lower water quality, and soil erosion traceable to the barges and the associated flood plain development that has accompanied the improvement of these rivers. Limiting traffic to that which is economically justified will minimize these river damages.

No. 5. Commercial navigation charges will save energy

Subsidization of waterways has created an overbuilt waterway system, overlapping an overbuilt rail system and an equally sprawling highway system. And, all continue to grow. Such a mixture of different modes leads to waste of energy on a massive scale as railways lie unused while new barge or highway construction proceeds at a rapid pace. This is an excess capacity that is maintained by subsidy expenditures.

An example of this problem is the proposed $1.6 billion dollar Dallas to Houston barge canal which would parallel the tracks of two existing railroads and an interstate highway.

Mr. BURLESON. Without objection, the memorandum to which you refer will be included in your statement.

Mr. Lederer.

Mr. LEDERER. I have no further questions.

Mr. BURLESON. Mr. Gradison.

Mr. GRADISON. Mr. Chairman, I am not sure whether I am really in disagreement with what the gentleman, the witness, has said. But I would just like to make a comment, because I completely share his concern about preserving our free-flowing waters where we can, and try to improve those which are used as transportation arteries with the least damage to the environment. I am just concerned with total transportation plan, that we take into account the environmental impact of barge versus railroad traffic, and at times I have been afraid that in fighting this lock and dam 26 issue and in trying to get started on user charges, that some of the environmental groups have worked so closely with the railroads as perhaps to have lost sight of the possibility that in the long run it may be sounder from an environmental point of view to stimulate further development of commercial transportation on those rivers which already have dams. I mean the Ohio is not going to become a free flowing stream, nor is the Mississippi. I think from living right there on the river, seeing it every day that I am home, that my personal view is, there is less environmental damage to put a couple of barges there, or to run larger tows, than might be true of the traffic that is diverted to the river.

I am not arguing against the fee, I am supporting the fee, but I just think that in doing so, we at least, as I say, should recognize that barge traffic on an established system of waterways that already are dammed may have certain environmental advantages over some of the alternatives which may involve not just the obvious problem railroads involve directly, but obtaining of the fuels which they use, the coal which has environmental problems, or the loss of water from certain relatively dry areas through the use of slurry pipelines, and so forth.

You are welcome to comment, of course, but I am really just saying this because I want to try to draw out a point that I haven't heard discussed so far today.

Mr. BROWN. If I may respond, the principal environmental disruption from transportation is in establishment of the corridor, establishment of the roadbed or vehicle. As to the railroads, we have an extensive system of railroad lines already in existence with a tremendous degree of excess capacity available on them. So you can add great amounts of rail traffic without building new lines.

Where there is an underused waterway, I think it is probably a wise thing to be able to make additional use of it. Establishing user fees is not going to shut down the use on that river. Except in the case of a few waterways which are totally or extremely underused, which economically are just not viable and are not bearing their own weight; these are waterways that perhaps some consideration should be given to shutting them down.

Once built, the maintenance that is required for railroads does relatively little damage to the environment. The barge canal you have; aside from the original construction of the waterway, you have to have continual maintenance, continual dredging of these waterways, and this maintenance and this dredging can be severely damaging to the environment. The dredge disposal is filled with pollutants. To dispose of it economically, they are almost always going to a site at or near the river, which invariably involves destruction of animal life and wetlands. I certainly agree with you, we need a sound transportation policy that uses all modes and makes good use of all those modes. The only bias I would say toward the railroads is that the railroads are a system which serves the entire country and serves it for a variety of goods, and we have to, we are forced to maintain, as any national transportation policy would be forced to maintain, those railroads in a viable means. You can't let go of the railroads and replace them totally with waterways, because the waterways can't serve the whole country and they can't serve all kinds of commodities; and environmentally, in terms of actual use, if you used waterways and trucking and in tandem as opposed to railroads, I think that the tremendous environmental disruptions in terms of fuel use and air pollution from the trucking end of it would bring a considerable loss on that end of the system.

