manufacturing, marketing and distribution, consumption and disposal-it is only the last step of disposal, which has largely been a municipal function, that is too often obsolete and ineffective.

Disposal must be replaced with resource recovery, and if that can be done without disrupting the other major sectors, it would seem extremely wise to do so.

II. RESEARCH, TECHNOLOGY, TECHNICAL TRAINING, PLANNING ASSISTANCE

AND DEMONSTRATIONS

All three bills, we are pleased to note, support technical activities. We enthusiastically support these provisions and activities as our own programs would suggest. However, we do not believe that massive Federal funding of demonstrations is wise or necessary at this time until the current efforts are evaluated and so long as private enterprise and private capital continue to flow to this area of endeavor.

We do strongly urge a vigorous Federal role in training and education, planning, and technical assistance to State and local governments.

III. MARKETS

The National Center has put extensive effort into the challenge of establishing markets for resources recovered from municipal solid waste. These activities include the development of specifications and testing techniques and we have been partially supported by EPA.

Our objective has been to put these materials on a competitive basis with virgin materials in the marketplace. The end result of these efforts in the form of market agreements, coupled with the drastic change in supply and demand conditions, suggest that fundamental progress is being made and sustained.

Section 218 of S. 3560 and 3277 could accelerate this process especially if market forces are the guiding elements. Elimination of unfair freight rate discrimination between virgin and secondary materials would also be helpful.

Other efforts which would dictate artificial conditions of supply and demand would appear to be unnecessary and impossible to administer. These provisions by example are such as sections 111, 112, and 113 of S. 3549, and might also include section 217 of S. 3560.

In closing, I would just like to say that the entire effort of the National Center is devoted to the promulgation of the systems approach to resource recovery. We congratulate this distinguished Panel for its intense interest in and support of this area of endeavor.

Thank you very much.

Senator RANDOLPH. Thank you, Dr. Lesher; you have helped the Panel by being very definitive in spelling out one or more projects in which your center is a leader. We will continue to counsel with you through our other witnesses. We have the formal statements and colloquy, but you are entirely right that we ask for further comment from you about the questions that may occur to us.

I wonder about the agreements the National Center for Resource Recovery has with, let us say, New Orleans and other cities under which the cities agree not to cut down on the raw material by the

imposition of restrictions on waste products through source reduction. Dr. LESHER. If you look at our total system-mining and agricultural, manufacturing, marketing, distribution, consumption and disposal-most of those sectors of that total system are working well. What is not working is disposal, which has been a municipal function. We must put into place recovery systems which will bring back waste components in the loop for use over and over again. Once you do that, you can allow the market system to continue to function to provide the goods and services for which that system was developed and to be responsive to consumer demand. Most of the materials that were here on this Earth from the beginning of time are still with us.

The problem is to keep them in the system and keep them being used over and over again. That is the basic challenge.

Senator RANDOLPH. You have stated in your document, which was very carefully drawn and very specific, a dramatic forward movement in resource recovery will include many factors. You spoke of careful analysis that can lead cities, both large and small, toward optimal recovery programs. This is going to come about, if it comes about-and we believe it can-through market forces, and we understand those and we appreciate them.

I imagine you would say the need for comprehensive Federal technical and financial support of the State and local programs, at least for planning and implementation, is a vital part of what we hope to do. I am not sure you feel that way; would you clarify or strengthen your position?

Dr. LESHER. Yes, sir; I believe the Federal role is essential in technical assistance and technical training, information programs, planning grants, and that sort of thing. The one thing that I do not believe is warranted at this time is massive amounts of demonstrations or facilities grants. I do believe that it has been proven over and over again that if you can put facilities of this kind on a competitive basis and let private capital respond to that opportunity, it will be the most swift and the most lasting solution. I believe that the Federal role is well defined and fairly largely agreed on, and there is a very large role for the private sector to perform in this public service.

Senator RANDOLPH. I am inclined to believe that with you. It is not enough just to say we will take a large sum of money. Now let us solve this problem. It will not come that way, will it?

