Yes, they are, and we have helped the States. We work with them to correct the condition-I am sorry. I reverted.

Mr. ROGERS. I understand. You did help them.

Mr. JOHNSON. The Federal Government does provide help to the States in correcting the kinds of conditions that it finds are the cause of the prohibition in the first place.

Mr. ROGERS. Yes. What about deleted supplies on the listings? What does that mean? Were they taken off because they were prohibited, or they didn't want them, or what?

Mr. JOHNSON. There is a constant changing, as you know, and where we have interstate supplies where carriers move in and out, and you are only there by virtue of the Federal legislation, if it is indeed an interstate watering point. If there is no interstate watering point, there is no need for the supply to be on the list, and it could be deleted.

Mr. ROGERS. But it is not on the list sometimes because it is prohibited?

Mr. JOHNSON. Yes; it could be maintained as a prohibited supply so that an interstate carrier will no longer take water on at that point. Mr. ROGERS. I notice there is one listed in Michigan, and one in Ohio, Crestline and so on, and another one in Illinois, Lemont.

Mr. JOHNSON. I dare say they no longer qualify as interstate watering points.

Mr. ROGERS. Yes, they have been deleted.

Mr. JOHNSON. Unfortunately, my recollection would not carry me to that kind of detail.

Mr. ROGERS. We can pursue it with the agencies.

We have approximately 700 watering

Mr JOHNSON. Interstate watering points that are controlled by present law.

Mr. ROGERS. We need to take a look at about 30,000.

Mr. JOHNSON. Those are the figures I have been using.

Mr. ROGERS. Thank you very much. We appreciate your being here and the testimony you have given.

Mr. JOHNSON. Thank you, Mr. Chairman.

Mr. ROGERS. I might say, if the members of the committee would permit one more witness, and then we will try to come back at 2 o'clock to hear the rest of the witnesses today, so that everyone will be heard, because I know some have come from out of town, and we will try to get all witnesses today.

Our next witness is Mr. Henry Patterson, the National Water Company Conference, and I might say that Mr. Patterson is an old friend of mine. We served in World War II together. He was a great artilleryman and a forward observer in a little plane. Mr. Kyros, having been educated at the Academy, is very conscious of the abilities of anyone in the military.

STATEMENT OF HENRY S. PATTERSON, GOVERNMENTAL RELATIONS COMMITTEE, NATIONAL WATER COMPANY CONFERENCE

Mr. PATTERSON, I might add that Mr. Rogers was a good officer, too; one of my senior officers. I think it was 27 years ago.

Mr. ROGERS. It is a pretty long time. We are delighted to welcome you to the committee, and to receive your testimony.

Mr. PATTERSON. My name is Henry S. Patterson. I am executive vice president of the Elizabethtown Water Co., Elizabeth, N.J. Elizabethtown is a public water system as defined by both H.R. 437 and H.R. 1093, since it is an investor-owned water utility regulated by State law. Elizabethtown, directly and through five operating subsidiaries, provides water service in New Jersey at retail to 44 communities in parts of six counties, and at wholesale to 10 other public water supply systems, both municipal and investor-owned. Our service area includes the large urban centers of Newark and Elizabeth, which are served at wholesale through their own municipally owned systems. On a retail basis, we serve such communities as Princeton, Plainfield, Somerville, Union, Mount Holly, et cetera, as well as smaller rural areas in Burlington and Hunterdon Counties.

I am also a member of the Governmental Relations Committee of the National Water Company Conference, and I am appearing before you today as a spokesman for the conference.

The National Water Company Conference is a nonprofit trade association founded in 1894 to represent the "investor-owned" segment of the public water supply industry. The "investor-owned" segment consists of approximately 5,500 water utilities serving some 40 million of the 175 million Americans who are served by a public water system. The others are served by approximately 25,000 municipal systems, authorities, and water districts.

I am here today to comment and make some suggestions on the provisions of H.R. 1093, The National Water Hygiene Act of 1971 and H.R. 437, Pure Drinking Water Act. First of all, I, for myself and for the conference, believe that legislation of this type is needed and should be promptly adopted.

We are especially pleased with the provisions of these bills which provide for Federal programs of research and development and training of personnel involved in the public health aspects of water treatment and purification facilities.

