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I have, from time to time, appeared before various congressional committees in the interests of the members of local union 57 and other members of the International Brotherhood of Electrical Workers.

We are opposed to the establishment of a Federal Bank for Rural Electric Systems as proposed in H.R. 14000 and H.R. 14837.

We believe that the establishment of an electric bank as proposed in either of these two bills would foster and encourage the expansion of REA co-ops into urban and suburban areas and into the industrial market free of restraint from Federal, State or local controls.

In an appearance before the subcommittee of the Committee on Appropriations of the House of Representatives in 1964 I made a statement which I would again like to repeat, of the 1,057 REA cooperatives, only 17 percent recognize the union and REA cooperatives are one of the principal sources of labor friction in the electric industry. The spokesmen for the REA cooperatives stoutly claim that electric cooperatives are a part of the free enterprise system. Yet this country would not be able to operate if all free enterprise organizations enjoyed the same special favors of the Federal Government as those enjoyed by the electric co-op system.

We have found that union conditions and collective bargaining can best be secured where construction and operation are performed by private utility companies.

On April 11, 1961, in Chandler, Ariz., Mr. Gordon Freeman, president of the International Brotherhood of Electrical Workers, made the following statement, and I quote:

We recognize that Government has a proper place in developing power resources when private companies are either unable or unwilling to do the job. But public necessity does not require government ownership and operation when private companies are willing and able to do the job.

Mr. Freeman said again in 1964, and I quote:

Our experience in municipalities and with cooperative ownership programs leaves much to be desired. The Rural Electrification program is continuing to expand with assistance of low-cost financing, subsidized by the taxpayer, and is now seeking to go far beyond the area for which it was created some 25 years ago *** Taxpayers' money ** * is being loaned through the REA, to groups of individuals, who then build generating plants, transmission lines, etc., with said taxpayers' money. No reclamation, no navigation, no flood control enters the picture. And to apply the test for which REA was created, these generating plants provide no low-cost electric service. As a matter of fact, they don't supply any service which the investor-owned utility industry is not perfectly willing to supply and able to supply.

We believe the establishment of a Federal bank for rural electric systems would create an unfair competitive situation which would eventually eliminate the private companies and jeopardize the working conditions and employment of thousands of members of the IBEW and would take from the public view, through congressional hearings, the necessity of REA co-ops to justify their needs for the use of public funds in the time-honored way by giving opportunity to all to object in the democratic manner.

The CHAIRMAN. Thank you very much for your statement, Mr. Hedquist.

Mr. HEDQUIST. May I take just a moment to introduce Mr. Francis A. Crowley, from Local No. 44, International Brotherhood of Electrical Workers, Butte, Mont., who, I think, has a statement that he would like to file.

The CHAIRMAN. He may file it, and it will be made a part of the record at this time.

(The prepared statement of Francis A. Crowley follows:)

STATEMENT OF FRANCIS A. CROWLEY, BUSINESS MANAGER, LOCAL No. 44, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, BUTTE, MONT.

My Name is Francis A. Crowley. I have been a member of the International Brotherhood of Electrical Workers for 14 years. I have served as Vice President, Recording Secretary and Business Manager of Local No. 65, International Brotherhood of Electrical Workers. Since November 1959, I have been a member of Local No. 44, International Brotherhood of Electrical Workers, and I have served that organization as Vice President and as President. I am now Business manager and Financial Secretary of Local No. 44.

Local No. 44 now has more than 400 members who are employed by electric utilities in a 90,000 square mile area in Montana.

I am submitting this statement in opposition to H.R. 14000 and H.R. 14837 because I cannot support further the expansion of rural electric co-operatives, many of which have denied free collective bargaining in their own operations and frequently have let construction contracts for the extension of transmission and distribution lines and other facilities to nonunion contractors who employ nonunion workers at substandard wages and working conditions.

In the area of Montana in which Local No. 44, I.B.E.W. has bargaining contracts, the principal electric utility is The Montana Power Company. The I.B.E.W. has had contracts with The Montana Power Company for more than 50 years. Our collective bargaining agreements with the Company have been advantageous to our members in terms of better wages, good working conditions and other union goals. Frequently, too, these contracts with The Montana Power Company have been used as guidelines in negotiating agreements with other employers including agencies of the Federal Government.

In addition, The Montana Power Company, whenever it has entered into contracts with electrical contractors, has consistently insisted that such contractors employ workers who are members of organized labor, thus strengthening labor's organization and improving the quality of the work performed under such contracts.

In contrast to this record of forward-looking bargaining with an investorowned utility, our experience with subsidized, rural electric co-operatives, frequently has been unsatisfactory. We have been confronted with substandard rates of pay, undesirable working conditions, refusal to adopt union security clauses and refusal to deal with union electrical contractors.

