ministration's insured lending authority, far from excessive, will help bring the program up to a level of adequacy at this time. The people of Oklahoma will be grateful for the opportunity you can put before them by your favorable action on this bill. I thank the committee for your courtesy in permitting me to make this statement. Senator HOLLAND. We are very glad to hear you. STATEMENT OF EDWARD D. KILEY, RURAL AREAS DEVELOPMENT SPECIALIST, NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION Senator HOLLAND. Let us hear Mr. Edward D. Kiley, rural areas development. Mr. Kiley, we will be glad to hear you. Mr. KILEY. Thank you. Mr. Chairman and gentlemen of the subcommittee, I am Edward W. Kiley, rural areas development specialist of the National Rural Electric Cooperative Association. With me today is Mr. Robert B. Smith, the legislative representative of the organization. Senator HOLLAND. We are glad to have him. Mr. KILEY. This is a national service organization for almost 1,000 rural electric systems operating in 46 States, and serving nearly 10 percent of the population of the United States with electric power. Rural electric systems have consistently supported legislation which would provide adequate water systems throughout rural America. We urged changes in the existing law to remove the present $1 million ceiling on loans to any one organization, and limit loans only by feasibility with the provisions to allow additions as they become feasible. At this point, I would like to submit for the record resolutions passed at the 1964 and 1965 annual meetings of our association dealing with this subject. At this time I would also like to submit for the record an article which Senator Aiken wrote for our news service release in our statewide paper around the country. Senator HOLLAND. Without objection it will all be admitted for the record. (The documents referred to follow:) RESOLUTION PASSED AT NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION, 23D ANNUAL MEETING, JANUARY 25-28, 1965 RURAL WATER SYSTEMS Whereas the Department of Agriculture through the Farmers Home Administration has in the past 3 years made construction loans to over 300 communities to build public water systems supplying over 100,000 residences with good water; and Whereas there are still many communities and areas that need and want a public water supply and will make applications for loans to construct same; and Whereas these loans are now limited to a maximum of $1 million to any one organization, thus limiting the size of a project so that in many instances it cannot be most economically operated; and Whereas there is a need to build larger systems in many locations and to expand some already constructed and on which the present maximum loan has been made: Now, therefore, be it Resolved, That we petition the Congress, the Department of Agriculture, and the Farmers Home Administration to revise the laws and rules as necessary to remove the limitations on the amount that may be loaned any one organization, and limit loans only by feasibility, with provisions for additional sections when feasible as determined by the Administrator in a manner similar to that now used by REA in making electric and telephone loans. RESOLUTION PASSED AT NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION, ANNUAL MEETING, MARCH 9-12, 1964 22D RURAL COMMUNITY SERVICES, WATER, SEWERS, FIRE PROTECTION Whereas there are now many rural areas contributing to the economic soundness of our rural electric systems, where the water table is falling fast because of increased concentration of homes and business establishments along paved roads as the exploding population seeks satisfactory living sites, and which concentration using septic disposal fields is also causing contamination of wells and individual water supplies making it impossible for many to secure adequate and potable water, satisfactory sewage disposal, fire protection and other community services; and Whereas none of the Government programs and agencies have a program that adequately serves these rural areas; and Whereas the Farmers Home Administration has made a good start on central water systems and is best set up to administer the rural community area needs if their program is expanded and remodeled to meet these needs for loans and guidance in community facilities: Now, therefore, be it Resolved, That Congress be asked and urged to authorize the Department of Agriculture through the Farmers Home Administration to provide a program and financing for rural central water systems, sewage disposal facilities, firefighting and protection units, and other community facilities as the needs develop similar to those now provided incorporated urban groups through other agencies of Government. WATER RURAL AMERICA'S GREATEST NEED (By Senator George D. Aiken) The greatest domestic problem facing our Nation today is the conservation, purification, and distribution of water. The great cities of America are apprehensive over their water supplies and are looking anxiously for new sources. The drought which is now entering its third year in some areas has intensified this anxiety. While the water situation in the cities is undoubtedly cause for concern, it is in the rural areas that the situation is rapidly approaching a crisis. It is not that America has a dire shortage of water that is causing alarm. It is because so much of the water is polluted or is unavailable to those whose means of living and whose destiny depends upon it. Water usage is showing each year a high per capita increase