The Bureau of the Budget advises that there is no objection to the submission: of this report from the standpoint of the administration's program. Sincerely yours, HON. OREN HARRIS, ORVILLE L. FREEMAN. DEPARTMENT OF THE INTERIOR, OFFICE OF THE SECRETARY, Washington, D.C., June 9, 1965. Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. HARRIS: Your committee has requested our report on H.R. 7065, a bill "To amend the Clean Air Act to require national standards for reducing or eliminating the emission of air pollutants from gasoline-powered vehicles, to authorize grants to municipalities and air pollution control agencies for the acquisition, construction, or installation of devices or facilities designed to reduce or eliminate air pollution resulting from the disposal of solid wastes, to direct the Surgeon General to conduct a study of and report to Congress on the effect of air pollution from all sources on human health (particularly lung cancer), and for other purposes; and to amend the Internal Revenue Code of 1954 to permit deduction of expenditures and increased investment credit for the ac-quisition, construction, or installation of water and air pollution control devices,” and on a similar bill H.R. 7394. We recommend the enactment of S. 306 with the amendments suggested by the administration which carries out the President's objectives of providing greater efforts in the control of automobile exhaust emissions and in the disposal of solid wastes in lieu of these bills. Section 1 of H.R. 7065 amends section 3 of the Clean Air Act, as amended (42 U.S.C. 1857b), in a number of ways. First, it adds to subsection (a) of this section of the act three new paragraphs: directing the Secretary of Health, Education, and Welfare to initiate, conduct, and accelerate research programs relating to air pollution and gasoline-powered vehicles, diesel-powered vehicles, and jet aircraft and missiles. Section 3(a) of the act now directs HEW to, among other things, "conduct, and promote the coordination and acceleration of, research, investigations, experiments, training, demonstrations, surveys, and studies relating to the causes, effects, extent, prevention, and control of air pollution." We think that this authority is adequate. Second, it directs the Secretary of Health, Education, and Welfare to establish within his Department a Federal Air Pollution Control Laboratory. We understand that the Department of Health, Education, and Welfare has recom-mended, in lieu of this provision, legislation which gives to that agency general authority to construct and equip facilities to carry out the purposes of the Clean Air Act. We concur in their recommendation. Third, it directs the Secretary of Health, Education, and Welfare to appoint a technical committee composed of various industry and Federal representatives, including representatives of the Bureau of Mines of this Department, and to encourage the development of low-cost techniques related to sulfur-bearing fuels and to conduct research programs relating to the feasibility of increasing the use of natural gas, electric power, and atomic power as a source of fuel and energy. We think that adequate authority now exists for such a committee, if one is needed. We also think that the Secretary of the Interior should have flexibility in appointing representatives to such a committee and not be limited by statute to appointing only representatives from the Bureau of Mines. In addition, we are unaware of any need to establish a committee to conduct a research program which, if needed, can be accomplished far more effectively using the existing capabilities of this Department and other Federal agencies. Fuel and energy sources are complexly related to the conservation of natural resources, and efforts to increase the use of one fuel in preference to another must be considered from more than an air pollution standpoint. Supplies of natural gas are limited and its conservation must be considered in any energy survey. It is difficult to see how research on the feasibility of increasing the use of electric power would solve air pollution problems. Electric power is primarily produced through the combustion of solid and liquid fuels. Section 2 is primarily concerned with grants for reducing or eliminating air pollution resulting from the disposal of solid wastes, while section 3 relates: to the control of motor-vehicle exhaust emissions. We think that S. 306, which passed the Senate on May 18, 1965 provides the best approach to both of these problems. Section 4 of the bill amends section 7 of the act. This section now provides for the establishment of classes of potential pollutants for which a Federal agency having jurisdiction over a Federal installation must get a permit before discharging any matter in the air. H.R. 7065, among other things, authorizes appropriations to the various Federal agencies to install devices to prevent the discharge of pollutants into the air. This section of the bill is similar to H.R. 7429 and title II of S. 560 which passed the Senate