maintenance of structures to be replaced of $76,000, which together with the figure of $730,000 makes a total of $857,000. The only other factor which the Board has recognized is a tonnage represented by the difference between 1,780,000 tons to Madison, Ind., already accounted for, and a total of 2,250,000 tons which the Board describes as the more definitely assured shipment. The difference between these 2 figures is 470,000 tons, to which the Board must necessarily attribute benefits of $350,000 in order to make up its total claimed benefits total of $1,207,000. This amounts to almost 75 cents a ton for the 470,000 tons. There is no tonnage enumerated in the report of the district engineer of sufficient volume to make up this difference. More significant, however, is the fact that there is a strong inference in the record that the Board made up the excess of tonnage over 1,780,000 tons, by recognizing only tonnage to the TVA area where the savings were found by the district engineer to be only 31 cents per ton. It is submitted, therefore, that based upon the figures contained in Senate Document No. 82 the total benefits cannot be as much as $1,207,000. With a discrepancy as great as there appears to be in this case, an appropriation would not be justified prior to a complete review of all of the facts which have heretofore been submitted.

However, there are other factors which appear to cast further doubt upon the figures forming the basis of the benefit-cost ratio. The tonnage of 1,780,000 tons to Madison, Ind., is not definitely assured to the Green River area. The contract covering at least the bulk of this tonnage has been let and a source of supply other than the Green River area is already available. The Green River area is only an alternate source of supply to the Indiana area, which has already been developed. There is no positive and definite assurance in the record that the requirements of the Madison, Ind., plant will be supplied from the Green River area. On the contrary 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. Therefore, the principal tonnage relied upon to produce the benefit-cost ratio recited is highly questionable.

Turning to the tonnage of the TVA, that agency describes it as a movement of 500,000 tons to its steam plant at Johnsonville, Tenn., under an existing contract. While the representative of the TVA has stated that this coal presumably would move by river, he does not stop there. He adds that the only other possibility would be the reduction of rail rates to the extent that rail shipments would be less costly to the user than barge movement. Not only did the railroads prove that the then existing rail-barge rates were less than a proper calculation of the proposed barge costs but in addition there have been reductions in rail rates applicable to the Johnsonville, Tenn., tonnage since the TVA reviewed this situation.

It is appropriate to point out that the Office of the Chief Engineer in replying to the TVA, referred to the possibility of adjustments in rail rates, the unknown interrelations that will develop among competing sources of supply and routes of transport and the speculative hazard associated with development of a new source of commerce and the factors affecting the demand therefor. While those advocating this proposal remain of such an uncertain state of mind, it does not seem advisable to embark upon a project that subsequent complete appraisal may prove to be unjustified.

The record is significantly silent as to the views of the majority of the coal operators in western Kentucky and particularly silent as to the views of their employees. It would appear logical that if this proposal is as beneficial as it has been represented it would be that the record would include evidence of the support of the entire western Kentucky coal industry and the employees who are dependent upon that industry.

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 the 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 landlocked mines in Kentucky.

3. 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 produc tion 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 coal field 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 recom mended 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 land-locked 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 other 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 Atonde 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 coalfield. 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. The Illinois Central railroad crosses the Green River at Rockport.

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 repre sented 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 from 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 consequence 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 cullsiderable share of coal now being shipped by rail from these mines would imme

diately 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 would be inevitable, resulting in loss of considerable taxes to the State, the counties, and the community 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 Engineers' 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. The Madison, Ind., plant will have water transportation available to it. Undoubtedly, a substantial portion of the tonnage moving to that plant will move by water from the sources of supply in Indiana or from some sources in the eastern region. However, it will so move without the expenditure of an additional $17 million of taxpayer's money, which 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 individuals 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 powerplant 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?

OBJECTION TO PROJECT

Mr. OSBORNE. Our objection to this particular action is the allocation of funds for the reconstruction of these two locks and dams and is predicated on three grounds. First of all, we feel that it is not justified economically, as we have pointed out in many statements filed with appropriate authorities. Second, we feel that it will hurt the entire territory of western Kentucky rather than help it. We have gone into that in some detail. Third, we feel that this particular question before your committee, such action is not appropriate.

As I have indicated, most of these matters are covered in our statement, but I would like to comment briefly on one aspect of it. That has to do with the timeliness of the action which is being urged on you and your committee and which is related directly to the justification for this project. As you know, of course, there is now pending before the House Public Works Committee the other part of this project. This project entails the construction and some work on the channel of the Green River in addition to the reconstruction of these locks.

These two locks, it was decided by the Senate and House committees last summer, came within the purview of the 1909 act and no authority for the project was necessary. However, the attendant work on the river is now before the Public Works Committees for their consideration. Secretary of the Army Stevens indicated in his letter, which

appears in the basic document concerning this, Senate Document No. 82, that these two projects were interdependent one on the other. In fact, he went so far as to say that insofar as the economic feasibility is concerned, the two phases are interdependent and the benefit cost ratio presented in the review report applies to the parts as well as the whole.

