod of allocation that would in any year exclude most
of their company, and one where receipt of a grant would invariably
signal a failure of their own -lollution control proorams — failure
evidenced by existence of certifiable pollution. It seems equally
unlikely that the Congress would favor any method of allocation that
restricted Federal assistance to the worst polluters, penalizing
communities that had accented the cost of providing adequate controls
by requiring them to maintain controls entirely unaided.
A Possible Combination
Block grants are potentially superior to the other techniques
of Federal assistance to State and local governments, in that they are
Potentially flexible and pertinent and in evrry case contribute
conditions that allow development of responsible State programs of
pollution control.
127
-------
Participation Grants have the advantage of establ is'iinn fixed
anc! invariable conditions for comunity decision, v/h 11 c providing an
incentive for State government to take an active, participating role in
decisions. Selective a! atement grants have the merit of high potential
effectiveness an:! pertinence. Each Ins innate disadvantages. Selective
combination of features would seen to offer the most reasonable course
of action
Without discussing relative weights to be accorded each
desideratum, one r,.iay postulate that the riesiroa.ble allocation procedure
include:
1) A constant nronrrtim of Federal assistance to any project,
to reduce incentives to -delay for the purpose of obtaining additional
Federal revenues as a result of changes in conditions and to avoid
penalizinq communities and sanitary districts for any lack of action
by State government;
?.) incentives to State qcvernm.cnt to direct their program
focus on situations that have a high nollutionr.l coritcnt--i .p. to
ostaMisI' meaningful priori tics and to enforce then vigorously
3) distribution of Federal assistance in some fashion that
reflects underlying need for capital, for purposes of system main-
tenance as well as abatement;
A) incentives to broader cost-sharing in the form of State
financial and technical assistance to communities;
5) reduction of opportunities for inefficiency, by connection
federal assistance in some fashion to normal unit cost solutions of
local problems.
Such a combination of features rnioht flow from an interstate
allocation formula that too!-, into account nonulation—the underlying
determinant of needs —existing needs for abatement and system
Maintenance} and nrovidoc- incremental Federal funos to States that
Participate financially in local projects and show an ability to bring
fin acceptable share of hi oh nrioritv requirements to the construction
stage. (Efficiency considerations could be served l:v defining need
in terms of average cost solutions—weighted, ^erhans, by regional
factor costs—to reduce the propensity of some areas to construct
engineering r;or,unonts rather than effective water processing works.)
128
-------
PPinRITY SY5TZ:'S
The F or' °r"51 ' !^t°r nol 1 iint of viev:, it r!'ust certainly he assurw!
th^t tr .'PC- '^ nri—?r1' r>!.iTtix,o is nril 11'tio.p *¦' ?.t.^r'^nt ^it1
control. Ie -vVition, its STXjy'nrv o! ioctive n,iy bo vie,wi as
strTc: to locrl ccrrwi ti(t.. ''ith these
nrovi r:i;/
'i ottoi ?.!
irr ir
objectives ^rv1 3 frflno of ro-^ronc"' thM' tt.stips suf^io.i°nt r.oni r.s
sr? not lyii 1.v v.. to that oil r-reacts vill \r fun'or". the
r|oo<' for r. "riori 1 v svsto;" c vrrri^s -'11 nrr"ir ~rts n^-iir.st one.
The r!iscission r.f oriorit.v systr!"s hero is vithin t!i« context, of
t|-p r.nlv ?1 torn-iHy* that rih.os such systems rnanira^hil--soarciJ"
r, p Tare's. Pri ori tw systems s s i r'e their '-roe tost significance
i i"! 11 i - tr ricsur" o i 'a s ? i y* ol^T-u" ov.*r ? rrtl -"it i v^l y
short ' irM fr*" r f e. o. . *'.':••• Vor! S? P^rn t^-rs nro^r.:1"') t!"'0
sirioi fi C'^iiop o.f '-ri^ri s^'S1* '?r'S 1 t-v! ''T',i
I" n-^p'-r"'! - r'ovr 1 oTont nf » ori ori tv s^st^*"' i s ? r'^ins l.'u ','liich
rrit.io-^l r"'('s or rpMf-"S C'ir !.o i''r,itifi. In fost c^r.r,r t'.is
acc'"::^1 is^^r' ] v vir
n roy.-'r"! cri tr'ri- tr-
f ' .»> v** ^ ** '! r-¦ ? *i -s I
^rr.,
% y r\ •? ("t *" c
,..u
non-it^ t'¦ r!'• to r?"'--'.^.;1 ir Ar''or o" '^sirot.ilit','. T! f' *ct oriv
r^o'iir"s t1-^t rr.ch o>aofir¦*rci^ 11'/ rssir.to'' ' r> "-rti4"! '' to r,rior-
itv rv 'r ' '"o etj-.-.r '^r'^'otr. r.r> *" fir." ".oi"! i.' r* •.•«¦>! 1 rz ? ool 1 sitiop
•>.? ' ! ot1-': 0,1 t<-r; -lin-iM-
c^ptrnl 1 nsis. 'T''ir
•To
r. 1 f
^*(T 0 1'' ^1 ^
*/,''' irr^jr
f" "> *' r1 p.*i 1 n f ""J r r '
'-rviT.ot •. 1' ••
¦P 1 • /V m _ ^
II' ' . (._ i ° »
Mru'r
rr
4. (.
.^/>o CO1'!^ * •") I
T r* T"' 1^ v 'jn wru-i ¦ti'; r r i tr ^ i m r •"» »\ ¦>«./ r> ' n
i'!notifi^e'. jmnnr,?]]f.-»n ir» M,rnp !-rra-J r.^tr^orirs, (?) '..'.ntor
Pollution control nook's, (b) finorcir.l noods, w' (c) stato of d1 an-
nino rty' rocidincss Jo 5or¦ ^ irstr.r.cs « critsrio. \*ithir a c^t'^orv
I:"!y0 | r -r, n,<. T!" S': '1 bo irtorrjr"to • ?.s i'V-nti'vino i>
-<:•'¦ 0" crit Ti"1 or-- s;r-•'. f.'-r -0", i.-rci-^r
y ^tr.iK-^t f ''.:!s, or !' i'v'ic^tos t'0 cr^t- rir rrn>1oyo-.!
•;thr»r 0 court r.n'or or nroioct. to Mi:Tipot''' L!¦ 0 ilischnr^r of
qintoly tr^^tof' \'?.sfT-c;. f,r ol iviiri^tr: c ruismicc, etc.
c
inru'
r r»
129
-------
^lUTION ABATEMENT
roFjjvr^?aTf)r~-~TftHtr~^Kat?irrT?iTer~Vorr—TnTFVT' Flnan.
Plan Hazard WQS P.eqd. Needs Uses Waste Intra Status
Alabana
X
Alaska
X
X
Arizona
X
X
X
X
Arkansas
X
X
X
X
Cal 1fom1a
X
X
X
X
X
Colorado
X
X
Connecticut
X
X
X
Del aware
X
X
X
District of Colwwbla(a)
Florida
X
X
X
X
X
Gecrqfa
X
X
X
Hawaii
X
Idaho
X
X
Illinois
X
X
X
Indiana
X
X
X
X
Iowa
X
X
Kansas
X
X
X
Kentucky
X
X
X
loulslana
X
X
X
X
y^1ne
X
X
X
X
X
Maryland
X
X
Massachusetts
X
X
*1chloan
X
X
X
f*', nnesota
X
X
Mss1ss1 pp1
X
X
X
Missouri
X
X
X
X
Montana
X
X
Nebraska
X
X
X
X
Nevada
X
X
X
X
New Hampshire
X
X
X
Mew Jersey
X
X
X
X
New Mexico
X
New York
X
X
X
North Carolina
X
Ncrth Dakota
X
CMo
X
X
X
Oklahoma
X
X
X
Oregon
X
X
X
X
Pennsylvania
X
X
Rhcxie Island
X
X
SoutJt Carolina
X
X
X
South Dakota
X
Tennessee
X
X
X
X
Texas
X
X
X
Utah
X
Vermont
X
X
X
Y1rg1n1a
X
X
X
X
Washington
X
X
X
West Virginia
X
X
X
Wisconsin
V
X
X
Wyomlng
X
X
X
Puerto ftlco
X
X
X
(a) Priority system not applicable
TABLE 41
PRIORITY SYSTCM CRITERIA
Priorities Assessed
financial PLANNING/PEAOINESS Independent of
Site fcncr. Plans Flnacng. Contract Inplr.ntn. Grant Grant Applications
Acqd. P.ept. Apprvd. Arrangd. Awarded Plans Apnl.for Yes No Unk.
Inc-
Const.
* 5 S.
Fond.
ome
Cost
Val.
Debt
Top. Ct^er
X
X
X
X
X
X
2
X
X
X
X
X
X
X
X
\
X
X
X
¦ -V
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
"X *
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
XX X X
XX X
X X X
X X
XX X
X X
X X
X
XX X • X
X
XX XX
XX X
X
X X
XXX X
XX X
XX X
X X
XX .X
X X
X
XXX X
XX X
X
XX XX
XX X
X X
XXX X
XXX X
XXX X
X X * X X
XXX X
XXX X
XXX X
X
X
X
X
-------
TABLE 42
Numerical Rank of Criteria by General Categories
Need Status of
Pollution Financial Plans
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connect!cut
Delaware
District of Columbia
Flori da
Georgia
Hawai i
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri (a)
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico (b)
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyomi ng
Puerto R1co
2
1
2
2
3
2
2
2
2
3
3
1
2
2
2
2
2
1
2
2
2
2
2
3
2
2
2
2
2
2
1
3
2
1
3
2
2
3
3
3
2
2
1
1
2
1
2
3
2
2
1
2
2
2
3
3
2
3
3
3
3
2
2
2
1
2
3
3
2
2
1
3
2
3
2
(a) Not Numerical (b) Single Formula
131
-------
?if 1) N r. pypnn") *j ft r
r
of ''-isr.ntiri,
?C!! ?J'r t P 1 ^
criteria s'">f^jn f» pir^ricil ^cvvwla vith the Toilet r-^coi vio
t.!c t pr.in* t^tal rjssumirto t'ne hinhost nriori tv. r;v nrotmi nn
criteria into three crt-corips. an'* cons i o'er iri the numeric*1 values
of each catcoory, it is possible to assess which prouo of needs
assumes th^ rest i^nr rtar.ee ip a St'te. (See Ta? lo -I-?). rren
it can bp seen tu*t the patterns ?ro pot prnfer^. So*"." Statr-s
¦"ilrifi i-'.oi'pi'ri'f ;>p vv.t'T "-P11'i..ion Pie'!r>.. others nvn opi"-rt°r
i'° *ri!",,•• pci«'l r,rfifl<;. In a f¦ iPst?riCrs. ro^r'i
produces t'*p M pI t n*st ""Ticr 1 r'riip1', sc^re.
ess to proceed
7" I p '' -i + p p j"! r ^ ¦
:ti! "! i sh the orieritv p.f ip.diyi
nroicscts t'•"•rr eva.luatec' in terns of t.!'n cr*5t-*ria rut!inee in the
studv introduction.
crit: ri r »'Mc1': h
c ¦?— I
:fr. ^"'^1'' p-*nr-ny» £n (.
affnc+i*»r> "ii !•. r'"¦ sc.'n t'1'-1 Ti'"o'f'11 r ^ri; ,n o!'i^cti vn--~, r.v;'-T
r,
"i"' r :
noi i ijtion control "'p'1 ¦'d'.-'V^or't. ' :rc:!.: Stoics * nn] 1 »t *."iojt control
!;m,-'c n;-o ;!¦) rn-r.'T'THrr 1 1 C ^ i f P IP COPC^rnod t'\rTP is
ro -issnr^rc^ tunt t'io -'prtic';l'-r
rpf'ipst.'H1 i*> t'-p iopt- ''it'' t':c
¦ r';¦">s in •'!m.
i^c'" fnr '/'lie'-' <",r-:sist.r?pc- 'i s
>t pritic^l ool 1 tit ion r.ppci. Ip
"y-st Stntos. '"pv.' n''rl;"»ns in •'fl"!-, cri :.crip r
173
i
in. 3
?
JiPO . r ro0
1 ?n
i
11 .3
S
OP] .. ]p opp
1"
n
13.7
in
pp] r>rt r-r1")
Plr
7
ic.e
?s
ep] riP. cop
1 re
r
13.3
r>0
P r, ¦] i ry r r.r) p
"]
r-
]?.7
l?1^
op"] p-^i npp
r n
i:
r>
5.^
?r>0
00"] rn,n r.np
y
p
3.2
son
r,ril an
*'
p.
6.1
TOTAL
tirir
~n
lorvT
132
-------
J up i <"),•! i;' ;t t'"»<*• 'ri ? S\'St.O!"!S
j.r fiynj- r,iv,-1] C"--:'viriirv..:, rrtlr.r then 1 ?)**$ siren'.!:?'! i tr.
P>-(-.rr. luros zo ?!"1'; ¥".r> oi ty of CI v-"1) and is r,o\' r.-l i'n'Me to r<"coivo
Fc-dc-rnl ••'.csir.tfjr.c? frer t.'-.p constriction ^rr>rt ororr-r-i. !kv.;ov?r,
tr,i-r»trfri ori t" S'.'<;fT s nr^ nr't c,r. r,i i".?! v t'"c c?ur>r; for thi s
"rnhiMM on. f.irl it v^.r^ i'vi? of V.~o Act carried n s ti•">tj 1 ntion
aoninst r.^'c.r?! fuVin"' fc> co:"Tni ti ~s v:!.c,so nrmlatinn exc^ct-yj
!.n+ "'-is r'stricti'Ti nc lonnor 'r:?s ?n effective n^nlicntior..
T/1 r,,!_r 44
"M.ittI it~r t '.'cr-^tro-^l itr.n ^istri! ntier
rc r''oc,r Construction fronts,
1 n r;r,_ i o --n
:rr>rtc> Of*
*v 'ill ior.s Porcr-nt
Cr)n
r;°. 7
111.?
10.1
7.1,0
f .7
7°.'r.
7.1
1°3.0
9.3
77.9
7.1
11^3.°
1 nn . 0
fVr riijp.i ti r'r, •.>i t!,i ° f':c-' ?
Or.upi ti os ¦""!t~ id^- S'o/11^
I ji r- i ' r-,
tr: '
o rpr» /" nr»r'
r rn/ _ r
]n ,-;nr' - .r9"
^ r f \ n n * r n1"
TOTAL
T',r,,,r,K r,p+ r„,-|,,7-r it cr-.!ld also to r.rquofi t!iat smaller
rli^r r^inr t" ir^nvince it. nroc-oeino to ovcrccr." their
.Wiri^ci':s. Or o-rh-ns tVey ^ro r-or^ financially
lrrrn , r-tr^or 1 itn c-ntnl city. In sry event it
c;;r:0. f,/ nr.,-nr?l distance !:ps rot served th? r-tro^oli-
hp'^o.r u H^'n^-jrn. ?inco the bfiinrira of t!v> construction
;nfo'nr<-w t'-r-«b *«:<*** 31, m*. 5?.t:. of««
tnt^Tnrlni-'^llprs h-s t'-on ^-liod in .-trn-rlit™ »m,k "v
ro-1-.ri'^ T"' 1 >r "3 end '¦<*¦ it c.?n ?lso sl>0'-p V:
ti;>c' (Ht^ir'-frr-olit.i^ rr^is) i.^., thos* undor ^,000 oonulation
rocoiv-d ''V of t'10 tot^.l or.'.nt dollnrr ?.«nrovcri.
Ti n r t n,.,. ...rc- rri^-orin svs^crs ?.ro ?nr>lio.r 0- f- Plication), runi^-, tho o-^c-
tiy,,;^ nf rrit-nr'svstr^. 7--' boco^o imf^cti^ fmcSuso thpy
do ro-hiPoVo rsnur* th«t critical pollution needs pro served. It
. r,r „,nt n o s.u ^ ; rnnMiPpss thnt such critical
1^. IP vr'jrf j I!.-v ,^rr 1. Oil l Cm r v - ' I, ^ .
nothiP^ in the e^l.wtion nr priority systtr*
con,trit"'if°s t° tli-r.t cn^.
on ?r^as.
