Mrs. MINK. 2(c). That prevents it from acquiring Federal land? Mr. WILSON. If I can get the exact language here: No company or corporation operating a common carrier railroad shall be given or hold a permit or lease under the provisions of this chapter for any coal deposits except for its own railroad purposes. Mrs. MINK. I go back again to my original question with respect to the nature of the railroad's interest, which is a fee ownership. If we are talking about a fee exchange, does 2(c) prevent that? Mr. WILSON. We are talking about an exchange-the prohibition is for a permit or lease. Mrs. MINK. Correct. I understand that. Mr. WILSON. For Federal lands. That is the prohibition. Mrs. MINK. Yes. So does it prohibit the sale and exchange of fee? Mr. WILSON. It does not prohibit the railroad from selling its land or its mineral rights. Mrs. MINK. My question is, does it prevent the Federal Government from entering into an exchange of the fee as distinct from a lease? 2(c) relates to leases. Is there any other law Mr. WILSON. Could the Federal Government acquire the railroad's fee interest? Mrs. MINK. Can it exchange a white square for a red square? Mr. WILSON. I think under present law, the answer to that is no. Mrs. MINK. No. All right. Do my colleagues have any questions? Mr. Kazen. Mr. KAZEN. Thank you. Following up on that question, what law is it that prohbits the Federal Government from selling in fee, for instance, land to the railroad, coal land to the railroad? Mr. WILSON. I think I am going to have to defer to the Interior Department on that, sir. Mr. KAZEN. This I think was one of the purposes of the questions by the gentlewoman from Hawaii. In other words, we know that under 2(c) you cannot lease the prohibition is there against leasing coal lands to the railroad. But now if you are going to have some kind of a program where you can exchange, you are not leasing, you are exchanging in fee. Now, is there a legal prohibition against doing that? Mr. WILSON. I don't know the answer to that question. We will be happy to find it out for you. Mr. KAZEN. This is what our chairman was talking about. Mr. STEIGER. Would the gentlelady permit me? The fact is, Mr. Wilson, that you are in error. The fact is that the only prohibition in 2(c) is against the leasing of the coal-the coal company leasing adjacent Federal coal, period. Mr. WILSON. The railroad company. Mr. STEIGER. The railroad company, excuse me. There is no prohibition against exchanges, implicit or explicit. Now, I gather what the gentlelady was getting at was, in order to fulfill your desires, why do we need why do we need additional legislation. That is what I infer from the question. I would like you to show me in 2(c) or anywhere else in the statute, but particularly in 2(c), since you said you interpreted 2(c) as prohibiting exchange-would you show me how you arrive at that interpretation, slowly? Mr. WILSON. Exchanges of the leasehold interest in the mineral rights, the permits or the lease-that is the question which we were asked to address ourselves to. We will be happy to go back and research the question of fee exchanges. Mr. STEIGER. Mr. Wilson, the question was-you are not committing the Government in perpetuity. We are asking you to respond to what is really a very, very rational and very direct question. Is there anything in 2(c) that prohibits exchanges. That is what the gentlelady asked. That is what the gentleman from New Mexico tried to expand on. And you said in your opinion there was a prohibition I would like for you to recite for us where that prohibition lies. You know, I am not trying to-I don't want to embarrass you. But I think it is important that you share with us your thought processes, if any. Mr. WILSON. Congressman, we will be happy to. But the question which we were asked to testify on today concerned 2(c). Now, whether or not there may be any additional provision of law, I do not know, 2(c), deals only with permits or leases. Mrs. MINK. That is a good point. Insofar as you are concerned, 2(c) does not prohibit the exchange of the fee. Mr. WILSON. But whether there is anything else Mrs. MINK. Yes. So we will then ask that you submit for the record the response to the question, whether there is any other law which. makes that impossible, thereby requiring statutory authority. Mr. WILSON [Continuing]. We will be happy to do that. Mr. KAZEN. Madam Chairman? Mr. STEIGER. You should understand, Mr. Wilson, that in your response to the gentlelady's original question you said you felt it did prohibit exchanges. You now feel that it does not, but there may be other language that does, is that correct? Mr. WILSON. That is correct. Mr. STEIGER. OK. Thank you. Mr. WILSON. I perhaps misunderstood the question, Congressman. Mr. STEIGER. Sure. It is easy to do. It happens all the time. Mr. KAZEN. I wonder, did you research the background of the enactment of 2(c)? Why was it ever enacted? Mr. WILSON. 