PROJECTS NOT SEPARABLE

We think, for that particular reason, at this time to allocate funds for the completion of a portion of a project—and I might add, the major portion of the project-would be ill-advised if it is not known whether or not the project as a whole will be subsequently approved. They are not separable. At the time the Public Works Committees considered the reconstruction of these locks and determined it was not necessary to approve the project, it was presented to the Bureau. of the Budget and the Bureau of the Budget indicated they had no objection that this be presented to Congress, but they desired that it be further reexamined from the standpoint of the economic feasibility of it.

Yesterday we learned for the first time the Budget Bureau had been furnished with information subsequent to this Document No. 82, on which information the appropriation was included in the budget which you are considering. The Bureau of the Budget, we are advised, acted on the information furnished it that this project was justified economically on the basis of transportation savings alone which would be realized on coal traffic moving to the electric plant at Madison and to the TVA plants in Tennessee.

TESTIMONY BEFORE HOUSE COMMITTEE

In the testimony before the House Public Works Committee last Friday on the other part of this project, the United States engineers have this to say:

TVA has recently completed a contract to haul a half million tons of coal from the western Kentucky fields to one of their plants on the Cumberland River. That coal can be hauled on an improved Green River for about 38 cents a ton cheaper than any other means of transportation.

Sir, this project is advocated for approval on the basis of two pieces of tonnage alone, the tonnage to the Ohio Valley Electric Corp.'s plant at Madison and to the TVA plant on the Cumberland River, which is Johnsonville, Tenn. The savings alleged on the traffic to be moved to Madison is $730,000 a year, less than the estimated annual cost of operation by the engineers. To complete the picture, there is an estimated savings on the TVA tonnage which would make the savings in excess of the annual cost.

Without regard for the moment to the propriety of considering the savings on the tonnage to the Madison electric plant, let me just take up the tonnage to the TVA which is the question raised by the budget and which is the question upon information furnished them that they submitted in the budget.

Senator KNOWLAND. Let me see if I am clear on your point. Are you making the point that the same benefit is being applied to the two different projects, using the same benefits on figuring out the cost ratio to both of them and therefore duplicating the benefits?

Mr. OSBORNE. No, sir. The point I am trying to make is that the benefit ratio has been determined on transportation savings on 2 blocks of traffic, 1 to the Madison plant and 1 to the TVA plant at Johnsonville, Tenn. If either of those savings is not present or will not accrue, then there can be no economic justification for any of this expenditure. Senator KNOWLAND. You do not allege that is the only traffic that will pass through here?

TWO TRAFFIC SEGMENTS

Mr. OSBORNE. I am just taking the words of the United States Corps of Engineers and the Bureau of the Budget. We do not feel that will travel here, but they have justified this project on the basis of those 2 segments of traffic, 2,250,000 tons of coal a year alleged to be moving. Of that amount, 1,750,000 will move to Madison; 500,000 tons, a half million tons, will move to Johnsonville. The savings, the computed savings on the tonnage to Madison, will not justify the project; there has to be the total savings on both segments.

I should like to take the one segment to show that this is not economically justified. On the tonnage that it is alleged will move to Johnsonville, Tenn., in the testimony last Friday and presumably the testimony which was given to the Bureau of the Budget, it was stated that on that traffic 38 cents a ton would be saved. Our contention, sir, is that there will be no savings on the TVA tonnage. We have taken the engineers' own formula for computing the river cost after the completion of this project, which appears on page 59 of Senate Document 82 in paragraph 79.

That is the 3-mill per ton-mile on the Ohio, the 3-mill per ton-mile on the Green River, and the cost of river terminal operation, which in the case of Madison they arrived at a charge of $1.54 a ton. On that same basis the charge on coal, if approved to Johnsonville, will be $1.67 a ton. At the time of the hearings on this matter the lowest present cost from the western Kentucky coalfields to Johnsonville was $1.64 a ton.

In other words, it was already 3 cents a ton lower than the proposed figure would be if this project were completed. As a matter of fact, subsequent to that time there has even been a further reduction in the coal rates to $1.46 now, or 19 cents a ton lower.

We have made computations which were filed at the time on all other plants to which coal might move and to which reference has been made. Not in one single instance would there be one penny saved over the proposed river rate as compared with the lowest present transportation cost.

The Corps of Enginers recognized that on most of the alleged 3 million tons and did not consider it. The Bureau of the Budget, however, if what was said last Friday is correct, was given to understand that this tonnage would provide this savings.

LACK OF ECONOMIC JUSTIFICATION

I do not want to take up too much time. Our point is this, sir: If this were a project that would redound to the benefit of this territory to the extent that it is pictured, we would be in support of it. It is