?\: srvll co'T'i.tni-
1
>
133
-------
The officialir/ of State criteria systems difficult
to assorts. Hot one State as^lies a specific tost to r-^asure the
cfficir-ncv r,f investments in vator eel 1 utien control. (Hit a rr^-
ratic vie\; of the oneration cf the systens. one that Questions
vhcthar n particular inves^ront results in creator •".oilution a'rato-
nont benefits thar a similar investment alsevdioro, vi 11 ev'e the
ansv/sr that chance, rot formal priori tins, is responsible for any
efficiencies resultin*"1 from the usa of construct!on orants. All
investments '.toy ro-'ueo the c'ischarge of un-tr^ato*"' v.'ast^s, there
is no .essUranee that the critical probl^n affoctinp t^e oual it,y
of 0 stream: is at"t^c!*cr'. (Fcr oxare!e, if tve communities disc'-'are
thoir • t? trs into the same stream, State erart enti tl orient cri tori a
mould !-?> ,->mi ire! indolendcntly to the anr>l ication received from
either. If on!v the ''o»;n« troar com^'initv a.r^li^d because it vas
''ready to proceed," ">n all orol'eMlit" the application vould he
c~rtifind \ 'i thout crnsi''!ori'v the 'impact of the ether's mast'*.)
jji.o oyirtie•" svetem ''i scyra^os apv Stat** anencv fro:" rof-.'sio
to certify a ":°rt i eul ar ir.r.tien. fac'1 yr;?r certain monies are
allocate:! to ct-ato, a"fl to den" app"1 ica ¦is tr 1 re -
r.v'nrii rsrist''Pr. f ¦>"*!inatives top-' to ' n rr:ih -¦!" certifi
I'lipp t;-.-. fi t frr " tl>e invstn'nh ^nf; >c ful 1 y reali?nr%
until -x-v'iti^ri^l 1 arM f-rouonf nr«>p r^trol. ' !'.i 1 •--> t!,v
^n^v-^aoh ir *•ir-^r°vr t''~° tj^Iitv of t^o stro^r, i+ is far
loss efficient than allocating scares resources to mhere they are
P'OS t P
Fnuii u >!rfinitier roouir^s that costs b° !-cr^e bv thef."
v;h.n receive J:he s "'tis-actions, .-•# rive/.; from such costs (at a ivi^-mm-
ir t'"p c"!r-"• of ,.;at".r "!utior. a'ate: ent- the residents of a \'a tor-
ched ,;r ;-n the resio'-'nts of a State) or h' those resec nsil.le for
the cost- ir.:^osii;p '!an,r:p.
T!;o orio.rity systcr-s as thev are ar:"lia^ nust. be caasi 'ered
to be * source of ao-^ravatec! inee-n't". (This :aay I e tacitly
r^co^iii7cx ie the forreV criteria ef^the States: none indues ae
Cxr'l irit r°ce^ni tio-: ot ?.u cnuiiy "*rir.cipi e.) i f^ilur" t^ assur
a neasurr of eoui tv is a.ttrii ute-' te the ultirate reduction of
priori tv te the ratter of v'i H i n-'jn.ess to orccc-a--;'. If ineffective,
the svsta^ !":'jst .be inequitabl", since it both denies the inteec'^c!
rociM-n-ts the assurance o? the b^":erits or the nost necessary
v:or!:s, a;-',-' it henies t',ns- eararors v'no '.'o construct or intenc' to
construct treatment v--orf*s t'°e assnrance of the orocer.ditiers for
attainment of n'n/sical benefits free th^se './orbs.
The State criteria systens eroyie'e a technieue by y.'hicb nro.i-
^cts can !•" evaluated. Fro:" an administrative noirt of vi0", tiiry
eli^inato r-ost of the ,,:r,r1' vhich othorv/ise vould !:e required to
anereve the particular aoolications, Once a nroioct is seproved by
the State as elioiblo for Federal assistance and entitled to oriorr
over'other ere ¦'acts little else needs to be considered.
134
-------
Fro> * (•}!<> st-iv'^oirt of t^e e>vrt ?.n~l i cations tho nricri *y
susI'^'i ^nsur^s '•¦ii!'iir"r ''ele*'? in the processin" of prfviocts that
ere ropdv to 'iroceoc' . Ir. theory r t 1 ' sx', th^ i"ns t. iVnc;rtant ^seect
cf util crit'«n> "r 3 la^is for ests!lisMne priorities is the
feet that it tends he <1:ji''n State ^reocios to those promote '.-'here
the oroatost need occurs er exists. This vowld ho particular!1'
voluaMc if thrt St^t^s ^p^lovrr! thoir critori•¦' .md cstaM isho-J
priorities indc-oon^o^t o'7' npnl ir.etiers heinn rade for assistance,
l iit. in '.'est cases tho criteria syster-;s indicate th-it -riori ti#=s ars
assessed ml1/ on -Tant ri^plic-^ tiers. (In sore States t'"e ''one-year
list" identifies per? "robots th~i" car ho funde-'1. This nav hn done
to assure that no ratter '-'hen the ^pplication is nade dunr-0 tho
fiscal ''^r. it wi 11 ! e ac.cint'jd, sinco the r-ro.iact has previously
y- identified. ; - si"!1.; d . y. iority and tho "one-yonr list' coos
'TV "' to I'O aP'-ndcd. j
Tfiou^h pot sneci^ic' !-n c; r>f>;oI-1 voa.r f'o 11 e::ir" the nrant. (See Tables ^r)
md nr).
Table shovs t'^t of tho PC r,rants nonrov°d, '•'bich \;ere
cnr^i^tod r.p !,'pr1-•" -"ir-;iTiirtyip of .Innunry ?\ l—f, op n^rront
r r .i|t- ¦•¦¦ •, .- •• ¦ . °1 "enths. Tho ro;-? i ni on *>r^i^rts
, • •. - ' ,.mi'w'.pp j.rr.r-, ro over 7? '":or:ths rf ol^^soi tis'o to
, i'i cons-' ri i o.ti or., tio-' -i!'o;)t nil! ion in o»vnt f'/:v's. "!iilo
t:iis r<*-nrrts^nts a s'""1!! ^ercontnr,r: the tot-1 furds vv/olvod
tSrro is no lcn'c ir: twi!!n un tho fi."-.ds, r^rticilerlv in vicv? of tso
sc'ircit-./ of evei 1'"!•! e resources. This sei'o lo«ic nr?V'?iis i>- dof^nso
of the or^ctic of c h°"o. nnorevod
I-,'—, nd vo?»rsreooroKi'"it.?ly million in funds ?.r^ tioc: un.
or the or^nts ?n"rcved ?.pd still sordino nft.pr t.vc "'ears and
''vr, hich too!' roro ther tvo ve-^rs to hooin construction, tue
orioritw r^tim is r,e;>riin*,less.. Since rest Stater cortify each
nnol legion ^nd i.-'^ntifv its nriorit1', it would he roasonnhle to
^ssu^'1 th^t the "ro^o^ts '-'oul 4 ' o under construction soon ?fter thov
r,rr> ,nnro"cd. "iven th?t this co"d'»t'ion is nossihle under the exist-
ing svstor' ?nd do^s in feet exist, the practical respects of the
criteria svstor arc suspect. Presets are del-iyec: for a veri-ty.
c.f re.-!soes" hu* thn u-desir-hility of froire fun-'s t'rf strict
r,nniic^tien of tho r^r^-h'^ss to 'toc-"'"^'' 'Tircirle should r""ul1
it> ?i ro,;issossiv.ort i f net ronl 1 oca.ticr.
135
-------
T7\DLf
a clonal Summary- id Time (Mos.) Bet
Mont-
Size o* Place 0 6 9 ¦ .15 13 21 2
_nder 2• DC
36.9
47.5
49.4
'1.5
51.1
48.8
55.:
2,501- 5,000
14.1
13.4
16.3
It'.:
;' , H
14.7
15.3
12.3'
5,001- 10,000
14.0
12.7
12.3
11.5
• "S i-i
10.4
13.5
14.0
10,001- 25,000
13.3
11.6
10.9
12.4
8.4
11.4
11.8
3.8
25,001- 50,000
6.8
6.2
4.6
5.7
5.3
A.3.
.5.3
3.5
50,001-125,000
5.2
4.1
2.6
2.4
3.3
3.9
1.8
2.6
125,001-250,000
2.2
1.3
2.3
0.8
1.0
1.3
2.9
0.9
250,001-500,000
1.6
1.3
0.7
0.5
-
1.1
0.6
2.6
500,001 and over
5.5
1.5
0.7
0.8'
0.5
1.4
-
-
% Grants in each
time period
9.4
47.0
14.8
7.7
4.3
3.4
2.1
1.4
Source: FWPCA Project Register, January 31, 1969.
136
"^ant Offer and G -uction Start
27
30
36
48
54
60
72
72
3.0
45.0
55.4
52.1
23.6
59.1
50.0
41.7
60.3
-1.2
23.3
12.5
25.0
25.7
4.5
10.0
33.4
12.6
"4.9
10.0
8.9
9.4
21.4
13.6
10.0
16.7
10.1
6.2
10.0
7.2
6.2
7.1
4.5
20.0
8.3
9.4
1.2
0.2
8.9
6.2
-
4.'5
10.0
-
3.2
2.5
0.3
1.8
-
-
4.5
-
-
3.4
-
0.3
5.4
-
-
4.5
-
-
-
-
-
-
-
7.1
-
-
-
0.2
-
0.2
-
-
-
-
-
-
0.9
1.0
0.7
0.7
0.4
0.2
0.3
0.1
0.1
5.7
-------
NATIONAL SUW
TABLE 46
-A GRANTS APPROVED AND STXL
TOTAL
ALABAMA
ALASKA
ARIZONA
ARKANSAS
CALIFORNIA
COLORADO
CONNECTICUT
DELAWARE
DISTRICT OF COLUMBIA
FLORIDA
GEORGIA
GUAM
HAWAII
IDAHO
ILLINOIS
INDIANA
I OKA.
KANSAS
KENTUCKY
LOUISIANA
MAINE
MARYLAND
MASSACHUSETTS
MICHIGAN
MINNESOTA
MISSISSIPPI
MISSOURI
MONTANA
NEBRASKA
NEVADA
NEW HAMPSHIRE
NEW JERSEY
NEK MEXICO
NEW YORK
NORTH CAROLINA
NORTH DAKOTA
OHIO
OKLAHOMA
OREGON
PENNSYLVANIA
PUERTO RICO
RJJODE ISLAND
SOUTH CAROLINA
SOOTH DAKOYA
TENNESSEE
TEXAS
UTAH
VERMONT
VIRGINIA
VIRGIN ISLANDS
WASHINGTON
WEST VIRGINIA
WISCONSIN
WYOMING
TOTALS
f
~7S
I
8
20
16
IS
II
S
3
18
25
I
I
IS
18
19
7
31
43
20
10
40
10
S
23
60
21
IS
26
4
9
1
9
61
17
17
41
SO
5
53
17
5
34
IS
25
40
11
7
13
1
18
26
10
4
$
TTi
2.7
2.7
4.1
6.8
1.8
1.4
1.9
3.6
3.8
7.8
0.8
0.7
1.5
S .9
6.2
2.3
l.S
4.9
3.1
2.4
2.2
1.9
1.7
4.5
7.3
2.0
0.8
2.5
0.4
1.8
0.2
0.6
6.6
S.S
0.3
11.1
3.8
1.8
8.9
5.2
4.1
4.8
0.4
5.0
6.2
0.9
1.8
3.0
1.8
1.8
7.4
4.6
0.2
1968
• t
TIT TO
i
in
1966
» J
T TTa
196S
' J
1009 190.1
1
2.7
7
2.7
12
3.6
5
C
2
0.1
15
6.4
1
0.4
,14
1.4
\
0.4
11
1.4
1
(a)
1
1.3
0.3
1
2.3
15
3.0
3
0.8
20
6.3
1
0.8
*
0.3
1
0.8
1
0.7
4
0.2
3
0.5
S
0.2
15
4.6
2
0.1
16
S.5
1
0.2
7
2.3
30
l.S
1
(a)
24
3.4
13
1.1
3,
14
1.6
4
0.2
1
0.6
4
1.2
4
0.1
1
0.5
32
1.2
4
0.5
1
(a)
10
r.9
2
0.4
1
0.1
2
1.3
20
4.4
2
0.1
28
3.8
21
1.2
7
2.0
IS
1.3
4
0.1
1
O.S
9
0.7
3
(a)
1
0.1
14
1.0
8
1.4
3
0.1
4
0.4
•
6
1.1
1
0.3
1
0.2
7
0.4
2
0.2
45
3.4
9
2.0
3
0.3
17
5.5
8
0.2
6
0.1
3
(a)
25
8.5
12
2.0
2
0.3
26
2.7
10
O.S
14
0.6
4
1.7
55
8.5
1
to
2
0.4
5
1.5
7
¦ 2.4
1
0.2
3
1.1
1
2.3
19
2.6
5
0.3
1
(a)
10
0.2
3
0.2
2
(a)
17
4.0
6
0.3
1
0.2
28
3.9
5
1.9
6
0.4
4
0.1
2
to
S
0.8
4
0.4
1
0.3
1
0.7
7
2.6
2
0.2
1
0.1
1
1.8
15
l.S
1
0.2
2
0.1
8
1.2
2.1
7
2.2
6
2.3
3
1.1
3
0.1
1
0.1
584
129.2
170
23.4
93
21.0
(a)
0.2
0.3
1.3
0.4
to
1.2
0.7
0.2
0.2
0.2
0.1
0.1
0.3
0.3
0.1
0.7
1.1
to
1.6
1.2
32 10.2 15
(•) less then *50,000.
Source: FWPCA Project Register 12/31/68
' f OF 12/31/68
1963 1962 -M
j , t ' 1960 19S9
5 _ _L_ JL JL * $ i ,
O.i. . 1 0.3
0. "
0.6
0.1
1 to
1 0.2
1 to
0.1 1 (a)
1 0.3
1 (a)
0.1
1 0
1.1
0-1 2 0.1 1 0.6
1 O.S
(a)
0.4
2 0.1
0.2
1 0.1
3.6 8 0.8 4 i.l
1 0-1 1 0.2 1 o.
-------
vorv effectiy-'
ly. !'
to o^r:St'v,,:c*' '
' * i
S t, 110 0"" ''v y"]
r> * "* <' ¦ na
in this r^s^ee
j- 1, ,
' * l .
''t< j-j •' r +
pyrny
¦ "[ r- ve -f
J;
r-v r;ei t"
*»
~f ". y*
J'.pr- tr c
.L
f;'N" f
' ;
nuse
Lor>!'ir/! '"it* crit^ri-*? in "'nether riann•<<• p -lAjp^r; ¦?•' ni'jcr-"} Mf 7 r> ("| nf
c^te^eri^s. T'*,t* fir's if "*rv cn;"""'tri ti^s in a ^tate v'*ro ccnrpt-
inn for Federal ass is tance, the oriori ty syston vrul d screen them
I'ovever, ce* unities do rot nor.orall>' crr^^f^
~n of "".i1 lie investment. To "the CT.tran', the
rh^es ex toss as the attitudes of ccr* unities
^ yc 1"!'M'*? pr! ryemt ^ - r-. py *jp/^o
r* < - n "j ^ rv
1'.../* 1 ¦"':st '•••'ithr-ijt. excrntien, rverv $o< 'era no nrc-ect
ir. "rr.'l^r1 Vt v*.en nrdert-aken at the s.'H^cntirn,
wren-,e. i'.si"»'irr:ce» ferr:>] orders, a;~,!, vhen adrinistra-
ti'/: oroco''!irr-s nre exhausted, hy Cf'urt action initiated
ty the Har.lt-* ^e'T-rti' eat and the Board of !!«al t'i and
' V' f; t" "i 1 '' yol '• .
