Mr. BAILEY. No, you wouldn't. Mr. TURCOTT. No. Mr. RUPPE. I would be faced with the option of either signing up at the terms the mining company would offer; or simply letting the world go on around me and my coal never being mined. Mr. BAILEY. That would be a possibility. Mr. RUPPE. You either got to sign up or never get a mine basically, because of economic factors. Mr. BAILEY. That is right, because they don't have enough coal to mine independently. Mrs. MINK. I believe there are no further questions, gentlemen. [No response.] Mrs. MINK. We thank you very much, Mr. Turcott, for your testimony and for the assistance of your other departmental staff. Mr. TURCOTT. Thank you. Mrs. MINK. We would request that the information you have promised to supply will be provided. Hopefully, those matters relating to the acreages questions can be sent to us as quickly as possible. The others we will expect at the agreed upon time, toward the end of the year. Thank you very much. The subcommittee will be in recess. [Whereupon, at 12:21 p.m., the subcommittee recessed, to reconvene at the call of the Chair.] PROHIBITION OF RAILROAD LEASING OF FEDERAL COAL LANDS THURSDAY, DECEMBER 4, 1975 HOUSE OF REPRESENTATIVES, COMMITTEE ON INTERIOR AND INSULAR AFFAIRS, Washington, D.C. The subcommittee met at 10 a.m., pursuant to notice, in room 1324, Longworth House Office Building, Hon. Patsy Mink (chairwoman of the subcommittee) presiding. Mrs. MINK. The meeting of the subcommittee will come to order. We have as our first witness on the continuing hearings of the repeal of section 2(c) of the Mineral Leasing Act, Mr. David M. Weiman, legislative assistant for the National Farmers' Union. We welcome you to the committee. We do have a copy of your testimony. We appreciate very much you sending it in advance so we have had an opportunity to read and study it. It will be inserted in the record in full as though read and you may proceed in any way you wish. [The statement referred to follows:] STATEMENT OF DAVID M. WEIMAN, LEGISLATIVE ASSISTANT, NATIONAL FARMERS UNION Madam Chairwoman and Members of the Subcommittee on Mines and Mining: I am David M. Weiman, Legislative Assistant with the Washington Office of the National Farmers Union. We appreciate the invitation to testify on the impact of repealing Section 2(c) of the Mineral Leasing Act of 1920. This amendment, requested by the Santa Fe Railroad and sponsored_by Congressman Runnels, passed the Senate in July, but was rejected in the Full Interior Committee during mark-up on a tie vote. There was no debate on the amendment in the Senate Interior Committee or on the Senate floor, and the House Interior Committee's relatively brief discussion of the proposed amendment pointed to the need to fully examine the consequences of repealing this section of law. We believe that a complete and thorough examination of the impact of repealing Section 2(c) will provide the justification for flat rejection of this proposal. Farmers Union members, at our most recent convention in Portland last March, adopted the following policy regarding a national transportation policy and specifically, a railroad policy: "We call for establishment of a national freight transportation policy that can provide efficient and dependable service at reasonable cost to farmers and other shippers, and for measures to prevent existing rail and other transport facilities from further deteriorating until such a national freight transportation network is in effect." Our members further stated: "The national freight transportation policy should include: "Programs and regulations to assure that railroad companies devote their resources to freight transportation rather than unrelated subsidiary operations, (107) and that the essential parts of railroading are owned and operated to the maximum extent consistent with dependable service by the railroad companies themselves. Specifically, we recommend: "A statutory prohibition against ownership by railroads of non-transportation facilities, with requirement of divestiture of existing arrangements covered by the prohibition;" National Farmers Union delegates approved the following policy statement vigorously opposing rail abandonment: "A mcratorium on all rail line abandonments until a formula for abandonment determinations is enacted by Congress that requires consideration of all economic and social benefits from a line prior to approval of any abandonment, including potential contribution of the line to future viability and growth of communities served; "In the event of any abandonment of a branch line, transfer of the rail roadbed to the government until consideration can be taken to reactivate the line;" Specifically at issue, is whether or not railroads should continue to be prohibited from obtaining federal coal leases. Presently, Section 2(c) of the Mineral Leasing Act of 1920 prohibits it. And, it is our belief that such a legal restriction should be retained. We believe the repeal of this statutory requirement is not in the best interest of the nation nor is it in the best interest of our farmers. Perhaps the real question facing this Committee is whether or not an incentive should be granted to western railroads to do things other than railroading. Is it in the nation's interest to encourage the railroads to invest their limited capital in nonrailroad related entities? ADMINISTRATIVE PETITION PENDING Before commenting on the more substantive issues being considered today, we believe that the Subcommittee should be aware of a pending legal challenge against the Interior Department regarding the lands granted the railroads almost a century ago. For three long years, the Department of the Interior has been unable to respond to an administrative petition filed by two California groups alleging that the Interior Department has a continuing responsibility to oversee the grants issued the railroads in the late 1800's. We wrote you, Mrs. Mink, September 8 stating that because of the pending legal action we believed consideration of the amendment to be inappropriate at this time. Since the petition is still pending we would recommend to the entire Subcommittee that consideration of this amendment be postponed until that matter is resolved. In addition to addressing the issue of the Department's responsibllity to oversee the land grants, the petition alleges the Department has the responsibility to enforce certain