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Senator THURMOND. Have you had this subject researched? Are you sure that is correct?
Mr. CLARKE. Yes; we have. It is correct.
Senator THURMOND. I have not researched it myself as yet, and I just wondered.
Mr. CLARKE. I will make this one qualification : back in the last century, during territorial days, there was some Federal legislation giving the railroads the right of eminent domain across Indian reservations, but that is hardly an exception to the general statement.
Senator THURMOND. Now the oil pipelines have gotten their rightsof-ways under State laws; haven't they?
Mr. CLARKE. Yes. Just as the railroads have. Senator THURMOND. The gaslines, though; what about them? Mr. CLARKE. Natural gas pipelines were given the Federal right of eminent domain for two reasons. In the first place, the Natural Gas Act empowers the Federal Power Commission to order an extension of a line. The only way that gas pipeline companies could comply with that obligation would be to have the right of eminent domain, plus the fact that natural gas can be transported only by pipeline.
Senator THURMOND. You feel it would not be equality of opportunity, as you express it, if this permission is granted by the Federal Government?
Mr. CLARKE. It certainly would not.
Senator THURMOND. All of the States, so far as I know, have eminent domain statutes. Is there any reason why these rights-of-way could not be obtained under the State statutes?
Mr. CLARKE. It is our contention that is the proper place for the proponents to go. In fact, they did recently obtain the right of eminent domain in West Virginia by action of the legislature. Bills are pending in other States such as Pennsylvania or-I beg your pardonDelaware, New Jersey. The matter is expected to come up in Pennsylvania next year.
Senator THURMOND. Of course you can't hold back progress, and if it is determined this is the most economical way to transport coal, it will ultimately probably end up that way.
But still I don't quite see why the Federal Government should be called upon to pass a statute that would provide that right, when the States have eminent domain statutes.
Maybe I am out of tune with a lot of people. I believe in progress, but I believe in progress at the appropriate level of government, as provided in the Constitution. Just like no one believes stronger in education than I do, but under the Constitution the National and Federal Government has no jurisdiction in the field of education. That is a matter for the States. And I think it should come at the appropriate level of government if we are going to follow the Constitution.
Mr. CLARKE. Those are our sentiments precisely, Senator Thurmond. We agree completely.
Senator THURMOND. What would be the effect if this pipeline was built under a Federal eminent domain statute or if it were built under State eminent domain statutes? What would be the difference in the effect on the railroads?
Mr. CLARKE. None whatsoever. It would be, regardless of how it is built, the effect would be the same.
Senator THURMOND. In other words, if they build—and they can build it, can't they, under the State statutes ?
Mr. CLARKE. By obtaining the right of eminent domain from the States through which they intend to pass.
Senator THURMOND. They can build them that way? Mr. CLARKE. Yes. The oil pipeline industry was able to grow without dependence on Federal right of eminent domain. There is no reason why this industry couldn't get started and move ahead in the same manner.
Senator THURMOND. Oil is a source of fuel and coal is a source of fuel, and you distinguish between those two and gas, I believe; do
Mr. CLARKE. Yes, I did.
Mr. CLARKE. But there is only one feasible way to transport gas, and that is by pipeline. There are not alternative methods of transportation. However, natural gas is very stringently regulated, as you know. They must obtain certificates of convenience and necessity not only to build, but to extend their lines. They can't abandon them. And furthermore the price of the product itself is subject to regulation of the Federal Power Commission. Whereas, this proposal would provide none of those safeguards.
Senator THURMOND. It seems to me too many people today run to the Federal Government for everything, and if they can handle these things in the States, it seems it might be preferable to do so.
There is jurisdiction in the Federal Government in the fields that are listed in article 1, section 8 of the Constitution. But it seems to be common practice now, the easy road to follow, to run to Congress or run to the Federal Government to get things done quick and simply because that might be the easiest way to accomplish something or facilitate or expedite a matter. It may not always be the I just wanted to get your view.
But I am opposed to running to the Federal Government for things the States can do.
Senator Scott. Thank you, Mr. Clarke.
Mr. William C. Altvater, vice president, Pittsburg & Shawmut Coal Co.
