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Mr. HUNGATE. What is that again. I think I misunderstood that. Pardon me.

Mr. BRANDS. The way dairies are categorized here, it is really milk processing as opposed to the dairy farmer. Feedlots include the feeding of cattle and would include the dairy farmer.

Now, let me make one other point here that I think may be troubling us, and that is that these costs were calculated on the basis, as Mr. Agee indicated, of very large cutoffs in terms of exemptions for feedlots. I believe anything under 1,000 head of cattle is not impacted by the feedlot regulations.

Mr. SMITH. Is that not questionable right now?
VIr. AGEE. Yes. In light of that recent lawsuit; yes, sir, it is.

Mr. BRANDS. If, in fact, we have to include the smaller feedlot operator, then the cost for feedlots, as you point out, would probably go up significantly. The costs are based on the way the Agency came out with the regulations: In the case of cattle herds of less than 1,000 head would be exempted from the EPA regulations.

Mr. Smith. Now, what is it that is so costly about dairies, as you have defined dairies, then?

Mr. BRANDS. Well, I am not entirely sure of the process here, except again, as Mr. Agee indicated, it is in the actual processing of the milk, the discharge of the organics. Jim, you know more about this than I do.

Mr. Smith. It takes secondary treatment to get rid of it, is that the problem?

Mr. AGEE. Mr. Chairman, that is essentially right. It is the biological treatment not unlike that we use for domestic waste. In the case of animal feedlots, and animal wastes, it is not nearly as expensive, and it is a matter generally of relocating the feeding operations in some large, open installations, and there are some huge ones. It may well cost a lot of money to move that feeding operation off of the stream, if you will, and provide some kind of containment device, a dyke or something like that, so that the waste would not then be washed or eroded into the receiving water. Usually, that is what is necessary. And I do not think that we estimate anyone will go to any kind of a treatment device for the treatment of animal waste, not generally. It could happen, however.

Mr. SMITH. However, the volume of waste is tremendous.

Mr. AGEE. I have heard figures that in the Missouri Valley, Missouri Basin, it may be something like 70 million head of cattle and the equivalent from cattle to human is something like 20 to 1. So we are talking about huge volumes of waste.

Mrs. FENWICK. What is involved in the processing? I am mystified, too.

Mr. AGEE. In the nrocessing of dairy waste?

Mrs. FENWICK. No; the processing of milk, which is what I understand you are talking about on these dairies.

Mr. AGEE. You have the dairy receiving stations, where they receive the milk in the 20-gallon milk cans, and they have to wash the cans and rinse them. There is a lot of residual milk there.

Mrs. FENWICK. That is not really polluting, is it?

Mr. AGEE. Oh, yes. It is a very, very strong waste. Just in that cleansing operation and the cleaning operations of the dairy, there is a large volume of milk waste and cheese waste. The whey waste that they have is very strong.

Mr. Smith. Do they not feed that to livestock?

Mr. AGEE. Frequently they can, and that is ultimately what we would hope would be done. But, dairy waste is a rather hot waste, as we see it.

Mr. SMITH. I know a large dairy that did it one time, dumped the whey into the sewer, but as soon as they were required to do otherwise, they gave it to a farmer and he is making a lot of money with it now. He has a tank wagon and hauls the whey away and feed it to the hogs. It is just easier to dump it in the sewer. Well, thank you. Mr. PHALEN. Mr. Chairman, could I ask just a couple of questions? Mr. SMITH. Mr. Phalen.

Mr. PHALEN. You mentioned that there have been 17 loans already certified and that you expect 600; did you say?

Mr. Agee. That is an estimate. We anticipate we might have as many as 600. Again, there were 17 for water pollution control, 46 for air pollution approved last year.

Mr. PHALEN. I just want to make it clear for the record that none of these loans that we are talking about, either the 17 or the 600 potential, would go to farmers.

Mr. AGEE. I cannot be 100 percent sure, but generally I do not think they have been going to farmers.

Nr. PHALEN. This is true. The SBA has administratively, as far as we are concerned, determined that they are not eligible. So, what we are worried about here is the one specific group, which is the farmers, and I do not think when we are talking about 600 potential loans, that we can say, I think we ought to make it clear that those are not going to be going to farmers.

Mr. AGEE. I think that is the way our numbers were put together.

Mr. PHALEN. And I notice in your statement you deferred to the SBA on the position of this bill, 5675 and others. And as I understand it, the SBA position, or the administration position is going to be that SBA loans under 7(g) should not be eligible to farmers, because farm products are subject to price supports, are supported by price supports. Now, I am a bit confused by that argument, because we are talking here about nonproductive equipment. And as far as I know, when price supports were agreed upon and decided upon, the cost of pollution abatement was really not considered, was it? Did you submit these figures to the Department of Agriculture or through the Agricultural Committee with regard to price supports and what they should be?

