somewhere else in the country, I think you can understand my concern-and I think it should be every American's concern with having a resolution of the lock and dam 26 issue because of its importance to that whole inland waterway system.

In that connection, I would like to state as Mr. Gradison did-I share his view completely-I do not foreclose the idea of a user fee or a fuel tax. I think what is fair is fair and what is right is right. I can understand your concern and the administration's concern over being able to pay for the new construction in the second and third generation of the locks and dams in our system.

My question is what kind of a study or process did you go through to come up with the goal or the conclusion you state which is 100 percent of operation and maintenance and 50 percent of new construction?

Secretary ADAMS. We went through an extensive economic impact analysis of the waterway system. It started with 100-percent recovery of construction costs and 100 percent of operation and maintenance costs, and that was felt to be too much.

So the recovery of new construction costs was cut back to 50 percent. That was a judgment of what was a fair amount of recovery. That is the judgment that was made and the Water Resources Act, section 80 study, came to that conclusion.

Now, as with anything else, Mr. Gephardt, when you finally come to a conclusion on something like that it involves the judgment of the people who have studied it a long time and their judgment may be right or wrong. It was not arrived at by picking a figure out of the air. We had gone through the water resources study. That is why this has been delayed so long.

We would like to see this move through this Congress and to get this behind us because we keep studying and analyzing and reanalyzing, as opposed to moving ahead with it.

Mr. GEPHARDT. I understand your concern with continuing to study, but I also believe that part of this study has to do with what is fair between modes and what competitive effect it has. Earlier in your testimony you said that the highway situation is one that is looked at as a model.

Secretary ADAMS. We are going to have to do a significant number of things with the highway program, but we looked at it as a model. Mr. GEPHARDT. In terms of returning the cost of construction you look at it as a form that you want to keep?

Secretary ADAMS. We built the interstate system with 100 percent of the Federal share of construction costs being paid for by the

Mr. GEPHARDT. But surely you understand the difference between. those two situations when the highway is literally used by every taxpayer in the United States and the waterways certainly are not. You have a purse there that is much deeper and wider than the purse you can dip into in the waterway situation.

Secretary ADAMS. That is why the judgment was made that you should not go for recovery of 100 percent of new construction costs on the waterways. It is 50 percent instead. Incidentally, in the highway area-because we will be discussing this with the committee-we are

looking intensely at the highway program because the Governors, mayors and many others are very concerned about big new construction projects as opposed to repairing existing highways. They are running out of the money to keep that system working. It is a very difficult problem, our transportation system. That is why we look at it nationally.

Mr. GEPHARDT. Can you tell me if we just enacted an operation and maintenance tax alone, what would that come out to as far as a per gallon tax? If we just enacted a fuel tax, and I understand what you are saying about the mix, what would that come out to on a per gallon basis?

Secretary ADAMS. Twenty-five cents at the end of the 10th year to recover $210 million for operations and maintenance for navigation purposes only.

Mr. GEPHARDT. When you say for navigation purposes only, does that include any irrigation work, the fill work, or anything that has to do with flood protection?

Secretary ADAMS. No.

Mr. GEPHARDT. That is just to keep the channel open?
Secretary ADAMS. Navigational expenses.

Mr. GEPHARDT. What would be your position if we passed a 4-cent tax for a short period of time, with the idea that we did not necessarily share your conclusion that we should go to 100 percent of operations and maintenance and 50 percent of new construction, but ask you or some appropriate group to come back and tell us what the conclusion is?

Secretary ADAMS. I would support this as a possible way of approaching it, and I have the same problems that you do in that there are many agencies involved here. We would have to go back-I am not saying that you have to put in the total 10-year schedule—you could meet the schedule for the first year or 2 years, whatever was the decision on how long you wanted to do it, then have us come in with regulations that triggered in a total program.

This is what the Senate, in effect, would instruct us to do. That is what I have said would be acceptable in terms of complementing segment tolls with fuel taxes or vice versa. And the segment tolls would go into effect unless the Congress said by joint resolution we don't want them. Of course, at that point you could pass whatever user charge system you wanted to have. By proceeding this way, the long-range goal would not be damaged.

