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may obtain a certificate of public convenience and necessity from the Federal Power Commission and with it authority to exercise the right of eminent domain. Under the Interstate Commerce Act, certificates of public convenience and necessity may not be granted to private carriers, as such. Therefore, to provide for the granting of such authority to a private carrier of coal by pipeline subject to the act, which appears to be altogether possible under the provisions of the bill, would constitute a radical departure from the regulatory scheme set forth in the Interstate Commerce Act. A further question is raised as to whether other carriers by pipeline subject to part I of the act should not also be certificated, thus enabling them to exercise the right of eminent domain. There are, of course, other questions involved, such as providing for "grandfather rights,” provisions for holding hearings where an application may be contested, and the related question of whether such carriers should be required to file an application showing, as a condition to the proposed abandonment of operation, that the present or future “public convenience and necessity” permit such abandonment.
These, and similar questions, could be avoided by changing the comma following the word "part” in line 8, page 1, to a period, and striking the rest of the sentence, and by inserting after the word “may” in line 11 on page 2 the following: ", upon a finding by the Secretary of the Interior that the taking of such land or other property is for public purpose,”. Thus, the test need not be whether there is a need for the pipeline service or the inadequacy of existing transportation services, but may be limited to the question of whether the taking is for a public purpose.
The institution of coal pipeline service, if successful, would have a most profound effect upon railroads and other existing forms of transportation. These effects should certainly be considered in connection with this proposed measure. The effects of such a proposed coal pipeline would not be limited to the points actually served. Conceivably, powerplants may be established along the pipeline and the power produced distributed to large areas, thus eliminating coal transportation to these areas. There is also the potential competition to both railroads and coal pipelines from the production of power at the mines and its transmission to the points of consumption by electric powerlines.
The railroads' loss of revenue may not be limited alone to the actual diversion to the slurry pipeline. Traditionally rail coal rates from competing origin groups have been differentially related over or under the rates from a specified base group in the general origin territory. These differentials have mainly reflected market competition between the groups, rather than distance or cost of the service to a common market.
Because of this origin rate relationship, a change in the rate from one group usually necessitates related changes from the other competing groups. It is reasonable to believe, therefore, that any reduction in shipper costs by pipeline from any particular producing group may necessitate related reductions in the rail rates from related groups throughout that general origin territory; otherwise, coal producers in such related groups in many instances would be shut out of the markets. The magnitude of the potential revenue loss to the railroads cannot be even estimated without extended studies of the existing rate structures and market relationships between coal-producing areas and many market destinations.
At the present time, there is one large-scale, long-distance coal slurry pipeline in operation in the United States. This 11-inch line operates between Cadiz, Ohio, and East Cleveland, Ohio, a distance of 108 miles. Other slurry coal lines have been proposed, the latest of which would extend from a point in West Virginia to New York and serve some intermediate points.
There is very little, if any, material immediately available which furnishes a comparison of the costs of transporting coal via a slurry line with the cost of transporting coal by railroad. We understand there was an estimate that there would be a saving of about $1 per ton in transportation costs through the use of a slurry line to move a capacity of 4 million tons from the coalfields to River Rouge and Trenton, Mich., for use by the Detroit Edison Co. The distance involved in this movement was 253 miles, and the costs of transporting and drying the slurry was slightly more than 1 cent per ton per mile. The railroads were able to retain the coal traffic by reducing their rate by 50 cents per ton. The 50-cent reduction would equal the possible $4 million saving per
year when the coal movement reached the 8 million tons expected within a few years.
In addition to the foregoing savings in transportation costs, the boilers used for burning slurry coal would be cheaper to construct than the boilers used for so-called “dry” coal because the pipes for the slurry would be less expensive than the conveyors required to move the dry coal into the boilers. We understand that further economies are anticipated from newer techniques for burning slurry. At the present time slurry transported to East Cleveland consists of 50 percent coal and 50 percent water. The slurry is decanted and dried to remove most of the moisture. The proposed line to New York would handle slurry composed of 60 percent coal and 40 percent water, and this could be burned after the removal of one-fourth of the water, forming a slurry of 70 percent coal and 30 percent water. The technological improvement thus made should, as we understand it, reduce the transportation cost per unit. Of course, the saving that might be made by a slurry line is dependent upon the existing rail rate for transporting coal.
