hundreds of millions of tons of sulfur-containing coal in Illinois, Indiana, Ohio and many other states, and protecting the thousands of American jobs depending on its mining, transportation and consumption."

Thank you very much, Mr. Chairman and members of the committee, for your courteous attention to my presentation today. If there are any questions, of course, I will be glad to answer them to the best of my ability.

Mr. EDMONDSON. The next witness is the able director of the Research and Marketing Department of the United Workers of America, Joseph P. Brennan.

We are glad to welcome you this morning.

I believe you have a prepared statement. Please proceed, Mr. Brennan.

STATEMENT OF JOSEPH P. BRENNAN, DIRECTOR OF MARKETING AND RESEARCH, UNITED MINE WORKERS OF AMERICA

Mr. BRENNAN. Mr. Chairman, I have a statement, which will take. about 15 minutes, and I would like to read it for the record.

Mr. EDMONDSON. Very good.

Mr. BRENNAN. Mr. Chairman and members of the committee, I am Joseph P. Brennan. I am the director of the research and marketing department of the United Mine Workers of America.

I am here today on behalf of active and retired coal miners in the anthracite, bituminous, and lignite mining industries of the United States. In a sense I am also here on behalf of the communities in which these men live-communities whose economic well-being is directly dependent upon the production and sale of coal.

I want to express their appreciation to this committee for the opportunity to present testimony here today. In our view nothing. touches more upon the future security and well-being of the United States than the question of oil imports. Unless this controversy is resolved in a proper manner, it will be impossible for the United States to retain its position of preeminence among the nations of the world.

More importantly, our ability to provide an expanding standard of living to our citizens is inextricably intertwined with our ability to maintain that energy base which underlies our industrial civilization.

For many years officials of the United Mine Workers have studied and commented upon the energy import policies of the United States, especially the oil import program. This experience underlies the statement which we will make today.

At the present time the major impact of residual fuel oil imports is felt on the east coast. Since 1966 there have been no effective controls upon the movement of residual fuel oil into that region with the result that residual cil has driven coal from almost the entire coastal region.

The New England and mid-Atlantic regions have been most affected. But, in recent months erosion in coal markets have appeared in the South Atlantic region, long a bastion of coal dominance. Major coal consumers, including electric utilities, have converted and are converting existing stations to residual fuel oil and are planning major new units for that fuel all along the east coast. This means that the coal industry must, for planning purposes, write off the east coast as an

as to make the continued exemption of residual oil from import controls c;" to supply our escalating needs in the years ahead. We can import low-snif or as quickly as possible."

I also want to recall to your attention to remarks made by Assistant Inter-Secretary Hollis M. Dole in his appearance before this subcommittee on March 16 Discussing the choices available to the Nation in determining its policy relating t oil and energy as a whole, he made this significant statement:

"We can, if we choose, go forward with measures which destabilize the b-'. ance we have maintained for the past ten years between oil imports and dmestic production. We can allow the domestic oil industry to languish a1⁄4 forego the challenge and opportunity to develop methods for synthesizing liquid and gaseous fuels from our enormous resources of coal and oil st•.• to supply our escalating needs in the years ahead. We can import low sn for residual oil and permit it to displace coal from our industrial and eletr utility markets in lieu of the harder and more costly business of develoning effective stack emission controls. We can trade long-term security for short term advantage. We can let our own resources lie fallow and purchase phone of other nations for as long as they are willing to sell them to us

"But this, to me, is not the kind of action that made our nation streng and secure in the past.”

Dr Wilson M. Laird, director of Interior Department's Office of Oil and Gas also touched on the national security implications of residual imports in a r speech to the Institute on Petroleum Exploration and Economies. In **** speech, he explained how adoption of sulfur dioxide emission controls has fres a shifting by electric utilities from domestic coal to natural gas and residual f oil and he made this statement:

"But shifting from coal to other fuels does not solve the problem in tim transfers it somewhere else. The ability of gas to take up any substanti«" pi of the load is very small, and the ability of oil depends, among other thi: gs on the availability of low-sulfur imports. Moreover, burning res d'al oil at 45 cents a million Btu as against coal costing 24 cents is a very et;** sive way of making electricity in places like Cincinnati and Pittsburgh in evitably, it will be reflected in higher prices for electric service.

