Although agreeing with the general objectives being sought by the proposal to increase a grant by 10 percent if the project is certified as conforming to a metropolitan comprehensive plan, we do not believe this proposal to be the most desirable means for achieving these objectives. It should not be necessary, and would create an undesirable precedent, for the Federal Government to embark on a course of providing financial inducements or premiums to assure that Federal grant assistance favors support to local projects which are consistent with comprehensive community or metropolitan development plans.

We believe that a more desirable approach toward meeting this objective is that taken in S. 855, upon which we reported favorably to your committee. That bill accomplishes the objectives through a general requirement, applicable to all Federal grant programs, that each grant applicant submit project plans to the metropolitan or regional planning agency, if any, for its review and comments prior to Federal consideration. We, therefore, recommend deletion of section 3 (h).

I am authorized to advise you that, unless modified in accordance with the foregoing comments, S. 649 would not be in accord with the program of the President.

Sincerely yours,

PHILLIP S. HUGHES, Assistant Director for Legislative Reference.

ADVISORY COMMISSION ON INTERGOVERNMENTAL RELATIONS,
Washington, D.C., June 14, 1963.

Hon. EDMUND S. MUSKIE,

Chairman, Subcommittee on Air and Water Pollution, Committee on Public Works, U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: Pursuant to a request from your staff for a statement by the Advisory Commission on Intergovernmental Relations with regard to S. 649, a bill to amend the Federal Water Pollution Control Act, as amended, there follows a statement of the Commission's position with regard to a portion of this bill.

The Commission has taken a position on the items treated in sections 3(a) and 3(h) of the bill. None of the other matters treated in the bill have been considered by the Commission and we have no comments with regard to them.

On October 11, 1962, the Advisory Commission adopted a report on intergovernmental responsibilities for water supply and sewage disposal in metropolitan areas; a copy of the report is enclosed. Two of the recommendations contained in the report are dealt with in S. 649. The text of the respective recommendations are as follows:

(1) The Commission recommends that Federal grants for sewage treatment plant construction be consistent with comprehensive drainage basin and metropolitan area planning, and that the existing program be amended to provide an additional matching incentive for the development of sewage disposal systems on a regional or major subregional basis.

(2) Federal construction grants for sewage treatment should be adjusted to provide for increased dollar ceilings in grants-in-aid to larger cities.

Section 3(a) of S. 649 would carry out the second recommendation cited above by raising the dollar ceilings for sewage treatment construction grants from $600,000 to $1 million. In its statement in support of the above recommendation, the Commission had this to say:

"The existing dollar limitation of the Federal program (not to exceed $600,000 per community project) discriminates against the larger communities and discourages construction on an optimum scale. The record of the construction grant program since its inception in 1956 indicates that while communities of 125.000 and over represent 46 percent of the total population aided by this program, they received only 9 percent of the grant offers made by the Federal Government to communities ($25.5 million out of a total Federal expenditure of $290 million). Likewise, communities of under 5,000 representing 10 percent of the population served, received 37 percent of the grant offers."

In the discussion the Commission also took note of S. Rept. 353, dated June 7, 1961, issued by the Committee on Public Works, in which the committee pointed out that the magnitude of municipal sewage disposal and growth is in direct

proportion to population increase and that by the year 2000, 95 percent of the country's population is expected to reside in urban places.

The first recommendation of the Commission referred to earlier would be carried out by section 3(h) of S. 649 which would authorize the Secretary of Health, Education, and Welfare to increase the amount of the sewage treatment construction grant by 10 percent for any project which has been certified to him by an official State or metropolitan planning agency as being in conformity with a comprehensive development plan established or in process of establishment for such metropolitan area.

In its reasons for a recommendation along these lines the Commission had the following to say in its report:

"Federal sewage treatment grants can, moreover, be a tool for shaping a better metropolitan community. However, the Federal aid program does not provide sufficient incentives for more economical and comprehensive waste disposal development in metropolitan areas. Federal policy should actively promote the development of sewage treatment systems on a scale consistent with sound investment and planning practices. State agencies and Federal officials responsible for the implementation of the assistance program should take steps to insure that Federal grants are denied to crisis-oriented, shortsighted, and uneconomical solutions. To the degree possible under the present legislation, Federal assistance should be used to promote sewage treatment plant construction based on comprehensive drainage basin and metropolitan area planning. Further, Congress should consider providing financial incentives (e.g., an extra 10 percent Federal matching) and exceptions to the present limitations on the size of grants for the development and implementation of sewage disposal systems in metropolitan areas which are planned or developed on a regional or major subregional scale."

In summary, the Commission strongly supports sections 3(a) and 3(h) of S. 649 and hopes that they will be enacted.

Very sincerely,

FRANK BANE, Chairman.

[S. 737, 88th Cong., 1st sess.]

