Chemical & Engineering
NEWS NOVEMBER 18, 1968
Pollution A voter mandate for control
AYE FOR WATER POLLUTION BONDS Water pollution control boards in some states and cities this week are grappling with the happy problem of how most effectively to spend millions of dollars. Of the water pollution bond issues on ballots last Nov. 5, three of four state issues and at least four of six city propositions received about a one to three voter mandate to raise money to solve water pollution problems. The people of Michigan, Ohio, and Washington voted to tackle their pollution problems. The Illinois proposal, by far the most expensive at $1 billion, apparently was defeated by voter apathy and some quirk of the state constitution. The city pollution control bond issues were all in Ohio, and the four that passed are in cities on Lake Erie or its tributaries. Coupled with the Ohio and Michigan proposals, it appears there will be a concerted effort to reverse the deadly tide of pollution overtaking Lake Erie. Ohio has been empowered by its voters to sell $120 million in bonds to match federal grants. The money will go to municipalities for construction and expansion of treatment plants and associated facilities. Clevelanders voted two to one for $100 million to help solve its vast pollution problems. The Cuyahoga River, which sweeps through the city's center, has been called "too thin to cultivate and too thick to navigate." With $111 million of state and federal funds, the city will spend a total of $211 million in the next few years for water pollution control. Cleveland's money will come from higher water bills—the sewer charge portion of which will be doubled.
Other Buckeye State cities that passed issues also border Lake Erie. They are Toledo, $17 million to expand the present sewage system, and Sandusky, $1.4 million to improve its facilities. While Warren voted for a tertiary treatment plant, two small Ohio cities defeated bond proposals. Working west across the U.S., Michigan voters passed a $335 million bond issue by a three to one margin. The Michigan Water Resources Commission expects to solve all the state's municipal water pollution problems through 1980 with this money. Construction of 210 new and 126 improved treatment facilities is planned. This will take $285 million; $50 million will go to small communities to construct sewer lines. The money will be distributed on a population basis. This means that Detroit's sewage system, which includes about 55 other communities, will receive half the money. Thus, Lake Erie will be the primary beneficiary here, also. The state money will pay 25% of the total cost of the improvements. Federal funds will account for another 25%, and the local community will put up 50% of the cost, although if it can get direct federal funds the share will be less. Therefore, Michigan's $335 million bond issue will generate a total of $1.34 billion to clean up Michigan waters. The state's voters apparently want to be sure the state lives up to its auto license plate motto, "Water Wonderland." Illinois voters were asked to approve a $1 billion, catchall proposition for water pollution control, air pollution control, water supplies, water-based
recreational facilities, flood control, and the like. It was rejected. Although the issue received a two to one margin of yes votes, it fell short of the constitutional requirement for "a majority of the total number of votes cast for all members of the General Assembly." About half of the Illinois voters did not vote on the issue. On the West Coast, Washington's $25 million water pollution control bond issue passed by a three to one margin. This money will produce about $170 million for new and improved municipal and local water district treatment facilities. The state will put up 15% of a project's cost (from the bond issue money), the Federal Government's share is 30%, and the remaining 55% must come from the local political entity. There is no timetable for spending the money, the state water pollution control board says. "The projects hinge on the amount of federal money received."
