# Appendix — Ramsey v. United Mine Workers > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386413_0248%3A07 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1971 - **Citation:** 401 U.S. 302 ## Text 7” ee ALOR ah Dad Nos. 17.878 and 17,879 AN THE United States Court of Appeals FOR THE SIXTH CIRCUIT No. 17,878 (irorce Ramsey; Leon Nunwey, d/b/a Leon NUNLEY COAL Company; Pau Gipss, d/b/a Pave Gisps Coat Company; Lois Haut Travis, Administratrix of the Estate of W. J. Travis and J. H. Grawam, d/b/a Nixtu Wesr Coat Com- paxy; A & R Coat Company, Ixc.: W. T. Morrison and JH. Granam, d/b/a M & G Coat Company; J. H. GranaM Coa Company, Inc.; W. T. Morrison and Lots Haut Travis, \dministratrix of the Estate of W. J. Travis, d/b/a M & T Coan CoMPANY ; STEPHENSON BroTHers Coat Company, INc.; Epwarp Nun ey, d/b/a Epwarp Nunxiey Coat CoMPany; Kast Vatiey Coat Company, Ixc.; Exiuirs Warp and Lon L. Varne.y, d/b/a Tracy Crry Coat Company; Henry WILLIS Fiyxyx, d/b/a Wiis Fryxn Coat Company; H. W. Fryx»x Coa, Company, Inc.; Howarp Hicerns, d/b/a Howarp Hiccrxs Coat. Company; Howanp Higcins Coat CoMPany, Ixc.: MarsHaLt MEEKsS, Plaintiffs-Appellants, v. Uxirep Mine Workers or AMERICA, Defendant-Appellee. No. 17,879 TENNESSEE Propucts aNbD CHEMICAL CORPORATION, Plaintiff-Appellant. v. Uxirep Mine Workers or AMERICA, Defendant-A ppellee. Appeals from Final Judgments of the United States District Court for the Eastern District of Tennessee, Southern Division APPENDIX FOR DEFENDANT- APPELLEE — READ ETP LE OILED EAN TABLE OF CONTENTS OF APPENDIX Excerpts From Transcript of Proceedings Volume | Wilwesses for Plaintiffs Page Paul Gibbs Direct examination ~~ ———— - !h Cross examination 12b Leon Nunley Direct examination 2Y)) Cross examination 33h Kdward Nunley Direct examination — vt 38h Proceedings ~-------- 39b Edward Nunley: Cross examination Fes eas le 40b John Stephenson Direct examination ——~ 46) (ross examination ...------------ - Hob Recross examination ———-—- aarp ee JH. Graham- Direct examination —_------------ : 72b Coons Gunmeimetion ...-..-....-..-----~------- Tib W. T. Morrison— Direct examination —_------------- jing tle ve he (a ee — 96b Dossees Quemnetion .........-..----~.--«------- 122b Howard Higgins— DISGAEA 125) ec 134b Howard Higgins— A awentowewarane ns 135b (SEES A 136b DESL SESS EAE 162b Willis Flynn— DE _ENS EES LAST SOL TOE TT 162b op enu ee memceae 169b a eabeseravannes 185b il Table of Contents of Appendix Continued Herschel A. Daffron Direct examination Cross examination Recross examination Redireet examination __ Walter Frizzell Cross examination John Waller Direet examination Cross examination John TL. Basham Direct examination Clarence MeGowan Direct examination Mrnest Campbell Direct examination Tommy Cates Direct examination Cross examination _ Redirect examination Proceedings Virgil C. Thomas Direct examination Proceedings Virgil C. Thomas Direct examination —____ (ross exarmination Max Condra- Direct examination Murphy Whited, Jr Direct examination (ross examination Proceedings Cyrus S. Katon— Direct examination ~~ 6 SAAR ESPNU Y/N MI EEE PEE NIST EO OILS HANI 8 Table of Contents of Appendix Continued iil Mark Kastin— Direct examination ~~~. 972) (‘ross examination ---------------------- Mb Merle C. KNelee- Direct examination ~~------~- aa eR S eae TS) Cross examination ~------------- cate 27T9b Proceedings ~---------- ae 7 ye ies YROD John L. Lewis— Direct examination ——- eee ae 987) J.C, Kelley-— Direct examination —-~--------- ee (‘ross examination ----------------------------- PQ? ]) Thomas L. Meazell— Direct examination —--~------------------------- 294) Carl MeFarlin, Jr.— Direct examination —-------------- PAP 2, Vere ea Herman I. Allen— (‘ross examination _---------------------------- 322) Carl McFarlin, Jr.— Pies GROEN Won cc wee ncnnssawonwnnee _ 334b Di eeek GSERMMIOR .. 0. - o-oo ewww eenewe 375b Rolland O. Baum—- a Ea a a een 376b Proceedings ...---------------------------------- 388b Rolland O. Baum— itt Re i. nw nceweneennmnnnenens 390b it SE onan cwenedennawecowerss 399b le A. enw onciomnadewenees 420b Paul V. Callis— ee Ee . nuewtereewennmnedios 421h ee a eT 427b Paul V. Callis— SAREE PAE IEG OTT 429b ay iv Table of Contents of Appendix Continued Volume II Paul Vo Callis Direct examination (continued) Cross examination Houston Beaumont Direct examination (ross examination William Bo Allison Direet examination Cross examination William vou Meding Direct examination Cross examination Recross examination Perseival Heury Fitzgerald Direct examination (Cross examination Marshall Meeks Cross examination Redirect examination Lon Shelton Varnell Direct examination Cross examination Max Condra Redirect examination Joseph Howard Graham Reeross examination George Ramsey Direct examination Cross examination Defendant's Motions: Proceedings 440) 407) ti} Dh) it) aT) Defendant's Motions te Strike Evidence, and for Judgment; Proceedings 9. Witnesses for Defendant W. A. Boyle— Direct examination Fa | bboh RARE RRS I ES RB ONAN Les Delle = - = . eae ee Table of Contents of Appendix Continued Vv John Owens Direct examination ———- Bonuses —— Cross NE SGOT REAR scone ame John L. Lewis Direct examination ——— ~~~ as 247 Cross examination f ; 74) Josephine Roche Direct examination TO) Proceedings 2 T3G) Josephine Roche Direct examination Val J. Mitch ~) “3 x = 3 Direct examination a - T45b George TH. Love Cross examination vA _. $aan P. B.C. Smith- Direct examination ——- ; : TO4h B.C. Hill Direct examination - Soh Pa Cross examination ro - Sa Direct examination A Viaaae a Cross examination ——— MSE Es ee ee Redirect examination —- Le Mee en ee Howard Ceeil Human Direet examination i= Se ig ie Oe ae 819) Roland A. Kampmeier— Direct examination ~~ --------------- | Cross examination —..——- cemicte agile tackle ae Redireet examination ete a Md eR _.. 92th L. C. Goering Direct examination __--------------- eo Cn CURRIE ts a sees ane (.M. Hieks— Direct examination ~~~ ------------ DD ts DE O35b Aare Sen wae NH6h nn ee ne ewwecnun G66b d. W. MeMahon— Direct examination __....-_---------- yo Sereda oonabaten _ &71b — vi Table of Contents of Appendix Continued Volume III J. W. MeMahon— Direet examination | ee 897} T. J. Hotfman— Direct examination _.....--....... ____ ORY), Mark EF. Kastin— Direct examination ------------- 1011) T. J. Hoffman— Direct examination —------- — | Mark Eastin, Jr.— Direct examination ------------ _- 1041) S. L. Jewell— i 1044) T. Reed Seollon— it eb no ipa, 106?) (. Kdwin Ross— Direct examination _--------- __ 1088), Allen Condra— Direet examination -.......................__ 1095}, George Gilbert— apace Le teg ee ec, fe EELS: 1100), Se ee ee: 1127) Howard Madewell— Direct emmmination ......................... 1150) Albert Pass— ata ea ee seygs, e 1170h one teats ogo, hn NE ET e 1210h William J. Turnblazer— tytn vce ree ong, Sot ROD he, See Lay Ae 1224) wang afb mess occ, Oe ETE 1282)) en eeeOR ............. 5... 1284h Mark Fastin, Jr.— ces etree, ss... A ae ee eRe ea 1285) Excerpts From Annual Reports of TVA ____________ 1286h Louis FE. Wolfson— ecegpy fies, ICMR MRE DS TORE hell ae 1292b Table of Contents of Appendix Continued Vil Excerpts From Minutes of Tennessee (Consolidated Coal Company — ~~~ --. 21th Edward Nunley— i AD nnn cman esate san nese 1214) Se pe eee eee 1314 William Turnblazer— Direct examination ~~~ ~~ se yee i 11Ddb Defendant’s Motions to Strike Evidence, | and for Judgment; Proceedings ——-~- 121Gb Proceedings .------------- 5: aah ew 4217 IX HIBITS Number Deseription Page Excerpts from: D2 Proceedings of Conventions of the United Mine Workers of America, Year 19934 Le 1321b D126 Proceedings of Conventions of the United Mine Workers of America, Year 1956 —_- P noc taee D129 Proceedings of Conventions of the United Mine Workers of America, Year 1942 ~--_---------1330b D130, Proceedings of Conventions of the United Mine Workers of America, Year 1944 —-------------1931b D121 Proceedings of Conventions of the United Mine Workers of America —--------- et en en D132. Proceedings of Conventions of the United Mine Workers of America, Year 1948 __----------- 1332h D133 Proceedings of Conventions of the United Mine Workers of America, Year 1952 _-------------1594b D135. Proceedings of Conventions of the United Mine Workers of America, Year 1960 —~_._-_-_-_-----1s L' a D375, Report on the Work of the National Defense Mediation Board, March 19, 1941—Jannary 12. 1942 . — aS) om, ~ illite ines: Hindi " 897) Testimouy of Roland A, Kampmeter Direct Mr. Rowntree: | think we object to this as a presentation of the market price of coal at Widows Creek for each of these vears. Apparently this is a cost of burned tonnage, which may go back for several vears on a term contract. The cost of the thing would relate back to a period gas oof vears before, as | understand the witness. Mr. Rayson: Your Honor, we are introducing it or We propose to introduee this exhibit to show the changes vear by year in the cost of coal burned by power systems. That is our purpose. We want to show what variations there were from year to year, [presume we can never obtain comething that would show that exactly because they don't buy coal today and burn it tomorrow. There is always that element of storage involved, but T think that certainly what over merit this objection has, and T don't think that it has auy, that if could only go to the weight of the exhibit. Mr. Rowntree: Well, may Task, is it offered to show the price that producers of coal were receiving at the particular award made in those various years? The Court: It could only show relatively. Mr. Rayvson: It would have some bearing on that, | would think. beeause, as I understand the proof in the record already shows there was a stockpile from 90 to 120 days at these plants, so it would have some bearing on the price as it varied over the years, however, the exhibit precisely stated goes to show the variation in the price of the coal burned. Mr. Rowntree: For instance, 1956, T think it is conceded isa high vear on the market at Widows Creek, it does not reflect on that sheet because the coal bought that vear 4330 was burned in future vears under term contracts and that high cost reflected itself in the later vears, as 1 understand the computation of the thing. The Court: I think that would go to what. if anv, weight should be given to the exhibit, recognizing that criticism. Mr. Rayson: T may say that the TVA reports for most vears show the slight distinction in the cost of coal as well 898} Testimony of Roland A. Kampmeier Direct as the cost of coal burned and if it will make counsel happy we will put those figures in. The Witness: [think | perhaps could throw some ligh: on this aspect of the point, if it would be helpful. Tf on examines the figures in the TVA Annual Reports, the Vears Where figures are shown both for cost of coal received and cost of coal burned, you will find that there is Only a smal! difference and the difference is pretty consistent. The di ference accounts for the facet that — it is aceounted for hy the fact that the cost of coal burned includes one or two minor items on cost of handling and so on that are dot included in the figures of cost of coal received and as fay as the effeet on prices from year to Year, as Taras carry over and storage is concerned, this is Clearly very minor from the relative changes that one sees and MY Purpose here was to get as nearly comparable figures as [could and the way to get the most comparable figures were to 45400 take the published information for the power indus try and the figures for coal burned by TV.A, If Thad taken figures for coal received by TVA, the pic ture would not have been significantly different. By Mr. Rayson: (). Well, will vou explain to us, Mr. Kampmeier, what this exhibit shows? A. Yes, In the first place, it covers a period from 1954 to 1962, and Td like to explain why that is the period that it covers, 1904 was the first vear in which we were coming up to a fairly large quantity of coal used on the TVA. system, The first year in which the system as a whole burned more than 5 million tons of eoal. It was the first vear in whieh Widows Creek burned more than one million fons of eoal. Then T eontinued it through 1962 heeause that was the last vear that T felt that T was in position to sneak with any competence as to any reasons that mieht lie behind any of the variations, beeause that was the last vear in which T was still very closely familiar with the facts that WR AR AEE AL eR NIE DAL DIRE el ETL 899) Testimony of Rtoland A, Kampmeier- Direct entered into the cost cof coal on the TVA system and at Widows Creek. Now, as to what it sshows, | think that one of the most significant things that it shows is that the pattern of price, and this is the total price paid for the coal at the $341 plant, including: the transportation, as well as the cost at the mine,, that the well, first that the varia- tions up and down from an average are rather small, and this applies directly two your question that you had asked me as to Whether costss had varied widely or not at Widows Creek. It will be seen not only for Widows Creek, but for the United States, that the high and the low during this period of nine years, yes, nime years, is 9 per cent up and down from the norm for the period, the average for the period. For the TVA system it is only 3 per cent up and down. So the variation up and down from high to low is small, is modest. Now, I grant that T am not talking here about individual contracts, of course. The individual contract may be higher. A particular purchase: may he higher or lower than this, but in terms of throwing together all of the coal received ina given year, burned in a given year, rather, whether hbonght, whether contracted for that vear or the year before, that the average variatioms in price in these annual averages from the average for nine years is rather small. Secondly, T think perhaps more interesting to me, at least, is the fact that the pattern of variations is so nearly the same in alll three columns. 