Let's take the State of New Mexico first.

Mr. WALSH. We would have to do a little studying on that question, Madam Chairman.

Mrs. MINK. That is the heart of the issue here. We have to be able to demonstrate that there is an absolute need for repeal and that it is not simply only an idea of preference. Normally everyone would prefer to have the largest acreage to develop in terms of an economic analysis of the resource, but unless this committee can be shown that there is, in fact, a lockout, or whatever the term is used, stymieing the development of coal, then I cannot see the necessity of repeal of the section which I feel, contrary to your statement, is far more important today then it was at the time it was first placed into the statutes, because we do have a problem of monopoly in all areas of energy development.

And it would certainly be contrary to the interest of the whole energy situation in this country if we were not careful and vigilant as to exactly what we are doing. It seems to me that any suggestion for repeal must be coupled with a very strong justification in terms of exactly what this section does, in fact, prevent.

So while I understand the necessity for protection of information which basically belongs to an industry or a company, it is extremely important that this committee has whatever documentation and economic analyses are available with respect to logical mining units which you have developed and which cannot go forward except for the acquisition of additional leasehold interests from the Federal Govern

ment.

Without that information we are unable to make any finding except that the repeal is convenient, and that is, I think, the major reason the committee refuses to repeal. We lack the evidence, and that is the basis for the Chair's decision to pursue this matter extensively. It is not our intention to block the development of coal, but neither is it our intention to approve a repeal without demonstrable evidence that there has been a foreclosure of development because this law does, in fact, exist.

Mr. MUYS. What if it showed that it foreclosed Santa Fe from developing, but perhaps didn't foreclose Union Pacific or

Mrs. MINK. We will make a study in a case-by-case basis with respect to each of the three major railroads. My inquiry is limited to Santa Fe because I assume that is the area of your special concern. Of course we will attempt to obtain the information from the other companies. The Department of the Interior will be testifying.

My major inquiry to them will concern the setting down of Federal holdings in so-called logical mining units by which they have attempted to plan, if you want to use the word, the orderly development of our resources in the West and have indicated that unless you group these lands together, you do not have an economic unit.

We want to explore their analysis to see whether it coincides with your view of your particular landholdings. It seems to me that is really what we need to have before we can go into conference with the Senate and know what to do, rather than just listen to the Justice Department's opinion or the railroads' preferences with respect to how they would prefer to develop their coal.

Mr. STEIGER. Would the gentlelady consider expanding the request to include not only the difficulty or impossibility of the Santa Fe mining its own property, but that property that is not likely to be developed, which is Federal property now that is checkerboarded in,

so in effect, while the Santa Fe could conceivably mine an area that would only be enhanced by the next square mile, that square mile has been abandoned because nobody could mine it, if you follow me.

In other words, you are not being inhibited from mining it because you could get along without it, but here is a resource we are not getting. I am as concerned about that.

Mrs. MINK. I think that goes beyond the scope of our inquiry, because we are only concerned with Federal leases as included under section 2(c). If the adjoining property is owned by the State or a nonFederal entity, no one can allege that the development is curtailed because of 2(c). Section 2(c) only relates to Federal leases.

Mr. STEIGER. Really, I am not trying to violate that limitation. What I am trying to say is that there will be Federal lands which will not be mined-at least it is my understanding-but I want to know are there Federal lands which are not going to be mined because of 2 (c) simply because the coarse resource doesn't justify the mining, but it would justify the mining if it were a part of the adjacent Santa Fe holdings?

That is really what I am saying.

Mr. THOMAS. That is the sort of thing that the chairman was asking. Mrs. MINK. Yes.

Mr. STEIGER. Fine.

Mrs. MINK. If you would expand my inquiry to include that, I think it would be within the scope of our consideration. I would also want to know with respect to the 4 million acres, for which you hold only the mineral rights, about the adjoining properties with proven coal reserves, which you have listed as 370 million tons or so, as to whether those lands are owned by the Federal Government or by the State or whether they are owned by Indian tribes or private individuals. I ask this question really as a followup of Mr. Runnels' suggestion that the whole concept of exchange is not as simple as has been suggested by the Department of Justice.

We need to know the full picture at least with respect to the Santa Fe Pacific Railroad holdings in New Mexico, and having an understanding of that physicial situation, we may be able to relate it to other areas of railroad holdings.

I think that response would be very important for our consideration. So without objection, if all of these questions and answers can be put in the record at the appropriate places, we will proceed.

What is your response to the suggestion, or the exchange proposition, which is offered by the Department of Justice?

Mr. THOMAS. I tried to mention that very briefly in my rundown. of my opening statement. I have to rely a little bit on Mr. Muys to tell some of the reasons why, because of the experience he has had with other situations where there have been such exchanges.

