Answer. Insofar as the Johnsonville plant is concerned, one cannot speak terms of competitive fuels. The Johnsonville plant is 100 percent coal-fire Without many millions of dollars of investment in boiler facilities to a commodate alternative fuels, competition is hardly a factor.

In 1975, the cost of coal to generate 1 million BTU's at the Johnsonvil plant was $.993 (the 91 cent figure mentioned may have been for an earli year). This equates to $20.94 per ton. An increase of "one penny" per milli BTU would raise the cost per ton to $21.72, or nearly one dollar. This assum that the same BTU content (10,546) is maintained). For the reason me tioned above this would most likely not cause the Johnsonville plant to co vert to an alternate fuel. However, in many instances the one dollar price i crease would be sufficient to influence a shift to gas (if available) or oil. the case of a new generating facility it could easily be a factor in favori a nuclear facility over a coal-fired plant.

"I also would ask the coal industry to look down the road five years fro now, and ten, and tell us what they really think coal is going to be worth a what its competitor will be."

Answer. The coal industry has absolutely no way of computing what t cost of coal will be five or ten years hence. There are too many unknow in the question. Labor is the greatest single cost in producing a ton of cos accounting for about 40 percent of the price. Industry has no way of knowi what future wage demands might be. In recent years labor costs have ris disproportionately faster than inflation indices. Further, it is common know edge that productivity in the deep mines has been falling since 1969. As pr ductivity falls, the cost must rise. Additional Federal restraints on coal pr duction will cause the price per ton to continue to escalate even more. The other expenses, such as materials and supplies, local, state, and Feder tax increases, and acquisition costs are equally impossible to determine. As part of the same question Senator Domenici asked ". . . what its (coa competitor will be." In five, and certainly ten years, competition as we kno it will probably not be a controlling factor. The nation will need energy fro whatever source available. Certainly, our reliance on oil and natural gas mu not increase. Hydrogenerated power may increase slightly in terms of ge erated power, but will have a lesser percentage of total volume. Insofar electric generation is concerned, coal-fired and nuclear plants are destin to carry the burden of the increase necessary to accommodate the nation needs until the dream of the exotics, such as solar, fusion, tide, and wind b come a reality-certainly not in our lifetimes.

Therefore, competition will not be a major factor. Every source of energ must be used to its highest degree of efficiency in the foreseeable future if t United States is to continue to prosper and survive at the level to which of people have become accustomed.

Yours sincerely,

ROBERT F. STAUFFER,
General Counsel.

Senator GRAVEL. Let me ask my colleagues if anybody else woul like to comment.

Mr. Hull?

Mr. HULL. The next witness is Mr. John E. Harvey, director o transportation, Archer Daniels Midland Co.

STATEMENT OF JOHN E. HARVEY, DIRECTOR, TRANSPORTATION ARCHER DANIELS MIDLAND CO., DECATUR, ILL.

Mr. HARVEY. Good morning.

Archer Daniels Midland Co., with corporate offices at Decatu Ill., is a multiplant agribusiness engaged in the handling and pro essing of grains and oilseeds with product distribution in the United States and world markets. The primary commodity is pro tein, fiber, and energy sources for human and animal consumption.

ADM is a true intermodal shipper relying on rail, water, and motor transportation, with an annual transportation bill of about $100 million. At Decatur, Ill., for example, where we operate multiple processing facilities, there are many days when we will handle ver 100 rail cars and in excess of 800 trucks.

A new corn wet-milling plant is nearing completion which will increase that demand by about 50 percent. Over 50 percent of the production at Decatur is joint rail-barge for export through the gulf. Decatur is landlocked, located about 120 miles from the St. Louis area.

In addition to the hundreds of millions of bushels of grain handled and merchandised as grain, ADM requires over 1 million bushels of grain and oilseeds daily to supply our flour mills, corn processing, soybean processing, and associated production facilities. To transport and distribute the handlings and production requires in excess of 1.5 million individual movements by rail, water, and motor carrier annually.

There are now, have been, and will continue to be too many times when transportation demand cannot be met, or when a transfer from one mode to another is required, at normally higher costs, because the mode usually employed does not have capacity to handle the demand. While we now need and require all modes of surface transportation, and will continue to have an increased need, we more importantly need improvement in each mode.