Mr. BRANDS. No, we did not.
Mr. PHALEN. I mean, do you see my confusion? I have a hard time

? relating the administration's position to what we are talking about. I do not think that you should be denying SBA loans for nonproductive equipment on the basis of price supports. There may be an argument there if we were giving loans to buy milkers and barns and whatnot, but have you seen that position of the administration ?

Mr. AGEE. No, I have not. And we did defer to the SBA because we are not honestly sure. We were aware that SBA was not normally, at least, providing loans to certain agricultural industries, and we did not know whether that was by legislation or by their own administra

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tive regulations. So, that is why we just did not feel that we could or should comment in this general area.

Mr. PHAlex. Well, it just seems to me with regard to your statement that perhaps you would give a person a breathing spell and not initiate enforcement action immediately, or injunctive action, or you are going to face an awful lot of that unless we find some way to give lower interest loans to these small people who really need them.

Mr. AGEE. Again, we can certainly see the need for a lot of pollution abatement from small industries and agricultural industries.

Mr. PHALEN. I should think it would be very important for the agricultural industries, because usually your farmer or your rancher does not have the option of hooking up to a municipal system like other smaller industries. They are out there alone, they are going to get no help, even if they were willing to pay the double-user charge. They have got to do it all on their own.

Mr. AGEE. Your observation is correct. Yes.
Mr. PHALEX. Thank you, Mr. Chairman. .
Mr. Smith. Thank you very much for your testimony.
Mr. AGEE. Thank you, Mr. Chairman.
[Additional materials submitted by EPA follow:]

EXCERPTS FROM THE ECONOMIC IMPACT OF THE FEDERAL ENVIRONMENTAL PROGRAM

Table of Contents

CHAPTER I
Introduction and summary :

A. Structure of the report.
B. Nationwide standards.
C. Economics in the EPA standard-setting process.
D. Major findings of the report.
E. Future work.

CHAPTER II
Costs of pollution control:

A. Total pollution control costs.
B. Air pollution control costs.
C. Water pollution control costs.
D. Cost of solid waste management.
E. Cost of pesticide regulations.
F. Noise control costs.
G. Reported expenditures for pollution control.

CHAPTER IV

Industry impact of pollution control :

A. 1971-72 industry impact studies.
B. Impact of effluent guidelines for 1977.
C. Impact of air new source performance standards.
D. Petroleum refineries.
E. Plant closings to date.

CHAPTER V

Impacts of pollution on agricultural production.

CHAPTER VII

Effects on individuals.

CHAPTER IX

Energy consumption due to water pollution control:

A. Municipal wastewater treatment.
B. Effluent guidelines for powerplants.
C. Effluent guidelines for all other industries.

CHAPTER X

Resource recovery and energy supply :

A. Source reduction.
B. Energy recovery by combustion of waste.
C. Recycling of materials.

CHAPTER XI
Further work :

A. Economic impact.
B. Further energy impact studies.

CHAPTER I-INTRODUCTION AND SUMMARY

This report is submitted to the Subcommittee on Agriculture, Environmental and Consumer Protection of the House of Representatives Committee on Appropriations. The report was requested by the Committee in its Report on the Agriculture, Environmental and Consumer Protection Bill, 1975 (H.R. 15472). The request for this report stated :

"Evidence before the Committee clearly indicates that the inflexibility of nationwide standards can and have played a role in creating energy shortages, inflation and unemployment. Testimony before the Committee indicates standards new being developed have the potential for costing hundreds of thousands of jobs, for significantly increasing prices for the consumer and for placing enormous demands on an already strained supply of investment capital. Common sense demands that all of these laws and regulations be reassessed in light of the precarious condition of our economy.

"Therefore, the Committee directs the agency to thoroughly review all existing laws and regulations, as well as those now in the process of being developed. The Committee requires this information so that it can determine whether or not funds should be provided to implement these laws and regulations. Since most of this information is currently available within the agency, and will therefore only have to be brought together in a single report, the Committee will expect the report to be submitted no later than October 1, 1974." A. Structure of the Report

The findings of this report result primarily from an assessment of economic and energy impacts of the following standards, regulations and programs:

Efiluent Limitation Guidelines, established under the Federal Water
Pollution Control Act (FWPCA).

