lines. The evidence is incontrovertible that where rail transport competition exists, the result has been lower haulage rates for coal. One need look only at the southern Powder River Basin or the East Lake coal slurry pipeline in Ohio as examples.

This Committee has favorably reported essentially the same coal slurry provisions in three of the last four Congresses and prior to that, when Scoop Jackson was chairman, we passed a bill through the Senate. S. 318 incorporates the language relating to environmental protection and state water rights as previously approved by this Committee.

I anticipate today's testimony to reinforce the fact that coal slurry pipelines will provide enormous benefits to our country in terms of reduced reliance on foreign energy sources, greater ability to compete in the world marketplace and creation of hundreds of thousands of jobs.

[The prepared statements of Senators McClure and McConnell and the text of S. 318 follow:]

OPENING STATEMENT OF SENATOR MCCLURE

HEARING ON S. 318, COAL SLURRY LEGISLATION

I WOULD LIKE TO BEGIN BY THANKING THE DISTINGUISHED CHAIRMAN OF

THE COMMITTEE FOR SCHEDULING THE HEARING THIS MORNING.

CERTAINLY,

THOSE OF US WHO HAVE SERVED ON THIS COMMITTEE IN PAST CONGRESSES HAVE HAD THE OPPORTUNITY BECOME WELL-ACQUAINTED WITH THE ISSUES ASSOCIATED HOWEVER, IN THE INTEREST OF PROVIDING NEW MEMBERS OF THE COMMITTEE WITH A SIMILAR OPPORTUNITY, I AM VERY

WITH COAL SLURRY LEGISLATION.

PLEASED THAT WE ARE HOLDING THIS SESSION THIS MORNING.

I HAVE LONG BEEN A SUPPORTER OF THE CONCEPT OF PROVIDING LIMITED

EMINENT DOMAIN AUTHORITY TO INTERSTATE COAL PIPELINE DISTRIBUTION

SYSTEMS WHICH HAVE BEEN DETERMINED TO BE IN THE NATIONAL INTEREST.

OVER THE YEARS, LANGUAGE TO ACCOMPLISH THIS GOAL HAS BEEN REFINED TO ADDRESS CONCERNS RAISED BY THE GRANTING OF SUCH AUTHORITY. ONE CONCEPT

WHICH IMMEDIATELY COMES TO MIND IS THE PRIMACY OF STATE WATER LAW. CERTAINLY, MUCH TIME AND EFFORT HAS BEEN EXPENDED IN DRAFTING THE WATER LANGUAGE WHICH WAS APPROVED IN THE COMMITTEE-REPORTED BILLS DURING THE 98TH AND 100TH CONGRESSES AND WHICH IS ALSO CONTAINED IN S. 318. I AM

SATISFIED THAT THIS LANGUAGE CLEARLY DELEGATES TO THE STATES THE POWER

TO REGULATE THE USE OR EXPORT OF WATER IN INTERSTATE COAL SLURRY

PIPELINE SYSTEMS NOTWITHSTANDING ANY EFFECT THIS MAY HAVE ON INTERSTATE

COMMERCE.

MY SUPPORT FOR COAL SLURRY LEGISLATION IS BASED ON MY BELIEF THAT

COMPETITION SERVES THIS NATION WELL. THIS IS ALSO THE REASON WHY I

PREFER THE BILL WHICH WAS REPORTED BY THE COMMITTEE DURING THE 100TH

CONGRESS TO THE ONE WE ARE CONSIDERING TODAY. LAST YEAR THE COMMITTEE

ADOPTED AN AMENDMENT I OFFERED WHICH MODIFIED SECTION 2 (C) OF THE

MINERAL LEASING ACT TO PERMIT RAILROADS OR THEIR AFFILIATED COMPANIES

TO OBTAIN FEDERAL COAL LEASES UNDER STRINGENT CONDITIONS.

I CONTINUE

TO BELIEVE, AS HAVE THE LAST SIX ADMINISTRATIONS, THE LINOWES COMMISSION, AND THE 1970 PUBLIC LAND LAW REVIEW COMMISSION, THAT SECTION 2 (C) IS NO LONGER IN THE PUBLIC INTEREST AND SHOULD BE MODIFIED

IN ORDER TO ENHANCE COMPETITION IN THE FEDERAL COAL LEASING PROGRAM.