in consumption and the old sources of supply are unable to meet the increased need. Adding to our problem is the estimated increase of 100 million in our population over the next 35 years. Some of this increase will be absorbed by the cities; more will be added to the suburbs where water systems already exist although many are in short supply. The real opportunity to absorb this huge increase, however, lies in the rural communities and the agricultural areas of the United States. Thanks to the splendid work of the Rural Electrification Administration most of these communities now have electricity. They are ready to take on their share of our population except for one damaging handicap. Over 30,000 of our rural communities lack adequate water systems. And without water they not only cannot grow and prosper, but most of them are likely to remain dormant or moribund. Until they can have adequate supplies of pure water they not only cannot absorb people on a residential basis; they cannot even produce the food products necessary to meet the increasing needs of the urban population. It is already becoming difficult for dairymen in many areas to meet the increased sanitary requirements for milk production because of lack of water. This situation is forcing thousands of small and medium sized dairy farmers to give up the ghost. Besides needing water for livestock many rural communities need clean water for food processing, for preparing vegetables for market, for fire protection, for maintaining local industries, and for domestic purposes. Until this need is met they cannot grow and make their proper contribution to the growth of our country. Yet it is to this direction we must look if the future requirements of the Nation are to be met. The disturbing phase of the rural water problem is that in so many communities having great potential for growth the local people are unable by themselves to bear the cost of installing an adequate water system. They are presently not eligible for Federal grants such as our larger towns and small cities now enjoy. Because of this handicap, Senator Mansfield and I last January introduced a bill to amend the REA Act to provide for a program for rural water systems with Federal grants under the REA. This bill encountered trouble not only in Congress but in Administration circles, so on April 13 we reintroduced a modified version of the bill as an amendment to the Consolidated Farmers Home Administration Act of 1961. The modified bill has proved more acceptable and has now been sponsored by 93 Members of the Senate while several Congressmen have also introduced it in the House. The national benefits which would result from a rural water system program are difficult to estimate but would certainly be enormous. There would, of course, be the broadened residential base for our increasing population. This would result in increased construction of homes, building a new market for appliances and supplies. It is estimated that the REA program has resulted in adding $6 billion a year to our national economy. A rural water program should do as well. With water available more people would remain on the land, contributing to the Nation's growing food requirements or finding employment in local industries. Small businesses would find it possible to locate in communities which cannot be considered unless a water supply is available. This new bill, S. 1766, provides for grants up to $5 million a year for planning and up to $25 million a year to aid construction under certain conditions. The FHA already has authority to make or guarantee loans for rural water systems but cannot presently make any grants for this purpose. The authority given by S. 1766 would apply only to communities of not over 5,000 population. No grants could amount to more than 40 percent of the cost of the project, and no grants could be provided unless it appears that the installation of a water system would probably result in an increased growth of the community. There are no fixed rules relating to the type of the facility. Water might be obtained from existing natural lakes or streams. It might come from newly constructed reservoirs which capture the spring rains. It could come from wells or in some instance from the purification or desalinating of existing sources. I would not have one believe that the installation of water systems alone would meet the requirements of our rural communities. Many of them are also in need of waste disposal, fuel lines, recreation facilities and many other items which go to make up a well-rounded community. However, without electricity and water, further growth is out of the question. Thanks to the REA we now have the electricity; our next step is to get the water. Senate bill 1766 and its companion bills in the House will be a long step in this direction. Mr. KILEY. Statistics show that some 30,000 communities in rural America-towns of 5,000 and under-do not have an adequate water supply. One out of four rural farm homes and one out of five rural 49-722-65-4 nonfarm homes are without running water; 8.5 million rural families are not connected to central water systems; 6.5 million families have wells as their source of water. The Public Health Service has estimated that 65 percent of these wells show bacteria contamination during various times of the year. In the annual loan fund survey of our membership this year, we included questions regarding area development needs. Over one-third of the systems reported that water and sewer facilities in their service areas are inadequate; and