dental, I suppose, patchwork of mineral leases or ownerships that fitted into our checkerboard.

It was kind of an ideal situation. But there were others, too. We had to work out to get the whole thing into a logical mining unit, we had to work it out with everybody who had any interest there.

Now, in other situations there may be lots of small interests. A lot of these leases, I understand, go to individuals who may not have the capital or any real desire to develop these leases themselves, but rather to act as, you might say, brokers and sell their leases.

We can't acquire leases from other people under 2(c). So we have a terrific problem in working out the legal relationships and it takes, again, tremendous time.

Mr. RUPPE. Under repeal of 2(c), if the railroad owned a substantial block or checkerboard pattern of land and, indeed, if they were able to acquire Federal leases adjacent to their own properties, wouldn't that give them a tremendous economic advantage, first of all, in actually acquiring those Federal leases, because they would have a rich deposit themselves which they haven't had to pay for and which would be useful in averaging down their costs. Secondly, if they were to acquire Federal leases, any private lands intermixed in that area would almost have to of necessity come to grips with the terms offered by the railroad entrepreneur since they have no one else, no other company with whom they could make a lease or sale arrangement.

Mr. THOMAS. I am a little bit limited in my knowledge to answer your question. But I can say, of course, there are a lot of very large coal companies that have tremendous holdings already in Federal leases. We are not talking about just this kind of scattered, independent situation that I mentioned throughout these areas. The situation would probably be where we have a checkerboard, there might be some coal company that has filled in a great deal of that checkerboard and then a scattering of the smaller individuals, so to speak.

I don't think the economic strength of our industry would overmatch, in such situations, the economic strength of large coal companies with their own mining techniques and skills.

Mr. RUPPE. One last question-or two. Do you think then that the repeal of 2(c) would, in effect, enhance competition rather than pose a threat of a competitive reduction in the West?

Mr. THOMAS. Yes.

Mr. RUPPE. One last question. I apologize for being somewhat brief. If you want repeal of the 2(c) clause to enhance competition, why would you not support legislation to approve coal slurry pipelines because they, too, really would offer a wider range of competition both within and without the railroad industry in the West?

Mr. THOMAS. We have specific reasons there which are somewhat different from the situations here. The railroads are common carriers. One of the basic problems of the railroad industry that accounts for much of the weakness of it, particularly in the East

Mr. RUPPE. But in the West?

Mr. THOMAS. In the West we are stronger, but we are continually faced with competition by people who are not responsible. A slurry pipeline, by its very nature, is going to work on contracts with large shippers, large producers, no small ones. The railroad carrying coal has to treat equally all shippers regardless of size. We have to charge rates that will maintain-produce enough revenue to pay our costs.

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The large shipper has to be-we have to get his business. We have to have volume to keep these costs down. If we lose the volume to these slurry pipelines, then our costs go up and we have to raise the rates, which falls on the smaller shipper, and it could get to a situation where it is uneconomical for him to even be in the business, and we lose a tremendous portion of this coal revenue.

Mr. RUPPE. If you quote a rate from a mine if you quote a rate to different producers, do you have the same rate for a mine of 1 million tons as you would have for a mine of 10 million tons, or, frankly, is there generally a break in railroad rates in favor of the very huge producers where you can unitize the

Mr. THOMAS. There are volume rates in connection with the unit train concept when you get that size. Below that we have to maintain rates for the general

Mr. RUPPE [continuing]. The unit train does give you a vehicle for competing even with a coal slurry pipeline, does it not, because of the efficiencies in the unit train and your ability to offer a lesser rate for that purpose?

Mr. THOMAS [continuing]. What we face is once they get the tremendous investment in the coal slurry pipeline, they are there, and we can face competition of incredible difficulty. As I say again, they are not going to become common carriers for the little fellow. By their very nature they don't propose to be.

Furthermore, just to make a point here, if our position seems selfish and anticompetitive, we do not have a Federal statute that permits us to secure rights-of-way. We have to operate under State law. Mr. RUPPE. Thank you.

Mrs. MINK. Mr. Steiger?

Mr. STEIGER. Just two factual situations.

One, on page 18 of your statement, Mr. Thomas, you state that there is a hundred thousand total acre limitation of Federal leases under present law. That is not true. It is being proposed under---Mr. THOMAS. It has been corrected on my copy this morning. Mr. STEIGER [continuing]. Mr. Muys, you shake me up. You are so willing to you are so anxious to get this repeal that you are willing to embrace the Seiberling amendment, which you know is going to be I assume you know-is going to be in the hands of people like the witness who preceded you, and you must be aware of the really intolerable delay that will be I realize it is good for the legal profession, but I also realize that the intolerable delays that are inherent in the Seiberling amendment incidentally, the gentlelady should know that the Seiberling amendment in total is rejected by Rules, not as a portion of her bill but as a separate entity, and died in the Rules Committee.

