Mr. STEIGER. Excuse me, are the squares sections?

Mr. BAILEY. Yes.

And the other lands not covered are either private lands, State lands, or railroad lands.

One of the examples shows three coal seams that can be surface mined.

The unit covers about 60,000 acres. It is roughly a third Federal land.

In this LMU so far it appears there are about 80 to 100 million tons of coal. This shows the complex problem of trying to mine where you have these checkerboard patterns.

Mrs. MINK. In that lower seam that you are pointing to in the logical mining unit, how many different owners do you have on each of those squares?

Mr. BAILEY. On where?

Mrs. MINK. On the lower seam that you pointed to on your chart there, how may different

Mr. BAILEY. You mean here?

Mrs. MINK. Yes. How many different owners would you have to involve in order to develop that seam?

Mr. BAILEY. I believe it would be the Federal Government and the railroad. At some places in here, are a few State sections.

I do not have those marked but there are three or four State sections within the LMU.

Mrs. MINK. The uncolored squares you have indicated are rairoad holdings, the yellow would be what?

Mr. BAILEY. The yellow is an application for a lease. Each of these colors are different applications.

Mrs. MINK. What are the pink squares?

Mr. BAILEY. They are applications for lease, too, for Federal lands.

Mrs. MINK. Where are the Federal lands with respect to your chart then?

Mr. BAILEY. These colored sections are the Federal lands.

Mrs. MINK. What color?

Mr. BAILEY. All the colored ones, the green, the orange, the yellow, the blue, and the red.

Mrs. MINK. The color shows lease applications. But the color does not show status of the lands. I am trying to understand what the chart is. It is difficult to see the colors from up here anyway.

Mr. TURCOTT. Any section of it that is colored, partially, is Federal lands under individual separate applications for preference right lease under the 1920 Mineral Leasing Act. I am showing the actual situation in the known coal area.

Now the alternate sections which can be seen best here, the true checkerboard, are still railroad owned. Now you get up here and you get a different version, you do not have a true checkerboard. What happens here is that over time some of the Federal land has been disposed of under the land laws to private interests and/or to States under the statehood acts.

So we have the true checkerboard here in the South. It gets a little muddled here and it gets more like a true checkerboard.

Mr. STEIGER. Would the gentlelady yield.

Mrs. MINK. Yes.

Mr. STEIGER. Would either of you gentlemen point to the two southernmost areas of coal seams, would you point to the railroadowned checkerboard? Which of the checkerboards do the-

Mr. BAILEY. This is railroad, this, this, this, this, this.

Mr. STEIGER. So in the southern seam we have-I think this is what the gentlelady was getting at-we have the true alleged problem that we face by 2(c). Would you describe what it would take now to exchange or make that a logical mining unit just on the lower seam under the present law if it is possible?

Mr. BAILEY. Under the Federal law, the ones that get the Federal lease in this lower part would have to have the railroad lands to make logical mining units to be economical.

Mr. STEIGER. In other words, there is no way that you could mine that whole seam under present law by a single entity. It would have to be mined by, are you saying, the seam would have to be mined in sections by different owners or it would not be mined at all. Is that what you are saying?

Mr. BAILEY. Unless the same person that had the Federal leases could lease the railroad lands.

Mr. STEIGER. Yes.

Mr. RUPPE. Would the gentlelady yield?

Mrs. MINK. Yes, I would yield.

Mr. RUPPE. How big an area is this whole thing circumscribed? Mr. BAILEY. This is about 60,000 acres.

Mr. RUPPE. Is this a logical mining unit?

Mr. BAILEY. Yes, it would be.

Mr. RUPPE. Could this-in the legislation that we have before us, as I recall, the maximum size logical mining unit that would be permitted would be 25,000 acres.

Mr. STEIGER. No. Would the gentleman yield because it is a very good point.

Under the existing Mineral Leasing Act, as I understand it, coal leases are confined to 46,000 acres by a single owner in a single State. Mr. TURCOTT. Yes, sir.

Mr. STEIGER. Therefore, this 60,000 would really be impossible to achieve with a 46

Mr. TURCOTT. If there is not 46,000 acres of Federal landMr. BAILEY. There is roughly 20,000 acres of Federal lands, sir. Mr. STEIGER. I understand, so you would be in compliance with the law.

Mr. TURCOTT. Yes.

