The public policy objectives served by navigation improvements-economic growth, regional rehabilitation, conservation and development of natural resources, and aid to agriculture, for example-are substantially the same as those to which improvements for flood control, water supply, water quality control and other features make their contribution.

Similarly, improvements in aid of navigation often contribute significantly to flood protection, water supply, soil and water conservation, recreation and other water resource objectives. Thus, the navigation dams on the Ohio and upper Mississippi and many other rivers provide stable pools for water supply upon which countless communities and industries depend and without which economic and population growth would have been sharply curtailed. The pools created by these same navigation dams help materially in recharging underground aquifers. The pools also provide artificial lakes used by millions of citizens for recreational activities. Again, bank stabilization programs which provide stable channels for navigation contribute directly to flood protection and soil conservation. Indeed, the system of levees and bank stabilization projects on the Mississippi serves jointly the interests of flood control, navigation and soil conservation, though authorized and funded as a flood control program. Upstream reservoirs often include low-flow augmentation features which permit releases in dry weather. These reservoirs, as well as reservoirs constructed primarily for navigation, not only enhance water supply for down-stream communities and industries, but they contribute importantly to pollution control through flushing and dilution of wastes, as well as to navigation through maintenance of water levels. For example, water released from the Fort Peck Reservoir, which was constructed for navigation and hydroelectric power development. was instrumental a few years ago in saving the New Orleans water supply from disastrous salt water intrusion. Flood control reservoirs, even when no low-flow betterment is incorporated, add materially to the safety and economy of waterway transportation.

Conversely, project design, scale or particular features which might be adequate from a strictly transportation point of view could well have adverse consequences in respect of related water resource objectives. Thus navigation dams for river canalization must be designed so as to minimize obstructive effects, lest flood heights be raised. Bank stabilization cannot ignore implications for flood control and soil conservation. Where uses potentially competitive with navigation, such as hydropower and irrigation, are involved in a comprehensive river basin program, the basic interdependence of water resource objectives is vividly highlighted.

With particular reference to economic evaluation, the public values and benefits properly attributable to a navigation project regarded as an element in a comprehensive basinwide program of water resource development, may differ materially from those reasonably to be expected from a navigation improvement viewed simply in its transportation aspect and in isolation from other projects forming part of a comprehensive plan. Properly conceived, the several projects of a comprehensive program will mutually support and enhance the values of the other projects and the whole may be greater than the sum of its parts. Criteria of evaluation confined to transportation aspects alone would ignore these dynamic relationships and, thus, result in serious understatement of project values.

In

As a consequence, proposals for navigation improvements fully justified under appropriate criteria might be curtailed or even rejected under standards designed for evaluation of investments in transportation facilities per se. such an event, costs of remaining elements of the comprehensive plan would be allocated over a reduced number of purposes and each charged a higher percentage of the total with possible impairment of flood control, water supply and other program elements. In this respect, the problem is not significantly different from that of multipurpose projects. Just as unduly restrictive evaluation of a particular project feature can impair feasibility of the entire project. so understatement of benefits of one project in a comprehensive plan can result in curtailment or rejection of the entire program of development.

Indeed, as previous discussion has shown, it is quite unrealistic to regard any water resource project as having only a single purpose. In this vital respect navigation is unique among transportation media: improvements to highways, airways and railways perform only a transportation function; navigation improvements invariably serve other water resource objectives. Thus, the at

tempted distinction in the bill between multipurpose water resource projects and projects involving a transportation investment only is unreal and could not fail to cause confusion.

Moreover, as pointed out above, achievement of the objectives of the Water Resources Planning Act would be gravely impaired if authority to establish standards and criteria for navigation features of water resource projects were removed from the Water Resources Council. Further, the relationship of navigation improvements to other water resource development is at least as significant and as essential as any other element or objective, be it flood control, water supply, soil conservation, recreation or fish and wildlife enhancement. Consequently, there is no greater justification for separating navigation improvement evaluation from the Council's jurisdiction than for transfer of any other phase of water resource development to another agency to which it is closely linked. Thus, the proposed transfer would undermine the basic structure of the Water Resources Planning Act and create an unanswerable precedent for atomizing its functions. Surely, the coordinated, comprehensive concept of water resource development embodied in that act and in operation only since July 22, 1965, should be given a reasonable trial before it is scuttled by carving out essential water resource elements for separate treatment.

