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steps had to be taken to deal with their water pollution problems. They organized themselves under law, with compulsory membership, into two associations, one to deal with water supply and one to deal with water quality. Each association is made up of membership which as I say is required by law.

The supply membership consists of everyone who draws 30,000 cubic meters of water or more a year from the streams.

The quality membership is made up of everyone who contributes anything at all to the pollution of the stream. About 46 percent of the membership of the Ruhr RiverAssociation is identical--that is, those who draw and also pollute

and 54 percent are separate. The supply association has the function of building reservoirs and the responsibility for engineering work that will maximize water supply. The money to build these reservoirs is borrowed and then amortized by annual charges to the members on the basis of a formula which takes as many as six factors into account, including ability to pay.

Then the operating costs of the supply association are also borne by annual charges to the members.

The quality association builds the treatment plants. The cost of the plants again is supported by charges amortized to the members. The operating costs are also amortized through annual charges to its members. This is the charge.

Certain members of the quality association are allowed discounts or credits against their annual charges to the extent that they perform in plant improvements that reduce pollution. This is the thing that has been twisted, I think, into an aflluent charge concept in American literature which undertook to analyze the Ruhr situation. I don't think the Secretary or Mr. Quigley, who was also with us, understands the effluent charge to be what we thought it was when we left. Have I described this accurately? Mr. QUIGLEY. It is not a license to pollute. This is, I think,

the one discovery we made.

Senator RIBICOFF. I am very pleased to be enlightened.

Senator MUSKIE. I am not sure that we should adopt this for our problem, but it is a different kind of a system than I understood it

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Senator RIBICOFF. I would say this. We have a few more witnesses, and we would like to finish with them this morning. Unless Senator Muskie has more questions for the three of you, I personally would be satisfied if you, for the purposes of the record, would supply the answers and make sure that the members of the committee get copies personally. I would like Senator Muskie to have a copy. And may I say this before closing: The fact that America is conservation minded and natural-beauty minded, and preservation of natural resources minded, I think the credit goes to you more than to any single individual, Secretary Udall. I think you have been a dedicated Secretary who understands the problem and really believes in it, but there are doubts in my mind about the efficacy of this whole program, as Senator Muskie indicates, countervailing our confidence in you. I am sure if you had supervision, and this would be your main function in your Department, you could give direction which would set an example not only in your administration but the administration of any Secretary

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that might follow you. I do want to pay this public tribute to you for the outstanding job you have done in not only trying to do something about this problem, but making this entire country aware of the importance of this problem to the present and future America.

Senator MUSKIE. May I say if you were to leave your post shortly after this plan took effect, I would be very unhappy.

Secretary UDALL. My plan, Senator, is to stay as long as the President will have me, if that will give you any great assurance. I think I have the best job in the Government and I would like to hang on as long as I can.

Senator MUSKIE. If his plan, which is so strongly oriented to you personally, is adopted, he has no choice but to keep you.

Mr. SEIDMAN. Mr. Chairman

Senator RIBICOFF. Just before the Secretary finishes, the staff has called to my attention the administration bill on the Clean Rivers Restoration Act of 1966. On page 7, subsection (b), appears this language:

“The planning agency shall also, in preparing a comprehensive pollution control and abatement plan, give consideration to effluent charges on public and private entities discharging waste or raw or inadequately treated sewage into any waters within all or part of a river basin or group of related basins or parts thereof."

Now I listened with great interest, Senator Muskie, because I was learning something about how Germany does this different from what I had anticipated. But what Senator Muskie described in his very, very brief statement here seems contrary to what is in this bill.

Secretary UDALL. Senator, let me undertake to explain the bill, although I won't take responsibility for drafting that particular language. This was drafted in January and February before some of us went to West Germany and got enlightened as to what we were actually talking about, and I would say certainly as far as Senator Muskie, Congressman Bob Jones, who is one of the leaders on the House side, Jim Quigley and myself—we were all together-are concerned, there is no disagreement among us as to how they are doing it over there. As to its application here, I certainly don't think that that language at this point should be interpreted as involving any kind of license to pollute, or implying that we favor it in the administration.