But basically we think it is unworkable if only because of the fact that the time element is such that we cannot visualize any kind of legislation of that sort being enacted and being acted upon in any reasonable period of time that will permit the development of the coal at the time it is needed by Western utilities and industries.

Mr. MUYS. Not only legislation but the physical problem of-first of all, just like the Federal Government, we don't know where all ou coal lands are.

Justice wants us to either trade lands or coal interests. We haven' inventoried our lands and neither has the Department.

Second, a lot of our lands have a number of minerals on them. Many of them are already under lease.

Mrs. MINK. Well, let's back up there a minute. If one of your main arguments is you don't know where your coal is

Mr. MUYS. I mean all of it.

Mrs. MINK [continuing]. You don't know where a significant part is or a small part-well, how do you relate your answer, a significant part or just a small part, to the fact that you have

Mr. MUYS. Well, Mr. Walsh might better address that.

Mr. WALSH. If I may explain that; in order to define whether you have a coal reserve or not takes a lot of physical work. In the areas where we are accounting for, 370 million tons, we have drilled, physically drilled, the property on a spacing of 1 hole to 40 acres.

Now, unless you have this physical information you don't know whether you have a coal reserve or not at all.

Mrs. MINK. This 370 million acre estimate

Mr. WALSH. Ton.

Mrs. MINK [continuing]. Ton estimate covers how many acres?

Mr. WALSH. It covers three areas, each of which has-and don't hold me to this figure because I am reflecting in my mind to a map-perhaps in the area of 20,000 acres in each of three areas.

Mrs. MINK. Total of 60,000 acres?

Mr. WALSH. Yes.

Mrs. MINK. So that the estimated proven reserves probably do not represent more than 10 percent of what you may have in not only your fee lands but also in your mineral holdings, and

Mr. WALSH. That would be difficult to say.

Mrs. MINK [continuing]. You have only made an estimate on the basis of drilling of 20,000 acres in each of three tracts.

Mr. WALSH. That is right, Madam Chairman. You start out with the regional-well, I am not a geologist but you start out with a regional geology in an area that is likely to have coal perhaps because of outcrops or something like that. And then those are we refer to them, that may be "elephant country." You look there first and you do your drilling there and you develop the land from that information. That is what we did.

we

We took the most likely areas to first do our exploration and then

Mr. MuYs. That percentage is not accurate, Madam Chairman. It would be 60,000 acres out of 4 million-plus acres.

Mrs. MINK. What would you say your 370 million tons is as an estimate of the percent of what you would be holding as total reserves? What might that be?

Mr. MUYS. "X."

Mr. STEIGER. It could be anything from 100 percent to an actual function of the 60,000 acres in relation to the 4 million.

Mr. WALSH. Yes.

Mr. THOMAS. Let me mention something there. I think we have to concede that there is a tremendous amount of land that I think you could say of course has no valuable minerals on it. It just is not the kind of land where coal would be found.

Mrs. MINK. May I expand my inquiry then to ask for a response to the question in terms of the fee title and the title where you hold the mineral reserves, the mineral rights; what portion are you able to specifically say has absolutely no coal or very little, or so little that it could not be economically developed? This so we might know to what extent these holdings need to be excluded in evaluating what we are talking about. Is that possible?

Mr. WALSH. That is like the 20,000 foot hole that one of the Congressmen spoke about earlier. There may be coal at any depth. Geologists may say that it is not possible, but I believe if you

Mrs. MINK. I realize the questions are difficult, but I think it is equally important for us to understand exactly what we are dealing with because it is you who is suggesting to this committee that you are being stymied from your coal development and that this is withholding "" millions of tons of coal from the benefit of the country. We are trying to ascertain what we are dealing with.

You have posed an inquiry to the Congress and we are attempting to deal with it. But we need to have the facts in order to make a rational decision.

So if it is at all possible I think that last question is extremely important to answer in order for us to evaluate the total resource that we are dealing with.

I apologize for the fact that the other members had to leave while. you were presenting your testimony, but I am sure that all of them will read it extensively.

I will offer all the members who are here this morning an opportunity to offer questions if they would like. These will be submitted to you at one time so that you may combine your answers if they are duplicative in any way.

We thank all three of you for coming here and giving us the benefit of your advice and information.

We thank you very much for that.

We will continue the hearings on Thursday promptly at 9:45 a.m. We will hear first at that time from the Department of the Interior. At this point we will insert into the record a statement from E. E. Thurlow, assistant vice president of the Burlington Northern Railroad. [The statement referred to follows:]

STATEMENT OF ERNEST E. THURLOW, ASSISTANT VICE PRESIDENT, BURLINGTON NORTHERN, INC.