I am just-I am chiding you, sir. I realize the concern you have over this amendment, but that is how we get this complete or have ungodly laws, is by arrangements between affected industries and unions and congressional desire, and the issue ends up with the worst of both worlds.

Mr. Muys. Unfortunately there seem to be more votes on the committee that felt that Mr. Seiberling's amendment was desirable than the other way. That situation, as bad as it may be as far as delay

on the Secretary's part and everything, is far preferable to us than remaining stymied in our coal development.

Mr. STEIGER. My only position-I think you make a valid point that we have not only the ICC to protect the rights of the oppressed, if that be the case, but we also have existing antitrust regulations even prior to Mr. Seiberling's conclusion and in the gentlelady's Coal Leasing Act.

So I really believe that is your strongest point, that we have legislative protection now that is the very thing that we fear by the repeal of 2(c) and there seems to be justification not at all for its continuing existence. I hope that would be the song you would sing and not the embrace of the Seiberling amendment.

Mrs. MINK. Thank you. I would like to propound a series of questions and I realize that time is short. If you are willing, I would like to submit these inquiries in writing and request that you respond as soon as possible so these may be entered into the record before the conclusion of our hearings.

We will have another series of hearings on Thursday. But pending the sound of the bells, I would like to begin the inquiry. I note from your table of organization and way the Santa Fe Industries is constructed, you indicate you have two segments of your holdings that engage in coal development and production, one under the Santa Fe Pacific Railroad and the other under the Cherokee & Pittsburg Coal & Mining Co. which you referred to as Cherokee in your testimony. What would be the total acreage of both of these subsidiaries, or however you referred to them, that is interfaced with the Federal Government and are, therefore, relevant for our consideration with respect to 2(c)?

Mr. THOMAS. First, as to Cherokee, it does not hold land grant land. Mrs. MINK. The Cherokee holdings are not involved at all insofar as the issue of the repeal of 2(c)? Is that the response that I have just heard?

Mr. THOMAS. In general

Mr. WALSH. There are some areas that there may be some Government lands.

Mrs. MINK. May we have a definitive response to my inquiry as to where the lands are located adjoining Federal lands, and therefore where development is stymied, as you said, Mr. Muys, because of 2(c). So that your paramount issue, then, is the holdings of the Santa Fe Pacific Railroad?

Mr. THOMAS. That is correct.

Mrs. MINK. These holdings are exclusively in the State of New Mexico, or in another State also?

Mr. THOMAS. There are some in Arizona.

Mrs. MINK. What is the acreage? Not the estimated coal reserves, but the acreages of land involved in both States?

Mr. THOMAS. Do you have it?

Mr. WALSH. It is broken up about evenly, Madam Chairman. We show approximately 4 million-plus acreage total lands, and I believe it divides up about 2.1 or 3 million in Arizona and 2 million in New Mexico. That is a rough estimate. I could refine that in the statement. Mrs. MINK. Mr. Steiger?

Mr. STEIGER. As I understand what the gentlelady was pursuing was the amount of Federal land that was blocked up by 2(c).

Mrs. MINK. No, their holdings.

Mr. STEIGER. Would you amend your-have you any feeling for the acres of coal-bearing lands which are locked up by 2(c), and I guess what we are really interested in, do these exceed 46,000 acres in either State?

Mr. WALSH. We would have to look at that question in a little more depth. One of the problems is: Is there any coal on the Federal lands? Mrs. MINK. The response to this question was 4 million acres of land currently owned by Santa Fe Pacific Railroad.

Mr. THOMAS. Let me clarify that. What we said, or what I said, in the statement is that Santa Fe Pacific owns 154,000 acres in fee, and reserved mineral rights in another 4 million acres.

Mrs. MINK. The 4 million acres not owned by Santa Fe Pacific Railroad is in fee?

Mr. THOMAS. Not today, just the mineral rights.

Mrs. MINK. They were originally conveyed by the Federal Government as railroad grants in fee, however; were they not?

Mr. THOMAS. Yes, that is my understanding.

Mrs. MINK. Who was the original recipient of the fee ownership of these 4 million acres from the Federal Government?

