is not the simple question it is commonly assumed to be. Let me point out some of the problems and the unknowns.

We do not know the degree to which waterways and railroads are competitive. About 1/3 of all the shallow-draft waterborne tonnage consists of petroleum and petroleum products. These are almost exclusively pipeline and truck adapted and have little relationship to the railroads. A large portion of railroad freight consists of high-rated manufactured goods. These are water-competitive only in unusual instances. With respect to both bulk freight and manufactured goods, the majority of railroad shipments are too small for water carriage. The smallest individual shipment by river barge is commonly 500 tons. The average rail carload in 1975 was only 61.2 tons. River barges do not compete for individual carload shipments.

Most of the railroad line mileage in the United States does not parallel any of the shallow-draft inland waterways, excepting at distances so great as to have little competitive significance. This is also true of most individual railroad companies, such as the Burlington Northern and the Norfolk and Western, only a small portion of whose lines parallel the waterways.

On the other hand, a number of railroads gain substantial revenue from the rail-to-water freight they originate. A number of middle western railroads, for example, carry farm crops all the way from Indiana to the Illinois River and from central Iowa to the

.ssissippi for movement by barge to the Gulf Coast. The Burlington rthern is developing a similar rail-water movement of western coal. Lilroads originate much of the coal for upbound movement on the Ohio ver from the Huntington area and for that on the Mississippi to the vin Cities and Chicago. Waterway user charges would be injurious to

ese revenue sources.

Caterborne Steel as an Illustration of Potential Injury to the Railroads

A further injury to railroads would follow from the impairment industrial production in certain water-based regions and industries. post water-based industrial plants utilize all surface modes of transportation, and impairment of output would reduce the revenues of all. or example, the iron and steel industry of the Chicago, Cincinnati, id Pittsburgh Districts ships large tonnages of finished steel to the ulf Coast by river barge. In 1975, these shipments aggregated bout 1.2 million tons with a mill value approximating $365 million. ail rates to the Gulf are about three-fold the waterway charges, and ignificant increases in either would very probably mean the loss of uch of the Gulf Coast market to foreign competition. Gulf Coast ustoms districts already import about 3.8 million tons of foreign teel per year.

The loss of a significant portion of the Gulf Coast market

would simply mean reduced output for the American steel industry.

principles are almost universally applied to ratemaking by railroads. Conceivably, therefore, a waterway user charge formula which would allow differential charges on the ability-to-pay principle, corresponding to that of much of the railroad rate structure, would merit consideration. In sum, the competitive equity argument rests almost entirely

on unexamined assumptions. No assessment has been made of the amount of waterway commerce which is actually rail-competitive, of what potential revenue this might represent to the railroads, of what rail-water interchange revenues the railroads would stand to lose by impairment of waterway commerce, nor of the complexities of the relationships of rates to costs which affect the competitive relationships. In short, the scope of our ignorance very substantially exceeds that of our knowledge as to the competitive equity between rail and water transportation. Waterway user charges on this rationale would be merely a shot in the dark without much concern as to whom is going to get hit.

Deep-Draft Exemption and Differential Regional Impact

No investigation has been made of the differential impact of waterway user charges of any stated structure on various regions and port areas of the country. For example, S. 790 would exempt deep-draft commerce on the Great Lakes and in the coastal waters, both foreign and domestic. The logic of such exemption is not clear. Annual Federal expenditures on the deep-draft harbors and channels

⚫e approximately 2/3 as great as those on the shallow-draft waterways.

ecause deep-draft vessels carry a considerably smaller tonnage of

>mestic commerce, the Federal expenditure per ton of cargo is

>mparable.

The deep-draft exemption would constitute a significant discriminaon between ports. How serious this would be remains unknown. No vestigation has been made as to the degree of disadvantage this would npose on such inland river ports as St. Louis, Memphis, Louisville, nd Cincinnati. Some of these inland ports are now developing a signifiant volume of foreign commerce. The effect of the deep-draft exemp ́ion on this development merits careful attention.

The deep-draft exemption would alter the relationships between ort areas in individual states. In Pennsylvania, for example, the Pittsburgh area would be subjected to the charges; Philadelphia would hot. The relationship between Birmingham and Mobile in Alabama and between Cincinnati and Cleveland in Ohio would be similarly affected. It would seem reasonable that state departments of transportation be consulted on this question.

Even within the shallow-draft waterway system, either the provisions of S. 790 or of Amendment No. 44 to S. 712 would be differentially injurious to selected regions of the country. In the

upper Ohio River Basin, for example, nine new modernization projects to replace or supplement existing and antiquated navigation works are now projected. Most of the present navigation works in the region date from the era of the Hoover and Roosevelt Administrations. The oldest was completed in 1905. The large industrial region dependent on this system, in its efforts to meet the standards of capacity and efficiency of the 1980's and 1990's, is progressively more handicapped and in danger of losing competitive position in domestic and international markets. Most of the region falls within Appalachia, where the potentials for loss of employment and income are substantial.

The industries affected include the steel industry of the Pittsburgh District, the chemical complex of the Kanawha River Valley and the Upper Ohio Basin, and most of the coal mining industry of eastern Kentucky, West Virginia, and western Pennsylvania. Much, and probably most, of the gasoline consumed in the region by motorists, truckers, and farmers is received by river barge from downstream refineries. Highway maintenance and building construction rely on river delivery of sand, gravel, and cement. The coal-burning electric utility industry of the region is deeply involved, both as to fuel supply and for receipt of materials for air pollution abatement. With respect to the proposed level of charges under S. 790,

the added cost to shippers of cargo between the West Virginia cities