Public Finance, 2nd Edition

APPENDIX: HISTORY OF U.S. ANTIPOLLUTION LEGISLATION

Controlling water and air pollution was entirely a state and local responsi-

bility until the last half of the twentieth century. The federal government

joined the eVort shortly after World War II with the passage of the Water

Pollution Control Act of 1948 and the Air Pollution Control Act of 1955.

These were hesitant Wrst steps that did little more than assist states in research-

ing the harmful eVects of various pollutants and identifying polluters.

15

Municipal Waste Treatment

The federal government's Wrst substantial antipollution program appeared in

1956. The Water Pollution Control Act of 1956 authorized grants-in-aid to

subsidize the construction of municipal waste treatment facilities. Municipal-

ities applied for the grants, which were allocated on a Wrst-come, Wrst-served

basis. The federal government paid 55% of the construction costs. The federal

subsidy was increased to 75% of the construction costs in 1972, and then was

returned to 55% in 1981. The appropriations were modest at Wrst, about $50

million per year, but grew to $25 billion by 1977.

The waste-treatment program has suVered from a number of handicaps

that have reduced its eVectiveness. An immediate problem was beginning the

Wght against water pollution with a clean-up strategy without any attempt to

reduce water pollution at its sources. As shown in this chapter, incentives

must be in place to encourage polluters to reduce pollution before attempting

to clean up the pollution. Otherwise, the burden on the facilities to combat

pollution is well beyond the optimum. A second problem was allocating the

funds on a Wrst-come, Wrst-served basis rather than according to the severity

of the pollution. Finally, by choosing to subsidize only the construction costs

the federal government did not have any leverage over the operation of the

waste-treatment facilities once they were built. All too often the operation of

the treatment plants suVered from insuYcient local funding.

The government tried to address the Wrst two problems in 1977. It

established a set of pretreatment standards for wastes entering the municipal

facilities. These standards applied to pollutants not covered by the source

standards that were in place by then (see below). The government also began

15

For an excellent, comprehensive history and analysis of the U. S. antipollution legisla-

tion, see T. Tietenberg, Environmental and Natural Resource Economics, Harper-Collins College

Publishers, New York, 1996, chaps. 15±19. This appendix draws liberally from these Wve chapters

in Tietenberg. Another excellent overview of environmental policy from an economics perspec-

tive is M. Cropper and W. Oates, ``Environmental Economics: A Survey,'' Journal of Economic

Literature, Vol. XXX, pp. 675±740, 1992. The seminal modern analysis of the economics of the

environment is W. Baumol and W. Oates, The Economics of Environmental Policy, Prentice-Hall,

Englewood CliVs, NJ, 1975 and the second edition (Cambridge University Press, New York,

1988).

262 APPENDIX: HISTORY OF U.S. ANTIPOLLUTION LEGISLATION