Mr. THOMAS. That was the Western Division of the so-called Atlantic & Pacific Railroad, which went into bankruptcy and was acquired by the Santa Fe Railway's predecessor.

Mrs. MINK. Santa Fe Pacific Railroad's predecessor company is the Atlantic & Pacific; isn't that correct?

Mr. THOMAS. Yes.

Mrs. MINK. The Atlantic & Pacific was the original recipient of the fee ownership of the 4 million acres in Federal grants?

Mr. THOMAS. Yes.

Mrs. MINK. Who owns the fee now if Santa Fe Pacific only owns the minerals?

Mr. THOMAS. The Santa Fe Pacific acquired the entire fee in those lands when it took over, when Atlantic & Pacific went into bankruptcy. Santa Fe Pacific has sold those lands, the 4 million acres we have mentioned, reserving the mineral rights, the equivalent of making the surface available to the purchaser with the mineral rights and the right to develop them retained by Santa Fe Pacific.

Mrs. MINK. Could you advise the committee what the total revenues from the sales of the surface rights of the 4 million acres amounted to? Mr. THOMAS. Yes. I can tell you it is a very, very tiny figure.

Mrs. MINK. Give us an estimate.

Mr. THOMAS. We can give that to you.

Mr. WALSH. It would average out to less than $1 an acre.

Mrs. MINK. Was the disposition to single owners by separate tracts or was it to a large corporation? How was the disposition of the surface. of these lands made and on what basis and why?

Mr. WALSH. The disposition was in various sizes. There were some large land tracts sold and there were some smaller amounts, depending upon the location of the land and the particular need of the purchaser.

Mrs. MINK. Who occupies the surface? Is the surface being utilized for ranching, farming, other types of activities?

Mr. WALSH. In a large part it is being used for ranching lands.

Mrs. MINK. In the deeds of sale to the ranchers and the farmers is there a reservation with respect to the right of the surface owner to agree to the method of the development of the coal resource? What considerations will be given to the surface owner should the coal resource be developed?

Mr. THOMAS. We have followed a policy over the years-we have developed a good many of our mineral lands in this situation where we have the reserved mineral rights. But what we have generally done is worked out an arrangement with the surface owner under which he receives either a royalty or some kind of a payment for the interference with his operations on the land by the mining.

Mr. STEIGER. Will the gentlelady yield?

Mrs. MINK. Yes.

Mr. STEIGER. Other than the Cabine Land & Cattle Co., what other entities are there similarly? The practice is, I should advise the gentlelady, that there are large companies that lease these grazing lands. I think more are probably leased than are owned by individual ranchers at this point; is that a fair statement?

Mr. WALSH. In Arizona that would be true.

Mr. THOMAS. In New Mexico. We had a great many-most of these lands were under lease. We often sold them to the person who was leasing them.

Mrs. MINK. As I understand the response, though, the fee of the surface was disposed. We are not dealing with leases to ranchers or farmers.

Mr. THOMAS. I said where the fee was sold, it was often to the person who had before that been the lessee of the surface.

Mr. STEIGER. What I would like to find out is the Cabine-I know it is not in your structure-is the Cabine Land & Cattle Co. a holding company of the Santa Fe?

Mr. WALSH. No; we refer to that, if I understand your question, Congressman-the New Mexico and Arizona Land & Cattle Co.Mr. STEIGER. Why did I call it Cabine? It used to have a manager called Cabine. That really dates me.

Mr. WALSH. What was the question now?

Mr. STEIGER. Is the New Mexico-Arizona Land & Cattle Co. a holding company of the Santa Fe?

Mr. WALSH. No, it is not.

Mr. THOMAS. No connection with the Santa Fe, never was.

Mrs. MINK. If the ownership then of the Santa Fe Pacific Railraod is limited in terms of fee title to 154,000 acres, my assumption is that this is exclusively in New Mexico. Is that assumption correct? Mr. WALSH. No; those lands are in Arizona.

Mrs. MINK. With respect to New Mexico, then, all of the fee has been disposed of and you are dealing only with the mineral rights beneath the surface?

Mr. WALSH. With the exception of a small amount of acreage that for some reason or other we weren't able to sell, but it doesn't amount to any considerable amount. I would guess maybe 1,000 acres.

Mrs. MINK. Now, assuming that the major inquiry of this committee, in line with the statements that you have also made, is that the development of coal is stymied without the repeal, do we have the precise acreages of your principal mineral interests in coal that cannot be developed solely because of the existence of section 2(c)?