Mr. ANGELL. Does Mr. Pollard White desire to be heard on this project?

Mr. PRIEST. He is also here for the Cumberland River project. Mr. ANGELL. Mr. Priest, do you desire to be heard on this project? Mr. PRIEST. No, sir.

Mr. ANGELL. Are there any other witnesses who desire to be heard on this project?

(No response.)

Mr. NEAL. Mr. Chairman, may I ask permission to have the opportunity to place a statement in the record if I so desire?

Mr. ANGELL. Without objection, that will be granted.

(A statement has been submitted for the record by the Illinois Central Railroad Co. and Louisville and Nashville Railroad Co., as follows:)

STATEMENT OF POSITION OF RAIL CARRIERS, ILLINOIS CENTRAL RAILROAD CO. AND LOUISVILLE & NASHVILLE RAILROAD Co., RESPECTING RECOMMENDATION of Board OF ENGINEERS FOR RIVERS AND HARBORS FOR IMPROVEMENT OF THE GREEN RIVER IN KENTUCKY

At the outset it should be made clear that if the Illinois Central Railroad Co. and the Louisville & Nashville Railroad Co. could hope for the realization of even a substantial portion of the pictured results which the improvement of Green River would bring about we would be here advocating the approval of the project. The development of the territory we serve is a serious factor in our self-interest. We are extremely interested in doing everything we can to stimulate the coal industry, as well as other industries in our area. Study has revealed that this project will have the opposite effect on the territory as a whole. This project includes the rebuilding of locks Nos. 1 and 2 on the Green River as well as the deepening and widening of the channel of the Green River. This committee has previously determined that no additional project authorization was required for the rebuilding of locks Nos. 1 and 2, since authorization therefor is outstanding under section 6 of the Rivers and Harbors Act of March 3, 1909. That particular aspect of this project is now pending before the Senate Appropriations Committee on a plea for the allocation of funds to begin this aspect of the project. The railroads here concerned appeared before the Senate Appropriations Committee and urged their denial of these funds at this time. It is our view that the project as a whole and as well as the major partthe rebuilding of locks Nos. 1 and 2-should not be approved until the project in its entirety has received approval for the reason that the two proposed undertakings are inseparable according to Secretary of the Army Stevens.

At the time that your committee determined that no additional authorization was needed for the rebuilding of locks Nos. 1 and 2 the matter was submitted to the Bureau of the Budget and the Director thereof stated, in his letter of August 10, 1953, to the Secretary of the Army:

"Accordingly, the economic justification for the improvement, if authorized by the Congress, should be reexamined and a current evaluation submitted to this Bureau before appropriations are requested for initiation of construction." We understand that this subsequent reexamination was made and submitted to the Bureau of the Budget and was predicated on the 2,250,000 tons of coal which it is alleged would move over this Green River if the construction sought is authorized.

In testifying before this committee on February 26, 1954, on this same project, Col. W. D. Milne, of the Corps of Engineers, Department of the Army, quoted from the letter of the Director of the Bureau of the Budget above referred to on page 7 of his testimony. He pointed out that the Director of the Bureau of the Budget has said:

"It is noted that the economic justification for the recommended improvement is based primarily on realization of a prospective average annual movement of 2,250,000 tons of coal over the waterway."

In meeting the question raised by the Budget, Colonel Milne has this to say: "I might say, Mr. Chairman, that that (reexamination of the economic justification of the project) has been complied with in connection with the sub

mission of the budget request for fiscal year 1955, and the supplemental request. The movement of coal on the Green River to the Tennessee Valley Authority and the Atomic Energy Commission is definitely assured if the river is approved." (R. 7.)

Colonel Milne further said: (R. 9)

"The Board of Engineers, however, in computing their benefits, used only the 500,000 tons of coal from the Tennessee Valley Authority."

This tonnage is the tonnage to be shipped "to the TVA steam plant at Johnsonville, Tenn." (R. 8.)

The other traffic used for the economic justification of this project is the 1,780,000 tons to be shipped to the steam-electric plants of the Ohio Valley Electric Corp. supplying power to the Atomic Energy Commission's Portsmouth, Ohio, plant. (R. 8-9.)

