I want to thank you for the courtesy shown our Association by your staff in allowing us to submit for the record, answers to certain transportation questions you placed in the CONGRESSIONAL RECORD on May 20, 1975, in remarks to accompany the introduction of S. 1777. Our Association takes no formal position on the bill itself but, of course, recognizes the great need for this country to attain energy selfsufficiency and the place coal occupies as the most available of all energy resources inside the United States. Many of the operator members of our Association handle the carriage of coal exclusively. Coal is the largest dry bulk commodity transported on the inland waterways of the United States. In 1973 over 120 million tons of coal were so transported. We, of course, share your anticipation of a great increase in the demand for coal in the United States. In the attachment to this letter, I have submitted answers for our Association on questions 19, 20 and 23 that you placed in the CONGRESSIONAL RECORD. I would appreciate your having them included in the record of hearings to accompany S. 1777. Responses to Questions Propounded by United States Senator, at page S8668 of the in conjunction with the introduction of S. 1777 RESPONSE TO QUESTION 19: Added coal flows, according to Project Independence estimates, will require upgrading of transportation facilities. Extensive upgrading of current railroad beds and facilities at a cost greater than $1 billion will be required. Hopper car and locomotive replacements and additions may run over $10 billion and require the use of over 10 million tons of steel for rolling stock alone. The problem is one of resource allocation coupled with the railroads' critical situation in obtaining sufficient capital to make such expenditures. The inland waterway system, on the other hand, may be required to carry as much as 63 million tons a year more by 1985 than it now does. The increase will be greatest on waterways serving the low sulphur coal producing areas of the upper Great Plains and Rocky Mountains, which are accessible to waterways by other modes. Again, according to Project Independence, "The overall (projected) rate of increase in waterway traffic is not excessive for an industry which has doubled its traffic over the last decade." New coal barges and towboats would require only $700 million in financing and less than one million tons of steel, compared with the above mentioned railroad capital and material needs. RESPONSE TO QUESTION 20: If the water carrier industry were to expand coal capacity beyond the over 120 million tons carried in 1973, it would do so with the expectation of conducting profitable hauls. Since coal is a low-value bulk commodity, the difference between the cost to the carrier and the rate charged the shipper is extremely small. The imposition of a waterway user tax would virtually eliminate all of the profit resulting from coal transportation on the waterways. The maintenance of an inland river system free of such user charges, an historical precedent almost as old as this nation, is incentive enough for the barge and towing industry to expand its capacity to whatever limit feasible in order to carry coal in the future. The absence of costly Government regulation coupled with Congressional reaffirmation of the "forever free" doctrine for our nation's waterways as stated in the Northwest Ordinance of 1787, would allow the water carrier industry to effectively transport the increased coal flows forecasted in Project Independence. RESPONSE TO QUESTION 23: Expansion and subsequent operation of the necessary coal barge capacity would require overcoming several obstacles. First, the issue surrounding the reconstruction of Locks and Dam 26 on the upper Mississippi River must be settled quickly and a replacement project initiated immediately. This is essential for the waterways to be able to handle projected increased demand for coal transportation. Reconstruction of the facility has been sorely needed for many years. Lockage delays now average about 18 hours and many river pilots will attest to a history of delays for at least the last decade. Second, the waterway industry must be able to operate free from the aforementioned impending burden of some form of waterway user tax. Third, in the event of a recurrence of the recent "fuel crisis" and the possibility of fuel allocations, the barge and towing industry operators should receive a full fuel allotment to allow them to haul their expanded energy cargo capacity. Since this industry is the most energy efficient, requiring only 500 BTU's per ton-mile of freight compared to 750 BTU's for rail, the next efficient mode; since 60% of the commodities hauled by barge is fuels for others; and since the industry has been taking measures to minimize fuel use long before the onset of the present energy crunch, water transportation should receive the necessary fuel allotment to move the projected coal tonnages. Costs and capital availability information is not available to AWO but would have to be elicited from individual companies; however, during the past decade of rapid growth this industry has been able to raise sufficient capital to meet growth needs, and this happy condition should continue in the future. ### I am writing you in regard to S. 1777, which our people in Middletown have reviewed and about which some concern has developed. The preamble of the bill addresses itself to major industrial boilers, As we read it, major steelmaking and finishing equipment such as Are we making a correct interpretation or not? Your comment would be greatly appreciated. We are pleased to respond to your letter of May 30, 1975 in which you requested comments on a number of questions posed by the Senate Committee on Public Works. These questions related to the many areas to be reviewed in considering the proposed Bill S. 1777, the National Petroleum and Natural Gas Conservation and Coal Substitution Act of 1975. Bankers Trust Company is not a member of the coal or utilities industries, and therefore we feel that we are not in a position to respond specifically to many of the listed questions which require the expertise of those particular fields. For this reason we are taking the liberty of addressing ourselves to those areas in which we feel we are best qualified to comment. Coal Reserves and Coal Mining Capacity Coal reserves should not be thought of as constituting a generally established total quantity to be produced at any particular rate for a given number of years. Although there is general agreement in both government agencies and industries that there are ample reserves in the United States to supply greatly increased usage (at least double current annual production rates) for well over 200 years, this general observation greatly oversimplifies the problem. The quantity of coal reserves (or for that matter, of any non-renewable fuel or raw material) must, in the final analysis, be measured in terms of their economic value rather than their purely physical quantities. In the case of coal this economic limitation depends on the geographic location of the reserves with respect to the consumer, their type (including heating value, ash content and moisture qualities), sulfur content, |