Senator MUSKIE. Our next witness is President Carl E. Bagge of the National Coal Association. I regret that so much time was consumed. But I don't think that any time has been wasted this morning. All of the questions were helpful and I think the answers were helpful. With that, I welcome you, President Bagge. You may proceed with your statement and handle it in any way you like.

STATEMENT OF CARL E. BAGGE, PRESIDENT, NATIONAL COAL ASSOCIATION, ACCOMPANIED BY JOSEPH W. MULLAN, VICE PRESIDENT, GOVERNMENT RELATIONS, AND DIRECTOR OF ENVIRONMENTAL AFFAIRS, AND ROBERT V. PRICE, EXECUTIVE VICE PRESIDENT

Mr. BAGGE. Thank you, Mr. Chairman.

Senator MUSKIE. I may say I have already had the opportunity to read it if that gives you any possibilities for abbreviating oral presentation.

I don't want to cut down your presentation in any way. You are entitled to read the whole thing. But that might be helpful.

Mr. BAGGE. Thank you, Mr. Chairman. I certainly intend to conserve the time of the committee and, so as not to be presumptuous, to highlight the statement which is a rather lengthy statement, but a very important one.

Senator MUSKIE. The whole statement will be included in the record. (See p. 96.)

I simply want to make the point that I am sure we all have questions. We want to be sure to have some time to ask them.

Mr. BAGGE. I am Carl Bagge, president of the National Coal Association. I am accompanied here by Mr. Joseph W. Mullan, vice president of Government Relations and Director of Environmental Affairs, and by Mr. Robert V. Price, executive vice president of the association.

I represent an industry which is deeply concerned, Mr. Chairman, with the implications of the recent Supreme Court decision in Sierra Club, et al., v. Ruckelshaus.

The National Coal Association intervened in the proceeding before the Court of Appeals and the Supreme Court of the United States.

We appreciate, and I underscore that fact, Mr. Chairman, we do appreciate the opportunity to discuss the effects of this decision not only upon our industry, the American coal industry, but its customers, its employees and, indeed, the effects on the whole Nation.

The Clean Air Áct is a monumental work of this subcommittee, with a laudable objective: to protect and enhance the quality of the ambient air in the Nation.

We endorse and support that objective. In that sense, we and the Sierra Club, are not headed on a collision course. But I believe the Nation is headed on a collision course if we persist in the present policies that we have embarked upon.

We have serious reservations about the methods which the Congress prescribed to attain that goal, and some fundamental objections to the methods adopted by EPA and the States to achieve Congress'

We believe some of these measures actually hamper rather than help our progress toward the goal of improved national air quality. Let me emphasize that the American Coal industry does not differ Iwith this subcommittee on the basic intent of the Clean Air Act. Improved national air quality is a necessary part of the whole mosaic of our national goals for a better and more secure life for all Americans. In the relatively short time that this act has been in effect, remarkable progress has been made toward that goal, particularly in that portion of the air quality problem with which the American coal industry has been concerned, control of emissions from stationary sources.

It is easy to become impatient with the pace of progress on massive national problems especially when visible results are not immediately obvious and widely publicized to the American public. But the fact is that our air is getting cleaner. EPA's own reports indicate that most urban areas are presently meeting primary air quality standards and even secondary standards in terms of sulfur dioxide and particulates, the emissions most commonly charged to coal.

Thus, time and conditions change. By enacting the 1970 act with a term of 3 years' duration, Congress clearly intended the law be reviewed this year. In the press of other business-and quite possibly because Congress was satisfied with progress Congress this year postponed the review and passed a simple 1-year extension.

However, events now prove that Congress was right the first timethe act is ripe for review. The Supreme Court ruling in the Sierra Club case has brought this matter to a head on the question of nondegradation and, may I say, Senator McClure and to the members of the committee, when I use the term "nondegradation" based on your questioning of the previous witness, that we intend to mean by that the issue of significant deterioration.

But this is merely the most urgent evidence of a critical need to reassess the act and its implementation to be certain they fit into the whole pattern of our total national goals and our total national aspirations.

