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commensurate amount of emphasis given to what you do with the waste after you accumulate it.

Mrs. FENWICK. Right. But you see, we ought to get these two groups together. They ought to be working together to solve the problem because the dairy farmer is in a peculiarly happy position in that what he collects is valuable.

Mr. ADAMS, Oh, ves.
Mrs. FENWICK. In fact, essential to the soil.

And that is not something that can be said of most industrial production pollution. What they collect by hydrostatic motors, or whatever they are called, and precipitators in the stacks are not universally desirable.

Mr. ADAMs. But again, going back to the problem, this is very costly to establish the waste collection systems and then waste distribution systems in turn. When you put the two together you are talking about a substantial initial capital investment as well as operating costs.

Mrs. FENWICK. But it does not complicate, does it? They complement it-in other words, it would make it less expensive in a way, because if you are going to have environmental protection, you are going to have to collect the effluent. If you are going to collect the effluent, as you said yourself, you have to have pumps or some way of putting it somewhere.

Mr. ADAMs. That is right.
Mr. GOODLING. One additional question.

Are you working equally as diligently to get Congress to get a handle on some of the monsters we have created as

you are trying to find some way to finance the result of the monsters that we have created ?

I do not know whether I put that very well.
Mrs. FENWICK. What monsters are you referring to?

Mr. GOODLING. I think you are aware of what monsters I am referring to. Are

you working equally as hard to get us to put some common sense into some of the requirements?

Mr. ADAMS. Yes.

In regard to this particular problem, I would go back to 1972, when we diligently tried to explain the impact this program would have if the definition of point source pollution was retained in the act, as it now is. I think that our concerns are pretty well borne out in terms of some of the difficulties EPA now encounters in administering this program.

Mrs. FENWICK. Have you spoken to them about possible changes. Are they prepared

Mr. ADAMS. As a result of this recent court decision, it requires EPA to now come out with new regulations on feedlots, I believe within 5 months. They are diligently searching for ways and means that they can appropriately administer this. Frankly, I do not think that they are ever going to find a way to reasonably administer this act until they change the definition of what is defined a feedlot.

Yes; we have been talking to them.
Mr. SMITH. Thank you very much.

The subcommittee is adjourned until tomorrow morning at 10 o'clock.

[Whereupon, at 11 a.m., the subcommittee adjourned, to reconvene at 10 a.m. on Tuesday, July 15, 1975.]



TUESDAY, JULY 15, 1975


Washington, D.O. The subcommittee met, pursuant to notice, at 10 a.m., in room 2359, Rayburn House Office Building, Hon. Neal Smith (chairman of the subcommittee) presiding.

Mr. SMITH. The hearing will come to order.

The first witness this morning is James L. Agee, Assistant Administrator for Water and Hazardous Materials, Environmental Protection Agency. He is accompanied by Mr. Paul A. Brands, Deputy Assistant Administrator for Planning and Evaluation. Mr. Robert S. Powell, Jr., executive director of the economic development authority of the State of New Jersey will follow.

Mr. Agee, you may come forward. We are glad to have you on this important question, with which I think you are well acquainted. You may proceed. TESTIMONY OF JAMES L. AGEE, ASSISTANT ADMINISTRATOR FOR


Mr. AGEE. Mr. Chairman, thank you very much. I do have Paul Brands with me, who is the Deputy Assistant Administrator for Planning and Evaluation.

I am pleased to have the opportunity to appear before you today to discuss an area which is of considerable concern to both the subcommittee and the Environmental Protection Agency—small businesses and their efforts to meet the statutory requirements of Federal environmental protection authorities.

The primary legislation which has in recent years called for increased pollution control expenditures by both large and small business firms has been the Clean Air Amendments of 1970 and the Federal Water Pollution Control Act Amendments of 1972. The Clean Air Act requires EPA to promulgate Federal ambient air quality standards and requires that the States devise emission limitations to insure


attainment and maintenance of air quality levels which meet these Federal ambient standards. Consequently, most of the impact on small firms as a result of the Clean Air Act compliance stems from State emission limitations, which vary considerably among the States. These requirements tend to be the same for all sources of a given industry within a region, independent of size.

The Federal Water Pollution Control Act, among other things, calls for EPA to set national effluent guidelines limitations for each industry or industry segment involving signficant pollution. These limitations have led to more consistent standards across the Nation. Because the statute calls for consideration of economic impacts in setting these guidelines and because impacts frequently vary with plant size, EPA has in some cases promulgated less stringent guidelines for small plans than for large ones. Examples of industries with less stringent guidelines for small plants include dairies, electroplating, leather, sea foods, textiles, meat processing and rendering. In some cases there are no discharge limitations at all on the smallest plants.

The Council on Environmental Quality has reported the estimated costs to industry of meeting clean air and clean water requirements for the period 1973–82 to be $24.5 billion for air requirements and $23.1 billion for water requirements, excluding electric utilities in both cases. These costs are discussed in detail in a report prepared last year for the Subcommittee on Agriculture, Environmental, and Consumer Protection of the House Appropriations Committee, a copy of which I am submitting for the record today. Unfortunately, it is not possible to identify how much of these totals will be borne by small business firms because the cost figures have not been aggregated on the basis of size.

A given set of environmental requirements frequently costs small firms more per unit of production than large ones. Smaller firms do not generally have the economies of scale in installing and operating pollution control equipment that large ones experience. Furthermore, these economies of scale can extend beyond the costs of control equipment to the management of a firm's environmental program, where a small firm's managerial overhead may be much higher per unit of production than that of a large firm.

