Senator RANDOLPH. Thank you very much. May I suggest that perhaps the speaking equipment is not turned up enough. I doubt if some of the people in the room are hearing what you said.

STATEMENT OF HAROLD GERSHOWITZ, PRESIDENT, WASTE

MANAGEMENT, INC.

Mr. GERSHOWITZ. Thank you. I will make my remarks very brief in the interest of time.

I think that the chairman of the committee and the staff have been treated today to as perceptive a discussion of resource recovery from the witnesses this morning as I have heard in many years of following developments in this field. I feel that one point that was made very clearly and very sharply, is that there is no discernible relationship between the infusion of federally subsidized capital, be it in the form of grants or loans or loan guarantees and increased demand for secondary material.

Dr. Lesher did a very comprehensive job of reviewing all the resource recovery projects that offer so much promise throughout the United States. They all have one thing in common with very few exceptions, they were designed and planned and proposed by the private sector.

In some cases they are being built with risk capital by the private sector. Our organization Waste Management, Inc. is the private firm committed to investing nearly $6 million of its money to construct and operate the facility in New Orleans that was discussed earlier. A very important point is that while we are doing that, one of our significant objectives, as Dr. Lesher indicated, is to demonstrate the technical feasibility of this entire project and we think we will be successful in doing that. Yet, we would certainly hesitate to build that facility at this point in time throughout the United States without the support of the guarantees by the national center's membership. Such guarantees are not yet available in the real world of secondary materials marketing yet in the United States, but we hope they soon will be.

I would also hasten to add that the examples of resource recovery discussed by Dr. Lesher are really the tip of the iceberg. You will hear many other examples from my colleagues here of additional resource recovery facilities that are being constructed with private capital for both industrial and municipal wastes throughout the United States. I feel so strongly that at this point in time, where you have the development of a new industry that is employing its resources and energies in this endeavor, nothing should be done to drive the interests of private investment capital from this field.

One thing in the bill that requires considerable attention that I would like to touch upon is the buy back provision of section 218 as an example of something that requires a great deal of study. If secondary materials are bought rather than sold (I believe that is a true statement) a mandate to a sector of the economy to buy the secondary materials produced by federally funded municipal recycling centers will not stimulate greater resource recovery. It will assure that certain industries will buy materials from those facilities that might be con

structed with Federal funds but they will buy those materials instead of materials they would otherwise buy at facilities (such as New Orleans and other facilities that you will hear about) that will be privately funded. I can think of no provision that would have a greater adverse effect on private investment in resource recovery. Mr. HALE. I would like to expand on this.

Senator RANDOLPH. You had something to do with these programs, Mr. Hale, did you not?

Mr. HALE. Yes.

Senator RANDOLPH. Are you happy with the results?

Mr. HALE. I would like to see more, certainly.

Senator RANDOLPH. Thank you.

STATEMENT OF SAMUEL HALE, JR., VICE PRESIDENT,
MARKETING SCA SERVICES, INC.

Mr. HALE. Mr. Chairman, with respect to section 216 specifically, I would like to raise two issues which I think are very important, the first is the one about whether more capital is really needed. We are a relatively small company with respect to others in this field whose aggregate assets together total $10 billion, yet we have already invested the following amounts of money in resource recovery. We have an energy recovery facility at Fort Wayne, Ind., which represents over $12 million in total investment. We have committed well over $10 million for a 1,200-ton-per-day energy recovery plant in Philadelphia. We are currently negotiating for a contract in Connecticut, totaling roughly $25 million, some of which will be our money. Finally our 14 other operating plants for the recovery of paper and scrap metal and for recovery of waste chemicals represent an aggregate investment of over $10 million.

In short, we have committed substantial amounts of money to resource recovery already-as have others. If you look at the mixed municipal waste recovery plants that have been committed to around the country, you will see an aggregate commitment of roughly $250 million without any action by the Federal Government whatsoever. Given this kind of willingness to invest, I think there is a real question whether at this point any Federal Government action to make more capital available is really necessary.

The second point I would like to make, which is more important, is whether, presuming we would all like to see more facilities built, making capital available is going to help the current problem. The current problem as I see it is lack of market demand, not lack of capital. We are all trying to stimulate a new market for new products-products that heretofore simply haven't been produced or used. Dr. Lesher commented about the fact that 2 years ago virtually no large scale resource recovery facilities existed and there was very little talk about energy recovery and resource recovery.

In our efforts to sell processed waste as fuel to utilities, in particular, we find that price or capital availability from our side is not nearly as important as other kinds of obstacles which we encounter. Let me mention some of those obstacles.

Utilities cite many technical problems with burning solid wastes as fuel-problems of corrosion, of air pollution, of a feared reduction in

their boiler efficiency, and so forth. There are also established fears about the reliability of the processing system itself and hence the reliability of supply.

Are we in fact going to be able to operate on a day-in, day-out basis? Can we become a dependable, stable source of fuel supply? Finally, we are approaching the utilities at a difficult time for trying to get them interested in a new opportunity when they have significant problems of their own, not the least of which is the utilities' own problems of capital availability.

