3. It imposes criminal penalties for failure to notify.

4. It imposes civil penalties for such discharge.

5. It imposes on the owner or operator the responsibility for cleanup costs incurred by the Government, unless he "can prove" that the discharge was "caused solely by" one of four specified events.

6. It limits the owner's or operator's responsibility for such costs if the discharge was not the result of "willful negligence or willful misconduct," but imposes unlimited liability where the discharge resulted from such willfulness.

Your regulations depart from the structure of the Act in a very significant way, namely, they exempt 5 classes of discharges from the definition of "harmful quantities." By such exclusion they become exempt from all the requirements of the Act. For example, section 610.6 of the proposed regulations excludes "discharges when necessary to save human life or limb." By such exclusion the proposed regulations would also exempt the owner or operator from paying for cleanup or the spilled oil, or from any penalty if he fails to notify the Coast Guard about the discharge. The Act makes no such exemption in these matters. Thus, the proposed regulations would in effect amend the Act.

Another example: section 610.6 of the regulations recites several of the exclusions stated in the Act concerning liability for cleanup costs, but the regulation adds some exclusions not in the Act. In addition, the regulation fails to state that the exclusions of the Act apply only where the owner or operator proves that the discharge was "caused solely by" one of the events which the Act specifically excludes. Moreover, it makes those exclusions applicable to all features of the Act rather than merely to the liability for cleanup costs.

We urge that you review section 610.6 of the regulations to make them conform to this law,

The following analysis of section 610.6, made by our Subcommittee Staff,, shows the reason for the objections stated above:

Section 610.3 and Sec. 610.4 of the proposed regulations provide as follows: "For purposes of section 11(b)(3) of the Federal Act, discharges of such quantities of oil *** determined to be harmful to the public health or welfare of the United States, at all times and locations *** and under all circumstances and conditions, unless otherwise excluded in this part, include discharges which:

(a) Violate applicable water quality standards of the navigable waters of the United States, or

(b) Cause a visible film, sheen or discoloration of the surface of the water. (Underlining supplied)

Section 610.6 of these regualtions provides as follows:

"For

or purposes of section 11(b)(3) of the Federal Act, discharges determined to be harmful in Secs. 610.3 and 610.4 do not include:

(a) Discharges resulting from a properly functioning vessel engine;

(b) Discharges resulting from the act of a third party;

(c) Discharges resulting from an Act of God;

(d) Discharges when necessary to save human life or limb; and

(e) Within the contiguous zone discharges where permitted under article I of the International Convention for the Prevention of Pollution of the Sea by Oil, 1954, as amended.

Although some of these exclusions are in the Act with respect to liability for costs of cleanup, they are not there with respect to other aspects of the law. Nor is there any basis in the law to imply that Congress intended such exclusions to apply to other aspects of the law. Further, the exemptions in the law governing an owner's or operator's liability to the United States for cleanup costs are expanded by the regulations excluding the discharge itself.

Under these exclusions, the prohibition against discharging oil in "harmful quantaties," as that term is defined in section 610.3 and 610.4 above, will not apply to such owners or operators, despite the fact that Congress did not authorize such exclusion. Consequently, oil "knowingly discharged," due in whole or in part to one of the above exclusions, will not, under section 11(b) (5) of the new law, be subject to a civil penalty of up to $10,000 for each offense assessed by the Coast Guard

Section 610.9 of the proposed regulations does provide that any person in charge of a vessel or such facility "as soon as he has knowledge of any discharge of oil," including "discharges identified as exclusions in section 610.6, must notify the Coast Guard.

But section 11(b) (4) of the Act imposes a penalty for failure to notify the Coast Guard only where there is knowledge of a discharge of oil "in violation" of section 11(b)(2) which prohibits only discharges "in harmful quantities."

Hence, failure to notify the Coast Guard about such discharges would not be subject to a penalty. Thus, with these exclusions, it is possible that a person in charge of a vessel or facility which discharges oil within the orbit of these exclusions could not be prosecuted for such failure.

Clearly, the purpose of section 11(b)(3) of the Act, in directing the President to define discharges of oil in "harmful quantities," was to allow the Department's oil pollution experts to develop a meaningful definition in furtherance of the law's purpose. It was not intended that by defining "harmful quantities," they be empowered to adopt exclusions all of which were considered and discarded by the Congress during preparation of this legislation,

Sincerely,

HENRY S. REUSS,

Chairman, Conservation and Natural Resources Subcommittee.

Senator MUSKIE. When the regulations were issued, I was very disturbed about some portions of them, especially section 610.6. The language seemed to me to go beyond the authority to issue regulations which was laid down in the act. Its thrust seemed likely to dilute the liabilities established by the act. It appeared not to go as far as we desired in defining certain factors essential to the effective implementation of the act.