If coal is a profitable traffic, its diversion from railroads to slurry pipeline would increase the burden on the traffic remaining to the railroads and thereby make it more difficult for the rails to compete with other modes of transportation. In addition, attention is called to the effect which the transfer of the traffic might have on local and State taxes derived from rail transportation and to the loss of the water used to form the slurry.
The use of integral trains for the transportation of large quantities of coal, according to engineering estimates, would enable the railroads to make substantial reductions in the rates and thus would make them more competitive with slurry pipelines. The introduction of such trains would require considerable capital and innovations in railroad transportation, but these obstacles do not appear to be insurmountable.
Changes in the categories of labor employed and location of jobs would occur. Increased numbers of slurry pipeline employees and of miners in some areas would be offset to some extent by reductions in railroad employment.
One other basic consideration should be mentioned if the bill is to be considered for enactment into law. Among the current problems confronting surface common carriers generally and railroads in particular are certain inequities which affect competitive opportunity between the modes of transport. For example, the direct and indirect subsidies to airlines and publicly provided airports and navigational aids as contrasted with the privately provided rightsof-way and terminal facilities burdens of the railroads have contributed to the current crisis in rail operations. Since the proposed legislation would grant to another of the rails' competitors, the pipelines, a competitive advantage not enjoyed by any other mode of common carriage, it might be an added factor to the present inequitable balance of opportunity to survive. Under the mandate of the national transportation policy this must concern us.
There are other factors which also should be taken into consideration. Transportation of coal by either of the two methods mentioned would make use of our most abundant mineral power resource as opposed to the use of the less abundant oil or gas. However, construction of slurry pipelines does not necessarily determine whether the coal would continue to be transported by the railroads. It is understood that powerline losses are being reduced in the longdistance transmission of electricity, and it appears that the time may be near when it will be more economical to construct electric powerplants near the source of the coal than to transport the coal to points where the electric power is used. The use of coal under either of the two circumstances outlined above, i.e., at or near the point of electric power use or at the mine, may be supplemented by the development of atomic power generators which do not require the transportation of large tonnages of fuel.
It is noted that under the procedure prescribed in subsection (b) of proposed new section 27, any action or proceeding instituted in a U.S. district court would be required to conform to the Federal Rules of Civil Procedure. The Natural Gas Act (15 U.S.C. 717f(h)) and the Federal Power Act (16 U.S.C. 814), on the other hand, provide that the procedure to be followed in a Federal court in exercising the right of eminent domain “shall conform as nearly as may be with the practice and procedure in similar action or proceeding in the courts of the State where the property is situated.” In the interest of uniformity it is suggested that the above-quoted language be substituted in S. 3044 for the requirement that the practice and procedure in the U.S. district court conform to the Federal Rules of Civil Procedure.
In conclusion, we believe that the question of whether the Federal power of eminent domain should be extended to carriers of coal by pipeline as proposed in the bill, or, to any other pipeline carrier subject to any of the provisions of part I of the act, is a matter of broad congressional policy. Accordingly, we have confined our comments generally to those factors which we believe the Congress may wish to take into consideration in its deliberations on this proposed measure. Respectfully submitted,
(S) Rupert L. Murphy,
RUPERT L. MURPHY, Chairman.
EXECUTIVE OFFICE OF THE PRESIDENT,
OFFICE OF EMERGENCY PLANNING,
Washington, D.C., May 17, 1962. Hon. WARREN G. MAGNUSON, Chairman, Committee on Interstate and Foreign Commerce, U.S. Senate, Washington, D.C.
DEAB MR. CHAIRMAN: This is in reply to your request for a report on S. 3044, 87th Congress, a bill to amend the Interstate Commerce Act to grant to any carrier of coal by pipeline, subject to any of the provisions of part 1 of the act; the right of eminent domain, and for other purposes.
