Mr. SPENCE. You are deeply interested in the control of pollution? Mr. LAMKIN. Yes, sir; both from the standpoint of conservation and protection of the streams, as well as public health.

Mr. SPENCE. And that program can never be carried out sufficiently unless there is complete cooperation, isn't that true?

Mr. LAMKIN. That is true, sir.

Mr. SPENCE. And if there are any cities along the river which throw their raw sewage into the river, the river will always be polluted.

Mr. LAMKIN. That is right. And I might say, sir-of course, if you study the history of our country, you see that the people used the waterways, and everybody accepts that as part of the history of our country. But if you will notice, there are very few cities-maybe I should reverse the statement and say that almost every stream has a city on it within a few miles of each other, because not only have people traveled there from the early times, but they still use them, as a matter of disposal, and they are getting into a serious condition. We have worked principally with the larger cities, and one of the reasons that we have, in the beginning of our water pollution control program, is because they were able to finance these facilities.

So we have done, we think, a good job in getting the larger cities going, but we are at the breaking point, and I know from a practical matter—and I have a list of some cities, if you would want them— that can't go forward.

There is no way for them to finance their sewage treatment facilities on the open market, and they are able to get letters from private bonding houses and fiscal agents that represent the cities, so stating. And some of them have applied to the Housing and Home Finance Agency for such a loan. And it is my further understanding that in no case has Housing and Home Finance Agency accepted a loan to a municipality in Kentucky unless they first present to them a letter from their fiscal agent saying their bonds are not marketable on the market.

Mr. SPENCE. It is very obvious they haven't accepted very many, because they haven't loaned very much.

Mr. LAMKIN. No, sir; they haven't. I don't know why. It is hard to understand why, because so many people need it. But I do know that in some instances it has taken many months to get the loan cleared.

Mr. SPENCE. Now, the control of pollution usually requires the realinement and reconstruction of the whole sewer system. They have to have the interceptor sewers, and disposal plants, and the only way in which they can get the sewage into the disposal plants is by interceptor sewers, isn't that right?

Mr. LAMKIN. That is right.

Mr. SPENCE. And that is a very expensive undertaking.

Mr. LAMKIN. It is one of the most expensive projects that any city has to finance, large cities as well as small.

The city of Louisville, as large as it is, is having financial troubles and that is one of the problems they have, in building the sewers that they need to build today.

Mr. SPENCE. You don't feel that it would be possible to make the pollution control program entirely effective until you have complete cooperation among all the cities?

Mr. LAMKIN. That is exactly correct, sir, and usually the smaller cities are on smaller streams and the sewage from that small city affects that stream sometimes more severely than even a larger city on a larger stream.

Another striking thing about it, not only are these streams used as a sewage disposal, but many of them are used as sources of water supply. That is true all over the State, but particularly in eastern Kentucky where you have so many mountains, that wherever the stream runs that is where the city is located, and that is the source of their water supply as well as their disposal. And for the city downstream that wants to make use of that water, it has a difficult time treating it.

Mr. SPENCE. And polluted water transmits many diseases.

Mr. LAMKIN. Yes, sir. And treatment is expensive, it's corrosive on expensive machinery that is bought to treat water, so that the cost is higher per gallon delivered, and of course it is certainly unsafe.

If someone forgets to turn a valve and they are treating polluted water, then the health of everybody is affected.

And, sir, I would like to add here, as a practical matter-it is not just merely a statement-in the past 6 years, I have worked with almost all the cities of any size in Kentucky, and I have also had the privilege of working with industry, and if you talk to those people who are interested in locating plants in these smaller towns, almost without exception the first two questions they will ask you are: What about an adequate water supply, and what about sewage treatment, and will the sewage treatment plant treat their industrial waste?

There are two reasons for that. In my hometown we had a very pleasant experience a few years ago. A big chemical plant located there. First, they hire people who are highly educated. They have some people who have Ph. D.'s from some of our leading universities; they have fine families, and it is difficult for that corporation to get that type of employee to go to a city to live, even a small town, if he cannot have a decent home, decent community health, so that he can raise his family. That is very important.

