Highway Statistics, 1970

Chart B

AVERAGE DISTRIBUTION OF COSTS ON FEDERAL-AID PRIMARY HIGHWAY CONSTRUCTION CONTRACTS COMPLETED DURING CALENDAR YEAR 1970

1/ Gross earnings of contractors' employees in the following classifications: Administrative and Supervisory, Skilled, Intermediate, and Unskilled labor.

2/ Aggregates consist of sand, gravel, slag, crushed stone, etc., for use in bases, portland cement concrete and bituminous surfaces, and portland cement concrete structures.

Includes structural, reinforcing, culvert and miscellaneous steel.
Other materials and supplies, excluding fuel and lubricants for equipment

(3.6%).

Equipment including fuel and lubricants, but excluding operators' and mechanics' wages is estimated to be approximately 16%. Overhead includes contractors' on-site expenses such as moving-in costs, office rental, taxes, licenses, insurance, etc. Source: Construction and Maintenance Division

Office of Highway Operations, FHWA

41.4%

Senator ERVIN. Isn't it rather essential, as a practical problem, in the construction of any highway project or the construction of any public works project, for that the work on that project be continued until the project is completed?

Mr. TEER. Absolutely essential, sir.

Senator ERVIN. And is it not true that freezing the funds which have been appropriated for the consummation of any project of that nature, after the work on that project has begun by the contractor, not only causes serious handicaps to the contractor, but also financial loss to the taxpayer, because it is almost inevitable under those circumstances that the resumption of the work on the project after a period of freeze is going to be more expensive?

Mr. TEER. That is correct, Senator. As you know, we have been cursed with inflation for a long time, but even without the inflationary forces that are involved in the on-again, off-again, stop-and-go plan, gearing up and gearing down is terrifically expensive and inefficient. Senator ERVIN. And it is also very grave economic injury to the country to freeze funds which afford a means of employment of people, thus throwing those people out of employment.

Mr. TEER. It does. And as we pointed out in our testimony, we have been trying in our industry to train minorities, and we were making a good start. But as they curtailed these programs, a man that you have partially trained, you have no place to even continue to train him, and no job to offer him if he becomes skilled, and the man gets disillusioned and disheartened.

Senator ERVIN. I think there have been serious mistakes made in impounding funds, although I am for economy in government and support all reasonable measures.

To give one or two examples. Last year the President recommended a very substantial appropriation for what he called the school emergency bill. I voted against the bill because I thought it was unwise in many aspects, and I might say frankly because they cut out of it some amendments I had gotten on the busing problem. Then HEW, an arm of the administration, insisted after the bill passed, that the North Carolina public school authorities avail themselves of the provisions of the bill and employ several hundred teachers, extra teachers, under the terms of the bill. They went ahead and did that, and then lo and behold, the President then froze the funds right in the middle of the term for which these teachers had been employed.

Either those teachers are going to stand substantial loss, or the State of North Carolina is going to have to step in and pick up the tab for their employment after they had been employed solely on the insistence of the Federal Government, and with the assurance that the Federal Government would provide those funds. I consider any impoundment of funds, except in most grievous economic need, during the period of the fiscal year in which those funds had been appropriated and were being used, as a very unwise action.

Mr. TEER. I Concur with you 100 percent.

Senator ERVIN. Outside of the constitutional aspects, there is serious economic loss occasioned by the cutting off of funds. President Nixon is not the first President that has impounded highway funds. President Johnson, as you recall, did the same thing before, so it is sort of a nonpartisan action. But in the case of the highway trust

fund, here are funds that are paid by a special class of taxpayers so that they can exercise what you may call the privilege, or right, to travel over public highways, the funds are placed in a trust fund and cannot be lawfully used for any other purpose, and they are funds which we actually have in the Treasury. It seems to me that, if you are going to fight inflation, it is better to spend money which you actually have in the Treasury, or in a trust fund, than to spend some money that you haven't got at all, as we do with deficit financing.

So I certainly share your views that the impoundment of these funds have been a very unwise act, both economic and governmentally -speaking.

Mr. TEER. Thank you, Senator.

Mr. EDMISTEN. Mr. Teer, have any members of your staff ever talked to the officials at the Office of Management and Budget about some of these impoundments?

Mr. TEER. I am sure they have. I cannot quote you specifics. If you like, I can turn to some of the staff accompanying me and ask them specifics.