4342 The price, IT don’t think, is surprising at all, but I think it’s noteworthy that the price went up for TVA and for Widows Creek when it went up for the United States generally and when it went down in the United States generally, it went down for TVA and the variations from the pattern for the United States, the variations from that pattern, when you look at the other two columns, are never more than two percentage points, except in the first vear EDO AEP ran ili ay 900b Testimony of Roland A. Kampmeier—Dirert for the TVA system as a whole, other than that Vear the TVA index was four points above the United States, in gi other cases the figure for the TVA system or for Widoy, Creek in any given year is within two points of that sany level on the pattern that shows up for the United States and which would be, you might say, a yardstick for con. parison. (J. What is the two points in cost per ton of coal? A. Well, two points would be 2 per cent of the cost of coal or roughly 10 cents a ton at Widows Creek, (). Now, as for the national pattern of price variations. can you identify factors which influenced that pattern, ear account for its variation? A. Yes. I think that there are about four things thar ought to be said about that pattern of variation in prices paid throughout the country by power systems, and befor: trying to explain any of them let me identify them. One would be the effect of temporary changes jn $345 demand, temporary fluctuations in demand. Second would be changing freight rates. The third would be changes in the value of the dollar, And the fourth would be improving productivity in coal mining. . What do vou mean by ‘*temporary variation in de- mand’’? Explain that factor. A. Well, this is a case of the law of supply and demand being at work. Over a long term if demand is expanded greatly then this permits more efficient production and lower costs, so the long-term effect is one thing and that is, I think, the point T mentioned last, and T want to eome to last, but in the short term it doesn’t work that way. Tn the short term if there is a sudden surge in demand, then you have what is generally called a seller’s market and prices tend to go up, or if vou have a temporary drop in demand then the prices tend temporarily to go down. Now, this doesn’t persist forever, but the immediate ef. fect, the short-term effect for a year or two, can be quite MRA RI IRN AL be IS RR 0 9s IE BYE EIEN SEEN RAB OE TORREY EAS EL BNET AO 901b Testimony of Roland A, Kampmerer— Direct pronounced and we see it, of course, in prices of almost anything. Q. What about the second factor you mentioned, the changing freight rates? A. Well, the effect of changing freight rates, of $344 course, has to be taken into account because these are delivered costs of coal, so that when freight rates go up the delivered cost of coal goes up. When freight rates go down, the delivered cost goes down and the point about each of these factors is that not only do T refer to them as a matter of theory, but I can refer to them as a matter of practical effeet. Let me go back a moment to the effeet of the temporary changes in demand. In 1954 there was a rather sharp drop in the total U.S. sales of coal to a point about 15 per cent lower than it had been the year before or than it was again the year later and this was about the lowest point that the coal sales added up to since the depression of the thirties, Now, allowing for the fact that there is a time lag in the effect of this kind of a change in demand on price, that it takes a while for — of course, the effect on spot contracts may be immediate, tend to be, but the effect on term con- tracts is a little slower, you do have the time lag of some slight averaging effect here. If you allow approximately a year as to the average effect of the time lag of the effect on the market changes on new contracts and of new con- tracts on the average delivered prices, then it would be uatural that one might expect that a low point temporary short drop in demand in “54 would be followed by a $345 low price in °55, which they are. Now, it takes more than one swallow to make a summer. If this were the only one instance it wonldn‘t prove much to me, but if we follow on through we find in “56 we had a temporary peak in demand, which was noticeable as com- pared to preceding and following years and in ‘57, in allowing a year’s lag, we have a high price for coal. By 58 we had a rather definite drop again in total U.S. coal sales 902b . ¥ of Roland A. Kampmeier—Direct Testimon then tended to persist for the next sever) id the price in °59 dropped to a level tha . . So this pattern followed very close gor. tended to persis , Ree’ ; changes in demand and changes in price, relation between. , ; , , : reight raise during this period, there was Now, on the f |! er ; ‘ . Which there were general freight rate jp. one interval in : Mae e » noticeably significant, and that was from creases that wer ; . ae ; ee oie re, too, this was a period in which average do to *O7, and th , : . _of coal to power systems went up. delivered prices - m : : {o8 or “9 there was a slight down trend jy After about 1! I ; ; ; i ‘ates, and this again tends to be consisten average freight ad ‘ : of prices. with this patter: I , , . -ik those two factors are reflected, T think So I say I thi : Saat an be said about the others. T mentioned to a level which years. So you fi the same thing « the third, T think : Q. The Value of the dollar, 2. 4246 A. Aq ight. The value of the dollar, During this period the wholesale price index for all commodities, and it is shown /@ this chart which we were looking on little while ago, for instance, didn’t change very great) but what change here was was concentrated almost entirely tn thoae Ceabe from 7°59 to 57. The rise in the solid line on that chart in the Wholesale price index took place in that 2-vear period, so that this was not just a rise in coal prices, this was a rise if prices generally. This was a brief flurry of inflation, von Might say, from °55 to °57, so that also is consistent with this pattern, Then finally T mentioned the effeet of the increase in coal productivity and this, T think, is an important element in this picture because if it were not for that then the prices should be higher by the end of the period than at the be- ginning of the period because the wholesale price index was somewhat higher. There was a decline in the value of the dollar which, theugh not large, was several per cent and. therefore, if coal costs just as much to prodnee in terms of constant cost in dollars, the real cost at the end of the period as at the beginning, then in terms of actual prices, - 903) Testimony of Roland A. Kampmeier— Direct actual dollars, the changing value of the dollar, the coal prices would be higher at the end of the period, But they weren't, they were no higher, they were a little lower, and this reflects the fact that with the shift to more and more sales of coal to the power systems — we are talking 4347 here only about sales to power systems —that the market that these power systems provided was in- creasingly a bulk market, which allowed the producers to supply coal in bulk and at a reduced cost, and this meant that the price of coal went down or, at best, didn’t go up. Actually it went down a little bit even though prices gener- ally were going up. Kven though coal prices generally, if you take the index of all coal produced instead of coal used by power systems, coal prices went up somewhat in this period and the coal prices to power systems did not, and particularly in the case of TVA system you had a distinet downward trend during this period because of the impact of this TVA market on the ability of its suppliers to supply coal in bulk and at a low cost. So I think each of these factors can be traced in this picture. My work causes me to deal a lot with economic questions of this sort and this to me is a very interesting picture and T think it shows that the price patterns here are entirely logical, consistent patterns that fit in with the changing economic conditions that were affecting the picture. Mr. Rayson: Your Honor, we offer the chart entitled “Changes in Cost of Coal Burned by Power Systems’’ as an exhibit to Mr. Kampmeier’s testimony. The Court: Exhibit 580. (The chart referred to above was marked D380 and received in evidence.) 4348 By Mr. Rayson: Q. Mr. Kampmeier, did you participate in the de- velopment of the contract under which Peabody Coal Com- pany supplies coal for the Paradise Steam Plant? A. Yes, yes. a. ' ; — 04D Testimony of Roland A. NKampmeier Direct (. Can you tell us whether that contract was made a result of a TVA bid invitation? A. Yes, it was. There were bids invited, and the Pe, body Company submitted a bid in response to that invity tion. The terms of that bid were not, however, Wholly sap. isfactory to the TVA and the contract developed out oy negotiations that followed the submission of that. . What was TVA’s purpose in issuing that InVitation’ A. Well, we had been asking ourselves questions for long time, several years, as to when the time might con, when it would be the economi ‘ally desirable thing to do. build one of the TVA steam plants or more at a place wher it could be right at the coal and where we could keep trans portation costs as low as possible or eliminate them entirely, and we had been a little by little over the vears obtaining information from the various suppliers as to the available reserves. We had been making studies in connection with the States of Tennessee and Kentucky with the Burean of Mines as to the reserves, We satisfied ourselves there wer places, particularly in western Kentucky, where there 4349 were reserves available in such large quantities and within a limited area, T don't mean the reserves are limited in a small area but within any small area voy could have enough coal available so that it would be possi. ble if one could locate a plant there ¢o minimize transpor. tation costs, and we had been interested, we had come to the conclusion that it was the time te make a serions exploration of this sort of possibility. We had inquired of all those companies who were known to have very large reserves as to their interest in offering a large quantity of coal and, therefore, in connection with one of our bid invitations we invited people to submit bids in very large quantities of coal they might have available for very long term in the hopes that out of this might come an opportunity to build a plant at such a mine. Q. Did you receive many bids in response fo that invi- tation? ays ——__ oa 905b Testimony of Roland A, Kampmeier Direct A. No, it was disappointing in that sense. The only bid that was of the size and the term that we thought would be big enough to justify this kind of a plant was the offer by Peabody and it was not as— it presented a very attrae- tive offer, but it was the only — the best one we had and prov ided at least a vehicle for exploring what can be done and finally did turn out to be quite satisfactory. Q. Did you find yourself and TVA in the position of being able to negotiate with Peabody Coal Company 4350 after that bid was made? A. Yes, because the ‘vooWwere the low bidder, vou might say, or the sole responsible bidder. We were in posi- tion to see Whether it would be possible to agree on the modifications in their offer whieh would make it a mutually acceptable and mutually desirable basis for proceeding, Q. Did you, in the course of your negotiations, did vou agree upon something that was more attractive to TVA than the bid originally submitted by Peabody? A. Yes; yes. Maybe the easiest way to indicate that is, as I recall, they offered coal at $5.80 a ton, which was to be a washed coal, and indicated in the bid that if it didn't need to be washed maybe some arrangements could be worked out in lieu of that and what we ended up buying was unwashed coal at $2.90 a ton, of course, very substan- tially less per ton. It was not as much less per million BTU as the price per ton might sound like, but it was a substan- tially more favorable price per million BTU than the origi- ual offer, and we also arrived at some different escalation provisions and some different quantities and schedules of quantities, as T reeall. No, 1 guess the quantity wasn’t par- ticularly different, but the scheduling of the quantity at least was different. Q. What did you say was the price at which you nego- tiated that contract finally? 4351 A. T think T said $2.90, but T think T misspoke, T think it was $2.95 per ton. 5a ee V06b Testimony of Roland A. NRampmeicr Direct Q. All right, sir. Do you know what kind of coal thy was? A. Yes. That was a raw coal, a mixture of three differey seams, as [ remember it, at least two principally, it was relatively low quality unwashed west Kentucky coal, (). When you offered that invitation had you already determined where you were going to build this plant! — A. No, we couldn't because we didn't know what kind of offers we might get. We had to, of course, explore varioys possibilities. We identified at least three rivers where wo might locate the plant in order to have an adequate cooling water supply, anywhere up and down these rivers, Wp had in mind the relative attractiveness of various alterny tive locations for transportation but then we had to wai to see what kind of coal might be offered and what com panies might offer coal, out of what reserves and wha locations and what quantities, in order to be able to judge Whether we would have a feasible basis for proceeding or not. (). Well, did you award the contract to Peabody, did you finally negotiate before vou decided where vou were going to locate the Paradise plant? A. No, both decisions were made simultaneously, that is to say, we worked out with Peabody what could 4252 be done if the TVA Board were willing to vo ahead and loeate a plant there at their coal to use it, and we were meanwhile having our engineers developing further details before they knew where the coal might be, before they knew whether the coal might be available, what the construction problems and opportunities might be, and then we went to the Board with our recommendation that the contraet be made and the plant be built and both decisions were made concurrently. (). Now, upon the construetion of that plant, the eon- struction of the Paradise plant, is there any transportation cost from the mine to the plant? _ : VOTb testimony of Roland A, Kampmeier Direct A. No, TVA has no transportation cost. The company has an average haul of maybe five miles, but that has to be included in the cost of them of delivering the coal to us, but the price that | mentioned, whieh | think was later reduced somewhat under the esealation provisions of the contract, that price is a delivered price into the hoppers, coal hoppers, at TVA’s plant, so there is ne transportation cost at all there, of course, whieh makes it rather attractive, Q. Do you know whether any of that coal, that is, the coal from the mine serving the Paradise plant has moved to Widow’s Creck? A. My understanding was that for some temporary period some of it did while TVA was having diffi $953 eulty with the equipment at Paradise and couldn't use the coal there and rather than refuse to take it, which I think under the terms of its contract we could, PE think rather than refuse the coal we moved some to, 1 shonledn’t say ‘we,”’ beeause this is after [ left TVA, but TVA, I understand, did move the eoal te Widows Creek for a tem porary period, | don’t know how long that was. (). One question, Mr. Kampmeier, [think it is exhibit 174 that you were looking at, the one in front of vou, if vou will he good enough to look at the number, please, sir, the very first page of that exhibit. A. All right. Q). Is that Exhibit No. 174? A, 175. (). 