Thus, Mr. Chairman, you made a good choice of words when you convened this hearing to consider the "implications" of the Supreme Court ruling on the nondegradation issue.

The question leads, I believe, to an examination of the relevancy of the Clean Air Act's objectives to our total national goals and total national needs. This hearing is most timely. It is urgently required because the nondegradation issue is so critical to shaping the future of the Nation, its economy, its culture and the lifestyle of its citizens that it has become a key factor in determining the kind of society we should develop and toward which we should aspire.

This is far too significant an issue to be determined as it has been thus far on narrow legal grounds by the judiciary. Its economic and social implications are so broad that it cannot and should not be determined by an independent regulatory agency in a rulemaking proceeding as has been proposed and is indeed going on at the present time.

This is an issue which can only be resolved if we seek to achieve a common commitment which is responsible to all of our national goals by the Congress of the United States.

This is truly a political issue of such importance that it must be resolved in the political crucible. Only then can it be examined within the entire range of our national interests.

The issues raised by today's inquiry demand, it seems to me, no less, Mr. Chairman.

In this regard, a review of our environmental policies as embodied in the so-called nondegradation issue and the Clean Air Act itself— must also include an assessment of our national energy objectives. Unless we consider the effect of those policies in this context, the attainment of one of the act's principal purposes; namely, to protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the productive capacity of its population, cannot be adequately evaluated.

The coal industry is uniquely illustrative of the impact that environmental policies are having on the achievement of our energy objectives, and equally important, of the effect the implementation of those Clean Air Act policies will have on the future attainment of our national energy and environmental goals.

I discuss at some length of the need for coal. We make the case there, Mr. Chairman, for the new recognition that has been given to the absolutely indispensable role that coal will play and needs to play not only by conversion technology, not by gasification alone, but which it needs to play today in its conventional form.

Today the Nation faces an alarming energy shortage which has the potential of becoming a major crisis. We don't need to document. that before this committee. But we do outline the projections made for coal demand.

The Nation has enough of only one fuel to bridge the widening gap in the next few years, between demand and domestic energy supply, and that fuel is coal.

Coal is a primary indigenous fuel which also can be called upon to meet our projected energy needs beyond the mid-term and well into the next several centuries.

The National Petroleum Council, in recognition of this prodigious domestic energy supply, projects a coal demand level as much as 1.5 billion tons by 1985. This demand figure is 111⁄2 times higher than the American coal industry's best production year and, if attained, will require an annual growth rate of approximately 8 percent per year. This staggering potential is both the challenge and the dilemma of the American coal industry. It amply demonstrates that coal must now assume a clearly primary role in the Nation's energy economy.

Coal's projected demand level can be met only if there is a national commitment to do so. However, that will require positive measures to encourage more coal production use and the removal of restraints which impair the American coal industry without substantially contributing to the national welfare.

Expansion of the American coal industry in the future must be orderly, rational, and carefully planned. To expand, the industry must have a healthy production base, and investors must believe the climate for expansion is favorable.

Production capability in 1985 will be determined by coal's position now. The industry cannot expand unless it survives. Thus, a part of the task confronting industry and Government is the structure of the economic and legal parameters of coal production, distribution and utilization so that expansion is encouraged.

President Nixon, in his first energy message to the Congress this year, gave strong support to such a national initiative by urging that

the "highest national priority" be placed on developing our indigenous coal resources.

In his second message on June 29, the President called for dramatically increased research and development funding for coal to unlock its huge store of energy for the benefit of the Nation.

In Congress, Senator Jackson and Chairman Randolph have introduced legislation calling for a truly dramatic increase in coal R. & D. In their farsighted proposals they have recognized the most vital objective of providing the United States, by 1983, "with the capability to be self-sufficient in environmentally accepted energy sources."

If we as a nation are to gain this objective, we must begin now and begin where we are. If we are to double the American coal industry's capacity, we must begin with today's mines, producing the kind of coals they contain.

It may be possible to build another coal industry on top of the one we have today, thus doubling our capacity by 1985 to meet anticipated demand. But it is clearly impossible to junk the present American coal industry, to start from scratch and to build two of the present size in a dozen years.

