The provisions of this act are administered by the U.S. Environmental Protection Agency, Water Quality Office (formerly the Federal Water Quality Administration in the U.S. Department of Interior).

We take this position because of the broad nature of the provisions of Section 8 and the associated definitions:

Section 8. (a) The Secretary is authorized to make grants to any state, municipality, or inter-municipal or inter-state agency for the construction of necessary treatment works to prevent the discharge of untreated or inadequately treated sewage or other wastes into any waters, and for the purpose of reports, plans and specifications in connection therewith.

Section 23. (c) When used in this Act: The term, "treatment works," means the various devices used in the treatment of sewage or industrial wastes of a liquid nature, including the necessary intercepting sewers, outfall sewers, pumping, power, and other equipment, and their appurtenances, and includes any extensions, improvements, remodeling, additions, and alterations thereof.

The conclusion to be drawn from the above is that what is required for the solution of this problem is a recognition of its importance on the part of the Congress, the specific inclusion of methods to cope with the combined sewer problem in the definition of "treatment Works," and the provision of adequate funds to cover the cost of effective solutions.

The following change in the definition of "treatment works" as proposed by Senator Magnuson of Washington in S. 4105 which he introduced in the 91st Congress, is supported by AMSA:

Section 23. (c) The term "treatment works" means the various devices used in the treatment of sewage or industrial wastes of a liquid nature, including works necessary for the separation of combined storm and sanitary sewers, works for the abatement of combined sewer overflows, intercepting sewers, outfall sewers, pumping, power, and other equipment, and their appurtenances, and includes any extensions, improvements, remodeling, additions, and alterations thereof.

In recent communications sent the Water Quality Office, some of our responses included, at their request, estimates of expenditures needed for appropriate systems. It is evident that the Federal agencies are gathering information in order to be able to estimate the total cost of such programs.

Needless to say, this alternative as well as others, also must qualify for financial assistance in construction grant programs if they are to be pursued seriously. It is recognized that this is going to cost money but the cost estimates of needed work which were previously furnished by AMSA included the works necessary to solve the combined sewer problem for many of the larger cities and also reflected the information submitted by the National League of Cities and further emphasizes the need for priorities-spending the money where it will do the most good rather than on an arbitrary and uniform basis throughout the country.

APPENDIX

AMSA LEGISLATIVE GOALS

Provide the mix of facilities which will best clean up waters:

Treat waste discharges.

Eliminate combined sewer overflows.

Apply funds to priority needs.

Authorize incentive grants on future projects:

Spread pollution abatement costs fairly.

Strengthen capacity of cities to pay local costs.

Maintain Federal Policies which will:

Encourage experimentation.

Recognize local differences.

Permit local decisions on local problems.

Encourage local initiative.

Senator EAGLETON. Thank you, Mr. Sosewitz.

Mr. KAISER?

STATEMENT OF CHARLES B. KAISER, JR., SECRETARY-TREASURER AND DIRECTOR, ASSOCIATION OF METROPOLITAN SEWERAGE AGENCIES, AND GENERAL COUNSEL, METROPOLITAN ST. LOUIS SEWER DISTRICT

Mr. KAISER. Mr. Chairman, Senator Eagleton, first I would like to thank you for the role you rave played in helping us pass our $100 million bond issue before you were a Senator as Lieutenant Governor of our State and know that we are in friendly hands when we talk about doing something about water pollution when we are before you. I would like to start by saying that we think it might be time for Congress and us who are in the water pollution field and have been in it for some time to say that tremendous progress has been made in abating water pollution in this country in the last 10 years. Much credit for this can be attributed to increased Federal funding and in recent years to some State funding.

However, most of the cost of treatment facilities in the last 10 years has been paid for by metropolitan areas of this country. From 1956 to 1968, 27 of our agencies represented by ASMA constructed $1.5 billion in treatment works. Only $84 in Federal Public Law 66 grants were constructed, or less than 5 percent.

ASMA originated in a joint effort to develop a legislative program to correct a serious discrimination against the metropolitan areas in the Federal water pollution control construction grant program. Research showed that a representative group of 26 large cities, most of them over 500,000 in population and serving 32 percent of the Nation's sewered population, accomplished 24 percent of the pollution control work in the entire Nation but received only 6 percent of the Federal dollars spent under Public Law 60 grants program. A table is attached, and again we are briefing our testimony here. First of all, we strongly support the increased Federal funding provided in all of the pending bills, the administration's bill, Senator Muskie's bill, and your bill, Senator Eagleton.

The prior grant discrimination was contained in much of the law and then in the limited funding and since 1956, Federal grants have helped many small cities catch up with backlog needs..

