way into mixed tows. Hence, this bill would impose a rate filing requirement on a preponderance of total tonnage which will never see a mixed tow. Large volumes of chemicals are shipped in barges in dedicated service, carrying but a single commodity.

As an important shipper by rail and highway, as well as water transportation, the chemical industry needs a healthy national transportation system on a national scale. The bill as passed by the House on August 12, 1970, will not, in our opinion, contribute toward this goal. On the contrary, it will destroy the flexibility and service we require. The growth of our present service is due mainly to the exercise of free competition. The carriers involved, represented by the American Waterways Operators, stand shoulder to shoulder with the consumers of the services they offer in opposing the publishing of rates. The fact that the great majority of those involved in the provision and use of services are in complete agreement should indicate that the traditional exemption should continue without the necessity of filing rates.

Therefore, we urge favorable consideration of the amendment proposed by the National Industrial Traffic League which would preserve the original intent of the legislation to permit mixing of dry bulk and nonbulk commodities without imposing burdensome and unnecessary regulation which would add to the expense of the consumer.

Mr. Chairman, that completes the statement of the MCA, but if I may, just for a moment, take off my MCA hat and speak as an individual shipper

Senator HOLLINGS. Yes, sir.

Mr. VESCELIUS (continuing). And prompted by a witness for the American Institute of Merchant Shipping I believe it was, I'd like to leave this thought with you:

They have asked and, in my opinion, rightfully so, for an exemption on manned vessels coastwise and I suppose across the gulf, and I'd like to draw the committee's attention to the fact that there is a new technology developing, and it's coming a long way and has come a long way to us unmanned barges of rather large size which are either towed or pushed, in many cases pushed, coast wise and cross gulf.

These ships or barges carry about the same tonnage as the manned vessels, and it would seem to me that you'd have an inequality if you were to exempt the manned vessels and not make some provision for the unmanned barges.

Now, I don't mean to have you understand in anyway that this changes my testimony. It does not. We are definitely opposed to this bill. But that seems to me to just create one more inequality, Mr. Chairman.

Senator HOLLINGS. Am I understanding correctly, Mr. Vescelius, that self-propelled oceangoing should be included?

Mr. VESCELIUS. No

Senator HOLLINGS. Mr. Reynolds

Mr. VESCELIUS. As I understand the American Institute of Merchant Shipping provision, they would include a clause in the bill which would exempt their manned vessels in coastal waters or cross gulf, for example. I only point out that there are also large barges which are not self-propelled and, therefore, would be different and yet they compete with each other.

Senator HOLLINGS. We appreciate your appearance. Thank you very much.

Mr. VESCELIUS. Thank you.

Senator HOLLINGS. Mr. D. L. Campbell Kerr of Freeport Sulphur.

STATEMENT OF D. L. CAMPBELL KERR, GENERAL TRAFFIC MANAGER, FREEPORT SULPHUR CO., ON BEHALF OF THE FERTILIZER INSTITUTE

Mr. KERR. Mr. Chairman, the testimony that I am to give will be in opposition to H.R. 8298 as it was passed by the House and in favor of the bill H.R. 8298 amended as was proposed by Mr. Stockton of the National Industrial Traffic League.

The Fertilizer Institute is against the inclusion of the rate filing provision.

My name is D. L. Campbell Kerr, general traffic manager, Freeport Sulphur Co. I appear on behalf of the Fertilizer Institute, a voluntary nonprofit trade association representing some 400 member companies comprising approximately 80 percent of the firms engaged in mining, processing, and manufacturing fertilizer ingredients and equipment. The fertilizer industry includes many major shippers by water, both on the inland waterways and offshore, of fertilizer and fertilizer material. The extent of this commerce may be judged from these statistics

If I may, I'll turn the page of my prepared statement and read 20 million tons of fertilizer materials per year.

The vast majority of these fertilizer movements takes place in bulk, and has always been exempt from the rate filing and regulatory requirements of the Interstate Commerce Act.

The Fertilizer Institute opposes H.R. 8298 in the form in which, without hearings, it was passed by the House on August 12, 1970. We support the position taken and the amendment proposed by the National Industrial Traffic League.

We testified in 1967 and 1969 before the House committee and this committee on H.R. 8298 and its predecessors. In its present form, H.R. 8298 goes far beyond the original purpose. That was to permit the mixing of dry bulk and nonbulk commodities in one tow and, therefore, to hold down the cost of transportation. Our testimony favored that.

As passed by the House, however, H.R. 8298 will increase the cost. of transportation. It will do this by requiring the filing of rates on dry bulk commodities, which will inevitably remove the one factor of free market competition that has produced a healthy barge industry as well as low transportation costs.