on March 25, 1965, and which is pending before the Committee on Public Works of the House of Representatives. While we think adequate authority exists to carry out the President's directives relating to this problem, the enactment of either H.R 7429 or S. 560 would be welcome as additional congressional support for the program. Section 5 of the bill directs the Public Health Service to conduct a study to determine the effect of air pollutants on human health, including a study on the causal relationship between air pollution and lung cancer. We think that section 3(a) of the Clean Air Act now permits such a study. Section 8 of the bill amends the Internal Revenue Code of 1954 to permit certain tax incentives for the acquisition, construction, or installation of water and air pollution control devices. President Johnson, in his natural beauty message, said: "I have directed the Chairman of the Council of Economic Advisers, with the appropriate departments to study the use of economic incentives as a technique to stimulate pollution prevention and abatement, and to recommend actions or legislation, if needed." We think that consideration of legislation providing tax incentives in this area should await the conclusion of this study. The Bureau of the Budget has advised that there is no objection to the presentation of this report from the standpoint of the administration's program. Sincerely yours, Hon. OREN HARRIS, STEWART L. UDALL, Secretary of the Interior. THE GENERAL COUNSEL OF THE TREASURY, Chairman, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: Reference is made to your requests for the views of this Department on H.R. 7065 and H.R. 7394, similar bills, amending the Clean Air Act. The proposed legislation would (1) require the Secretary of Health, Education, and Welfare to prescribe national standards for reducing or eliminating the emission of air pollutants from gasoline-powdered vehicles; (2) authorize grants to municipalities and air pollution control agencies for the acquisition, construction, or installation of devices or facilities designed to reduce or eliminate air pollution resulting from disposal of solid wastes; (3) direct the Surgeon General to conduct a study and report to Congress on the effect of air pollution from all sources on human health; and (4) amend the Internal Revenue Code to permit deductions of expenditures and increased investment credit for the acquisition, construction, or installation of water and air pollution control devices. Since the Department of Health, Education, and Welfare has the primary responsibility in this field, the Treasury defers to its views as to the need for and desirability of legislation treating with this subject matter. The tax provisions of the bills (sections 8, 9, and 10 of H.R. 7065 and sections 7, 8, and 9 of H.R. 7394) are of particular interest to the Treasury. These provisions would permit a taxpayer to deduct expenditures for certified air or water pollution control devices in lieu of charging these expenditures to his capital account, and to claim an investment credit on devices, facilities, or equipment to control water or air pollution equal to twice the amount normally available. The President, in his message of February 8, 1965, on Natural Beauty of Our Country, stated he had directed the Chairman of the Council of Economic Advisers, with the appropriate departments, to study the use of economic incentives as a technique to stimulate pollution prevention and abatement, and to recommend actions or legislation, if needed. In view of this, the Department recommends that consideration of the tax provisions of the bills be postponed until the Council of Economic Advisers has submitted its report. Finally, the bills would impose cetain responsibilities on the Bureau of Customs of this Department in connection with importations of gasoline-powered vehicles. From this standpoint, the Department would recommend the enactment of S. 306 in lieu of provisions of H.R. 7065 and H.R. 7394 dealing with gasoline-powered vehicles. S. 306 as passed by the Senate and referred to your committee, would in general present no unusual administrative difficulties for this Department. There is, however, one additional technical matter which the Department would like to have considered by your committee. S. 306 provides that motor vehicles not in conformance with established standards may be entered into the United States, under suitable bond, to be brought into conformity. The bond would be breached in cases of failure to conform, thereby making the importer liable to liquidated damages. However, the principal purpose of the bill is to keep nonconforming vehicles out of domestic commerce. Therefore, it is suggested that a provision be added to S. 306 to indicate what disposition should be made of motor vehicles which are not brought into conformity with the standards. The Department has been advised by the Bureau of the Budget that there is no objection from the standpoint of the administration's program to the submission of this report to