The purpose of reciting this here is to show that:

(a) This project is predicated primarily on alleged savings accruing from transportation costs;

(b) The only transportation service seen as justifying this project is coal expected to move to the Ohio Valley Electric Corp. at Madison and to the TVA at Johnsonville.

Our primary objection to the construction here proposed is that it is not economically justified. The foregoing was necessary to establish these factors. The following discussion will be divided into two parts, as follows:

(a) While the project is purportedly justified on the basis of transportation savings alone, no such justification appears in the records presented to this committee; and

(b) The area comprising western Kentucky, wherein lies the Green River, would be harmed rather than helped by this development.

(A) While the project is purportedly justified on the basis of transportation savings alone, no such justification appears in the records presented to this committee

It should be remembered that the alleged justification for this proposal is predicated solely upon savings in transportation costs. There are no flood control, power development, etc., or other aspects to this project, which might properly influence the result.

The Board of Engineers for Rivers and Harbors, in paragraph 9 of Senate Document 82, on page 20 thereof, indicated that the annual charges for the operation of this project would be $800,900. Colonel Milne in testifying before this committee utilized only two segments of traffic, i. e., the traffic to Madison, Ind., and Johnsonville, Tenn. The report of the district engineer estimated 1,780,000 annual tons to the Madison plant. The district engineer estimated the lowest present cost to move that traffic as $1.95 and the river cost as $1.54. It is strange that the comparison to arrive at a savings on this traffic is made with a nonexistent route over which the traffic will never move regardless of what happens. This coal tonnage to Madison will move via water in all events. As we will comment a little bit later, the traffic will move either from Yankeetown in Indiana by river to Madison or from the Green River mines by river to Madison. It will be noted that Chairman Gordon Dean of the Atomic Energy Commission, in his letter of May 27, 1953 (pp. 14 and 15 of S. Doc. 82) to the Chief of Engineers, stated that the Ohio Valley Electric Corp. under the contracts which it already had entered into had authority to elect to authorize the suppliers to develop the Green River coal source of supply or to develop a more expensive coal source north of Boonville, Ind. Obviously, a proper comparison to arrive at a potential savings would logically be a comparison of the cost by water from the Green River to Madison versus costs by water from the Indiana mines to Madison, even though such be nothing but a mathematical exercise. Yet it is superior to comparing the cost by water from Green River with the cost over a route which could not move any of the traffic under any conditions.

Furthermore, there is positive and definite evidence that the transportation costs from the Green River area under any circumstances will be substantially greater than from the Indiana area, even with the proposed improvement of the Green River. That fact is present from the basis of water transportation costs set forth in the district engineer's report. Therefore, the principal tonnage relied upon to produce the benefit cost ratio recited is highly questionable.

Turning now to the tonnage of the TVA, which is the only other tonnage relied upon by the engineers in economic justification of this project, described as a movement of 500,000 tons to the TVA plant at Johnsonville, Tenn.: The lowest present cost to Johnsonville for coal from the Green River area was shown as $1.64 per ton. (This was the lowest present cost at the time of the hearing before the engineers. As a matter of fact on February 1, 1954, this cost nad been reduced to $1.46 a ton.) The proposed river cost from the Green River mines to Johnsonville after this improvement goes into effect is $1.67. Therefore, at the time of the hearing, the available rail cost from the Green River mines to the Johnsonville TVA plant was 3 cents a ton under the proposed river cost and the actual cost by rail now from the Green River mines to the Johnsonville, Tenn., TVA plant is 21 cents lower than the proposed river cost. There is no saving of any kind on this tonnage.

It might be well to point out that the railroads showed in their presentation to the engineers that to the TVA plants at Shawnee, Johnsonville, Colbert, Widows Creek and Gallatin there was in existence a rail rate lower in every single instance than the estimated river cost to those same plants from the same origins.

The use of Green River coal, if that should materialize, and there is no assurance that it will so materialize, will have only the effect of substituting Green River coal of two producers in that area for coal from other origins. There is evidence in this record that these two producers have agreed to supply Madison, Ind., from Indiana sources unless they are given the option of selecting between that source and Green River. There are also statements in this record that the Eastern producers supply coal to the Ohio River points. There is also evidence in this record that the sale of excess energy to be produced at the Madison, Ind., plant will have the effect of curtailing the business of western Kentucky coal producers who are presently supplying generating plants in this area. Stated differently, this sale of excess power will have the effect of taking existing business from the land-locked mines in Kentucky.