Mr. GRADISON. I do appreciate your additional comments, and they make a lot of sense to me.

Thank you.

Mr. BROWN. Thank you.

Mr. BURLESON. Mr. Frenzel.

Mr. FRENZEL. I might thank the witness for invaluable testimony. I can show him, or arrange to have him taken swimming on beaches which have been created from dredging, arrange to have him catch fish that weren't available before, because of improvement made in the river. Again, thank you for his testimony.

I yield back my time.

Mr. BURLESON. Mr. Lederer, do you have questions?

Mr. LEDERER. No questions, but I wonder if Mr. Frenzel would

take me?

Mr. FRENZEL. There is a price.

Mr. BURLESON. Mr. Brown, thank you for your testimony.

Mr. BROWN. Thank you very much.

Mr. BURLESON. Thank you for coming.

Our next witness is a representative of the United States Gypsum Co., Harry D. Gobrecht, director of transportation and physical distribution.

Glad to have you, Mr. Gobrecht. You may proceed. Your statement will be included fully in the record, if you wish to summarize.

STATEMENT OF HARRY D. GOBRECHT, DIRECTOR, TRANSPORTATION AND PHYSICAL DISTRIBUTION, U.S. GYPSUM CO.

Mr. GOBRECHT. Mr. Chairman, I will summarize my statement. My name is Harry D. Gobrecht. I am director of transportation and physical distribution for the United States Gypsum Co., in Chicago, Ill. United States Gypsum Co. utilizes all modes of transportation including the inland waterways.

I actively participated in a number of transportation and business organizations. Currently, I am an officer of the National Industrial Traffic League and chairman of the transportation committee of the Gypsum Association.

I testified before the Subcommittee on Water Resources, Committee on Environment and Public Works, U.S. Senate, on April 19, 1977, when they were considering the various Senate bills involving locks and dam 26 and Inland Waterway user charges. This testimony was at the invitation of the subcommittee.

My letters on 1976 legislation, and my previous testimony before the Senate subcommittee, mentioned the waterway policies of the National Industrial Traffic League which I fully support. The National Industrial Traffic League membership includes over 1,800 representatives from all segments of the shipping public. It is commonly referred to as the "voice of the shipper."

The league policies, which have been in effect for over 30 years, and which have withstood challenges at many meetings, include the following:

1. The shippers, receivers and the national defense require the continuation of all available means of transportation.

2. The National Industrial Traffic League favors the imposition of inland waterway user charges.

3. They also favor separate treatment, for user charge purposes, of each waterway or segment thereof and believe that users should not be required to carry part of the burden of costly projects from which they receive no practical benefit.

4. In establishing user charges, its overall effect must be measured against the continued movement of traffic, the navigational use of the waterway, the specific industries and communities located along the waterways, and particular sections of the country.

My company's responsibilities include the obtainment of a maximum amount of services for each of the 150 million transportation dollars that the company spends; also, to insure that transportation expenses are kept as low as possible consistent with the services that we require.

These responsibilities require that I spend a great deal of time examining our transportation costs; I also must consider how our transporttaion and distribution costs will affect the ability of my company to profitably penetrate various markets-most of which are subject to dynamic competition. Most other transportation executives perform similar responsibilities.

There are dozens of cost factors that must be considered when making distribution decisions and in selecting the transport mode that will handle your shipments. The process is complex. Relative trans

portation costs are only one of many cost, service, and investment factors.

THE ISSUES

The current waterway controversy can be boiled down to two issues: 1. Locks and Dam 26 Issue: Must be repaired or replaced?

Is greater capacity required?

I don't intend to comment on this issue. It must be resolved, however; hopefully by congressional directive, and hopefully only after Congress receives proper and sound economic data and analysis.