your committee. Sincerely yours, FRED B. SMITH, Acting General Counsel. FEDERAL POWER COMMISSION REPORT ON H.R. 7065 AND H.R. 7394, 89TH CONGRESS, JUNE 21, 1965 Bills to amend the Clean Air Act relative to research programs and establishment of pollution standards for gasoline and diesel-powered vehicles; and to amend the Internal Revenue Code of 1954 to permit deduction of expenditures and increased investment credit for water and air pollution control devices. These bills, which are generally similar, would authorize the Surgeon General to prescribe national standards for reducing or eliminating the emission of air pollutants from gasoline-powered vehicles and direct the Surgeon General to research problems of air pollution and solid-waste disposal. H.R. 7065 would also authorize a system of grants to municipalities and air pollution control agencies to finance the acquisition, construction, and installation of devices or facilities for these purposes. In addition to amending the Clean Air Act, the bills, as a means of providing tax incentives for adopting air and water pollution abatement measures, would amend the Internal Revenue Code of 1954 to permit the deduction of expenditures and increased investment credit for the acquisition, construction, or installation of water and air pollution control devices. These bills include provisions for pollution research which are similar to those in H.R. 4001, 89th Congress, upon which we transmitted our report on June 4, 1965. We incorporate that report by reference herein, and supplement it with respect to the matters of water pollution control and tax incentives, which are not raised by H.R. 4001. The Commission maintains a continuing interest in the solution or alleviation of air and thermal pollution problems associated with the design, location, and operation of large thermal electric plants, which entail significant temperature rises in the water of streams and the pollution of air from toxic powerplant effluents. These matters are discussed in chapter 9 of the Commission's National Power Survey Report, issued December 12, 1964. 1. WATER POLLUTION PROBLEM S While we recognize that the basic remedy for water pollution is to treat the source of pollution before it enters the stream, we believe that the hydroelectric projects which the Commission has licensed under the comprehensive standards of the Federal Power Act have enhanced the effectiveness of our rivers in disposing of wastes without excessive pollution. Many streams in their natural state have periods of extremely low flow during which they all but disappear. Storage reservoirs at hydroelectric projects usually regulate natural flows so as to supplement them during low-flow periods. Such stream-flow regulation increases the production of firm power and may also facilitate water quality control. Thus, a hydroelectric plant at a storage reservoir is generally most valuable as a peaking plant because hydroelectric generation can start and stop much more readily than steamplant generation. When so operated, maximum water discharges are made at times of peak power requirements. Optimum operation of the plant in the interest of power alone would probably dictate that no water be released during offpeak periods of power demands. However, such operation would not maximize the project's contribution to water quality control. Therefore Commission licenses sometimes provide for a reregulating reservoir to be constructed downstream from the powerplant. The reregulating reservoir accommodates daily or weekly peaking operations of the upstream powerplant by storing all or a part of the releases and then releasing the water from the lower reservoir at a uniform rate, thus preserving or improving water quality. In other cases the Commission prescribes minimum water releases from the storage reservoir. (Another method of harmonizing peaking power operations with water quality control is the ponding of wastes for release during periods of highflow discharges for power.) II. PROPOSED INTERNAL REVENUE CODE AMENDMENTS The bills are designed to offer tax incentives to the installation, completed on or after January 1, 1964, of water or air pollution control devices. The proposed incentives would consist either of (a) additional investment tax credits, doubling the credit allowed by existing law, to the extent that the cost of the devices is capitalized for tax purposes and qualifies for the credit within the meaning of section 38 of the Internal Revenue Code; or (b) the privilege of treating the entire outlay as an ordinary business expense, deductible in the tax year of incurrence, with the deduction itself subject to carry back for up to 3 years or carry forward for as much as 5 years. Without attempting a general evaluation of the employment of tax inducements for such purposes as encouraging installation of pollution control devices, there is plainly no purpose in offering tax inducements to the extent that the desirable actions will be taken by the taxpayer in any event. The proposals as applied to the