2(c) was originally enacted, as I understand it, in order basically to prohibit vertical integration by the railroads. In other words, integration of the transportation company back into the mining of coal, except for their own purposes. Now, that is treated briefly in pages 2 and 3 of my prepared statement. Today we do not think that that kind of new entry into the coal industry would be particularly bad. In other words, we look at this thing from basically the discharge of our own responsibilities to protect and preserve competition. I think it implies a pro tanto repeal. In other words, to the same extent that 2 (c) allows the railroad Mrs. MINK. What kind of repeal? I can't get that word. Mr. WILSON. Pro tanto-to the same extent. Mrs. MINK. The next question which must be asked, in the view of the Department of Justice, regards the decision which permits a holding company an escape clause, one which the Department approves with respect to the railroad lands. Mr. WILSON. If I have to comment on a very early Supreme Court decision, there is the escape clause there. But if one is going to repeat 2(c), one might as well Mrs. MINK. We are not repealing 2(c), we are following your recommendation of exchange. And you say pro tanto, it means repeal of the Commerce Act. Then I want to know whether that means that you feel that that commodities clause is not really necessary for the purposes of promoting competition in the development of coal. Mr. WILSON [Continuing]. If one modifies 2(c), one could rely on that escape clause out under the old Supreme Court decision. Yes, one could. But one might as well say, "All right, railroad, you can haul your own coal over here." One then, I think, has to rely upon enforcement of the nondiscrimination provisions of the law by the Interstate Commerce Commission. Mrs. MINK. Does that mean you are then abandoning the importance of your cautions with regard to vertical integration of the energy industry? If we can get new entrants into the coal business, we think that is good. We think this is a proposal which might do it. Mr. KAZEN. I see. And repeal of 2(c) would, in your opinion, not do it? Mr. WILSON. We think this will do it better. Mr. KAZEN. Would repeal of 2(c) do what you want done? Mr. WILSON. Outright repeal of 2(c)? Mr. KAZEN. Yes, sir. Mr. WILSON. It might result in all the squares being red. Mr. WILSON. That could result. Mrs. MINK. As I visualize the suggestion you are making, it is to encourage and promote the development of coal. It really has nothing to do with the nature of vertical integration because it encourages it, as far as I can see. My second inquiry that needs to be answered is, suppose an exchange does take place, what effect wold that have on the validity, viability of the commodities clause of the Interstate Commerce Act? Mr. WILSON. What we are seeking to do is encourage the development of coal resources in a competitive manner. Now, adjustment to the commodities clause, if they are going to carry the coal-their own coal-maybe Mrs. MINK. So does your statement then imply also the necessity of repealing the commodities clause? Mr. WILSON. No, I think not. Mrs. MINK. Would you explain how not? Mr. WILSON. I am saying, one then must rely upon the enforcement of the nondiscrimination provisions by the Interstate Commerce Commission. Yes, I suppose to a certain extent we are abandoning it. But it is a weighing question. Do you get a new entrant into the coal business in this way, and then say, "Railroad, if you discriminate against the fellow who leases this part from the Government, you are in bad trouble"? Mr. KAZEN. If you discriminate in what, carrying his coal? Mr. WILSON. Yes. In price, in service. In other words, you are a common carrier. You treat everybody the same way, including yourself. Mrs. MINK. Mrs. Pettis, do you have any q estions? Mrs. PETTIS, Mr. Wilson, are you, as a representative of the Justice Department working with the Department of the Interior in developing alternatives to the repeal of 2(c)? Mr. WILSON. Yes, We have discussed this alternative extensively with Interior. My understanding is they require additional study of this proposal. Perhaps someone will come up with a better suggestion. We do not have a monopoly on knowledge. If we did, I suppose we ought to sue ourselves. Mrs. PETTIS. Pursuant to that, has the Justice Department drafted language which would authorize the exchange system that you view as an alternative to the repeal of 2(c)? Mr. WILSON. We do not Mrs. PETTIS. Would you be willing to draft such language and share it with the subcommittee? Mr. WILSON. We would be happy to. We have worked on some sections of this, some of the disclosure language, for example, and some