the experience under the Water Quality Act of 1965. There was a strong feeling on the Senate side, reflected in the bill that they have reported, which will be taken up this week, that we should not wait to strengthen the existing legislation, and therefore the administration has changed its position.

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The committee has made a careful analysis in an effort to arrive at a figure which might more realistically lie in the same range as the amounts which could actually be used over the next few years. Available information indicates that there are not enough projects ready for the utilization of the sums contemplated under the Senate proposals. This is due partly to a lack of readiness in the completion of the planning, design, and specifications, and partly to the fact that even when plans are completed the financial resources of the States or the local communities are not sufficient to supply their share in a program in which the Federal Government would so markedly increase its participation. This condition will be improved, at least insofar as non-Federal financial abilities are concerned, by the bill, which, through increases in grants and through provisions of incentive grants, will decrease the burden upon the States and the communities.

The most important aspect to be considered in this entire matter is, in the opinion of the committee, the fact that undoubtedly better figures will be obtainable within the next few years. This is why a cost estimate study to be submitted by January 10, 1968, is included in the bill. If the estimate study discloses that larger amounts are needed, appropriate Federal increases can be included in future legislation.

The committee hopes that the program will be accelerated in future years, but considers that the figure of $2.45 billion included in the bill for a 5-year period is in itself somewhat optimistic, since it actually exceeds the amounts that would be obtained if a truly mathematical projection was made of the data now available on local capacities and on the status of planning.

In summary of its position the committee feels that this is not the time for a crash program but a time for shifting into high gear.

With respect to the allocation of funds to the States, the committee feels it advisable to explain why it did not accept a provision in the administration bill which would have reserved a portion of the appropriation to be held by the Secretary of the Interior for use only on projects in the "clean river" program. The approach suggested by the administration was to reserve 75 percent (later 60 percent) of the appropriation for use only in supplying grants to projects qualified

under the "clean rivers" formula. No apportionment in this case was provided in accord with any formula for State population or per capita income, as is provided for the grants under the existing program. The committee does not look with favor on this proposition. It would grant to the Secretary complete control over the major portion of the appropriated funds which, even with the best of intentions, might not be distributed to the satisfaction of all States.

The committee sees no reason why funds for approved basin projects cannot be treated in the same way as funds for projects under the existing program, and, in the bill reported, has made no provision for a reserve to be distributed by the Secretary. Not only does this seem a much fairer and more equitable method, but it is possible that it may save the Secretary from receiving many complaints that might otherwise be engendered by the States who might think they were getting less than their share of the total appropriation.

The committee endorsed the administration proposal for accelerating clean streams by promoting basin concepts. However, the committee also recognizes that effective action will be most dependent on imaginative leadership which can reduce the problems to specifics and

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propose solutions in such a manner as to convince the citizenry of their responsibilities as well as their ultimate rewards.

Since 1956 the committee has nurtured the national awareness of the problem of pollution, its magnitude, and possible avenues of approach, as well as methods of financing. The development of State and interstate agency programs has not advanced as rapidly as might be desired; but these agencies are an integral part of the program, and their participation in the construction grant program is essential.

This is properly their function and is directly related to the public hearings now being held by State and interstate agencies in adopting criteria and plans of implementation. Familiarity of the agencies with the relative importance of problems, and their knowledge of the potential for action in solving them, coupled with the challenge to the State and interstate agencies to develop basin plans to achieve the quality standards, makes decision on priority of disbursement of funds for construction grants a rightful part of their responsibility.

INDIVIDUAL PROJECT GRANTS (PRESENT PROGRAM)

The bill provides for two significant changes in the existing grant program, both of which should add appreciably to the effectiveness of the water pollution control program.

The first is the doubling of the present dollar limitation on projects. Under the present law the limitation on grants is $1.2 million

for an individual project and $4.8 million for a project serving two or more municipalities. The bill would double these amounts, making the maximum grants for this type of project $2.4 million for an individual treatment plant and $9.6 million for a combined project. Under present law the grants to this type of project cannot exceed 30 percent, and the dollar limitations come into play only when these limitations are less than 30 percent of the project cost. However, these dollar limitations are removed if the State agrees to contribute 30 percent to all projects in the State receiving grants from the same allocation. This provision is retained in the new bill.

The second significant and highly desirable change is the provision for permitting an increase in the Federal contribution from 30 to 40 percent if the State contributes 30 percent in accordance with the previous paragraph. The provision removing the dollar limitations would be retained as in existing law.

If there is no State contribution, the first provision explained above, which would double the present dollar limitation, would be important as illustrated below. A project which costs $10 million could, under the bill, receive a maximum of $2.4 million. Under existing law, the dollar limitation would be $1.2 million. The community under the present law would have to pay $8.8 million, whereas, under the new law it would have to pay $7.6 million.

