of a coal slurry pipeline system, which will safely and efficiently transport the coal needed by electric utilities in Texas and at the same time provide a competitive force to the railroads. And by all indications the experience of the next decade will surpass that of the last, but high rail shipment rates will discourage this transition to coal. If the rest of the Nation had equalled the Texas performance of the 1970s, the U. S. would be energy independent today. In 1972, Texas' per capita consumption of coal was .2 tons, 1/15th of the national average per capita consumption. Last year Texas per capita consumption was 3.6 tons, 16 percent higher than the national average. A decade ago Texas ranked number 35 among the states in coal consumption; And in terms of today it ranks number 3, behind only Ohio and Pennsylvania. total coal used by electric utilities, Texas is neck-and-neck with Ohio for the number one position, and should move to number one this year. In 1972, the U. S. consumed 563 million tons of coal. The cumulative volume of additional coal use above the 1973 base through 1981 was 580 million tons, accomplished during the past embargo period when national policy was directed to increased coal consumption. Of that additional coal use since 1973, 170 million tons were consumed in Texas, 30 percent of the additional national coal consumption. Stated differently, the amount of 1981 Texas coal consumption above the 1973 embargo year levels was equal to more than 40 percent of the volume consumed in the rest of the entire Nation. bituminous coal The Texas consumption of coal comes from two sources: imported chiefly from Wyoming, Colorado, and Montana, and lignite coal produced in Texas. Of total consumption last year, 32 million tons were produced in Texas and 21 million tons were imported. This year total consumption will reach nearly 66 million tons. Texas lignite will account for 36 million tons and imports of coal from the West 30 million tons. Coal in the United States is abundant, and competition among the mines causes a reasonable price to be paid at the mine mouth. However, rail rates are several times higher per ton than is the price of the commodity itself. For example, in Texas, the City of San Antonio presently pays $7.30/ton for coal from Wyoming with a heat content of 8,000 Btu/lb. Transportation charges are $24.64 per ton, which sets the delivered price of coal at $31.94 per ton. Rail rates for the City of Austin and the Lower Colorado River Authority are very similar. Not only are these rail rates very high, they have increased dramatically during the period when the railroads were being freed of regulations: rates in 1976 were $10.93 per ton, escalating to nearly $25.00 per ton in five years, a 17.7% annual rate of increase. The monopoly position of the railroads has allowed them to receive monopoly profits on the transport of coal to Texas. The total cost of $31.94 per ton is the equivalent of $2.13 per million Btu, which is nearly equal to the cost of natural gas to electric utilities in Texas: the railroads have eliminated any price difference between coal and natural gas that should exist based on the greater abundance of coal. If these high rail rates continue, the Texas record of conversion to coal will be diminished. I believe it is in the national interest to encourage rather than discourage the conversion to coal. With this highly profitable status as the only transporter of coal, the railroad industry opposes the passage of S. 1844. However, the railroad industry was developed in this country with substantial subsidies provided by the Federal government. No such subsidy is claimed by the proponents of a coal slurry pipeline system, but rights-of-way should be guaranteed so as to allow for the construction of a slurry pipeline system. I support the position taken by the Texas Energy and Natural Resources Advisory Council (which I Co-chair with Lt. Governor William P. Hobby, and which is composed of leading elected and appointed officials with responsibilities in the energy and natural resources areas), on December 3, 1981, which passed a Resolution stating, in part: RESOLVED, that the Texas Energy and Natural Resources Advisory Council supports the development of coal slurry pipelines and believes that the United States Congress should grant coal slurry pipelines the same right of eminent domain as enjoyed by other modes of energy transportation. Expedient The full text of the Resolution is attached for your information. passage of this bill will provide the environment for the development of this much needed transportation system. With a fair price for coal, electric utilities will use more of this commodity, thus allowing natural gas to be used for a wider range of purposes and allowing for the conservation of one of the Nation's best and most limited resources. Since Texas shares the same concerns about water usage and availability with the Western coal-producing states, I believe that individual states should continue to have the right to allocate their water resources. However, I believe that this issue can be fairly and adequately addressed in Federal coal slurry pipeline legislation. ATTACHMENT Resolution Texas Energy and Natural Resources Advisory Council Regarding Coal Slurry Pipelines WHEREAS, transportation rates for coal have escalated dramatically during the past several years; and WHEREAS, it is recognized that railroads are currently the only available method of long distance, overland transportation of coal; and WHEREAS, coal slurry pipelines may provide an alternative to the railroads; and WHEREAS, the establishment of coal slurry pipelines should work efficiently in an open free market; and WHEREAS, the states have a legitimate interest in the right to allocate water resources and to enforce applicable environmental laws; and WHEREAS, the potential benefits of coal slurry pipelines may be the reduction of electricity costs to Texas consumers; THEREFORE, BE IT RESOLVED, that the Texas Energy and Natural Resources Advisory Council supports the development of coal slurry pipelines and believes that the United States Congress should grant coal slurry pipelines the same right of eminent domain as enjoyed by other modes of energy transportation. TENRAC also believes that the allocation of a state's water resources for such purposes should continue to be controlled solely by the individual state. Adopted this 3rd day of December, 1981. A.P. Clemen William P. Clements, Jr. WP Hobby iam P. Hobby Lt. Governor of Texas STATEMENT OF THE HON. MORRIS K. UDALL BEFORE THE COMMITTEE ON ENERGY AND NATURAL RESOURCES ON S. 1844 Monday, May 10, 1982 On December 8, 1981, the House Committee on Interior and Insular Affairs recommended the approval of H.R. 4230, the Coal Pipeline Act of 1981. Although the Committee's ultimate decision was that it is appropriate and necessary for the Congress to exercise its powers under the Commerce Clause of the United States Constitution to grant Federal eminent domain authority to coal slurry pipelines, the final vote of 21 to 20 reflects the lively debate that led to that decision. Most of the concerns and issues that were discussed at the hearings on H.R. 4230 were the result of a misconception as to the scope of the bill. Scenarios were conjured up in which H.R. 4230 was the means by which the national government revoked states' autonomy over their water rights, and then depleted scarce water reserves all in the name of national interest. Such concerns overlook the entire point of the bill. H.R. 4230 does not expand the power of the Commerce Clause, or change the historical attitude toward states' control over their waters, nor does it authorize the construction of a pipeline by some Federal fiat. H.R. 4230 simply gives coal slurry pipeline companies the ability to take advantage of eminent domain powers in the hope that it will expedite the completion of slurry lines. Perhaps no aspect of coal slurry pipeline development has created more concern than the possible impact on scarce western |