B-199440, AUG 7, 1980

B-199440, AUG 7, 1980

PRECIS-UNAVAILABLE

ROBERT T. STAFFORD, UNITED STATES SENATE:

YOU RECENTLY WROTE TO US ABOUT THE MORATORIUM ON THE ENFORCEMENT OF SECTION 204(B)(1)(B) OF THE FEDERAL WATER POLLUTION CONTROL ACT (FWPCA), WHICH REQUIRES A GRANTEE TO RECOVER THE FEDERAL SHARE OF INDUSTRY-RELATED COSTS OF A PUBLICLY-OWNED TREATMENT WORKS FROM ITS INDUSTRIAL USERS. MORATORIUM WAS IMPOSED UNDER SECTION 75 OF THE CLEAN WATER ACT OF 1977, UNTIL JUNE 30, 1979. IT WAS LATER EXTENDED TO JUNE 30, 1980, BY PUBLIC LAW NO. 96-148, DECEMBER 16, 1979.

YOU INDICATED THAT S. 2725, 96TH CONGRESS, WHICH HAS PASSED THE SENATE, REPEALS THE INDUSTRIAL COST RECOVERY REQUIREMENT AND THAT H.R. 6667, 96TH CONGRESS, WOULD ALSO DELETE THE REQUIREMENT, BUT THAT THE STATUTORY MORATORIUM PERIOD WOULD BE OVER BEFORE FINAL LEGISLATIVE ACTION ON THIS MATTER IS COMPLETED.

IN THIS CIRCUMSTANCE YOU REQUEST OUR ASSISTANCE -

"*** IN IDENTIFYING THE LEGAL, ADMINISTRATIVE AND FINANCIAL RESPONSIBILITIES OF THE ENVIRONMENTAL PROTECTION AGENCY; OF MUNICIPALITIES WHICH HAVE RECEIVED GRANTS UNDER SECTION 201(G)(1) OF THE FEDERAL WATER POLLUTION CONTROL ACT; AND OF INDUSTRIAL USERS OF PUBLICLY-OWNED TREATMENT WORKS CONSTRUCTED WITH ASSISTANCE UNDER THE ACT, IN THE PERIOD BETWEEN THE END OF THE STATUTORY MORATORIUM AND THE DATE OF ENACTMENT OF ANY SUPERSEDING LEGISLATION."

YOU ASK IN PARTICULAR IF ANY FORMAL OR INFORMAL ADMINISTRATIVE EXTENSION OF THE MORATORIUM IS LAWFUL. YOU ALSO WISH TO KNOW IF THERE IS ANY GRANTEE OR INDUSTRIAL USER LIABILITY IF THE ENVIRONMENTAL PROTECTION AGENCY (EPA) ADMINISTRATIVELY EXTENDS THE MORATORIUM DEADLINE BEYOND JUNE 30, 1980, IN THE ABSENCE OF LEGAL AUTHORITY TO DO SO.

BECAUSE OF YOUR NEED FOR A QUICK RESPONSE WE HAVE NOT OBTAINED COMMENTS FROM EPA, THE ADMINISTRATIVE AGENCY CONCERNED, AS IS OUR USUAL PRACTICE.

HOWEVER, SUBSEQUENT TO YOUR REQUEST, YOU FURNISHED US WITH A COPY OF A LETTER TO YOU FROM EPA'S ASSISTANT ADMINISTRATOR FOR WATER AND WASTE MANAGEMENT, DATED JULY 24, 1980, WHICH ENCLOSED AN EPA MEMORANDUM CONCERNING INDUSTRIAL COST RECOVERY WHICH WAS ISSUED JULY 14, 1980.

AS INDICATED BELOW, WE BELIEVE THAT THERE IS NO AUTHORITY FOR ADMINISTRATIVE EXTENSION BY EPA OF THE STATUTORY MORATORIUM WHICH EXPIRED JUNE 30, 1980. AFTER THIS DATE AND PRIOR TO THE PASSAGE OF LEGISLATION ABOLISHING THE INDUSTRIAL USER COST RECOVERY REQUIREMENT OR ESTABLISHING AN ADDITIONAL MORATORIUM, SECTION 75(D) OF THE CLEAN WATER ACT AND IMPLEMENTING REGULATIONS, REQUIRING THE PAYMENT AND COLLECTION NO LATER THAN JUNE 30, 1981, OF THE USER FEES FOR THE PERIOD AFTER JUNE 30, 1980, AS WELL AS FOR PAST MORATORIUM PERIODS, IS IN EFFECT.

