benefit from an increased need for barges, tankers and other ocean-
going vessels.
It is estimated, I might add, that Japan alone will account for 50
percent of the world's steam coal demand by 1990. As I said recent-
33
ly to many of my members, would it not be a nice change to sell
more American coal to Japan than they sell cars to us?
The railroad scenario of disastrous consequences in that industry
simply does not square with reality. Even the most optimistic fore-
cast suggests that pipelines would be competitive enough to carry
only a small percentage of all the coal transported. In any case,
since when does fear of competition carry the day in America?
Since when do we say, monopoly is good and competition is bad? In
the hauling of coal the marketplace is not free and that is one of
the reasons this nation needs this bill.
Without the kind of controlled eminent domain procedure this
bill provides, the railroads will continue to force pipeline develop-
ers into endless and expensive litigation that has made pipeline
construction nonfeasible right up to the present moment. The
American people and American industry must no longer be denied
the right to decide for themselves whether they can or cannot
make use of the coal slurry pipeline technology.
During the last Congress, when I testified before your Commit-
tee, I said it was outrageous that the railroad industry, using prop-
erty rights ceded it by the government, had gotten away with the
blatant obstructionist tactics they were using. Mr. Chairman, in
that respect things have changed. The railroads are not getting
away with it. They are finally paying for these underhanded tac-
tics, and they are paying dearly.
Just a few weeks ago, as this Committee knows, a Federal Court
in Texas ruled that the Santa Fe Southern Pacific had conspired to
block construction of a 1,400 mile ETSI pipeline carrying coal from
Wyoming to Texas and Arkansas. Santa Fe Railroad was ordered
by a jury to pay $345 million to Energy Transportation Systems,
Inc. — which is ETSI — for its part in this conspiracy. Under anti-
trust laws, Santa Fe would pay triple damages, or $1,035 billion.
Earlier, the other railroads named as conspirators in the ETSI
suit chose prudence over vplor and settled out of court. This includ-
ed Burlington Northern, for $175 million, Kansas City Southern for
$69 million, Chicago & North Western for $15 million and Union
Pacific for an undisclosed amount.
Railroads were also sued by the Houston Lighting & Power Com-
pany. They settled that one for some $112 million. It is my under-
standing the utility will share that award with its customers by
giving them a reduced rate. But any savings to those customers
will be a drop in the bucket compared to what they would have
saved if the railroads had not conspired to kill the ETSI pipeline.
Furthermore, the State of South Dakota filed its own lawsuit
against just one of the conspiring railroads, Kansas City Southern.
South Dakota, which would have sold the water for use in the ETSI
pipeline, accused Kansas City Southern of a conspiracy to block
pipeline construction resulting in restraint of trade that hurt inter-
state commerce in general and South Dakota in particular. The
jury agreed and awarded South Dakota $200 million, an amount
that has already been tripled under the Federal antitrust laws.
All of this, I suppose provides a little balm for some of those in-
jured by the railroads' unrelenting and unfair opposition, but we
see it as a stunning example of the truth of the often-repeated
adage, justice delayed is justice denied. Even though they are
34
paying for it now in the sense that it is costing them money, I
would suppose the railroads still feel that it was all worthwhile.
They did crush the ETSI joint venture after all and have certainly
discouraged others who would dare propose another coal slurry
pipeline.
Congress can and certainly should put an end to these abusive
practices by passing S. 318 without further delay. It will not elimi-
nate railroad opposition, but it will go a long way toward eliminat-
ing their opportunities for further manipulation and conspiracy.
All we ask is a level playing field. Pipelines deserve a chance to
compete fairly and above-board.
Thank you, Mr. Chairman and that concludes my testimony.
[The prepared statement of Mr. Boede follows:]
35
TESTIMONY OP
GENERAL PRESIDENT MARVIN J. BOEDE
UNITED ASSOCIATION OF JOURNEYMEN AND APPRENTICES
OF THE PLUMBING AND PIPE FITTING INDUSTRY
OF THE UNITED STATES AND CANADA, AFL-CIO
BEFORE THE
COMMITTEE ON ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
THURSDAY, APRIL 20, 1989
36
MR. CHAIRMAN AND MEMBERS OF THE COMMITTEE, I AM MARVIN J. BOEDE,
GENERAL PRESIDENT OF THE 335 , 000-MEMBER UNITED ASSOCIATION OF PLUMBERS
AND PIPEFITTERS, AND I AM HERE TODAY TO TESTIFY IN STRONG SUPPORT OF
S.318, THE COAL DISTRIBUTION AND UTILIZATION ACT.