I say this because in my experience in transportation, which reaches back to 1928, the effect of regulation or rate filing has typically been to increase the shipper's cost of doing business. The filing of rates, even an exchange of knowledge of rates, tends to immobilize them at a higher level.

We believe that this legislation focuses attention only upon the interests of the water carriers and the railroads. When the bill was

51-425-70-7

broadened from a mixing rule bill that would provide great economic advantage to water carriers and shippers alike to a bill that provides for the filing of rates, it ignored the interest of all of the consumers of transportation-efficient service at low cost.

We use all kinds of transportation and do not favor nor wish to favor one above the other. We do wish to direct the attention of this committee back to the intended ultimate beneficiaries of this legislation and of all transportation legislation, the shippers and consumers, who are in this case the farmer and the housewife.

This legislation originally had nothing to do with the filing of rates for dry bulk transportation, and should not be used as a vehicle to require such filing. If it is now desired to make a revolutionary change in the carefully considered choice of the Congress in enacting the Transportation Act of 1940, then it should not be made without full hearings so that all concerned might have ample opportunity to testify. After all, it would be a change in a practice that has existed from before the birth of this republic.

The amendment proposed by Mr. Stockton in his testimony for the National Industrial Traffic League would return to the original purpose of the legislation-namely, to permit the mixing of dry bulk and nonbulk commodities, with resulting improvement in efficiency. We urge the committee's favorable consideration of that amendment. Senator HOLLINGS. Thank you very much, Mr. Kerr. We appreciate your appearance.

Mr. KERR. Mr. Chairman, may I add another comment?

Senator HOLLINGS. Certainly.

Mr. KERR. I heard Mr. Vescelius speak of the testimony of I believe Mr. Reynolds. My company has a contract to move phosphate rock across the Gulf from Tampa to the New Orleans area. It does so in barges that carry 26,000 tons of phosphate rock each.

In order to reach a contract for that kind of transportation, we carry on what have been described as arm's-length negotiations. The barges are not self-propelled. They have a notch in the stern and are pushed by very expensive, high-powered towboats.

That type of ocean transportation should be treated in the same manner as is self-propelled vessel type.

Senator HOLLINGS. I understand.

Mr. KERR. Thank you.

Senator HOLLINGS. I have seen those.

Thank you very much. We appreciate it. (The statement follows:)

STATEMENT OF D. L. CAMPBELL KERR ON BEHALF OF THE FERTILIZER INSTITUTE I am D. L. Campbell Kerr, General Traffic Manager, Freeport Sulphur Company. I appear on behalf of The Fertilizer Institute, a voluntary nonprofit trade association representing some 400 member companies comprising approximately 80 percent of the firms engaged in mining, processing, and manufacturing fertilizer ingredients and equipment. The fertilizer industry includes many major shippers by water, both on the inland waterways and off-shore, of fertilizer and fertilizer material. The extent of this commerce may be judged from these statistics:

In 1968, the latest year for which figures are available, the following tonnages of fertilizer, fertilizer material, and fertilizer ingredients moved by water in domestic commerce :

Source: Department of the Army, Corps of Engineers, "Waterborne Commerce of the United States," part 5, table 10-domestic barge traffic: Commodity by type of traffic, at 33-35 (1968).

The vast majority of these fertilizer movements takes place in bulk, and has always been exempt from the rate filing and regulatory requirements of the Interstate Commerce Act.

The Fertilizer Institute opposes H.R. 8298 in the form in which, without hearings, it was passed by the House on August 12, 1970. We support the position taken and the amendment proposed by the National Industrial Traffic League.

We testified in 1967 and 1969 before the House Committee and this Committee on H.R. 8298 and its predecessors. In its present form, H.R. 8298 goes far beyond the original purpose. That was to permit the mixing of dry bulk and non-bulk commodities in one tow and therefore to hold down the cost of transportation. Our testimony favored that. As passed by the House, however, H.R. 8298 will increase the cost of transportation. It will do this by requiring the filing of rates on dry bulk commodities, which will inevitably remove the one factor of free market competition that has produced a healthy barge industry as well as low transportation costs.

I say this because in my experience in transportation, which reaches back to 1928, the effect of regulation or rate filing has typically been to increase the shipper's cost of doing business. The filing of rates, even an exchange of knowledge of rates, tends to immobilize them at a higher level. We believe that this legislation focuses attention only upon the interests of the water carriers and the railroads. When the bill was broadened from a mixing rule bill that would provide great economic advantage to water carriers and shippers alike to a bill that provides for the filing of rates, it ignored the interest of all of the consumers of transportation-efficient service at low cost. We use all kinds of transportation and do not favor nor wish to favor one above the other. We do wish to direct the attention of this Committee back to the intended ultimate beneficiaries of this legislation and of all transportation legislation, the shippers and consumers, who are in this case the farmer and the housewife.