2. The User Charge Issue: This subject has been debated in and out of Congress for years. According to Senator Domenici's analysis, at least 18 studies and positions have been made on inland waterway user charges between 1939 and 1976.

Most of the studies specifically recommended that a user charge system be established.

The majority of shippers favor inland waterway user charges. This is clearly evidenced by the National Industrial Traffic League policies. The executive director of the National Committee on Locks and Dam 26, recently advised the members of his committee-"It is obvious to me that there is little chance we can kill, in total, a user fee.” Apparently those who have been the most ardent opponents of user charges have at long last realized that their own self-interest arguments are no longer valid.

SEPARATION OF ISSUES

It has been suggested by some individuals, and some groups, that the two issues-Locks and Dam 26 and User Charges should be considered separately and resolved.

To me the purpose and implication of these suggestions are obvious. The opponents of user charges want a new dam and new locks with greater capacity. They want the facilities now. They want the facilities to be built at public expense with no contribution of their own. They don't want further debate on user charges since they know that they will run the risk of exposing additional fallacies of their own arguments.

Mr. Smith, of the American Waterways Operators, who favors the separation of the issues states: "The railroads are attempting to hold L&D 26 hostage to the waterway user tax."

This is the type of argument that has been used for years.

The issue of user charges goes far beyond the simply jockeying for competitive position between the railroads and the waterway companies and waterway users. The American taxpayer, whose taxes pay for the facilities, are also beginning to think and be heard. This is what scares the user charge opponents and why they want the issues separated.

I would urge that the issues remain joined.

THE LOGIC OF USER CHARGES TODAY

To me the expenditure of public funds to create transportation facilities made a lot of sense in the early stages of our country's eco

nomic development. Railroads, motor carriers, airlines and inland waterways have all benefited from public grants in the past. So has the public. It is doubtful if any of these transport modes could have developed or matured without such public expenditures.

Today, however, we have mature industries. The developmental period is over. The necessity for public expenditures for right-of-way and facilities is also over.

I believe that most enlightened and objective transportation managers agree with the logic and necessity for the removal of subsidies from the inland waterways. These people also know that the railroadwaterway battle is real.

All transportation managers are witness to the desperate railroad dilemma between their costs and revenues. Railroads, when requesting Interstate Commerce Commission permission to raise their rates, point out that costs have risen rapidly with only slight increase in revenues and tonnages transported. Most transportation managers also know that railroad freight rate levels are volume sensitive. We know that the railroads will require lesser rate increases if they can. transport greater volumes. We also know that the effect of greater volume is reflected in all freight rates.

We also know that the additional diversion of volume from the railroads will result in the necessity for still further increases that will be felt on all railroad movements. We also know that when some rates are held down to meet, or partially meet, waterway competition, that the railroads have little choice but to raise rates on noncompetitive traffic. Such are the economic facts of railroad ratemaking if railroads are to conduct profitable operations.

Removal of waterway subsidies will not necessarily result in the ability of railroads to meet the cost of all waterway movements. At best, it will permit them to compete on a more equal footing.

Many voices have been recently raised asking for more evenhanded regulation and Government policies between the various transport modes.

All transport modes are essential and should be able to, and encouraged to, compete within the private sector for their share of the shipper's transport dollar that they are best equipped to handle.

Few people favor multimillion dollar grants to railroads as outright gifts with no repayment provisions.

The logic of one-sided subsidies for one transport mode, therefore, fails to make any sense from the standpoint of even treatment or overall public benefit.

TYPE OF USER CHARGES

My previous testimony before the Senate included the fact that I favor the imposition of a segmented type of user charge.

I am definitely opposed to fuel tax charges or other charges based on any systemwide type of assessment.

My position in favor of the imposition of inland waterway user charges is largely motivated by my conviction that inland waterway facilities should be constructed only when their cost can be offset by real benefits to the public as a whole.

Imposition of fuel tax charges or systemwide charges will not result in the same type of effective restraint against wasteful and unneces