I SHOULD POINT OUT ALSO THAT I AM VICE PRESIDENT OF THE BUILDING
AND CONSTRUCTION TRADES DEPARTMENT OF THE AFL-CIO, MADE UP OF 15
NATIONAL AND INTERNATIONAL UNIONS IN THE CONSTRUCTION INDUSTRY.
I AM FULLY AUTHORIZED TO. SPEAK FOR THE DEPARTMENT WHICH HAS
REPEATEDLY AND UNANIMOUSLY PASSED RESOLUTIONS SUPPORTING EMINENT
DOMAIN LEGISLATION FOR COAL PIPELINES. ALTOGETHER THE UNIONS MAKING
UP THE DEPARTMENT TOTAL MORE THAN 4 MILLION MEMBERS.
MR. CHAIRMAN, REPRESENTATIVES OF MY UNION, AND OF OTHER
CONSTRUCTION UNIONS, AS WELL AS PRESIDENT ROBERT GEORGINE OF THE
BUILDING AND CONSTRUCTION TRADES DEPARTMENT, HAVE TESTIFIED MANY
TIMES IN SUPPORT OF COAL PIPELINES.
AND, I MUST SAY THAT THE REASONS FOR OUR TESTIMONY ARE EVEN MORE
COMPELLING TODAY THAN THEY WERE IN THE PAST.
WE HAVE THE TRAINED MANPOWER THAT CAN BUILD THESE PIPELINES AND
WE HAVE A DEEPLY-FELT NEED TO PROVIDE MORE JOB OPPORTUNITIES FOR
CONSTRUCTION WORKERS WHO ARE ALWAYS HIT THE HARDEST BY RISING
UNEMPLOYMENT IN THE AMERICAN ECONOMY.
BUT THERE IS ANOTHER COMPELLING REASON TO ENACT THIS BILL, A
REASON THAT IMPACTS ON EVERY CITIZEN AND EVERY WORKER NO MATTER WHAT
HIS OCCUPATION HAPPENS TO BE.
- 1 -
37
WE MUST HAVE AN INCREASED MEASURE OF ENERGY INDEPENDENCE OR OUR
NATIONAI. SECUr.ITY WILL CONTINUE TO BE JEOPARDIZED AND UNDERMINED BY
FOREIGN 'fJATIONS, OFTEN OUR BITTER FOES, WHO CONTROL SO MUCH OF THE
FLOW OF OIL IN INTERNATIONAL COMMERCE.
THE ASTONISHING AND DANGEROUS EVENTS THAT CONTINUE TO OCCUR IN
THE MIDDLE EAST OUGHT TO MAKE IT CLEAR TO ALL OF US THAT, WHERE ENERGY
SECURITY IS CONCERNED, WE ARE MOST DECIDEDLY LIVING IN A FOOL'S
PARADISE .
IT IS UNFORTUNATE FOR ALL OF US THAT IT TAKES A CRISIS AND THE
DRAMATIC EVIDENCE OF GAS RATIONING AND LONG LINES OF CARS AT THE PUMPS
TO BRING HOME TO THE AMERICAN PEOPLE THAT THERE IS A PROBLEM.
IT WILL NOT SIMPLY DISAPPEAR. IT MUST BE DEALT WITH. YOU CAN
ONLY COURT DISASTER FOR SO LONG.
A SPECIAL REPORT ON ENERGY FROM THE SENATE'S DEMOCRATIC POLICY
COMMITTEE DURING THE LAST CONGRESS SAID, "THE UNITED STATES IS HEADING
FULL SPEED INTO ANOTHER ENERGY CRISIS AND ITS ACCOMPANYING
NIGHTMARES".
THE REPORT ADDED THAT THE UNITED STATES NOW HAS AN ENERGY POLICY
"DICTATED BY OPEC PRICING PRACTICES, WITH THE LOOMING POTENTIAL FOR
THE SAME CONSEQUENCES WE EXPERIENCED IN 1973 AND 1979."
FOLLOWING THE TWO ENERGY CRISES OF 197 3 AND 1979, THE GOVERNMENT
IN BOTH REPUBLICAN AND DEMOCRATIC ADMINISTRATIONS, DEVELOPED A VARIETY
OF PROGRAMS AND POLICIES DESIGNED TO MOVE THE NATION TOWARD A LARGER
DEGREE OF ENERGY INDEPENDENCE.
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38
THEY INCLUDED THE SYNTHETIC FUELS DEVELOPMENT PROGRAM, INCREASED
FEDERAL SUPPORT FOR OTHER ALTERNATIVE ENERGY TECHNOLOGIES AND FOR
ENERGY CONSERVATION MEASURES.