I was careful not to draw hard and fast conclusions on that point, because it seemed to me that it would be most useful if we could, instead, get into a discussion of what was intended rather than the actual language of the regulations. It was for that reason that I invited the Secretary to testify this morning-during the 30-day period given for comments upon the regulations-so that if the language of the regulations failed to accurately reflect the intention of the Secretary and the administration, it might be corrected and modified to reflect the intent.

I am sorry the Secretary could not be here.

It is important, I think, to raise these questions now, not only for the reason that I just stated, but also because there is pending in the Foreign Relations Committee the IMCO Treaty on Oil Pollution. This subcommittee was asked to hold hearings in order to make comments on the treaty to the Foreign Relations Subcommittee. The obvious relationship between the treaty and our own Water Quality Improvement Act, I think, dictates that we understand fully the administration interpretation of the act if we are to understand the relationship between the treaty and the act, and to advise intelligently the Foreign Relations Subcommittee on our conclusions.

It is for these reasons that we went forward with this hearing this morning notwithstanding the inability of Secretary Hickel to be here in order to raise the questions in time to serve these other

purposes.

Now, if I may, there is one other question this morning that I would like to get to and dispose of. It has to do with the appropriations for waste treatment facilities in this year's budget.

The House approved $1 billion for waste treatment facilities. The administration has recommended, I gather in Senate hearings, that the entire $1 billion be deleted. The justification in the administration comments is as follows:

The change is proposed because the President's legislative proposal of a $4 billion contract authority for the construction grant program to be used at a rate of $1 billion per year for each of the fiscal years 1971 to 1974 should be enacted in lieu of the House allowance to permit a dramatic and more effective program plan.

These comments were submitted to the Senate committee. I do not have the date, and I have not focused on these comments. But I am disturbed by them.

Last year, the Congress appropriated $800 million for this purpose. I think that action began to stimulate confidence on the part of States and communities that the Congress was going to meet its commitment to the waste treatment program. This year the House approved $1 billion, which is only $250 million below the authorization. I think this action tended to reinforce that confidence.

Further, I have been assured by Senator Ellender, chairman of the Senate subcommittee of the Appropriations Committee, that he will seek the full authorization of $1.25 billion. But now the administration has recommended deletion before the Congress has acted upon the legislation before us. And this has been done notwithstanding the fact that the administration and the Congress disagree on what the total cost of doing this job would be, and notwithstanding the fact that we have before us recently submitted by the National League of Cities and the U.S. Conference of Mayors their most recent estimate of that cost. I think it is very disturbing that the Appropriations Committee should be given this recommendation from the administration.

The program reflected by the $1 billion appropriation on the House side was the product of an authorization act, enacted in 1966, designed to spell out a 4-year program. It didn't get moving at all for the first 2 years. The Congress reneged on its commitment, its promise, and now in the fourth year of that program we are in the position of getting the same lack of action. This is hardly likely to build up confidence in the intentions of the Federal Government, and hardly likely, I think, to continue whatever momentum was generated last year when we finally began to move here in Washington.

I would like to have your response to that, Mr. Secretary.

STATEMENTS OF CARL L. KLEIN, ASSISTANT SECRETARY, WATER QUALITY AND RESEARCH; THEODORE R. RAGOWSKI, ACTING ASSOCIATE SOLICITOR, DIVISION OF ENVIRONMENTAL QUALITY, SOLICITOR'S OFFICE; AND KENNETH E. BIGLANE, DIRECTOR OF THE OFFICE OF OIL AND HAZARDOUS MATERIALS, FWQA, DEPARTMENT OF THE INTERIOR

Mr. KLEIN. May I take them in order, Mr. Chairman?

First, I apologize for Secretary Hickel not being able to be here but he was unable to rearrange his schedule on such short notice and, as the Assistant Secretary for Water Quality and Research, I am here in his place instead, and I trust you will accept the substitution.

I have with me Associate Solicitor for Water Quality, Mr. Theodore Ragowski, and he will deal with the regulations and the section thereof that you referred to.

I have Mr. Kenneth Biglane, who is from the Federal Water Quality Administration, and is their expert on and handles all of the oil spills, on the matter.

We were unable to get the Solicitor who handles FWQA, he was out of town, and on this notice we couldn't get him back on time.

On the regulations, I will say to you this, generally: because of the time that was involved herein to get them out and to get the act as passed by Congress and signed by the President operating, we had to move very, very quickly. Ordinarily, on regulations such as this sort, we would have consulted with your staff and with the House staff. I say to you that we are in the process of looking at them again on the basis of your letter and other letters, and we will have consultation before the final promulgation, with your staff in the Senate and with the House staff in order to insure that the regulations conform to the bill and cover what they should cover.