electric utility industry present such a situation. The definition of air pollution control devices ("so much of any facility, machinery, or equipment, or any part thereof, used to reduce or eliminate air pollution") is so broad that it would seem to include the mechanical and electrostatic precipitators which are now standard equipment in the chimneys of new steam-electric generating plants and might even be construed to include the chimney stacks themselves. There is no point in offering tax incentives for the devices which will be installed in any event in new electric plants. FEDERAL POWER COMMISSION, By JOSEPH C. SWIDLER, Chairman. Hon. OREN HARRIS, DEPARTMENT OF AGRICULTURE, Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: We wish to thank you for your letter of April 16, 1965, giving us the opportunity to report on H.R. 7394. The bill is entitled "To amend the Clean Air Act to require national standards for reducing or eliminating the emission of air pollutants from gasoline-powered vehicles, to direct the Surgeon General to conduct a study of and report to Congress on the effect of air pollution from all sources on human health (particularly lung cancer), and for other purposes; and to amend the Internal Revenue Code of 1954 to permit deduction of expenditures and increased investment credit for the acquisition, construction, or installation of water and air pollution control devices." This Department makes no recommendation as to the enactment of H.R. 7394 as it does not affect any of our programs. We believe that the Department of 51-707--65——— Health, Education, and Welfare would be in a better position to give a more definitive recommendation on this bill. The Bureau of the Budget advises that there is no objection to the submission of this report from the standpoint of the administration's program. Sincerely yours, ORVILLE L. FREEMAN. FEDERAL POWER COMMISSION, Hon. OREN HARRIS, Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: H.R. 7429, upon which your letter of May 24, 1965, requests us to make a report would amend the Clean Air Act to provide for improved control of air pollution from Federal installations and facilities and automotive vehicles. The bill does not affect the responsibilities of the Federal Power Commission since we do not purchase motor vehicles or operate Federal buildings, installations, or other property within the purview of this legislation. Consequently, while we appreciate the opportunity extended, we have no comment to offer on the merits of the bill. Sincerely, DAVID S. BLACK, Acting Chairman. DEPARTMENT OF THE INTERIOR, OFFICE OF THE SECRETARY, Washington, D.C., June 9, 1965. Hon. OREN HARRIS, Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. HARRIS: Your committee has requested our report on H.R. 7429, a bill to amend the Clean Air Act in order to provide for improved control of air pollution from Federal installations and facilities and automotive vehicles. H.R. 7429 amends sections 6 and 7 of the Clean Air Act (42 U.S.C. 1857e and 1857f). The provisions of this bill are identical to the provisions of title II of S. 560 which passed the Senate on March 25, 1965, and which is pending before the Comittee on Public Works of the House of Representatives. Title I of S. 560 also amends section 9 of the Federal Water Pollution Control Act, as amended (33 U.S.C. 466h). H.R. 7429 amends section 6 of the Clean Air Act which relates to the encouragement of continued efforts by the automobile and fuel industries to find devices and fuels to prevent the pollution of the air from automotive exhaust emissions. The bill adds to this section of the act a provision which prohibits any Federal agency from purchasing any automotive vehicle after October 1, 1966, unless it is manufactured or equipped to prevent or reduce emissions from its exhaust in accordance with standards set by the Secretary of Health, Education, and Welfare. Special purpose vehicles may be exempt. The bill also amends section 7 of the act. This section now provides for the establishment of classes of potential pollutants for which a Federal agency having jurisdiction over a Federal installation must get a permit before discharging any matter in the air. The bill, among other things, authorizes appropriations to the various Federal agencies to install devices to prevent the discharge of pollutants into the air and prohibit, after the effective date of the bill, the construction of any Federal property unless provision is made for adequate air pollution control measures. President Johnson, in his recent message on natural beauty, said: "I am directing the heads of all agencies to improve measures to abate pollution caused by direct agency operation, contracts, and cooperative agreements. Federal procurement practices must make sure that the Government equipment uses the most effective techniques for controlling pollution. The Administrator of General Services has already taken steps to assure that motor vehicles purchased by the Federal Government meet minimum standards of exhaust quality." |