THEY ALSO INCLUDED ELECTRICAL APPLIANCE EFFICIENCY STANDARDS,
PROGRAMS TO ENCOURAGE CONVERSION TO COAL-FIRED BOILERS AND FULL
DEVELOPMENT OF THE STRATEGIC PETROLEUM RESERVE.
YET, AS THE JOINT ECONOMIC COMMITTEE SAID IN ITS ANNUAL REPORT
FOR 1987, ALL THE PROGRESS MADE SINCE 1981 IN REDUCING CONSUMPTION OF
IMPORTED OIL WAS CANCELLED OUT BY 19 86 WHEN IMPORTED PETROLEUM
ACCOUNTED FOR 37 PERCENT OF TOTAL U.S. DEMAND. TODAY IT'S OVER 40
PER CENT.
THAT IS A HIGHER PERCENTAGE OF IMPORTED OIL THAN AT THE HEIGHT OH
THE 197 3 ARAB OIL EMBARGO WHEN IMPORTED PETROLEUM CONSTITUTED 35 PER
CENT OF AMERICAN OIL CONSUMPTION. AND OUR PERCENTAGE OF IMPORTED
PETROLEUM CONTINUES TO RISE.
WHAT'S MORE THE ENERGY INFORMATION ADMINISTRATION OF D.O.E.
WARIfED IN ITS MOST RECENT ANNUAL REPORT THAT IMPORTS COULD RISE TO 55%
BY 1994 AND TO MORE THAN 60% BY THE TURN OF THE CENTURY.
AT ONE TIME IT WAS WIDELY BELIEVED THAT THE ANSWER TO DWINDLING
DOMESTIC OIL SUPPLIES WAS NUCLEAR POWER. BUT WE ALL KNOW WHAT
HAPPENED TO THAT DREAM OF ENDLESS ENERGY SUPPLY.
AND THERE IS NOTHING TO SUGGEST THAT THE OVERWHELMING
OBSTRUCTIONS TO NEW NUCLEAR FACILITIES WILL DISAPPEAR IN THE NEAR OR
FORSEEABLE FUTURE.
-3-
39
so WHERE DO WE TURN? TO MANY OP US THE ANSWER IS OBVIOUS. WE
TURN TO COAL.
WE HAVE COAL RESOURCES UNMATCHED BY ANY NATION ON EARTH.
ONE-THIRD OP THE KNOWN COAL RESOURCES ARE LOCATED RIGHT HERE IN THE
UNITED STATES AND THEY WILL LAST FOR HUNDREDS OP YEARS.
ANYTHING WE CAN DO TO PROMOTE INCREASEi; USE OF COAL TO REPLACE
OIL IN THE POWERPLANT OF AMERICAN INDUSTRY, ESPECIALLY IN THE
PRODUCTION OF ELECTRICITY, SHOULD BE DONE AND DONE FORTHWITH.
AND, GENTLEMEN, I SUBMIT THE BILL YOU HAVE BEFORE YOU IS THE
SINGLE MOST IMPORTANT MEASURE THAT WILL ULTIMATELY PROVIDE INCENTIVE
FOR INDUSTRY TO BUILD AND OPERATE COAL-FIRED BOILERS RATHER THAN
OIL-FIRED BOILERS.
ONE OF THE MAJOR STUMBLING BLOCKS HAS BEEN AND CONTINUES TO BE
THE SOARING COSTS OF TRANSPORTING COAL FROM THE MINE TO THE BOILER.
THAT IS NOT TO SAY THAT COAL PIPELINES ARE ALWAYS MORE ECONOMICAL
THAN RAILROAD CARS OR BARGES.
BUT AS THE OFFICE OP TECHNOLOGY ASSESSMENT POINTED OUT IN ITS
STUDY, SOMETIMES PIPELINES CAN DO THE JOB BETTER AND CHEAPER.
THIS BILL WILL MAKE COAL MORE READILY AVAILABLE TO AMERICAN
INDUSTRY .
IT WILL INCREASE COAL TRANSPORTATION OPTIONS BY REMOVING A
BARRIER TO ENTRY FOR NEW COMPANIES WHO SIMPLY WANT A CHANCE TO PROVIDE
HEALTHY COMPETITION IN THE TRANSPORTATION OP COAL.
-4-
40
PIPELINES HAVE CLEARLY BEEN DEMONSTRATED TO BE ONE OF THE SAFEST,
MOST RELIABLE AND MOST ECONOMICAL HAULAGE METHODS EVER DEVELOPED.