Mr. EDMISTEN. In your negotiation with OMB, what excuse do they give you for impounding funds?

Mr. SPROUSE. I don't think I can truly say we negotiated with OMB. We tried to talk to them about this without a great deal of success. Mr. EDMISTEN. What reasons do they give for withholding funds? Mr. SPROUSE. I don't know that they ever gave any reason. Mr. TEER. I think what Mr. Sprouse means is a monolog.

Mr. SPROUSE. We got polite responses from them which I can quote from memory but I don't think there was much substance to them. Mr. EDMISTEN. They never cited any law to you?

Mr. TEER. No, sir.

Mr. SPROUSE. We brought up that very question and they just told us the President has the legal authority to do this without citing law. Senator ERVIN. I think I can probably answer that question. In a suit brought in the district court in Missouri and which is now pending in the court of appeals for the eighth circuit, the excuse given by the Government was that the President impounded highway funds to fight inflation and the statutes governing highways have no provision for the impoundment of funds to fight inflation; they do have a provision that has no application in this particular case in certain instances. Mr. SPROUSE. I did, Mr. Chairman, talk personally to the Secretary of Transportation at the time of the first impoundment, which was in November of 1967, and that was Mr. Allan Boyd, and discussed it with him. He had no doubts about his authority ever.

Senator ERVIN. I have been informed, I don't know what your experience is, but I have been informed by other people it is very difficult for a citizen to get an audience with the OMB.

Mr. SPROUSE. I think you said what I was reaching for.

Senator ERVIN. While the Constitution provides in the first amendment that people have a right to petition Government for redress of grievances, they don't get to exercise that right in respect to actions contemplated or taken on the recommendation of the OMB. And that is one reason that I think that the question of the appropriation of funds and the expenditure of appropriation of funds ought to be left where the Constitution places it; namely, in the hands of Congress, be

cause Congress in the very nature of things sits as representatives of the people, and is dependent upon the people, and is always willing to grant people their right of petition. It is rather arbitrary and unchecked when you transfer to the executive branch of the Government powers which are bad enough when the powers under the Constitution, belong to the Congress, for my experience is that most appointed officials as distinguished from elected officials, are not susceptible of receiving partitions for the redress of grievances.

Mr. SPROUSE. I think as a citizen I can see my two Senators or Members of the House of Representatives a great deal easier than I can see anybody in the OMB.

Mr. MILLER. I think, Senator, if I may say so, Mr. Teer has brought to the committee something which hasn't been brought before, and that is the human element of impoundment. We have been talking really abstract legal theory heretofore, constitutional theory and so on, and you brought some of the impact on people themselves which, I think in my judgment at least, would be a great benefit to the committee.

I wonder, Mr. Tee or Mr. Sprouse, if you ever had occasion to have your lawyers look into the legal basis for impoundment and have they come to a conclusion?

Mr. SPROUSE. They have, Senator.

Mr. MILLER. Please, professor is the most I can claim, Mr. Sprouse. I sometimes doubt if I should claim that.

Mr. SPROUSE. I will start over.

The AGC of Missouri, which is one of our affiliated organizations, brought to the attention of the Highway Commission of Missouri the case which now has become the case in which the highway commission of Missouri sued the President of the United States and the Secretary of Transportation on impoundment of funds.

Mr. MILLER. Let me correct you. He didn't sue the President, he sued Mr. Weinberger and Mr. Volpe.

Mr. SPROUSE The Secretary of Transportation is the one that comes to my mind because we questioned the legality of it, the G.C. of Missouri. They brought in the highway commission and they brought the case to court. Those lawyers, the law firm in Kansas City which is handling this is the only one which we discussed the actual legality of the action.

Mr. MILLER. You take the same position on other impounded funds as you do on highway trust funds?

Mr. SPROUSE. Yes, sir.

Mr. MILLER. As for any other impounded funds, you take the same position so far as the legal authority of the President and the human impact in America generally? Although you haven't studied this for other programs and so on, it seems the same conclusion that you draw, Mr. Teer, for your industry, and concerning people who work for you, might be drawn in other areas as well, and the same conclusion can be drawn so far as the lawful authority of the President

to act.

I take it you don't single out the highway trust program as a special

case.

Mr. SPROUSE. No. One of the things that we do single out, sir, is, and object to, is the tendency of this administration and previous admin