Dr. LESHER. No, it will not.

Senator RANDOLPH. It will have to be carefully used, selectively as you are doing in New Orleans. It will have to be for a process? Dr. LESHER. Yes.

Senator RANDOLPH. You have observed that a great forward thrust since the passage of the Resource Recovery Act in 1970 has not been really evident. You have said that this is because there has been a rather modest amount of money spent in R. & D. Was this due to lack of proposals that would be viable or due to insufficient funding for the Resource Recovery Act of 1970?

Dr. LESHER. I think the funding was sufficient. There is a frustration on the part of all of us. Now that we very clearly have identified solutions, there is the tendency to desire that solutions be effected

immediately. The fact is that there is a great forward thrust and a great amount of progress. It hasn't been evident to many observers because it has been scattered in a number of research development tests and evaluation processes. That progress is now becoming much more evident to all of those who are working in the field. I believe if we had put much larger amounts of money into earlier legislation that much of it would have been redundant and wasteful.

Senator RANDOLPH. Thank you, Dr. Lesher.

What sort of a budget do you operate on a year!

Dr. LESHER. Slightly over $2 million.

Senator RANDOLPH. That is 17 groups of industries?
Dr. LESHER. Yes.

Senator RANDOLPH. Roughly?

Dr. LESHER. Yes; and labor also gives us financial support.
Senator RANDOLPH. Federal funding?

Dr. LESHER. Our industry support comes under a formula decided on by the board. In addition, we have some contract revenue from EPA as well as State and local governments.

Senator RANDOLPH. How many persons are involved in your Washington office?

Dr. LESHER. We have a full-time staff of 33 people. In addition, we do call on outside contractor people and universities to do some of our work. We also draw on some of our board member companies. These are chief executives of some of the largest companies in the world. They abide by the rule that we do not permit substitutes at the board meeting. These people attend and give leadership rather than just appear as names on our publications.

Senator RANDOLPH. In effect, then, it is a nonprofit organization; is that right?

Dr. LESHER. Yes, sir.

Senator RANDOLPH. Dr. Lesher, I commend you for your statement. We will continue, as I have indicated, to confer with you. We want to keep current on the developments that have taken place and what you have said this morning. It is perhaps a plus in our thinking. We have received a rather negative feeling that is just beyond us but you are saying: No; it can be done. Is that right?

Dr. LESHER. Yes.

Senator RANDOLPH. And in a relatively short period of time, not tomorrow, but it can be carried out in 10 to a dozen years in the large cities?

Dr. LESHER. Yes; in a half dozen years we will see a dramatic change on a national basis. All of the seek work is going on right now, the planning and the beginning of implementation. I would like to extend again the invitation to you, Mr. Chairman, and any of your guests at your convenience to visit our demonstration facility here in the District of Columbia to see the equipment on line and operating. We will be back in touch with your office.

Senator RANDOLPH. I think we can accept your invitation. We will try to fit it into the schedule. I will want to and I am sure at least some of the Panel members would want to join me in seeing what has been done.

Thank you again. It has been very helpful.

Now we have Mr. Mighdoll. I keep asking myself, is that the correct pronunciation?

Mr. MIGHDOLL. That is correct.

Senator RANDOLPH. And I believe others have joined with you? Mr. MIGHDOLL. Mr. Merrigan, our Washington counsel.

STATEMENT OF M. J. MIGHDOLL, EXECUTIVE VICE PRESIDENT, NATIONAL ASSOCIATION OF RECYCLING INDUSTRIES, INC. (NARI), ACCOMPANIED BY: EDWARD L. MERRIGAN, COUNSEL, NARI

Senator RANDOLPH. Some of the statistics you have given, will be very important, but your statement runs 60 pages.

Mr. MIGHDOLL. I anticipated the time element and with your permission, I would like to submit the statement and exhibits that I have here for the record and deal quite quickly and I hope to the point of some of the issues I have heard discussed this morning.

Senator RANDOLPH. I thank you, Mr. Mighdoll. I promise not to interrupt you, that is if you can believe a Senator which sometimes I doubt, but you go right ahead.