THEY ARE COMPOSED OF WELDED SECTIONS OF STEEL PIPE BURIED DEEP
UNDER THE GROUND.
THEY PROVIDE AN UNINTERRUPTED SEAMLESS HAULAGE SYSTEM WITH
EXTRAORDINARY INTEGRITY. THE LINES ARE VIRTUALLY IMMUNE FROM MISHAP.
COAL SLURRY PIPELINES ARE ALMOST IDENTICAL IN DESIGN TO GAS AND
LIQUID LINES. THE ONLY REAL DIFFERENCE IS IN THEIR PUMPS.
COAL SLURRY PUMPS ARE SPECIALLY DESIGNED TO HANDLE THE MIXTURE OF
WATER AND PULVERIZED COAL WHICH IS GROUND ABOUT AS FINE AS SUGAR. THE
REST OF THE PIPELINE SYSTEM IS VIRTUALLY THE SAME. THERE IS NOTHING
COMPLICATED OR EXPERIMENTAL ABOUT THE COAL SLURRY LINES.
THE LONGEST COAL SLURRY PIPELINE NOW OPERATING RUNS FROM THE
BLACK MESA, ON THE NAVAHO INDIAN RESERVATION IN ARIZONA, TO THE MOHAVE
POWER PLANT ON THE COLORADO RIVER IN SOUTHERN NEVADA. THE LINE IS 27 3
MILES LONG. IT CONSISTS OF WELDED STEEL PIPE EIGHTEEN INCHES IN
DIAMETER .
IT STARTED OPERATION IN 197 0, AND IT HAS RARELY BEEN SHUT DOWN,
MAINTAINING AN AVAILABILITY OF BETTER THAN 99 PER CENT.
THE ENERGY EFFICIENCY OF A COAL SLURRY PIPELINE IS 96 PER CENT.
IN OTHER WORDS, ONLY FOUR PER CENT OF THE ENERGY VALUE OF THE
COAL IS ABSORBED IN THE HAULAGE PROCESS. AND UNLIKE MOST
TRANSPORTATION SYSTEMS, THIS ENERGY IS SUPPLIED BY THE COAL ITSELF, IN
-5-
41
THE FORM OF ELECTRICAL ENERGY TO RUN THE PUMPING STATIONS.
I MIGHT POINT OUT THAT PUMPING STATIONS ARE BUILT EVERY FIFTY TO
' f
ONE HUNDRED MILES ALONG THE PIPELINE ROUTE, DEPENDING UPON THE
TERRAIN.
THE BILL BEFORE YOUR COMMITTEE PROVIDES AN ALTERNATIVE SYSTEM FOR
DELIVERING COAL TO BULK USERS THAT IS COMPETITIVE, EFFICIENT AND
ENVIRONMENTALLY SOUND.
IT CALLS FOR NO GOVERNMENTAL SUBSIDY, NO EXPENDITURES OF FEDERAL
REVENUE, STRICT COMPLIANCE WITH ALL ENVIRONMENTAL PROTECTION STATUTES
AND EXPRESSLY DELEGATES TO THE STATES THE POWER TO REGULATE THE USE OR
EXPORT OF WATER IN THE INTERSTATE COAL SLURRY PIPELINE SYSTEM.
THIS LEGISLATION GIVES NO GUARANTEE THAT A PIPELINE WILL BE
BUILT. IT WILL ONLY ENSURE THE RIGHT TO COMPETE FOR THE
TRANSPORTATION OF COAL FROM THE MINE MOUTH TO THE USER.
WE BELIEVE ENACTMENT OF THIS LEGISLATION WILL ENHANCE NATIONAL
ENERGY SECURITY AND, AT THE SAME TIME, LOWER THE COST OF ELECTRICITY
TO THE CONSUMER WITHOUT THE EXPENDITURE OF SCARCE FEDERAL DOLLARS
A POINT WHICH CANNOT BE OVEREMPHASIZED.
THIS BILL ALSO HAS THE POTENTIAL TO REVITALIZE THE SUFFERING
AMERICAN STEEL INDUSTRY BECAUSE OF THE NEED FOR STEEL PIPE IT WOULD
CREATE.
IT WOULD PROVIDE JOBS IN CONSTRUCTION AND MANUFACTURING
INDUSTRIES .
-6-
r I
42
AND, IT WOULD REDUCE OIL IMPORTS AND INCREASE COAL EXPORTS,
THEREBY HELPING TO REDUCE THE ENORMOUS TRADE DEFICIT FROM WHICH ALL
INDUSTRY AND ALL CONSUMERS CONTINUE TO SUFFER GRIEVOUSLY.
