utilizing natural gas to make hydrogen, in my judgment, is one in which an alternate fuel capability would not be avaliable to make that service. Now, that is based on my general knowledge of the economics of the industry, and where the situation is such that the economics have changed substantially, by virtue of attractive export opportunities, I do not know whether that situation still stands or does not stand as a matter of economics.

But also, what I am trying to illustrate here is that the Commission, in effect, has taken a group of interruptible customers, and in some of their orders in here which speak for themselves, but for purposes of trying to make some understanding here, they have taken these interruptible users as a group. But that does not prevent any interruptible user from indicating the peculiar nature of his circumstances at the Commission now or any time, to determine a different approach to his requirements. So, they are not foreclosed, is what I am trying to emphasize. And in fact we have pending litigation right now regarding the different parties' problems with the Commission, the general nature of the Commission's priorities, and many different industrial groups before the Commission asking for relief, and a different placement, or a modification to fit their particular needs. Mr. BERGLAND. Thank you very much.

Thank you, Mr. Chairman.

Mr. DE LA GARZA. Mr. Mayne?

Mr. MAYNE. Thank you, Mr. Chairman.

Mr. Solters, these interruptible contracts have not yet come into effect yet, have they, this fall?

Mr. SOLTERS. In some instances, sir, they have. In others, no. It generally depends upon the viability of a particular pipeline's supply deficiency. Some pipelines are not in as bad a situation as others with respect to their supply deficiencies.

Mr. MAYNE. Well, is it not generally true though, that it is when the weather gets colder that service is interrupted under interruptible contracts because more heat is required by those holding firm contracts?

Mr. SOLTERS. That is absolutely true. That is the general situation. On a few pipelines, I am aware of, a supply situation for the forthcoming winter is such that usual circumstance would not necessarily be the rule at this time. And there may be requirement to cut some of these interruptible users ahead of the time they would normally expect to be cut back, and I think that has caused some of the problems with respect to the concern over fuel shortage this winter which we did not have last winter or the winter before that.

Mr. MAYNE. Do you mean they are starting to invoke the interruptible clause in these contracts earlier than weather conditions would require because they are trying to stockpile this fuel?

Mr. SOLTERS. No; not so much a question of that, sir. The capability of the pipeline to meet the industrial requirements directly, and the ones behind the distributor are such that actually, his supply deficiency is greater this year than it was last year. And in absolute terms, he is not able to deliver the same amount of gas.

Mr. MAYNE. Well, this is quite unrelated to the weather conditions? Mr. SOLTERS. Yes. As you normally think about weather, yes. But the situation in the industry has gone away from that because of the nature of the shortage.

Mr. MAYNE. Thank you.

Mr. DE LA GARZA. Mr. Ingram, you heard my question to Chairman Stafford as to a plan for the future, a definite goal, et cetera. Do you have such a plan in your administration?

Mr. INGRAM. Sir, we are operating on many fronts. The most important one, I think, is to create a healthy industry in the United States. The present return on investment that the railroad companies earn on average comes out to just a tad over 3 percent. And it is quite obvious that you can do much better at the corner bank. I think if we are going to have adequate freight car supply and locomotive supply to pull those freight cars, and the other fixed facilities the railroads need in order to make good utilization out of their freight car fleet, then that return on investment is going to have to be brought up to an adequate level. There is only one railroad in the United States at this time that is able to replace its freight car fleet and physical facilities out of its cash earnings, and that is the Union Pacific Railroad. Even the healthier railroads are earning what most consider to be a substandard rate of return.

We have several programs within the Department to help cure that. We are working now with the appropriate committee on a bill to resurrect a vital, vibrant, demand-satisfying railroad in the Northeast out of the wreckage of the six major bankrupt railroads there. We are also working on a plan for assistance for railroads, and for regulatory reform in the regulations that they face at the Interstate Commerce Commission, mainly to bring it up to date. And in addition to that, we are also working in the area of research. We have several research projects going in cooperation with the railroads now, the most notable of which is probably the one going on in Chicago, where we are trying to improve the freight car utilization of cars moving through that major gateway area. We are working with an association of railroad general managers there, installing automatic car identification equipment, computers, and so forth, to keep the railroads current on the whereabouts of the cars in the Chicago area. We are also seeking a car distribution system on the national level for the railroads, so that they will know where their cars are. One of the problems in improving car utilization is improving the knowledge of where the cars are. It is not enough to know after the fact where the cars were.

