the numbers worked out, to get this agreement. I would suspect that for every additional person you put in the executive session or the agreement session you are not just arithmetically, but geometrically increasing the difficulty of achieving an agreement.

I have one more point. In almost all our conferences we have had unanimous agreement. One of my charms, I guess, is that I keep the boys' noses to the grindstone and will not let them out of the room until we do have that. To my mind, this has helped in pollution abatement. I do not think if we have the industries and the cities coming in, the number of cases we get unanimous agreement on is going to be sharply increased.

Senator MUSKIE. The solution probably will be to find a way to bring industrial polluters into the conference in a way that would give them an opportunity to present their side of the problem and express their points of view without giving them a vote on the agreement.

Mr. STEIN. I would think that would be so. To my mind, it is very important that they urge the States, with or without the law, to get the polluters into the conference. I would agree with your point.

To make this specific, in one case, and this is an example, we have had an industry which it was charged by our representatives would not let them get into the door to inspect. The allegation made was that this was done because they were advised to keep us out by the State officials, and they wanted to get along with the State officials.

That is why they shut the door and would not let the Federal people in. The State refused to let the industry take the stand to present their portion of the story, and the industry was left with the newspapers for a reply.

I don't think that is a very satisfactory state of affairs and the way to run any kind of business under our system.

Senator MUSKIE. Thank you very much, Mr. Stein.

Mr. STEIN. Thank you, Mr. Chairman.

Senator MUSKIE. We appreciate your helpful statement.
It is always very helpful to have you before us, Mr. Stein.
Mr. STEIN. Thank you.

Senator MUSKIE. Ŏur next witness is Mr. Paul W. Reed, Chief of the Construction Branch of the Federal Water Pollution Control Administration, of the Department of the Interior.

STATEMENT OF PAUL W. REED, CHIEF, CONSTRUCTION GRANTS PROGRAM, FEDERAL WATER POLLUTION CONTROL ADMINISTRATION, DEPARTMENT OF THE INTERIOR

Mr. REED. Mr. Chairman, I am pleased to have this opportunity to appear before your committee to present my views on the sewage treatment construction grants provisions of the proposed legislation under consideration.

There is little question that financial aid to municipalities in the form of construction grants has stimulated communities to meet their treatment needs more rapidly than might have otherwise occurred. Last year, my testimony reviewed the history of the program, which demonstrated the amount of that stimulation, and the problems that remained. In the interest of time, I shall avoid the repetition of that

material and speak only to the legislative and program changes that have occurred since then, and present my comments on the effect of proposed legislation.

The Water Quality Act of 1965 (Public Law 89-234) increased the authorized appropriation and liberalized the provision of aid to municipalities, principally by increasing the dollar ceiling on individual and multimunicipal projects and provided for a 10 percent increase in grant when a project has been certified to be in conformance with a metropolitan plan developed by an official State, metropolitan or regional planning agency.

The above amendments were effective October 2, 1965, approximately 7 months ago, and it is too early to fully assess the effect of the 1965 legislation. There is no question but that it is beneficial and more attractive, especially to the larger cities, but it would be dangerous to draw sweeping conclusions from limited data. This is especially true in view of the need to assess the effect of other legislation that was enacted at the same time. I am referring especially to the Housing and Urban Development Act of 1965 (Public Law 89-117), the Public Works and Economic Development Act of 1965 (Public Law 89-136), and the amendments to the Consolidated Farmers Home Administration Act (Public Law 89-240). The latter two acts provided for grants to aid communities with the construction of sewage treatment facilities under special conditions set forth in those acts, and the percentage of aid exceeded that which is allowable under the Federal Water Pollution Control Act. Quite understandably it occurred to some community officials that they might be better off if they could qualify for a larger grant under one of those other programs. The program under the Housing and Urban Development Act of 1965 does not permit grants to sewage treatment projects, but requires coordination with such projects.

