The coal from our mine takes the Fairmont freight rate East. We, therefore, compete directly with the northern West Virginia coal operators, both because of the analytical similarity of their coal to our own and also due to the fact that we are subject to the same freight rate. We strongly oppose the granting of the right of eminent domain for the construction of a pipeline that would be used to transport_coal from only northern West Virginia mines to utility plants in the East. The proposed pipeline would have a disastrous effect on our company. We have made a very substantial investment in plant and machinery so that we could maintain our competitive position with these same northern West Virginia coal operators. This competitive status that we have worked so had to maintain would be wiped out. The monopoly that would be created by the proposed pipeline would sound a death knell for our company. Our total investment in modern plant and equipment would be worthless. The result would mean the loss of income to our 150 employees and their families in addition to the many people from whom we purchase both goods and services, all of which would have a serious effect on the economy of our local community. Senator LAUSCHE. Senator Case? Senator CASE. Does your company now participate in any of this integral train operation? Mr. JAMISON. We have loaded, on a trial basis, two such trains. Senator CASE. What is your own judgment as to the extent to which this may result in the ability to compete more effectively? Mr. JAMISON. You mean the integral train? Senator CASE. Yes. Mr. JAMISON. I would assume from the turnaround time on the railroad equipment, there would be a very substantial saving in operating costs for the railroads. Senator CASE. Would it be competitive with the coal slurry? Mr. JAMISON. I am not qualified to answer that question. Senator LAUSCHE. Thank you very much, Mr. Jamison. David J. Benjamin, Benjamin Coal Co., Lajose, Pa. Mr. Benjamin is not present. Seymour Weisberger, vice president and general manager, Elliot Coal Mining Co., Inc., Osceola Mills, Pa. STATEMENT OF SEYMOUR WEISBERGER, VICE PRESIDENT AND GENERAL MANAGER, ELLIOT COAL MINING CO., INC., OSCEOLA MILLS, PA. Mr. WEISBERGER. My name is Seymour Weisberger, vice president of the Elliot Coal Mining Co., located in Center County, Osceola Mills, Pa. We are relatively a small shipper. Nevertheless, we are protesting the passage of S. 3044 which, if passed, will permit the building of a coal pipeline from West Virginia into the metropolitan East. We presently ship the bulk of our tonnage to eastern utilities. The coal pipeline would take from us a vital market on which we are dependent. In the year 1962 we have made a capital investment of three quarters of a million dollars for the modernizing of our cleaning plant and the purchasing of a new dragline. Our total capital investment represents approximately $3 million. We will produce 500,000 tons of coal this year, all steam coal. We are responsible for the employment of 215 men through our own direct employees and the employees of contractors working on our properties and moving our coal. We spend in our own area for the purchase of supplies and parts for our equipment approximately $300,000 a year. Our payrolls average about a half million dollars a year. We are located in central Pennsylvania which is one of the most depressed areas in the State of Pennsylvania, if not in the country, and a pipeline such as the one proposed could have a tremendous effect on the economy of our area, of which there are now so many men unemployed. We feel that the building of a pipeline from West Virginia to the Atlantic seaboard would have a damaging effect on our company, as well as many other companies in the same category who move most of their steam coals to the major utilities in the East. I would also like to say, which is not included in my statement, that the type of coal that will be moved through the pipeline, that can be burned in the type of steam-generating plants that can handle slurry, calls for a low-fusion coal, speaking analytically. Low-fusion coal comes out of the West Virginia area, where the pipeline is to originate. And if at some later date, if the pipeline were available to any Pennsylvana shippers, the coal would not work properly or efficiently in these steam-generating plants, because low-fusion coal originates in that particular area. Also, the distance, if the pipeline is not intended to go through Pennsylvania, but if it did border on the end of Pennsylvania, it would still be so expensive to move our coals to a point where they could be incorporated into the pipeline transmission. That is all I have. Senator LAUSCHE. Senator Case? Senator CASE. No questions. Senator LAUSCHE. Thank you very much, Mr. Weisberger. The next witness is Daniel L. Loomis, president of the Association of American Railroads, Washington, D.C. STATEMENT OF DANIEL L. LOOMIS, PRESIDENT, ASSOCIATION OF AMERICAN RAILROADS, WASHINGTON, D.C. Mr. LOOMIS. My name is Daniel P. Loomis. I am president of the Association of American Railroads, with offices in Washington, D.C. The member lines of our association operate 99.2 percent of the total class I railroad operating mileage and have 99.5 percent of the total class I railroad operating revenues. Our industry is unanimous in its opposition to S. 3044. Spokesmen for a number of individual railroads will follow me and their statements will show, in part at least, how they will be affected by the construction of coal slurry pipelines. I believe some general information concerning the position of bituminous coal in overall railroad traffic would be of interest and aid to this committee. In the year 1960, the latest calendar year for which final figures are available, the class I railroads in the United States originated 304,500,304 tons of bituminous coal. This coal tonnage amounted to 24.5 percent, or approximately one-fourth of the total tonnage of all traffic originated by the class I railroads. The class I railroads gross freight revenue from bituminous coal traffic in the year 1960 amounted to $1,034,403,703, or 12.3 percent of