This legislation is the draft bill that was transmitted by the President to the Congress on March 20, 1962, to carry out a recommendation made in the President's conservation message. We urge its enactment.
From the standpoint of the administration's program, the Bureau of the Budget advises that it has no objection to the submission of this report. Sincerely,
(Signed) EDWARD A. MCDERMOTT.
AMERICAN FEDERATION OF LABOR
May 8, 1962.
DEAR MR. CHAIRMAN : In connection with the hearings of your committee on S. 3044, which would give the right of eminent domain to pipeline carriers of coal, I wish to call to your attention the enclosed copy of a resolution adopted by the AFL-CIO on December 11, 1961, at its fourth constitutional convention. The resolution opposes legislation along the lines of S. 3044. Please include this letter and the resolution in the record of hearings on S. 3044 as a formal expression of AFL-CIO policy on this legislation.
Allow me also to direct your attention again to the statement presented to your committee on May 3 by G. E. Leighty, chairman of the Railway Labor Executives' Association. We are in full agreement with this statement and we hope that you and the members of your committee will give it most sympathetic attention. Thank you. Sincerely yours,
ANDREW J. BIEMILLER, Director, Department of Legislation.
RESOLUTION ADOPTED DECEMBER 11, 1962, BY THE AFL-CIO FOURTH CONSTITU
OPPOSITION TO PIPELINE TRANSPORTATION OF COAL
Whereas Consolidation Coal Co. has combined with Texas Eastern Transmission Corp., a pipeline company, to construct a pipeline intended to transport coal in a slurry mixture from West Virginia to certain ublic utilities along the Atlantic seaboard in the Baltimore, Philadelphia, and New York areas, this coal pipeline to be approximately 400 miles in length and designed to transport up to 8 million tons of coal annually; and
Whereas this project, tending to monopolize the carriage of up to 50 percent of coal moving from the largest commercial coal producing company in the world to a relatively few of its largest customers, will deprive the railroads of the transportation of this coal tonnage, resulting in substantial and serious losses of revenues, and consequent extensive railroad labor unemployment estimated up to 3,000 persons, in already depressed areas; and
Whereas the operation of said pipeline can be conducted with a minimum of employees in no way comparable in number to the displaced railroad employment, as is evidenced by the fact that less than 3 cents of each pipeline revenue dollar represents wages as compared with more than 48 cents of the railroads' revenue dollar; and
Whereas the loss of these revenues to the railroads will undoubtedly result in higher transportation costs on coal moving to other markets and other commodities, with resulting higher prices to consumers, all to the serious disadvantage of the economy of the State of West Virginia and other States to be served by the pipeline; and
Whereas the operation of such a pipeline will encourage similar wageless and jobless carriage of coal and other commodities to other markets, resulting in further distress to the railroad industry and already seriously depressed areas mentioned aforesaid; and
Whereas a major decline in railroad operations, such as this portends, would adversely affect employment in steel and related industries due to a decline in railroad purchases; and
Whereas Consolidation Coal Co. and Texas Eastern Transmission Corp., in order to construct said pipeline, must obtain from the several States through which the line will pass the right of eminent domain for the acquisition of their right-of-way and has sought such right in the State of West Virginia; and
Whereas this legislation will not be limited to only the particular pipeline involved, but will be available to any other similarly conceived enterprise: Now, therefore, be it
Resolved, That the AFL-CIO, in convention assembled, does hereby oppose this proposal and authorizes and directs its national officers and its affiliated organizations to vigorously oppose the proposed legislation in West Virginia and any similar legislation that might be introduced in any other State.
BROTHERHOOD RAILWAY CARMEN OF AMERICA,
PORT JERVIS LODGE No. 962,
Port Jervis, N.Y., May 10, 1962. Mrs. KATHERINE ST. GEORGE, Washington, D.C.