ANALYSIS

UNDER SECTION 204(B)(1) OF THE FWPCA, AS AMENDED (33 U.S.C. SEC. 1284(B)(1) (1976)), APPROVAL OF GRANTS FOR PUBLICLY OWNED WASTE TREATMENT WORKS AFTER MARCH 1, 1973, IS CONDITIONED ON GRANTEES PROVIDING FOR COLLECTION FROM INDUSTRIAL USERS OF THE PORTION OF THE COST OF CONSTRUCTION (WITHOUT INTEREST) ALLOCABLE TO SUCH USERS, TO THE EXTENT ATTRIBUTABLE TO THE FEDERAL SHARE OF THE CONSTRUCTION COST.

BECAUSE OF QUESTIONS RAISED ABOUT THIS PROVISION, SUBSECTION 75(A) OF THE CLEAN WATER ACT (PUB. L. NO. 95-217, 91 STAT. 1566, 1609-10, 33 U.S.C. SEC. 1284 NOTE (SUPP. I 1977)) MANDATED AN EPA REPORT TO THE CONGRESS, TO BE COMPLETED WITHIN 12 MONTHS OF DECEMBER 27, 1977. SUBSECTION 75(B) ESTABLISHED A MORATORIUM FOR AN 18-MONTH PERIOD TO PROVIDE TIME FOR BOTH THE COMPLETION OF THE REPORT AND A 6-MONTH PERIOD FOR CONGRESSIONAL REVIEW AND ACTION. DURING THE MORATORIUM EPA WAS PROHIBITED FROM ENFORCING OR REQUIRING GRANTEES TO ENFORCE COLLECTION OF INDUSTRIAL USER PAYMENTS UNDER SECTION 204(B)(1). UNDER SUBSECTION 75(D), FEES ACCRUING DURING THE MORATORIUM WERE TO BE PAID, AFTER THE PERIOD ENDED, IN EQUAL ANNUAL INSTALLMENTS PRORATED OVER THE REMAINING USEFUL LIFE OF THE TREATMENT WORKS.

THE MORATORIUM PERIOD EXPIRED ON JUNE 30, 1979. HOWEVER, THE CONGRESS, WHICH HAD RECEIVED THE EPA REPORT, WAS UNABLE TO COMPLETE ITS CONSIDERATION OF INDUSTRIAL COST RECOVERY. ADDITIONAL INFORMATION AND RECOMMENDATIONS FROM THE AGENCY WERE REQUIRED. BECAUSE OF THIS, THE CONGRESS EXTENDED THE MORATORIUM, RETROACTIVELY TO JUNE 30, 1979, TO EXPIRE ON JUNE 30, 1980. ALTHOUGH A PROPOSED REPEAL OF THE COST RECOVERY PROVISION IS PENDING BEFORE THE CONGRESS, JUNE 30 HAS PASSED WITHOUT ITS ENACTMENT. IN THIS CIRCUMSTANCE SECTION 204(B)(1) OF THE FWPCA IS TO BE ENFORCED BY EPA.

THE MORATORIUM'S LEGISLATIVE HISTORY SHOWS CLEARLY THAT IN EACH CASE, UPON EXPIRATION OF THE MORATORIUM WITHOUT FURTHER LEGISLATION, THE INDUSTRIAL USER PAYMENT REQUIREMENT WAS TO BE ENFORCED. THE CONFERENCE COMMITTEE REPORT ON THE CLEAN WATER ACT, IN COMMENTING ON THE FIRST MORATORIUM SAID THAT, "AT THE END OF THE 18-MONTH PERIOD, IF CONGRESS HAS NOT CHANGED THE LAW, THE GRANT RECIPIENT MUST BEGIN TO COLLECT THE INDUSTRIAL SHARE OF FEDERAL GRANTS FOR APPROPRIATE DISTRIBUTION." H. R. REP. NO. 95-830, 110 (1977). THE HOUSE REPORT ON THE SAME SECTION CAUTIONED GRANT RECIPIENTS THAT "DEFERRED PAYMENTS ABSENT FURTHER CONGRESSIONAL ACTION WILL BE DUE AND PAYABLE 18 MONTHS FROM THE DATE OF THE ENACTMENT OF THIS SECTION." H.R. REP. NO. 95-139, 28 (1977).