During the past 7 months, we have participated in interagency procedures to coordinate activities in the areas of mutual interest. Procedures have been worked out now whereby all applications for aid for construction of sewage treatment facilities are first referred to us for review. If the project is eligible for aid under the Federal Water Pollution Control Act, it is processed under that authority. In the event that a community requests percentage participation beyond our authority and is in an area eligible for such aid, the application is forwarded and considered for a supplemental grant under the other program. In the event that funds are not available under the Federal Water Pollution Control Act due to exhaustion of State allotment, the application is referred to the Economic Development Administration or Farmers Home Administration for their consideration.

I believe that the above procedures will successfully meet the initial problems occasioned by multiple legislation on this subject. I have reviewed it here only to indicate the difficulty of providing you with an accurate report on the effect of the 1965 amendments to the Federal Water Pollution Control Act, as it pertains to the Federal Water Pollution Control Administration's construction grants program.

I also find it difficult to predict the effect of proposed legislation with confidence. There is no question in my mind, but that a liberalization and expansion of the program will have a great beneficial

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effect on our goal of cleaning our waterways, but the exact extent is difficult of prediction.

The first problem is to predict the likelihood of municipalities responding fully to meet their needs within the time indicated. Except in those cases where the States act to match 30 percent of the cost of a project, the applicant municipality must finance 70 percent of the cost of projects. This committee has heard much testimony in the past concerning the financial problems of municipalities and the competition for the municipal dollar. This competition for the municipal dollar will play a significant role in the response of municipalities to this

program.

Our experience under the accelerated public works program, a few years ago, showed that communities would respond to greater fund availability. It must be remembered, however, that under that program, communities could qualify for grants up to 75 percent and that the sewage treatment grants under the APW program averaged 50 percent of the eligible cost. Many communities responded to meet their needs under that program that probably would not have responded to a lower Federal participation, such as 30 percent.

STATE PROGRAMS

Emphasis is placed upon a community share of 70 percent, since at the present time only two States, Maine and New York, have funded programs which would qualify for a widespread use of the 40 percent grants proposed in S. 2947.

There are five other States-Delaware, Georgia, Maryland, New Hampshire, and Vermont-that have laws that would require some modification to fully qualify. For example, Delaware provides for grants up to 40 percent but has a dollar limit of $100,000; Georgia has a provision for 30 percent grants but has a dollar limit of $250,000; Maryland law provides for matching the Federal grant, but the total of State and Federal grants may not exceed 50 percent of the project cost; New Hampshire has a program authorizing grants to pay 40 percent of the annual amortization charges on the original costs; and Vermont can grant up to 75 percent, if the municipality can show that they cannot raise more than 25 percent of the cost.

In addition to the above, seven other States provide for assistance of some type, such as construction loans or planning grants.

There are several other States that are considering grant-in-aid programs for waste treatment facilities, but no analysis can be made of the probability that they would qualify for the additional 10 percent Federal aid at this time.

Thus, we see that the number of States that would qualify initially for the additional 10 percent Federal grant would be quite limited. Undoubtedly, some State legislatures would establish State programs in response to a Federal bonus provision. However, in the face of the keen competition for the limited number of State dollars to cope with the many State problems there is an unanswerable question as to just how many States could and would respond to the incentive offered in S. 2947. It would appear, then, that the majority of grants would initially be limited to 30 percent and municipalities would be required to finance 70 percent from their own resources. Legislation, such as

S. 2481, has been introduced to increase the Federal share without the requirement that the State participate in the financial aspects. Such a provision could be expected to excite more construction of sewage treatment facilities.

Another difficult area of analysis is the size of the backlog of unmet needs. This is a problem with which this committee has struggled before and we are unable, at this time, to provide any new insight into the problem. The annual survey of this matter by the Conference of State Sanitary Engineers is presently underway. When it is completed, we are confident that it again will indicate that there is a substantial need for additional municipal sewage treatment plants throughout the country.

As technical people, we are somewhat irritated at our inability to get a precise measure of this backlog, but we should not allow it to interfere with program progress. While we do not know its precise size, we do know that it is formidable, and we do know that it should be eliminated.