New Source Performance Standards, established under the FWPCA.
Thermal Limitations, established under the FWPCA.
Municipal Construction Grant Program, established under the FWPCA,

New Vehicle Federal Emissions Standards, established under the Clean Air Act (CAA).

New Source Performance Standards, established under the CAA.

Ambient Air Quality Standards, established under the CAA and implemented through State Implementation Plans (SIP's). Economic and energy impacts in media other than air and water are also dis-cussed; however, in many cases, the impact estimates for these programs (noise, radiation, solid waste, toxic substances, and pesticides) are incomplete and not well quantified because final Federal legislation has not been enacted or implementing regulations have not yet been promulgated. Until these regulations are fully developed, it is virtually impossible to estimate the associated economic and energy impacts with any precision. As EPA does perform economic impact analysis in the regulation formulation process in nearly all instances, data from these interim analyses have been included in this report.

For those sectors for which reliable data is available, this report assesses the following:

Costs of meeting Federal regulations; Macroeconomic impacts; Impacts on specific industries; Plant closings and production curtailments to date; Impacts on food and fiber production; Impacts on the automotive industry and automobile owners; Impacts on individuals of various income classes; Impacts on energy consumption and supply ; Further work being done to assess economic and energy impacts of EPA's programs.

The Committee advised that, in view of the short time available to carry out this work, this report should generally bring together information contained in available studies. Consequently, this report discusses a number of separate

studies, some of which have been recently completed and some of which are as much as three years old. The major disadvantage of pulling together the results of disparate studies is that the studies cover varying time frames, have somewhat different assumptions, and have cost and energy estimates that may require updating. Thus, this summary report may not be as precise as desired. However, EPA has tried to insure consistency and compatibility in the development of this report.

A program of studies which will assess more precisely the economic and energy impact of EPA's standards and regulations is currently underway. This program, described more fully in Chapter XI, is scheduled for completion later this fiscal year.

Three additional limitations should be mentioned. First, most of the air and water cost estimates have been based on end-of-pipe treatment because that provides a basis for costing a standard treatment approach for a given type of plant. In many cases, however, less costly compliance can be attained through process changes which reduce the emissions, rather than through addition of equipment or mechanisms to capture the pollution. To the extent that less costly process changes are possible the costs presented here and consequently the economic impacts derived from those costs are overestimates.

Second, the energy estimates were developed assuming lower than rrent energy prices. Current higher prices provide a substantial incentive for industry to comply with pollution control regulations with an investment mix which is more capital-intensive and less energy consumptive than that used in EPA estimates. For this reason, some capital costs may be understated and energy demands may be overstated. And finally, no major improvements in curent technology have been assumed. Such improvement could greatly reduce costs and/or energy consumption and thus reduce impacts below estimated levels. B. National Standards

The Committee Report specifically suggests that a single nationwide standard may be unwise from an economic standpoint and unnecessary from an environmental standpoint. Considerable Congressional debate has centered around this issue, both before and since the 1970 and 1972 Amendments to the Air and Water Acts respectively. The previously established ambient air quality standards and water quality standards set general parameters for public health and safety with the intention that each State would devise its own method of achieving those parameters through a State Implementation Plan (SIP).

In the case of water quality standards, several major problems a rose under pre-1972 legislation. Six different quality standards had been defined for water, depending upon the use for which the body of water was designated. Too often, determination of a use category by local government yielded a standard which was advantageous to industry and did not adequately protect the interests of the affected residents, leaving a widely varying system of standards. In fact there was the distinct possibility that States would compete with one another for location of industry through the setting of water use categories advantageous to industry. Also, significant problems arose in the case of two states bordering on the same body of water and each assigning it a different use category.

Finally, there was the general belief that many of the States lacked sufficient water quality monitoring data and capability to relate effluent discharges to ambient water quality or to enforce their own effluent standards. Therefore, though the States still have responsibility to achieve the overall water quality standards, Congress concluded in enactment of the 1972 Amendments that the setting of nationwide standards for point source discharge would be much simpler to implement.

Though it was recognized that some economic inefficiency might result, it was thought that a greater economic inefficiency would be eliminated and that more uniform and equitable requirements would be placed on industry with nationwide standards.

With respect to ambient air quality standards, the use of point source limitations is not as applicable as with water, since the ambient air quality is more regional in nature, depending upon mixing and dissipation of pollutants by air movements over large areas. For this reason the bulk of responsibility for meeting the air quality standards has been left in the hands of the States, to be accomplished through the State Implementation Plans (SIP's) which are subject to approval by EPA. However, for the prevention of competition among States for reasons stated above, Congress concluded that it was necessary to set national New Source Performance Standards (NSPS) for air emissions.

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