IN ADVOCATING THE SUBSEQUENT EXTENSION OF THE ORIGINAL MORATORIUM TO JUNE 30, 1980, CHAIRMAN MUSKIE OF THE SENATE COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS DISPLAYED A SIMILAR UNDERSTANDING ABOUT THE EFFECT OF THE MORATORIUM -

"SHOULD THIS EXTENDED MORATORIUM EXPIRE WITHOUT FURTHER CONGRESSIONAL ACTION, ALL INDUSTRIES SHOULD BE PREPARED TO COMMENCE INDUSTRIAL COST RECOVERY PAYMENTS. THE AGENCY, ALL GRANTEES, AND ALL INDUSTRIES INVOLVED MUST CLEARLY UNDERSTAND THAT ACTIONS MUST BE TAKEN TO BE CAPABLE OF FULLY IMPLEMENTING THE INDUSTRIAL COST RECOVERY REQUIREMENTS ON JULY 1, 1980."

ALTHOUGH EPA MAY EXPECT THAT INDUSTRIAL COST RECOVERY WILL BE TERMINATED BY NEW LEGISLATION, THIS DOES NOT PROVIDE A LEGAL BASIS FOR EITHER EPA, GRANTEES, OR INDUSTRIAL USERS NOT TO COMPLY WITH CURRENT STATUTORY REQUIREMENTS. CONSEQUENTLY, EPA, THE RECIPIENTS OF TREATMENT WORKS GRANTS, AS WELL AS THE INDUSTRIAL USERS OF PUBLICLY-OWNED TREATMENTS WORKS CONSTRUCTED WITH ASSISTANCE UNDER THE FWPCA, ARE RESPECTIVELY RESPONSIBLE FOR THE ENFORCEMENT, COLLECTION AND PAYMENT OF INDUSTRIAL USER COSTS IN ACCORD WITH CURRENT STATUTORY AND REGULATORY REQUIREMENTS. ADMINISTRATIVE EXTENSION BY EPA OF THE MORATORIUM IS AUTHORIZED UNDER CURRENT LAW. EPA CANNOT RELIEVE EITHER GRANTEES OR INDUSTRIAL USERS OF THEIR RESPONSIBILITIES UNDER STATUTES NOW IN EFFECT.

IN HIS JULY 24 LETTER TO YOU, EPA'S ASSISTANT ADMINISTRATOR FOR WATER AND WASTE MANAGEMENT STATED THAT:

"IN THE ABSENCE OF NEW LEGISLATION, THE AGENCY IS LEGALLY COMPELLED TO IMPLEMENT ITS RESPONSIBILITY TO ENFORCE THE COLLECTION OF SUCH (INDUSTRIAL COST RECOVERY) PAYMENTS. THE ENFORCEMENT PROCEDURE BEING FOLLOWED IS THE SAME USED PRIOR TO THE INSTITUTION OF THE MORATORIUM. UNDER THIS PROCEDURE, AN INDUSTRIAL USER OF A MUNICIPAL TREATMENT WORKS MUST MAKE ICR PAYMENTS AT LEAST ONCE A YEAR. HOWEVER, A GRANTEE HAS THE OPTION TO CHOOSE TO COLLECT THE PAYMENTS ON A MORE FREQUENT BASIS ***."

