Page images
PDF
EPUB

Mr. CRAMER. I do not think the administration is very honest about accomplishing the full amount of mileage up to standards at the estimated cost when the estimated cost, you say, is really $1.2 billion but we are led to believe it is $920 million. That is $280 million differ

ence.

Mr. BRIDWELL. I am not under any circumstances indicating that anyone believes you can build a full 2,350 miles to full standards for $920 million.

Mr. CRAMER. Yet, you are instructed under the act to build it to standards. How can you justify coming in with a lower figure than you estimate it is going to cost, a lower figure by $280 million? That is not being realistic.

Mr. BRIDWELL. The $920 million, Mr. Cramer, was developed quite a number of months ago at a time when I say our estimates were not nearly as well perfected as they are now. But be that as it may, it is my understanding that the President and his advisers considered our estimate, the estimate submitted to them along with other information available to them and concluded that the Federal resources which could be committed to this program in view of their overall budgetary needs should be limited to the amount specified in the bill.

Mr. CRAMER. It just does not make sense to me. You sit here and testify it is going to take $1.2 billion, the authorization thus should be $600 million and not $460 million, And that does not include the $50 million for the access roads, does it?

Mr. BRIDWELL. That is correct; it does not.

Mr. CRAMER. So actually, you are $330 million under what you estimate the estimated cost to construct the system is.

Mr. BRIDWELL. Excuse me, it does include the access.
Mr. CRAMER. The $460 million does, in the bill?

Mr. BRIDWELL. Yes, sir.

Mr. CRAMER. That is right. So you are $330 million under estimates?

your own

Mr. BRIDWELL. No, Mr. Cramer. I say the latest estimate that we have and which we have reason to believe is much more accurate than the estimate that is contained in the Commission report, is about $1.2 billion.

Mr. CRAMER. What I mean is that you are authorizing expenditures for $330 million under your estimated cost of construction. That is not being honest.

Mr. BRIDWELL. I am sorry, it is on the basis of the latest estimate. that we have. It would be $280 million.

Mr. CRAMER. But $50 million for access highways.

Mr. BRIDWELL. The $1.2 billion figure which I have just given you includes the access roads.

Mr. CRAMER. I see. It is $280 million, then. Well, it just does not make sense to me to ask us for $460 million, knowing full well you are going to have to come back later on for more money, to the tune of $140 million more to do the job.

Mr. BRIDWELL. Your question assumes actual construction of the full system as was recommended.

Mr. CRAMER. I have just a few other questions. I do not want to take all the time. Why is Alabama left out?

Mr. BRIDWELL. Alabama is not left out. It will have available to it the access funds. It does not have any part in the development roads system.

Mr. CRAMER. That, obviously, is what I am talking about, the development roads system.

Mr. BRIDWELL. The portion of Alabama in Appalachia is exceptionally well served now with interstate highways and it was not felt the Alabama needed additional development roads and Alabama did not request any mileage of development roads.

Mr. CRAMER. If this is a good program, development highways and access roads for Appalachia, how can you justify and why should it be limited to Appalachia and not be nationwide in application as all other highway programs are?

Mr. BRIDWELL. I think the Commission report and the President's message to the Congress when he submitted the legislation pointed out that this region is at a much lower economic level than the Nation as a whole and to this extent it becomes essentially a drag upon the economy rather than bearing its full share of the requirements of the country. So that we have a geographical region which we are attempting to help in the same sense that there are a number of the Federal programs which attempt to help very limited areas.

Mr. CRAMER. Undoubtedly, there are other areas that need additional highways for these same purposes in other places throughout the country and other areas throughout the country. Is obligational authority in advance of appropriations included in this program as in other highway programs?

Mr. BRIDWELL. No, sir.

Mr. CRAMER. In other words, no contract will be let, no plans made until the actual appropriation?

Mr. BRIDWELL. That is correct, sir.

Mr. CRAMER. That is in your statement on page 7. That is all I have, Mr. Chairman.

Mr. DAVIS. Mr. Baldwin?

Mr. BALDWIN. Mr. Bridwell, do I understand correctly that if title IV of this bill were not in the bill at all pertaining to the Appalachian Development Corporation, that section 201 would function exactly as it would if title IV were in the bill?

Suppose we drop title IV out of the bill and there was no Appalachian Development Corporation, would that in any way affect the function of section 201 specifically?

Mr. BRIDWELL. I apologize, I do not believe I am able to answer offhand. I will be glad to supply an answer for it.

Mr. BALDWIN. Will you supply it for the record?

Mr. BRIDWELL. Yes, sir; I will.

(The information follows:)

While the deletion of title IV creating the Appalachian Development Corp. would not actually prevent the construction of highways under section 201, it would lessen the impact of the highway portion of the program on the overall developmental objectives of the bill. This is so because the developmental effect of the highways would be lessened if the other development efforts that depend on title IV for financing were curtailed or eliminated.