IN ORDER TO GIVE THE COMMITTEE SOME INSIGHT INTO THE JOBS IMPACT
OF THE BILL BEFORE YOU, LET ME CITE THE STATISTICS DEVELOPED BY THE
BECHTEL CORPORATION SHORTLY BEFORE THE 1983 VOTE ON A SIMILAR BILL.
USING STANDARD BUREAU OF LABOR STATISTICS METHODS IT WAS
ESTIMATED THAT CONSTRUCTION OF SEVEN PIPELINES THEN UNDER
CONSIDERATION WOULD HAVE CREATED 50,000 JOBS FOR CONSTRUCTION WORKERS.
THAT MEANS PIPEFITTERS, OPERATING ENGINEERS, LABORERS, TEAMSTERS,
BOILERMAKERS, CARPENTERS, ELECTRICIANS, IRON WORKERS, CEMENT MASONS,
MILLWRIGHTS, AND OTHERS.
ANOTHER 100,000 JOBS WOULD HAVE BEEN CREATED IN THE CONSTRUCTION
SUPPORT SECTOR AND ANOTHER 350,000 IN THE PRODUCTION OF VALVES,
PUMPS, STEEL AND HEAVY EQUIPMENT FOR A GRAND TOTAL OF 500,000 JOBS
FOR THE SEVEN PIPELINES.
IT HAS BEEN ESTIMATED THAT $2,817,000,000 IN WAGES WOULD HAVE
BEEN PAID JUST TO THE 50,000 CONSTRUCTION WORKERS IF THOSE SEVEN
PIPELINES HAD BEEN BUILT.
DEFEAT OF THAT 1983 BILL, IN EFFECT, ALSO CANCELLED THE NEED FOR
2.9 MILLION TONS OF STEEL PIPING.
THAT FIGURE REPRESENTS TWICE THE ANNUAL AVERAGE IN THE 1970 'S FOR
THE PRODUCTION OF LINE PIPE.
-7-
43
AND REMEMBER THAT THE CREATION OF JOBS GOES FAR BEYOND THE
INITIAL CONSTRUCTION OP PIPELINES.
FOR MANY UTILITIES, LOWERING THE DELIVERED PRICE OF COAL WOULD
PROVIDE INCENTIVE FOR EXPANDING EXISTING POWER PLANTS AND EVEN
BUILDING NEW COAL-FIRED PLANTS.
FURTHERMORE, COAL PIPELINES ARE PARTICULARLY WELL SUITED TO
DELIVER COAL TO SHIPS FOR THE EXPORT MARKET ~ A MARKET THAT IS
SITTING THERE FOR AMERICAN COAL PRODUCERS.
JOBS WOULD BE CREATED TO BUILD NEW MARINE TERMINALS AND SHIPYARD
WORKERS WOULD BENEFIT FROM AN INCREASED NEED FOR BARGES, TANKERS AND
OTHER OCEAN-GOING VESSELS. IT IS ESTIMATED, I MIGHT ADD, THAT JAPAN
ALONE WILL ACCOUNT FOR 50 PER CENT OF THE WORLD'S STEAM COAL DEMAND BY
1990.
AS I SAID TO THIS SAME COMMITTEE IN 1987, "WOULDN'T IT BE A
NICE CHANGE TO SELL MORE AMERICAN COAL TO JAPAN THAN THEY SELL CARS
TO US?"
BUT IN ORDER TO DO THIS WE MUST BE MORE COMPETITIVE WITH FOREIGN
COAL PRODUCERS, AND PIPELINES WILL HELP MOVE US IN THAT DIRECTION.
IT IS THE HEIGHT OF ABSURDITY THAT EVEN AS WE ARE CALLED THE
SAUDI ARABIA OF COAL BECAUSE OF OUR ENORMOUS COAL RESOURCES, WE ARE
ONE OF THE WORLD'S LEADING IMPORTERS OF COAL AT AN ANNUAL RATE OF
ABOUT 2 MILLION TONS.
IN AN EVEN MORE PESSIMISTIC REPORT, THE COMMERCE DEPARTMENT HAS
-8-
44
WARNED THAT WE COULD BE IMPORTING AS MUCH AS 17.7 MILLION TONS OF COAL
BY 1990.