' . ..°ecei;ec '.he ee-l ication for a Tent is ;'""!o only
after the o^'nuni tv a to as to Teeee'd yith the cor-
stfiif1"io^ r.f the "re*r,ct", r. !,ard t*j 3t "Metier o-c
t'--: v.riority in K':ic'i .T'-'li cations vi 11 ho c-
is ¦
sit'
Sorv
""J P U
firsncine Mr't h^cnuse tse reer.ey vasn't availahlo,
i,,t because sor.oor.e. higher en tl,e pred°t.er'",iprw,!
Tirrity lir-t hps v.c4: vet cave:' in.
:In : 5r*'l-^nd. ve h2*/-° not reached th^ point v.here
epolicants ere eaner and creatine for crants to build
S(>\!?r-n. tre-trert vorhs. There ere too iaanw other
Wine tine r-'-e^s... .r-^'.ine danards on their 1 initad
capacities to tcrrov; r.n;'1 seeiic! to ^e enyt!iinr' th?t
ie net r.ecpssor-'. 7'w or-ly v:het the" ?,r?
forced tn hi'il^ and only then if thor^ ?.re Fec'er?,]
err' St?.te eraets imcJi^.t^ly avail?blo....!1
T!,-e el^rve runtc- "i^rh.^^s covers nost Str,tc/co"*?r-wnity relations
in thi?, reoerc'. It in'lic^t".? tl^t it rvf bo ill07Ic? 1 to require
State rrirntios nn rach e-olicntien. In tin's instance tho State
treats ?r>niications on a first cor? first served t-^sis. On^ rn'ibt
?.ss'.!r,e fror the 2+^ter.^nt t'^et t'¦»•*•• Stat° d^vete^! its efforts to
those noHution -
-------
However, since State political leverage on a community may
be presumed to be inversely related to cost effectiveness of
investment, it is not difficult to see v/hy the sir,all community
often builds its plant first. Then, because of inadequate improve-
ment in stream quality, its weight is added to pressures for action
by the larger community or industry. However obvious the situation
the way to implementation of the most cost effective investments
first has not been so obvious.
Perhaps this insures—assuming the oattern is the same in
every Statc--that the majority of the applications received will
come from those communities which are ready to proceed. They
represent the communities who have been worked over, so to sDealt,
and who have "caved in." If this is the real world, the need for
a priority system with an elaborate set of criteria does not exist,
'..'hat is needed is simnly more direct and immediate attention paid
to the benefits derived from the project, i.e., improved water
quality, or stream standards satisfied. Furthermore, unless these
conditions or benefits are present, no grant should be approved.
It would apnear, as in Maryland, communities are net compet-
ing for grants to'build sewage treatment works. Table f.7 shews that
year by year there are unused allotments of the construction gr^nt
funds." Yet, the total grant applications and funds requested'are
always greater than the monies available for grants.
Although the total amounts may be s^all when compared to
entire allocations for each year, it is interesting to note that
several of the States have large deficiencies as far as waste
treatment is concerned. There may be many reasons fer the monies
remaining unused, but an obvious one is thDt in those States,
ccmmum' ties are ret competing fer ft ire's made :vai Table to them.
In pr^ctieel toros, the criteria used to develop priorities
among orcjccts obviously has worked and has allocated funds*,
however, it must be concluded that the systems as currently
constituted cannot be made workable with respect to establish-
ing priorities on the basis of abatement need because of the
inherent bias toward readiness to proceed as a aomnant criterion.
Although desirable, the State priority systems as a basis
for establishing Driorities among construction projects fer
receiving Federal assistance do not satisfy ar.y of the four tests
used to evaluate them. They are neither effective, efficient,
equitable, r.cr practical as far as the agency's water pollution
control objective is concerned.
139
-------
TABLE 47
Federal Water Pollution Control Administration
Division of Construction Grants
Analysis Branch
Unused Allotments by Fiscal Year
States
1957-58
1959
1960
1961
1962
1963
1964
1965
1966
1967
Alaska
$0.85
$0.18
$0.30
$0.42
$ (a)*
$0.39
$0.68
$0.75
$
$
Del av/are
0.25
Hawai i
0.2G
•
0.90
Idaho
0.03
0.01
0.13
0.89
0.95
0.85
0.64
Maine
0.77
0.13
• 0.37
0.37
Mississippi
0.43
0.11
0.20
0.11
1.26
Montana
0.27
. 0.88
0.99
0.48
0.98
Nevada
0.17
0.09
Hew Hampshire
0.13
0.10
Mew Mexico
North Dakota
0.42
0.58
0.30
1.28
0.80
0.77
0.91
Rhode Island
0.20
0.11
0.22
0.02
0.14
South Carolina
0.07
0.51
0.23
South Dakota
0.22
0.60
0.43
0.31
0.12
0.10
1.21
0. 8i>
0.90
0.69
Utah
0.54
0.49
0.46
Vermont
0.11
0.41
0.89
Wyoming
(a)
0.23
0.06
0.44
0.56
0.45
0.88
0.93
0.79
0.79
Guam
(Not
eligible under proaram until
FY 1963)
1.38
1.52
1.51
1.50
1.49
Puerto Rico
0.39
0.47
1.10
0.83
0.64
0.04
0.54
1.71
1.90
Virgin Islands
1.65
0.81
0.32
0.82
1.25
1.38
1.35
1.51
1.48
1.47
*(a) Less than $10,000
-------
The overriding force which causes this failing is the "readi-
ness to proceed" concept. It must be concluded that in most
instances Federal construction grants have been awarded on a
"readiness/willingness to proceed" basis, and apparently no
systematic effort has been trade to maximize benefits from assisting
in the construction of municipal waste treatment facilities.
On the other hand, it is equally true construction grant
funds should not be approved and set aside for a community to use
whenever it decided it was ready to Droceed. From the agency's
point of view, the optimum condition requires that the monies be
put to use as quickly as possible to assist in solving or bringing
under control particularly critical pollution nroblens not necrs-
sorily within on^ State but perhaps over a wider area. The Federal
agency should have the control or flexibility to effect the maximum
benefit possible with the limited funds available. It has been
suggested that the present method of operation might be effective
in bringing pressure to bear on those initially unwilling to meet
their treatment requirements by those who have built plants. This
is plausible but there are no data to evaluate the extent to which
it is effective.
It is interesting to note that in several State application
instructions the following statement appears:
"The final decision on the propriety of Federal grants for
sewage treatment works construction projects and on the
amount of the grant to be awarded will be made by the Federal
Water Pollution Control Administration. It is possible for
a project application which has been awarded a high priority
by the State to be ruled ineligible for all or a part of
the grant requested."
But this statement as it appears in the State plans applies
to eligible construction costs and eligible facilities. If the
existing grant program operated under the premise that P/JPCA
does not have the power to deny a grant application, then lack-
ing such power it must accept and approve any and all grant requests
which receive a State certification and priority rating.
In view of the Water Quality Act of 1965 which imposes a
requirement that each State adopt water quality criteria for its
interstate and coastal waters, the above premise seems contrary to
the standards requirement. That is, it could conceivably be possible
for a grant to be approved which does not result in a plant which
v/i 11 meet water quality standards. If indeed the agency vere
unable to deny applications then this apparent position must be
ameliorated to permit the Secretary to have greater discretionary
control in order to permit channeling of funds to the nation's
most critical pollution problems where the greatest public
benefits are possible.
141
-------
The following system or technique is proDosed in a very
generalized form which would in effect achieve or tend to promote
greater control or flexibility in the use of Federal grant monies.
Assume for the moment that the only criteria to be applied at
any level, local, State or Federal, originate from the water quality
standards already approved--to look only to the stream benefits
which result from a project and to ignore all else. At the same
time it should be possible and certainly practical to identify the
critical pollution problem area on a national basis, i.e., Lake
Erie, Hudson River, Potomac River, etc. Similarly, it should be
possible and is also necessary to identify the critical pollution
problem area within each State. Once the total needs have been
identified within each State, the relative priority of each would
be set, focusing only on water pollution control needs. This done,
the ordered projects might be divided into, say, four equally sized
groups, providing a rough grading of classes of need. Those
projects in the first quartile would provide a measure of performance
of "the total State nrogram, and serve as the base for a bonus. If,
for example, a State was successful in bringing to the application '
stage a certain percentage of those projects identified in the
first quartile, a bonus could be given over and above any amour*
otherwise established under whatever allocation formula is in use.
The tabulation could be as follows:
% of Projects From
1st Quartile Under % Bonus Over
Application Normal Allocation
Rancie
41-50 50%
31-10 40%
21-30 30c/$
11-20 20%
5-10
Moreover, grant awards not used within a year could be
reduced from succeeding years' allocations, in order to avoid tying
up capital in lov> priority and long deferred projects.
It can be seen that if no projects from the first quartile
vfere brouoht in by a particular State during the fiscal year, monies
available~would in effect be channeled to another State which had
Sore success in solving its critical pollution problems. If no
bonuses were awarded in any State the funds could be carried over
to the next fiscal year and used in the same manner.
The effect of this technique is to place a premium on solving
critical pollution problems which from an agency point of view
represent those which should be attacked first and foremost. It
also requires that the criteria used to evaluate projects be oriented
to pollution control and abatement, FWPCA's primary objective.
142
-------
r^LIC TnL7.T."!:;7 T' U'^'S'PUL WASTE
The Sit:i^tion
i<- incr^.^si!"!•'» evidence that a vcn' sm't.tenti--if r;ot a
ir.r¦ior--ri.ri»,t.icn of tl^e rcnn' !",ros?urn or "uM'ic \?a?to tr-aatrcnt capita 1
ori"i pat,o c i ¦. r forr. ot cfr.?i- and ror ca^aci s._y t.o ^anele !>" st.^s o f
i p¦'i1 s ' r in 1 origin.
j:-,c r-ir^rc-j rrpc r-f that depap'' C^P not h° P'OastJrod nrociso! v. T!-r
''t'r".i oir"¦ 1 \'as Tcontain5 ar> income!-at? -'escri oti or. cf hydrau-
Tfc"T?wTr'~r~f o"r's eidlie i.^rta tr^a fr.-.-.pt- n]?nt«-: \ „ + it dons
p.nt ?r "ssess^ant of th^ w+rif uHons cv v-n stater !.-y source
of t'icr'-irn^•. tfirr" ir. r° irv?»*tr.ry 0"° inHij'jtri.ni •••.??tes. T! c
rir.nrr.c.t I'lirn ^ SUO.h .'-10 aC CO'.IP t i PH is *>0 V°r>' H^POr? "H Z0:d: SO'!' of
for f^ctori^s ucir.o ?n ,0i11 ion o?Tirps or pore- or v'^t^r a
i/"nr thaf i'", nuHishoe1 at Mvo yp'.r ir tennis l.v the Census ?>urn*u u^-'^r
V)r- ii11 ° 1-'-ifr rse in ''a^u^actnrinn.
,rrn i p n<; c-"1 n r'h 1 o ''¦'•aSr"S involyed i n ar-<» nade throinh use oc
nuioic cv^fnn-.c. rr. t.l">e has is of tho *.ir-t-?u of Census data. T'ie r^st
rrcent.lv 'mj! -lis'ied inforr.atien copcerns the vear lr'd<1. It is, t'r on,
fivp "ears eld* --nd +>» fivo y-f^rs involvc-vost ant to ur.o nuiniciral f^cilitios. Tho estinated
! i 11 iop nallon^ of v;ater usrd ( y such s^all nlants in 1°?7 must, in
larnp part, havo toen m'scharnod to nuMic sopors and r^-^v te thouoht
to account ^or an indo tormina to portion of th?? 100 npllons nc-r-ca^ita
n«5r r'av that is often assured to he the norr-M minicipal loadinq rate
to vaste troat^ont nlants.
A hazy assessment of the over-all irrract of industrial loadings
on runicinal sv^to^'s is, iiov^ver, possible. ue cap ns.tatlis!-!--imper-
fectly, and lackino detail--that factories and n«onle n;a''o anoroxiratcl v
equal d-nands on nutlic facilities for transHttinn and troatinci liouid
vastus.
143
-------
Water !'so in ?\anuracturiro, vith its eqorpnatn estimates of v/ater
use {••v ThVTaTo"sT~in du s t ri a 1 users , is the sourer of Table that o re-
sents the regional distribution of "•¦a.ior water-usina '':anufacturers 1
discharnes to nublic severs, ns th^v are accounted for in that doc.urent
for 1 r-c?nitn ncr dav is a corron rulp of
f i-**!r* ^unhpp ic;
conceded to include "ere sort of •'porn*1industria 1 -cnirrorcial cor-
oonent. t'^asurerents of leadings to individual septic t^nks, houseboat
disc^^r^^s ?nrJ larnelresidential cerr'MPities <-.i.-.n<-c.t fhat r'^r-c^eita
'!rir<--c + ic Tradings ton'1 te be vel 1 belo«-' th° :>ccented l'io nailers, fMl-
ire in a ran"0 of r^ijiM v •y"^ to *5 "?11nnr j To accornodate i-ot.h tra-
ditional ci7ipi standards ;ind ror'1 r^c?nt reaeurereots:, the comarisop
of runicio^l arc! 'rairr n-ir.u^actwrers' discharges- to Public severs was
calculated on the basis of a nunicioal loadine of hcth !°n and f:r nnl-
lor.s nnr emit.-1 r«er dav.
T'io rfpoc r.othe 'ever. su^icientlv describe t!-.o ir^nn^t r,f
ri wastes on "uni cir?l tre-it;- ?nt reruirarest* . Annual vol nr.e
ef lostr^'Mr-r oschar'^d to sevens frils to r'n*:rt si^ni^icrnt assets
of vas to trr,atr'ent. netably Unit!" •»nd cercntr"1 Merc.
ocvr^tic 'rste loadings tend tr vary or an hourly b:isis, '-'itn
r,f>rrim nnd r'rrl" ovenine noabs. Tncre is also a '^ekly bias--that is
less^nirn oy-^r ¦»-iro — i^art^d hy t^e tradi tier of '•'ore^y vn^f.dav?.
;:ut. r>\/vr the course c-f a year, lr^dirns arc hc-Te-arcus for riost cep-
i*-uni ties. Cnr',-> industrial ;jisc'-*r']rs, on f h.o '"t-r*' l'-ani?, have 'ironourc-
ed cv/c 1 ice 1 "atterns. S^arpnal cnrratirns ^ccur i?1 r^ny industrial
sectors and t.hn five day v/or!: v;oe'' is s + ill the star-hard por industry.
Sienific-Tt in this reeard is the f*ct that food nrer.-ssin.n, vhich
accounted for a quarter of esti"nt^d industrial disc^ar^es te n>uMic
sewers in !or'T, is highly seasonal in at least cc^e of its fern's.
because x-asto treatP°nt el^nt d^siun is scaled of necessity to
(»?i1 v n°air loadine rates rather than average finnual loadings, the effect
of industrial onpp^tir.^ fluctuations is tc olace a ^^jltiplier ueon cana-
city reouiregents.
The hi>'°er average r^terials concentrations ef industrial vastes
so eprve? to noye "^unici^al costs avav fref" the 1 evel inc'icated bv
nvfirao^ ?.pp.ua! hydraulic volume. Industrial '*aste concentrations t°nd
to vary widely. A s^udv ty r''?CA of s oven tv-so von ri/nici^al ••-as-'-e treat- •
nent nlants that recorded industrial vaste data revealed influent con-
centrations that r?nn«d fror aiillieran-s of standard Lioche^ical
oxveon demand (HODr,) oer liter cf ",'ater devn to 20 Mq./L. The nean v=)lue
144
-------
Table 48
Pattern of Waste Discharges
To Public Sewers By Manufacturing
Plants Using 20 Million Gallons Or More In 1964
Region
Discharges
Billion Gallons
Total To Public Sewers
Percent
To Public
Sewers
For Comparison Domestic
Wastes Billion. Gallons
@65G/Capita @100G/Capita
Manufacturer's
Discharges as a
Percent of Total
New England
488
49
10.1
157
242
24-17
Northeast
2439
204
8.4
653
1004
24-17
Ohio-Tenn.