In other words, we must build on what we now have, and that means maintaining a market for the coal we now produce and a market which involves burning it in the ways which are now available. We can and must improve these methods as rapidly as possible, but we cannot stop using coal as we are doing today until environmentally perfect methods are achieved.

Mr. Chairman, I deal at some length, with the impact of the Clean Air Act on the American coal industry.

The implementation of the Clean Air Act has had a devastating effect on the American coal industry. This has taken its toll in a number of ways-on markets, mines, and men.

The impact of the act on coal markets, especially along the east coast, has been well documented. The result has been a dramatic change in the number of plants burning coal. In 1964, when New York City first began imposing sulfur limitations, and we used that as our base year in the charts and graphs attached, New England, the Mid-Atlantic and a part of the South Atlantic regions, there were 100 coal-burning powerplants which consumed 40 million tons.

By 1973 only 20 plants burning coal remained in these areas and their coal consumption is estimated to be 152 million tons. The coalburning capacity by electric utilities has gone from 86 percent from the total in 1964 to 13.4 percent of the total in 1973 in the regions affected.

Coal supplied 70 percent of the electricity and utility fuel in that area in 1964. This year it will supply something less than 15 percent. Regional variations were pronounced as shown in the charts which are attached, but the trend is clearly downwards. Of course, while this was taking place demand continues to grow. The major beneficiary was oil, imported, mostly low sulfur, and increasingly from the Middle East.

Electric utility oil consumption in 1964 in the area in question was 12 million tons of coal equivalent, while the 1973 is estimated to be 77 million tons of coal equivalent, an increase of more than

The strictures of the Clean Air Act will work an even greater hardship in 1975, when the primary and most secondary air quality standards go into effect.

The magnitude of the problem is evident in an unpublished draft report done under the sponsorship of the Environmental Protection Agency. This report was done by the Mitre Corp., a leading consulting organization associated with MIT. It shows that by 1975, 324 million tons of the coal which normally would be consumed that year will violate the SO2 standards.

They are the standards already established. This figure represents 54 percent of the total coal consumed in 1975. Moreover, the reports indicate that by 1977 the situation will be even worse.

With no reliable SO2 removal systems commercially available, the American coal industry will only be able to market coals low enough in the natural state to meet those stringent SO2 requirements. The prospects of the American coal industry, Mr. Chairman, surviving under such an alternative are nil.

In addition, EPA's new source performance standards require, in the absence of other control means, the use of "east of the Mississippi" coal containing less than 0.7 percent sulfur. A U.S. Bureau of Mines study published in 1966 showed that only about 8 percent of our coal reserves in this area of the country could meet the requirement. I have discussed the impact, and I document this in some pages further, of the act upon coal's markets. But it is also essential to consider the effects on those who depend on the American coal industry for their livelihood, for the miners, for their families, and the communities in which they live.

President Nixon, in his message to Congress on April 18, recognized the devastating impact the act could have on jobs in the coal industry when he pointed out the prospective loss of 26,000 coal mining jobs as a direct result of implementation of primary and secondary air standards by 1975.

The president of the United Mine Workers of America, Mr. Arnold Miller, is also understandably concerned about the threatened loss of jobs among coal miners. He released a statement in April in which he said that unemployment in the major coal mining counties of the Nation already is 30 percent higher than the national average.

His fears underscore the real possibility that at least 26,000 of the Nation's 145,000 coal miners can be out of work as a result of the Clean Air Act and its implementation.

Let me be more specific. In West Virginia last year, Clinchfield Coal Co. closed three mines employing 413 workers; Galloway Land Co. closed mines employing 265; Island Creek Coal Co. cut back its work force by 155 at a single mine, and Eastern Associated Coal Corp. reduced its work force by 126 at one of its large mines. In each instance these mines were closed or cut back because there was no market for the high-sulfur coal they produced.

Or take the example of the Putnam mine of Union Carbide in Putnam County, W. Va. There, a modern mine with a $2 million annual payroll went into production in 1969.

On September 27, 1971, the mine was closed, and 200 coal miners lost their jobs. The mine produced coal of 2 to 2.5 percent sulfur content