If there is a State contribution of 30 percent, the present removal of the dollar limitation reduces the local cost only when the project cost exceeds $4 million for a single project or $16 million for a combined project, since at those amounts the control shifts from the dollar limitation to the 30 percent Federal figure. Under the bill the control would shift, because of a higher dollar limitation and a higher Federal grant, at a level of $8 million for a single project and $32 million for a combined project. In the example of the $10 million project, the

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Federal contribution would be $4 million, and the State $3 million, leaving the local community only $3 million to pay. This will bring into range many of the less prosperous cities which might not be able to raise sufficient revenue for the larger amounts.

The committee recognizes difficulties larger cities have in obtaining significant Federal grants in the construction of their treatment facilities. The committee feels that the modification offered here will provide real assistance to many cities. However, the committee is also concerned about the smaller cities where the cost per capita can be several times that of larger cities. Small municipalities on small streams can create serious pollution problems. The committee does not want to see the funds distributed in such a way as to limit the

number of municipalities to just a few large cities, so the committee has retained a dollar limitation provision but has doubled it.

INCENTIVE GRANTS FOR PROJECTS IN APPROVED BASIN PLAN With respect to water resource development it is recognized by all concerned that the control, disposition and use of water in a river basin must be coordinated, not only among the individual elements performing a specific function, but amongst all the functions. In formulating such a plan there must be a comprehensive plan for each of the functions, such as waste assimilation, water supply, flood control, hydroelectric power development, navigation, recreation, fish and wildlife, conservation, and other elements. After the individual functions are formulated so that each purpose is served, there must be a further fitting together of the projects so that none of the individual units, in serving its own function, interferes unduly with the performance of other units. A basin plan for water quality control, therefore, is as essential in the development of a river basin as a similar plan for the other functions.

The introduction of the concept of an approved basin plan for incentive grants under title II, clean rivers restoration plan, is new in the field of water pollution. While the engineering and economic value of a basin approach is well recognized, this is the first time in the water resource field the Federal Government has used it to stimulate State and local participation, and at the same time retained the program originally established under present law. The principle is as follows: If a project is part of an approved plan for water pollution control and abatement in a river basin or in coastal waters, bays, lakes, etc., it is eligible for an incentive grant. State approval of priorities is applicable, as in existing law. The procedures for securing an approved basin plan are described in the next section of this report.

The incentive grant amounts to 10 percent above the basic 30-percent grant provided in existing law, or 40 percent. There is no dollar limitation. The grant may be increased by another 10 percent, making a total of 50 percent, if the State agrees to contribute 25 percent for all projects for which Federal grants are made under this program for the same allocation.

In this case, the State matching requirement has been reduced to 25 percent so that the balance to be contributed by local communities would also be 25 percent. In other words, the 30-percent State matching required for a project which is not part of a basin is arrived at by dividing the non-Federal contribution of 60 percent by 2, leaving, as [p. 16]

explained before, a matching requirement of 30 percent State and 30

percent local. When the project is in a basin plan, the same principle of a 30-50 distribution between State and local community is achieved by requiring each to contribute 25 percent, because the total Federal grant in this case can be 50 percent.

The committee noted with approval that 12 States are now offering financial assistance to municipalities in construction of treatment facilities. In some instances this assistance is offered on a yearly continuing basis, and in one instance in the form of a payment based on a percentage of the original project cost but offered as a means of assisting in the financing of operation. The objective seems to be twofold: to provide State assistance at lower annual cost to the State and without the necessity for a large bonding issue and to assure continued good operation of the facilities. Such an approach is considered as acceptable as State financial assistance as long as the cost to the State is equivalent to 30 percent of the original project cost.

The committee wishes to point out here, since the question has been raised several times, that the metropolitan area bonus of 10 percent of the amount of the grant (not the project cost) is not applicable to grants made to projects qualifying as part of a basin plan under title II. This additional 10 percent under the provisions of section 8 (f) of title I applies only to projects qualifying under that section. The maximum grant under the bill, therefore, is 50 percent, although the new maximum grant for projects not in a basin plan would increase from 33 to 44 percent.

The committee feels that this approach, which is a compromise among other suggested approaches, represents the most practical means of keeping grants for sewage treatment plants distributed most equitably between the old and the new programs. The approach adopted by the administration of giving a 50-percent grant if the project conformed to a basin plan would, in the opinion of the committee, result in making the reward so great for the new program that the old program upon which communities outside the basin plan must depend would be slowed down if not stopped altogether.

The inducement for a community and State to proceed as rapidly as possible in the development of approved basin plans must be sufficient to attract the States without making it so desirable as to reduce to a point of ineffectiveness the Federal incentive to assist those cities and towns which cannot hope for early approval of projects in accordance with a basin plan.

The incentive in the bill for the basin plan alone is, therefore, 10 percent, rather than the 20 percent in the administration bill. The grant for the State matching is also 10 percent, which has the advantage of being the same as the new additional grant under the existing