You would have an interim system on the books and within a definite time period, the Congress would have before it for review a system of segmented tolls and fuel taxes that it could vote up or down. Now, I would have no objection to proceeding in that fashion if that is the will of the Congress.

Mr. GEPHARDT. Two other quick questions. Did your study include what has been done by the Government in terms of subsidy for all modes of transportation? Was there an exhaustive look at that at all? Secretary ADAMS. Not as part of this study, but we have-and this was done in the last administration-an analysis of all the policies and trends and amounts spent on the entire transportation system in

the United States. It did not arrive at a conclusion as to what should be done next. But, yes; all of that information is available and it was published by the Department of Transportation in the first part of this year. It is a public document which can give you any piece of the whole picture that you would like to examine. It runs more to facts than to conclusions, however.

Mr. GEPHARDT. The last question is, in looking at the effect of the user fee on competitive transportation rates, did you find or is there any evidence to the effect that when a waterway development is completed or extended, and water transportation service is first made available, that the railroads in that region would lower their fares to meet the competition expected from the waterways? Is that a true statement or not?

Secretary ADAMS. When a new competitive factor comes into the field we have found generally that whoever is competing, trucker or railroad, will generally lower its rates to meet whatever competition is there.

Mr. GEPHARDT. Would you then expect that if rates went upputting on some odd-cent tax over a 10-year period-that competitive rates would also rise?

Secretary ADAMS. Competitive rates, if you have true competition, will vary around your cost factors plus a return on investment so that the answer to your question as I understand it would be yes, your rate structure is always going to vary with the total costs involved.

Mr. PIKE. Mr. Lederer.

Mr. LEDERER. The National Transportation Policy Study Commission, I understand, should come in with their conclusion around December 31, 1978. Does your Department have a handle on which way they are going, in the area of waterways?

Secretary ADAMS. We do not know which way they will go with respect to waterways. They are right in the middle of their activities and I do not know what their final conclusions will be or the degree to which they will focus on waterways as opposed to highways for example. I want to be very cautious about that Commission because I sat on it as it was being organized. It is looking at the needs of the United States out to the year 2000, and what we are dealing with in the Department of Transportation and what you in Congress who work on transportation matters are dealing with are the immediate problems of the type mentioned by Mr. Gephardt and others, such as whether dams should be built and, if so, how do we pay for them.

I do not know that they will address specific issues like the one we are trying to resolve today.

Mr. LEDERER. Mr. Secretary, I understand the Senate bill called for in dollars and cents for a tax of 40 cents and I don't have a handle on what the administration is asking.

Secretary ADAMS. No; that is not correct. The Senate did not want to get involved with a tax proposal because taxes are supposed to originate on the House side. So they gave us instructions-by "us" I mean the Department of Transportation-it is a trigger mechanism that says we shall publish rules and regulations which would go into effect on October 1, 1979, unless disapproved by both Houses. They have stated the goal of recovering over a 10-year period 100 percent

of the costs operation and maintenance and 50 percent of new construction costs. That is what the Senate amendment did. And what they really did was to avoid the imposition of taxes so that they would not interfere with the jurisdiction of the House.

Mr. LEDERER. Could you tell me what the administration has recommended?

Secretary ADAMS. We recommended a mix of the two types of charges. As I indicated to Mr. Gephardt, we are prepared to start meeting the schedule with a tax which, if you want to go for 1 year would be 4 cents, or, if you want to go for 2 years it would rise to 8 cents the second year. In the meantime, the Department would propose additional charges in regulatory form and then Congress would decide whether the total package for the 10-year operation was what you wanted. Of course, the committees that are involved also could move to change the whole thing if they wanted to.

Mr. PIKE. Mr. Secretary, earlier I asked you some questions about the energy uses and you referred me in responding, or you commented in responding, that there are a great many studies and they have a range of fluctuations. Has not the Department of Transportation itself had statistics on the relative fuel efficiency of barges as opposed to railroads as opposed to pipelines as opposed to trucks?