175, Is this a published publication of TVA, is that their analysis of all bids received by TVA on the term contracts? A. No, T think not. TVA prepared sueh an analysis following each bid opening, and I think that a summary was prepared of the bids that were accepted, and T think that was given some general distribution, but T think that this analysis of all bids opened was not what one would eall a published document. Mr. Rayson: That is all. 908b Testimony of Roland A. Kampmeier— Cross 4554 CROSS EXAMINATION By Mr. Rowntree: . * * * * * . » * e 4572 (). (Interposing) Are you familiar with th amount that Tennessee Consolidated expended oy mechanizing or the amount that Tennessee Products guar. anteed on loans to the small mechanized mines? A. | have no recollection of the figures, but T way fairly familiar at the time with the statements that the companies made to us as to the various steps that they had taken ay were taking and were prepared to take and what was involved in them in terms of cost. {). But there would be a limit as to how far a company of modest sums and means could go in expending money or guaranteeing funds on a mechanized project? A. Well, there would be a limit. The limit would be quite a long ways beyond the numbers that were being talked about. (). Well, would you say that a million dollars is 4378 not the limit for a company the size of Tennessee Consolidated ? A. Well, sir, I think that the only way that T could answer that, and IT will do my best to be as responsive as I can, is that these companies were not content, nor did we want them to be content, with the present size of their deliveries to TVA. They Were talking in terms of expansion and we were anticipating that the field might, that these principal producers in the field at least might be producing two or three times as much coal as they were and for opera- tions geared to that kind of an output T would say a million dollars would be a rather small amount of money. (). What was the problem after the Seetion 22 rail rate from west Kentucky to Widows Creek, was it the rail rate or was it some other problem that was the main concern of this coalfield? A. Oh, the rail rate was one of a number of elements 909) Testimony of Roland A. Kampmeicr Cross of an overall problem of their not competing sneeessfully oras successfully as they might or we thought or hoped they would in the total TVA market. The problem was that as conditions changed and other suppliers became more and more competitive relatively this field became less and less competitive. Q. Well, I believe it was your position in the LOC case in which TVA intervened on the Section 22 rate from West Kentucky to Widows Creek that the Section 22 rate 4374 was really beneficial to the southeastern field, ts that not true? A. Yes, not directly but indirectly in the sense that if there had been no such rate from Western Kentueky to southern Tennessee there would have been no expansion of the Widows Creek plant and without an expansion of the Widows Creek plant the opportunities of the southern Tennessee field would have been less than they were with the expansion of the plant. It all comes back to the propo sition that I referred to much earlier in the ease that TVA created a market which grew to %”) million tons a year when it might otherwise have been only a couple of million tons a year and a substantial part of that growth to 20 mil lion tons Was the growth that was taking place at Widows Crock, and I think it is very obvious, or at Jeast it always womed so to me, that the southern Tennessee field, or any other element in the TVA eoal supplying picture, is much better off with a 20-million-ton-a-year market than with a .million-ton-a-year market, even though they might wish that the prices in the 20-million-ton-a-year market were the prices that would exist if it were a 2-million-ton-a-year market, so my point here, the point I was trying to make before the ICC, is that the expansion of the market is the important thing, after all, to folks like the southern Ten nessee coal producers and there could not have been that expansion at the time of that freight rate without the freight rate, oe he 4 a 910b Testimony of Roland A. Kampmeier—C ross 4375 Q. The problem is the competitive position with respect to the west Kentucky field? A. With respect to the west Kentueky field, the Horther: Tennessee field, the Virginia field, the east Kentucky tied because they are all competing in the TVA coa! supply picture, (). But on this immediate market, the Widows Creek plant, it was the west Kentucky field that was the source, main source of competition after that Seetion 22 rate? A. Right. It has been interesting, though, to me that, for instance, the closer mines to the plant than souther Tennessee, in northeast Alabama, have begun, since [ wre, the letter to Senator Kefauver in which I said if anybods ought to have a preference maybe it is the nearest mins the Alabama mines, that since that time they have begy to supply increasing quantities of coal to Widows Cree} also, so it isn’t just a partieular competitor, it’s the whol competitive pieture. (). Would vou say that the main problem of the sont! eastern Tennessee field is the failure to reduce its labor cost? A. Yes, if you will allow me to make it very clear that I don’t mean that reducing labor cost means reducing wages I think that the main difference which may be just what You were saying, but I want to be sure that Tam we 4376 misunderstood, that the main difference bet ween that field and most of the suppliers in TVA in their com. petitive positions and their cost position is that Wage costs per ton are higher in that field than for most suppliers be cause their productivity per man is lower. * . * * . * * * . ‘ ——-~4 381 By M r. Rowntree: (). WE Rampmeier, IT show you Exhibit P3si, $382 would you look on page 89 amd st-ef that exhibit with respect to the southeast, the east south central dra and T will ask you, does that show the cost per ton at the 911b Testimony of Roland A, Kampmeier—C ross steam plants, the utility plants for the States of Kentucky, Tennessee, Alabama, and Mississippi? 4. Yes, it does on page 89 and 90. Q. Would you look on page 90 for the year 1958 for the area as a Whole? A. Yes. QW. Do you find a figure there for the cost per ton at the plant in that area for the year 1998? A. Yes, if you are referring to the figure in column 9, wst of coal per ton, total, east south central states, Q. That is right, correct. A. $4.61. (). Now, outside of the State of Mississippi are not those states that have the TVA steam plants situated in them? A. Yes, that is correct. (). And is Mississippi a substantial user of steam utility coal? A. Not very substantial. No, the figures would appear here it is not very large. (). Is it about 4,000 tons a year or something like that? $283 A. Right, 4,000 tons per vear. (). Now — A. (Interposing) That is in 1958, which more or less is a typical vear also, (). Would vou look at pages 81 and 82 of that exhibit for the area of east north central and would you state what states that area covers? A. East north central includes — what I am looking at the page starts with the word ‘*continued,”* but T don't think it is continued, so ignoring that for the moment, it would include Ohio, Indiana, IHlinois, Michigan, and Wis- consin. Q. Would you look on the total for that area for the year 1958 and see what the price per ton was in that area at the plant2— SBS. 4 12h Testimony of Roland A. Kampmeier Cross A. Yes, 1958 total east north central states delivered ens per ton of coal, $6.00. (). Now, it is true that transportation does enter som What into this picture, is that not right? A. Yes, rather considerably, | would say. Q. But is it not true that the States of Hlinois, Ohio, and Indiana that are considerably ahead of the State o Tennessee in the production of coal, the availability of mine sources? A. Yes, Illinois and Indiana produce more. coal thar Tennessee, is that your question? 4584 Q. What about Ohio? : A. Ohio also. Ohio, Indiana, and HHlinois always produce more coal than Tennessee, | think that is corre (J. In your direct testimony — I beg your pardon. A. Because | am not quite sure T understand what Vor may be intending to bring out there, perhaps [T should nov that if you are comparing east north central with the oth= area, east south central, that, of course, the principal pro ducing state in east south central area is not Tennessee bur Kentueky. (). Kentucky. Now, of course, these figures are the eos! to the utility at the plant? A. Right. Q). And really the production sources would eo to th problem of transportation availability of coal in the areas of the plants? A. Yes, if you would like to try to make comparativ costs of the coal, exeluding transportation, this is a rathe clumsy way to try to get at it, unfortunately. (). Yes, but it is the best way we have. A. No, it isn’t; no, it isn’t actually. (). What do you have in mind? A. Well, I, of course, have been interested for a long time in comparative costs of coal and one of the things tha’ recently beeame available directly from the Federal 385 Power Commission which I think is much more help- —— RI 1 NR, RINNE OM Gib Testimony of Roland A, KRampmeter —Cross ful in this regard, is this data based on figures sub mitted to the Federal Power Commission, the Federal Power Commission itself recently put out a report called “The National Power Survey” this is the second volume, a monumental report which com piles more basic data With regard to the electric power industry than has ever been done before. In that report, among other things, is a tabulation of in two volumes, of which typical coal prices f.e.b. mine for electric utilities, and I think this gives us a much more refined approach to the problem and still leaves some difficulties, but it eliminates not most, at least the sreater ones, and if vou would like to pursue this point slig ily further, | could do it. (). What sort of prices do they have on there, utility prices or What? A. Yes. Let me just quote from the report this para- graph, ‘‘In order to determine the f.o.b. mine price of coal the cooperation of a umber of major coal consuming utili ties in different areas of the country was requested. This report is compiled fom the answers of twenty selected electric utility systens which purchased approximately &5 million tons of coal curing 1961 or more thin 45 per cent of all coal burned by electric utilities.” And they fdlow then with a tabulation of 1961 4386 average price |.0.b. mine and cents per million BTU by coal producng distriets and Distriet 8, for exam. ple. (). What is Distrid 8? A. This would be astern Kentucky, northern Tennessee, and small parts of Virginia and West Virginia. Q. All right, sir. A. 14.34 cents per million BTU for District 9, which is western Kentucky, v.56 cents per million BTU for Dis- trict 10, which is sonhern Tllinois, which is Tlinois, totaled 15.03 cents per millin BTU, and then the only other dis- trict that T think w are particularly concerned with is District 13, which # southern Tennessee, Alabama, and — 914b Testimony of Roland A. Kam pmeter—Cross perhaps a county or two in Georgia, 15.82 cents per million BTU, (). Does it have Indiana or Ohio? A. Yes. Ohio is District 4 and the average is 15.20 copys per million BTU, Q. What about Indiana? A. Indiana, I don’t remember What district that is, lor see, District 11, 15.56 cents per million BTU. Q). Ohio, Indiana, and Ilinois are roughly equivaley; to the price in this district right here? A. No, no, I would say not, Ohio and Indiana are liz and 15.56, respectively, and I computed an average for this district based on proportioning this area, the TY, 4387 area, based on proportioning a weighted average, the prices for the district involved in proportion to the total amount of coal TVA gets from each and came out with 13.7 as being the figure here that would be the price that you might say that TVA would have paid in 1961 if it had paid the same price that the other, that the utilities reporting here paid for those districts. In other words, using the proportion of TVA’s purchases by districts, but using these folks’ data rather than our cost, you would get 13.7, which was wh: it the alternative cost to TVA would have been had they paid the same price. The Court: Your cost is not included in that, TVA’s cost is not a part of that compilation ? The Witness: Yes, I assume that TVA’s costs are a part of this. This would be comparing TVA with an average for all of the systems, including TV A, and that figure for the average of all of the reporting systems which account for 45 per cent of all coal burned by electric utilities, accord- ing to this report, is the figure that I arrived at. By Mr. Rowntree: Q. What about Illinois, IT didn’t get that? A. Illinois was 15.03, and that was included in my weighted average of 13.7. PLIAGE EM PELE TIES PTS yA AST VTA OES BTN aed 915b Testimony of Roland A, Kampmeier—Cross yxs ss Q.sT didn’t quite understand. I thought the 13.07 was the southeastern Tennessee. A. No, the 15-— Mr, Owens: (Interposing) Your Honor, I can’t hear either Mr. Rowntree or the witness. By Mr. Rowntree: (). [am still not clear on the 13.07. A. Well, Lam sorry that [ wasn’t more explicit. Let me be more explicit. Q. Do you have a figure for the southeastern and Ala- hama area, southeastern Tennessee and Alabama? A. For District 13, which is southeastern ‘Tennessee and Alabama, and T think a bit of Georgia, let me just be sure that ] am not misstating, yes, Dade and Walker County, there’s practically no coal production there, but, anyway, they are included, the average is 15.82. Now, my figure of 13.7, let me be sure L haven't misled you with regard to that, what [ did was say that TVA gets or did get in 1961 certain proportion of its coal from western Kentucky, about 47 per cent, and a certain proportion of its coal from Tli- nois, about 16 per cent, and a certain proportion from Dis- trict Sand a certain proportion from District 13, and taking those proportions as the basis for weighting and arriving at an average price from these four distriets weighted by supply produeed the figure of 13.7, so T think if vou 4389 are looking for, as I gather you must be, a figure of average prices paid by all power systems and not just TVA, drawing from the area that TVA draws from and proportioning the way TVA draws from those areas, you would get a figure of 13.7, and T think this is a much more reliable figure than one could derive from these de- livered cost figures or any other source that T know of. (). Was the one you have given f.o.b, mine? A. Right. Mr. Combs: Counsel, pardon me. Did he say what the > Mend national average was? I got the 13.7, but what is the other? — 916b Pestimony of Roland A, Kampmeicr— Cross Wy * mS . . . ° * pa Phe W Itness ; No, I did not, Lam sorry, f think it is hep Che national av. na 1h (? ‘ erage Was 10.02. By Mr. Rowntr \. Now, let The have the west Kentucky figure once mor A. Yes, 12.5¢. . im Q. Mr. Kam ie oh na char tae: _pmeier, have you ever seen a sheet like | am handing yo - l1now? A. | don’t P , “o-, ecall ever seeing a sheet exactly like thic although if it sl cord : hows what [take it it does, Pam sure Tsay the equivalent o. 2”. : ; , faitin various forms, I don’t reeall : get ge he » oy ever having seen exactly this list, this king of a list. ’ $390 QQ. Lo ports to b the date there i es : ; into the TVA st! 1996 for the middle western coals coming a Pe iwi’. me November 1. 