A BILL To promote water and air pollution control and abatement by authorizing the Secretary of Health, Education, and Welfare to provide certain assistance to small business concerns in obtaining necessary treatment works

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

PURPOSE AND AUTHORIZATION

SECTION 1. For the purpose of promoting Federal and State programs for the control and abatement of water and air pollution, the Secretary of Health, Education, and Welfare (hereinafter referred to as the "Secretary") may make loans. in accordance with the provisions of this Act, to small business concerns for the acquisition, installation, or construction of treatment works necessary to abate or control water or air pollution caused by such concerns.

DEFINITIONS

SEC. 2. For the purpose of this Act—

(1) the term "small business concern" means the same as provided under section 3 of the Small Business Act (15 U.S.C. 632) for the purposes of such Act:

(2) the term "State" includes the District of Columbia and the Commonwealth of Puerto Rico; and

(3) the term "State certifying authority" means

(A) with respect to a loan for water treatment works, the State water pollution control agency, as defined in section 11(a) of the Federal Water Pollution Control Act; or

(B) with respect to a loan for air treatment works, the State air pollution control agency, as defined in section 6(a) of the Act of July 14, 1955 (42 U.S.C. 1857e).

CONDITIONS AND TERMS OF LOANS

SEC. 3. A loan pursuant to this Act

(1) shall be made only for treatment works, certified by the State certifying authority as being in conformity with the State program or requirements for the control of water or air pollution, whichever the case may be, and determined by the Secretary to conform to Federal programs in water and air pollution;

(2) shall be made in such amount, not exceeding the cost of the treatment works, as is determined to be necessary by the Secretary, and only if the applicant is unable to secure the amount of such loan from other sources upon terms and conditions equally as favorable as the terms and conditions provided under this Act;

(3) shall be secured in such manner and shall be repaid within such period, not exceeding ten years, as may be determined by the Secretary;

(4) shall bear interest at a rate determined by the Secretary which shall be not more than the higher of (A) 24 per centum per annum, or (B) the total of one-fourth of 1 per centum per annum above the average annual interest rate on all interest-bearing obligations of the United States forming a part of the public debt as computed at the end of the preceding fiscal year, adjusted to the nearest one-eighth of 1 per centum.

REVOLVING FUND

SEC. 4. There is established in the Treasury a water and air pollution loan fund which shall be used by the Secretary as a revolving fund to make loans under the provisions of this Act. Any funds received in payment of principal or interest on such loans shall be deposited in the fund and shall be available for making additional such loans. There are authorized to be appropriated to the fund such amounts as may be necessary for the purpose of this Act.

GENERAL PROVISIONS FOR LOAN PROGRAM

SEC. 5. (a) Such financial transactions of the Secretary as the making of loans and vouchers approved by the Secretary in connection with such financial transactions, except with respect to administrative expenses, shall be final and conclusive on all officers of the Government.

(b) In the performance of, and with respect to, the functions, powers, and duties vested in him by this Act, the Secretary, notwithstanding the provisions of any other law, may—

(1) prescribe such rules and regulations as may be necessary to carry out the purpose of this Act;

(2) sue and be sued in any court of record of a State having general jurisdiction or in any district court of the United States, and such district courts shall have jurisdiction of civil actions arising under this Act without regard to the amount in controversy, and any action instituted under this subsection by or against the Secretary shall survive notwithstanding any change in the person occupying the office of Secretary or any vacancy in such office; but no attachment, injunction, garnishment, or other similar process, mesne or final, shall be issued against the Secretary or property under his control, and nothing herein shall be construed to except litigation arising out of activities under this Act from the application of sections 507 (b) and 2679 of title 28 of the United States Code and of section 367 of the Revised Statutes (5 U.S.C. 316);

(3) foreclose on any property or commence any action to protect or enforce any right conferred upon him by any law, contract, or other agreement, and bid for and purchase at any foreclosure or any other sale any property in connection with which he has made a loan pursuant to this Act; and, in the event of any such acquisition (and notwithstanding any other provisions of law relating to the acquisition, handling, or disposal of real property by the United States), complete, administer, remodel and convert, dispose of lease, and otherwise deal with, such property, except that any such acquisition of real property shall not deprive any State or political subdivision thereof of its civil or criminal jurisdiction in and over such property or im

pair the civil rights under the State or local laws of the inhabitants of such property;

(4) enter into agreements to pay annual sums in lieu of taxes to any State or local taxing authority with respect to any real property so acquired or owned;

(5) sell or exchange at public or private sale, or lease, real or personal property, and sell or exchange any securities or obligations, upon such terms as he may fix:

(6) subject to the specific limitations in this Act, consent to the modification, with respect to the rate of interest, time of payment of any installment of principal or interest, security, or any other term of any contract or agreement to which he is a party or which has been transferred to him pursuant to this section; and

(7) include in any contract or instrument made pursuant to this Act such other covenants, conditions, or provisions as he may deem necessary to assure that the purpose of this Act will be achieved.

ADMINISTRATION

SEC. 6. (a) The Secretary may delegate any of his functions under this Act, except the making of regulations, to any officer or employee of the Department of Health, Education, and Welfare.

(b) In administering the provisions of this Act the Secretary may utilize the services and faciilties of any agency of the Federal Government and of any other public or nonprofit agency or institution in accordance with appropriate agreements, and may pay for such services either in advance or by way of reimbursement, as may be agreed upon.