ENCLOSED WITH THE ASSISTANT ADMINISTRATOR'S LETTER WAS A COPY OF A MEMORANDUM DATED JULY 14, 1980, FROM THE DIRECTOR OF THE GRANTS ADMINISTRATION DIVISION TO EPA REGIONAL ADMINISTRATORS. IT STATED THAT, EFFECTIVE JULY 1, 1980, INDUSTRIAL USERS MUST PAY COST RECOVERY CHARGES ON A CURRENT BASIS. THE FIRST PAYMENT BY EACH INDUSTRIAL USER MUST BE COLLECTED NOT LATER THAN JUNE 30, 1981, ONE YEAR FROM THE MORATORIUM EXPIRATION. THIS ANNUAL PAYMENT MUST INCLUDE PAYMENT OF THE CURRENT CHARGE AS WELL AS THE PRORATED PAYMENT OF ANY CHARGES INCURRED DURING THE MORATORIUM.

THUS, EPA RECOGNIZES THAT IT LACKS THE AUTHORITY TO ADMINISTRATIVELY EXTEND THE MORATORIUM PERIOD. THE COLLECTION OF THE FIRST INSTALLATION ON ACCRUED CHARGES NOT LATER THAN ONE YEAR AFTER THE MORATORIUM EXPIRATION IS CONSISTENT WITH THE REQUIREMENT OF SUBSECTION 75(D) OF THE CLEAN WATER ACT THAT PAYMENTS ARE TO BE MADE AFTER THE END OF THE MORATORIUM IN EQUAL ANNUAL INSTALLMENTS PRORATED OVER THE REMAINING USEFUL LIFE OF THE TREATMENT WORKS.

AS TO CURRENT CHARGES, EPA ALSO REQUIRES THESE TO BE COLLECTED WITHIN A YEAR FROM JUNE 30, 1980. THE STATUTE DOES NOT ESTABLISH A SCHEDULE FOR SUCH PAYMENTS BY INDUSTRIAL USERS; IT MERELY REQUIRES THAT GRANTEES HAVE AN EPA-APPROVED PLAN FOR THESE PAYMENTS. THE SCHEDULE FOR PAYMENTS IS GOVERNED BY EPA REGULATIONS.

UPON THE EXPIRATION OF THE MORATORIUM, EPA REGULATIONS REQUIRE INDUSTRIAL USERS TO PAY CHARGES FOR WASTE TREATMENT THEREAFTER "NOT LESS OFTEN THAN ANNUALLY" WITH THE FIRST PAYMENT DUE NO LATER THAN ONE YEAR AFTER THE USER BEGINS USE OF THE TREATMENT WORKS. 40 C.F.R. SEC. 35.928-1(C) (1979). THE JULY 14, 1980, EPA MEMORANDUM CLARIFIED THIS PROVISION TO INDICATE THAT FOR ALL INDUSTRIAL USERS WHICH BEGAN THE USE OF THE TREATMENT WORKS PRIOR TO JUNE 30, 1980, THE FIRST PAYMENT, INCLUDING CURRENT CHARGES, MUST BE COLLECTED NOT LATER THAN JUNE 30, 1981. THIS APPEARS TO BE A REASONABLE INTERPRETATION BY EPA OF ITS REGULATIONS. THUS, SINCE THE MORATORIUM ENDED ON JUNE 30, 1980, THE FIRST PAYMENT BY INDUSTRIAL USERS FOR SUBSEQUENT USE COULD BE MADE, CONSISTENT WITH THE REGULATIONS, AS LATE AS JUNE 30, 1981.

ACCORDINGLY, PAYMENT AS LATE AS JUNE 30, 1981 OF THE FIRST INSTALLMENT OF ACCRUED CHARGES DURING THE MORATORIUM AND OF CURRENT INDUSTRIAL USER CHARGES FOR THE PERIOD JULY 1, 1980 THROUGH JUNE 30, 1981, IS PROPER UNDER PRESENT STATUTORY AND REGULATORY PROVISIONS. APPROVAL BY EPA OF COLLECTION OF CHARGES BY THIS DATE DOES NOT CONSTITUTE AN EXTENSION BY THE AGENCY OF THE EXPIRED STATUTORY MORATORIUM BUT, RATHER, IS CONSISTENT WITH RECOGNITION OF ITS TERMINATION.