193 '8 listed “TVA Contracts in Effect as of king at that, ean vou tell whether that pur 0a summation of the existing contracts an’ and apparently 26," and it lists quite a number of contracts perhaps HlinoisOMly contracts in the western Kentucky and list of those cor fields, so it may purport to be a compler QO. It gives qptraects or it may not, it doesn’t say, her week the pre contract number and the mumber of tors A. Yes. Tdotice? any more as to w't recognize the sheet and T could not sa I have said tt apvhether it is a correct and complete list and many of them Joopears to be a listing of such contracts and panies and mineok familiar to me by name and so on, con: saving whether ¢ Sources and so on, but T have no way o! Q). You wouldthis is a correct list or not. determine the ael have to look at the TVA award sheets to A. Well, everrcuracy of that sheet, T suppose? to not only look 2 more than that, T suppose T would have have to verify w at the suecessive awards but T wonld also been cancelled oxhether or not any of those contraets have Q. Coulr amended or otherwise modified. 4591 Kentueky (ld you say whether or not in 1956 West Coal Company and Nashville Coal Con- _— , —— 917h Testimony of Roland A, KRampmeier Cross pany combined was the principal shipper of coal from the middle western field to the TVA? A. Well, | would say that probably they were, af least they were among the two or three Jargest, and PT would sav that in *56 they probably accounted toge ther for more than any other supplier, Tam not completely positive, though. (). All right, sir. Now, | believe on your direct testimony you pointed out that The Court: (Interposing) That was West Kentueky and who? Mr. Rowntree: Nashville Coal Company combined, By Mr. Rowntree: Q. That the Peabody Coal Company represe ‘fed about one-sixth of the coal supply to TVA? A. Yes, roughly. Twas pulling a figure out of my mind by doing some mental arithmetic, it might be one seventh or one-eighth, but if is in that general order. (). Was Peabody shipping on other contracts besides the Paradise contract? A. Yes. You say was it? (). Yes. A. You mean when? (). Well, now, whatever time you were talking 4392 about on your direct testimony, [have forgotten what period that was. A. What [ said, | think, or intended to say at any rate, was that the Paradise contract was one that was made late in the period that I was referring to as the period which was namely up through °62 and that it was made rather late in that period. Shipment did not aetnally begin on it until after the period so that T was not actually talking about any deliveries on that contract during that period, I was only noting the fact that after that period there were deliveries on that contract which would now amonnt to, say, one-sixth or one-seventh of the total amount. There were deliveries on other contracts throughont much or all of it IISh Testimony of Roland A. Nampmeier Cross that period and those amounted to, L think | festitied, pro) ably around 5 per cent in the early years and around 0 por cent in the later years of the total TVA receipts, Q). So that would be 10 per eent plus one seventh, sav, or one-sixth? . A. Yes, something like that, T don know that those ear be added directly, because | don't know well CHOU why: the percentages were of other deliveries by Peabody hy 4} time the Paradise contract came into effect. Tf ONO ASSIMes that they were continuing at about the same rate that the Were in the lite fifties, then you could have those, but thi would be an assumption on my part, TP don't know. 4893 Tam not that familiar with how the varions Suppliers shared in the market after about "62. . Then T believe you attributed about 5 per cent ty Pittston? A. Yes, up to 5, T would sav for 5, Q). And that would be the Clinehfield mine at Monterey and the Virginia mines in Moss No. ? or Moss No, 3? A. Well, total deliveries from Clinehfield, Virginia, ‘Nines, there were some others besides the Moss mine, but that was the principal supplier, Q. About 2 per cent from Pittsburgh Midway? A. Yes, Q. About one per cent from Consol? A. Yes. (). Now, we will have to adjust our Western Kentueky figure, West Kentucky coal figure upward, would we not, after these last two contracts, sinee they are now shipping about 4 million tons a Year to the TVA system, according to their recent figures? A. IT eouldn’t say Yes or no to that. [did say, and this is as far as my recollection carries me, that there was an increase in shipment by West Kentucky as a result of those contracts that are made in °6] and then later they exer- cised that option in ’61 or °62 and they brought the ship- we N19b Testimony of Roland A. KRampmeier Cross ments from West Kentucky up, but this happened 4904 after the period we are moving out of, Q). Hf they were shipping 4 million ton a year to the TVA system, that would be roughly 20 per cent? A. Well, it would be, it would be roughly 17 per cent, something like that. Mr. Rowntree: That is all. The Court: Mr. Kampmeier, in quoting from the hed eral Power Commission report on Distriet 9, for example, west Kentucky, you gave a cost of 12.56 per million BTU. In District 13, southern Tennessee, vou gave a cost of 1582 cents per million BTU. Could vou approximate what that would mean in cost per ton, difference in cost per ton? The Witness: Yes. [f the eoal were of the same quality, which of course it is not, then the difference between those two numbers, which is 3.26 cents, would be roughly 85 conts a ton, but the difference in price per ton is actually considerably more than that because of the fact that one isa different quality than the other, Now, here Lhave to doa little guessing, if vou don’t mind, because T don’t know what the average BTU content would be of either of the coal bought by all utilities, west) Wen tucky, or the coal bought by all utilities in southern Ten nessee, but if one were to assume, for example, a figure of, say, 11,800 BTU per pound as being more or less $395 typieal of west Kentucky, To think that wonld be for west Kentucky, that wouldn't be too bad, then that would mean that the cost per ton for western NKentneky coal would be an average of about, oh, 2.95 a ton, say, whieh doesn’t sound too bad, | mean it seems to cheek ont reason ably. T would say that maybe, | would have thought the cost per ton might have come out slightly lower than that, if so, that would mean that the BTU may be a little lower, but this is about as close as T would venture to a guess. Then on southern Tennessee if one assumes that the 9.” average was 13,200 BTU per pound, which T think was about a ~™ ee 90h Testimony of Roland A. Kam yucier-C ross . / What most of the deliveries on Palmer and Whitwell pay, than that 15.82 cents per million BTU, that would be abou: $4.20 roughly per ton, so that is the difference there, migh: be a dollar twenty-five cents or something like that. The Court: One other question. Karlier in vour dipo: testimony you were testifying as to the percentage, approy, mate percentage of the market that various coal Operators supplied to the TVA market, and you indicated that a proximately 50 per cent of the market was supplied by 4 number of coal operators that Mr. Rayson named as being supposedly some of the larger coal COMPANY Operators, voy named 25 per cent. What | want is what period of tiny were you talking about? The Witness: I was talking about the mental hic. $596 ture that Thad in my mind of the period of the total coal purchases that TVA made for "32 to “62, whieh add up to probably 350 million tons of coal, more or jess. and that 150 million tons of coal more or Jess | divided then out that way. Now, Iam not quite sure Whether, as | under. stood your question correctly, but 1 think T said that the companies that he had asked me about specifically accounted for 25 per cent. The Court: 25 per cent, that is correct. The Witness: Then T named some others that might ae count for roughly another 25 per cent, and then the other 20 per cent would be by unnamed companies, The Court: Yes. The Witness: The proportion actually of 25 per cont, I think, would not only be pretty close to right for the U- year period, but T would say it probably didn't change greatly during that 10-vear period, it: might have heen gradually increasing during that period bet pot ereatly, The Court: This other 50 per cout that eame from other companies, what geographical distribution wonld vom sav that came from? The Witness: Well, T would say that 40 per cont may he out of western Kentueky and Hlinois. maybe 30 per v21b Testimony of Roland A. Kampmeicr Redirect cont out of eastern Kentucky, eastern Tennessee, and the other 30 per cent, well, maybe half of that was sold 4307 in Virginia and the other half from southern Ten nessee and Alabama, The Court: All right. REDIRECT EXAMINATION By Mr. Rayson: (). Mr. Kampmeier, it would be helpful if you would explain to us how you arrived at the 15 to 20 cents per ton differential that you estimate the TVA enjoys over the other utilities ? A. Well, L have said that 1 think my own statement, just judging from all of the various cases where we had had opportunity to make comparisons, and on that it led me to the judgment that the figure might be about 15 cents, and | said that some consideration of the available data ineli- eated it might be a little more, and T was referring there largely to these that I was just quoting which arrived at this figure of 15.7 cents, the figure for cost of coal received by TVA in 1961, and that was, I am speaking of fiseal “61, this was probably calendar *61, but this is cost, and figures fortunately werent changing too fast right along in there, in TVA’s Annual Report it shows the figure of cost of coal at the plant of 18.58. Now, that includes transportation and includes TVA’s receiving costs, and transportation T esti- mated to be about 4.9 cents per million BTU or maybe 5, depending, | would be inelined to round it off to 5, although my estimate Was as near as I could figure was a little 42398 Jess than that. The handling costs are in the order of one for 24000 for 36 months. 4). So it was the shipments on these contract andl term contracts vou had in previews yea Whiel) mide ups sour total of TO11,000 to TVS in 1956. is that correct? “A. That is correct, ves, siY, ), Does that imelude a tonnage from the Nashville Coal Company contract? “A Yes, sir, it ineludes all tonnage ). Do you know how mueh that was ona vearhy ba i~ “A. You mean from Nashville? “Yes. “A. Well, only that portion of if that wa- earried through from previous years Where there was a loner term contract, | Now, you have testified that the Nashville Col Company whieh you acquired in To, had a contract with the TVA ealling for a 1,050,000 tons over ao vear period? “A. That is correct. Tt expired in Toe, “~. And this was a contract that vour compa inherited when vou aequired the Nashville Coal Company, is 2%) 6that correct? “A Yes, sir, that is so. “OQ. Ts the tonnage indicated by that Nashville Coal Company contract indicated in the 1855 and “56 figures? “A. Yes, sir, it is.”’ “Q. The Uniontown Mine te which vou referred was a Nashville Coal Company mine, was it net! “A. That is right. But Nashville Coal Companys ¢ ter was surrendered when we obtained the property State of Tennessee, It was a Tennessee corporation, Then the Nashville Coal, Inc., was created, which is a Kentucky 90h Testimony of Tod, Moffman Direet corporation amd whieh ois a wholly owned subsidiary oy West Wentueky Coal Company, "OQ. Att right, ser What pereentige of the TVA marke cid West Whentueky Coal Company aiid the Nashivitle Coy Company bave a Poe! "AN Gd percent, "OQ Now, in Toe what was vour total tonnage to TV AT "AN OOS SSA tons. "OQ Did vour company have a number of contracts wy TVA whieh came to gnend tn that vear?! “A, You, ot chi. "Q) Did the Nashville Coal Company contraet who vou had inherited from: the Jistin Potter Compan fob terminate during that vear? “N Ves, it dltel. "OQ Do vou reeall when that terminated ! "ON. DP think along about Jame. "O. And what was then the amount of this 965,000 tor. Which vou seld te the TVA whieh was ona spot order basis "AL Tn 1957 there was SES.000 tons, "OQ. So in L956, whereas vou had orders to the TVA f> approximately a million and a half tons, all ona term bass in We vou had term orders with the TVA) for approy mately GOO000 tons and the balanee of vour tonnage to TYS was on the spot order market, is that correct? "AL Phatis correct. Twas unable to continue the Us town eontract after its expiration ona term: basis. "OQ. Tosee. Now, what pereentage of the TVA] mars did vour 1957 sales to TVA represent? "AL 4.9 per cent, "OQ. Now, in 1998 this chart indieates that vour sales‘ the TVA inereased slightly, LOO98 S96 tons, is that eerres’ “AL That is correct; ves, sir. “OQ. And what part of that tonnage constituted the * * * > > > * = 457% Mr. Rayson: We read now, your Honor, the teat) mony of Mark KE. Eastin in April of 1961 in the tr of Pennington against Lewis and others. ' MARK EF. FASTIN DIRECT EXAMINATION Mr. Ravson read the questions and Mr. Com. t! “dy, This is Mr. Mark L. Bastin. is it mot $579 ‘+A. Mark F. 1012b Testimony of Mark E. Eastin—Direct “Q. Mr. Hastin, where do you live? ‘*A. Madisonville, Kentucky. “(. What is your occupation? ‘‘A. Tam president of the West Kentucky Coal Co pany. “(). How long have you been president of the We Kentucky Coal Company? “A. LT was elected president Mareh 16, 1956, * . mS % * * * 4580 “(). What is the history of West Kentucky Co Company? Tlow long has it been in existence? ‘A. Well, it dates back to 1904 and °5 when the Nor American Company, which was a utility holding compar in the Kast, started up a coal field to go on the Ohio Riv in Union County for the purpose of having reserves for