"Along the Northeastern seaboard, where residual oil now meets the petition of coal and gas at 35 cents a million Btu, there probably will h noticeable difference in the cost of electric power. But here we face ar dilemma: 85 percent of the residual fuel supply of this region comes oversens sources. Until recently, virtually all residual was importest the Caribbean, with a sulfur content ranging upward of 211⁄2 percent low-sulfur oil from the Eastern Hemisphere is steadily displacing t'ela sulfur oil of Venezuela. Thus the heavily populated, highly in distri Northeast will eventually become dependent upon Eastern Her Pat? una sources for its main industrial fuel. In this case, the added cost is not meta ured in dollars, but in national security.”

It seems to me the facts I have cited make quite clear the problems we are ing in fuel and energy supplies in this Nation, and particularly the contribrt. these problems being made by already excessive imports of residual o 1, toge with a threatened spreading of such imports into other major fuel ec5str parts of the Nation I hope this Committee will see fit in its report to call on the President's Of Polley Committee to carefully consider these factors and to my le take the type of study recommended by Secretary of Defense Laird is forev new n. -jor policy decisions on residual imports are made

Mr Chairman. I recently wired the President protesting the action by the I° terior Secretary in granting import permits and increasing the permissible quatas in oder to supply 45 million barrels of foreign residual to be in pred Con nonwealth Edison Company of Chicago I will not repeat the reasorigi In the telegram, although I will be pleased to supply copies of it if anvors like to see it. However with your permission. I would like to close with 2paragraph whh seens to me to suggest the only reasonable alternative to creased re idu il imports. In that paragraph I stated:

· Rather than take such action as this, frought as it is with the peter*. of severe damage to the Nation, we respectfully urge that the highest ; * be given to an immediate fully funded crash research program to de economically and technologically acceptable methods of controlling s

hundreds of millions of tons of sulfur-containing coal in Illinois, Indiana, Ohio and many other states, and protecting the thousands of American jobs depending on its mining, transportation and consumption."

Thank you very much, Mr. Chairman and members of the committee, for your firteous attention to my presentation today. If there are any questions, of course, I will be glad to answer them to the best of my ability.

Mr. EDMONDSON. The next witness is the able director of the Re~arch and Marketing Department of the United Workers of America, Joseph P. Brennan.

We are glad to welcome you this morning.

I believe you have a prepared statement. Please proceed, Mr. Brennan.

STATEMENT OF JOSEPH P. BRENNAN, DIRECTOR OF MARKETING AND RESEARCH, UNITED MINE WORKERS OF AMERICA

Mr. BRENNAN. Mr. Chairman, I have a statement, which will take At 15 minutes, and I would like to read it for the record.

Mr. EDMONDSON. Very good.

Mr. BRENNAN. Mr. Chairman and members of the committee, I am Jph P. Brennan. I am the director of the research and marketing artment of the United Mine Workers of America.

I am here today on behalf of active and retired coal miners in the taracite, bituminous, and lignite mining industries of the United States. In a sense I am also here on behalf of the communities in which se men live-communities whose economic well being is directly .pendent upon the production and sale of coal.

I want to express their appreciation to this committee for the portunity to present testimony here today. In our view nothing

les more upon the future security and well being of the United States than the question of oil imports. Unless this controversy is solved in a proper manner, it will be impossible for the United States retain its position of preeminence among the nations of the world. More importantly, our ability to provide an expanding standard of Ang to our citizens is inextricably intertwined with our ability to intain that energy base which underlies our industrial civilization. For many years officials of the United Mine Workers have studied and commented upon the energy import policies of the United States, peally the oil import program. This experience underlies the stateint which we will make today.

At the present time the major impact of residual fuel oil imports felt on the east coast. Since 1966 there have been no effective control upon the movement of residual fuel oil into that region with the resa't that residual cil has driven coal from almost the entire coastal

The New England and mid-Atlantic regions have been most affected. But, in recent months erosion in coal markets have appeared in the South Atlantic region, long a bastion of coal dominance. Major coal nsumers, including electric utilities, have converted and are convertng existing stations to residual fuel oil and are planning major new wit- for that fuel all along the east coast. This means that the coal ndustry must, for planning purposes, write off the east coast as an

For all practical purposes they have done so and the east coast region of the United States, or at least that portion of it encompassing the new England area, is no longer considered as a coal competitive sector. The gradual erosion of the coal market along the east coast poses an immediate and obvious threat to the national security. Coal cannot be expected to provide a backup source of energy in the event that supplies of foreign residual oil are curtailed or eliminated because of military or political crises. There is simply not enough production capacity in the coal industry to expand to any significant degree in an emergency. Nor, in our opinion, is the distribution system adequate to transport significant additional tonnage under emergency conditions.