We are also working on various programs with the railroads on a spot basis. When trouble areas occur, we try to get together a team composed of Department of Agriculture personnel, ICC people, Department of Transportation people, and others who may have knowledge of the areas concerned. Principally, to make sure that there is nobody out in the field who can be conned by some of the people who sometimes try that. If you have someone from all sides of the fence in the team, you can usually get some straight answers and get things cleaned up pretty quickly. This has operated very well to improve

carrier utilization.

Mr. DE LA GARZA. You mentioned in your statement that the railroad industry is deserving of highest praise for the work they have done, and certainly it is not the intention of this subcommittee to chastise them for any matters which are beyond their control. We are trying to get at the facts and see what the problem is, and what we can do to assist them with this problem, and that was the reason for that question.

Now, the things which you enumerated, are they independent individual things, or everybody in this Government has a game plan of some kind, that they always show with great pride, this is what we are looking forward to in 1976 for the Bicentennial and 1980.

The things that you mentioned incorporated in something that one could look at.

Mr. INGRAM. I have never seen it written down in a document, putting forth schedules and so forth. Our first order of business right now, Mr. Chairman, is of course the railroads in the Northeast that are teetering on the brink of what I might call superbankruptcy. They are already bankrupt, and are getting ready to just plain run out of cash. This could produce quite a serious problem of car utilization and car supply.

The Eastern railroads are not able to produce and purchase the number of freight cars that they ought to produce, and as a result, they use other people's cars. The facilities are, well, to put it bluntly, falling apart in some places, and trying to move a car faster on a piece of railroad where the speed limit is 10 miles per hour is a very difficult thing to do. I am afraid that that set of problems has taken so much of our time that we have not set out in a timetable fashion what we would like to see the railroad industry do in general, in improving its rate of return so that cars could be purchased, locomotives could be purchased, and facilities constructed to do the job that has to be done. But I assure you, if we resolve this problem in the Northeast, we are going to start setting down a long-term program.

Mr. DE LA GARZA. Well, we can understand that. Now, how long has your administration been in existence?

Mr. INGRAM. About 5 or 6 years now.

Mr. de la Garza. Since the inception of the Department of Transportation?

Mr. INGRAM. That is correct.

Mr. DE LA GARZA. Now, the problems of the railroads in the Northeast go further back than that?

Mr. INGRAM. They certainly do, sir.

Mr. DE LA GARZA. Perhaps if we had had a game plan we would not be in the situation that we are in, and we understand your preoccupation with the immediate problem now. But I would hope that in 1980 whoever is sitting here does not have to come back and say, well, we did not plan. We spent all our time just putting out the little fires here and there, and we did not have an overall transportation plan.

But from your testimony it seems that you are looking towards that, and hopefully you will. Now, you mentioned something about the need of the railroads to know from the industry what they need, or the industry's responsibility to let them know with sufficient time their needs at a specific time. And further in your testimony you mentioned about meetings with shippers and carriers and so on. Is this what you are doing at these meetings?

Mr. INGRAM. Yes, we are. We are also working on spot problems as they come up. But what we are trying to encourage shippers to do is to let railroads know well in advance what their requirements are for freight cars. There is a tendency on the part of some shippers to call the railroad for a car and expect it to be there immediately. And while that works many times, in major movements it is much

better if it were planned out in advance. And we are trying to promote that kind of planning.

Mr. DE LA GARZA. Well, do you find that perhaps this is not a question for you, but do you find that the railroad industry is going out to try and sift out this informaiton, that it is a two-way street?

Mr. INGRAM. Yes, the railroads do, of course, and the individual firms that they serve also give them some information. What we are looking for is a way to put this all together, so that in general the railroad system in the country, as opposed to an individual railroad, can do its planning properly. If the cars are in the wrong place of the country, we hear this typical excuse that, well, I bought my cars, but they are somewhere else. We would like to get the planning done among all the railroads and all of the shippers in the particular industry, so that those plans could be made well ahead, and of course, cars then be in the right place and on the right railroad.

Mr. DE LA GARZA. Pardon my ignorance in this field, but does a railroad get a charter or a franchise, or can I just go and start me a railroad line?