AGAIN, I THANK THE CHAIRMAN FOR SCHEDULING THIS HEARING ON S.

318 AND LOOK FORWARD TO THE TESTIMONY OF THE WITNESSES.

OPENING STATEMENT

SENATOR MITCH MCCONNELL

ENERGY AND NATURAL RESOURCES COMMITTEE

APRIL 20, 1989

MR. CHAIRMAN, I'M PLEASED THAT THE ENERGY AND NATURAL RESOURCES COMMITTEE IS HOLDING THESE HEARINGS TO LISTEN TO ARGUMENTS FOR

AND AGAINST COAL SLURRY PIPELINE LEGISLATION.

I UNDERSTAND MY COLLEAGUES WHO ARE NOT NEW TO THE ENERGY
COMMITTEE ARE ALSO NOT NEW TO THE ISSUE OF COAL SLURRY.
THESE FINE SENATORS I WISH TO EXTEND MY THANKS FOR BEARING WITH
THOSE OF US WHO ARE NOT SO FAMILIAR WITH THE ISSUE AND WHO ARE
TRYING TO BRING OURSELVES UP TO SPEED.

ΤΟ

MR. CHAIRMAN, I MUST SAY THAT I AM CURRENTLY UNDECIDED ON
COAL SLURRY LEGISLATION. AS A SENATOR FROM THE TOP COAL
PRODUCING STATE IN THE UNION, I HAVE BEEN VERY INTERESTED IN
LEARNING MORE ABOUT THIS ISSUE.

HOWEVER, AS I DELVE FURTHER INTO THE CONCEPT OF COAL SLURRY,
I REALIZE JUST HOW CONTENTIOUS THE ISSUE IS BOTH ON A NATIONAL
LEVEL AND WITHIN MY STATE.

MANY COAL PRODUCERS IN MY STATE TELL ME COAL SLURRY IS A GOOD THING BECAUSE IT WOULD LOWER THE TRANSPORTATION COSTS INVOLVED IN

GETTING COAL TO MARKET.

THIS, I AM TOLD, WOULD ALLOW KENTUCKY COAL OPERATORS TO BETTER COMPETE IN OVERSEAS MARKETS. IT WOULD ALSO ALLOW THEM TO BETTER COMPETE FOR DOMESTIC MARKET SHARE.

I'M ALSO TOLD THAT LOWER TRANSPORT COSTS WOULD ALLOW U.S. COAL PRODUCERS TO STEM THE GROWING WAVE OF FOREIGN COAL IMPORTS. IN FACT, I'M TOLD, OTHER COUNTRIES ALREADY HAVE COAL SLURRY PIPELINES, WHICH GIVE THEM A FURTHER COST ADVANTAGE.

ALSO, LOWERING THE COST OF COAL WOULD LOWER THE COST OF ELECTRICITY, WHICH WOULD BENEFIT INDUSTRIAL USERS OF ELECTRICITY. THIS, IN TURN, COULD MAKE OUR MANUFACTURED GOODS MORE COMPETITIVE OVERSEAS AND LOWER THE TRADE DEFICIT.

PROPONENTS OF COAL SLURRY ALSO POINT OUT THE LARGE NUMBER OF JOBS CREATED THROUGH CONSTRUCTION OF THE PIPELINE.

OPPONENTS OF COAL SLURRY TELL ME IT WOULD COSTS JOBS IN THE RAIL INDUSTRY. THEY ALSO SAY THERE MAY NOT BE SUFFICIENT WATER IN SOME STATES TO PROVIDE FOR PUMPING COAL THROUGH THE PIPELINE, TAKING CARE OF AGRICULTURAL NEEDS, AND PROVIDING FOR HUMAN CONSUMPTION. I MUST SAY THAT THE DROUGHT MY STATE EXPERIENCED LAST SUMMER MAKES THIS POINT ONE WORTHY OF CONTEMPLATION.

I'M ALSO TOLD BUILDING THE PIPELINE COULD CAUSE HARM TO THE ENVIRONMENT AND TO AGRICULTURAL LAND. SOME FARM GROUPS WORRY