212.9
172
8.1
243
374
OJ
CO
1
Great Lakes
2483
297
12.0
514
790
37-27
Middle Atlantic
986
39
4.0
158
243
20-14
Southeast
851
32
3.8
181
279
15-10
Gulf
2350
28
1.2
260
400
10-7
Plains
291
64
22.0
185
285
26-18
Southwest
96
22
22.9
89
137
20-14
Pacific Coast
1452
151
10.4
356
547
30-22
Total
13,560-Z
1058-/
7.8
2796
4301
27-20
1/ Exceeds reported U.S. total, apparently due to effects of rounding in the Census Bureau's reporting
of State figures.
-------
(iri n'^tr r> for \/nl u*"^ r.f J" V 1 •vhr. t ri\1 i r< f 1 LiC;i*¦ t s to the S^Veo + y-Typ.,
rr\v n") ip<•_<; . -nc. r,Tr '"u/L---ror - tlian tv.'O and hul " t ir'o-s that or
ro"'r-r + ir pjcfnr "> i" r! t''2 i'nc'l~in V-11 I't* K^S .i./f' ''O/L. f 05 t pod i fv1 i'iH
offnets of f'iefuso concentration attorn is. !.v no roans urr'forr.
Hinhor crincTT'tr^tiV.'-s. to thc extant tN?t tho ri'triont bajanco rf the
influent. is oro-.^r, ^ccol-^r^te biolooical nroductiyiof Vm lifo
forms that ?ccrr""lis'n the trcatront ofpoct. In sue!" c?sos> tl Mvon
1 cvn 1 of officiTcv is oftainod vit> * no'-hjctior in tino of w to ^uhlic s^t^s in lrr r c?n bo v.'oiohtc! i.y a^rooriato
n-ent factors *o ni v * ner.eral i?t?d vie'-' of the rftla+ivo rVrand^ on.
facil iti-^s '-osr^ Sv dorostic »v>d industrial \;pstos, \ot'n ir torrs of
Hydraulic loadino ?*h' of biochemical oxyier dopippr'. Such p.diustn-'^t
suqn^sts rhon the basis of an indicated 11 billion oallons a chv
r\r 3c«-ivolv t!ti 1 i7r' vf?sta troat^er.t ca.^acit.v, alwct e.r.y. i.-.^s talari m
} V industrial testes. 1/ '/hen tho focus shifts frcr volume of v*tor
to oross volume of o/vqon Hrr,andir'0 ratervils, ir;f'urial <'^rtes treated
in n.nicir?l nl.»pts accounted f^r P37.' to f3c/ of tho tcta.l, ?.J
1/ Tho $+at*r'rtnt assures 1) a ?Cr: 6zy ^v^n^no o^^r^tinn vesr for
fectnrios °) Fr n*"lions nor c?nit,i nor d.iv of rurioi^pl v.'a.s^o lo--.-linos.
3) r->y,-»ilihil-;t.v of tro?tror-t o^^scit^' to se^'or-H industri?.! \;?stes in
tho snro oror rtion ?s to• sov/or) half of tho vastos
of r-iinor i^nuf^ct'irino ^l^ts disch-'r^O'1 to oublic sowcrs. Porcontaqo
industrial utilization ste
str^naf!> of l/r' "nurd of DOPk ocr oor^on "or d?.v and riorr^l vat-r dis-
charno"of K nallons oer o-rson ner day vith industrial concentrations
nf -\'%o '"n/i nf n>npr (^«dian for tho sevent.v-s^von corrunitios r-asurim
to m 'S/l of W5 (»"^pqe for the 77
conmunitios.
146
-------
TABLE 49
B0D5
Concentration
of Industrial
Influent
No. of
Plants
Distribution of Industrial
Loadings to a Sample Group of
Municipal Sewage Treatment Plants
Hydrauli c
Total Volume
in Million
Gals./Day
Percent
of Total
Volume
Total Pounds
BOD5 of
Industrial
Influents
Percent
of Total
BOD5 to
PI ant
J*
100 MG/L
101-200
201-300
301-400
401-500
601-700
701-800
801-900
901-1300
1501-1900
2100-3000
4000
9000
7
13
8
9
7
6
4
4
6
4
7
1
1
6.70
28.36
6.05
4.61
9.37
1.88
6.27
2.76
10.27
4.40
2,04
.01
.01
8.1
34.3
7,3
5.6
11.3
2.3
7.6
3.3
12.4
5.3
2.5
0.1
0.1
2,770
39,190
12,700
13,590
33,510
10,530
38,340
19,550
91,310
63,830
41,460
670
1,560
0.7
10.5
3.4
3.6
9.0
2.8
10.3
5.2
24.4
17.1
11.1
0.2
0.4
TOTAL
77
82.73
374,010
-------
in 1 , then, industrial v.'^stc discharnes ^n?3r to ;,sye
boon a significant „ if not ? ore^ondornnt, scurco of dn^nc? -For rrnniri-
ml v^to troatnent edacity. The l°f-0 :^iricir>al waste inventory nro-
vides ^noi/qh information on nl.int size and hydraulic lo-->dims to Wd
to the inference t;.nt the volume cf industrial iradinns i|« increa?»d
substantially. Total hydraulic lovMnns r.f th» ";!mici ~
I'ill ion idlers a day. on the '-as is of averae"1 dail" flows. ' Of tM +
tCal . 37" to rr'1" (the spread ic. due to the to 1 rn n? linns ">pr/caoita
day standards us*'' to assess dr res tic loadings.) fay ! p estimated. on t1^-
t asis of connected modulations, to ho due to industrial influents. "
The ^eta.ilr rf ¦!"-:¦ information on \;hich that assessment is !;^sed
are oyy-scnt.ed c ran Meally in fienre *3. The fi^ur* cr r+.rasts the p^di^n
si?' of r.unici">al "-as to treatmert nlarts ^ccorHm to cc'runi tv nnni. ''
Tat ion vit'" the median !;ydr*ul ic 1 canine in each *-ymul ation si?o nrcn
Op the hp si s of +V- of s'ervo'! rol atien^hi^s. i+ <•• cl-'~r
OOr-C-M t? vol -ro rr SOWaoe ris.is ' fi t'' SI?" n-p Cr»r>n.,pif-u -,onu]->tion
The a ^riori_ ?$<••< ration *!*'!e h^r? ir- t'->?*• the re^r.r. for rj-.r. coidit->cn
is ip'''jstrial washes. the ri^ine availability o^ factories +o
discharqe their wastes in larger communities. The assur^ticn fits
industrial loon!icn nr<*d a'ilitios.. ant? sue'1 1 ini t*d s^ci^'r ir-orr-p-
tion as nr,cs'-ss with r-s^ne'r. to occurrence of industrial u«e of
i.'ijp.i ci nif>l svtrr's
°clicy -"/"•¦"cts
T'-oro can !o r;o mrestlT. that any effort a* rater collision err-
trol t'-^t; ''oos rot accost as a rinii'-u^ con-^ition the tre-^t-¦ ->-.+ "n* '
industrial wastes vi 11 he o failure. Toa r:stir?te'f volwr-- or'r.vw^
dorr.andif;-1 ?atori'"»ls dischamod fror- rinnufacturino ii-ir'-c, ?r.,r.,'(p+g" +r','
three tiros t!;at cf scrercd s'eit^ry vastes —before tre-''t!':er+ in pi.cs
C'->so- an'' f.te estimated vol wo of solids disr.W"od frf.r- V.-'nnf<»c+iirinT
olantc i5 rouohly t"o and a -half ti-'G that of sanitary s^'an^t ao?in
K'for^ troatr ent. "or^over, the volui-'e indtjstrial vasto is^rovir^
several t.irroS as fast as that of sanitary sewage as a result cf" err-'-in-.
per canita outnut of ooods, erc^ressively declinirn ra\• o^t^ri.^ls con- '
contritions, and oroer^-ssivcly incroasinq decrees of orccsssinc n~r
unit of r-roduct. "M
On the hroadps* ouantitative levels, t.hop, control cf ir,^,stn3l
var-tes nssu:nes a critical position for ncllution control 'nroornrs. V
co'-T^irify t^at '-aint'ins el?fecfivr tr^atr'ort. o-r its ,'^r^'r c?r
still he a oo 11 uter if industrial h'pst? discha> "not; ¦Prof' its ! orders ?r°
uncontrolled. In the interest of effective co-rum'tv action/toth s^'i-.
?nd industrial vastes Hist he dealt vit1; in thr conduct cf lr.rsi Pol-
lution control r-roerars. ''any ccr^unities—erohnh 1 v not a rraiori^-v '
148
-------
TABLE 50
RELATIVE DOMESTIC AND INDUSTRIAL
LOADING OF MUNICIPAL WASTE TREATMENT PLANTS IN 1963
Million Gallons Per Day
Community
Number
Gross
Domes ti c
Component
Industrial
Population
of
Indi cated
Percent
Category
Plants
Loading
@ 100 G/C/D
@ 65 G/C/D
Remainder
Industrial
under-500
1400
64.0
49.0
32.0
5.0- 2.0
23-50
500-999
1600
156.0
120.0
78.0
36.0- 78.0
23-50
1,000-2499
2400
588.0
420.0
273.0
168.0- 315.0
29-54
2,500-4999
1300
682.5
487.5
317.0
195.0- 366.0
29-54
5,000-9999
1000
1050.0
750.0
487.5
300.0- £62.5
29-54
10,000-24,999
800
2010.0
1400.0
910.0
610.0-1100.0
30-55
25,000-49,999
300
1687.5
1125.0
731.0
562.5- 955.2
33-57
50,000-99,999
160
2040.0
1200.0
780.0
840.0-1260.0
41-52
100,000-249,999
85
2677.5
1487.5
967.0
1190.0-1710.0
44-64
250,000-500,000
28
2100.0
1050.0
682.5
1050.0-1417.5
50-68
over 500,000
24
2700.0
1800.0
1170.0
900.0-1530.0
33-57
TOTAL
9100
15,756.0
9890.0
6430.0
5870.0-9325.0
37-59
-------
Figure 5
RELATIVE DOMESTIC AND
INDUSTRIAL LOADING
PUBLIC WASTE TREATMENT
PLANTS
O
»
'w
0)
Q
2.5 5.0 10.0 25.0 50.0 100.0 250.0 500.0
SIZE OF PLACE (OOO'S)
150
-------
for the ripple reason that factories tend to hp concentrated—Stvp
accented the !;inl° toc'"nirnie of treatipp all, or pt>st, of the wastes
occurring <-'ithir their .¦um'sdiction, v/ithout rnnard to its source.
¦p. at practice, taj-en for nrartpd -for mny years in th® ca.se of
inner citv rnI ricatin" piarts and anrNlaudod *c a "regressive innovation
when extension tn rvror pnri'^'oral or v'Pterside factories vas initiated
on a larn* scale. *-?s recently cope under attack on nrounds of equity
or propriety. Antagonists have questioned the sui+aMl i ty of a->olvinn
public resources and ^I'Mic run^s to the solutior of the problems of
nrofit rM.ini industries. In particular. tho General Accounting Office,
in a erelirinan' rnnort to the Cnnpress on *h« administration cf federal
v/aste treatment ola^t construction orants, cast dcubt on thf» vali<-'ity
of tho practice of extending Federal ^ssistaece on tho basis of total
construction cost rather than restriction tho scoop of Federal assis-
tance to capacity intended to serve domestic users only. (It is,
ppr'ianc. sionificant that, tho rA0's final report +o i:h* Comross con-
tained almost po r,?r.tion of tho sub.ioct, and had ^e r^cp^-ondc-tions v;ith
rrnan! to the vector. FstaMi.sbed us^ee, "cc-or^y and officirrcv rpv
;-.pv" lean such ^orsuasivo *rn,mnnts fnr current rederal pssistar-co
practic-" in this r^^ard as to chape? tho r^vi^i-'ers' first re^ctions—nr
th.r" pav si ml v hay* dosnaired of developinn Procedure*" for rosolviii"
tho rnorro.i»<: nroble,;,s of definition involved in deternnniriq v/hat is in
fact a 'nunicioalwaste source and what is properly industrial.)
The estimates of investment need presented earlier in this study
orr,sui,;0 threueh sT)1 ication of si?iro standards and projections of
rate of increase i- 1 o r d i »v s - - c.o n t i n u ? t i o n pf current tendencies toward
I-ro,r ^ublic resner.sihil ity for industrial ^asto treatrvnt. As has
Urn rotod. in, atrial sources presently sustain a rou^h »*a.rity vith
dor^stic ^rd cerrorcial sources in ''*r?.•%-: on nuhlic vasto h»rdlir.q
sources, and r:a.intop,apcrt in full forco today rill soon oivo
fractorv. vastus a nro''ciHn5uit position. Tndustria 1 roods, then, rest ho
considered to !~o a c-rtral ratter in detorrinino ipvest^or.t. nr.]iru.
Tho r^ainir.a "ortion of this section of our stud'-' ?tt«mts to ouali fv
the ocono'-.ic im?ct.s of euhlic treatrer.t of industrial vastus in torrs
of effectiveness for cmtri hut ions to vat or pollution control), effi-
ciency (approach to raxirun outnut doriver! frop; anticipated resource
inouts). eouitv, in its economic sense of ?ssossinn costs en tho i.asis
of benefits rocked and/or daraeos incurred, and of technicnl and
i ns t i tutiona 1 nracti cahi1ity.
rrf-e ti Vf no s_s_
Public troatppnt of industrial v.'astes is effective in insuri-n-i the
utilit'-' of the tr~atront cf sanitary vastos, since it ouarartees that
the results of treatment for th« dor^stic oonulation v.'ill not ho nulli-
fied fv tho effects of untreated industrial vastos. It is effective,
too, in that it locates resoonsibil it.v for the on^rption ard mainten-
ance of the local v;pst5 handling ^ctivitv vithin ? sir.nlg authority
v/ith a cloarlv defined responsibility for the operation and maintenance
151
-------
of the local v.-aste Mndlino activit"-' t!vt is assineed to a orem of
professional operators. In su'-'Stince, it nuts the njnicinal or nth or
nuhlic aoencv into a public utilitv status with rpsnoct to an industry
soo'^nt or nrcjr of factoriss-~3 posture not at all unlike one that
it no mail*' accents °n lehalf of a eroun of residential and cornorcial
custor-nrs,' and of ton for other oublic- jurisdictions or anencios as wel 1.
Dn olnrert th»t enters strenoh' into consideration of the effec-
tiveness of that ro]atinnshio, hut one v/Mch is difficult to ouantify,
is the weakness of industry's incentives to treat vastes adeouatelv.
Waste troatrert is •? col 1 at oral and profitless activity fror the stand-
point of the fir". Subjective t'or job it nay he, the nereral opinion of
nrofpssicnals in the field of '••ator pollution control is that factory
n?.na.nrp'ont often vWs v/este treatment as an imcsed responsibility that
nay tnost convenient!*' be discharged for Horn's sahe by construction a
facilitv—vhich nay then he operated very indifferently. This opinion •
assur.es' a critical importance. in vi <*¦' of the industrial tor don c.v to
reject caoital intensive vasts treatment rethods. even vhere a con-
siderable increase in operation cost^ is incurred thereby. (The lo'-;
capital, hi"h operation cost formula is rational fror the standpoint of
the cirr. i:oth because it frees coital for -1 tor-nati ve and or of i table
aenl icatiors. and because? of the euite sen-irat^ e^^nots of corporate'
t ;a>: orcvisim for operation expenses ?nd capital depreciation.) Pi von
that set of conditions, there is relative assurance of effective waste
treatront. "'hore industrial '.vastes are channeled through a. nublic eye tor<.
posnonsibil itv if, n^ssc-d !:p an instrumental ity vith a stronoly develced
S'"t ' ef incentives to oner^te and raintair. the systor in an acceptable
fas'-ion. Fvrn «re the cost to industry is equal on r-r annual !asis,
if has an incentive to -¦'/font th* use of public facilities, both hecsus"
or«or-->t.i^nal ^reM'^'s are ro-revd *r-•¦<¦' its nurvi and [ oc-^uso the full
t,-r c-"vr-r e'"-rpn heeeres a l,T*x r'n(!noti 1; 1 e ex.p^n^o "ji-| the
incurred.. vn'thout the interposition ec de'^rr^d depreciation rrryjirennnts.
rJ*f i ci nrr'/
TV:t is efficient in an onenonir sons? vhich inoreases the cutout
of products fron a given input of resources. Efficiency, then, is a
relative and not an absolute test. Put if th* tash vr V-n. public adrin-
istrator is .to *-axini70 tii? satirr actions available fror; the resources
avail ^'1" to hi'", efficiency rust always be a orire ooel.