As estimated 85 percent of the systems in the public water supply industry and this includes both municipal and investor-owned companies are very small, serving between 500 and 1,000 customers. Four thousands of the 5,500 investor-owned water utilities have revenues from water sales of less than $10,000 per year. Certainly companies of this size cannot provide or afford the research facilities or the technical expertise which would be available to them through the passage of this legislation. And all public water systems-small and large-must have these facilities and these experts if they are to continue to provide the high-quality water service which has been provided in the past and meet the even higher standards that consumers require for the future

As for specific comments, I have several, mostly along the lines of asking for clarification, particularly on the provisions of H.R. 1093. This legislation provides for grants to State and interstate water hygiene agencies for the cost of planning, developing, establishing, and improving public and private water supply facilities. I congratulate Representative Rogers for recognizing the private segment of the water industry by including us in the definition of the term public water system in H.R. 1093, and Representative Robison for the same reason in H.R. 437. We assume and urge that this provision will insure that small, private water utilities with the same difficult.

problems of many municipally owned systems will be eligible for the same assistance under this legislation. We believe that H.R. 437 and H.R. 1093 recognize investor-owned utilities as equals and provide for equal treatment for the consumers of our water.

I would like to state our association's policy on this matter by quoting from a statement delivered by our past president, Frank E. Dolson, before the National Water Commission on November 6, 1969. He stated:

The National Water Company Conference is of the firm belief that public water utility construction, expansion, operation and maintenance should be on a self-supporting basis. The value of a good water supply is such that the beneficiary has no reason for asking to be subsidized. In this connection, then, there should be no difference between water supply utilities that are owned by municipalities, districts or authorities, and those owned by private investors. Each utility should pay its own way. Also, each utility should have equal opportunities and privileges under law in the bond markets and other areas where capital funds can be made available. It is not the role of government in a democratic society to prejudice one form or another of ownership either through taxes or concessions or subsidies. The investor-owned portion of the water utility industry pleads earnestly for equal treatment at all times.

Althoug the National Water Company Conference is of the conviction that public water utility operation should be self-supporting, should the Congress determine that grants, loans, or other assistance to public water utilities are in the Nation's interest, such grants, loans or other assistance should be made equally to all public water utilities regardless of ownership.

All suppliers of water must work together to solve our ever increasing problems and, therefore, we think that in H.R. 1093, line 23 on page 2 should reflect that fact by stating "that suppliers of water to the public," a broader term than just "State and local governments," be stated as "in need of assistance, et cetera."

The following comments are also in regard to H.R. 1093. On page 3, lines 10 and 11, appear the words "up to the free flowing tap of the consumer." We are not sure what is meant by this. Except for the meter, the supplier of water ordinarily has no ownership or responsibility functions for the pipes on the consumer's property. Our responsibility historically has stopped at the property line.

On page 10, line 17, we would suggest that the wording be changed to "any public water supply system" to reflect the broader meaning of these words as defined in the legislation.

Referring to page 17, lines 22 and 23, we are not sure of the exact meaning. To avoid any misunderstanding, we would again suggest using the words of the definitions, namely, "Public water supply systems" in place of "private or public nonprofit institutions."

The hygiene programs section beginning on line 16, page 19, again gives us concern. Are all public water systems, as defined, to share in the grants? We believe that this should be so. Does this section in any way intend that boards of health become water supply operating agencies? If this can happen under the provisions of the bill, we believe it to be a mistake. These boards have enough to do without having to accept the day-to-day responsibility of operating a water system. Finally, on page 23, line 9, we believe that the role of interstate cooperation should be that of "insuring safe water for drinking, recreation, et cetera," rather than "providing water" for the same purpose.

In conclusion, I want to thank the chairman and members of this subcommittee for granting us the opportunity to appear before you and present the views of the National Water Company Conference

with respect to H.R. 437, Pure Drinking Water Act and particularly with respect to H.R. 1093, the National Water Hygiene Act of 1971.

Mr. ROGERS. Thank you very much for your statement. It will be very helpful to the committee, and particularly in pointing out these particular sections of the bill that need attention.

Mr. Kyros?

Mr. KYROS. Thank you, Mr. Chairman.

I think this is very helpful, Mr. Patterson, to show us what the investor-owned water utilities are interested in, and I am pleased that you came here to support the legislation and indicate those changes that you did. Thank you.

Thank you, Mr. Chairman.

Mr. ROGERS. Dr. Carter?

Mr. CARTER. Thank you, Mr. Chairman.