th Union Eleetrie Company, which was a utility in St. Loui and from there on the reserves were enlarged and the con pany increased in size. “(. What is the area from which West Kentucky get its production? In other words, where does it operate? ‘A. All in Western Kentucky, and at the present tim we are operating in Hopkins County and Muhlenber 4581 County. We own some property in Webster Count and also have operated in Union County. ‘*Those counties all lie joining each other, they lie elos together. “Q). In its production field, does West Kentueky pro duce mostly in the field of underground mining or in stri mining? “*A. Yes, we have been principally underground miner: since the inception of the company. In fact, we have never done any actual stripping on our own. We have had som coal stripped on our properties by others for us. *(Q. Do you lease any of your coal lands to anybod for production purposes? ‘“A. Yes. We have from time to time had leases with various companies down there. Particularly with respect Aye. iT CARL DAS AE, ARIE NAAR A 6s TEI 1018h Testimony of Mark FE. Eastin—Direct to our strip acreage because we are not strippers, and we have had people who have the equipment and the know-how in the stripping industry to do that stripping for us. “We have also leased some small underground areas to other underground operators. We have at present one small lease with Hatfield-MeCoy Coal Company, which is an un- derground operator. “We have at the present time some coal leased to Pond River Collieries, which is owned by Peabody. That is strip coal. $e We have an acreage of coal leased to the Ruby Chandler Jordon Company, which is a strip operator near Madisonville. We have some coal leased to the Badgett Mining and Stripping Company near Providence which is also strip coal. “(, You mentioned a moment ago that you had some lands leased to Peabody upon which they were conducting a stripping operation. How long — how far back have vou leased coal lands, or a portion of your lands, to Peabody? “A. Sinee the early “40s. They have stripped in two or three, or three or four, different areas on our property, “We entered into one big lease in particular with them in which — at that time they were Sinclair Coal Company of Kansas City, and, of course, that company was merged into Peabody, That goes back to the early 40s when the Homestend Mine was developed on our property. We sold the coal. In fact, we helped in some respects to put the mine in but it was their mine and they operated it on our property. “(. Did you get the coal from their operation or did they sell the coal themselves? “A. We sold the coal. “Q. Now, in the coal that is being prodneed now on this contract, the lease you have with Peabody, what about the sale of the coal? $583 “A. We have the option of selling the coal. Frankly, the coal business has been such of late that 1014b Testimony of Mark E. Eastin—Direct we are selling part of it. We haven’t needed the tonnage. And, consequently, under our lease with them, the ‘V have a right, if we do not sell the coal, to either sell it the mselves or let someone else sell it in order to operate the mine, and a the present time they are selling most of the coal from that mine because we don’t have the business to keep the mine running. “QQ. Is that lease with Peabody similar to the leases Vou have with the other companies that are operating, in the main? “A. Very similar; ves, sir. “Q. Are the mines of West Kentucky mechanized mines’ ‘“*A. Yes, sir, they are all mechanized. “(. Give us a short history of your mechanization. ‘A. We started our mechanization program in late ‘40 and there was a transition from hand-loaded mines to mech. anized mines. I would say that our mines bee: ame completely mechanized in about 1943 or ‘4. “(Q. What about the mechanized equipment, machinery or equipment as to improvement? What have you done with reference to improving the mechanization in your mines! “A. Well, of course, we try to keep abreast of all im- provements. We only have one what is known as a ‘con- tinuous miner’, which we use somewhat as a guinea pig. “The balance of our mechanization is with con- 4584 ventional loading machine, equipment that goes through the eyele of drilling, cutting, shooting, and loading the coal. And in a continuous miner, of course, that is all done in one operation. “*Q. My attention is called to the fact that you stated — I didn’t catch it at the time —that you started mechani- zation in the ’40s or late ’40s and finished in 1943. What is your statement so we have the record clear on that? ““A. What I meant by that was that we put in our first mechanized mine in the late “40s and was suecessful, and so then we gradually converted to complete mechanization —~7""”" ADD MG EAS, MTV IEE OLIN LAOLELI EAI TB 5 AIEEE LOE 1015) Testimony of Mark BE. Eastin—Direct which —I am trusting to my memory, but I think that completion was about °43, 1945. “(Q. You said you started in the late ’40s and finished in ‘43. Do you mean late in the year 1940? “A. Yes, late in the year 1940. It took us two or three years to complete that transition from the hand-loading mine to the mechanical operation. “(). So it was in the latter part of 1940 that vou finished the mechanization in 1945? “A. That is right. (). Was there in the same operating territory formerly a mine company by the name of Nashville Coal Company ? “A. Yes. Nashville Coal Company started as a $585) sales agency or a jobber, coal sales agent, and they eventually became interested in actual production and in properties and acquired coal lands and developed into a right substantial operating company in the field. “(). In the early 1950s where were the operations of the Nashville Coal Company, I mean its territory on land on which it was producing? “A. Principally in the same areas that we were working ourselves. They had mines in Muhlenberg, mines in Hopkins County, mines in Union County and Western Kentucky. “Q. Did the West Kentucky Coal Company aequire the Nashville Coal Company and its properties? “A. Yes, after negotiating during the vear 1955, we entered into a deal with Nashville Coal Company, which was signed September 13, 1959, effective October 1, 1955. “Q. And in that contract did West Kentucky Coal Com- pany acquire all of the properties formerly owned by the Nashville Coal Company ? “A. Yes. We acquired the physical properties, the mine sites, the machinery, their boats, barges, and then we en- tered into a lease on their coal lands. “Q. And you presently hold the lease that they had on coal lands? ‘A. That is correct. pele RRL Diino. — 1016b Testimony of Mark EB. Eastin Direct *Q. You spoke about acquiring barges and soo 4586 which would indicate water transportation. Wa. West Kentucky ever engaged in transportation «: coal by water? “A. Well, yes, for many years ina right substantial wa I explained that the property was originally acquired fy the purpose on the river- aequired on the river for thy purpose of the reserve for the Union Mleetrie Company o: St. Louis, which was also on the river. Being on the river for many years we operated towboats and barges up aw down the rivers. We had river terminals at Memphis Vicksburg, Donaldson, New Orleans, and on down. *Q. Was that use of barge delivery of coal from vou mines continued on continuously or was it abandoned o changed at any time? “A. No. In time we gradually reduced our river activi ties and we had some river movement by others. Then wher the North American Company, under the Seenrities Ey- change Act, was ordered to integrate its properties, befor: they distributed our stock they gave the Poplar Ridge prop. erties, which was our river properties, to the Union Elec. trie Company, ineluding our barges and so forth, and so we we were out of the river business for a number of vears. because we had no property located on the river. “Q. When vou aequired Nashville Coal Company in 75), did they have river moving coal equipment? “A. Yes, operating. 4587 *Q. Was it operating in the name of a subsidiary or division or what, if you reeall? ‘A, They operated under the name of the Potter Towing Company. It was either a partnership or separate corporate entity of some kind, “(). Did the properties that were formerly handled in the name of Potter Towing Company come to West Ken: tucky at the time vou aequired Nashville Coal? ‘*A. That is correct. 1017b Testimony of Mark BE. Bastiu—Direct “@, Since that time have you engaged in the transpor- tution of coal you produced both by water and by rail? “A. That is correct, sir. “(. Into what areas do you deliver coal from your sales on Water transportation? “A. Well, we deliver coal up the Tennessee River as far as Guutersville, Alabama. We deliver coal along the Ohio, down the Mississippi, up the Mississippi by water. “(), Now, you also have rail deliveries ? “A. Oh, ves, all of our mines but one are located on rail. “Q, Over what areas are your sales usually made, the eneral area in Which your coal is distributed? “A. Well, the area, our market area has changed over the years. There was a time when our principal market was inthe South, Due to the inroads that gas made in the {88 markets. I would say our primary market is probably North, Northwest, in the Chicago area, Towa, Wis- consin, We export some coal to Canada, which coal is dumped through a terminal in Chicago, Now, of course, we market coal in Tennessee, and Tam speaking chiefly of West Tennessee, Western Kentucky. We go as far east in Kentucky as Louisville. “(Q. In connection with the marketing of coal, do you sell coal to other companies as well as to customers? “A. Yes, we have always done that to varying degree, = depending upon what the situation was at the time. If we had surplus coal and there was a demand for coal, if we had coal on tracks, we often sold that to various sales agents or jobbers who marketed coal. They had a list of customers and we allowed them a commission on it, “Q. Among other companies that you have sold coal to over the vears, have you sold to Peabody? “A. Yes, we have sold coal to Peabody before the mer- ger of Sinelair with Peabody. We sold them substantial coal, a substantial amount of coal, and then after the merger, when the Sinelair Coal Company became Peabody and when their sales company, the Southern Coal Company, heeame “= 1018b Testimony of Mark FE. Eastin—Direct Peabody, we have continued to sell coal to I eabody, whe they needed the coal or when it suited us mutually te ; in that manner, “QQ. Has there been any difference in recent Years o) your sales policy in sales of coal to Peabody fron 4989 what has been true throughout many Vvears! “A. No, sir, there has been no difference in thy policy, The demand for coal might change the situation slightly. That is if they don't need the coal, We can't ver well sell it to them, or if we don’t need the coal, we wouldy’ buy coal from them, when we had coal in our own Mines, but the poliey has not been changed in any way. “Q. Mr. Eastin, have you prepared at our suggestion » tabulation showing the production of coal by West Ken tucky? “A. Yes, sir, | have a copy of that." Mr. Rayson: We offer that as the next exhibit, your Honor. The Court: Three hundred ninety-three, (The tabulation referred to above was marked D393 and received in evidence.) Mr. Rayson: ‘These figures, if I may explain, your Honor, in the last column marked ‘national tons’ are take: from the publications that are already in the record. ‘Now, the figures under ‘West Kentueky/Nashville’ showing the number of tons produced per vear come from the company records, and these have been examined and are in the record, but not combined in this form. “(. Will you explain, Mr. Eastin, what vou mean or what we mean by this tabulation under production? How do you get the production and what figures are in 4590 cluded? “A. Well, in these particular figures they repre sent the tons of coal that were actually produced by us from our properties, Of course, there are two or three ways of figuring. we 1019b Testimony of Mark EB, Kastin—Divect “(Q, That is the reason I want to get it. How is this figured? “A. Well, it is actually a count of the tons of coal pro duced from our property. Now, that does not include coal that Was mined from our properties by someone else under these leases, and, of course, it does not include coal pur- chased by us from others for sale. That would be sale ton- nage. This is actually production tonnage we produced ourselves. “(, Your own employees produced ? “A. Correct, sir. “Qf notice, beginning with the year of “dR and “54, under this column marked * West Kentucky/Nashiville’, there is but one figure for each year, That is West Kentucky pro- duction because it was before you acquired Nashville Coal, Ine., is that right? “A. That is correct, sir. “(. Now, beginning with 1955, while West Kentucky had heen the owner of Nashville, have you separate records showing the amounts produced and so on: “A, Yes. “Q. Is the figure in 1955 and so on through the $591 vears where it says West Kentucky, the coal actually produced by what was West Kentueky Mines before and Nashville by what was — by the Nashville Mines before? “4. That's correct. The Nashville figure, of course, is for October Ist in 1955.7" Mr. Rowntree: I wonder if counsel can reconcile those production figures with those of Mr. Hicks. Mr. Rayson: I think that the witness here explains that point there as Mr. Eastin acknowledge in his testimony there is some difference in it and the reason for that dif- ference, as I understand it, is that there is coal produeed from the West Kentueky Coal Company and Nashville Coal Company Mine, there is also coal produced from the Nash- ville Coal Company properties under contracts with others. I think Mr. MeMahon referred to some of that today, and 1020b Testimony of Mark EB. Eastin—Direct there is also coal produced by others completely oi? of th property and sold by West Kentucky Coal Company, Mr. Rowntree: There are production figures on this char Mr. Rayson: What? Mr. Rowntree: These are production? Mr. Rayson: These are actually produced tonnages an) as T understand it, now, T think that their annual report shows a prodneed tonnage which may include some of this other coal that may be produced from their other 4592 lands under contract, that is. * * sd 7 * * * * * + “Q. Mr. Eastin, in its production of coal and its operg tion, has West Kentueky operated at a profit every year from its earliest days down to the present time? “A. Well, hardly. T probably should correct that and say a lot of the time we unfortunately operated at a loss. **A review of the records of the company since its incep- tion back in 1904 and °05, showed that they started off with losses in the early years. That was extended for seven or eight years, and then there have