In January 1977, the Department of Transportation issued a 412page study titled "National Transportation Trends and Choices" to the year 2000. This represents a very ambitious undertaking, albeit the National Transportation Policy Study Commission is charged with basically the same responsibility.

While DOT specifically states their document is not an official position of the executive branch of the Federal Government, and that the document is only a starting point concept and is based on events and relationships not completely understood at this time, it evertheless sets forth numerous historical data and trends, and Combining the two does attempt to offer a forecast for transportation demand through the year 1990, or 13 years hence.

Known data for the year 1975 is projected to the years 1980 and 1990. These forecasts reveal that from 1975 to 1980, there will be a 29-percent increase in tonnage transported, while from 1980 to 1990, there will be a further 25-percent increase.

More importantly, the document forecasts that by 1980, the demand for rail transportation will increase by 434.8 million tons, or an increase in rail transportation demand which represents 77 percent of all the tonnage moved over the inland waterways in 1975. By 1990, the rail demand will be increased over 1975 demand by 1.1 billion tons, or by more tonnage than was moved over the Great Lakes, inland and intercoastal waterways by all water carriers in 1975. This reflects that in 15 years, the rail transportation demand will have increased from 1.48 billion tons to 2.56 billion tons, an increase of 1.081 billion tons. In 1975, all water movements in the United States totaled 986.7 million tons.

While DOT shows the railroads moved 1.48 billion tons of fre in 1975, the 1976 Yearbook of Railroad Facts indicates tha 1975, the railroads moved 1.396 million tons and involved 23 million individual car loadings, with a total U.S. fleet of 1,723 rail cars.

If the DOT data is close, this means in the next 13 years. railroads will have to improve their efficiency by 77 percent or fleet of cars to haul the projected increased tonnage will have t increased by at least 50 percent.

In the 15 years from 1960 to 1975, the average daily car mil by railroads improved by 17.8 percent of from 45.5 miles a da 53.6 miles a day. During this same period, the carrying capa of railroad cars increased 33.4 percent or from 55.4 tons per ca 73.9 tons per car. In that 15-year period, railroad ownership cars decreased by 244,782 cars, 16 percent, or from 1.6 million to 1.36 million cars. Net ton miles per train hour increased percent of from 29,671 to 38,778.

In 1975, each rail car averaged 13.4 trips per year, or one every 27 days, yet each such rail car was in active service ear revenue only 1 hour and 45 minutes each day. To meet the proje increase in rail tonnage in the next 13 years, with no further de in rail car ownership, each car will have to make a trip ever days, in lieu of every 27 days. Otherwise, sufficient additional cars will have to be added to the system to handle the increas

If the railroads can, in the next 13 years, show an improve in miles per car per day of 17 percent as they did in the prece 15-yar period, or improve turnaround by 17 percent, from 27 down to 22.4 days, and car-carrying capacity increases by 33.1 cent or from 73.9 tons per car to 98.3 tons per car, then they sh also be able to handle the increase in projected tonnage.

However, this assumes that the waterways will be sufficie improved to handle an additional 534 million tons and the truc industry will be able to handle an additional 1.57 billion ton

It becomes obvious that a radical improvement in all mode surface transportation is essential, and the failure of any mod meet its projected increases in tonnage places an unbelievable den on a projected situation, which at this point in time seems possible for each mode to achieve. These data do not take into sideration the energy situation or projected escalations in mate and labor.

Based on projected transportation demand, we believe there be a need for subsidization of one or more modes of surface ti portation, and that there is a true need for a complete stud subsidization in the public interest.

That concludes my statement.

Senator GRAVEL. Do you have any questions, Senator Dome Senator DOMENICI. I thought you were going to tell us specifi how a user fee was going to impact on a bushel of corn or a b of wheat. I don't question any of your statistics, but I don't u stand at all how it is relevant.

Mr. HARVEY. The relevancy of my statement bears on the fact at there is a compelling need for improvement on the inland aterway by construction of locks and dam 26.

Senator DOMENICI. Then the whole purpose of all those statistics that we have to improve the situation at Alton and, in your pinion, improve the situation for transportation on the inland aterways?

Mr. HARVEY. And on the railways and on the highways, yes, sir. Senator DOMENICI. But you do not want to leave the impression at any user fee would carry with it less development or less use the inland waterways, do you?