There is no eu°stion that in a nMority of cases nublic tre.atr^nt
of industrial vastes is no re efficient than separate treatment of runi-
cipal ard industrial vs+es, in t^at it corronlv costs less pcr fallen
of vater ^rc ccssc' or n'*r unit err e*)l 1 utaiit relieved to treat vaste
frm several sources at a sinele eeint.
Thero are tve reasrns for the cost sdvap.t?"". On the one hand,
eeenonies of scale ?rn attained by construction and utilisation of
lareer nla.nts that a.re require-:' vhen a' r.un'ber of independent vaste
152
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r.nurc/'s crl looted at one oMr.t for tr^trrrt: c tuo of or,
stmire c-"""'*:1 ilitior ~nf'1 cerolor'votnrv characteristics of so*nn? and
indus •rial vastus often norrit ooora.tion;*! ccor.o^ies.
T'.o oHor of i~n^niti|r'° in vhich econorios of seale occur is indi-
cated i»i T>!lr' 31 v!Mc'i lists cost to si7° rAl^tionshi"^ for the nrin-
cin^l v'asto trea.t^opt "r^cess^s. Thci^h the cost rf the- ircreioontnl
unit nlacorl into ^"or^tiop varies rcccrdinn to t^e treatment orocc-ss
emlo, +,-;r> savings that accrue through corsolidaticr arc* use of
lorn or pl ants arc suhs tanti al in every case.
"op^nnc- |-j,p rrincielo '"?v 1.os t h° i res *,<>•' tf^ronnuso of an
'*x?i'nlr. Consider the situation of ? commity tl'at -"'oveloos 70 nillicr
eancrs c'-y '-f lin-nM wastes in sor-o- cc-vti nation cf sewaqo and indus-
trial di $cha roohvsic?lV' ennvrni'-ot tr T'n'ide treatment 1) throuoh construction cf
ten on11a 1 Iy si?'-'' »i],?nts* fivo oeorated iy nuoicieality for tho use of
rosi-'ertial and rorvico industry users, fiv® curator! by individual
factories, '•) throueh (.to of two equally si,?od "lant?, or.-? operated hy
thn cor-¦'uriitv o-r; t'e othr-r by tho factories in c.pPSortiur, 3) throuoh
uso of a si role i aroo r>l ant servino tho needs of all waste oroducors* in
tho co; '-unit'/, Msu-iinn a twenty-five year us^il life of nlant, a
five 'oorcort rato of in tercet, and serial anortization in each c-->sc, and
o°ual 1 r^nsr iss ion costs, the alternative solution? would entail dif-
ferential cosfs on the oHcr of those "resented in Finur^ 6.
n
n
»K, H*> rf ">e tvera-c wmrel cost? wild weunt to
,(niltrr r," of t'l" ton -.lwt srl«t1«m, ""1/"0 in tt>*
ca™'rf fiT t-o M* ^"V'Or for «* ?t n virus, !«t ponally tr..». Is t«.f/«t th?t it is to thr
fr_.fiP»t1cr»l CCMKT* to serk the simle elint kind of srlu-
rorirfit .f nv doim so, rn ".-"ion frees for otiPr
n vMrnrvrr it • ¦ , otbon-lse tr «>t11 Isret* for vrstc treatment.
^urnMsrs resources t':?t '¦to; i u-i ¦.>•
Tn nr,rtir« sc-le econo-i-s nnv in .nany-^r^ns a -raiority---of
L h/ nnrtrstienal ecorcmies doriver: fror* the char-
MJOS ^ •- p te sources. Ccmlen^ntarv deily flew
act^nstics nn ;;.Vcf ^or-stic activities can be utilized tc
cycles 0' r,aru,<
-------
TABLE 51
Generalized Cost To Size Relationships of
Basic Waste Treatment Processes
Construction Cost, $1000's for Plant of Given Size*
(Hi Hi on Gailons Per Day Capacity)
PROCESS
.01
.10
1.00
10.0
100.0
Primary
58.7
308.6
1,247.7
6,559.0
Primary, Separate Sludge Digestion
85.2
305.1
1 ,092.2
3,084.0
Activated Sludge 11,7
70.8
417.3
2,458.9
14,487.6
Trickling Filter
101.8
288.9
1,374.4
5,045.2
Lagoons 6.2
23.4
88.0
330.3
1 ,080.0
Annual
Operating & Maintenance
Charges, $1000"s**
Primary
4.5
19.7
Primary, Separate, Sludge Digestion
5.5
20.6
Activated Sludge
6.3
31.3
172.3
Trickling Filter
5.1
18.3
83.3
Lagoons 0.1
0.6
• 3.0
*Source: Modern Sewage Treatment Plants
, How Much Do They Cost a-nd Sewage
Treatment Plant Cost Index for June, 1969.
**Source: R. L. Michels, et al "Operation and Maintenance of Municipal Waste
Treatment Plants," Journal of the Water Pollution Control Federation,
March 1969. 1962-64 dollars raised to 1968-S9 conditions by use of BLS
Craftsmen's median earning, 1968 4 craftsmen's median earnings 1963 X.
-------
CJ
CD
w C3-
Q3 ^
Q_ u
^2 'o
CO
— CO
£ °
C75 ^3
LTD Q-
I oo
L? ™
cri
1.000.000
LO
c
-------
trea*r->nt are in tborselves a serious source of pollution, the incro-
nent?*l reduction of those nutrients in the ultimate discharne that
occur!'; vi'ian thcw ar* incorporate! in slud^r? derived frorc the industrial
wastes neaps that the waste trrntrcnt nay often !¦ o no re complete end
effectiv than conventional secondary- sewaoo treatment. H final source
of ro< ontial economy ?nr' enhance-"' o-frrctivonoss sbouV ho noted. Tho
toimor^t'iro of industrial vast's is often hinder than the sewane. In
those rn^s vhcro tho vol'no ovC temorature of wastes fror> industri al
sources is sufficient, to increaso neaninofully tho temperature of tho
total voluno of wastes !:>einq treated, the effect is to accelerate tho
lifo orocosses or tho bacteria that effect the -'r-coro^sltlon processes,
That ir.etakol ic acceleration produces an cf'cicioncy incr^r.oMt, in that
a qiven d^oree of wacte sta1 ilination can bo attainor! .,r
averaoe temperature effects and ta'-euo of sewane nutrients by industrial
sludges--is more complete waste treatment, absolute pollution aha tenon t
benefits as well as relative cost reductions are ant to flow frv.'i nuni-
cipal-industrial .ioint waste treatment arrangements.
Tochnical 0 Institutional Practicability
It is probable, as indicated earlier, that industrial wastes arc
currently the major source of loadings dischamod into public waste
trea truant plants. (The statement presumes application of a correct
definition of "industry," but it nay '-'ell he true svpp if the idiomatic
substitution of 'industry'' for "factory" is -a-'e). The texthr-olr stan-
dard that dates hack to the lnon's specifies that oor-caeita waste
production is lr'0 naliens oer day: I ut even traditional sizinci standards
reflect seme assumption, pf the existence of a "noma!" industrial re-
ouiremont above the capacity tnat pust f e installed tc handle produc-
tion of domestic sevane• In ract, .tov.'cver, 1OH qal 1 ons per capita o?r
dav fails completely to measure the inflow to riodern sewaeo treatment
plants. Hydraulic demand ris^s consistently with comurity sire; and
in even the snallest size class, the nedian loadino level is 110'nailons
per capita per day.
fierce authorities have atteroted to explain a hinker than noma! level
of loadings on the basis cf increased p^r capita use c-f water that is
oresuned to have accompanied risine. livinp standards. There is prob-
ably validity in the observation: but it ca>inot. be us°d to unset, t'^e
conclusion that puMic treat^pnt of i^dustri^l ^astos acco'.mts for
noro than half of capacity utilisation ir nr.esent day vaste treatment
nlants. Ccth the fact that relatively recent studies are responsible
156
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for + h* of rasid-ntial seva^e production -f /T-f.-j "?lions
n„r ,.:r ,w r>> fact v.-;? t on* in -r^'»r *f*w tr.-^tnent plants
Prr.;^-|,; ./nr;7r- mnr:ns oar c^Ua -er day or no apnrc-
in i^i^nce of r-crf.rd. ov-rloa.dirp *w< sue:*- rlsnt.s—
'tr ;;,^nr. fur stntr-rpt that. Iritis try and rot risinn irdivv'c*]
^ f;f r 'io,"ro<;nr.ih 1 c for rost of the 1ncrrr«nt.?l re*d for Public
| ^ fI O p 1* ^ 1 f1 ri ^ •
T,„.. ^rr? js nr.fj.inn MtW novel «r excitinn shout the practice
nf rrrontinn' inHu«5tria! vastes in municipal treatment plants. It is
sirolv~a "continuation of established Practice. As cities have instal-
;.ur.<, yy* n«sterarilv 'J:i'C^d ccr-arcial and service nste!-~
1 ^r;P U,r,r netvnrl:. an.' in "?.ny c^-s ranufacturino «strb-
.'..vs ^.v^r-nr1 ^ vol 1. ' 'hen, un^r tV pressure f;f everts,
-1.; cf,;',;r... -Tcro c'+rvr-s care to hn collect-d ^ np-so:! three'-. a
-,1-nt, all recipients of the s«wer service became
c„;t^,;rr' (',V *rr.,-t/v-nt service. In -rir.t of f?-.r.f, there is liUl-
Ont.ion vr r ' ^'-' Tir^. location pry c^strM- ;,nv ec-tabl ishn?nt loci tod
^•fh-in ., ri'fy' to i^.iliz- ntibl ic se-ers to carry a.ic?l, nharnsco'jtical, plastics,
t°xtilo rn^ rubber plants wastes havo successfully incorporated
into nfblic^troM-rent systons. In six of eleven ra-jor rvnufacturino
sectors f'r.e nrrvalenco of treatment throunh nuhlic s.vstens in l?c4
^0'iallec'i or exceeded prevalence -of tr^-itrent in industry-on«rpt°d
oianV In s"itft of the fact th^t the three ranufac^tirinri sectors that
inakoVcst'a^ur^-nt »'se of Process vat^r (nrin.p.ry net^ls, chemicals and
3lli°d products, and oap^r and allied nroducts) are often precluded
•fron use of public treatment facilities by reason of discharo? volume
or v'aste characteristics, a fourth of the fross volume of factory v.-aste
,".g^ treated passed throng public facilities in that ve^r.
157
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(See Table '">?.) Th° Tomrtion is nrohaM,v or^ater today. ,Anc! it is
$5fr> t.o assume that in almost ?11 cases, vrast.e treatment provided to
corrnercial and service industries depends ueon use of public facilities.
TAPLF ^
p.olativo Prevalence of
Industry-Provided rind °iihlicly-Providcd '-teste
Treatment hy Ite.jor flanufacturiwj Sector, 19G4
PERCENT OF '-IPSIF TREATED
BY INDUSTRY
n,Y PU3LIC
Food p- ''inured ndts.
34. o
f^.i
Textile ''ill pdts.
OO /*
61.F
Pp^5r r,'i Allied °^ts.
91! 4
8.f-
Conical r Allied Dd1;s.
r-°.n
12.0
Pet roleun ? Coal
on .o
P.l
r-ubter ?• Plastics
50. e
50. n
Primary -'etaIs
or; c
A, 2
Machinery
2n'.C.
7°. 4
Flect.rie.al 'techirery
l^.F
oi n
Transportation r^et.
ofl n
r,r > r
Other ! !fe .
ro o
•.
41 ! 1
I
i
t
i
i
*
1
jf
t
p
7r-.?
?>\. o
Cenerally sne^kinn. there are ro technological i>-o^dinents te
cordon use of t recent facilities by manufacturers ard hcusrhol »c
The treatment processes arc I:asic and si^lr., ;?.nel icabl'e to ^st Hn^
of waste. There are sonc wastes t*at rsoulrp ^roc-ssiry- otvr""tW
addition?! to, t\e screen inn, sedimentation, flet^tien" wswsJT
ical stabilization e-oloyed in conventional runirinal v?sf-« 'tr^atp-'n+""
syster-s. In ?<>ch cases, industry must either Provide nretrp»trn»n+" '
'leisures or si;""]1' its own treatment facilities *
A variety of institutional and procedural er^c+ic^s hav--
developed to extend treatr-^nt to * notary wastes. Th^ naturoo^ tho
arranpenent between nuhlic agency and factors tends to '^e ^eci-'ed o
* local level, thounh sore reeiorally consistent trends nav no+nd
with roseact to finarcino treatment. ' ' ' ' *¦
"it!: r^s^ct te -V/sical facilities, the ccr~on is
both sewa-c and isdustri*! «••*.<; tcs in a sine]* ri~nt i» rv>^r tn
the economies of sc*1o ar" c^nlcrer.tarities evaila?-^ >op t>~ o^rMr-
On ia?r,v occasions, the pressure o.n caeacit.v imosed »v
•vrt has created a need for ra^r nlant exnnnsion or ev*n^lar* Vnlar"*
ment: and there can be little doubt that the gvailaf-.ilitv ,f'^r?1 '
158
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construe"".ion or^nts h-s ra.'o such ?rr?'iTn3nts f"r r:crA attrac*ivf? *n
i^'-'ustry. It is unn<-tiM, [-(;t th^ ^nctic^ of nrovi :'ini snt\ar?tG
facilities for th° \!se of in •'nr. trie! cus torpors, or even ? sinnlr- cusf'>-
'':er, is not unknovn. Though cv/ned and Derated by ?. nuhlic .ir-ppc"*
such a facility Must he r-vrar^od as an extension of tho f*£trrv in'
noint of font.. S'.ich ^rranie-rents havo b«or vi"vo^! as a sul.terfunp + o
o! tain i-•!>lie funds for tho use of n nrivnt.o interest. The onnorali-
zation is, ^rh^s. too ?'•'??>¦>ino. Each situation should nro^riv he
reviov.'crj in the contoxt of its financing 3rd its elace ir, th.o total"
Public s."sten. "lit there con ho no question that the fov arromempnts
of this sort---no '"oro than half a dozen vere uncovered in a sunofficial
reviov of Federal erart a<"ards--?ro responsible for r.uch of tho opposi-
tion thn '"•-is ho on raised to nroviVino Fed*r»l orants for construction
of the portion of a treatment facility that vi 11 le used to tr~at
i n di i s t r i (i 1 va. s t os.