been other periods 4593 in the history of the company where vou have had losses for as many as four or fire years in a row, and then there’s heen periods of one or two vears when vou would have losses seattered through there. “Unfortunately, the coal business, as T have observed it. and as T know it, is full of vallevs and peaks. Sometimes it is described as a business where it’s either feast or famine, and we have hoped that that would level out in time, hut we still have the wide fluetuation, and in those periods when demand is light, why, coal companies sometimes have some bad information for their stockholders, T might put it that way. “(. Are there certain times of expense or charges, over- head, and so forth that must go on regardless of volume of sales? ‘*A. Oh, yes, sir. That is one of the problems of our So7o7~” = 4 PALER EOE OL IEEE BLOC LIL GLIAL EE CDI LEAL AN, 1021b Testimony of Mark BE. Rastin-—Direct dustry, particularly in the Mid-West. You have got to duce your coal and market it. You can’t store it well the mines, and I refer in that respect particularly to coals oduced in the Mid-West, because there is a tendeney, less they are stored very carefully and impacted and red for properly, for this coal to ignite, to burn, and not ly will it catch fire, there is the expense of putting it on e ground and picking it up. ‘Consequently what happens, vou run until you 94 get your tracks full, that is of coal, assuming the market is slow, and then vou have to move that coal run again. Well, then von might move the sizes that are demand, current demand, and there may be some sizes ere that you might refer to as resultait sizes that are left track, and in time those resultant sizes will develop to mere you can’t run your mines, and vou have got obliga- ms for other sizes, so it creates problems. “Tt is not like other industries where vou can produce ur product and store it and wait for a market to develop. lat situation is not quite as broad in the strip mining end our business as it is in the underground end. “(. Explain, please. “A. Well, in a strip mine, you can go ahead and uneover a considerable degree the coal, and it is there for loading. “Q. Just take off the overburden? “A. Just take off the overburden and leave it in what ey call the pits. “OQ. Yes, sir. “A. And when the market is there vou put vour shovels there and load it out and rush your production up to take re of the situation. “But in an underground mine, which our company is principally operators, or which we operate mines, % you have got to move that coal every day or the mine ean’t run the next day. “(Q. During the vears that are shown on this exhibit, lich runs from the years running from 1953 through 1960, 1022b Testimony of Mark E. Eastin—Direct were any of those years, were the operations of the Wes Kentucky during any of those years operated at a loss’ “*A. Well, yes. We operated at a loss in 1960, whieh is right cutharsnecing. It is always embarrassing — well, | said it is a little embarrassing to the president of the com. pany to have to explain losses. “Q. You always have to do it to stockholders, so explai to us, please. ‘SA. With 6,000 or 7,000 stockholders, and T even hay to explain it to my family and young son why we lost money “(. Well, go ahead. “A. Anyhow, as I analyze the situation in this country, if we have a national economy of coal production at a lev of about 500,000,000 tons, the coal industry is in a healthy state, and IT would say practically all coal companies cai. operate satisfactorily and at a reasonable profit. ‘*Now, when the national production falls below 500,000, 000 tons, as it did in ’58, down to 405,000,000 tons, that is a loss of 95,000,000 — no, I beg your pardon — it fel] 4596 from 490,000,000 tons down to 405,000,000 tons. Tha: is a loss of 85,000,000 tons. ‘Then the industry gets into what we refer as sometimes as a depressed state. That is, there is more ‘apacity, there is more coal than there is business. ‘Well, of course, every fellow feels that maybe he should operate his properties, and he’s got good reasons to, Mayle he owes the banker, or he has mor tgages of other types that he’s got to take eare of, so he makes a special effort to operate his properties, and in so doing, the effect is that you begin to depress the market. “So, you have got your fixed expenses that you men- tioned a moment ago, and you want to make these fixed costs, so you start trying to find business to operate your mines and the other fellow, he’s in the same shape, and you grad- ually work the thing down until your realization has suf: fered, and the first thing you know you are in red figures. ‘*Now, that is not the fault of any one particular party. — cre DAR TITS SATS ONE TA SSIES LER OLEATE 1023b Testimony of Mark E. Eastin—Direct t is a collective action that develops as a result of the ureumstances. “(Q. What about the competition for markets when you ave this overproduction or an underconsumption, which- ver you want to say? “A. It becomes very intense. (). Ordinarily will it reduce the prices? Will it 97 cause a reduction in prices? “A. Very definitely, yes, sir, substantial. The onger it lasts, why, it seems the deeper the prices go. “(. Let’s take your figures for 1956. I see you have hem in front ef you. Maybe we had better begin with 1955. They are not shown on this exhibit but they can be marked m it. “Did West Kentucky during the vear 1955 operate at a wofit or loss? “A. We operated at a profit in 1955 of ‘£938,000 on a tional production of 470,000,000 tons. “(. Tell us about the year 1956. “A. We had a profit of $1,465,000 with a 500,000,000 ational production. “(Q. Now, 1957? “A. We had a profit of $1,254,000 with a national pro- luction of 490,000,000 tons. “(Q. Now we come to 1958 where vou told us there was i loss. “A. We had a loss of $204,000 with a national produe- ion of only 405,000,000 tons. “(). Let’s take 1959. “A. Then in 1959 we got back in the profit column with + 410,000,000 ton preduction and, incidentally, $410,000 profit. 1598 “QO. Now, what about 1960, if vou have it there? A. We had $749,000 profit and the national pro- luction was 413,000,000 tons. “Q. The 413,000,000 tons production is the national production ? 1LO24b Testimony of Mark Bo Mastin Divect \. That is rieht. "Q). Not your produetion? \. ‘That is rieht, "OQ Gio ahead, vou started to explain, "AL The tmanagement would want to take eredit toy having made some tmprovements that got us in the profit columm in those vears, if bomiay. "Q. Naturally. Mr. Mastin, was the loss suffered hy West Kentucky Coal Company in 1958 die toa deerease ) siles price carried on for the purpose of cbrivine Operators, uny operators, out of business? "AL No sir never, We were just trying to look out for West Wentueky Coal Company, "CQ Didh vou have any agreement or nderstandine of any kind with any other eoal producers on any reduetion of price? ‘*A. No, sir. “QQ. Did you have any agreement amone coal producers to reduce prices ? "AL No. sir, never, 4009 “OQ. So Farias vou know did any aereement of that sort exist in the industry? "AL No, there wasn't, that we ever heard of, “Q). TP it did vou people did not participate therein? “AL No. sir in fact, we are trying to improve our reali zation, not hurt it. "QQ. Something has been said in this reeord about a eon tract for the sale of coal which the Tampa Kleetrie Com pany had with certain producers of coal in the area in whieh vou operate. “Did West Kentueky Coal Company have anything to do with the original entry or making of that contract? “AL Noysir. The first contract with Tampa Mlectrie was made by the Nashville Coal Company on May 23, 1955, which was before we acquired the property. “Q. While that was before vou acquired the property. as you say, did you people enter into negotiations er par- Lob Testimony of Mark bo Mastin Direct ticipate in any Way tn those negotiations bor that contract? “A. No, sir, We knew nothing about at, “), Anything to do with the prreniye or the price per ton that that coal was to be furnished at? “A No, sir. 6. Consulted about ita any was! a, No, war. “And you, Weet WKeatueky, wire not in any wise 1600 interested in the making of that contract? ‘A. No, sir. “Q. When you purchased when Tsay ‘you’, Pomniean West Kentueks purchased the Nashville Coal Company, the Nashville Coal Company ablreads had that contract? “A. That is correct, “(y, Did you acquire that as one of the tem that was ae quired in the acquisition of the corpus “A Phat is eorreet, «ar, “0, After having acquired that contract, thing, was done with reference to that contract tb Wee Kentucky? “A Wello initial delivertes were to start oon that con ract in Mareh, 1957. We aequired Nashville Co yay Oetober 1, 1950, thisat j when Wwe ton) the propertie Cyery \f ey; had to he done ty trol ready to deli er egal to é h WIN Ta There was no coal moving down there at that tine. ‘feavo much had to be done, floating equings for equipment, unloading equipment he constructed, so we immediate) vis? 2 (Jnterposing) How would the delir ory of been made? “A. Tt would have been loaded on barges at f Jontow om - acky, floated downstream on the Ohio and Missi- et corpiee cote) tbe ground, of that is what vou hace on mine “Now, what happened with reference to thre eontract after vou had started to get ready te fulfill at? Dd thing oeeus with reference to the contri fs ae, | Well, we were tiabkatge a geod elowe book at the contract, We disd or attenns ier f rine ¢ tract, ay ‘| ‘ hiceed sudt fopebbigent Preotga evcit 'f eontract was tlegadlor oo soled) gareed weave ryeot bere yeti 6 r part Sod prrees ot Wars ae Eb Near count ' valdotoft money to get ready fo mince t Pee a ' f twas peorptedd crt that viride a ofiregs sored Verspeditiye , exjeted that most any troe that tt On tMiareet they pight Want tor corn soleotige seteed ony ? the Tampa Klectrie Company that we might b ! %? Leswy, Sev ten spoecak. sored th of wee tysaed ’ 4 tf . t ehootsld bee goaecle a bareedinge eer ‘The re were one op two tiseteor ’ vi- fom yf the eontract, that wer thee entered Phiten pyergrest aah iat j rif ‘os THK SOTNe ebay gand legal on both party YY During the period of those reget were trving te make certs PH! bog eontraet, did anvihing ? Se strpehee On the mpftpatjeor, oor r A. There was considerable negotiating : Blick Was Ohisnecesst il, and in time 7 ' t ‘ter they were terminating t : i$ ment made of the cont: ther or a a oat ° it Was a Vaid Pia: SebSie ores Sh 1028b Testimony of Mark E. Eastin—Direct “Q. Now, the lawsuit that was filed to determine th validity of that contraet which your attorneys questione was filed not by you but by Tampa? ‘‘A. That is correct.’ ““Q. IT take it you did not request Tampa to cancel th contract? “A. No, sir. We implored them to continue to negotiat With us and work with us, and we had every intent of fillin: the contract some way, somehow, but we wanted a firm ayy binding contract before we started making deliveries unde it. “QQ. Was any coal ever shipped by you on that contract’ ‘*A. Not on the contract; no, sir, “(). You did have this spot order that vou mentioned’ ‘A. That is correct, “Q. According to this reeord some time after this, short. ly after probably, Tampa Eleetrie entered into a contract with Peabody Coal Company. Did vou participate in tha entry, have anything to do with it? “A. No, sir, none at all. In fact. we felt that that bnsi. ness, having—we had bought that business from Nashville Coal Company, had pioneered the movement down 4605 there, and we felt that was our business and we did not like it much when Peabody went in and modded into it and finally made a contract. That is the situation. “Q. So that you did not cooperate or have anything to do with Peabody obtaining that contract? ‘“A. No, sir, We didn't cooperate to the extent. that they came to us and wanted to use our unloading facility at Tampa and we refused to do it. They took the position it would be better for the unloading equinment to be work. ing than sitting there rusting, but we didn’t want. them moving coal to Tampa Electric. We wanted to work that out for ourselves, “(Q. Did you take any attitude in connection with the negotiating between West Kentucky and Tampar or the procedure that oceurred for the purpose of getting released 1029b Testimony of Mark FE. Kastin—Direct from that contract so that you could use, using the expres- sion used here, dump coal that otherwise would have goue there into the T'VA market and thereby depress it? “A. Oh, no, sir, never. “Q, Did you ever have any such purpose or motive at all as far as West Kentucky was concerned? “A, Certainly not. “Q. Ever have any negotiations with anybody or look- ing for any accomplishment of any such purpose? ‘AL No, sir, never. 4606 “QQ. Or any intent upon your part to do anything of that sort? “A, No, sir.’’ * & * * ¥ * a * > ~ 4611 “(. After time went on and some time after Pea- body did get in there and take this market away from you, did you make an arrangement in which vou might ship some coal down there? “A. Yes, sir. We entered into an arrangement with Pea- body whereby we would share one-half of the tonnage. “Q. Has any coal ever been shipped on that arrange- ment? “A. No, sir; not vet. “Q. Do vou know that there is existing im Memphis recently constructed a municipal steam generating plant? “AL Oh, ves. “Q. Did West Kentucky enter into competition fo obtain sales of any of its coal to the Memphis Steam Plant? “A. Yes, sir. “QO. As a result of those negotiations, was West Ken- tueky awarded a contract? “*A. Yes, we were awarded a contract for—TI 4612 think it was for ten vears at a rate of about 25,000 tons per month. “(. And vou are engaged in delivering on that contract now? “A. Yes, sir. LOS0b Testimony of Mark BE. Eastin — Direct “QW. Did the entry of West Kentueky into that contrac have as a purpose any depression or interfering with the coal market in East Tennessee or in any other TVA ares’ “AL Certainly none that | knew of. leant Cone! Ve oF it. “QQ. Did other people also get awards at the same tim from the Memphis Steam people? “AL Yes, sir, they awarded the business to three eerns, eo “Q. Can you name them for us, please? "AL Peabody Coal Company and Pittsburgh Midws Coal Company. “Q. Somebody said something in this record a dav or two age, maybe it was further back in the depositions, | don't reeall, about Kirkpatrick Company being awarded ; is in Memphis, and they have been there for many vears and they don't have faeilities for putting coal on water They ean ship their eoal to Grand Rivers and load it water there, but because ef the rate between the: Vie 4613 0 mines and Grand Rivers. they wouldn't be comper tive. They aeted as sales agents In the thing. Tha: is, they acted as salesmen and we agreed for their heln ir selling the order, that we weuld pay them, T think it was e's conts a ton as a commission on one third of eur awant “OQ. When vou sav we’) are you referring to West Ke tueky Coal Company ! "AL Oh, ves, West Kentueky Coal Company. “Q. That was vour own contraet with them and not th group? "AL That is right, “QQ. You had ne joint agreement? A. Ne. "OQ. Are you shipping on that order er on that eonteact to Memophis? “A. Yea. ———s AOA EA NN EAAN NE TS AABN RIG AE SENET Ri MARDEN ATR ht RO LS Tb Testimony of Mark BF. Bastin’ Direct “©. lave you sold eoal te either of the ether parties vho received Inds on there, on that coutraet or on that ward, for delivery under their contract to Memphis? “AL Yes, We ive been shipping Peabody's order of late or them by agreement with the Memphis pewer people and greement between ourselves and Peabody. “QQ. Se vou are selling toe Peabody the eoal that they vould furnish on that eontraet? ‘AL Thatois right. ou "dQ. Now, was there any agreement in connection with that sale or that eoal that vou made to Peabody, hat that was done fer enabling Peabody te dump other oal inte the markets and thereby depress the markets? "AL Oh, ne, sir. "Qo Any sueh understanding er promise or agreement fany kind? oA, No, sir, “Qo ods that simply a straight sale by vou to Peabody f that quantity ef coal? "AS That ois right. You understand we make the de Very, toa. "OQ. Yes. You sell the coal and vou make the delivery fat? “A. That is right. "QQ. Does that coal eome trem veur own preduetion ! ‘ oe A. From our Unientown Mine. "QQ. So that veu are selling it as a delivered eoal to femphis? "AL Thats right. But Memphis pays Peabody for their eal They pay us. “Q. In other words, veu haven't even taken over the wntract then? Tt is a eontraet between Peabody and Mem his and vou sell the eoal and vou get veur eompensa ion from the person to whem vou sell it, namely Pea body? a "AL That is right. "Q. You say there are no side agreements of any Bian: ae 1032b Testimony of Mark E. Bastin Direct thing with reference to any other deliveries or sales in C0, nection with that? ‘*A. No, sir. “Q. Mr. Eastin, what about sales of coal to Tennesse Valley Authority? Yesterday I believe your man Iloffmy stated they began the sales in the early “40s somewher Have vou personally handled those sales to TVA ; “A. No, sir. Mr. Hoffman, that is his account. THe Jools after the sales to TVA, “A. Have you done any of the negotiating for sales coal by West Kentucky to Tennessee Valley Authority! "-,. No, sir. “Q. So far as you know has there ever heen any cutting of prices or depressing of prices in the sales that. hay been made by West Kentucky to TVA for the purpose o: forcing out some small operators or other operators and take them away from the TVA market? “A. No, sir, never. “). Ever been disenssed in your presence as presiden: of the company? “AL Never, “Q. So far as you know has there ever been any disens. sion among any company personnel? 4616 ‘“*A. No, sir. “(Q. Any authority ever beon granted by the Wes Kentueky Coal Company to do any such thing? ‘A. No, sir. “(). As far as the actual sales and negotiations or sub- mitting of bids, Mr. Hoffman looks after that? “fA. That is correct, sir, “(). Does the West Kentueky Coal Company have a col- lective bargarining agreement with the United Mine Work. ers of America? ‘6A. Yes, sir. “). When did West Kentucky first enter into a collec. tive bargaining agreement with the union, United Mine Workers of Ameri a? 1083b Testimony of Mark EB. Rastin—Direct “A. Oh, our first contract was signed with the United Mine Workers on February 15, 1954, effeetive Mareh 1, 1954. “(), Did you personally sign the contract or was it somebody else in the company? “A. No, sir. The then president signed the contract. “(. Was that Mr. Hooper Love? “A, Yes. “(). Is he dead now? “A. Yes, sir. “Q. Before that contract was signed, what, if anything, did you do to ascertain whether or not the United $17 Mine Workers of America had been chosen as a col- lective bargaining agent by vour employees? “A. Well, the United Mine Workers first advised us in writing that they represented a substantial portion of our emplovees and asked us to enter into—to bargain with them. We replied by letter that we would bargain if they could show us that they represented the majority of our employees, From there on there were a number of meet- ings held, which T participated in, in which they brought in membership cards, signed eards, and at first we took the position that they didn’t represent a majority of our em- nloyees. There were certain discrepancies in some of these eards as we saw them and we — “(). What tvpe of discrepancies, just briefly? “A. Well, the names didn’t gibe with our payroll names in some instanees. Tn fact, T reeall there were some ecards presented where we knew the men couldn't even write that were signed. Well, we said, ‘We ean’t aeeept those eards.’ “Well, the cards were returned and the man made his mark and they brought them in later and we were satisfied that they were valid ecards. “There would be oceasions where mavhe a eard would he, for example, signed ‘Harry Jones’, when our pavroll records showed that we — didn’t show us having a Harrv Jones, might have H. G. Jones. We said. ‘We don’t 4618 have a Harry Jones.’ 1034b Testimony of Mark E. Eastin—Direct ‘They said, ‘That is the fellow so-and-so.’ ‘**Well, you will have to correct that.’ ‘*So the card would go back and then eventually come back signed properly. We compared the cards to the signatures that we had in our payroll department, and in time about — I think the last meeting was about December 10, °53, it became definitely evident that they had a majority, repre. sented a majority of our employees. “Q. That having been ascertained, did vou then enter into the collective bargaining agreement? ‘‘A. Yes, sir, we signed the contract in February, the following February. “*Q. Since then there have been several amendments made to the 1950 collective bargaining agreement of the United Mine Workers. Have you people joined in the those amendments? ‘‘A. Yes, sir. We have continued right through. ‘““(). Have you signed any of the extensions or amenda- tory agreements personally? ‘*A. TI signed the second one, yes, sir. After the original contract with the union, I signed the next one. “Q. And the others have been signed by others as rep- resentatives of your company? “‘A. Well, the president signed the first one. ] 4619 signed the second one, and T think, Tam sure by that time we had joined the coal producers, the West Ken- tueky Coal Producers Association, who have signed for us since. They represent the other union — the other opera- tors who have contraets with the UMW.A. ‘*(). But your ecompariy has been and is now, has been since 1950, December 54? ‘*A. Fifty-four. “*(). And is now a party to this United Mine Workers Collective Bargaining Agreement? ‘*A. That is right. ‘“*Q. During the period that you people have been under this contract of the United Mine Workers of America, has o7~ ici BART DESI LI WES SAAS S PEER IOC LITE INT SS MISTS ila ate 1035b Deposition of T. J. Hoffman—Direct that organization or any officials thereof attempted to dic- tate to you or your company selling policies? “A. Oh, no, never. “Q, Pricing? “A. No, sir. “Q, Tried to dictate anything in connection with the man- agement prerogatives? “A. No, sir. “(Q, Have they influenced pricing policies, that is when you would price to TVA, that you had to meet certain stan- dards or anything of that sort? “A. No, sir, never. §20 ‘(. Have you or your company at any time since 1950 enter into any agreement of any type whatsoever or done anything at all toward a joint policy with Island Creek Coal Company, Peabody Coal Company, Pittston Coal Company, Pittsburgh-Midway Company, Pittsburgh Consolidation Company or any other coal company for the purpose of arranging prices for the sale of coal in the territory in which you sell? ‘A. No, sir. “Q. Or for the purpose or with the intent either of depressing the market for the sales of coal in the area? “A. No, sir. “Q. As far as you are aware, has anything been done by West Kentucky with reference to accomplishing the results T have just referred to? “A> No, sir, nothing that T know of. “Q. Or taking the same questions, premise, for the pur- pose of eliminating from the industry any coal producer, large or small? ‘“A. No, sir. * * * + * ~ * * . * 4123. Mr. Rayson: Your Honor, we turn now to a deno- sition of Mr. T. J. Hoffman, whose testimony in the Pennington case has already been read. This testimony was taken by Mr. Van Derveer in this case on September 11, i “i Picts... eee 1036b Deposition of T. J. Hoff man—Direct 1962. We expect to read a part of this only, beginning g Page 76. ; T. J. HOFFMAN DIRECT EXAMINATION (Mr. Rayson read the questions and Mr. Owens {jy answers. ) “(Q. Will you state your name, please, sir? “A. T. J. Hoffman. “QQ. By whom are you employed? “A. West Kentucky Coal Company.’ “@. In your sales capacity, have you handled the nego. tia tionn in behalf of your employer with the Tennessee Val. ley Authority for the sale of coal? **A. Yes, sir, I do. “Q. Now, Mr. Hoffman, are you the individual in thy company who handles that phase of West Ke ntucky Coal Company ’s business? ‘‘A. Yes, sir. 4624 “Q. Does anyone else, is there anyone else csih you ee directs that or handles it in any wav! “A. No, sir, they do not.” Mr. tal Turn to Page 78, Line 22. “Q. Did von negotiate the two present contracts “A. Well, I didn’t negotiate any contracts. T eels a bid. “Q. Perhaps IT used the wrong word. Just in vour own words, explain to us. “A. And received an award. “(Q. Just explain to us in your own words how it eam about that the West Kentucky Coal Company now has thes contracts ? ‘‘A. We received an invitation to bid if we had coal to offer. We had coal to offer and we filed a bid. It was a public opening. There were at least 50 people there that took down the bids. ““(). Where did this take place? _—— 1037b Deposition of T. J. Hoffman—Direct “A. At Chattanooga. “(, And you are referring now to which contract? “A. Well, all of them. . All right, sir. “A. All the contracts that I ever made with them. “Q. All right, sir. Go ahead. “A. And we received an award. 4625 “Q. Mr. Eastin has told us that you have two con- tracts with the TVA today, I believe? “A Yes, sir. “Q. And what do those contracts call for or provide for? “A, One contract ealls for 850,000 tons of coal annually and the other ealls for 2,000,000 tons of coal annually. “Q. After the exercise of an option, 1 believe? “A. Well, I don’t know that vou’d call it an option. The way the bid was filed, it was all filed at one time at a public opening. The offering was for 2,000,000 tons of coal annu- ally but feeling, perhaps, the quantity might prevent an award beeause they were only going to buy so much coal, I specified in the bid that we would accept an award for 1,000,000 tons and they elected to buy the million tons with a deferred award perhaps on the second million. It is all included in one bid.’’ Mr. Rayson: Turn to Page 81, Line 19. “(). What part of the 850,000 contract or the 2,000,000 contract, What part of that coal, if any, goes to the Widows Creek Steam Plant? ‘A. None. We have never shipped a pound of coal to the Widows Creek Steam Plant. *(). Do your records here show where this coal 4626 was shipped? A. Oh, ves. T ean tell you where it was shipped. “(). Where was it shipped? “A. It was shipped to Shawnee, it was shipped to Grand Rivers, it was shipped to Gallatin, and at the present time we are shipping coal to Florence, Alabama, for the Colbert Steam Plant. That’s the only plants we have ever shipped. Pains nt se ite 1038b Deposition of T. J. Hoffman—Direct “*Q. Now, you know along in mid-1960 there was an Lay freight reduction for the shipping of coal from Gallas to Widows Creek, was there not? “A. That’s right. “*Q. Tell us what you know about that. “A. Yes, sir. But we never shipped any coal to Widow: Creek. “*Q. Just in your own words, Mr. Hoffman, tell us how that freight rate reduction came about. “A. Well, I couldn’t tell you how it came about heeaus: I had nothing to do with negotiating that rate? “*(. You make it your business to stay familiar wit) those things, do you not? “A. First I knew that the rate had been nominated or agreed to by the L&N Railroad was when T received » written instrument from the TVA about two weeks prio} to the opening of bids specifying the rate. KNvery man that received an invitation to bid also received a notic 4627 of that rate. “Q. What do you mean when you sev ou received an ‘instrument’, a letter? ““A. Well, no, it was a printed form just like the invita- tion to bid. It was an addendum, or whatever you want to call it. * * * * * * * * * * “*Q. In fairness, Mr. Hoffman, let’s recapitulate and try to clear it up. The rate, do T understand vou correctly, « put it in your own words, it was from where to vhere? “*A. IT don’t reeall, I'd have to look it up, but the present rate was or this established rate, which was a Section 2 rate, was $1.55 from Western Kentueky mines to 4628 Widows Creek or Bridgeport, Alabama, that’s where the plant is located, and it was predicated on a volume movement, and as I understand it the volume now has arrived at a point where the rate from Western Kentueky is now $1.50 a net ton. * * * * * * * * * s — a EE ARLE ASAI MEN LSE BI LL ERNE 1039b Deposition of T. J. Hoffman—Direct “Q, What difference did it make in your bid that there had been a reduction to $1.55? “A. Well, as far as my bid was concerned it made. no difference at all because I offered the coal to them F.O.B. ear mines and they decided and always decide where they are going to ship the coal. I have no control over that. “Q. They simply notified you that there had been a reduction, is that what you are saving? “A, No, sir. They notified, I suppose, because they didn’t want any bidder to feel that, for instance, that he was working in the blind, that he didn’t know what his rate was going to be on what coal that may be offered. IT suppose that was the object. “(). They notified you then that the rate of a shipment of coal on the L&N would be $1.55 per tone from your 4829 mines here in West Kentucky to Bridgeport, Ala- bama? “A, From all mines in West Kentucky, not only mine.” Mr. Rayson: Going to the bottom of Page 85, “Q. Did you make a bid and submit it to the TVA for an F.O.B. mine price? A. Yes, we submitted a bid. “Q. Did you get the bid? “A. T got an award, not all of it. “Q. What award did vou get and for how much? “A. Well, I think T got an award, as far as T reeall it, 850,000 tons a vear. “Q. Which is the contract that was 15 vears at 850,000 tons annually ? “A. That’s right. “Q. Now, then in obtaining that bid for the 850,000 tons, was it, from the