In Montana, there are now 24 operating rural electric co-operatives, but bargaining agreements with the International Brotherhood of Electrical Workers exist with only 12 of such co-operatives. Additionally, some of these cooperatives still let their contracts for electrical construction to nonunion contractors.

These nonunion contractors employ nonunion workers frequently importing them from other states. These workers are paid substandard wages and do substandard work which is costly in the long run and may be dangerous to the public and to other workers. Safety inspections are not required by such nonunion contractors and hazardous conditions go unnoticed.

As you might expect, we follow the reports of loan authorizations made by the Rural Electrification Administration very closely. We find that, when work is started, to complete the authorized line extension or other improvements, the result usually is that a nonunion contractor has been awarded the contract. This simply means that the Federal Government, through the Rural Electrification Administration, has subsidized nonunion employers to the detriment of organized labor.

The problems we face in our efforts to negotiate satisfactory bargaining agreements with rural electric co-operatives can be illustrated by reference to the experience of Local No. 44 with the Marias River Electric Co-operative with headquarters at Shelby, Montana.

In elections ordered by the National Labor Relations Board, Local No. 44, I.B.E.W., was successful in organizing the workers employed by the Co-operative. However, we have not been able to negotiate a contract with the Cooperative primarily because its officers have resisted the inclusion of a union security clause in the proposed contract.

Thus, winning an NLRB election is not necessarily a victory for organized labor when tax exempt, heavily-subsidized rural electric co-operatives are involved.

It is not necessary for me to recount the tremendous sums of money which would be available to the rural electric co-operatives in this country under the provisions of HR 14000 and HR 14837. We believe that there is adequate monies available for the necessary functions and growth of rural electric co-operatives under existing laws and congressional appropriation. The passage of either of these bills would permit a vast expansion in the activities of the rural electric co-operatives whether such expansion would be in generation and transmission facilities, in distribution facilities or in other system additions. It is certain that the proposed legislation would be detrimental to the investor-owned utilities. For the reasons enumerated above, passage of such legislation also will be detrimental to organized labor.

I believe that HR 14000 and HR 14837 would not be in the best interest of the International Brotherhood of Electrical Workers.

I appreciate the opportunity of presenting this statement for the consideration of the Committee.

The CHAIRMAN. It seems to me that someone else spoke to me about a witness who wanted to be advanced on the witness list.

Mr. JONES of Missouri. I spoke to you yesterday about Mr. Roedder who will take about 5 or 10 minutes to present his statement. Mr. Gene Roedder is also with the International Brotherhood of Electrical Workers from St. Louis, Mo.

You have a prepared statement?
Mr. ROEDDER. No, I do not.

The CHAIRMAN. You may make your statement then.

STATEMENT OF GENE ROEDDER, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, ST. LOUIS, MO.

Mr. ROEDDER. I am employed by the membership of the International Brotherhood of Electrical Workers. I appear in opposition to the proposed legislation as provided for in the two bills before the committee.

I recognize that you gentlemen have, no doubt, a serious problem before you and that there is considerable pressure upon you to try, perhaps, to understand and provide this legislation to supplement the original intent of the Rural Electrification Act.

I think many of us, certainly, recognize the rapid change that has occurred in the United States in the development of our great industrial society. And in these periods of changes, we have not had too much advance in our political and social sciences. It strikes some of us that we have now entered an era where greater attention must be paid to the social sciences than to the commercial sciences, in order that the future course for America's great growth may continue as it was intended to continue by our forefathers.

Once these rules are established, and these tenets, I would suggest that the bills before this committee be tested on the basis of those tenets and those rules.

One of the questions that appears in the minds of many of us is: Is there a further need to subsidize the REA's? Has there been a demonstrated need that the services that they desire are not now available, through legislation already enacted? And is it not through this means that the service that they desire, which is not now available, could be provided through the facilities of private enterprise?

Based on a limited inspection of the report from the Federal Power Commission, in my judgment I recognize no evidence that would tend

to support the objectives provided for in this bill, or in the two bills, as a matter of fact.

I think then that an analysis should be made to determine whether or not legislation introduced as proposed would provide for this country the means of achieving the goals desired, keeping in mind that we do have a system which to a large extent is supplied by industrial utilities which carry with them an automatic repayment of sorts in the form of tax money. Something in the area of approximately 13 percent of every revenue dollar is returned in the form of taxes when these services are provided by the private utilities. This is not true when the same yardstick is used in an analysis of the return achieved through the REA's.

I think the bills as proposed need to be tested, to determine whether or not the potential, as I understand it, of some $17 billion is truly requisite, to determine whether or not provisions in the bill as written would not, in effect, cause Congress to relinquish its statutory rights.