The sound and practical solution to the problem would appear to be an amendment to exclude water resource projects from the proposals for investment of Federal funds as to which the Secretary of Transportation would be empowered to develop, revise and (with the approval of the President) promulgate standards and criteria.

The existing law provides that the Chairman of the Council shall request heads of other Federal agencies to participate with the Council in matters affecting their responsibilities and calls for consultation by the Council with other interested parties prior to establishment of evaluation standards. Thus, the structure of existing law is fully adequate to provide for consideration of the new Secretary's views. We would have no objection to a specific provision permitting the Secretary to submit his recommendations to the Council as to standards applicable to transportation features of water resource projects, nor would we object to an alternative provision designating the Secretary as a member of the Council.

An amendment to section 7(a) as set forth below would automatically exclude water resource projects from the requirements of section 7(b), since its provisions apply only to surveys, plans or reports which include proposals "as to which the Secretary has promulgated standards and criteria pursuant to subsection (a)" and the proposed amendment to subsection (a) would preclude such promulgation as to water resource projects. This is essential since prescription of types of data to be considered would inevitably affect the outcome of the evaluation process. Authority for prescription of types of data should, therefore, reside in the agency charged with responsibility for establishment of criteria.

The text of the proposed amendment is as follows:

(1) In line 15, page 19, delete the word "or".

(2) In line 16, page 19, after the word "assistance" substitute a semicolon for the period and insert the words "or (5) water resource projects".

(3) In line 16, page 19, strike out the words "The standards and criteria"; strike out lines 17, 18, 19, 20, 21 and, in line 22, strike out the words "tion features of such projects".

Subsection (a) of section 7 of S. 3010 (H.R. 13200) as so amended would read as follows:

"The Secretary shall develop and from time to time in the light of experience revise standards and criteria consistent with national transportation policies, for the formulation and economic evaluation of all proposals for the investment of Federal funds in transportation facilities or equipment, except such proposals as are concerned with (1) the acquisition of transportation facilities or equipment by Federal agencies in providing transportation services for their own use; (2) an interoceanic canal located outside the contiguous United States; (3) defense features included at the direction of the Department of Defense in the design and construction of civil air, sea, and land transportation; (4) programs of foreign assistance; or (5) water resource projects. The standards and criteria developed or revised pursuant to this subsection shall be promulgated by the Secretary upon their approval by the President."

PART II

We are equally convinced that the objectives of sound water resource development will be obstructed by the restrictive criteria for evaluation of navigation improvements promulgated by the Chief of Engineers on November 20, 1964, under the policy guidance of the Bureau of the Budget.

At this juncture in the growth of the American economy, it is essential that, in the development of our water resources and, in particular, in the field of navigation improvements, standards and criteria of evaluation be applied which, at the very least, are no more restrictive than those which were applied so long prior to the directive of November 1964.

The harbors and inland waterways of the country are, in fact, probably underdeveloped at the present time. This is because of the extreme conservatism of the benefit estimates and traffic projections for waterway improvements upon which the Army Corps of Engineers has long relied. The Nation has now entered upon an era of growth accompanied by rising demands for transportation service, on a scale without precedent in our history. Even if the long-established criteria are restored and continued, the navigation improvements they will commend for action will be barely adequate to the needs of an expanding population and labor force and a rapidly rising volume of industrial and farm production requiring water carriage.

Proposed navigation improvements now under consideration, and to be evaluated in the future, will relate to a vastly expanded economy. The Bureau of the Census projects a U.S. population for the year 1977 of 232 million, for 1990, of 300 million, and for the year 2000, only 34 years hence, of 350 million— almost twice the population of 1960. The United States is literally in the process of doubling in size within a single generation.

Twice as many people might seem to require twice as much transportation of the commodities they will need for their jobs and livelihood. In fact, however, they will require well over twice as much. This is because, with rising standards of wages and income, the volume of production per person is going up. Our gross national product in 1966 will not be far from $700 billion. But by 1976, according to projections of the Natural Planning Association, the GNP, without inflation, will be close to $1,000 billion. By the year 2000 it will have nearly tripled to over $2,000 billion.