RIVER BASINS:
New Approaches Needed "The best cure for a threatening water shortage is not necessarily more water; savings in water use or transfer of water use to less-consumptive, higheryield applications . . . may offer better solutions. Indeed, if objectives are clarified, water development per se may not be the desired solution." So says a committee of the National Academy of Sciences in a report "Water and Choice in the Colorado Basin." In developing river basins, too much attention is being given to the simple NOV. 18, 1968 C&EN
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THE CHEMICAL WORLD THIS WEEK
objective of increasing the water supply; not enough attention is paid, if any, to other alternatives to achieving the desired goals for the region, the NAS committee says. The committee report discusses details of problems peculiar to the development of the Colorado River basin, but it points out broad principles, general problems, inhibiting viewpoints, and alternative approaches to development of other basins such as the Columbia, Hudson, and Potomac. For example, the report says, alternatives are sometimes ruled out because of restrictions previously imposed on the region. Although these limitations that govern water management and use—laws, policies, and administrative arrangements—are manmade and therefore mutable, often they are hardened by usage and are accepted as inflexible. "No constraint on a method of handling water for the public good should be assumed to be unchangeable until examined to determine its consequences," the report says. State laws have tended to inhibit efficient use of water resources. In many states it is hard to transfer water rights from lower-value uses, such as agriculture, to higher-value uses, such as industry. In fact, the report says, agricultural water users are sometimes encouraged to waste part of the water by using their full entitlement whether they need it or not lest they forfeit their future rights by failure to use it all. Another problem is the major federal agency involved in river basin planning, the Bureau of Reclamation. It is in some measure the prisoner of existing policies as actively prescribed by Congress. "The question is," the report says, "whether the bureau's tradition, existing Congressional policies, and the political forces that bear upon it will permit the bureau to present, or consider, the full range of choice." An underlying concept of the report is that factors of these types unnecessarily constrain the consideration of alternatives in water management and use. The range of choice is limited, on the one hand, by the physical characteristics of the resource, and on the other by the objectives people seek. Objectives, in turn, are limited by the relation between estimated costs and prospective returns. The important thing, the report says, is that in considering alternatives, short-term decisions should not be made that could foreclose new directions in the future. No water problem is so urgent that it must be solved without consideration of alternatives and their consequences, the report says. But projects 16 C&EN NOV. 18, 1968
Water supply Man-made and mutable
can't be stopped until every alternative has been explored. The Colorado experience shows that only by beginning a systematic canvass of other possibilities can reasonable judgments be reached on the wisdom of proceeding with large new investments.
EARNINGS:
Allied's Worst Quarter If one man can be said to be in the hot seat in the chemical industry these days, that man has to be John Thomas Connor. As president and recently elected chief executive officer of Allied Chemical, the 54-year-old former Marine and former Secretary of Commerce faces the Herculean task of pull-
Allied president Connor Braking an earnings nose dive
ing the big chemical makers earnings out of the screaming nose dive they have been in since he joined the company in early 1967. He hasn't done it yet. The company has just had what was probably the worst quarter in its history. Thirdquarter operating earnings were 5 1 % off from the already low level of a year earlier. And with extraordinary charges still piling up, final net aftertax earnings for the full year will likely amount to less than half of their 1966 peak of $89.2 million. Whether Mr. Connor, a 1939 graduate of Harvard Law School, can eventually do for Allied what Lynn Townsend, an accountant, has done for Chrysler Corp., remains to be seen. In seven years chairman Townsend has turned Chrysler from a faltering giant with a shaky 10% of the auto market into a full-fledged member of the big three of that industry. So far Mr. Connor has not had as long in which to work his miracle. He became Allied's chief executive officer just this May. Also, he may be starting with an even bigger dog than Chrysler was. In recent years Allied's return on investment has persistently trailed the basic chemical industry's average return by some 25 to 35%. Allied's program for recovery has so far included a standard pruning operation. Dividends have been cut from an annual $1.90 per share to $1.20. 1968 earnings have already been reduced by extraordinary items amounting to a charge of $10.5 million. The company has sold some resin operations and closed an old alkali works in Detroit. Among many management changes the company elected six new division presidents last year. And in just the past few weeks two Allied men have been elected to the new corporate position of group vice president. Robert H. Kinderman has been brought in from Mead Johnson as corporate vice president and assistant to Mr. Connor, and Dr. Helmuth Schultze has been brought in from the presidency of Michigan Chemical as assistant to executive vice president Frederick Bissinger. Mr. Connor is not yet detailing what further plans he has—he isn't talking to the press these days. There is no obvious solution to Allied's distress as there is no simple reason for it. But Mr. Connor is a man far more used to upward than downward movement. In his 10 years as chief executive officer of Merck (1955 to 1965) he saw sales grow 110%, earnings almost 250%. He may not do as well at Allied. But he has a chance, to be sure. This year will be so bad that future growth will look very substantial on a percentage basis.