Senator MUSKIE. May I ask this question: In past years you have given us a record of the construction that has taken place under this program. It has grown, as you have testified, many times. Has the backlog to the extent that we have had figures over the period of the program growth has then been a reduction in the backlog or a growth in the backlog?

Mr. REED. It has been a slight growth actually because of the fact that while the individual communities on the list would change, in other words, they would be eliminated from the list by providing facilities, the new municipalities that had no facilities prior to this time, who needed to build both a sewer system and sewage treatment plant, were added to the list.

So to a certain extent it has remained level or had a slight growth.

AUTHORIZED APPROPRIATIONS

The proposal in S. 2947, to increase authorized funds, would result in a 400-percent increase from fiscal year 1967 to 1968, a 67-percent increase from 1968 to 1969, a 25-percent increase from 1969 to 1970, and a 20-percent increase from fiscal year 1970 to 1971. The increase from fiscal years 1967 to 1971 would be 1,000 percent. It would be an understatement to suggest that such a vast expansion of the program. would not confront us with a formidable challenge. The challenge would not be to Government alone, but to the engineering profession and the construction industry as well. Sewage treatment construction has never experienced expansion of this magnitude before, so we have no basis upon which to predict the ability of the industry to respond.

For example, the design of sewage treatment facilities is a specialty area within the engineering profession and a sudden expansion in this area may exceed the availability of scarce engineering personnel. There are already some indications that there is considerable competition for engineers in New York State at the present time, resulting from the anticipated program growth in that State.

Senator MUSKIE. I think it would be useful to point out at this point in the record that similar doubts were raised as to our ability to im

plement the Interstate Highway System program. I was Governor of my State at the time that the legislative approval in Maine was needed. The legislature approved it. There were similar doubts as to the availability of engineers, as to the ability to respond to the design requirements, and so on which were expressed at that time.

Yet, somehow we met that challenge. Although there was some initial lag, as the industry and professions involved cranked up, they were able to do the job.

It seems to me, although it is appropriate to have questions, I don't think that we need to have doubts about or ability to meet that challenge.

Mr. REED. Now I would like to comment on the effect of grant ceilings.

Despite the considerable increases in the maximum allowable grant provided by the 1961 and 1965 amendments to the Federal Water Pollution Control Act, the larger cities have not achieved complete equality with the smaller municipalities who usually receive a full 30 percent. Equality would be provided by proposed amendments which eliminate the dollar ceiling on grants.

Data on the sewage treatment needs of the 100 largest cities in the United States was obtained last year in response to a request from this committee, and reported in the committee print entitled "Steps Toward Clean Water," issued in January 1966. Analysis of this data shows that there are 48 municipalities whose present needs for sewage treatment facilities exceed $4 million. These municipalities would be entitled to only $1.2 million each under the present act, or $57.6 million. The elimination of the dollar ceiling would enable them to qualify for a full 30 percent of the total cost of nearly $1.3 billion or about $380 million.

REIMBURSEMENT

Provision for the reimbursement of State and local governments for funds used for the construction of sewage treatment facilities after June 30, 1966, to the same extent that assistance could have been provided, if adequate Federal funds had been available, is a feature of S. 2947, and several other bills pending before this committee.

Such a provision would have a very beneficial effect, for the municipal official could proceed to build the project with the confidence that he was not doing a disservice to his people by not waiting until funds were available.

In assessing the desirability of this provision, consideration should also be given to the effect of the formula contained in the act allotting appropriated funds to States. The present formula applied to an appropriation of $150 million will result in four States receiving less than $1 million; 18 States receiving more than $1 million, but less than $2 million; 14 States receiving between $2 and $3 million; and only 18 States receiving more than $3 million.

With this type limitation, some States cannot certify a major project who's entitlement may exceed the State allotment. Likewise, they may not be able to grant a priority to a community that is ready to proceed. Under the reimbursement provision, the community could proceed to construct the facilities and be assured of receiving funds