Thus, it appears likely that, at present and projected rates of growth, the American transportation system is going to have to carry in the year 2000, over three times its present traffic volume. Much concern has been expressed over the impact of waterway improvements on the railroads. This anxiety reflects a backward-looking and depression-oriented view. It assumes a static economy. The American railroad problem as it is now emerging is not one of inadequate traffic. It is the very opposite. It is a problem of the adequacy of the capacity of the American railroads to the freight-carrying demands the economy is going to make upon them. The biggest load the railroads have ever carried so far was about 745 billion ton-miles under the forced-draft operation of World War II. But, by 1976 the Nation will be demanding of the railroads over 1 trillion ton-miles of freight per year. And, by 2000, if they continue carrying only their present share, the railroads will have to be equipped to carry close to 2 trillion ton-miles of freight, much more than all modes of transportation combined in 1965.

This rising demand on the railroad system is already underway. Along with the current growth in water transportation in this country, railroad freight is growing even faster. From 1959 to 1964, the production of physical goods requiring transportation in the United States increased by 17.6 percent. Water carriage on the rivers and canals performed its share in carrying these goods with an increase of 28.3 billion ton-miles. But, the ton-miles of freight carried by the railroads increased by 83.7 billion, three times as much as the waterways. Alongside the growth in water transportation, the railroads are already on their way, and on a bigger scale, toward the 1-trillion ton-mile demand the economy will place upon them in 1976.

Thus, it is vital that steps be taken toward a balanced expansion of the country's transportation system. The railroads will not be able to carry the entire traffic increment. In view of the huge economic growth lying ahead, they will be under severe strain to handle even their present percentage of the rising total. Each mode of transportation will have to be enlarged and extended so as to provide that type of freight service for which it is best adapted.

No other mode of transportation can be substituted for the role of the rivers and harbors. Water transportation is uniquely suited for the mass haulage of bulk commodities at low cost. On the average, what you can move for $1 by rail you can carry just as far by water for only 25 cents. For this reason most of our basic industries, such as steel, petroleum, chemicals, coal, electric power, fertilizers, and much of food handling and processing is literally built around waterway transportation. According to the American Waterways Operators, Inc., from 1952 through 1965, a total of 5,882 new industrial waterside plant projects were established in the United States. This has been fundamental to the economic growth of the country.

The Nation is under the deepest obligation to develop its water transport base for the future. As the years pass, constantly increasing numbers of young Americans will be seeking jobs at rising standards of income. During the 15 years from 1950 to 1965, the American labor force increased by 12 million persons, reaching a total of 76 million last year. But, for the next 15 years, it will expand twice as fast. The Bureau of the Census projects an increase of 25 million to over 101 million persons in the labor force in 1980.

We have been hard pressed over the past 15 years to provide 12 million additional jobs. How are we going to provide 25 million in the next 15 years? The Americans who will be members of the labor force in 1980 are now alive and with us. They are our children growing up in American homes and in the schools. We are making an enormous investment in their character, their citizenship, and their training. The future prosperity and security of our children, as young adults, will require a rising abundance of the basic metals, chemicals, and fuels to nourish a growing industrial economy, and the supply of these underlying requirements of their livelihood rests directly on a water transport base.

The long-established criteria and standards for navigation improvements need, if anything, to be liberalized. Waterway and harbor improvements over many years have been under the restraint of extremely conservative benefit and traffic estimates on the part of the Corps of Engineers.

While conservatism is to be respected in professional judgments of this category, if carried too far it becomes unrealistic and will deprive the public of highly beneficial and badly needed waterway improvements.

It may be helpful to cite a few examples of the extreme conservatism of the Corps of Engineers. The following are illuminating:

1. Early in this century, the Corps of Engineers evaluated the soundness of providing for the Ohio River a navigation system which would assure a yeararound channel depth of 9 feet. The corps recommended the project on the basis of an annual traffic expectation of 13 million tons of freight. The year the project was completed, 1929, the Ohio River carried 22 million tons of freight. In 1955, while the navigation works the corps had recommended were still 100 percent in service, the Ohio River carried 71 million tons of freight. 2. During the 1920's the Corps of Engineers studied the economic advisability of canalizing the Upper Mississippi River from St. Louis to Minneapolis. They based their estimates of benefits to the American public, notably to the vast farm communities of the Upper Mississippi Basin, then suffering from chronic depression, on a traffic projection of 9 million tons per year. In 1964, the Upper Mississippi, between St. Louis and Minneapolis, carried 34 million tons.