Mr. INGRAM. Well, we have not had that problem recently. No one seems to be wanting to go into the railroad business lately. But the railroads get a certificate of convenience and necessity from the Interstate Commerce Commission to provide railroad service along a certain specified plan that is laid out in the certificate, and that is the authority under which they operate as common carriers. There are private railroads in the country. One has recently been built in the State of Arizona, 83 miles long. It is entirely used by one private firm. They use it for moving coal from a utility-owned coal mine to the utility where it is burned. So both types of railroads exist, although most of them are common carriers operating under a certificate of convenience and necessity from the Interstate Commerce Commission. Mr. DE LA GARZA. The State of Texas used to run a railway line from Rusk, Texas to Palestine, and I chaired the committee that finally saw the demise of the State of Texas' venture into the railroad industry.

Mr. Ingram, we commend you for the work you are doing in this respect, and we urge you, like that famous commercial, to try to do better.

Mr. INRGAM. Thank you, sir.

Mr. DE LA GARZA. And Mr. Solters, we appreciate very much your participation today. We were informed that you were a technical man and would not deal with policy, but did very well, sir, and we commend you, and appreciate your contribution and that of your counsel. Mr. SOLTERS. Thank you.

Mr. DE LA GARZA. With that, the subcommittee will stand at recess, subject to the call of the Chair.

[Whereupon, at 12 noon, the subcommittee recessed, subject to the call of the Chair.]

[The following statement and letters were also submitted to the subcommittee:]

STATEMENT OF HON. GUY VANDER JAGT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. Chairman, Members of this distinguished Committee, I am pleased to have the opportunity to present this statement to you on the subject of the current fertilizer shortage. I am deeply concerned about this problem partly because I have a good deal of agriculture in my Congressional District, but also because I believe the problem has much broader implication as it relates to the adequacy of supply, quality, price and variety of food available in this country in the near and more distant future.

While I recognize the serious question of supply of fertilizer here as it relates to price controls and higher prices available abroad, and I am also aware of freight car and other transportation equipment shortages contributing to our present difficulties, I would like to direct my observations to another aspect of the subject which may not have received the attention it deserves.

Perhaps the best approach to this particular perspective is a simple review of the "life cycle" of fertilizers. Basically, fertilizer is mined, manufactured and/or processed, packaged, transported, purchased by farmers, spread on agriculture land to stimulate crop growth, taken up by plants, removed from farms in crops or fed to livestock, eventually reaches human beings in food, is consumed and digested, a small percentage remains in the human body while the balance is excreted in waste which then is subject to sewage treatment processes. In sewage treatment, for the most part today, the fertilizer elements are discharged to lakes and streams where they again cause plants to grow. Under some very limited circumstances this plant growth can be useful, but for the most part it is a matter of plant growing where they are not wanted because they accelerate the eutrophication process in those bodies of water. (I hope you will excuse this oversimplified and generalized description.)

The basic point I want to make that we ought to be giving as much attention to the recycling of fertilizers already produced as we give to the question of the need to stimulate the production of more and more fertilizer to meet growing needs.

I have had the opportunity to look into this subject in some detail and it is quite astounding to discover that sewage in this country contains fertilizer equivalent to about 33% of the commercial fertilizer sold. In other words, the 40 billion gallons of sewage we produce each day contain about one billion dollars worth of fertilizer on an annual basis. In effect then we are wasting almost one-third of the commercial fertilizer we produce, in a sense, if it is reasonable to recycle that fertilizer. From a somewhat different viewpoint, we may be able to reduce basic fertilizer production by one-third if we recycle what has already been produced. (We ought to have in mind the huge power requirements for phosphate fertilizer production and the vast quantities of natural gas needed to make nitrogen fertilizer as well. Both present unique problems that obviously also relate to current shortages.)

Is there a practical means to recycle fertilizers? Indeed there is. And it is being done on a very limited basis in some parts of the country. Penn State University is responsible for the most significant research here on recycling fertilizers to agriculture land.

Muskegon County in my District has gone far beyond the Penn State program by establishing a sewage treatment system covering sewage from most of the County which provides aerated lagoon secondary treatment for wastewater after which the odor and health problem free but still nutrient rich effluent is to be spray irrigated on 6,000 acres of cropland. (While the treatment process is in full operation today, the spray-irrigation system is partly operative this fall and will be in full operation next year.) Small scale programs here and similar systems in other parts of the world suggest considerable increases in crop yields using this approach. Tests of the effluent at Muskegon indicate fertilizer worth about $100 per acre per year will be applied through the spray-irrigation system. If yields are as good as anticipated at Muskegon, profits from the agriculture operations may come close to covering all of the -operating costs of the sewage treatment process there.