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It should be noted, however, that the traditional approach to environmental prob- 

 lems, standards and enforcement, does not solve the problem of qualifying the 

 damage, rather it merely obscures the issue. Standards, if they are to be efficient, 

 are based on judgments, albeit implicitly, of the magnitude of environmental 

 damage and the value of reducing it. 



The second way to calculate a regulatory-based charge focuses on the desired air 

 or water quality — what can be labeled the ambient standard approach. This ap- 

 proach begins with a predetermined level of air or water quality, presumably estab- 

 lished through an administrative or legislative process, then imposes effluent 

 charges sufficient to bring about this ambient standard. This approach encourages 

 the polluter to reduce emissions to the level where the cost of reducing another unit 

 of pollution, the marginal treatment cost, is greater than or equal to the unit emis- 

 sion charge. Under the ambient standard approach the fee-setting authority must be 

 able to predict the discharger's reaction to the fee in terms of their level of clean-up. 

 To do this the authority would need detailed data on the relative costs of abatement 

 technologies and alternative disposal measures. 



The second basic purpose that a charge can fulfill is to generate revenue. Reve- 

 nue-oriented charges are calculated in light of the revenue needs of the particular 

 governmental entity. These charges are widely used in the United States and other 

 countries. Examples of revenue based charges can be classified into three subgroups 

 according to the use to which the resulting income is put: to finance environmental 

 protection efforts; to compensate victims damaged by the discharges; or to reim- 

 burse the government entity for providing special services. 



There are a number of examples of charges designed to finance environmental 

 protection efforts. The Outer Continental Shelf Lands Act, for instance, imposes a 

 three cent a barrel tax on oil extracted from outer continental shelf lands; this reve- 

 nue is put into a fund for oil spill clean-up. Superfund is another example of a reve- 

 nue based charge. 



Revenue-oriented charges are also used to finance victims of environmental con- 

 tamination. The Federal Black Lung Act taxes coal mine operators according to the 

 amount of coal produced. The revenue from this charge is put into a fund used to 

 compensate miners who contract black lung disease. The Japanese charge industries 

 which emit air pollutants to raise revenue to compensate for health injuries associ- 

 ated with air pollution. 



Finally, charges can be used to recoup the expenses incurred by providing special 

 governmental services to identifiable recipients. These charges are commonly re- 

 ferred to as user fees. Federal agencies are given authority to charge a fee for their 

 services under the Independent Offices Appropriations Act. The Act sets out criteria 

 as to when a fee can be imposed. While the Act has been subject to extensive litiga- 

 tion the basic test of when an agency can impose a fee is: when the government 

 provides a service to an identifiable recipient who receives a benefit not shared by 

 the general public. 



The distinctions among the above approaches are, to some extent, artificial. In 

 practice these pricing mechanisms often accomplish more than one goal. A revenue 

 based charge, for instance, such as the Japanese health compensation levy, has been 

 shown to have regulatory effects by encouraging the reduction of air pollutants. 

 There are a number of examples of pricing mechanisms designed to both generate 

 revenue and regulate polluting behavior. 



The French, for example, have a complex system which exemplifies the dual pur- 

 pose charge. Charges for discharges into water bodies have a revenue generating 

 function since the income is used to fund water quality improvement projects. More- 

 over, the charge is adjusted to encourage sound waste disposal practices. The charge 

 is lowered, for instance, for dischargers who adopt efficacious pollution control tech- 

 niques. These variable fees, therefore, create a regulatory or incentive effect. 



A number of states have recently adopted a dual-purpose charge system for haz- 

 ardous waste disposal. Kentucky, for example, taxes hazardous waste facility owners 

 according to the efficacy of the disposal process used — the more effective the treat- 

 ment the lower the fee. The income from this fee is put into a fund used to monitor 

 and clean up abandoned hazardous waste sites. 



An ocean dumping charge designed to achieve both revenue and regulatory objec- 

 tives could be a very effective tool. The following discussion highlights the rationale 

 for adopting a dual purpose charge system for ocean dumping. 



ARGUMENTS FOR A DUAL PURPOSE OCEAN DUMPING CHARGE 



An ocean dumping charge could accomplish a number of significant regulatory 

 functions. First, a charge system could be used to reduce the overall amount of 