Mr. BALDWIN. I have one other question. I just want to verify what I think something means. Section 216, page 20, supplements to grantin-aid programs, enable the State contribution and local contribution to be waived for grant-in-aid programs normally.

If I understand the proviso at the bottom of page 21 correctly, there can be no waiver as to the existing Federal aid program for both interstate highways and State primary and secondary routes under this bill.

Mr. BRIDWELL. I am sorry, Mr. Baldwin, would you please ask that again? I want to make sure I understand it.

Mr. BALDWIN. My understanding of this proviso, if I read it correctly, is that although in other grants-in-aid programs the local contribution can be waived completely, under the provision of this bill that as far as the existing Federal aid to highway programs for both interstate construction and State primary and secondary roads you cannot waive the requirement of local contributions or State contribution as now required by the Federal Interstate Highway Act and other Federal-Aid Highway Acts?

Mr. BRIDWELL. That is correct.

Mr. CRAMER. That does not mean, however, that the State cannot borrow from the Development Corporation to pay part, as a loan to pay part of its cost of its contribution. So that it can have a hundred percent Federal money through the loan process from the Development Corporation.

Mr. BRIDWELL. I would have to check out that particular provision, Mr. Cramer. I suppose theoretically it is possible.

Mr. CRAMER. That is what it is for. It is set up to take care of State participation cost in State-Federal programs.

Mr. BALDWIN. Mr. Chairman, could we ask Mr. Bridwell to provide an answer to that question for the record?

Mr. DAVIS. Certainly.

Mr. BRIDWELL. Yes, sir. The particular question of whether the Development Loan Corporation can lend funds which would pay the State's share of the highway program?

Mr. BALDWIN. That is right.

(The information follows:)

The provisions of title IV do not specifically prohibit the making of loans thereunder to pay for a State's share of the highway costs under section 201. However, such title does not appear to have been drawn with such purpose in mind and consequently would not be readily adaptable for such use. To be eligible for such a loan, a State highway department would have to qualify as a "local development district," show that financial assistance is not otherwise available, and agree to purchase stock in the Appalachian Development Corp.

Mr. Davis. In the spirit of cooperation, Mr. Blatnik will not ask any questions because we have to answer this quorum call. We now have concluded 18 sessions of these hearings. We have not delayed our approach. We have heard from all sorts of witnesses and some were asked not to appear because they would have been purely repetitious. We have had no insistence from anybody that they have been treated unfairly. But I want the members of the committee to say that as fairly as possible next week we will meet in a purely informal status to discuss these questions.

Mr. CRAMER. Is the record open for any statement for any period of time? There could be people who have asked to submit a state

ment.

Mr. DAVIS. I think that would be entirely proper.

Mr. CRAMER. How many days do you want to keep the record open for statements?

Mr. DAVIS. Could we hold it open until next Tuesday?

Thank you for the cooperation on the part of all the committee. The committee will be in recess subject to the call of the Chair. (Whereupon, at 11:15 a.m., the ad hoc subcommittee adjourned, subject to call of the Chair.)

(The following material was furnished for inclusion in the record :) STATEMENT OF THOMAS F. MITCHELL, SPECIAL REPRESENTATIVE, THE NEW ENGLAND COUNCIL, WASHINGTON, D.C.

INTRODUCTION

My name is Thomas F. Mitchell. I am a special representative of the New England Council in Washington, D.C., and I am concerned solely with the effects on New England consumers and industries of the mandatory oil import control program's restrictions on imports of residual fuel oil.

The New England Council is a nonpartisan, nonprofit organization, representing all aspects of the New England economy made up of representatives of industry, labor, educational, and farm groups as well as the six State governments. The council is concerned solely with regional development and with the improvements of the New England economy. The council was established in 1925 at the request of the six New England Governors and serves today as secretariat for the New England Governors' Conference.

Residual fuel oil is a heavy, viscous material which remains after lighter products such as gasoline and heating oil have been extracted from crude oil. It is used extensively throughout New England to heat hospitals, schools, large apartment houses, and other public institutions. It is also used to supply power for New England's industries and to generate her electricity. During 1962, over 75 million barrels of residual fuel oil were consumed by New England users. Of this amount, only 61⁄2 million barrels could be obtained from domestic supplies and it was necessary to obtain the remainder from imports, principally from Venezuela.

PURPOSE OF THIS STATEMENT

The Honorable Clifford Davis, of Tennessee, chairman of the Public Works Ad Hoc Subcommittee on Appalachian Regional Development, has clearly stated on several occasions during the course of that subcommittee's hearings that the purpose of these hearings is to hear testimony confined to specific sections of the proposed legislation (H.R. 11065 and H.R. 11066) so that the subcommittee at the conclusion of the hearings can present to the Congress a clean bill which will best "provide public works and economic development program and the planning and coordination needed to assist in the development of the Appalachian region."