Then the second thing, in the case of some industries, they say that competition is so great in the marketplace that the community that cannot afford to treat their industrial waste for them, since communities do vie with each other and bid heavily for industry, if a city has the facilities, they will go there, because they can market their products cheaper. It is part of their cost. And some of them will tell you very frankly that they cannot afford to build these facilities. And we have some instances where the communities, along with the industries, have financed the buildings into which an industry would move. Not only are they required to furnish sewage treatment, but also the buildings that these people move into. And some of them have been successful.

Mr. SPENCE. Don't you think if we could obtain an adequate water supply, and adequate sewer facilities, that many of those towns in eastern Kentucky that are so terribly depressed at the present time might eventually have greater employment opportunities?

Mr. LAMKIN. Yes, sir, I certainly do.

The little town of Cumberland, which is northeast of Harlan, is a good example. It is a beautiful little town. I don't remember the population exactly, but I am sure it is probably two to three thousand.

The University of Kentucky is locating there an extension where the mountain boys and girls can go to school. And they do not have a sewage system.

The mayor was before our commission a few months ago, and even though the Kentucky Water Pollution Control Commission had allocated all the funds available under the terms of the law, under Public Law 660, as a grant to the city, it was not able to meet the cost and sell the bonds on the open market. And today we know that mayor has already told us that he cannot make use of those funds, and we can take them and give them to some other city, because he can't raise the remainder of the money. And he is in the process of trying to find out whether or not he can get a loan from Housing and Home Finance Agency.

They told us at the commission meeting that they were going to Atlanta. I am not sure that they have. But it seems that it is a difficult and long and drawn-out process to get a loan from these people, even though they are eligible.

Mr. SPENCE. And you believe the passage of this bill would be of great benefit?

Mr. LAMKIN. Mr. Chairman, this is not a blanket statement, and I hope the Commission will take it as a statement based on my experience and general belief in dealing with the cities and mayors and city councils of Kentucky.

This bill and the availability of this money will do more to build sewage and water treatment plants where they are needed in the small cities than anything I know of, and in fact, Mr. Chairman, I don't know how they are going to do it if these funds are not made available to them.

And I would think that if you traveled from here back to Louisville and looked at the little cities outside of Kentucky, that there are uncompleted streets and houses all over the place.

We are expanding and our population growth as well as industrial growth is a fact and a reality, and it is something that we haven't considered seriously enough in the past or we wouldn't have so many of these severe problems at the present time.

And I think this bill will do much to eliminate it and I want to urge personally as well as for all the people I represent here today, that it be passed and made effective as fast as possible.

Mr. SPENCE. Thank you.

Mr. LAMKIN. Now, sir, I have a list of cities which I will be glad. to read to you, which I obtained from our official files this morning, of people who are having difficulty-and I mean municipalities and cities-in obtaining money on the open market.

They are willing to pay for it. But they will be able to submit a letter to Housing and Home Finance Agency, which it has required in the past, stating they cannot finance these facilities in the open market, because they are a bad risk.

I suppose if they paid 6 percent, the monthly charge would be where the people could not afford it, or where they could not sell the bonds, and even if those factors are present, people won't buy them.

Mr. SPENCE. Have you a list of cities?

Mr. LAMKIN. Yes, sir, I will be glad to give them to you, sir.
Mr. SPENCE. Read it.

Mr. LAMKIN. The first one is Beechwood Village. Greenville, Brandenburg, Cadiz, Radcliff, Olive Hill, Cumberland, Flatwoods, Litchfield.

Now, the city of Muldraugh is presently using a loan from Housing and Home Finance Agency.

New Haven, Lebanon Junction, Florence, Shepherdsville, Owingsville, Burkesville, Dawson Springs, Earlington, Williamstown, Brownsville, Auburn, Irvington, Brooksville, Mount Washington, Upton, and Camargo.

Now that is quite a list of cities, Your Honor, but it is a practical problem to go sit down and talk to people and require them to build these facilities when they don't know where they can get the money.

And on the city of Brownsville, a few years ago, was the last city, about 3 years ago, the last city in Kentucky that did not have an approved water supply that provided safe water for the city, or which had a system which could be made to operate safely.