their total gross freight revenues. This gross freight revenue from bituminous coal of $1,034,403,703 is equal to 21.1 percent of the total payroll of the class I railroads in the United States for the year 1960. Even more revealing is this same information on a regional basis. For instance, in the eastern district bituminous coal tonnage for the year 1960 amounted to 209,062,900 tons, or 40.8 percent of the total tons of all traffic originated by the class I railroads in that district. Gross freight revenue obtained in the eastern district from bituminous coal tonnage amounted to $778,953,112, or 23.2 percent of the total gross freight revenues of the class I railroads in that district. This gross freight revenue was equal to 36.6 percent of the total payroll of the class I railroads in the eastern district. Comparable figures for the southern region were 25.1 percent of total tonnage,13.3 percent of total gross freight revenues and 24.4 percent of total payroll. For the western district the percentages are 6.8 percent, 2.5 percent, and 4.5 percent. The railroads have a tremendous investment in plant and facilities devoted to the handling of coal traffic. Illustrative of this is the investment in coal-carrying freight cars in the year 1960. Approximately 350,000 freight cars were utilized in handling the railroads' coal traffic. These cars have a depreciated ledger value of approximately $1 billion. It was because of this vital interest of the railroads in the matter here under consideration that in January of this year I wrote Hon. Stewart L. Udall, Secretary of the Interior, and on March 14, 1962, the President of the United States, pointing to many factors that should receive the closest scrutiny in considering any legislation such as S. 3044. Copies of my letters to the President and to the Secretary of the Interior are attached to my statement and I respectfully request that they be made a part of the record of these hearings, along with my testi mony. (The letters referred to follow :) The PRESIDENT, ASSOCIATION OF AMERICAN RAILROADS, The White House, Washington, D.C. DEAR MR. PRESIDENT: Your message to the Congress of March 1 on "Our Conservation Program" referred to a recent development in which it is indicated that a method had been devised for the feeding of coal slurry directly into boilers for producing steam to generate electricity. It stated further that this slurry, capable of being transported through pipelines similar to those used for oil, holds great promise and merits governmental and industrial consideration. We would agree that such a development as this does merit careful consideration both by Government and industry and urge that this is precisely what should be done at this point. It seems clear that certain private interests feel that this development promises benefit to them. However, there is the more important question of the broad public interest, and so far as we can ascertain there has been no thorough governmental consideration of this matter which would warrant precipitate action by the Federal Government. The last sentence in your statement on this subject in your conservation message stated that you would send to the Congress proposals to facilitate the construction of pipelines to transport coal slurry in interstate commerce. In the light of the publicity given this development it is assumed that the proposals contemplated have to do with the power of eminent domain rather than any sort of Federal financial assistance. Control over the exercise of the right of eminent domain has traditionally rested with the States. The Federal Government can, of course, exercise the right of eminent domain for its own governmental purposes, but the instances in which the right of eminent domain has been delegated by the Federal Government to private concerns are few indeed. Such authority has been delegated to natural gas pipelines. But how different the situation was in that instance from the one here involved. There, the produce involved, natural gas, could be feasibly transported only by pipeline; here, the product involved, coal, not only can be but is being transported feasibly in large volume by three alternative forms of transport; there many natural gas pipelines had already been established, proven successful and of benefit to a broad segment of the public-in other words established themselves as true public utilities-while here the slurry pipeline is substantially untested and of no proven benefit to the general public. Also, it is to be noted that in that instance before Congress granted the right of eminent domain to natural gas pipelines they had been subjected to intensive economic regulation by the Federal Government and required to obtain certificates of public convenience and necessity before being allowed to construct such lines. The authority of the Federal Government to grant such authority was tested in the courts; and in the case of Thatcher v. Tennessee Gas Transmission Co. the U.S. Court of Appeals for the Fifth Circuit upheld the constitutionality of section 7(h) of the Natural Gas Act, the section granting the right of eminent domain. However, it is to be noted that the court made much of the fact that the natural gas pipeline industry in previous enactments had been subjected to intensive Federal control, including the requirement that a company obtain a certificate of public convenience and necessity, that constituted the principal justification for upholding the grant of the right of eminent domain to a private company. It is respectfully suggested that it would be appropriate for the Government to consider carefully the extent to which coal slurry pipelines would actually operate as true public utilities. Bearing upon this question would be such considerations as the number of coal producers and coal consumers that would likely be served, whether service would be rendered in the manner of a true common carrier, whether large concerns would obtain undue advantage over small concerns, whether the pipeline would as a part of its common carrier obligation provide on a nondiscriminatory basis for the preparation of the slurry