Tennessee Valley Authority’s viewpoint, hased upon a freight rate of $1.55? “A. No. Tam telling you they made an award and never took a pound of coal to Widows Creek. All the eoal went to Gallatin, Shawnee and Padueah, and to Grand Rivers. “Q. On that contract? Py 6 I “T think we reached an agreement on it in the latter part of “D8, and T think we reduced it to ritten contraet -— ves, we did —-in the early part of °59, February, €'d say, of °59, “Q. Now, what have been vour efforts wit the Tampa Electric Company to sell eoal to that eompany doing bnsi- ness in — “A. They have not been very active, Frankly, we 4652 went to sleep on the job there a little bit and another coal company stepped in there and scooped us, and — Testimony of S. L. Jewell—Direct 1053b stepped in and got a contract. We knew them, and we called on them but we hadn't realized Florida was too good a pros- pect. We went down occasionally and called on the utilities, We knew Tampa Electric, but we had not gotten them into any serious negotiations with us, and another company did, the Potter Towing Company seeured a contract. “Q. lxcuse me. Was that the company that was owned by Nashville Coal Company? “A. It was. “Q. Tt was the Nashville Coal Company then, owned by Judson Potter? “A. Justin Potter. “Q. And what was the name of the transportation com pany that entered into the contract? “AL As T reeall, Potter Towing Company. “Q. What did you do after you found that that eon- tract had been entered into? “A. We congratulated Mr. Potter and continued to eall on Mr. Maetnnes and tell him the next time he wanted to buy coal, we hoped we would be more ready than we were this time to seriously negotiate with him. “We did not at that early stage have water-carrving facilities, and the Potter Towing Company did, and 4693 they beat us to the draw, but we kept in touch, becanse these utilities grow and build additional units and plants. “Outside of that, Tean’t say we did anything except keep in contact and hope for opportunity to do business at a later date. “Q. You spoke of Mr. MacInnes. Who is he? “A. He is president of the Tampa Electrie Company. Excuse me. I thought that had been brought out. “Q. Did you later have further discussions and nego- tiations with the Tampa Electric Company, and, if so, how did they come about and when? 1054b Testimony of S. L. Jewell—Direct “A. Well, you said did T later. That last question you asked me if in the early °50s or mid-'30s. “Q. That’s right. “AL T told you what we had done back for a period of time. Iam not sure of all of these dates. T think 1957, we heard and it was generally heard by the gossip route and maybe in the papers that the company that had taken over the original Potter Towing Company contract with Tampa Klectrie had given notice to Tampa that it was not going to perform on the contract. “(). Was that West Kentucky Coal Company? “AL It was West Kentucky, which we understood had purehased Nashville Coal Company, and its subsidiary, the Potter Towing Company. 4654 “Of course, that re-aroused our interest, and we got active again in our contacts with Tampa Electric Company. We went to see Mr. Maelnnes, and tried again to sell him coal, and continued to try. “Q. When you say you went to Tampa Electric and undertook to negotiate with Mr. MaecInnes? ‘fA. LT will have to qualify, I think it was in the early fall of 1957. Lam almost positive that is when that was. “Q. Now, what resulted after these discussions that you had with Mr. MaeInnes at that time? ‘SA. Well, after many contacts, many discussions, it resulted in what we called a sort of a test order or some- thing like —we shipped a total of 140,000 tons, 1 believe on it, which we secured from the Tap. Eleetrie Company. “We were not ready to negotiate seriously on a eontraet, and Tampa Eleectrie wasn't either, but we wanted them to test our coal, and they were willing 0 test it, and we wanted to test out our experience of river shipments and transferring the shipments and shipping them across the Gulf before we committed ourselves to a substantial long: term contract, so that order was secured for that purpose and granted for that purpose. “Q. Mr. Jewell, did you go to the Tampa Electrie Com- Sf a2 BLE BEML GIN LIE REDE AEE RE IRE NESTE NEE INR LENA BD LINL 1055b Testimony of S. L. Jewell- Direct pany and negotiate with those people at the sug- 4655 gestion of the United Mine Workers? ‘“A. No, sir. “(). Did you go there to negotiate with Tampa Electric Company at the suggestion of anyone with West Kentucky Coal Company? “A. No, sir, not with the suggestion of them and not with the knowledge of any one of them so far as we have any way of knowing. HQ), Now, when was this 140,000 tons shipped to Tampa? “A. That was — took us about a year to get that order, so it must have been — started in late ’d8 and extended over into °59, probably into the spring of °59, “It was a make-shift arrangement we had, and we had to move pretty slowly. We weren't really equipped to han dle it. We wanted to get some coal in their hands. “Q. And how did you get it to Tampa? “A. We had at that time established a barge company which is a subsidiary of Peabody Coal Company named the Mid-American Transportation Company, which is a barge line company. We shipped it down the river by that method. “We transferred the coal from barges to Gulf transit equipment at the Burnside Transfer facility owned and operated by Olin’ Mathieson Corporation at Burnside, Louisiana. “Tt was shipped from that point in open vessels 4656 without loading or unloading facilities to Tampa by an arrangement we made with the Marine Transit Company of Tampa, Florida, who were engaged in trans- porting products across the Gulf, in one way or the other, and it was unloaded at the Tampa dock with a crane and clamshell that we sent down from Western Kentucky, down this hundred some-odd thousand tons of coal, because we were unable to get arrangements for the use of the un- loading facility that was on the dock, which was owned, inei- dentally, by West Kentucky Coal Company. “We had attempted to get the use of it through some lease eres 0 1056b Testimony of SL. Jewell Direct arrangement, and we were unable to secure that equipment from them, "Q. Did vou also - “A. We had the order, we took the gamble, We thoneh we could surely get that equipment. They are a rather friendly company, and when we got it, we couldn't vet the equipment, and we did something that was Very unprofit. able. Wo had to ship a erane down there, and unload it to ship our coal, "Q). In other words, West Kentueky would not deal with you with reference to this equipment? “AL They wouldn't make a deal that we could vo for, | don’t reeall the negotiations, wholly unsuceessful. They may have at some time said they would agree to so-aid SO, but nothing we could ever consider at all. “Q. Did vou ship any of the West Koutueky Coal 4607 Company coal on this contract to Tampa Electric Company? “AL No, never have. Did not and never have. “Q. Now, during the period that vou were shipping the tonnage on this test order to Tampa Electric Company, von were also negotiating with Tampa Electric Company for aterm contract? “*A. Oh, yes. That was the purpose of shipping atest order, to try to get it going and after we got some we vot into more serious negotiations on that and continued them until we began to get results on a contract, and finally did get results, “Q. When did you reach an understanding with Tampa Kleetric as to the term contract? “A. Well, TE would say late in 195—-well, early in 1959, "OQ. Now, that was — A. Woe made a contract, signed, as. | remember, in February of 1959, “QQ. What does that contraet eall for? “A. It called for a schedule of tonnage. Very small the first year. Maybe 150,000 tons, T don't reeall, mavhe 200,- - Testimony of S.L. Jewell Direct 1057b oO, And then the next vear when another unit would be complete it steps up considerably, too, | believe, GO0,000 tons. And we get in the third year the tonnage was sup posed to be 800,000 tons, but it seems that they got JOOS oa little accumulation of coal and we micht not get to ship that much. But that is the range and it in CTCASCS. Lean’t remember the exact steps, It woes ip. after the fifth, sixth or seventh vear somewhere around a million or 200,000 toms and extends for a period of 20 vears “Q. Do you know whether this quantity of tomnage is all of the coal which Tampa Electric will use during that period of time? “AL No, it isn’t all of the tonnage. They are using another coal now that they received by rath b gwness they still are. They were the last time T was there. Q. Have they been using another coal during all this period that vou have been selling coal? "AL Yes, they have. “Q. You say that ts rail coal? “A. Yes. “Q). Do von know where it comes from? "AL Why hearsay only. TP have been told it eames from Kast Kentucky and Mast Tennessee. “Q. How are vou shipping this coal on this term eon tract to Tampa? “AL Weare shipping this coal with water shipping facil ties that are owned jointly by onr company, Peabody Coal Company, and Pampa Mlectrie Company, which arrange ments were worked out in the tine during the time 41590 immediately following the exeeution of the eontraet, “The contract was excented by a long time before we could ship beeause we had to wet the water facilities, The contraet was exeented in February, 1950, but we did not vet started shipping on it until December of 1950 hecanse jointly the Tampa Kleetrie Company and the Peabody had the necessity of setting up water shipping facilities, One a barge line, whieh is ealled the Mid South Towing Com. 9 i. paea 1058b Testimony of 8S. L. Jewell—Direct pany, and a Gulf steamer, whieh is a converted [2 tanke called the ‘Martha Mack *, Which is a 15,000-ton ship. “Q. Are both of these companies, that ix, the barge com pany and the Gulf shipping company, jointly owned In Peabody and Tampa Electric Company? **A. That is right. There is a transfer involved. Yo want the detailed facts? “(@. Where do you barge the coal to, what point? “A. We barge it to, recently, the last few months, to a point just south of New Orleans. Previously, for the first four or five months, maybe six, we transferred upstream above New Orleans. “We were unable, for a long time, to make arrangements for facilities. Tried to but didn’t. We had to equip the ship with a clamshell with which it ean reach over into the barge and take the coal out of the barge and dump it into its own hold, and at the distination then it reached in the 4660 hold and take the eoal out and unload it. That was are original method. “We later acquired or leased, made a lease arrangement with West Kentucky Coal Company for a transfer facility that company owns at Myrtle Grove, Lonisiana, about 45 miles south of New Orleans. We now make the transfer from barge there at that point using that facility. “Q. Had vou negotiated the use of the facilities of West Kentucky Coal Company prior to the time you had reached an understanding with Tampa Electric? “A. Oh, no, for, as T say, we had to transfer for months in mid-stream with our own equipment because we did not and had not reached an agreement on it. “Q. Now, I will ask you, Mr. Jewell, if after vou reached an understanding with Tampa Electric Company on this term contract, whether vou worked out an agreement with West Kentucky Coal Company to biy from West Kentucky Coal Company an amount of coal equal to half of the coal you were selling to Tampa? “TA. Yes, we did. OR Oe rea Te he a 1059b Testimony of S. L. Jewell—Direct “(), Has any West Kentucky Coal Company coal been shipped on your term contract to Tampa Electric? A. No, sir. “(, And what have you been doing with the coal you have been buying from West Kentucky Coal? 4661 “A. I know what we are doing with it now. I think it has been done with it right along, is we are ship- ping it on another contract which we have, which is a con- tract with the City of Memphis—light, gas and water divi- sion of the City of Memphis, Tennessee, to a municipal plant operated by that division. “(), The West Kentucky Coal Company coal is being shipped to Memphis? “A. That is right. “Q. Why did vour company enter into this contract with the West Kentueky Coal Company ? ‘A. Well, there are many reasons for buying of coal. We produce and sell our own coal. We also, at times, for verious reasons, buy some additional coal. ‘In this case this is a water borne contract or shipping coal by water. In other words, the coal in this contract we have the privilege of shipping not just from our own mines but we specifically have the privilege of shipping coal from any mine we desire so long as it meets the quality specifi- cations of the contract. “We did that purposely because we only have two river mines in Western Kentucky. The River Queen Mine and the Ken Mine. And we wanted a little broader base than that to be sure to be able to give service at all times. “You ean have a breakdown in a coal mine or a 4662 coal dock, Now it is very logical in a contract of this responsibility and this size to have as many sources available as possible. That is one good reason for doing it. ‘We had a number of other, two or three, contracts near Cincinnati, New Albany, Indiana — many of them. When you have those contracts you are responsible. You want to be sure you can perform. 1060b Testimony of S. L. Jewell Direct ‘It wasn't out of any unusual force. It was good to have another source of supply. I can tell you other reasons, “We at that time were hoping to get, and trying to get, the good wishes and cooperation and help of West Kep. tuecky Coal Company on a problem which was a little deli. ‘ate. We knew they had the contract and they had some reason for not shipping on it and we had moved in on it. “We were trying to get their blessings and eo- operation to the extent we could make a deal with them for the lise of that Myrtle Grove Dock. They needed business hadly, just as perhaps we all do, but we knew that thev needed business. We were in position to place this amonnt of tonnage with them, and it was in the interest of good rela. tions hetween the companies for us to do it, and we lis. cussed it and beliving it was helpful and I finally reached amagreement with them on the Myrtle Grove Doek. T ean think of those reasons offhand, and [think th ey are 4665 sufficient to Justify it if any justification is needed When von are in the eoal business buving eoal, “Q. When was it that you worked ont this agreement with West Kentueky ? “A. DT tell you Tdon't know. It was some time after the contract was made, Just how long T just don't recall, “Q. Tt would have been some time after Rebruary of 159? “AL Oh, Lord, it was after [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386413_0248%3A07. Public record. Not legal advice.