about 1 out of 10 of these systems reported no water and sewer facilities available whatsoever. As rural areas development specialist at NRECA, I receive many requests for assistance with varied development projects. By far the most frequent requests I receive are for help in developing water systems. President Johnson, in his farm message, called for a "parity of opportunity" for rural America. Without adequate water and sewage facilities, rural America will continue to be handicapped as compared with urban America. Rural electric systems, recognizing this, fully support all efforts to close this gap. Our systems have consistently worked for the development of their communities. Through their efforts in the last 4 years, 135,000 jobs have been created by 1,500 various projects, which represent an investment of over one-half billion dollars, most of which was locally raised funds. We believe that just as the Rural Electrification Administration, through its assistance and with the efforts of rural people in the past 30 years, electrified rural America, so too in 1965 a similar coordinated all-out effort is required to obtain much needed rural water systems. Enactment of S. 1766 can help attain this goal. In reviewing the provisions of this bill, we believe that the $25 million limitation per year for grants is far too low to begin to accomplish the job that must be done. If this program is to move forward and achieve worthwhile results, I am confident larger annual grant authorizations will be required in the years ahead. Section 2 of the bill, increasing the lending authority of the Farmers Home Administration for water systems from $200 to $450 million, is excellent because it demonstrates awareness by Congress that greater efforts in this area are essential. But we believe this amount will not be adequate to do the job. It is my understanding that while 800 water sytem loans have been made by the Farmers Home Administration, there is now a backlog of 736 applications not yet processed, and 364 applications tentatively approved. These alone total over $170 million. It has been our experience that legislation affecting rural areas and particularly legislation for rural water systems programs, have been continually tacked on to urban area bills. This has resulted in various agenices of the Federal Government being assigned bits and pieces of the job of aiding the rural sections of the country. In our opinion, such efforts cannot be successful. We recognize in this legislation an opportunity for the comprehensive effort we seek and are pleased that it will be under the leadership of a rural-oriented agency. Farmers Home Administration has demonstrated that it can provide the service to do this job, through its 1,600 field offices. The his tory of their water system loan program is unexcelled. To date, Farmers Home Administration has loaned over $100 million and only one loan of $60,000 is in default. This is less than one-tenth of 1 percent. Rural America is being electrified as a result of a Federal-local partnership that began in 1935. The achievements of this program, in terms of human dignity, productivity, buying power, and opportunity have been of enormous benefit to this Nation. The success of a comprehensive effort to bring water to rural America can, in my opinion, make the same kind of impact on our Nation's economy and can succeed in achieving these same results. Senator HOLLAND. Thank you, sir. I notice that you have some attachments appended to your statement. Are those the ones mentioned a while ago? Mr. KILEY. Yes, sir. Senator HOLLAND. They are already included in the record. Mr. KILEY. And also Senator Aiken's article. Senator HOLLAND. Do you have any questions, Senator Aiken? Senator AIKEN. No; no questions because the time is limited, but since the hearing started, the committee has received seven telegrams, two in opposition and five in support of the bill. The five in support of the bill are all from Iowa. The ones in opposition-one from Champaign, Ill., and the other one is from Gary, Ind., manufacturers of supplies, I think. Senator HOLLAND. Let them all be filed in the record, not as part of anybody's statement but just as having come to the committee from various sources. Senator AIKEN. There is, I suppose, quite a lot of support for privately owned water systems. These telegrams speak for themselves. Senator HOLLAND. It seems to me they ought to all appear in the record. Senator AIKEN. Yes. These seven have been received in the last few minutes. (The telegrams referred to follow :) Hon. ALLEN J. ELLENDER, U.S. Senate, Senate Office Building, Washington, D.C.: CHAMPAIGN, ILL., June 16, 1965. Of the approximately 1,500 public water supply systems in Illinois almost 800 are over 50 percent serving rural area populations of less than 5,000 and new ones are being constructed each year utilizing private investment capital. I wish to express my opposition to the loan and grant provisions of Senate bill 1766 as they relate to the construction of public water supply systems. These provisions are not necessary and would serve only to further extend and encourage the dependence of our citizens upon the Federal Government. E. R. HEALEY, Vice President, Northern Illinois Water Corp. GARY, IND., June 17, 1965. Hon. ALLEN J. ELLENDER, Washington, D.C.: I wish to express my opposition to the grant provisions of S. 1766 for the construction of public water supply systems. Ordinarily where a public water supply is feasible the users can well afford to finance the system. Water rates have |