of the jurisdictional provisions But at this time we do not have, a final draft. Mrs. PETTIS. Thank you. Mr. WILSON. We do not have a full provision that we could set before the subcommittee, but we will try to develop that. Mrs. MINK. Mr. Runnels? Mr. RUNNELS. Thank you, Madam Chairman. Let me, first, discuss with you, Mr. Wilson, what 2(c), I think, actually says. Now, are you assuming that the Federal Government on your chart owns all of the white land in your checkboard? Mr. WILSON. On my checkerboard, which I tried to simplify, I made that assumption. Mr. RUNNELS. But you have not researched to see if there is State land or private fee land. You are assuming that just one of those checkerboard blocks to a railroad company and the next checkerboard belongs to the Federal Government? Mr. WILSON. I tried to simplify it, Congressman. That is one of the things that the Interior Department, in considering this kind of a suggestion, is looking into. Mr. RUNNELS. All I am trying to do is clear the record in some people's mind. So long as 2(c) is on the books, if any of that land does not belong to the Federal Government under your proposal or under your suggestion if there is an outright exchange the railroad and Federalyou can put it all together and all the problem is solved, is that correct? Mr. WILSON. What I am assuming on this checkerboard is the simplest situation. There will be other factors that would enter into the equation as to what would be available for exchange, what kind of rights, who owns the surface rights, how easily can we get to the coal-there will be all sorts of things that would enter into this. Mr. RUNNELS. What I am trying to say is 2(c) says now, "No company or corporation operating a common carrier railroad shall be given or own a permit or a lease." Now, if they would have to lease from a private owner or from another coal company, then they would be barred from doing what you are suggesting here; right? Mr. STEIGER. Right. Mr. RUNNELS. School is out if they have to go put anything else in that block other than exchange Federal land for railroad land. If you are trying to block it up, to make it feasible, if you are trying to make it economical, if you are trying to make a situation-if there is anything in there other than Federal that can be exchanged, then we have a problem with 2 (c); is this right? Mr. STEIGER. And in addition to that, we also have a problem, I would submit, Mr. Wilson, with Federal coal under fee land, for exactly the same reasons. So that the problem generally for New Mexico in my view is right, the continuance of 2(c) would negate your exchange theory in those instances in which we have Federal coal under fee land or State land or fee land itself. I thank the gentleman. Mr. RUNNELS. Thank you. Let me further clarify. In your statement where you say "The Antitrust Division continues to believe in the basic wisdom of keeping common carriers which have natural monopolies of particular modes of transportation out of the business of developing or marketing the commodities which they haul. In these situations our experience demonstrates that there is so much potential" could you give me some instances of what you re referring to? Mr. WILSON. I think there is something which the Congress has been very much concerned about in recent years, which is joint ownership of the petroleum companies of oil pipelines. That is probably the most outstanding example. There have been considerable hearings both in this body and in the other body on that question. Mr. RUNNELS. Then have you at Justice looked in to see whether they have abused or violated the law in a common carrier pipeline and if so, why haven't you pressed charges? Mr. WILSON. Congressman, these are very difficult cases to investigate. These are very difficult cases to prove. We have had investigations. Mr. RUNNELS. Have you found anything? Mr. WILSON. I don't think I could comment on that. In some we have not. In some we have. Mr. RUNNELS. In those maybe that you have, why haven't you brought charges then? Surely Mr. WILSON. Let me define the difference between the negative, the undecided, the positive. I said in some we have not. Mr. RUNNELS [continuing]. Is that the only instance you can think of the monopoly Mr. WILSON. I think that is perhaps one of the closest ones to this situation. But don't forget, we have many more coal companies, than we have petroleum companies. Mr. RUNNELS [continuing]. Under your suggestion would you extend the principle of Federal oil and gas leases, swapping rentals of oil and gas, or are you just talking about coal? Mr. WILSON. We have not thought about that. I would have to go back and look at that. Mr. RUNNELS. Do you think the Federal Government today ex changes their minerals with anybody else, a private citizen? Mr. WILSON. The exchange |