[The statement and exhibits appear on pp. 861-984.] Mr. MIGHDOLL. Thank you very much.

With your permission I will completely depart from the comprehensive statement. It is a comprehensive statement relative to the state of recycling. It contains considerable information developed since the Resource Development Act of 1970 mandated a number of studies in the area.

Senator RANDOLPH. I wanted to state to you that Richard Grundy, who sits with us in committee, is not just a layman in this subject matter. He is a person who is counseling with the members of our Panel, and with the staff of members of the Panel on the materials that you have is discussed, so that when we come to the period of meeting together, hopefully to draft constructive legislation, our other members not here today, will be apprised of what you have said.

Please proceed.

Mr. MIGHDOLL. Thank you, Mr. Chairman. I would like to deal a moment in addition to what is in the statement with a paradox that I believe exists in this country, and you pointed it up very well earlier with two penetrating questions. You posed a question relative to the success in the private recycling sectors as opposed to doubts in those of the municipal recycling sectors. Then we heard the thought about the need for expanding markets and, seemingly a paradox on the other, limited supplies and high prices for scrap.

We lived through an extraordinary period of time in this economy of 1973 and 1974 a literal boom. If recycling was ever going to happen, certainly it would have happened during this period and then we find another paradox, the paradox of production increasing and recycling apparently declining. Something must be wrong. We believe a number of things are wrong. They might be summarized in the expectation of recycling in response to the raw materials issue in 1970 with policies developed for a different purpose.

As we look at the legislation pending before your committee, legislation that we think is vitally needed, certainly since the Resource Recovery Act of 1970, we have had a great number of studies and little positive action. We believe that action is badly needed at this time. We would like to urge the committee to consider several of the economic factors that really impede the recycling of materials, irrespective of whether the materials come from industrial sources or municipal waste sources just described by Dr. Lesher, and irrespective of the price levels that we have today or those that we had 12 years ago, and I trust we will get them related to a different period in the economy. These problems relate to such as transportation policies wherein the movement of recycled freight is almost double the cost of transporting virgin materials.

The Federal Government's own procurement policies do not encourage their use by having a virgin-only label many times and in the specifications. We have seen these issues discussed over and over again by various committees of the Congress. They have been pointedly mentioned by Mr. Klaff, studies by EPA and studies by private organizations. These are the things that impede the ability of recycling materials ever to reach the marketplace and for more materials to flow into the marketplace.

You posed a very interesting question. As I said, if recycling is occurring, why aren't municipal waste materials being absorbed? It is a little bit like the cream and milk story, what is being recycled now is the cream, industrial waste. When we get to municipal waste, we have an unknown element. Those materials which obviously are of lesser value which have never been tested in the marketplace, in spite of important work done by Dr. Lesher's group-what plants are going to absorb them? Investments in new plants are increasing on the virgin (primary) material side at the rate of 712 times those capital investments that are made in plants that can recycle materials. What we have in this country are laws and policies that are continuing to build a virgin material ethic. What we really need now are policies which will encourage a recycled ethic. We urge the Public Works Committee not to depart from the urgency of those provisions.

The subcommittee in the Sentate Commerce Commission has taken favorable action on transportation legislation, supported by the private sector and railroads, which should go a long way toward identifying the discriminatory and inequitable freight rates cited not only by our organization, but others. Waste paper represents 40 percent of all municipal waste. We have a situation where the exportation of waste paper from the west coast to the Far East-the transportation rates are double for virgin wood pulp being exported from the same point to the same point in the same ocean liner in the same container and with the same weight. Two boxes unless you opened the box, you wouldn't know what is in it. Yet waste paper travels at twice the rate. Senator RANDOLPH. Who sets the rate?

Mr. MIGHDOLL. The conference. This example is the Pacific Westbound Conference made up of American and Japanese flag carriers. This case is before the Federal Maritime Commission, a hearing has been held, and we are awaiting a decision.

[An order of investigation from the Federal Maritime Commission relative to the above may be found at p. 985.]