My name is E. E. Thurlow. I am by training and profession a geologist and am employed by the Resources Division of Burlington Northern Inc. at Billings, Montana, as Assistant Vice President, Coal and Minerals.

This statement endorses the reasons advanced by Santa Fe and others in support of the proposal to repeal Section 2(c) of the Mineral Leasing Act. It is not, however, my purpose to deal with the legal issues involved in the antitrust arguments which have been raised in the Committee's hearings. Instead, I wish to describe the practicalities of the situation as I see them in my daily work. That work involves not only appraisal of coal lands and the negotiation of coal leases; it concerns also my company's effort to initiate the construction of a fertilizer manufacturing plant. I will deal with the latter subject first since it illustrates the dilemma faced collectively by the Federal Government, the coal mining companies and the land grant railroads by reason of the so-called checkerboardin problem.

Through a subsidiary, Burlington Northern plans the construction of a fertilizer plant in McCone County, Montana, near the village of Circle. That project is known as Circle West. It has the enthusiastic support of most agricultural interests, including such organizations as the Montana Council of Cooperatives. They, as we, see the new facility as a means of alleviating the nitrogen fertilizer shortage caused by the fall-off in production of natural gas. The raw materials which Circle West will employ are local lignite (very low grade coal) and water.

Although the railroad already owns the coal underlying the alternate sections in the area planned for the lignite mine, it nevertheless through a subsidiary acquired outright ownership of all of the shares in the ranching company which held the surface rights over both railroad and Federal coal. We hope to lease the government coal in order that an economical and efficient lignite mine may be opened. Should Burlington Northern's involvement make it impossible because of Sec. 2(c) to acquire this coal, the entire project may have to be abandoned. At best, we will be required to mine alternate sections only, thereby unnecessarily disturbing far more land than would otherwise be required. In addition, our mining cost and the ultimate cost of the fertilizer will be forced upward. Thus the artificial legal disability created by Sec. 2(c) creates handicaps for a most constructive project-handicaps which to me make no sense whatever.

I turn now to the fact that the Public Land Law Review Commission after years of most careful work, found that Sec. 2(c) should be repealed and the United States Senate has itself several times passed bills which would carry out the Commission's recommendation. I emphasize the fact that were repeal effected Burlington Northern and other land-owning railroads would for once be able to bring some bidding competition to energy giants like EXXON, ARCO, Mobil, Peabody, Sun, and Continental Oil (Consolidation Coal Company). Believe me, in the West you are not dealing with small hole-in-the-wall mining firms which need protection. Put another way, on repeal of Sec. 2(c) the railroads could give the government help it could not otherwise obtain in getting a better return for its coal leases. This is not to say that we have any plans to mine and ship coal on our railroad; on the contrary, I am told that a section of the Interstate Commerce Act known as the Commodities Clause prevents a railroad from shipping its own coal. Nevertheless, we do know the geology of the territory as no one else does. Given authority to bid on Federal coal, we would assemble packages of coal property which are efficiently mineable by putting together title to adjacent government and railroad sections. Thus, selected seams could be fully and properly mined without waste. Disturbances of the surface could be minimized and reclamation would be facilitated. To illustrate the overall problem, I attach a sketch map which shows the typical configuration of mineable coal seams and the manner in which they wander across the countryside without regard to property lines. I venture also to remind you of the "Additional Views" of Messrs. Udall, Johnson, Taylor, Ruppe, and Martin, as set out in your Committee's Report to accompany H.R. 11500 (House Report No. 93-1072). It was there pointed out at page 179 in connection with the question of surface owner consent that the Congress should avoid an "irrational pattern" of mining dictated by title considerations and went on to say: "A more wasteful approach to the use of our vital coal resources can hardly be imagined. Coal is going to be mined and much of it will be strip mined. In the interest of both the environment and the energy economy the decision to strip mine should be based on a number of factors including environmental considerations, surrounding land uses and geologic conditions as well as property ownership patterns."

To repeat, the service which we could provide by way of assembling coal properties would certainly be useful to the government in conserving its coal resources. It would also be worthwhile to the mining companies which, because of checkerboarding, now cannot locate or acquire contiguous coal properties of a size adeequate to justify opening a mine. (Usually a western mine site requires a minimum of four square miles to meet operating needs and provide adequate reserves.) I certainly do not see any disadvantage to the government in giving us a bidding opportunity, the National Coal Association to the contrary notwithstanding. Does anybody really think that the energy firms need to be protected against the bids of resident railroads?

I emphasize that we seek nothing like the so-called preferential leases which many mining companies have enjoyed after having first obtained exploration licenses to locate Federal coal. What we want is simply to be treated like anyone else when it comes to making a competitive bid. It would make no sense were