Financial r-.echanisns that have been ;*nni -jr>d to fund tho cp^acit''
roouire^ents associated vith wider ny'-lic treatment of in dust rift] v^-f-ps
orobshly "invo a 1 are* effect on the favor or disfavor vith vh.irh the""'
nracticn is "«?nprM 1 v rv^ 1 •;^^c1. An incr^sinniy fevered niothod c'f"
obtiinirn rrvrp'jos is tbo uso of tho sever service charge. Its pro-'
valence has nrovr vith exoar.sior of ^u!-iic tr^trert o* fnctorv v^st^-
and th? existence of se'*e vrv enrol ox charge form la?? based on v'olj^p'
strength, and characteristics of raster, nnuos strrnolv that industrial
vastos, r^t'-or than d~nestic sev:aae v:ith its horm^rrus character',
3 factor contributir.c to t'-o extension of sov^r chnro^ svstcrs lV^
charoes are not, hovovor, universal. In sor.e c^sos, n^rticul^rlv in'
tho rorth^^storr St-^tos, thoro is o tenancy to continue to ro]v on'
orn^r.il t'lxrtion to ^in-Tnce trostrftnt vor';s. It is ofton ^h^ c?so
thnt "hnro usni ehnroos exist they tend to t ? senior' to r.roviiie'"for
olont ?nd sov/or roerntion f>nd "V^i.ntonpnco, vi+.h oonor^l t?x»s ofton
oovorinn c-anit?l costs— th$',tyMc?lly hiq'i^r coupon r?te of loc*l"rovo_
nuo l-onr's r,»y account in o.->rt for this, "hero cpnitnl rpcV ('^ht"sorvic.~
ina charges are !:uilt into tho scale of user foos, tho orpctico is to "
establish thorn at rat-s that, cover only local particir^tinn"in't'»p
investment. (Cases nay exist where t he amount of Federal \~ssis+anco i-
also charaod !:ach to wsors. hut the anal}/-sts aro unaware of^then.)3
V?*r ciiarnos, ooncral taxes, ceder?l and State nr?nt«; dr« tho
usual roans to finance aod service the o!events o-f indnstrial "»••=>.st^
tr"-'triert th.^t use ouMic fecil'ities, !«ut. spocializrd binc'^of fir an
ci? 1 relationships f:ave also d«vr-lr^a^ on the locaY'lpvol ' T^-or^
have K?on instances vl>ore th« fir^s th"t «ro"oSo to share in t'^ use %
a r-mieieM troatront systo- have ?dv--nc=?d rrooortim of th0 ^inY "
required for construction, uave eontrihutod land fnr tho'r.irT'„'
-urc'^sed tho Krr,ds is^'oa to finsnc^ c-n struct inn'.' is ?f*ctn.M,
copstr-ictior of a ^l^^t in ''hic! can.icity is erovi '^d fr.r r>n' ar'-ioinino'
corrunitv Mn'-rovr, though the fc s-;eh situations thn ccrn 'tc'^ird
date r.V'-'ilatility nf Fr^onl assistance for elant construction ' ''
159
-------
p.n + idf -> 1 nrncC'''Trt^ '•*C!'7»¦' iri '"-v ' "> s i <; n" ip-#ror,^at'«Vn
f.!•.,->+ ic ;*»»,->i ] ?H°, t° a'/° iru,"~l m 'ird'ie r,ri%!'1nns . C'V '/r^rv to t'"0
oenoral 1 v hold onoinierirq opinion cf a decade ano. when cormunities
vrere cautioned aqainst the o^eratin'* oroh 1 e.^s t!iat industrial vistas
vould ir-osr, trr-ni"-'•"¦rt soms o^'i^ral-ly to t"d'c ?1 nr.^ <'ith lift!o or q<~
•ior."' difficulties as t'-c ^re^ortior, of in*,us'f'r-ial v.'isttr. in tho in^l""'^-
'vs incr-" W. it von! -! s^e"1 that discharge crr.di tiers ar--* us11 v
stinulatod vith sc~n oraci'sion in ord<--r to vorista.ll rial fur ctior>$, m-d
^ f3rt(*,i"'i o^ "c r"rr? 11v instoll t.'iT cqui""" ant .^rd ^c^'iM"c*necnsc'r,ri/
to root those reoinr-pi-oets.
nv.np,-»tirnnl failures arc not i;nhr.cvr, 'ic^vr1 and vhor. thoy occur,
tkii r.^v ! '> s^ctaculnr•' as in the cass r-f tso richinan olant ,..^!';er•',
lectorial acti on v^s short.-'Circui^d hy a chanoe in the c'aracteristicr.
of r. n?n?r frill's discharge, so that sludge dr'in" Mds fitted no'-.-erful
odors of out r*1 faction' or the cas^ of the 0;.io '•'•">r. to troa t^aent olant
that literally h.urnc-d r3,".'r,. nrc-s'.ral--ly as the result of ignition of ar
accidentally d.isesarqed an:! volatile industrial waste.
jY-vicv.' of the "literature orevidas f o\* serious exanolf-s of opera-
tional fail'ir«<;. !'oro c.er-op is th? sort of dasvaoo that results frck
inadequate design annlicatiotvs or loss of an industrial wasto source?
"i-oy-p treatment rlar.t is desioned in substantial e-rt to a.cco p.o-Jrto
th» wstpc, of a racten', and that factor' stors its oooraticf:, a signi-
ficant loss r-f sun'', caoi'al is inescapable. Sirilarly, t!:o application
of sever service ch^roos that fr'-oc'^ incantivos to r^'-'uro v-^sto dis-
chnross throuah ir.-^lant r'o^ifications has on occasion nrovoc! too
successful. Victories hay^ succoadod in r^'neinn the vr^vrr, or str^rath
of thoir dischr*rcos to f!"° aoint "i:!*at a significant mrtior of the
car."»ci'tw of 1'ho tr^at^ont olant is not. utilised, with tho rosult th^^
svstor usors find thrtrs.?lvcs in t'ir> ur.fortun*tr* ncsition of ravine fcr
a oood daal of unnecessary capacity.
Zquity
It vould soo'a that the central difficulty tlia.t exists ';ith resnoc.t
to t.ho nractico of troatinn industrial vastos in "uMic svstens is the
ethical eyol-lon of thf? nronrioty of s'.inolyir.q cut of nullic facilities'
and nullic funds a sorvico to assist a irivato irtorest. The "roM"''"
Scores particularly no in tod './ho n Federal construction orants nro in-
volved. for t!io sinrjle raason tf^t the Conqross has evincac a disin-
clination, to orovido ronoral su!>sioifor industrial v.*aste troatr^nt
nur^oses.
Yet there is sorothinn sn^cious about the ethical ouostion and
tho torrs in vhich it is nhrasod. The distinction totvoen a mmicinal
vist'i arc' an irx'i'z+ria) \:?stn is an *rki^icinl rmt dependent nre-
definition. The nrovailim oat torn of oninion has been to accent all
commercial and service industries as loqitirate contributors to the
runici^sl '--'aste strears, anr' even to accent snail factories or "dr"
process industries as the "normal industrial coherent" of "municipal"
160
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v^ste^ Tnpp th->n, dors one drav the linn? Connercial laundries and
rr-tniir^tsVr.' Wicall'-' bo consider-'' to be only extensions of dopes-
ti^ 'pC-;-TVi^ioc, ^'rw hotelr, and rotols. But vhat of the grocery store
M-,f, ,iA^,rt'pnpi- storo? rde varo'nous^s and marshal lino yards qpnerate
runicinaf vastes' or industrial vastus-? ''hat about tho airnort, the
t-i.pnp-jrp cantor j the industrial r-fli K?
Ti.nc. n„nctWs P?v be valid, fc'Jt th.ey Pust be admitted to be somewhat
noint. The real distinction involved is not one of source,
t:t|£ rPi?tiv^ r^nitude. Certain ranufacturini industries dnr^ctcr-
J„r," 1 -Tho niants and marked use of water nor unit of output are
p,;or?nv"/rron^^ to he the exclusive source o* "industrial" v-aste.
;,n+''fi-/- p->c+ +hr waste co^es fro^ a factor, but that th» anoimt
of V?s+;r.' annro^ohos' 0r exceeds the -'rwt operated !;v the nonulation
finnppHr'nt'o- n'rt'factor' causes its diseharn- to be so distinguish*-!.
It i; tp +¦ i-)• ¦!--.r-: incremental costs irmosed by the necessitv tc
t);rn t.hn "indus trial 5ro si orient that the equity ouoption is
nosed.
-i.o. distinction on t^e basis, of relative rnr'nitude nay vol 1 bo a
yr] v'' n«r" p-.^ /'^r^nnc occasioned h" the nnior v*tor-us inn industries
-^n-r^ll'' rorn^ni7od to exceed t':osr; of all other -aste-'isc'-areino
_r, c..r " cinil-"!rlv, the incremental abatement costs nosed by factories
"in such"industries' are so ruch nrsator than the incremental cost o*
nr^/iV-i frr retail c-ctablis'-r.-.-nt or th- dry process indus+rv,
-r that the- p
-------
vnstes \'Ould tend to oror'uco inter-sectoral iroouitios. Scv> Indus trial
sectors '-.'culrf receive benefit of Federal assistance, ethers v?o'.ild
be cut off fron it. 1/
Finally it should to considered that there are elcrents of
regional d-jscrinini'tion illicit in a nnlicy of linitini erant assis-
tance for nublic treatment of inc'ustvin"! wastes. Not all industries,
but the heavy v'M;cr-usine: first-star^ processors arc, as has been
not^d, n^psir'od to !e the source of industrial wastes. To exclude sue!:
vast" sources fron Federal assistance voulH be to inflict a distinct
nonalty on the fir :'ost and on the Southeast where a disproportionate
share of industrial activity is based on such nrecoss inri, and where the
oroo^nsitv tn provide mjMic treatr^nt of industrial v:a st.es is bistor—
icallv vol 1 established—in the far '-'est, at least, the nolicv antedates
Federal assistance ^ronrar- hy at least a decade.
Potential inequities inhere, then, in any -uiMic nostur" tl;at ray
! e assured vith ronard to bro^d ruHic traatront of industrial wastes.
sufficiency and -racticabil it'-' of the practice; are ostatli$h*d he-
vond cuestion. It contributes tr> ef^ectivanr>ss of ncllutir^ .->» p. ter t
efforts I v "•st'ibl ishinn nuMic control cf wastes fror; sources? a.nr:
in kr-v/il'-' ir<'(fstri^^ i.aed urban areas it is the rest practical "'av tc-
achieve ryf"f^ciyr> w^tar ^fjllL'tion ava ;...o'1 ent. Yet in the c.^se ^f crrt"*ie
heavv irdustries. its effect is to shift fron ir4tict.rv to the ryMic
sector an econo' iic ! urdor. of ver;-' size.n- 1? dir.cnsiers.
T'ip essentia"! Guestim of equity arises out of the cprortunities
for c^st v^ir'enc° td'-^t the practice ircvi\ins p,nni;fnct"rirn industries•
end rbirctiens te assistance have been n?"nifi<~d ';v o>'isJ-~
enoe cf certain cis-'s \ here a local. ecv*rrr:crt1 s t-^1 ic'-ien for a
"rant amounts te a tuinly r:as!:e'' e^c-rt tc o!;tain public assistance cry
what is essentia! 1" ar industrial facility, f'nreovT, t>.n iennuiM'*s
1/ T';e author is vritine this in a Nuildinn that is ~^rt of ? r^-crntlv
cmstr"cted of rfric61. retail . T'd r'''si'h pti^l units,
r'uri!'¦*' the day by ^nrsens 'roucht in fren more than a fift1' nile radius
and v:ith a probable vestft discharge equal to about one six.t1^ of that of*
t.'ie city on vhoso rutsl'irts it lies. There is r.e n'-i.">cti^n te sun"h> '
trent'en'nt of the "a^trr. of this naeen^r'- -f^ctorv or* to r,Veral ccnstr'ic
tion nrarts te nr^vi''e the el art e^ansier; and the tranr/eissicn frcili-
ties n-^e'ed to accor^lish it. Vet the effect of t>se ^r?nts is to
benofit tue r^al estate, corstructien, retail, and finenciel" sreters
just as surely as the c^aciJ" te b^r-dlc a i:c; Fn--:l-:v' 1 e J-r>r-crv
v'astris I,credits the factory a'/n-ers.
162
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that P'1 ativ"-l" sli-'1' 't in tho context cf the- Fedora 1 orc^rrn ! oc
cr.orr.oijs on t'ro local V--vol , in the casn '¦¦hor^ r-^r.^ral t^x revenues
arc uM 1 i?'d t° construct -nd oner^t"1 such a trcatnont systcr\
ro
rs,
r.on
nit" quest'*'ios 3ssi.ro e l^nal coloration v-!i^r vi'¦••••--is fron
the s*.?nd-:Hrt of Sec* ion ^(i) of the Federal '.'ator Pollution Control
Act., < >hi ch rovi dos th?t t
The Svocrotarv rof th* Interior? is *uthori?ed to n or interr-Mnicioal cr interstate
do'--rev fr»r th« construction of nocess<~p' treat* •<"-r,t v.'or1'^ to
nrovT* t''-" discharge of urtreat-v' or io?dcouatc 1 y treated
sr"-;^ or other wast* into ?.ry raters.
The -taction is s^ocific in 1 im'tino tt* avail?! ilitv cf rcdoral
construct!^n "rants to eovorr.r^nt")! unit$: and thrt lrnisl?tive hi?top/
s'ln^^st<*. vp/ cl-\"rlv t',r!t ".'":rro '.MS no (.orcressiopal • ietont to extend
such nr^n4"? to. industrial traitrent of 1 ;nst~s: yet the Act Tcvi^es
that the erants e^ond to nl.mts rhes° our-ese is to treat not col" sovMor
! ut ''o•?-'-1 r i:estns,'i so lono as it is 2 ecvTPrent'el pnnrcy that ir'tmds
to construct—a r/1 nresusably to on^r?.te-~the v>orl:s in Question, dor
tioes the "••tor Pollution Control Act's oxn^sition cf the c'i scroti onarr
novors and the res nor, si'' ilitios of tho Secretary of tho Intori or, ?.s
thov nnn-jv to the -tvrd of n'V'!.-r^l Construction frantr, s»iqaost that ?.
ool'icv of" or.cli.tc! inn con-mini tics for troatrent industrial v.-p.stos should
he o!served.
There is, then. prbliuity vith rososct to the decree to which ar'nin
itivo orocc!;jr?r. should internrot the intent of the Congress v;i th
I 4- / •.' ii^l J- v* a ^ • v r\\-1 +" ¦! ii^nr 4-wJ •* 1 ¦ — -1- *
Th
¦jc f ° ^' 1 l' '
. tr ~,L,njcir>»l tro-">t-"oY-'t of industrial vostos m m-r?.rdir.q construc-
tion Th-^r- is al^:: m obvious dis'^rity hotv:oor the v;.v/ in
,,N1V'1'W,nicin7liti^ pnnrc.xqh t.hoir vv-isto tronfront r-s-r.nsibilities
arc! tbV v'»v in vhich Conoross vi^v/od theso rosnonsibilitios vhen
tho act '/as fcrr'.-'l?tod ovorn d^ca^o ano.
Oivon the conflictino doo-an^s of tho^ situation, it would a "near
M i; mo' ^od-rnl nolic" should continue to be one th^t sip^orts effoc-
tiv^'n^ss and'^fficiorc1-' irhnrnnt in tho stronntVninn of local and
rnnipv-ai ,.»cfo h^ndlino orocr^rs that a.ro cor^reh?n«-iv? in thoir r^ach.
rr0n/ + hc rational noint cf vicv/,'th? fact that avail Ability of Federal
ac^s^rcc r ift' to nn indirect use of nr^ts by nublic aooncios t^
",r'n iVrtp atrial '.'as to troatr.ont v.'orl'.s by indue inn ranufacturirri rlants
^n'rrlrnprt +r.'^nl^r"0d '-'unicinal syston is not ir the le^st bad. It is
-ntirnl^nsist^nt v/ith th" -urnoses of tho Hater Pollution Control
r I sinr- it ir.cr^f.os tho Monroe of troat^ont of untreated or inndo-
't^afod v:ast:s. and pdhems to the su^sidiarv ohdoctivo of
oontri1''"inn to ^lannod roaional or r«trmol it?.n oollution control
s^stons.
163
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>c.at!se cost-sharirn vruld sear" to lie at the r^ot of the diffi-
cult'/. roprdios pirht ! e a^nl ied post efficaciously hv 1 ccn 11 y ostah-
1 i?hrc' reiuirrr^ntF to aM or. in federal nroorars v.-oul* cnlv reverse, not eliminate,
tho fact of disadvnntaeec! industrial sectors. The pain burden cf
Federal re la tier 5 vi th irdtis-rv throughout th? nation's history has
heor a ste?dv stride to evolve a nraT-atic }-alance hatwoon t!:e nuhlic
intor-st and the characteristic external daranes inppsoc) hy a qivee
industry. There swis to he no reason to depart fror that rollcv in
the'case'of industries whose characteristic moHors include a hiah
measure of nroductirn of vater-lcme nollutants. Thr> public int«r^st
v.'cuid seep test served KV including such industries in the enforcement
erovisions rolatino to '''a.ter nellution, ^nd t>y nrevi."ire the States ?n/l
P'uni ci eal i t i es in * 'hi ch they are locator a full ncasure of the assistance
nrevised to all rvtnicinalities for the euroese of oollutien ahatepent.