for all shippers tendering coal to the pipeline, and numerous other such considerations. If, upon such careful consideration, the conclusion should be reached that the construction and operation of coal slurry pipelines could produce broad public benefits justifying the grant of the right of eminent domain, equally careful consideration should be given to the obligations and responsibilities that should be attached to insure protection of all segments of the public interest. If the Federal Government should invade the field normally reserved to the States by granting the right of eminent domain to this new form of pipeline, the duty should rest heavily upon the Federal Government to insure correlative safeguards for the public. These safeguards might appropriately take the form of Federal regulation of the scope and character imposed upon natural gas pipelines, including as one important feature the requirement to obtain a certificate of public convenience and necessity. It would seem clear that the appropriate Federal body to carry out these functions would be the Interstate Commerce Commission, which is charged with the responsibility of maintaining a sound national transportation system. Coal slurry pipelines once constructed, even though restricted to the handling of a single commodity, would become parts of the national transportation system. The particular commodity in question is presently handled in substantial quantities by three other modes of transport, namely, the railroads, the motor carriers, and the inland water carriers. As is well known, the transportation system can be adversely affected by a surplus of capacity to the detriment of the shippers and the general public interest. It is also well known that there al ready exists today a substantial surplus of transportation capacity to the point that much anxiety over the plight of the common carriers by all modes of transport has been expressed by those having responsibility for the well-being of the national transportation system. Accordingly, it would not appear to be sound national policy to open the door to indiscriminate multiplication of transportation facilities. Also, in view of the fact that the depressed state of the coal industry appears to be one of the factors being weighed, it is suggested that before action is taken to facilitate the construction of coal slurry pipelines the most careful governmental consideration be given to the clear and undeniable adverse effect that the building of such pipelines would, if successful, have upon another severely depressed industry, namely, the railroads. Representations in this regard are being made to representatives of the Secretary of the Interior. It is sufficient to note here that coal moves over the railroads in greater quantity than any other single commodity. Furthermore, careful investigation should be made to determine whether possible benefits to a limited number of coal producers would not be fully offset by damage to others; this would require a thorough study of the extent to which coal slurry delivered by the proposed pipeline would supplant other coal instead of supplanting residual oil or natural gas. Accordingly, Mr. President, it is respectfully suggested that governmental consideration of the kind outlined above would be appropriate before any message is sent to the Congress relating to a single aspect of a very broad and serious problem. We feel that we could contribute to that consideration if given the opportunity to confer with the appropriate officials of the administration and stand ready to do so. Respectfully yours, DANIEL P. LOOMIS, President. ASSOCIATION OF AMERICAN RAILROADS, Hon. STEWART L. UDALL, TRANSPORTATION BUILDING, Washington, D.C., January 24, 1962. U.S. Department of the Interior, Washington, D.C. DEAR MR. SECRETARY: Your interest in the coal pipeline proposed to be constructed from West Virginia to New York by the Pittsburgh Consolidation Coal Co. and the Texas Eastern Gas Transmission Co. suggests that in considering this matter you will undoubtedly be interested in certain aspects other than those which, assuming that the line were built and successful, would benefit its sponsors. Consideration of the impact this pipeline will have not only on the railroads and railroad workers, but also on the coal industry itself, raises serious questions not only as to the propriety of the Government affording encouragement to this project, but also as to whether the Government might not find an even better means of achieving reduced costs of transporting coal and other products. Let me point out that public utility coal, comprising some 60 percent of total coal production is traffic which the hard-pressed railroads simply cannot afford to lose. This particular coal pipeline would mean the loss to the railroads serving West Virginia of revenue on 6 to 8 million tons of West Virginia coal a year. The railroads serving these coalfields now pay the State of West Virginia $10.4 million a year in taxes and provide employment to 15,000 people in the State with a payroll of about $100 million a year. The decreased revenues which the loss of this traffic would mean raises serious questions not only as to its effect on railroad employment and railroad tax contributions, but also on the question of railroad unit costs on the remaining railroad coal traffic which would not be served by this pipeline, and the possible effect on railroad rates. Furthermore, there is no shortage of railroad facilities to move this coal to market. There is already a disturbing excess of transportation capacity. The construction of this pipeline would merely add to this surplus and duplicate existing transportation plant not only adequate to meet all present requirements, but also capable of considerable expansion merely by repairing and returning to service thousands of existing idle coal cars. Moreover, with additional cars and locomotives, the railroad plant is adequate to double or treble present capacity. It is the plan of the sponsors of the pipelines to transport coal only in huge quantities from one or a very few large mines and only to the largest con |