DEAR CONGRESSWOMAN: In connection with the proposed law which enables coal pipelines to secure the right of eminent domain, Local No. 962, Brotherhood Railway Carmen of America, at a meeting held on May 7, 1962, unanimously :
Resolved, That since this type of pipeline is not a public utility and would, serve relatively few coal producers and a few big customers, it is our contention that it is a private carrier engaging in contract carriage and is not entitled to the right of eminent domain.
As members of the Brotherhood Railway Carmen of America and employees of the Erie-Lackawanna Railroad Co., we are in oposition to the proposed bill and would appreciate anything you may do in transmitting our feelings on this matter to the Senate Commerce Committee which is now holding the hearing. Very truly yours,
W. J. MOCAnn, Recording Secretary.
INDEPENDENT FUEL OIL MARKETERS OF AMERICA, INC.,
Washington, D.C., May 21, 1962. Subject: Coal slurry pipeline hearings. Hon. WARREN G. MAGNUSON, Chairman, Senate Commerce Committee, New Senate Office Building, Washington, D.C.
DEAR SENATOR MAGNUSON : It is requested by the members of the Independent Fuel Oil Marketers of America, Inc., that you place this letter in the record as a statement reflecting the views of the Independent Fuel Oil Marketers of America, Inc., on the captioned subject.
This organization consists of independent marketers of residual fuel oil, most of which is imported, on the east coast. Since the coal slurry pipeline would reduce the cost of delivered coal at the east coast area by somewhere between $1 and $2 per ton, it has a direct competitive effect on the members of this organization. We do not object to the construction of such a pipeline since we believe that such technological progress is a vital part of our economic system. However, if residual fuel oil marketers are to be subjected to competitive pressure of coal by pipeline transportation, we believe that under our system we should not be prevented from remaining competitive by import restrictions that are inequitous and unjustified from the standpoint of the east coast consumer.
With the above thought in mind there should be no indication, implied or otherwise, that the owners of the proposed pipeline can count on the continuation of residual fuel oil import restrictions. It is important that this point be made very clear before the pipeline owners commit themselves to the necessary investment in order to prevent, at some later date, the argument arising that import restrictions on residual fuel oil are necessary in order to protect the pipeline investment.
In closing, the members of this organization believe in free competitive enterprise and are violently against any form of discrimination that eliminates interfuel competition and injects end use control. We are fighting for our corporate lives, directly and indirectly fighting for the continued existence of a vital small business community that plays an important part in delivering to the consumer a product that is competitively priced, that is playing a vital role in keeping the cost of living down, and that is enabling east coast industry to remain competitive. Sincerely yours,
JOAN K. EVANS, Executive Director.
STATEMENT OF RAY S. WALKER, SECRETARY, CENTRAL PENNSYLVANIA OPEN PIT
MINING ASSOCIATION, PHILIPSBURG, PA., OPPOSING SENATE BILL 3044 My name is Ray S. Walker. I reside in the village of Bigler, Clearfield County, Pa. I am secretary of the Central Pennsylvania Open Pit Mining Association, and I am authorized by action of the board of directors of said association to submit this statement to your honorable committee.
The Central Pennsylvania Open Pit Mining Association is a nonprofit association, composed of a membership of over 50 bituminous coal operators. In 1961 the present membership mined and produced from the central Pennsylvania bituminous fields located principally in the counties of Clearfield, Centre, Blair, Elk, Jefferson, and Clinton over 542 million tons. Our membership produces approximately one-fourth of all of the bituminous coal which is mined in the Commonwealth of Pennsylvania by the open pit or strip mining method.
The members of our association are unanimously opposed to the passage of Senate bill 3044, or any similar bill which proposes to amend the Interstate Commerce Act to grant to any carrier of coal by pipeline the right of eminent domain. It is felt by our membership that the passage of such an amendment would be inimical to the interests of the membership and the many thousands of employees and other persons who rely in one way or another upon coal business in our area for a livelihood.
Central Pennsylvania coals are primarily thin seam coals suitable for steam markets. Our production of metallurgical coal for use in industry is negligible; however, although our seams which we mine are relatively thin, there are many millions of tons of coal reserves available in our area for development.