I suggest, again, gentlemen, that you are confronted with, I would say, several problems and that you have many people that, I guess in any age or in any society, desire something for nothing. I suppose some element like this is inherent in all of us.

I think the real question is whether or not a democratic nation can continue to function properly if we provide within this framework the opportunity for some to gain at the expense of others. I believe that the day will be at hand shortly when you gentlemen can be objective enough to take, shall I say, a panoramic view of what the future holds for this country, and in doing so can we recognize that the day is not too far ahead when some determination will have to be made as to whether-30 or 50 or 80 years-some determination will have to be made as to whether or not the system of providing energy and power will be accomplished through federally controlled or owned public power companies rather than to continue to permit the constant conflict that, in my judgment, will exist and increase if we do not throttle our present trend.

I think the time to make this decision, to make the determination as to whether or not our cost is just and whether or not additional moneys need to be channeled into this total program, is a matter of serious

concern.

I would like, finally, to say that I think there are those of us, your constituents, who believe that when each of us are given equitable treatment and I think this is the feeling of the membership of our organization-that will be the answer to the point at hand. And I thank you for the time you have extended me.

The CHAIRMAN. Thank you very much for your statement.
Mr. ROEDDER. Thank you.

The CHAIRMAN. We will now hear from Mr. David C. Fullarton.

STATEMENT OF DAVID C. FULLARTON, EXECUTIVE MANAGER, NATIONAL TELEPHONE COOPERATIVE ASSOCIATION

Mr. FULLARTON. Mr. Chairman and members of the committee, my name is David C. Fullarton. I am executive manager of the National Telephone Cooperative Association, which serves the Nation's telephone cooperatives.

The general counsel, Mr. James L. Bass, of the National Telephone Cooperative Association, has requested me to ask that his statement be made a part of the record.

The CHAIRMAN. All right. It will be made a part of the record following your statement.

Mr. FULLARTON. Further, in the interest of saving time, I ask that my prepared statement and the exhibits attached to it outlining specifically the recommendations we make be made a part of the record and that I be allowed to summarize it.

The CHAIRMAN. Very well, your statement together with its attachments will be made a part of the record.

(The prepared statement of David C. Fullarton follows:)

STATEMENT OF DAVID C. FULLARTON, EXECUTIVE MANAGER, NATIONAL TELEPHONE COOPERATIVE ASSOCIATION

My name is David C. Fullarton. I am executive manager of the National Telephone Cooperative Association. NTCA is the national service organization for the nation's 226 telephone cooperatives, which provide telephone service to more than one-half million residences in 31 states.

The member systems of NTCA have a vital and immediate interest in legislation affecting the REA telephone loan program. It was this program that first brought telephone service to more than 50% of the present subscribers on telephone cooperative lines.

Statistics as to the nation's telephone cooperatives are probably the best means of illustrating the reason for and necessity of the REA telephone program. As a group, telephone cooperatives have the lowest subscriber density in the entire telephone industry-2.4 subscribers per mile of line, as compared with more than 40 per mile for the Bell System. The average telephone cooperative realizes $261 annually for each mile of line, while other non-Bell systems bring in just under $2300. No comparable figures are available for the Bell System.

Despite these and other disadvantages, the nation's telephone cooperatives, along with other telephone borrowers of REA, have made remarkable progress over the past 17 years since enactment of the telephone amendment. For example, as recently as 1960 only 54% of the farms in the United States had telephone service available. This figure is now close to 80%. Telephone cooperatives and other borrowers have in many areas not only kept pace with the industry but have taken the lead in extending the best in communications services to the rural areas. Just this year a Wisconsin cooperative borrower cut over that state's first all one-party exchange.

The REA telephone program is a tried and proven one. Although relatively noncontroversial and not much in the public eye-it has quietly made significant contributions to rural America and to the economy at large.

The objectives of the REA telephone program have not been fully reached and it is the position of this Association that loan funds under the present 2%. 35 year terms must be continued if these objectives are to be achieved.

On the other hand, there are borrowers who have developed to the point where other types of financing might be feasible, and there are new and special communications services being developed for which funds at other terms might be usable, but supplemental financing for REA telephone borrowers can only be discussed after it has been established that the present REA lending program will continue and in sufficient volume to achieve the objectives of the program. We believe that language to the effect that the Congress finds that many telephone systems continue to require financing under the terms and conditions provided in Titles I and II and that nothing in any subsequent legislation shall be construed to change the loan purposes, terms and conditions authorized by those titles, should be included in the enacting clause of any supplemental financing legislation.

As to the specifics of the bills thus far introduced in the Congress, we find desirable provisions in each of the bills. We believe that the provisions of H.R. 14000 specifying in detail the transfer of control of the telephone bank to class B and C stockholders will provide the greatest incentive to voluntary borrower contributions of capital. These borrower contributions could contribute meas

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