164
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REGIONAL i/ASTE UANDLIMO SYSTEMS
The '-'ater Pollution Control Act was framed to favor anc! support
establishment of regional waste handling systems. The ostensible
values of renional cooperation and regionally directed-programs under
lie a nuuber"of provisions of the Federal i.'ater Pollution Control Act
including ones that 1) directed comprehensive river basin studies
2) r^ouired that federal grants for construction of waste treatment
forks V.!i»re to the conclusions of compressive prorrans developed
* r.;r ts,- Tct *<) provided a ten percent increner.tal grant award for
construction ttet is certified tot* included in a ttHropolUan or
recjional plan, anly significant that the sane lew that requires that
a coii.nlnity ^'includ^ in a comprehensive plan augments the a-ount
r-f rv-»n+<- to ro-v,unities that- are certified to i>e include m sore
Seine! of "plan. The fact that the incentive postdates the rer)Nl reront
si jo nests fit'oer ti.at the rate of plan development has no. Matched
PxnP<-tat The inrd ility to produce a regionally structured
pollution control nro~ra::i 'U examined here in full knowledne that
L,e fundamental restructuring of the Federal program nay become
necessary either to provide superior incentives to develop srch
organizations, or, conversely, to tailor Fe-'aral activities r.orc
o^rti n^ntl v to the local doci si on-main no . that is most often the
ultimate source of the activities and facilities required to control
water pollution.
Th« argument for the regional system is well founded. A regional
s"sten' provide a means to adjust administrative institutions, capital
iiives^nt, and abatement practices to the over-riding physical
imperatives of streamflow, temperature, and water chemistr/--and to
dn' ^o in '"manner that effectuates eccnomies of scale and allows
sel^ctiv." application of effort. To obtain these practical benefits,
it shifts the focus of attention from the series of specific seurccs
of oollution, with their uneoual and interlocking i^nacts. to the
ri,«r basin and to the physical conditions and chemical reactions
that take place in the stream. In concept, it is the most effective
and the least costly "cans to insure water of given desired quality.
165
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Tut the river
the United
he river basin pollution control system can not bo found in
States: anc! it s!;c.;s no evidence of coeiing into full scale
existence in the near future. There are, hovever, variants that
flourish vn'th more or less vigor and public acceptance.
The pro!•lens of 1rr.nl crr.entlnn regional pollution abatement systems
then, sc-en to fall under the heading of practicability. Their
potential effectiveness, efficiency and equity are unquestioner'; hut
there seems to be something in the idea that conflicts vnth American
views of the uay that thirds should he done.' Political r?a Titles and
institutionalized procedures collide pov/erfulTy i/ith the concept a
a nunhsr of places-:, end '..'here a regional solution to a prob Tors' has
been adopted after a collision has taken place, regionalism has I.
subtly adapted to the needs of pre-existina institutions. The e-ohasis
of this discussion, then, v.'ill be not upon the theoretical benefits
of renional systems, but upon the difficulties of implementing thcr,..
and on the notifications that theory has experienced as it has been
translated into fact. If basin systems v;ith all their presumed
virtues are inconsistent v.'ith other values that. .".nericans prefer, it
na./ be v.'ort'r'hile to consider the evolutions of -the concept that hrv?
boon considered to bo acceptable, an:! to devise incentives to organize
in for~s that preserve something of the efficiency and effectiveness
of basin planning, but that adhere to politically acceptable ny-ios of
action.
To undertake that kind of ccrparison, it is necessary to distin-
ct
c*
;oen
nm r,n
- - _ - ^ ^ I J jf| | y LP U! c
betv.'een three characteristic forns of regional organization.
Tho_ river. basin. s/£te;i is the purest for* of th* ror-Wai onll-.
tien ebntroi syste-. It places all sources of nollutpnt* I'ndn/^
cordon regulatory authority v/ith an indennndent financial ¦v-e' °T' ~
authority may undertake remedial measures on the basis of n'^'ar 'G
natural rc-quirenents i'-posed by stream conditions. The -^ield 'of
regulatory acticn is considerably broadened to include m~asur-s
other than waste treataent--stroainflov; augmentati on, waste stnr—
'./aste transmission, in-stroan settling, artificial r^reration
zoning, assessment of penalties--and the intensity of t-eatr-nt
requirements can be varied to take advantage of natural'conditions
The closest approach to this idealized svstc- is to Hp
Germany, vhere the kvhr and Ciser ge:m0senschif;°n f,r al rV"
a century acininistered a program of environ:renHT~controls that
includes area-ride regulation geared to natural conditions
financing derived from user and effluent charges, strea-cla?si°??;
tion. and application of in-stream as well as sev-erac* enqi^rinr
Several approaches to a basin system have been made in t:'p • ?'¦>-
these efforts have been of the nature of voluntary' federation-
include an administrative superstructure substantially'Vit-o'rt
enforcement peters (other than those of the separate constituencies
entering into the a5ree:ient) or the resources to enoare in inve". rnt
programs. ~ J VCjJ"cnt
166
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Note that tins discussion is frcrcd in the context of t'-e short
run future, perhaps five years, for purposes of this study. Histori-
cal developments portend a rioro distent future in v:hich the basin-
wide authority wii 1 hove the powers needed not only for water quality
management but total voter resource management. The nelav.-nra Com-
mission and others constructed in its pattern give insights into
what :na\/ evolve- but tin's cannot be expected as a vi?Ue mechanise
in most' cases in the ocriod of interest. I'ov such authorities evolve
will depend un on Federal 'policy, among other factors, and n;ost
significantly' on Federal policy in the water resource field as a
whole ratijor than in the field of v/eter quality management. The
l.'ater Resources Council has given attention to tbis ratter, as v.'ill
the recently constituted "ational 'dater Cas1n-
vide renace-ent through the <,nC and bb'C rather than attempting to
stimulate'singlo-purnoso wcter quality authorities.
The ftetrojcljtnn_ra_nitT' district 1s a fern of the regional
ool 1 ution control system whore the oporrticnal base is net the water
hod/" but the social and economic focus provide by the ur'-an area,
b'hero the river basin systen has been noel.ected,'the metropolitan
system is I •' nov- the ncnerall/ accepted approach to w?ste handling
in and around major Amorican cities. Almost without exception, Irr^-
cities serve as the nodes of vast col lection systems t'\et reach well
ba'/Oiid the city's legal boundaries to brine v-istes into one or more
•/aste treatment pl?;its. It speebsperhaes, to t!;o profoundly urb^n
orientation of Amencans that they have rejected orr'anizatforis hasec'
oil the natural elements of the watershed, but have almost instinc-
tively created sets of local systems based upon core cities. The
character of such arrangements varies to include informal associations
in i/hich the central city accepts arid treats the waste of its
satellites for a fee (Portland, Oregon), the county-vide or multi-
county sanitary district composed of a group of contributing
coi.T:nunitic-s (Allegh
organized and fu:
legal boundaries . _ —^ u..i w, a ii;u trope n tan
area {Los Angeles County, California), and highly concentrated unit
systems with independent funding and a nigh_ decree of regulatory am
operational autonomy (Chicago, Illinois). The form of the arrangement
may be dictated by local preferences, but the function of the
city as the foundation of metropolitan waste handling is generally
accepted.
:ry district composed of a group of control tin"
«]0?^iy
-ies to confo^ to physical configurations'of a"motro^f?-.
eles County, California), and highly concent™tnri uu'
Tne S.ate-vnL^^em is a recent development that is founded
upon several evolving lnfTuences-scne provisions of the Clran
restoration Act **-~• CJG wean . ater
ning and fir.rnci
nents, the entry
local waste handling, the growing bureaucratic strength^of'tiV
- -rounc.ec
jTvTTir~^^u2nces""5onG provisions of the Clean b'ater
that"provide strong Federal incentives to State plan-
's! assistance, rivalry beb'een State and local gcvorn-
r of States into financial assistance programs for
Hinn. the arovino ^ «¦.+. ¦>< - -¦
167
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technicians vho adninister Stats pollution control pror?re~s, and an
a^nc^i' Irv^l Of nollution abatencnt capabilities that in nost
Steins'i,as"c;catcd-a need for discipline,! and orderly syrte^ein-
tpn^rP rnqt-jr-s in the conduct of envi ronncntal control policies.
^n';yg ^'^onclltcn systops, the -crirn State-vi-'e systc-s ap-wr
to !n tr-Mnn «r, s^aratc configurations that reflect the political
instiH'ti^s an'" traditions cf States, as well#as the renylatory
pMIosoo1'"'' of "the individuals or groins desi<-mn~ the system
••ars'l;rd"Jr^r York, and °hio have all proposed to enter vith nre?t
v'i-or into the conduct of local wjstc han-, v-'iore the liniteu gsoirppeic reac.i of uie a-cats
pollution control capabilities create a
situation requiring staged, coordinated extensions of pollution
control acti vi ti es.
Effectiveness
L/'istcnco of an organized regional waste handling system provides
no as S'Vancr* of effective pollution control, but effectiveness :>f the
sh^ticVoc^":; is their chief theoretical -orit. The core of
the concept is rcco^iticn of the fact thai not all dischemes sre
equally pillutla;: relate lagrn cuue ov un conditions for effectiveness, then, are comprehensive
annllration of controls to sources of pollution, and discriminating
indication of those controls. Unless the functional powers of the
^c^n'ranaocrs include the ability to draw resources fror all
constituents m
-------
pollutants r:ust adhere to and slicro the costs of systematic condition
if tiic- organization is to he of more than cerorronial consequence.
BotJi metropolitan system and propose State systems divorne fro-
the effectiveness re. qui re: sent in that each accents somewhat no re
limited goals. The intent of the metropolitan systen is in rno«?t cases
to provide a pa ens to most conveniently dispose of the li^rfc" wa st"-^
of an urban area. The prince purpose of the' State svster isto'en^ry'
State control over community actions in the sphere of waste hrnr''i ¦; no'
and to insure the responsible use of St?.to funds advancer! tc rorWl'/ "'
local financial deficiencies. Pollution control is airest"a coluVral
goal: anc area or regional exoneration is no nore than organizational'
technique utilized to facilitate accomplishment of another curvese
The voluntary nature of the typical notronclitan system tpp*"i fies to
the fact that the prime concern is satisfying an ir-nosed—from whn+1
ever di recti on—reni'i recent for waste treatment, ^iven'a yolnrt?r«'
situatien; pollution wy continue through failure of a. si^nific>nt"
waste source to jojn the systen, which then does no more than satisfy
the^formal regulatory requirement imposed upon participantsT *
oin:ilarly, cnc
-------
•Snake, the San Joaquin, the Colorado, the Vhansas, the Ohio9 the
Potomac, Lake Frio, am' Uhe "icbignn. b'ithout oxception, investi-
gators have found that sewage trertnent is only one S'^all piece of
a hody of pollution a' otecent roqui regents. Industri al waste treat-
ment is another, slirhtly larger, piece. A host of land- mnaperient
and water manaqensnt'practices ccntri'i'te to the presence of pollution
and these oust f-e adjusted and monitored if pollution abatement is to
be accorplishcd. Co-preliensive reach, technical virtuosity, and
flexible resource allocations v.'i 11 become increasingly necessary as
water pollution control efforts extend in tire and intensity, ''here
attention begins and ends at the sewage outfall—as it must v.'ith
local resnonsihi 1 ity for pollution abatement and even with th" use
of metropolitan w::sto treatront systes-.s~--pr>l 1 ution "ill probably be
only slightly and locally diminished.
In ten:? of effectiveness of national nronrars over the near
future neriod, it is apparent that such programs rus.t he related to
existinn, viable political organizations, not frarer' in terns of a
conceotual 3nnaratus v.'hich c?n he arranged only with considerable
tim fnpf! expense if at all. a key to a large proportion of the
pollution 'problems rests in the large urban area.' Prc-graTS directed
to this unit of government wi^ht well prove to be the rr.est effective.
Efficiency
on
! 1
Sizeable efficiencies have been attributed to regional nrll,,M
control sjKtensi bvt these. ,W rested on tte assi. nticn r ' n---v"
i.'atersiicu-based applications. Failure to translate' the t^o-'v-iT'
organizatienal pattern into practice has larc-ely short-cirri-^-•
attainment of the particular efficiencies that are timnn,*
peculiar to regional systqris. L c ue
Efficiency considerations, however, must be thought to under!i
the most vigorous — — n..-.-.... - ¦ -
be found in the
? us form of rem on a 1 pollution control ^ u'Ky-f ,il-'
„ prJ-iJ x conti o i orgar.i zati on to
- ".J -tatu^. ,ti, o,., :C'n l or no trowel i tar
hcmciling procedures has stewed largely fron the econc;no30-
tnat the practice affords. Larger plants involve lo-rr im'* ™c?-, .
high ratio of transmission facilities to treat-onf f-iriiu •' os ^; . •
a longer average life for the body of physical car.ital e--lnL5r°VU^
System size permits greater labor specialization,'nor- co-oW°'
worker utilization, arid continuity o* st--
-------
flexibility and pertinence arc the ones t!lat proponents of such
systems systems had iiopac' would develop from application ofVnion-1
principles. r'
Sue!i economies had boon expected to flo" fror attention to
undarlyiiig physical toperatl ves and from epplication "of fr^st cost
solutions. The formulation .techniques are strait tfor'and an''
relatively unce~anding. Oevelopnent of conputar*techno!o^/"has
enhanced their breadth and flexibility enormously, thouch"thp
technical concepts were applied on a lirited basis well" he fore th =
general availnbili'ty of computer techniques.
Unfortunately, all such solutions have two thinqs in ce^-on
Thoy require some waste sources to treat to a nuch hiqhsr do«iv>e*
tiian o triers --and' usually such waste sources are factories "\nd the*'
include sone in-stream measures for which no conmuni-ty can '.'c as s assu-
res pons ii ility under ex is tin-;; regulatory procedures, bneqnal i-nn-i_"
ti on of controls, with no direct increase in benafi ts oh tains.-' b-'
those './hose costs are increased thereby, would create sur'-! o^/ic^ -
problems of administration that it is not at all difficult to
why optimizing systems have not been utilized. In the absence of
a method for s.hnrirv the savings ar.onn all components 'of «¦•./«: *-r-
the promised efficiencies of river basin pollution control '
are unlibely to be obtained. ' pro.j,a,,s
Equity
Equity considerations are, in theory, served rnnro co'vel^e!•/ !- /
a full-fleshed river basin systen of pollution control that ircV'-'-s
proportional user charees than by any other approach tbat h?s 'u^
devised. The broadening of, the financial base to include all ir'4' i
tants of a watershed is consistent with the unassiVnaMe"na+tr^ of
benefits conferred and v;it!i the inter-related nature of darnels
occasioned. (In larjo neasure, the same judgement aopli-^' to
wide systems, and for the same reasons.) Cy'assinniry> Cos^ on
basis of least cost solutions, the basin "system corps'clo-V
humanly possible to establishing an erjultahle'cos* o* poll'tir^ ' 13
control. Py distributing locational and scale artv^n+a™"? ,'„on
by reduclnr the charts (CO-7 r,%. of the total, jmMnn b or'
costs, as well as by the diseconomies incurred b" tHp s^f-i^tor--^- •
behavior of polluticn control grouns sec-kin" to irrr^rr Ju~u
• • f , i « • 1 «J ' ' • *¦* i '*»• { *¦<, c 11i t
portion or national mcocme.
171
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Practicability
We are presented with the anomalous situation of a means to
organize for pollution control that is apparently superior to any
existing procedure in terms of equity, efficiency, and effectiveness
and yet one that is used only on a very limited scale and with '
modifications that seem to detract from, rather than add to its
vi rtues.