ON THE OTHER SIDE OF THAT LEDGER, AMERICAN COAL EXPORTS HAVE
FALLEN FROM A PEAK OF 113 MILLION TONS IN 1981, AND NO SIGNIFICANT
IMPROVEMENT IS EXPECTED BY D.O.E, IN THE YEARS IMMEDIATELY AHEAD.
IP THIS BILL IS ENACTED, I BELIEVE WE CAN REVERSE THOSE TRENDS
AND I BELIEVE THERE WILL BE PLENTY OF COAL TO KEEP ALL THE MODES OF
TRANSPORTATION BUSY.
THE RAILROADS' SCENARIO OF DISASTROUS CONSEQUENCES IN THAT
INDUSTRY SIMPLY DOES NOT SQUARE WITH THE TWO MOST IMPORTANT
GOVERNMENT AND CONGRESSIONAL REPORTS ASSESSING THE IMPACTS OF
COAL PIPELINES. THESE GOVERNMENT ASSESSMENTS ARE CONTAINED IN
REPORTS RELEASED BY THE ENERGY INFORMATION ADMINISTRATION IN 1985
AND BY THE OFFICE OF TECHNOLOGY ASSESSMENT ALMOST A DECADE EARLIER
IN 1978.
THE BOTTOM LINE CONCLUSIONS OF THESE TWO REPORTS ARE
INSTRUCTIVE. THE EIA REPORT PROJECTED A 2 30 MILLION TON RISE
IN COAL PRODUCTION FROM 1984 to 1995, OUT OF WHICH IT ESTIRZ^TED
THAT THE MARKET WOULD SUPPORT FOUR PIPELINES TO CARRY ABOUT
ONE-THIRD OF THE INCREASE. EIA CONCLUDED THAT, IF THESE FOUR
COAL PIPELINES WERE IN OPERATION BY 1995, "RAILROAD REVENUES FROM
COAL CARRIAGE WOULD STILL BE ALMOST 60 PERCENT HIGHER AND RAILROAD
TON-MILES NEARLY 30 PERCENT HIGHER IN 1995 THAN IN 1984."
- 9
45
THE OTA REPORT REACHED THE SAME CONCLUSION A DECADE EARLIER.
THIS REPORT SAID THAT "...RAILROAD ECONOMIC PERFORMANCE WILL
BENEFIT FROM INCREASES IN COAL AND OTHER COMMODITY TRANSPORTATION
REVENUES EVEN IN THE PRESENCE OF PIPELINES."
NOR DOES THE OVERALL EMPLOYMENT PICTURE COMPORT WITH THE
SCENARIOS OF DISASTROUS CONSEQUENCES PAINTED BY OUR BROTHERS AND
SISTERS IN THE RAILROAD INDUSTRY. THE OTA REPORT CONCLUDES —
JUST AS THE BECHTEL STATISTICS I CITED BEFORE WOULD INDICATE —
THAT THE NET IMPACT OF DIRECT OPERATING EMPLOYMENT OF RAILROADS
AND PIPELINES AND THE INDIRECT EMPLOYMENT EACH TRANSPORTATION
MODE GENERATES IN CONSTRUCTION AND EQUIPMENT MANUFACTURING IS
POSITIVE FOR THE 20-YEAR PERIOD THEY STUDIED.
THIS IS SO EVEN THOUGH RAILROADS OVERALL ARE MORE LABOR
INTENSIVE THAN PIPELINES BECAUSE OF THE DEMAND THAT PIPELINES
GENERATE IN THE CONSTRUCTION AND EQUIPMENT MANUFACTURING SECTORS
OF OUR ECONOMY. ACCORDING TO OTA: "FOR THE PERIOD 1980-90 JOB
POSITION REQUIREMENTS ARE GREATER FOR PIPELINES THAN FOR
RAILROADS. AFTER 1990 RAILROADS WILL GENERATE MORE JOBS THAN
PIPELINES, BUT RAILROAD REQUIREMENTS DO NOT EXCEED THE CUMULATIVE
TOTAL FOR PIPELINE JOB REQUIREMENTS UNTIL 2000."
THIS FINDING IS PARTICULARLY IMPORTANT IF WE ARE TO ACHIEVE
BALANCED ECONOMIC GROWTH. CLEARLY, THE FINDING DEMONSTRATES THAT
WE AS A NATION DO NOT HAVE TO CHOOSE BETWEEN BEING PRODUCERS OF
PIPE, PUMPS, VALVES AND PRODUCERS OF RAILROAD CARS. A MIX OF
- 10 -
46
TRANSPORTATION MODES WILL ALLOW US TO PRODUCE BOTH WITH A POSITIVE
EMPLOYMENT IMPACT, STIMULATING ALL SEGMENTS OF OUR BASIC INDUSTRIES,
CONSTRUCTION AND CAPITAL GOODS SECTOR. THE MARKET IS BIG ENOUGH FOR
THE BROTHERS AND SISTERS OF THE RAILROAD AND PIPELINE INDUSTRIES TO
SHARE, THOUGH IT WILL NEVER BE SHARED EQUALLY, OF COURSE.