But the more pressing needs of the large metropolitan areas have been largely left to local resources.

Again from 1956 to 1969, municipalities of over 250,000 population which contain 35 percent of the sewered population of the United States received less than 8 percent of the Federal grant dollars for waste treatment.

During the same period, cities under 50,000 in population with less than 35 percent of the sewered population of the United States received more than 70 percent of all Federal waste treatment dollars. Again, a table is attached to illustrate that.

The large city needs are great. A sample of only 27 large metropolitan complexes in the United States showed a need of almost $11.7 billion worth of treatment needs in the next 10 years for their waste treatment works including costs necessary for solving the combined sewer problems in some of those cities where the combined sewer overflows we feel create some of the most serious problems, as Mr. Sosewitz has pointed out.

Again we have a table 3 which illustrates this data.

It is our feeling that Congress should establish a new system of incentive grants. In order to enable metropolitan areas to solve water pollution problems, we must compensate for the fact that past_constraints have greatly diminished the financial ability of many large cities to provide solutions to their pollution abatement problems.

By new additional compensating grants, we can restore a strong capacity to perform.

We recommend that a special 20 percent incentive grant be authorized for new construction of pollution abatement works by any muncipality or agency which has built sewage projects since 1956 that qualified for Federal assistance at the same time they were built but did not in fact receive the minimum 30 percent Federal grant authorized.

The total of these incentive grants for new construction would be limited to the total amount of Federal grants for which such municipalities were short-changed over the period since 1956.

The incentive grant concept not previously considered by Congress was included in Senate bill 3688 as introduced by Senator Muskie on behalf of the National League of Cities and U.S. Conference of Mayors during the last conference.

If provisions of incentive grants that we are asking for or contained in Senate bill 4105 of the 91st Congress are enacted, total additional amount of Federal money ultimately required to fund these provisions will be approximately $500 million. This would reduce all grants discriminations for both large and small cities which have occurred since the passage of Federal Law 660.

In terms of fiscal impact of this provision, since it is keyed to a maximum of 20 percent of any project to be constructed in the future, total amount could not be used up in 1 year or 2 or even 3. It may take several years.

The impact in fiscal year 1972 will be less than 5 percent of the 2.5 billion appropriation and the impact will continue at a declining percentage of subsequent appropriations.

In our State alone, or our city, we passed and built in the last 10 years since 1960, over $100 million worth of facilities and received less than $10 million in Federal grants and we presently have approximately $80 million outstanding in bonds, so you can see that our bonding capacity has been used pretty severely and any incentive grant program would help us very much.

We urge the Congress to consider legislative language which would insure that the funds to be made available will be allocated somewhat on a population basis. There is no rational excuse for not directing the funds to where the problems are most severe and where people of the country live.

Some States have compounded the difficulty by discriminating against the large cities within their boundaries and though they subscribe to the philosophy of States being better able to determine their own needs than the Federal Government, some protective language is essential to prevent some of the abuses that have occurred in the past programs.

One of those, the Mayor of Cleveland, has cited that in the past 10 years he has received, I think, almost zero from Federal grants be

cause of State priority systems. I think this could be looked into by Congress.

In closing, we strongly urge the increased funding that is talked about now by Congress and the Administration, and there is one other problem and that is the making available of the Federal funds would help all of us, particularly in States like Missouri where before we can let a contract to construct these works, we must certify that funds are available.

You can see if we are bidding a job, let's say $50 million treatment plant or $20 million treatment plant, and we only have one-fourth of that in cash, 25 percent in State money, and 50 percent in Federal money, we would like Congress, if possible, to set up a procedure whereby a contractor bidding that job and we as an agency letting the contract be assured of a procedure whereby money would be made available during the construction of that project so that the contractor could be paid.

It would save considerable interest cost to the contractor and to the local agency because we feel that the Federal Government can borrow money cheaper than a contractor who is building a plant or even we as a municipal agency.

So, if you could maybe take a look at how the highway program funds, they are 90 percent grants, and then pattern it somewhat in an effort to make these funds available during construction so that we can let these contracts with a set policy of making Federal funds available during construction, we would surely appreciate it. Thank you very much.

Senator EAGLETON. Thank you, Mr. Kaiser. (Mr. Kaiser's prepared statement follows:)

PREPARED STATEMENT OF CHARLES B. KAISER, JR.

AMSA originated in a joint effort to develop a legislative program to correct the serious discrimination against metropolitan areas in the Federal water pollution control construction grant program. Research showed that a representative group of 26 large cities, most of them over 500,000 in population and serving 32% of the nation's sewered population accomplished 24% of the pollution control work in the entire nation but received only 6% of the Federal dollars spent under the public law 660 grant program. (See Table I attached).