(B) The area comprising western Kentucky, wherein lies the Green River, would be harmed rather than helped by this development While the improvement as proposed, providing a 9 foot stage for 103 miles, would touch 7 counties, the coal lands lying within 5 miles of the river, which is the area depended upon by the engineers to supply the anticipated water tonnage, is to be found only in Muhlenberg, Ohio, and McLean Counties. No mines of consequence are operated in the other counties within 5 miles of the river. Private and industrial engineers have extensively surveyed the area and have found it broken with faults and thus not suitable for development and production in the foreseeable future.

In the coal-proven area in Muhlenberg, Ohio, and McLean Counties, the greatest coal acreages within 5 miles of the river are owned or under lease by two concerns. The owners of said properties are also owners of coal properties in Warwick County, Ind., who have negotiated a renewable 15-year contract for supplying the Madison, Ind., plant with its coal.

Another coal property within 5 miles of the Green River, which has not been in production for over 20 years, is owned by an individual who, for years, has been the most active in support of promoting enlarged river facilities.

The Kentucky property leased or owned by the two syndicates holding contracts with Ohio Valley Electric Corp. would be further developed only if those concerns choose to supply Kentucky coal rather than Indiana coal. These two operators own land in Warwick County, Ind., and the coal they are to supply to Madison is to move to Yankeetown, Ind., a point on the Ohio River, thence via water to Madison, at a lower charge than can be made available from their Green River operations, even if the Green River improvement, recommended by the Engineers, is carried out. In short, substantially the total effect of improving Green River would mean making available an option of shipping coal to Madison in 1,000-ton barges from either Indiana or Kentucky, but if from Kentucky only at a higher water transportation cost.

The majority of active mines in the western Kentucky coalfield lie west of the Green River, and sufficiently west thereof to make it impracticable to transport coal overland at costs which, when combined with the water transportation charge, would produce total charges less than the all-rail rate. Thus, the recommended improvement would be of no advantage to these western Kentucky landlocked mines notwithstanding their coal reserves represent the

preponderant share of the total deposits in the field. Not only is that true, but giving to those several shippers on the Green River subsidized water transportation places landlocked mines, unable to utilize subsidized water transportation, in a much less favorable position than they now occupy in selling their coal in competition with all ohter producers in the very same field.

The Madison steam plant is to be operated for the Government by associated utilities and such utilities will take the surplus, not consumed by the Atomic Energy Commission, for transmission to their regular patrons and, by that arrangement, the Madison surplus will displace energy presently generated at other plants by these same utilities now operating with western Kentucky coals. Thus, western Kentucky will lose orders for quantities equivalent to the surplus power manufactured at the Madison plant distributed by the separate utilities.

The L. & N. Railroad and the Illinois Central serve the western Kentucky coal field. The L. & N.'s line, extending from Owensboro to Russellville, crosses Green River at Livermore and at Smallhaus and serves the river town of South Carrollton, as well as coal properties adjacent to the stream. Illinois Central Railroad crosses the Green River at Rockport.

The

In this river area there were produced and shipped in 1940 from 8 mines located on the L. & N. Railroad 33,460 carloads of coal, while in 11 months of 1953 the number of active mines in the same area served by the L. & N. Railroad had been reduced to 3 which shipped only 17,358 carloads.

Coal originating and shipped over the L. & N. from this area in 1940 represented better than 58 percent of the total coal tonnage shipped via the L. & N. from the entire western Kentucky field while in the 11 months of 1953 coal shipped from the active mines in the same river area represented only 26.5 percent of the total L. & N. shipments for the entire field.

The line of the L. & N. in the Green River area is little used except for coal tonnage; in fact, there is no other tonnage of consequences either originating or terminating on the line and this line is not used as an overhead line for movement of traffic between other sections of the system. Diversion to water of any considerable share of coal now being shipped by rail from these mines would immediately lessen the ability of that line to make expenses and return a profit. In those circumstances there would be no choice as to the course to be followed and abandonment of that line would be inevitable, resulting in loss of considerable taxes to the State, the counties, and the communities served by it. Without a railroad, any section, whether it be the Green River Valley or some like area, has but the slightest chance of securing or retaining an important industry.