At this point, I will let Solicitor Ragowski respond to the rest of it, if I may.

Senator MUSKIE. I wonder if you would comment on the budget question first, because I would like to get into the other one with some specificity. I would like to zero in on particular provisions of the regulation and get your comments-raise the questions and get the issues spelled out-but I think if we could get the budget question out of the way, we then could concentrate on the other.

Mr. KLEIN. When we had asked that the authorization which covered $1.25 billion for this year as the last year of a period of 4 years be deleted and that we have, instead, this $4 billion contract authority to which you referred, with the $1 billion of contract authority for this year and $1 billion for each of the next 3 years, we did this so that we would have continuity and long-range planning, that we would have no doubt of commitment when the States and local governments have committed themselves that funds would be there, that the job would actually be done, that total job would be done. We had looked the matter over and we had come to the conclusion from FWQA's experts that of the $800 million, that because of the fact that we didn't have steps going forward, escalating from $200 million to $450 million to $700 million to $1 billion, that out of the $800 million, because we had a jump from $214 million to $800 million, that we could not obligate all of it by the end of the 18-month period and at the end of the 1-year period we had only obligated out of the $800 million about $360 million. That is, by June 30, 1970. Senator MUSKIE. The appropriation wasn't approved until the fiscal year was 6 months gone.

Mr. KLEIN. So we had difficulty getting into it, but by the end of the year we will only have obligated about $600 million of it. We looked over all of the other figures and on the basis of what we have now, the most that we can obligate in fiscal year 1971 is $965 million. That is the total.

We asked that the provision for $1 billion be deleted from the appropriation bill because when you have contract authority then you do not need the appropriation in this year's bill to cover it.

Senator MUSKIE. What about the $800 million-odd in reimbursables that are outstanding?

Mr. KLEIN. Sir, as of December 31, 1969, that figure was approximately $320 million. Due to a mistake on the part of FWQA in labeling all new obligations from prefinancing States as reimbursables. it has at one time appeared that the figure of $814 million was reimbursable. I say to you that that is not reimbursables. They were newobligations, new contracts just entered into, where payments may not have to be made for a year or 2 years or 3 years or 4 years as the

work gets done. Nobody knows whether they are going to fall into the regular program or whether they are actually going to become reimbursables at the end of the allocation period.

As a result of that, we determined that there should be an item called "reimbursables" with a complete definition of it, and we went. out to all of the States with the proper definition of reimbursables and we have asked them to define what they think their reimbursables were December 31, 1969, and March of 1970, and June 30, 1970. From this, we are verifying to see what the actual figures are.

The best I can get is that $320 million as of December 31, 1970, was an approximately correct figure.

From that time forward, sir, we do not know exactly what those reimbursable figures are.

Senator MUSKIE. The $814 million on reimbursables, as I understand it, was a figure submitted by the Federal Water Quality Administration. Am I wrong?

Mr. KLEIN. I don't know whether it was submitted. It did appear on one of their forms as being reimbursables. It should have had a full definition of reimbursables and new obligations from prefinancing States. I, therefore, clarified with the FWQA the definition of reimbursables and asked that they be resubmitted by the States and verified so that we would have exact figures therein.

I do not wish to rely on the $814 million as being a reimbursable. It is not, in my opinion, a true reimbursable. I think the figure is much less than that, sir.

Senator MUSKIE. We will have to reexamine the testimony given by the Department earlier this year, because I think we examined the $814 million figure at that time. We will do that.

Now, let me take the figures you have given us this morning and make sure that I understand them. You say that, as of June 30, of the $800 million appropriated last year you have been able to obligate $360 odd million.

Mr. KLEIN. Yes, sir; there was about $400 million left.

Senator MUSKIE. Then you say that you can obligate $985 million in this fiscal year.

Mr. KLEIN. Yes, sir.

Senator MUSKIE. Then where does the $320 million in reimbursables to which you refer fit in? Is that included in either of the two figures I have mentioned, $360 million or $985 million?

Mr. KLEIN. No, sir; at the end of the allocation period, since it is on an 18-month period, the fiscal year plus 6 months, which will be December 31, 1970, we believe that out of the $800 million only $600 million of this will be allocated and that there will be $200 million left over for reallocation.

According to the statement made to the Conference of Governors by the President of the United States, that $200 million will be used to defray the $320 million that was left over, so there will be $200 million to apply to the $320 million.

Senator MUSKIE. Senator Randolph has to leave and he wants to ask a question at this point. I will ask the reporter to put this at the end of the discussion on these figures.

The three figures you have given us are: the $360 million obligated in the last 6 months of the past fiscal year, the $985 million you say will be obligated in the current fiscal year, which is covered by the