I notice on page 5 you think that your system should share in grants; is that correct?

Mr. PATTERSON. Under the same terms as someone else. I don't think that the Federal Government's role should just be to give out grants per se.

Mr. CARTER. Are you a nonprofit organization?

Mr. PATTERSON. No, we are not.

Mr. CARTER. I hardly see how it would be possible for the Federal Government to give grants to a profitmaking organization.

Mr. PATTERSON. I understand the legal problems involved. I mean, I realize that there is a legal problem involved. I think that all of us feel that grants, per se, are not necessary.

I do agree with your observation earlier this morning that there are occasions when grants are absolutely necessary to provide proper water for rural areas that have no other means of getting it. I was a mayor for 8 years. I know the problems of the urban areas.

I think that the city of New York and the city of Newark and the city of Trenton, et cetera, with their problems, with their other financial problems, if they have to make certain improvements to their water systems, I think they should get grants if the grants are made available by the Federal Government.

If, legally, grants can be made to investor-owned water companies that need the grants, whatever rules are set up to determine whether the grants are needed or not, if they meet those rules, the investorowned water company should get the grant even though it is investor owned.

It will not be allowed by any public utility commission I know of to earn on the basis of that grant. Already water companies are receiving grants in terms of payments by developers, for instance, to run a main, that otherwise would be uneconomic, out to a certain location. The PUC does not permit the water company to earn on that particular grant, or that advance.

Certainly, and this goes without saying, under the terms of this bill the investor-owned water companies will, and certainly should, get the advantage of the research that the Federal Government will be providing.

Mr. CARTER. Certainly. I would certainly agree on that.

Of course, there are certain areas of the country in which private nterprise has not seen fit to go. It is uneconomic for them to go into any, many areas, and they haven't. In those cases, it has been

necessary for the Federal Government to give grants and loans 'to provide pure water for the people in that area.

Mr. PATTERSON. I couldn't argue against it.

Mr. CARTER. In those instances, it is my feeling they should maintain themselves as far as possible, and the Federal Government should not engage in maintenance.

Mr. PATTERSON. I would agree. I can think of one example in Gary, Ind., which is served by an investor-owned water company, where there was-I don't know whether the grant requested there would have come under the terms of this bill. I rather think it would not. But it would have been to the advantage of every one concerned if the grant had been at least given to the municipal entity, the city, and they then could have turned it over to the water company, not directly, but entered into the same kind of contract with the city that a developer could have.

Mr. CARTER. I hardly see how the Federal Government can ever give grants to a private utility, a profitmaking concern.

Thank you, Mr. Chairman.

Mr. ROGERS. Mr. Symington?

Mr. SYMINGTON. Thank you, Mr. Chairman.

I am not as familiar as I wish I were with what the Federal Government could or couldn't do with respect to helping private utilities such as the one you represent.

Mr. PATTERSON. I am speaking for the association. I am not asking it for my company.

Mr. SYMINGTON. I understand. Such as your association represents, I should say.

But obviously, the principal aim of this legislation is to provide clean drinking water, and inasmuch as it is not illegal for that water to be provided by private utilities, then the thrust of our legislation must somehow reach that effort. Perhaps it could be done through tax incentives of one kind or another, and perhaps, Mr. Chairman, this could be explored after we talk with counsel about the matter.

I certainly would want all available and appropriate carrots and sticks to be used to assure safe drinking water.

Your objection to providing water on page 5, and the substitution of the word "insuring," would you explain that?

Mr. PATTERSON. I just think it is more to the point of what I think the bill is intended to accomplish; that safe water for drinking is assured to everybody. It is minor wording. I wouldn't characterize it as being major. It wasn't intended to have any other reason.

Mr. SYMINGTON. I understand. I just wanted a clarification there. It is interesting that the investor-owned segment of this industry serves 40 million Americans. Is this on a broad geographical pattern, or is it concentrated in certain areas?

Mr. PATTERSON. I would say it would be broad. The bigger companies are probably concentrated more on the east and west coasts, but there would be very many smaller ones in between.

Mr. SYMINGTON. This is 20 percent of the total served, if the figures are accurate. Clearly, Mr. Chairman, we shall have to give close attention to this testimony, and I appreciate having it.

Mr. ROGERS. Mr. Kyros?

Mr. KYROS. Thank you, Mr. Chairman.

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