This legislation orginally had nothing to do with the filing of rates for dry bulk transportation, and should not be used as a vehicle to require such filing. If it is now desired to make a revolutionary change in the carefully considered choice of the Congress in enacting the Transportation Act of 1940, then it should not be made without full hearings so that all concerned might have ample opportunity to testify. After all, it would be a change in a practice that has existed from before the birth of this republic.

The amendment proposed by Mr. Stockton in his testimony for the National Industrial Traffic League would return to the original purpose of the legislation, namely to permit the mixing of dry bulk and non-bulk commodities, with result ing improvement in efficiency. We urge the committee's favorable consideration of that amendment.

[From the Journal of Commerce, Oct. 1, 1970]

CANADA SETS GAS PRICE REVIEWS

OTTAWA, Sept. 30-The Canadian government-with something like a seller's market for natural gas in the U.S.-adopted the "canny" approach of requiring future price reviews of export prices in giving approval to the 6.3 trillion cubic feet in gas exports Tuseday.

At Tuesday's press conference, Energy Minister J. Greene noted that the governor-in-council had made new regulations under Section 85 of the National Energy Board Act providing for such reviews.

"The government," he said . . . "considers that the price arrangements should be such as to call for a review should there be a significant increase in prices in the United States market for competing gas supplies or for alternative energy

sources.

"The National Energy Board will keep under close review the adequacy of pricing arrangements under contracts for the export of gas, and the report of the board arising from such review will be considered by the government in determining appropriate action."

'SHOULD REFLECT VALUE'

The minister also said that "the government considers that in all circumstances the prices being received for export gas should reasonably reflect its value in the market in which it is used, including the recovery of all the costs of providing the service. Further, the prices to comparable Canadian distributors should be at least as low as those at which gas is exported."

His announcement came at a time when predictions are current in the U.S. of an increase in wellhead prices for natural gas by year end, in the light of America's present "screwtight" gas supply situation.

This situation was mentioned in the NEB's report on the gas applications. However, it points out that the Federal Power Commission had approved applications before it corresponded to four of the five export applications before the NEB, accepting the price and other arrangements proposed by the applicants.

The report added: "Though there exists at the moment something like a seller's market, it is necessary to keep in mind that at some point there is a ceiling on the price which will be paid in the United States for natural gas imported by pipe line whether that cost is expressed in the cost of developing additional indigeneous gas, gassifying coal, or importing liquefied natural gas from overseas."

In cutting down permissible exports to 6.3 trillion cubic feet from the requested total of 8.9 trillion cubic feet, the government accepted the NEB's finding that the historical rate of finding new gas reserves of 3.5 trillion cubic feet a year would not be sufficient to permit approval of all the export license applications "for the full quantities and time periods requested and provide adequate protection for the future requirements of Canada."

RESERVES DEFICIENCY

In fact, the National Energy Board calculated that if the 8.9 trillion cubic feet in requested exports were granted there would be a current deficiency of available reserves in Canada of 2.5 trillion cubic feet. Even with the addition of future reserves, the annual growth rate required would be unsupportable.

The effect of the decisions in that Alberta and Southern Gas Co. Ltd. gets a license to export the daily and annual volume specified in its application but for a period of 15 years rather than the 23 years sought. This means reducing the term volumes from 1,592 billion cubic feet to 1,038 billion cubic feet.

Canadian-Montana Pipe Line Company gets a license to export the volumes specified but for a period of 15 years, instead of 23 years, and the term volumes are reduced from 86 billion cubic feet to 56 billion cubic feet.

Three licenses are issued to Trans-Canada to export the daily and annual volumes specified but for a period of 20 years, instead of 25. The term volumes are reduced from 2,336 billion cubic feet to 1,872 billion cubic feet.

A license is issued to Westcoast Transmission Co. Ltd. to export 75 million cubic feet per day for a period of 20 years and a second combined license which incorporates, effective Nov. 1, 1971, the aforesaid license as well as Westcoast's two existing licenses. The combined license is for the full 18 years sought by Westcoast.

The total incremental export volumes authorized by the two licenses are, as in the application, 3,329 billion cubic feet.

Also certificates of convenience and necessity are issued to Alberta Natural Gas Co., to Trans-Canada, and Westcoast to construct additional pipeline facilities. These do not include those already approved.

The National Energy Board did not approve the applications of Consolidated Pipe Lines Company and Consolidated Natural Gas Ltd. on the grounds that "Where a choice has to be made between licensing exports by a project wholly oriented to export and a project which serves Canadian customers and export customers, if all other factors were equal the choice would have to be made in favor of the project serving Canadians as well as export customers."