They were not able to sell their bonds on the open market, and they applied to HHFA for a loan, which took several months to get through, and they finally were able to sell their bonds to the HHFA, and they now have almost complete, and I believe in partial operation, an acceptable water supply for the people of that community, which is the first time in history they have ever been able to have it.

Now, with the increased use of water, with the growth in that community, which is small but it is growing, they are going to need sewers and a sewage treatment plant.

Now, if they were not able to sell their bonds for the water system in the first place, I think the committee can readily see that they will not be able to sell their bonds on an open market for added indebtedness for their sewer system.

Mr. SPENCE. Thank you very much for your statement.
Mr. WIDNALL. I have a question, Mr. Chairman.

Mr. SPENCE. Mr. Widnall.

Mr. WIDNALL. Mr. Lamkin, Kentucky is mighty fortunate in having the able and distinguished Brent Spence as a Representative. Mr. LAMKIN. Thank you. We are very proud of him.

Mr. WIDNALL. Over a period of years he has rendered outstanding service not only to Kentucky but to the Nation as a whole, and we respect him for his ability and his dedication in trying to do a job for this bill.

I have some questions addressed to the ability to finance and some other sections of this bill.

I believe you said that there were 92 cities which presently couldn't finance even with a 30 percent grant. Did I understand you correctly? Ninety-two municipalities which couldn't make the grade now with a 30 percent grant? And my question was going to be, if that is so, how would this bill help them when, within the bill, it says:

"All loans under this section shall be of such sound value or so secured as reasonably to assure retirement or repayment."

If they can't do it with a 30 percent grant, I can't see how they can do it with just a little bit lower interest rate.

Mr. LAMKIN. I don't think, sir, it is altogether the interest rate, although as you know the interest rate gets to be a factor. It adds up, and if you take a 30-year loan, I suppose it would be twice repayment of the debt.

But I think in answer to your question, what we mean by this, im working out this statement, is that these communities are the communities that are in the classes of those that have been unable to sell their bonds on the open market, even though they have been tendered this grant, a 30 percent grant, which is approximately 30 percent of the whole cost, although there are technicalities there and it is a sewage treatment plant and interceptor lines. Actually, it is not the whole system.

But these communities fit into that same category.

Now, if they can do two things, if they can have a lower interest rate, which as I understand most of those loans, it's a little bit lower than the interest rate on the open market, and if they can have an extended period of time, the extra 10 years or so to pay this off, then they can pay it, because it gets down to being a practical matter of paying a monthly bill.

Under the use of revenue bonds, they are paid back, as you know, from the services rendered, either so much water use, or that sort of thing, and the payment of the sewage charges is usually based on a percentage of the water bill. Because after many years they are finally able to say that just about as much water as goes into the house by the meter comes out of the house for sewage treatment.

So if you give them this added period of time, plus a lower interest rate, they have been able to do it.

I think the classic example is the little city that I told you about, Brownsville, which just couldn't do anything. They were a health hazard, and we were on the verge of closing their schools. But they were making progress and by watching it carefully, we were able to control it until we got the system in.

Mr. WIDNALL. Of course, as I understand it, when they were finally able to apply under the present program, they were able to finance under that program?

Mr. LAMKIN. After a period of time.

Mr. WIDNALL. So your criticism would be as to the extent of time required under the present program, rather than the inability to do anything under the current program?

Mr. LAMKIN. Well, I think that certainly this program, if it is made available, and smaller cities know they can obtain money there, I think it will facilitate it.

I don't know whether we have been limited or what, but I have just read you the list, and the statement contained here gives two reasons about why it has taken so long-either money is not available or it's the handling of the applications.

Mr. WIDNALL. Mr. Lamkin, along that line, you pinpoint one municipality. I believe you said Cumberland was going to be the site for the extension school of the University of Kentucky and that the maximum amount of funds was granted by the State but they then found they couldn't finance it.

Mr. LAMKIN. That is right.

Mr. WIDNALL. They are now in process of trying to obtain a loan from the HHFA?

Mr. LAMKIN. Yes, sir.

Mr. WIDNALL. When did they first apply to them, do you know? Mr. LAMKIN. I don't know exactly, but I would say it would be around the last of November or possibly the first of December.