I am fully aware that the bills under consideration do not relate to nor mention in anyway residual fuel oil imports, nor were they mentioned in the report of the President's Appalachian Regional Commission. However, testimony has been offered during these hearings to the effect that the coal industry cannot support almost unlimited imports of residual oil from Venezuela and at the same time expand the coal industry when these imports displace some 55 million tons of coal on the eastern seaboard. Testimony has also been presented that residual oil imports have increased steadily during the last 10 years and that there has been an 85.8 percent increase of allowable imports since quotas were first established. Other witnesses have further stated that proposed legislation freezing residual oil imports at 50 percent of the domestic demand for the corresponding quarter of the previous year would be in the national interest.

It is indeed unfortunate that this problem has been injected into hearings on proposed legislation which has the clearly humanitarian motivation of eliminating poverty in a specific region of our Nation. The people of New England know

poverty-perhaps not as severe, certainly not as widespread as that of Appalachia-and from that knowledge comes our sympathy for our fellow-distressed citizens along with the sincere desire to join in the "unconditional war on poverty" in Appalachia and elsewhere throughout the country. This war, to be financed by the tax dollars of all Americans, cannot be won, however, by needlessly bringing up false issues, even before the battle has been joined.

In this regard, I respectfully bring to the attention of the committee a statement made on the floor of the U.S. Senate by the Honorable John O. Pastore, of Rhode Island, who has long been in the forefront of New England's struggle for relief from the crippling economic restrictions on residual fuel oil imports. Senator Pastore has said:

"Let us not fall for the fallacy of turning back the clock. Time and technology do not stand still. To yearn for the coal status quo, or the good old days, is to surrender to a dream and to invite disappointment and disaster. In these restrictions upon imports of residual fuel oil there is no help and no hope for the miner. For the threat to his job does not come from that source.

"America does not advance itself by creating roadblocks among the sister States. All that is negative. Progress is positive, sincere, sound, and mutual. "Unemployment is our universal ill and our common concern. Let us meet it with directness, not with detours. Let us employ all our resources of research to put men to work in the mining regions and the manufacturing regions of America. Let us conquer unemployment, not by delusions but by determination. "And conquer it we can."

However, since testimony detrimental to the fuel oil consumers of New England has been presented to this committee, the New England Council thanks the chairman for the opportunity to place on record its position with regard to residual fuel oil imports, and to offer our analysis of the effects of these imports on the domestic coal industry.

EFFECTS OF RESIDUAL FUEL OIL IMPORTS ON THE DOMESTIC COAL INDUSTRY When the mandatory oil import control program was first placed in effect in March 1959, its stated purpose was to protect the health of the domestic petroleum industry. Residual fuel oil was included in the program because of its relationship as a petroleum product.

It has been generally recognized, however, that much of the pressure for the original inclusion of residual oil imports in the control program and for the continuation of the current quota system comes from domestic coal industries. Representatives of the coal industry have claimed that the greatest single obstacle to expanded demand for Appalachian coal is imported residual oil. They have claimed that imports of this fuel each year decrease demand for domestic coal by 50 to 55 million tons. This claim is based on the assumption that coal and residual fuel oil can be used interchangeably.

Actually, only a relatively small portion of the demand for residual oil is in direct competition with coal. Since World War I, residual oil has been used in New England and other eastern seaboard areas extensively in large heating plants, in hospitals, schools, and other public buildings. It is also used in large quantities to power ships. Residual oil is particularly adaptable to such usage in view of its ease and cleanliness of handling and clean burning characteristics. The cost of conversion to coal-burning and additional handling costs make such conversion economically prohibitive.

There is only one significant area where in residual fuel oil and coal are in basic competition. That is the utility market. Even here, the utilities of Maine, parts of Massachusetts, and Florida either have never used coal or are not now equipped to do so. Furthermore, because of the very nature of imported residual oil, such competition is limited to a very narrow strip along the east coast. The Interior Department has estimated that 6 million tons of coal per year is the total amount of coal in direct competition with residual oil.

But even in this area of competition, the coal industry has little cause for alarm. From 1950 through 1960, sales of residual fuel oil to utilities east of the Rocky Mountains remained relatively constant. In the same period, coal sales to electric utilities increased from SS.3 to 174 million tons per year and by 1963 there was a further increase to 211.4 million tons. On June 1, 1964, the United Mine Workers Journal estimated that potential market demand by utilities for bituminous coal could reach 450 million tons annually by 1970.

In view of this actual and potential growth in coal demand, assertions that residual oil imports constitute a threat to expanded coal production and are re

« PreviousContinue »