Mr. HARVEY. It depends upon the level of the user charge emloved, sir.

Senator DOMENICI. It would appear to me that because there is oing to be such a demand, if your figures are correct, that certainly here is no justification for 400 million a year in subsidy to the aland waterways. It would seem the barges need not fear competion. If there is going to be such a huge demand, it would seem hey are as safe as can be.

When you use the impact the DOT has on a bushel of wheat and bushel of grain, their report is filled with statements that it is significant, almost negligible. So it doesn't seem terribly relevant aat we need an awful lot more transportation unless you were tellag us that because we put on a user fee we are not going to build cks and dam 26.

I don't see that as being a conclusion. I don't see you concluding hat with user fees, reasonable user fees, we are not going to do the ther improvements that are pending. So are you telling us that ou oppose any user fee?

Mr. HARVEY. No, sir, I am saying that because of the projected semand, the Department of Transportation has been bandied round here this morning as experts. I am using their very data in ay testimony. I am saying that

Senator DOMENICI. To prove what?

Mr. HARVEY. To prove in the next 3 years, by 1980 there is going be such a surge for transportation demand that the rails will not e able to handle it and the water and the highways will not be ble to handle it.

Senator DOMENICI. You want locks and dam 26 built?

Mr. HARVEY. Yes, sir, we have been going around with it since

969.

Senator DOMENICI. Can you tell me whether or not you are for or gainst some reasonable user fees?

Mr. HARVEY. I am speaking only for my company, not the busiess. Our company is not opposed to a user fee on any mode of ransportation: but we think it must be equitable based on a reasonble study and in the public interest. We have no opposition to it. Senator DOMENICI. Have you had an occasion to study Senate bill 90 to see whether its impact is unreasonable or whether it is a easonable user fee?

Mr. HARVEY. I read it this morning, yes, sir. From what I glean from the proposal as it now rests before this committee, I am 1 convinced as to just what the import of it will be.

Operation and maintenance-as far as we are concerned, we own and operate our own barge line as a private company; operation and maintenance includes more aspects on the inla waterway system than merely the operation of the locks.

Senator DOMENICI. It includes the dredging, obviously.

Mr. HARVEY. Yes, sir, it includes flood control, it includes in gation. It includes many, many factors.

Senator DOMENICI. The corps activities include those.

Mr. HARVEY. Which is operation and maintenance of the syste yes, sir.

Senator DOMENICI. I can tell you that the bill does not conte plate that those kinds of costs will be charged as O. & M. for inland waterways.

Mr. HARVEY. Yes, sir, I appreciate that from you as the spons But it was not clear to me from reading the bill that this was intended.

Senator DOMENICI. Thank you. It would have been much eas had you opened your statement by saying, "We do not necessar oppose user fees, but we would like to build locks and dam 26."

Mr. HARVEY. I was under the impression we were talking of Senate bills, 712 and 790; 712 did not assume user fees. My purp here was to say we do need locks and dam 26. I was speaking te nically of that one.

Senator DOMENICI. Thank you very much.

Senator GRAVEL. Would any other Senator like to make a commen this point?

Senator BURDICK. As long as you mentioned user fees, have given any thought, if we should decide on user fees, what th should be? I know your company very well. I know they deal agricultural products. If you had user fees, would you have thought about the kind? Should it be on a postage stamp r should it be on a per-lock charge, mile charge? Have you thoughts along those lines?

Mr. HARVEY. No, sir, I am not directly involved in the ba location. But I am sure those in my company have. I would assi it would be something in the nature of a fuel charge.

Senator GRAVEL. Thank you.

Mr. Hull, your next witness?

Mr. HULL. The next witness is Mr. Lloyd Anderson, executive rector of the Port of Portland Commission, Portland, Oreg. Senator GRAVEL. Mr. Anderson?

STATEMENT OF LLOYD ANDERSON, EXECUTIVE DIRECTOR, P OF PORTLAND COMMISSION, PORTLAND, OREG.-REPRESENT AMERICAN ASSOCIATION OF PORT AUTHORITIES

Mr. ANDERSON. Mr. Chairman, members of the committee, I h a brief statement. I will try to make it briefer.

Senator GRAVEL. I appreciate that because we have already b at it almost an hour. I realize this is important.