EVEN THE MOST OPTIMISTIC FORECASTS FROM THE 1978-1984 PERIOD
SUGGEST THAT PIPELINES WOULD BE COMPETITIVE ENOUGH TO CARRY ONLY A
SMALL PERCENTAGE OF ALL THE COAL TRANSPORTED.
IN ANY CASE, SINCE WHEN DOES FEAR OF COMPETITION CARRY THE DAY IN
AMERICA? SINCE WHEN DO WE SAY MONOPOLY IS GOOD AND COMPETITION IS
BAD?
IN THE HAULING OF COAL, THE MARKETPLACE IS NOT FREE. THAT'S WHY
THE NATION NEEDS THIS BILL.
WITHOUT THE KIND OF CONTROLLED EMINENT DOMAIN PROCEDURE THIS BILL
PROVIDES, THE RAILROADS WILL CONTINUE TO FORCE PIPELINE DEVELOPERS
INTO ENDLESS AND EXPENSIVE LITIGATION THAT HAS MADE PIPELINE
CONSTRUCTION NON- FEASIBLE UP TO THE PRESENT MOMENT.
THE AMERICAN PEOPLE AND AMERICAN INDUSTRY MUST NO LONGER BE
DENIED THE RIGHT TO DECIDE FOR THEMSELVES WHETHER THEY CAN OR CANNOT
MAKE USE OF COAL SLURRY PIPELINE TECHNOLOGY.
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47
DURING THE LAST CONGRESS WHEN I TESTIFIED BEFORE YOUR
COMMITTEE, I SAID IT WAS OUTRAGEOUS THAT THE RAILROAD INDUSTRY —USING
PROPERT'Z RIGHTS CEDED TO IT BY GOVERNMENT — HAS GOTTEN AWAY WITH
BLATANT OBSTRUCTIONIST TACTICS.
MR. CHAIRMAN, IN THAT RESPECT AT LEAST, THINGS HAVE CHANGED.
THE RAILROADS ARE NOT GETTING AWAY WITH IT. THEY ARE FINALLY
PAYING FOR THOSE UNDERHANDED TACTICS AND THEY ARE PAYING DEARLY.
JUST TWO WEEKS AGO, AS THE COMMITTEE KNOWS, A FEDERAL COURT IN
TEXAS RULED THAT SANTA FE SOUTHERN PACIFIC HAD CONSPIRED TO BLOCK
CONSTRUCTION OF A 1,400-MILE PIPELINE CARRYING COAL FROM WYOMING
TO TEXAS AND ARKANSAS.
SANTA FE WAS ORDERED BY A JURY TO PAY $345 MILLION TO ENERGY
TRANSPORTATION SYSTEMS, INC. FOR ITS PART IN THE CONSPIRACY.
UNDER ANTITRUST LAWS, SANTA FE COULD PAY TRIPLE DAMAGES, OR
$1,035 BILLION.
EARLIER, THE OTHER RAILROADS NAMED AS CONSPIRATORS IN THE ETSI
SUIT, CHOSE PRUDENCE OVER VALOR AND SETTLED OUT OF COURT.
THIS INCLUDED BURLINGTON NORTHERN FOR $175 MILLION, KANSAS CITY
SOUTHERN FOR $6 9 MILLION, CHICAGO AND NORTH WESTERN FOR $15 MILLION,
AND UNION PACIFIC FOR AN UNDISCLOSED AMOUNT.
12
48
THE RAILROADS WERE ALSO SUED BY HOUSTON LIGHTING AND POWER.
THEY SETTLED THAT ONE FOR SOME $112 MILLION.
IT IS MY UNDERSANDING THAT THE UTILITY WILL SHARE THAT AWARD
WITH ITS CUSTOMERS BY A RATE REDUCTION.
BUT ANY SAVINGS TO THOSE CONSUMERS WILL BE A DROP IN THE BUCKH
COMPARED TO WHAT THEY WOULD HAVE SAVED IF THE RAILROADS HAD NOT
CONSPIRED TO KILL THE ETSI PIPELINE.
FURTHERMORE, THE STATE OF SOUTH DAKOTA FILED ITS OWN LAWSUIT
AGAINST JUST ONE OF THE CONSPIRATORS, KANSAS CITY SOUTHERN.