Further, we understand that consumers of residual fuel oil, especially electric utilities, could not easily or quickly convert to coal, even if the coal were available for their use.

All of this means that our entire east coast industrial complex is now almost entirely dependent upon foreign energy. For many years officials of the United Mine Workers of America have predicted that this would occur. Our warnings were not heeded. The prediction, unfortunately, is now a reality.

We do not know what provision has been made to insure a continuation of fuel into that region in the event of an emergency. Naturally, if such an emergency should arise, we of the UMWA will do everything we can to meet whatever demands will be placed upon us.

However, barring a substantive change in the oil import program, there is little that coal can do to make up any deficit in energy caused by a disruption in the flow of residual oil.

Until very recently the east coast was the only area where residual fuel oil and coal came into competition. Suggestions by us that a significant relaxation of oil imports would inevitably make itself felt in the Middle West were ignored or dismissed. Unfortunately, our fears in this regard have also been realized.

Within the last several weeks the UMWA has filed three separate protests against applications for residual oil quotas for Midwest consumers. In one instance the application has been approved and an oil allocation has been granted.

In our protests we suggested that the granting of these requests would set a precedent which would open the flood gates for residual into the Midwest. The fact that an allocation has been granted compounds our fears and causes great anxiety among our officers and membership for the future of our industry.

The Midwest market is the heart of the U.S. coal market. Any significant loss or even a reduction of growth in that market would be a severe, if not fatal, blow to the economic viability of our industry.

In our view, unless stern action is taken to forestall any importation of residual fuel oil into the Middle West area, we can anticipate a situation similar to that which now exists along the east coast. If significant quantities of residual oil move into the Midwest, it is quite probable that the coal industry will enter into a period of decline, with all of its attendant economic and social chaos.

The threat of residual fuel oil to the coal industry goes beyond the actual market competition between coal and residual. Rather, the emerging ownership patterns of the coal industry have injected a new

For all practical purposes, the coal mining industry as a separate economic entity has ceased to exist. Today the bulk of America's coal production capacity is owned by conglomerate management. This management is motivated by a desire for the highest possible return on investment. In order to secure that return they have many alternatives open to them, only one of which is coal mining. It should be obvious that the flow of capital will go to the point of highest return.

It is also obvious that management's assessment of future developments in social, political, and economic conditions have much to do with investment decisions. Given the uncertain state of oil import controls, it is not difficult to comprehend a certain reluctance of the conglomerate holding companies to invest in new coal mines without some type of market guarantee.

We can anticipate that if a further relaxation of the residual oil import program is permitted, the present impact on the coal industry will be greatly compounded.

The net effect will be an aging and shrinking coal industry, an industry unable to grow to meet its full potential. This will be a tragedy, not only because coal mining is an essential and basic industry, but also, because the tremendous economic potential in our coal resources will never be realized.

It is not my intention to speak primarily on the impact of the oil import program on the coal industry. Rather, I am here today to represent the interest of the coal miner, whether he be active or retired. I am also here, as I have said, to represent the interests of the Communities in which the coal miner lives.

The major burden of oil import policies have been borne by the coal miner and his family and by his community. We say this for several

reasons.

First, capital is relatively mobile. It moves from an industry with a low rate of return to an industry with a high rate of return with relative ease. If investment in coal mining is not attractive, capital will flow to other more lucrative areas.

Second, present corporate management does not have any vested or community interest, as such, in the coal areas. By this, I do not mean that coal companies are not concerned with being good neighbors. However, the bulk of investment decisions, those decisions which affect the life and death of the coal industry, are not made at the operating level. They are determined at the top corporate level by men who carry very little personal interest in the affairs of the coal mining community.

The people most directly affected, therefore, are the people who day by day must live and work in those communities. Those people are coal miners, pensioners and the men and women who serve the needs of coal miners.

If the coal industry is to become a stagnant industry, it is the coal miner himself who will bear the heaviest burden. Capital will move to areas with a higher rate of return. It is the miner who will feel the full impact-job insecurity, lost wages and the lack of hope for a prosperous future.

What has been said of the active miner is compounded in the case of the pensioner. For fiscal year 1969 the UMWA welfare and retirement fund spent $95,957,910 for pensions to 68,380 former coal miners.