Discrimination also resulted from the shortage of total Federal appropriations which caused pro-ration of available funds and lowered the Federal share much below the 30% maximum authorized prior to 1966. Cities of all sizes which worked to clean up their waters received much less federal help than those who waited until today to start.

Federal assistance for the massive pollution abatement needs of the large metropolitan areas, in particular, has been badly neglected.1 Although dollar ceilings on grants were removed in 1966, a decade of serious Federal discrimination against the heavily populated areas has left serious gaps in their financial capacity to clean up some of the nation's dirtiest waters. A comparison of small cities and large metropolitan areas as to sewerage needs, financial capability and Federal assistance revea's the serious disparities that have developed and the necessity for corrective action.

PRIOR GRANT DISCRIMINATION AGAINST LARGE CITIES

Since 1956 Federal grants have helped many small cities catch up with their backlog needs, but the more pressing needs of the large metropolitan areas have been largely left to local resources. From 1956 to 1969, municipalities of over

1 Ellis. J. R.. "Federal Grants for Municipal Waste Treatment-The Need for Policy Change", Journal of Water Pollution Federation, Vol. 42, p. 679 (May 1970).

250,000 population, which contain more than 35% of the sewered population of the United States, received less than 8% of all Federal grant dollars for waste treatment. During the same period, cities under 50,000 in population with less than 35% of the sewered population of the United States received more than 70% of all Federal Waste treatment dollars: (See Table II attached).

LARGE CITY NEEDS ARE GREAT

Water pollution problems and the required construction in high density areas are massive and costly. A sample of only 27 large metropolitan complexes in the United States showed a need for almost $11.7 billion in the next ten years for their waste treatment works alone including the costs necessary for solving the combined sewer problems in some of those cities. These data are in the form of responses to an inquiry to the metropolitan areas and are attached as an exhibit to this statement as Table III.

A critical need of many metropolitan areas in the elimination of pollution from combined storm and sanitary systems. Needed combined sewer storage or separation improvements are not now eligible for Federal construction grants under the Federal Water Pollution Control acts, except as demonstrations.

Without disrupting aid to the smaller cities, we urge Congress to take decisive action in giving equitable assistance to the metropolitan areas. Our organization supports an increase in total appropriations as contemplated in S. 523 but strongly urges that additional steps be authorized if the nation is to equitably and adequately solve its water pollution problems.

CONGRESS SHOULD ESTABLISH A NEW SYSTEM OF INCENTIVE GRANTS

In order to enable metropolitan areas to solve their water pollution problems. we must compensate for the fact that past constraints have greatly diminished the financial ability of many large cities to provide solutions to their pollution abatement problems. By new, additional compensating grants, we can restore a strong capacity to perform. We recommend that a special 20% incentive grant be authorized for new construction of pollution abatement works by any municipality or agency which has built sewerage projects since 1956 that qualified for Federal assistance at the time they were built but did not in fact receive the minimum 30% Federal grant authorized. The total of these incentive grants for new construction would be limited to the total amount of Federal grants for which such municipalities were short changed over the period since 1956. The incentive grant concept, not previously considered by Congress, was included in S. 3688 as introduced by Senator Muskie on behalf of the National League of Cities and the U.S. Conference of Mayors during the last Congress.

RESTORE LOCAL CAPACITY TO FINANCE

We accept the principle inherent in S. 523 and other proposed legislation that payment of the costs of waste disposal in proportion to the amount of waste produced would rationalize our pricing structure and improve the efficiency of many operations. However, in order to make practical the use of sewer charges for payment of part of the operating and capital costs of waste disposal, it is particularly important that prior inequities be redressed and a common plane of local capacity to bear future local costs be established. Otherwise, communities which have built treatment plants with local money will be at a disadvantage in attracting industry. Those cities which used sewage disposal charges and revenue bonds as a means of financing prior capital needs will be forced to maintain higher user charges to pay bonds issued to cover costs of sewage disposal facilities which should equitably have been borne by the Federal government. The ability of these communities to increase their existing user charges to pay for future needs will be weakened. Any Federal grant program should be designed not only to solve the pollution problem but to solve this problem in an equitable manner, just as a system of local sewage charges should equitably spread the costs as among local users.

If a system of incentive grants or an equivalent system of restoring equity to the Federal grant structure for waste treatment is not established, the pressures to relieve continuing inequity may force the Congress to increasingly and permanently fund all water pollution abatement costs.

In short, if the Federal goal is to meet catch-up needs with Federal grants and plan upon the local assumption of future responsibility for the operation, mainte