STATEMENT OF WILLIAM C. ALTVATER, VICE PRESIDENT,
PITTSBURG & SHAWMUT COAL CO., KITTANNING, PA. Senator Scott. We are glad to have you here, Mr. Altvater.
Mr. ALTVATER. Thank you, Senator Scott. I am delighted to see the Senator from Pennsylvania.
Senator Scott. The Senator from Pennsylvania is glad to be here.
Mr. ALTVATER. I am William C. Altvater, vice president of Pittsburg & Shawmut Coal Co., of Kittanning, Pa. We are engaged in the business of buying and selling bituminous coal. We are the general sales agent for Allegheny River Mining Co. and several other coal
operators located in western Pennsylvania, principally in what is known as the Reynoldsville district. The largest company we represent produces approximately 600,000 tons of bituminous steam coal per year, and the smallest produces approximately 25,000 tons per year. Last year we sold 150,000 tons of bituminous coal to various utilities located in Northeastern United States. These shipments represent a substantial part of the business of our producers and without which they could not remain in business, as these orders are necessary to provide volume and continuity to enable them to maintain normal worktime for their employees.
Our coals move into the eastern utility market in direct competition with coal produced in southwestern Pennsylvania, West Virginia, and eastern Kentucky. This competition has existed in the industry for many years. In this competition our producers are at a substantial disadvantage due to our higher costs, principally due to the fact that our coal seams are much thinner. This disadvantage has been greatly aggravated by the freight-rate structure which is unfairly favorable to the southwestern Pennsylvania, West Virginia, and Kentucky coals.
While the bill before your committee purports to grant the power of eminent domain to a common carrier, as a practical matter it will not work that way. The bill, if passed, will in fact grant the power to seize privately owned land for right-of-way purposes to a private carrier with only a color of common carrier status. In other words, while the carrier may be technically set up as a common carrier, due to the nature of the facilities and circumstances, it will as a practical matter render service to only a limited few. If such a pipeline is built and operated, both the mine and the powerplant will become captive and will not operate in a free market. The equipment required to manufacture the coal slurry for injection into the pipeline is so expensive and complex that only the largest producers and the favored few can afford to make the investment or can produce the volume necessary to make it economical. Only the mines located along the pipeline could possibly use the facility and very, very few of them can afford the investment or can meet the other requirements. If they are not an uncommonly large producer, they might as well be a hundred miles away. None of our operators could possibly use the pipeline if it were built. If the right of eminent domain is granted to the large coal companies and to the large gas transmission companies, and the proposed pipeline is built, the producers which I represent and who now transport their coal by rail would be unable to compete in the plants served by the pipelines as these plants would become captive consumers to the companies hooked into the pipeline. Therefore, they are not serving all of the public as a common carrier. Further, this type of captive operation will take all of the desirable large utility plants which now buy their bituminous coal from a number of different mines located on a number of railroads. The utility coal business is the largest market available to the coal industry. By permitting large coal companies to build these pipelines to the several utility plants, they will control the market for those plants. Where the railroads at present are serving a number of mines and permitting them to participate in the various utility plant business, the pipelines, because of the economic feature, would squeeze out those small operators who are now supplying part of the utility business.
Also, if the pipeline is constructed, it would take away this steady business to the railroads which we know over the last several years have come to depend on this busines to keep the railroads operating. If this business is taken away from the railroads, it will further injure the railroads, causing their costs to increase because of the lesser tonnages available to them to transport to the utilities. It stands to reason that with less tons to haul, their costs must go up. The small operators who depend upon the railroads to transport their coal from their mines to the utility plants would be at a further disadvantage if the railroads are forced to increase their costs of transportation. Also, they would be forced to curtail their services. This would affect us with our other customers.
We in the coal industry have been plagued by cheap, foreign residual oil produced by low cost, cheap foreign labor. We are also plagued with imported natural gas from Mexico and Canada which is dumped at prices below cost of production and transportation to the coal consuming area on the eastern seaboard and the Northeastern States.
By granting the right of eminent domain to the several large coal companies, you are putting them in a position to corner a substantial part of the coal market to the exclusion of all other producers, thus creating a monopoly of the most vicious kind. In other words, with the pipeline they can exert undue competition on the small coal' operators in the area.