SOUTH DAKOTA, WHICH WOULD HAVE SOLD WATER FOR USE IN THE ETS
PIPELINE, ACCUSED KANSAS CITY SOUTHERN OF A CONSPIRACY TO BLOCK
PIPELINE CONSTRUCTION, RESULTING IN RESTRAINT OF TRADE THAT HURT
INTERSTATE COMMERCE IN GENERAL AND SOUTH DAKOTA IN PARTICULAR.
THE JURY AGREED AND AWARDED SOUTH DAKOTA $200 MILLIION, AN
AMOUNT THAT HAS ALREADY BEEN TRIPLED UNDER FEDERAL ANTITRUST LAWS.
ALL OF THIS I SUPPOSE PROVIDES A LITTLE BALM FOR SOME OF
THOSE INJURED BY THE RAILROAD"S UNRELENTING AND UNFAIR OPPOSITION.
BUT WE SEE IT AS A STUNNING EXAMPLE OF THE TRUTH OF THE
OFTEN REPEATED ADAGE, "JUSTICE DELAYED IS JUSTICE DENIED."
EVEN THOUGH THEY ARE PAYING FOR IT NOW IN THE SENSE THAT
IT IS COSTING THEM SOME MONEY, I WOULD SUPPOSE THE RAILROADS STILL
FEEL IT WAS ALL WORTHWHILE.
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49
THEY DID CRUSH THE ETSI JOINT VENTURE, AFTER ALL AND HAVE
CERTAINLY DISCOURAGED OTHERS WHO WOULD DARE PROPOSE ANOTHER COAL
PIPELINE.
CONGRESS CAN AND CERTAINLY SHOULD PUT AN END TO THESE ABUSIVE
PRACTICES BY PASSING S,318 WITHOUT FURTHER DELAY.
IT WON'T ELIMINATE RAILROAD OPPOSITION, BUT IT WILL GO A LONG WAY
TOWARD ELIMINATING THEIR OPPORTUNITIES FOR FURTHER MANIPULATION AND
CONSPIRACY .
ALL WE ASK IS A LEVEL PLAYING FIELD. PIPELINES DESERVE A CHANCE
TO COMPETE — FAIRLY AND ABOVE BOARD.
THAT IS ALL THIS BILL WILL DO.
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50
The Chairman. Thank you very much, Mr. Boede.
Mr. Otero.
STATEMENT OF JACK F. OTERO, INTERNATIONAL VICE PRESI-
DENT AND POLITICAL DIRECTOR, TRANSPORTATION, COMMU-
NICATION INTERNATIONAL UNION, ACCOMPANIED BY K.O.
RICHARDSON, CHAIRMAN, RAILWAY LABOR EXECUTIVES' AS-
SOCIATION TASK FORCE ON COAL SLURRY
Mr. Otero. Thank you and good morning to you, Mr. Chairman
and to all the members of the Committee.
I thank you for the opportunity to testify on S. 318. I have a pre-
pared statement which I have asked to be put into the record. I
will summarize my remarks if that is your desire.
The Chairman. Yes, please.
Mr. Otero. My name is Jack Otero. I am International Vice
President and Political Director of the Transportation Communica-
tion International Union, an affiliated organization of the AFL-
CIO. I appear here today on behalf of the Railv/ay Labor Execu-
tives' Association in strong opposition to the enactment of S. 318.
Accompanying me is Mr. K.O. Richardson, Chairman of the RLEA
Task Force on Coal Slurry Legislation.
As you know, Mr. Chairman, the RLEA has testified many times
in the past 10 years in opposition to enactment of this legislation.
S. 318 would grant to private parties Federal eminent domain au-
thority to construct coal slurry pipelines which would compete with
railroads in the transportation of our nation's coal.
Testimony and documentary evidence presented to Congress over
the past 10 years demonstrate that pipelines are not needed,
cannot be made environmentally sound. They deplete the already
overburdened water resources and their construction would contra-
dict established Congressional policy of revitalizing the nation's
railroads.
In my prepared testimony I discussed several of our objections to
such legislation. Therefore this morning I will confine my remarks
to what we in RLEA labor believe will be the effect upon employ-
ment by the enactment and successful implementation of S. 318. I
would like to say, Mr. Chairman, for your benefit and the benefit
of the members of this Committee, that all but one of the RLEA
unions are affiliated to the AFL-CIO. Over the past 10 years the
AFL-CIO has maintained a policy of strict neutrality regarding