Senator RIBICOFF. But they still have charges, you have effluent charges. In other words, you have been reeducated since your trip to Germany. Secretary UDALL. That is, I think, part of my answer. ,

. Senator MUSKIE. May I hasten to say, Mr. Chairman, in defense of my own position, that I have never been very friendly to this concept to effluent charges, anyway. I was delighted that I was able to pick up ammunition in Germany about the whole concept.

Senator RIBICOFF. I am delighted too, because I think that Senator Muskie joined me when the matter came to the Senate in getting cosponsors, giving tax credits in the form of fast tax writeoffs, to industries that install water and air pollution devices.

This is something that has now received the support of the chemical industry, the steel industry, many of the largest polluters, the pulp and paper industry, as a way to encourage them to move rapidly in this field.

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The reason I point this out, while you are here, so you will understand my thinking, and while Senator Muskie is here, this came about from my experiences as Governor, and I am sure that Senator Muskie, who was a fellow Governor, might have had the same experience.

Our water resources commission in Connecticut, which has jurisdiction on a statewide basis, would issue an order to a factory in a small town to stop polluting the waters of a stream. As soon as that was announced and that order handed down, I, myself, as Governor, would immediately be advised by the head or the owner of the factory, the head of the union, the mayor of the town, the chamber of commerce, pointing out that here we had a multistory old factory that had for 100 years been operating in a certain way. This was an antiquated plant. If you suddenly saddle them with a $100,000 or $200,000 charge to install water-pollution devices and change their manufacturing practices, they would find it much easier to listen to the siren song of some other State that would give them a modern plant free, and they would move.

Now you had a great dilemma. You wanted clean streams and yet you had the jobs to protect in a small town where this was a basic industry. While I was Secretary I was aware of this. Then when I became a member of the Finance Committee of the Senate I saw the possibility of combining all these by giving fast tax writeoffs, where industries could be encouraged to install water pollution devices and heed the orders of the water commission of their State. We would give them the means because we recognize the fact that, basically, water and air pollution devices have a negative effect on the economy of a company, while the public receives the benefit of clean water and clean air.

In this way we would encourage the cooperation of industry, because it becomes very obvious that the Government itself cannot clean up the air and the water. It is a matter that will take years and years and years. Unless you have the cooperation of industry, you aren't going to get this job done rapidly.

Therefore, we have to find a means and a device to win the active cooperation of industry. Without this active cooperation we are not going to do the job.

Now I find widespread interest and growing concern. I think industry today recognizes that it does have an obligation to eliminate water and air pollution. I have been visited in the past number of months by spokesmen for all the major industries that contribute to pollution and I would say that this bill would not only have the active support of Congress, but this kind of procedure would have the active support of industry, whose cooperation we must have if we are really going to do a job of cleaning up the streams and the air.

Now if you are going to have the responsibility, I would hope you would give attention to it, because it raises this point. I think the Budget Bureau is involved. The Treasury unfortunately takes a very negative attitude toward utilizing the tax system for social and economic purposes outside the mere gathering of taxes. Now, we in Congress authorize and vote large sums of money to eliminate air and water pollution, and yet the job is only partial.

If, by the expenditure through tax credits, which is an expenditure because this money will not flow into the Treasury, of much smaller

sums we are able to do this much more rapidly, in the long run the amount that the Government will have to spend on Federal or State programs will be that much less and will do the job that much faster.

Now I think what has to be done by men like yourself and the Director of the Bureau of the Budget, when you discuss this in the executive branch, is that you have to realize that every means that we have in our arsenal should be used. And if we can use the tax device to get the desired result much faster than if we use the appropriationof-public-funds device, and at a smaller cost, we shouldn't be bound by some theoretical opposition from the Treasury Department, which may not understand the overall proposals that the President may have. Now if the President has an overall proposal to clean

up

the waters and clean up the air, and if you as Secretary of Interior, and the Budget Bureau, and HEW all have this as an objective, then this is something that you have to iron out around the table, so that the Treasury doesn't come in supposedly speaking for the President of the United States, when actually the argument has never been presented and never been discussed before the President of the United States in weighing all these factors.