In the past 15 years I have seen the bituminous coal business in Pennsylvania go from a statewide production of 145 million tons down to a production of 65 million tons. This has created large areas of permanent unemployment in Pennsylvania. The pipeline will put many more of the coal miners and producers in Pennsylvania out of competition in the utility field because it is my understanding that in order to construct a pipeline and the necessary facilities to inject the coal slurry into the pipeline, it requires large reserves of coal which can be produced at low cost. Over the years the West Virginia operators have enjoyed low cost transportation to the eastern consumers, compared to the producers in Pennsylvania reaching the same market when you take into consideration the miles of transportation involved. The railroads do not require any specialized equipment for the small operators to load their coal into railroad cars.
In closing, gentlemen, we request that you thoroughly consider the plight of the small coal producer should you grant the right of eminent domain to build coal pipelines. Also, consider the loss of employment to the miners. These employees of the small coal producers are just as important to our economic life as the employees of the large corporations.
There is one other thing I would like to ask be put into the record, and that is the last four paragraphs of an article appearing in today's Wall Street Journal, on the front page, and the title of the article is "Soft Coalfields Feel Steel Output Decline, Oil, Gas Competition.”
Senator SCOTT. Without objection, it will be so ordered. (The portion of the article referred to is as follows:) The stepped-up competition from other fuels, partly a seasonal matter, complicates coal's outlook. Coal competes with low-grade or residual fuel oil for the business of utilities, which, like steel mills, consume enormous quantities of fuel ; but unlike steel mills, the utilities have dual-purpose burners that can use either fuel. On April 1 the Department of the Interior raised east coast import quotas on residual oil to 506,889 barrels daily for the next 12 months, a 9 percent gain from the preceding 12 months. The price of the fuel has been cut 10 cents a barrel early this year in anticipation of the increased quota and was dropped another 10 cents after the raise became effective.
Since 1 ton of coal is usually balanced against 4.3 barrels of fuel oil for price comparisons, the oil price cuts were equivalent to 86 cents on a ton of coal. That more than offsets a 10-cent-a-ton reduction coal producers agreed to give utilities in a 12-month contract that took effect April 1.
Carlos J. Routh, financial vice president and secretary of New York-based Pittston Co., says the price cuts “could cut into" coal consumption on the east coast in coming months.
At the same time, coal is being hit, mostly in the Midwest, by the customary switchover to natural gas by some utilities which occurs when warm weather and lessened heating demand permit gas companies to offer large users bargain rates.
Senator Scott. Mr. Altvater, I think we are all very much concerned about this unemployment problem, and I am very glad that you made that point in your statement.
I have no questions. Senator Thurmond, do you have any questions?
Senator THURMOND. It is your feeling that only the mines located along the pipelines could use the pipelines, as I understand it?
Mr. ALTVATER. Definitely that is my feeling, because otherwise they would have to construct a common facility somewhat and transport this coal to the common facility which would entail further costs.
Senator THURMOND. Would that be very practical ? Mr. ALTVATER. I don't think so, no. Senator THURMOND. If this coal slurry pipeline should be built, whether it is built through a Federal eminent domain statute or State eminent domain statutes, wouldn't it be more practical to build it so everyone could use it rather than it almost being compelled to serve the coal mines along the pipeline?
Mr. ALTVATER. It may serve the mines along the pipeline, but the ones that are any distance from it would not be served economically.
Senator THURMOND. If that is the case, would it really fall in the category of a common carrier ?
Mr. ALTVATER. I don't believe it would, as I have stated.
Mr. Machamer, president, Independent Miners & Associates, Pottsville, Pa.
STATEMENT OF CLYDE L. MACHAMER, PRESIDENT, INDEPENDENT
MINERS & ASSOCIATES; ACCOMPANIED BY JAMES W. THOMPSON, SECRETARY, INDEPENDENT MINERS & ASSOCIATES, POTTSVILLE, PA., AND CLARENCE KASHNER, PRESIDENT, ANTHRACITE INDEPENDENT MINERS, BREAKERMEN & TRUCKERS ASSOCIATION, SHAMOKIN, PA.
Mr. MACHAMER. Mr. Chairman, members of the committee, it is a pleasure to be here and have a chance to address myself to the committee. It is certainly a pleasure to me also to see a fellow Pennsyl