3. In the early 1930's consideration was given to improving the Illinois River. The Corps of Engineers, in considering this project, based their estimate of the public benefits on a traffic projection for the Illinois River of 7.5 million tons a year. In 1964, when the completed Illinois project was still less than 30 years in service, the Illinois River carried 27 million tons of freight.

The record of waterway improvement in this country under the standards in effect prior to November 1964, is a great success story. It would be difficult, indeed, to cite any major American waterway now in service the improvement of which has been a disappointment. Could it be honestly stated today that the American people now have reason to regret the original canalization of the Ohio River? Have the Illinois River and waterway not lived up to expectations? Do we hear any expressions of chagrin and disappointment from the communities of the Upper Midwest with respect to the canalized Upper Mississippi? Do we genuinely regret having improved the Columbia River, the Houston Ship Channel or the Gulf Intracoastal Waterway? If we could reverse the decision once made to improve any of the major waterways, would we actually do so? On the contrary. The Congress might more appropriately be critical of the

evaluating agency for the substantial understatements under the earlier standards of the potentials of these waterways. Every lesson from our past experience with waterway improvements would seem to call for liberalization of the earlier standards. Surely there is no justification in our national experience for making them more restrictive.

These examples are merely illustrative of the degree to which the actual volumes of waterborne traffic, and the actual public benefits consequent upon navigation improvements have been exceeding the projections of the corps, even under the criteria and standards utilized before the directive of November 1964. The long-established criteria and standards have left this country with

a deficit and retardation of waterway improvement.

Surely, we cannot afford, standing as we do on the brink of the greatest national expansion in our history-in population, in labor force, and in the volume of production to be transported-to retard even further an already inadequate pace of waterway and harbor modernization and expansion. Conservatism, carried to an extreme degree, ceases to be prudent and becomes. instead reckless. There is no policy more wantonly wasteful than to withhold the outlay of sound public investment required to construct the water carriage foundation of those industries most basic to economic growth.

The amendment which we recommend is intended only for the limited purpose of restoring for the judgment of Congress, in the evaluation of proposed navigation improvements, the highly conservative criteria and standards which were followed prior to the directive of November 20, 1964. Under the criteria for evaluation of navigation improvements prescribed by that directive, transportation savings are based upon "projected competitive rates or charges" for the movement by alternative means and "projected rates and charges utilizing the waterway." Traffic expected to use the waterway is estimated on the basis of "projected, water-compelled rates," "foreseeable technological developments" and other factors.

Thus, the directive introduces into the evaluation process rate practices specifically designed to prevent the development of waterway traffic. Such rates often have little relationship to the true economic cost of providing the service. As a key element in waterway improvement evaluation they will inevitably result in a serious underallocation of resources to navigation improvements. Indeed, the unduly restrictive consequences of such reliance upon projected water-compelled rates are amply demonstrated by the fact that not a single waterway improvement apart from replacements has been recommended for construction since the new criteria were promulgated. This is the inevitable result of a procedure which is based upon projected rates by a competitive mode designed to prevent realization of waterway traffic potential and thereby to obstruct waterway improvements.

Moreover, the projected competitive rates in question here are those which in the absence of the waterway would never have been put into effect. Consequently, if reliance upon such projected rates is permitted to block waterway improvements, the national economy will be deprived of the benefits of both lowcost water carriage and reduced rates by competitive modes.

As we have urged earlier in our statement expanded transport facilities by all modes are imperatively demanded by our growing economy. By obstructing the provision of means to fulfill rising national requirements, the criteria promulgated in November 1964 are directly contrary to the national interest in an adequate economical transportation system.

We have previously invited the committee's attention to the relationship of interdependence both in operation and evaluation which exists among the several elements of water resource programs and projects. The impairment or elimination of navigation projects conceived as elements of comprehensive river basin programs or the impairment or elimination of navigation features of multiple-purpose projects casts a higher proportion of total program or project costs on remaining elements. Thus, by the operation of unduly restrictive criteria applicable to navigation improvements, flood control, water supply. water quality control, recreation, and other water resource objectives are imperiled and the national imperatives for accelerated water resource development are frustrated.

The criteria promulgated in November 1964 contain another defect which in our judgment is sufficient in itself to require their rejection.