sections of the grants. For example, much of the land issued the railroads in the checkerboard pattern, according to the complaint, was to be divested to settlers. And, of special importance to thls Subcommittee should be the question of whether or not certain grant restrictions are still applicable— namely whether or not the mineral restrictions found in many of the congressional grants are still applicable. If they are, then approval of this amendment would be a major error. We are unable to explain why the Department has been so slow in responding to the petition. Undoubtedly, the complexity of the issue is the cause. When I talked with Mr. Woodcock in the Solicitor's Öffice last year, he informed me that the draft response was several inches thick. He insisted that it would be released before the end of last year. Now, it is more than eleven months later, and the Department has not responded. In July of this year, I wrote the Solicitor about the petition and Mr. Garner of the Solicitor's Office wrote me in August that the response would be released by the end of the following month. The end of September passed without the release of the response. In short, title to much of the land and to the minerals beneath the land is being studied by the Department. To extend additional rights at this time is clearly inappropriate. Moreover, if the Committee were to allow the Santa Fe request, and it was later determined that title is not secure to much of the land to which Santa Fe claims title, then this Committee will have created a terrible legal and political mess. The petition, I might add, was not directed solely at the Santa Fe Railroad. It is directed to all land grant lands. That would include Southern Pacific's massive farmlands in the Central Valley and Burlington Northern's substantial holdings in the Northern Great Plains as well as other lines. Mr. Steiger and others have echoed concern that legislation from this Committee not be a hidden incentive for the legal profession. If this Committee grants the railroad's request and it is ultimately determined that they don't possess clear title to the land, then we'd be embarking on a legal battle the likes of which I don't even want to contemplate. We therefore urge that before further consideration of this amendment or one similar to it, that the issues in the administrative petition be resolved. We would also ask the Committee to urge the Department to promptly conclude their study and make it available to the public. IMPACT OF REPEAL The Justice Department pointed out, in a letter to Mrs. Mink earlier this year, that two railroads, the Union Pacific and the Burlington Northern, have enormous holdings. If Section 2(c) is repealed these railroads and others could be allowed to consolidate their checkerboard holdings to the extent that federal coal is intermingled with their railroad holdings. Those railroads would then own and control the largest coal reserves in the country. That, coupled with their exclusive ability to transport the coal, would place them in a dominant position in the coal industry and would allow them to enjoy unusual competitive advantages. The railroads would own the land, own and lease the coal, and have the ability to transport the coal to a generating facility. Thus the very thing Congress sought to prevent in 1920 would be accomplished in 1975 if this amendment prevails. And, if the railroads are allowed to lease coal, we can then be assured that they will aggressively do so. However, others in the industry, particularly publicly and cooperatively owned utilities, are presently experiencing difficulty in obtaining coal, especially western coal. To compete with the railroads for leases in addition to the existing problem will exacerbate an already existing problem. They need coal, but are unable to acquire enough to meet their needs. The anti-competitive and anti-trust issues have been briefly discussed before this Committee, but the real economic impact has not been fully explored and a more comprehensive report should be requested from the Justice Department. This nation needs a strong and healthy rail system. It's good for agriculture, it's good for industry, and it's good for the nation. Unfortunately, this nation's rail system is in serious state, physically and economically. Roadbeds are in great need of repair and, in many cases, replacement. At a time when service needs to be expanded, we find that it's being constricted. National policy should dictate that our rail system should be upgraded for another reason: energy wise, it's more efficient to move freight by rail than by truck. We can save substantial amounts of energy by proper utilization of existing tract rather than building more roads for more trucks. And, rural communities are better served, in many instances, by rail. It is true, very true, that railroads need capital. To upgrade America's railroad system to make it an efficient system serving our rural and agricultural areas will take capital. However, we greatly fear that if the railroad's limited capital is diverted to coal development, then the railroad end of these resource conglomerates will continue to be capital-short and capital starved. We, in agriculture, continue to suffer hardships because of rail abandonment. For example, the Santa Fe Railroad, the company that appeared before this Committee seeking the repeal of Section 2(c), announced in 1970 their intention to abandon more than 800 miles of track. Our members throughout the Midwest and Great Plains are vigorously opposing railroad plans of abandonment. Why should the Congress extend to the railroads an incentive to enter non-rail sectors of the economy while the railroad companies are letting the railroads deteriorate? We believe this shouldn't be allowed to happen. But in effect, this Committee will be encouraging the railroads to invest their limited capital resources in non-railroad related entities. We are opposing this amendment because we believe that the ultimate effect of repealing Section 2(c) will be to starve the railroads of needed capital, thus allowing further deterioration in service. Moreover, railroads are pulling out of area after area in rural America. A Senate report published last year noted other problems with railroads: "Railroad problems are also implied by complaints of shippers concerning deteriorating service, rising rates, and a shortage of railcars." |