It is true, as the Board of Engineer's report states, that the railroads object to this waterway improvement on economic grounds. The railroads are vitally interested in this area and have done much to develop it. They are interested in the welfare of their employees and their customers and the employees of their customers. They have demonstrated that almost 90 percent of the miners employed in western Kentucky will not be benefited by this proposal.

Undoubtedly a substantial portion, if not all, of the tonnage going to the Madison plant will move from sources from which water transportation is now available. The expenditures of an additional $17 million of taxpayer's money therefor can do no more than give water transportation on the Green River the advantage of lesser operating costs, coming from the use of larger barges, than existing river facilities now permit. It is to that extent, and in that way alone, that Green River water transportation costs is to be reduced. Yet to provide facilities permitting 1,000-ton barges on the Green River will not lower water transportation cost of Green River coal sufficiently to equal the water transportation costs now available from other sources of coal supply. Certainly $17 million of taxpayer's money could be devoted to a more useful purpose. There is no assurance that the proposal will result in benefits to the Government. There is absolute certainty, however, that the proposal will result in harm to many and it is submitted that the appropriation requested should be withheld.

CONCLUSION

This proposal presents an anomalous situation to this committee. As pointed out herein it is definitely premature and out of order. The project as a whole is not economically sound in that the only justification alleged, transportation savings, is not shown to exceed the annual cost of operating the facility and the

territory, as a whole, through which the Green River flows, will be hurt rather than helped by this project.

The modification recommended would result solely in a benefit to but several parties while the cost would have to be borne by every taxpayer. The two coal operators, the principal beneficiaries, already have executed contracts to furnish coal to the power plant at Madison and now have a cheaper means of moving their coal than by water. Why should inland coal operators in western Kentucky, constituting the vast majority of coal production in this area, and other citizens, as a body, contribute to the operating cost of their competitors?

CUMBERLAND RIVER, KY. AND TENN.

Mr. ANGELL. We will proceed to the next project, which is the Cumberland River in Kentucky and Tennessee.

We have with us, as we have noted, our very distinguished colleague, Mr. Priest, who is interested in this project. If it is agreeable to you, Congressman, we will have the Army Engineers' report first. Colonel Whipple, we will be glad to hear from you.

STATEMENT OF COL. WILLIAM WHIPPLE, CORPS OF ENGINEERS, DEPARTMENT OF THE ARMY

Colonel WHIPPLE. Mr. Chairman, this project was investigated by the authority of the Senate Public Works Committee resolution dated July 31, 1951, and reported on in Senate Document 81 of the 83d Congress, second session.

We are discussing a proposed multiple-purpose project on the Lower Cumberland River, which will take the place of authorized and existing projects.

Mr. ANGELL. Is this a river and harbor project or a flood control project?

Colonel WHIPPLE. It is a multiple-purpose project for the combined purposes of navigation, power and flood control.

Mr. ANGELL. What is the major objective of it?

Colonel WHIPPLE. The major objective of this particular project is to take maximum advantage of the potentialities of this site for multiple-purpose development. There is an existing project

Mr. ANGELL. But my question goes to what multiple purpose. Which is the major purpose? Is it flood control, rivers and harbors, reclamation, or what?

Colonel WHIPPLE. I can only answer that, sir, by saying that from the standpoint of benefits the maximum single economic benefit is power; the second is navigation and the third is flood control.

Mr. ANGELL. Power is the major benefit.

Colonel WHIPPLE. The largest of the benefits.

Mr. ANGELL. You may proceed, Colonel.

Colonel WHIPPLE. The Cumberland River has an existing navigation project, the oldest dams of which are 50 years old, consisting of dams A, to F, and dam No. 1, to bring 6-foot navigation as far as Nashville, Tenn. These dams are obsolete. The locks are inadequate in size, being only 58 feet wide and less than 300 feet long. They are inadequate for the existing traffic on that river. This has been recognized for some time and a series of three modern medium-height dams was authorized, consisting of the Dover, the Kuttawa or Eureka project, and the Cheatham project, to provide a 9-foot channel as far