ADMINISTRATIVE APPROPRIATIONS AUTHORIZED

SEC. 7. There are authorized to be appropriated such amounts as may be neces sary for administering the provisions of this Act.

Hon. PAT MCNAMARA,

DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE,

Chairman, Committee on Public Works,
U.S. Senate, Washington, D.C.

June 15, 1963.

DEAR MR. CHAIRMAN: This letter is in response to your request of February 14, 1963, for a report on S. 737, a bill "To promote water and air pollution control and abatement by authorizing the Secretary of Health, Education, and Welfare to provide certain assistance to small business concerns in obtaining necessary treatment works."

The bill would authorize the Secretary of Health, Education, and Welfare to make loans from a revolving fund, which it would establish in the Treasury. to small business concerns, as defined in the Small Business Act, for the acquisition, installation, or construction of treatment works to abate or control water or air pollution which are certified by the appropriate State water or air pollution control agency as conforming with the State program or requirements and determined by the Secretary to conform to Federal programs. S. 737 would provide also that the loan period shall not exceed 10 years at an annual interest rate no higher than 24 percent or the total of one-fourth of 1 percent per annum above the average annual interest rate paid on the public debt. Additionally, the bill would provide necessary administrative authorities and would authorize appropriation of necessary amounts for this purpose.

This Department administers programs for the prevention and control of water and air pollution in accordance with the provisions, respectively, of the Federal Water Pollution Control Act, as amended (33 U.S.C. 466 et seq.) and Public Law 159, 84th Congress, as amended. Industrial wastes and the adequacy of their treatment comprise a major consideration in achieving the aims and purposes of these programs. We, therefore, recognize the need to encourage and stimulate industry's cooperation and participation in this regard.

As to the bill's specific provisions, we would point out that existing authority as provided by the Small Business Act (15 U.S.C. 636) for loans to small business concerns, encompasses the financing of those facilities contemplated by

S. 737, although at higher interest rates. If it is determined that loans for the purposes proposed by the bill are to be accorded a preferential interest rate, State and Federal certification as to the need for the treatment works and as to their conformity with water and air pollution control programs should be required conditions attaching to such loans.

Consideration of any interest rate such as proposed in this bill would need to include the relationship of such action to the national fiscal policy. Accordingly, we would defer in this respect to appropriate agencies within the executive branch.

We are advised by the Bureau of the Budget that there is no objection to the presentation of this report from the standpoint of the administration's program. Sincerely, ANTHONY J. CELEBREZZE, Secretary.

COMPTROLLER GENERAL OF THE UNITED STATES,
Washington, May 28, 1963.

B-135945.

Hon. PATRICK V. MCNAMARA,

Chairman, Committee on Public Works,
U.S. Senate.

DEAR MR. CHAIRMAN: We offer the following comments which your committee may wish to consider in connection with its consideration of S. 737.

This bill would provide assistance in the form of loans to small business concerns for acquisition, installation, or construction of treatment works necessary to abate or control water or air pollution caused by such concerns. Section 3(4) provides that loans made under the bill "shall bear interest at a rate determined by the Secretary which shall be not more than the higher of (A) 24 per centum per annum, or (B) the total of one-fourth of 1 per centum per annum above the average annual interest rate on all interest-hearing obligations of the United States forming a part of the public debt as computed at the end of the preceding fiscal year, adjusted to the nearest one-eighth of 1 per centum.”

We suggest deletion of the words "not more than" (line 15, p. 3), in connection with the authority to set interest rates because we believe that the policy regarding interest rates should be stated by the Congress rather than left to the discreion of the Secretary. In addition, we believe that the interest rates should be established on a current rather than a historical basis. We suggest, therefore, that the remainder of the paragraph following the letter "(B)" (line 16, p. 3) be deleted and that the following language be substituted therefor: "the total of one-fourth of 1 per centum per annum above the current average market yields or outstanding marketable obligations of the United States having comparable maturities as of the last day of the preceding month, and adjusted to the nearest one-eighth of 1 per centum."

Section 4 of the bill would authorize appropriations to be used as a revolving fund for the making of loans under the provisions of the bill. The General Accounting Office generally does not favor the creation of revolving funds unless there is a demonstrated need for this type of financing. We believe that congressional control of Federal activities is stronger when exercised through the annual review and affirmative action on planned programs and financing requirements which attend the appropriation processes. We are not aware of any particular reasons why the direct loan program authorized by section 1 could not be successfully operated within the framework of the annual appropriation processes.

Section 6(b) would authorize the Secretary, HEW, to utilize available services and facilities of any agency of the Federal Government in carrying out the provisions of the bill. With a view to avoiding unnecessary duplication of existing staffs and facilities of the Federal Government, we believe that this provision should be revised to specifically require that, with the exception of such matters as loans approvals, the administration of the program shall be performed by an agency already engaged in the operation of loan programs.

Sincerely yours,

JOSEPH CAMPBELL,

Comptroller General of the United States.