Secretary ADAMS. Yes. A lot of them. The problems you get into are matters of circuitry, how the streams run, truck backhauls and the like, and some of the statistics are soft. That is all I am saying. But, yes; we have had a number of studies.

Mr. PIKE. Are you familiar with the Congressional Budget Office document on this issue, the question of financing waterway development? In that study they quote one set of statistics as being the statistics of the U.S. Department of Transportation. Are you unhappy with those statistics or are you, are they real or are they what is wrong with them? Page 19 of that CBO study. They are cited as the statistics from your Department.

Secretary ADAMS. These are, yes. These are in the range that I testified to earlier.

Mr. FRENZEL. Will the Chair yield? I notice on those statistics there is a figure for domestic waterway which I assume is all freight, but the railroads' statistics refer to the unit train only which is the most energy efficient hauling of freight. So I suspect we are comparing camels and jackasses here.

Secretary ADAMS. That is why I indicated that when you make these studies you must always be very careful with your caveats. For example, you may need to take into account such factors as the percentage of backhauls that are empty, either on railroads or trucks, and the time that is taken to navigate on a river with several locks as opposed to one that is relatively free of obstructions.

Mr. PIKE. If you have to get the goods to the rail head or river head?

Secretary ADAMS. Then you have to shift them. These are generally accurate figures.

Mr. PIKE. My point is, Mr. Secretary, that the statistics in here. seem to show a very substantial energy-efficiency advantage for the barges.

Secretary ADAMS. You mean compared to the trucks or the railroads?

Mr. PIKE. Even to the railroads it is a 36-percent advantage.

Secretary ADAMS. What you see reflected in the studies is that in each case, particularly with barges and to a lesser degree with trains, you are nearly always dealing with two modes. The longer you have to go by truck to get it to the barge head or the rail head, the less energy efficiency you have for the total haul. So what I am saying to you is that these figures give you the general range. There is no question that once you put the items on a barge and proceed from point to point, it is going to be more energy efficient than if you put them on a truck going between those two points.

Mr. PIKE. Or putting it on a train.

Secretary ADAMS. Or on a train.

Mr. PIKE. The gentleman from Minnesota said this is the unit train figure that is being used here, if the statistics are correct.

Secretary ADAMS. The thing we are trying to point out is that despite the fact they are owned by different groups it is all one movement and that generally in this operation when you use the barge lines you must combine units. With trains you do it to a lesser degree in that they are able, because of their connections, to get into a particular area. The truck may have a very high Btu usage, but it is essential to collect items for use in both modes. That is all we are saying.

Mr. PIKE. Mr. Secretary, we thank you very much for your testimony this morning. We do have another vote. I think at this point it would be appropriate for us to suspend and we will proceed forth with the testimony of Mr. Woodworth, Dr. Woodworth, Secretary Woodworth as soon as we get back.

We thank you very much.

[Whereupon, a recess was taken.]

Mr. PIKE. Mr. Woodworth, Dr. Woodworth, if your time is as I perceive your time to be, my guess is you would rather proceed with an almost nonexistent committee than wait for one which might materialize at some later date. Do I read you right?

STATEMENT OF HON. LAURENCE N. WOODWORTH, ASSISTANT SECRETARY OF THE TREASURY FOR TAX POLICY

Mr. WOODWORTH. I will be glad to testify now.

Mr. PIKE. Do it whichever way you want.

Mr. WOODWORTH. I am happy to go ahead. I think you have my statement and I would like to summarize that. Nevertheless, I request that the entire statement go into the record.

It is a pleasure to participate in these hearings on waterway user charges. The user charge concept is an issue which Congress has been concerned with in regard to highway and air operations for a long period of time. The types of user charges that can be used have already been discussed by the Secretary of Transportation this morning. A tax on fuel could be enacted. As a matter of fact, you currently have an excise tax of 4 cents per gallon on diesel fuel used in motor vehicles on highways. This type of excise tax could be extended to vessels using the inland waterways.