There are no technological constraints. Limitations on annlica
tion that trace to deficient knowledge of physical conditions in
waterbodies can be remedied. The method is wholly consistent with
Federal policies, as contained in the Federal Water Pollution Control
Act.
Yet Americans have shown no inclination to pursue the policies
required to develop river basin pollution control systems To the
contrary, the main thrust of State policy, and of Federal policy as
outlined in the guidelines for adoption of interstate water quality
standards, has been to go down the line of uniform waste treatment
requirements, local rather than regional responsibility State reau
lation, and adversary enforcement proceedings rather than cooperation
and acceptance of technically induced courses of action.
The operative element in determining public acceptance of river
basin pollution control systems would seem to be the fact that such
systems relate to few, if any, of the existing procedures of
American governments. They represent a foreiqn accretion a perhanc
functional but isolated additional layer in the structure'of inter
governmental relations. And when it si considered that independent
financial status is one of the prime essentials for effective onera
tion of such systems, it becomes clear that their implementation
would take pollution control out of reach of normal local aovernmpnt
decisions, and set it apart from discussion of the hierarchy ®Jnment
total public needs for resources. nierarcny of
American State and local government is qenerally strong attune
to public demand, and sanctioned by tradition. Quite reasonably
since they have a working, well understood, and reasonably efficient
method of doing things--citizens and established powers tend to
resent the interposition of independant authorities that reduce
citizen participation in public processes, and that receive fund*
that local preference might wish to consion to schools or hosDitaU
or roads or police powers. In the nation's value system citizen
participation and citizen control would appear to offer satisfar«nnc
well worth the price of some minor technological diseconomies
172
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Similar political and cultural value mechanisms impede industrial
participation in regional systems. It has been demonstrated aqain and
again in water quality studies that industrial waste discharges are of
pivotal importance, so that the effectiveness of any pollution control
scheme must hinge uoon industrial participation. Indeed, the success
of the Ruhrverbaende may be ascribed'entirely to industrialists who
devised and Initiated the system in the nineteenth century and have
adhered to its requirements ever since. The behavioral mode was —
and is—quite consistent with the cooperative, cartelized organization
of German industrial activity, (Just as German municipal adherence
to the system conforms to a pattern of routine acceptance of centra-
lized, technical administration.)
American industrial behavior, on the other hand, is conducted
with a considerable degree of competitive activity—and its ritual
code of values places a premium on competition that is even greater
than the degree of real competition would suggest. Rather than
cooperating to reduce the impact of external diseconomies, the
American business, manager will attempt to evade the consequences of
such actions on his costs or failing that, to insure that his
competitors will bear at least an equal cost. Regulation, negotiation
the competitive interposition of public interest and private interest '
that marks the American system of countervailing powers —these nrevail
in the conduct of water pollution control activities. Thev are not
conducive to establishment of rationalized regional systems; but it
would be rash to contend that the total and long run productivity
that results from the opposition of countervailing powers is not well
worth the intermediate diseconomies that the system generates.
Perhaps it is an indication of the innate flexibility generated
by our political and industrial practices that the regional systems
concept has been adapted—or is in the process of adaptation—to
fit American conditions. The central function of the city and the
established pattern of local public utility services have accented the
general outline of regionalism in developing the metropolitan sanitary
district. State control and the interpenetration of State and local
government activities are apparent in the development of State-wide
systems, as in Maryland or New York, where cost-sharing, plannino
and efficiency standards are evolving from processes that a decade
ago were directed exclusively to the obvious and limited ends of
control of contagion and adoption of "good practice".
On the face of it, it would seem that regionalism and systems
engineering based on watershed conditions are not practicable in thp
United States at this time. The institutional mechanisms to implement
them generally do not exist, and may even be inimical to some venT
strong social preferences. On the other hand, existing institution-;
are evolving to incorporate many of the desirable features of wafpr
shed systems. The major forms of regionalism that are emeraina
at this time, perhaps less efficient than the river basin system But
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they are not only more comfortable in terms of compatability with
existing institutions, they exhibit a rich variety that tends to
conform to local conditions. Over the long pull, the flexibility of
interrelated State-wide and metropolitan systems may prove to havp an
effectiveness of a high order. Ve an
Economies of Scale
One of the principal inducements to regional waste-handlinq
systems—particularly when viewed in the context of the Metropolitan
system rather than, the broader terms of the river basin or State-wide
system—is their presumed ability to activate substantial economies
of scale.
Analysis of recorded investments since 1962 raises the possibility
that the particular advantage is not a constant virtue. There appear
to be significant discontinuities in application of economies of
scale, at least as these relate to investment. The dimensions and
findings of that analysis are presented here, but it must be emphasiz-
ed that it would be premature to base policy decisions upon those
findings. They are incomplete, in that they deal only with initial
construction costs and are not time-phased. Interpretation of the "
interplay of investment and operating costs, the long run indications
of the difference in effective life of treatment and"transmission
components of a system, and consideration of the effects of interest
rates may indicate that the inferred discontinuities of scale
economies in initial investment may be reduced, eliminated or rein-
forced by more comprehensive consideration of cost factors.'
In theory, the unit costs of waste handlina should decline as
size of the system increases. A generally accepted economic concent
holds that each incremental unit of product soreads fixed costs over
a larger base, so that unit costs invariably decline with size- and
also in theory—there is no point at which increasing size should
result in an upward shift in unit costs: at the point at which
returns to size become negative, the rational manaoer will beain to
replicate a system rather than expand it. (The logic of the latter
argument is somewhat debatable. If there is some physical or other
limit to effective optimum size that dictates replication rather
than expansion, the second and succeeding units may be viewed as
subsystems of a multi-unit system; in which case, unit costs minht
properly be calculated on the basis of costs and output of the
aggregated components.)
The theory rests on physical as well as financial and orqaniza-
tional aspects of cost. The general tenns of the physical relation
ship are expressed by the engineering rule of thumb called the six
tenths-power rule, a convention that holds that in the desion of a
system the cost of an incremental unit of capacity is equalto
174
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approximately sixty percent of the cost of an anterior unit of the
same dimensions. (More precisely: if X capacity costs Y dollars
then 3X will cost 3fu-°): Both the economist's ahc! the engineer's'ex-
pression of the concept of economies to scale imply a continuous
assertion of those economies. The economist will usually have at the
back of his mind a general view of marginally diminishing returns to
size, while the six-tenths-power rule suggests a constant rate of
continuous accretion of such returns; but the principle is a fixed
feature of either practitioner's view of the world.
Investigation of the cost of incremental waste handling services
provided through investments made between 1962 and 1968 sugqests
very strongly, however, that there is a significant discontinuity in
the expression of waste handling economies to scale. Figure 7
presents the results of the analysis, which related'unit"investment
to size of place.
The procedure followed in developing the relationship was an
exercise in aggregation. Total expenditures that were made for
sewers by communities of a given size class were- divided by additional
population reported to be connected to sewers in communities of the
same size class (line A). Total expenditures for waste handling
investments in all categories other than sewers were divided b-"a
factor equal to 30% of all persons added to secondary waste treatment
systems plus 30% of all persons added to primary waste treatment
systems in each size class during the period (line E). (The factor
is intended to provide a measurement of incremental waste reduction
based on a rough measure of waste strength—one person equal to
population equivalent of biochemical oxyaen demand—and a broad
estimate of the average efficiency of the basic waste treatment
processes.) Finally, the mean contribution to municipal waste dis
charges imposed by industrial effluents in towns of each size class
was taken into account by multiplying increased population served bv
a loading factor proper to the size of the community and then by the
appropriate treatment factors and dividing investments other than
those for sewers in each size class by the products (line C) (The
multipliers, which even and extend the observed pattern of the
relationship of waste concentrations to persons served in places of
a given size were: 0.85 for towns equal to or less than loon n cic +nvt
towns of 1000 to 2500, 1.15 for towns of 5000 to 10 000 1 4n*fhr
towns of 10,000 to 25,000, 1.67 for towns of 25,000'to 50 000 1 q fov*
towns of 50,000 to 100,000, and 2.05 for towns of 100,000-250'ooo
These were determined by an analysis of operating records for'trpatmpn*
plants built with the aid of Federal grants, c.f. R. Michel et al
"Plant Operation and Maintenance," Journal of "the Water Pnliu-H™
Control Federation, March 1969.) -¦ 1 uI±OR
Subject to the reliability of the data and the uncertainties of
cost and population distributions within population size classes
the lines connect the juncture of population class midpoints with"
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"FTgure
UNIT INVESTMENT BY SIZE OF PLACE. FOR INCREMENTAL
WASTE-HANDLING CAPABILITIES
1962-68
C~Investment in Treatment Plants & Ancillary
Works Per Unit Waste Reduction. Adjusted
, far Typical liuitrslria! Loadiny Pattern
B—Investment in Treatment
Plants & Ancillary Works
Per Unit of Incremental
Domestic Waste Reduction
9 m 9t cm* o mi a
A-Investment in Sewers Per
Person Added
1000
10D0Q
Units Processed
-------
unit investments—the Figure may be thought to provide a fairly good
estimate of what it has cost to connect one more person to a sewer
system (line A), to treat the wastes of one more person to the averaae
level provided by a community of the size in which he lives (line B)"
and the cost to provide that same average degree of treatment to an '
additional population equivalent of wastes from either domestic or
industrial sources (line C). There may be significant divergences
between actual unit costs and the indicated costs at any point along
the curves, but their general shape must be considered to be accurate
if the data is accurate.
The graphed lines indicate clearly, if somewhat imprecisely,
that unit investment requirements drop off initially as size of place
increases; but as population reaches about 10,000, a rather sharp
increase in unit waste handling costs may be anticipated.
Although the pattern of discontinuous application of economies
of scale may seem to conflict with theory, there is no reason to
doubt that the phenomenon exists. With respect to waste treatment
there are well defined explanations for the increase in unit costs'
for larger towns and for cities. (These are discussed below.) For
sewers, however, we can only conjecture about the influences'that
press costs upward for towns of a given size.
Possible explanations for rising incremental sewer costs in
larger places include higher excavation costs and other disruption
charges in built up areas, greater likelihood of the interposition of
terrain problems as area expands with population, more complex systems
in larger areas, lower population density in outlying areas that mav
be served by larger towns, and need to include within the system
substantial areas that are locations for commercial or industrial
development and so provide limited additions to the body of users
relative to the area of additional service. Should such factor-;
indeed, be responsible for the increase in unit sewer investments for
towns of ten to twenty-five thousand, it is"not unreasonable to
infer a second discontinuity in expression of economies of scalp that
may occur in very large cities, where the same complexities of c-iJL
exist in an enlarged fashion as compared to cities in the upper size
classes considered in the analysis. (While the additional discont n
uities may be inferred, it has proved impossible to document them
Reporting procedures are such that it is not possible to di«;Hnn..
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prevalence of industrial wastes at each population size class. The
effect of the adjustment is to sharply reduce dimensions of indicated
diseconomies. It is obvious that to assign costs entirely on a
per-capita basis is to exaggerate unit costs when a significant
portion of capacity is utilized for industrial wastes/ Because the
proportion of industrial wastes handled by a system typically
increases with population, the exaggeration becomes increasingly
operative as population increases.
Also significant to the pattern of unit costs is distribution of
treatment processes by size of place. As hydraulic loading increases
a shift in the factors of production occurs from land-intensive treat-
ment processes to capital-intensive methods. Because construction
costs alone enter into the calculation, the interaction of land and
construction costs is not reflected in the curves of Figure 4
(Land costs are highly variable, but tend to rise with population
concentration; so it is unlikely that consideration of land costs would
make any significant change in the shape of the cost to size curves
If land prices did not characteristically increase at multiples
greater than demand for land for waste treatment needs, then the shift
to facilities-intensive treatment methods would be unlikely to occur.)
The manner in which increased demand for waste treatment capacity
influences preferences among treatment methods is indicated very
clearly in Table 53, which lists the relative prevalence of treat-
ment processes in 1963 by size of plant. In some cases, the "normal"
construction cost for a 1 million gallon per day plant as presented
in Modern Sewage Treatment Plants, How Much Do They Cost? is inriiraf^
in the taFTeT "in otTier cases, statistica 1 "anaIyses ofThe correlation
of plant size and construction costs are not available. The general
ranking of costs, however, is known to follow the pattern presented in
Figure 8.
(The figure is not calibrated for relative unit costs and removals
except in the most elementary sense. The position of a process
simply indicates that under normal conditions it costs more per unit
of capacity than processes that appear below it in the figure and less
than processes that appear above it. Degree of waste removal too is
presented only in a "more than" or "less than" sense. It should be
understood, too, that the indicated relationships are by no means
invariable. The less costly "post-secondary" processes may sometimes
conveniently be substituted for secondary treatment by small towns
in which case they might be little, if any, more costly than biolonirai
filters. The basic principle that capital replaces land as size of
place increases definitely limits the application of septic tanks
lagoons, and land disposal, to relatively small communities.)
The relationships embodied in Figure 8 help to explain the
discontinuities that have been found to exist in application of
economies to scale in waste treatment. Table 53 indicates that the
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TABLE 53
Distribution of V'aste Treatment
Processes by Size of Plant
Percent of Plants of Size Class by Tyne of Treatment
Tyoe of Treatment
.25
.25-
.499
Design Flow,
.50- 1.0-
.999 4.999
Million Gallons
5.0- 10.0-
9.999 29.999
Per Day
30.0-
49.999
50.0-
99.999
100.0-
199.999
200.000
Percent of
All Plants
Exnectable
Cost per MC
Capacity 1/
Imhoff & Septic Tanks
13.3
7.2
4.8
2.1
•' 0.7
4.3
4.0
9.3
$237,000
Primary Treatment
4.3
10.1
14.8
20.3
28.6
34.7
30.4
34.5
28.0
33.3
9.9
235,000
Chemical Treatment
0.1
0.3
0.6
1.7
1.7
4.2
2.2
13.8
0.6
235,000
Ciological Filters
22.0
41.5
43.1
45.7
35.0
23.5
17.4
6.9
12.0
30.6
288,000
Activated Sludge
6.2
11.9
13.3
17.5
25.5
31.5
32.6
41.4
36.0
50.0
10.6
321,000
Lagoons
39.5
20.4
15.4
8.0
4.1
1.4
2.2
27.9
68,000
Extended Aeration
8.8
5.6
4.5
1.8
1.7
0.9
2.2
3.4
4.0
6.6
NA
Other Secondary
1.2
1.5
2.1
1.6
1.7
2.3
6.5
16.0
16.6
1.5
MA
Land Disposal
1.4
0.4
0.6
0.4
1.0
0.5
1.0
NA
Intmt. Sand Filters
3.0
1.0
0.7
0.4
0.5
2.0
HA
Tertiary Treatment
(a)
(a)
(a)
0.4
0.5
2.2
0.1
MA
Number of Plants
6973
1677
1279
1832
294
213
46
29
25
6
12374
Percent of Total
56.3
13.6
10.3
14.8
2.4
1.7
0.4
0.2
0.2
0.1
100.0
(a) = Less than 0.1%
NA * Not available
1/ 1957-59 Dollars
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Figure 8
GENERALIZED RAKING OF
UNIT COST AND REMOVAL
EFFICIENCIES OF CONVENTIONAL
WASTE TREATMENT PROCESSES
REMOVAL
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likelihood that a high construction cost treatment method will be
applied increases directly with size of plant.
Time, as well as land availability and required treatment effec-
tiveness, plays a part in the mix of treatment methods. Imhoff tanks
and septic tanks represent hangovers of an obsolescent technology; it
is seldom that a community would install either of them today.
Similarly, it is extremely unlikely that any small community west of
the Mississippi or south of the Mason-Dixon line would install a
primary treatment plant of any description. The much higher removal
efficiencies and much lower costs available with the use of lagoons
have made them standard technology for small communities in most of
the nation during the last ten years. Indeed, the point at which the
investment cost to size function for treatment plants and ancillary
works turns upward in Figure 7 corresponds very closely with what
has generally served as the effective limit of application of lagoons —
that is, a town of about ten thousand persons, or an hydraulic capacity
of a million gallons per day.
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