Section 7(g) of the Small Business Act, as amended by section 8 of the Federal Water Pollution Control Act, already provides a mechanism designed to help minimize any transitional impacts on small firms by authorizing financial assistance through SBA loans to firms which add to or alter their equipment, facilities, or methods of operation in order to meet water pollution control requirements. Under the law, EPA must determine the sufficiency of the proposed additions or alterations in meeting one or more of the applicable requirements and issue a written statement of necessity and adequacy, prior to a firm's receipt of a SBA loan.

Applicants for such financing must be independently owned and operated small businesses, not dominant in their field, and must meet employment or sales size standards established by SBÁ. To be eligible for an SBA loan under this program, the additions, alterations, or methods of operation necessary for pollution control must fall within one of seven categories of water pollution control-related activities :

(1) The business has a discharge requiring a national pollution

discharge elimination system (NPDES) permit under section 402 of the Federal Water Pollution Control Act.

(2) The business discharges into a publicly owned treatment works which requires pretreatment by the business.

(3) The business plans to discharge into a municipal sewer system through the construction of a lateral or interceptor sewer.

(4) The business is subject to the requirements of a State or areawide authority for controlling the disposal of pollutants which may affect groundwater.

(5) The business requires a Corps of Engineers permit for dredged or fill material.

(6) The business is subject to Coast Guard or State requirements regarding the standards of performance of marine sanitation devices controlling sewage from vessels.

(7) The business is implementing a plan to control or prevent the discharge or spill of oil or other hazardous substances.

Small businesses apply to the EPA regional office for the region covering the State in which the proposed additions or alterations to be made or located. Applications are not generally subject to public notice or hearings, but are available for public inspection during the period of EPA review. Processing time at EPA should generally not exceed 45 working days from the date of receipt of a completed application.

In its technical review, EPA does not determine the cost-effectiveness of the proposed additions or alterations nor does it assess whether or not other more efficient or technically superior alternatives exist. EPA does attempt, however, to identify those components of the additions, alterations, or methods of operation which appear to be extraneous to the degree of pollution abatement required by an applicable standard. Such review results in one of three determinations: approval, conditional approval (which is still sufficient to secure an SBA loan), or disapproval, which may be appealed within 60 days directly to the EPA Deputy Administrator.

Provision has also been made for States, upon application to the approval by EPA, to conduct their own programs for issuing such certification statements to SBA. Since many applications for additions, alterations, or modes of operation are designed to meet requirements issued and enforced by the States pursuant to various sections of the Federal Water Pollution Control Act, we have encouraged the States to accept the responsibilities for conducting such a program themselves. Maryland is the only State with its own certification program in operation at the present time. Michigan and Oklahoma have applied and are awaiting EPA approval. Other States are expected to follow this lead.

Legislation before the subcommittee, H.R. 78 and H.R. 5675, proposes to permit more small businesses to obtain financial assistance available to ease the impact of meeting environmental protection requirements.

H.R. 78 would amend the Small Business Investment Act of 1958 to create a pollution control financing program for small businesses. Under the bill, when the Small Business Administration determines that small business concerns would be, or would likely be, at an operational or financing disadvantage with other business concerns with

respect to the planning, design, or installation of pollution control facilities or the obtaining of private financing for such activities, SBA would be authorized to guarantee, either directly or in cooperation with a qualified surety or other qualified company, the full amount due to rental payments or other amounts under qualified contracts.

The SBA would be directed by the bill to fix a uniform fee, deemed necessary and reasonable for any guarantee issued, to be payable at such time and under such conditions as it may determine. The fee would be subject to periodic review in order that the lowest fee which experience shows to be justified would be placed into effect. Uniform fees also could be fixed for the processing of applications for such guarantees. SBA would also be allowed to require that an amount-not to exceed one-fourth of the average annual payments for which a guarantee is issued—be placed in escrow,

While we endorse assisting small businesses in meeting pollution control requirements, we believe that the significant economic and tax policy considerations inherent in H.R. 78 go beyond the purview of this agency-EPA. We would, therefore, defer to the Small Business Administration, the Department of the Treasury, and the Council of Economic Advisers as to the specifies of the bill.

We do, however, want to suggest the importance of limiting the coverage of legislation of this kind to firms which are good credit risks. No purpose would be served by allowing assistance to be given to firms which are likely not to be able to service the debt or lease payments. There would be no economic or environmental benefit from covering such firms. At the very least, a provision should be included in any such legislation requiring that the SBA determine that there be a reasonable probability that the firm will be able to service the debt or lease payments. Other, more technical comments with regard to the drafting of the measure are contained in Administrator Train's July 8, 1975, letter to Committee Chairman Evins on the bill.

H.R. 5675 would amend the Small Business Act to include small business establishments primarily engaged in the production of cow's milk for purposes of obtaining loans to assist them in meeting the requirements established under the Federal Water Pollution Control Act. We defer to the SBA on the specific merits of this bill.

The Environmental Protection Agency is acutely aware of the special problems that environmental protection requirements may present to small businesses. We have endeavored to take these impacts. into account in setting our standards to the maximum extent permitted under our statutes. We are working closely with both small businessmen and SBA to provide accurate and timely certifications of necessity and sufficiency for pollution control additions, alterations, or modifications to plant operations and will continue to refine our procedures to insure that our technical reviews are made in the most efficient and expeditious manner possible.

I will be happy to respond to any questions which the subcommittee members


have. Thank you.

Mr. SMITH. Mr. Assistant Administrator, we have been told that there are varying periods when different industries must complete their pollution control requirements. They vary over a period of several years, is that right?

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