If you proceed with a capital subsidy, that kind of action, in my estimation, is going to have very little actual effect in expanding this new market. The real need is for actions other than making capital available on the supply side or other than subsidizing the cost of that capital-things like expanded technical assistance, research and development and technology assessment efforts aimed directly at convincing industrial, and utility consumers to use solid waste as fuel, and so forth.

Where you feel that money is needed and should be made available, the place to make it available is on the demand side, not the supply side. If the demand develops, the supply will be there.

Mr. WINGERTER. Thank you.

Senator RANDOLPH. Thank you very much.

Mr. Flood?

Mr. FLOOD. I am Mr. Flood.

Senator RANDOLPH. Do you wish to speak?
Mr. FLOOD. Yes.

Senator RANDOLPH. Thank you. Are you

from Texas?

STATEMENT OF TED FLOOD, VICE PRESIDENT, BROWNING-FERRIS INDUSTRIES, INC.

Mr. FLOOD. Yes. My name is Ted Flood. I am vice president of Browning-Ferris Industries, Inc. We have submitted a statement to be incorporated into the record, but my remarks now will relate to sections 217 and 218.

[The statement appears at p. 1011.]

We currently have 40 secondary fiber reception centers in operation across the country. Our resource recovery division supplied 1 million tons of papermaking fiber to the papermaking industry in 1973 and we expect to handle in excess of a million-and-a-half tons in 1974.

We believe an accelerated use of secondary materials to conserve virgin resources and energy recovery from waste to be among our Nation's most important priorities.

We in the private sector stand ready to make technical, financial and managerial investments necessary to implement and operate a national recovery program.

What is required to accelerate recovery is not Federal funding, but a greater demand for recovered resources. Without sustained markets, you simply perform the function of converting refuse to another form of refuse while incurring the processing expense.

Mr. Chairman, we laud and are in accord with the objectives of S. 3560; however we feel strongly that the focal point of the bill should place more emphasis on creating demand on greater use of recovered

resources rather than on building unproven recovery systems using

tax revenues.

We are also concerned with the limited involvement of private enterprise contained in the bill. In light of the fact that private industry handled 73 percent of the total solid waste, we believe it is vitally important that all-encompassing legislation be promulgated with more consideration of those companies currently involved and performing the management of our daily waste stream and resource recovery.

Specifically we have the following recommendations regarding resource recovery sections of S. 3560: (1) The Federal Government is now the largest single purchaser of goods in America. We are told its purchases range from 20 to 30 percent of the GNP. Having outright control of so much purchasing power, we endorse the mandate that all agencies of U.S. Government purchase competitive goods employing recovered materials. We believe the mandate should go further to require that all specifications for materials purchased by the Government should be promptly reviewed and revised and new specifications issued to permit the inclusion of recovered materials wherever possible. Second, authorize expenditures necessary for the EPA to create and implement a massive public education program on the desirability of recycled products and their competitive equality with products manufactured solely from virgin materials.

We agree with the basic concept of A-1, 2, 3 and 4 of section 217, and we oppose the system of grants authorized by section 217(b) as an unnecessary expenditure of funds. We believe section 217(b) will proliferate excess inventories while accomplishing nothing to increase demand.

We recommend elimination of 217(b) in its existing form since it would have a counterproductive effect on the goals of the program.

Your attention is also directed to section 218 in its present form because the bill would tend to displace existing facilities which again would be counterproductive. Private enterprise operating in the affected industries would find it difficult to justify further capital investments in recovery systems when resources recovered from heavily financed centers would receive mandated purchase preferences. We see no rhyme or reason to create discriminatory markets for the facilities that would be built with grants or loans, when there will be many existing private facilities in every major city.

In summary, Browning-Ferris Industries believes that the Federal Government should aggressively promote and provide stimulus to use products manufactured from recovered wastes; should proceed very cautiously in appropriating Federal funds or guaranteed loans which would discourage or displace existing and planned private investment; permit the States to plan for their needs without mandating requirements which will inhibit the participation of private enterprise or add new agencies unless the need is clearly shown. Thank you.

[Mr. Flood's prepared statement follows:]

STATEMENT OF BROWNING-FERRIS INDUSTRIES, INC.

BEFORE THE PANEL ON MATERIALS POLICY

SUB-COMMITTEE ON ENVIRONMENTAL POLLUTION

COMMITTEE ON PUBLIC WORKS

U.S. SENATE

JULY 18, 1974

My name is Ted Flood. I am Vice President of Browning-Ferris Industries, Inc., the nation's largest waste systems company with operations in 130 cities in 32 states, as well as Canada and Puerto Rico.

We have 89 Solid Waste Systems Operations; numerous contracts with municipalities serving all parts of 90 cities; we have 40 secondary-fibre reception centers in operation, with more planned; 25 Chemical Services Division locations, 5 of which are liquid-waste reception and treating centers. We will handle approximately 12 million tons of our nation's waste this year; and our Resource Recovery Division supplied one million tons of paper making fibre to the paper making industry in 1973; and we expect to handle more than 1,500,000 tons in 1974. We have established 5 hazardous liquid-waste reception and treating centers, located in Houston, and Port Arthur, Texas, Baton Rouge, Louisiana, Mobile, Alabama and Youngstown, Ohio.