This is one of the things that bothered me yesterday, that bothers me today, and represents the continuing quarrel that I have with the Budget Bureau. Because I regret to say that with the many capable men in the Budget Bureau I find that in many ways they lack'imagination and the ability to understand the overall problem.

I say this publicly and I say it hoping that you will take this back to indicate that you have a bigger job than just the narrow concept of what is currently being done. I think what we are trying to do in this committee is to point this up in a friendly way, in a cooperative way, and sometimes in a stringent way to make the points that we are trying to make.

I think that Senator Muskie and I bring varied experience to these problems, not only experiences as legislators but experiences we wrestled with when we were Governors, and so we can understand the problems that exist back in the States, with the Governor, with the State agency, with the mayors, industry, and labor who wrestle with these problems. So we are trying to take the realities and mesh the theories with these realities to accomplish the objectives that we all say we are for, but we must be pragmatic, we must be practical, and we think the executive branch should use the knowledge that some Senators may have from their varied experiences.

Secretary UDALL. Mr. Chairman, may I carry on this dialog? I am sure Senator Muskie and I at his hearings later in the month are going to be discussing it in a very similar tenor. We found, for example, in the Republic of Germany that they use the tax-credit device with regard to pollution abatement. This is a matter of deep-seated policy. The value that a society gets from having clean rivers and clean air, and so on, in terms of health and outdoor recreation and everything else, is a very vital value. But, nevertheless, some States already have recognized that a pollution abatement facility built by a large industry is not productive in the normal sense, and that, therefore, it should not be on the real estate tax rolls, and should be exempt.

Senator RIBICOFF. I think 11 or 12 States do have this now.

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Secretary UDALL. I personally share some of the views that you have expressed here. Senator Muskie has expressed others to me, and I don't know that I am going to win any argument with any admission, but I have already had discussions with some of the officials you mentioned since my return a month ago from West Germany with regard to the fact that it seems to me we do need to give this serious consideration in light of the new objectives that the President has set forth.

I know there are persuasive arguments on the other side, but I think that this case ought to be argued out, and I want you to know that as far as I personally am concerned, I have very strong views on this, and I am going to argue the one case. Whether I win the argument is another matter, but to me when we look at what some of the States are doing, what other countries, industrial countries are doing, I think we have to ask ourselves some very serious questions.

I would like to think that this is an open issue within the administration at the moment.

Mr. SEIDMAN. Mr. Chairman, I assume it will be satisfactory to the committee if we provide a joint answer to these questions.

Senator RIBICOFF. I think there should be a joint answer. I think we would like to have the administration's point of view. I know the deep interest and concern of Senator Muskie, who really is the leader of this whole field and who has the responsibility on the Committee on Public Works.

I think if this plan is not to have any objection and if it is to be approved, it is going to have to save the support of Senator Muskie and myself and Senator Gruening. I think we would like the answers to these questions which would be more or less a commitment from the administration, and I think a guideline that Senator Muskie will be able to use in the committee that is dealing with this.

I think we would like a joint reply to this, by the way, provided the Budget Bureau doesn't delay it beyond April 29.

Mr. SEIDMAN. The new dates are April 22 for plan 1 and May 10 for plan 2

However, before this hearing closes this morning. I would like to comment briefly on your first point, which is the lack of any real effort to tackle the real organizational problem of water resources; namely, the bringing together of a number of water programs now located throughout the Government.

I know of few areas of Government organization which have been subjected to more intensive analysis and study in the last 10 years than the problem in the field of not only water but land resources, and they are difficult and complex. This goes back to the recommendation of the first Hoover Commission, which split as to whether you can separate land resources from water, or whether they should be in the same department.

Now there has been more than just study, because I think we would be properly subject to criticism if all that we did was study it for 10 years and no action was taken. The Congress last year enacted the Water Resources Planning Act, which is a landmark piece of legislation in the whole area of the Federal role in water resources, and which recognizes that this is not only a problem of how we organize within the executive branch of Government, but also, if we are going

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