Mr. STEIGER. Because the 60,000 includes 40,000 other than Federal lands.

Mr. TURCOTT. Well, it included-right; 40,000 of other lands, mostly railroad.

Mr. RUPPE. Getting back to the legislation we have passed out of this committee, my recollection of the law not on the books but the law coming out of this committee is that we are limiting where there are Federal lands involved, any logical mining unit to a combined maximum of 25,000 acres. This is about 60,000 acres. With the passage

of this legislation and faced with what we have on your map there, what would happen to the development of this area or could it be developed with the legislation that has been passed by the full committee only that would limit any logical mining unit involving Federal ownership to any degree to a maximum of 25,000 acres?

Mr. STEIGER. Total.

Mr. RUPPE. Yes, total.

Mr. BAILEY. You would have to cut it into probably three units which, with the way the coal reserves are scattered out, it would possibly be uneconomical. But putting it into three different units you would have to produce from the three different units and you probably would not produce any more coal but it would increase the cost because you would have to have maybe three sets of mining equipment and three mines running instead of one.

Mr. RUPPE. So in your opinion, it would probably make it somewhat more costly to mine. Would it possibly in any way diminish the recovery of the maximum potential of coal reserve there or does it affect the cost or the totality of coal removal over the entire unit?

Mr. BAILEY. I do not really believe it would affect the amount of recovery but what I am saying is you would have to have three mines working instead of one so you could reach production.

Mr. RUPPE. Well, it would be more costly, and somewhat greater organizing problems in a three-mine operation than it could be in a single mining operation.

Mr. BAILEY. That is right.

Mr. STEIGER. Would the gentleman yield?

Is it possible that some of the smaller deposits would simply not be mined because they would not be as economical to mine if they were part of a larger unit?

Dr. Ross. Yes.

Mr. STEIGER. I wonder if Mr. Turcott could explain that.

Mr. TURCOTT. Mr. Bailey is one of the Interior's most capable and competent mining engineers for coal. And I was going to ask him if he answered Congressman Ruppe's question with respect to geologic reference in conservation of coal just being available through modern technology; or were you answering on an economic basis?

You said that you did not think there would be much difference in the recovery of coal in three units versus one. I would think that there would be a question of economics, Madam Chairman. There would not be as much coal mined. I would not call that conservation of coal.

Mr. STEIGER. In other words, you are saying, your opinion, at least, is that it is possible some of these smaller deposits would simply not be mined rather than to establish a structure that complies with the law.

Is that correct? Is that possible?

Mr. TURCOTT. As a practical matter, the mining industry is replete with this, that as mines diminish and the coals are more difficult to get at there may be a tendency to leave that last 10 or 12 percent and

move out.

Mr. RUPPE. You could lose a little production or some production by virtue of the fact you would have three mining plants and you would be considering mining just in your own piece of the pie rather

than considering the totality which would be, obviously, leased to different persons and perhaps mining operations than if a guy had the whole lease.

Mr. TURCOTT. Yes, I would like to have our doctor of economics talk on this, too. The Geological Survey, in talking to the BLM, servicing us as the minerals experts, has told us that under a geological reference and from a mining standpoint this is the logical mining unit.

This really is an actual situation, planned to get the optimum conservation of the coal resource. As Mr. Bailey has said, it could be divided into three units but on optimum basis the advice of Geological Survey to us is to keep it in 60,000 acres and one whole mining unit.

Mr. RUPPE. Over what span of years is this a logical mining unit to be developed, as you look at it? 20, 40, 50?

Mr. BAILEY. I would say this because if expected production runs up to 4 million tons a year or so, with hundred-million tons of reserves it would be a 25-year reserve.

Mr. STEIGER. What area of the country is this in? Excuse me.
Mr. BAILEY. It is in Wyoming.

Dr. Ross. I think what you would find for surface mines, where the front-end costs of capital to acquire equipment, drag lines, etc., to begin operation are so substantial, is that if the requirement that there be several logical mining units did require separate mining on each of those parcels, you would see the margin to which the mine operator would be able to go economically in each of those areas

reduced.

That is, the point where it would not be economic to continue. operations further would be reached earlier than if the operator had a larger mine where he could experience what are called economies of scale in the development of it.

So there would be a potential both for individual seams not to be developed and for a seam to be abandoned earlier than it would otherwise be.

Mr. RUPPE. You have 60,000 acres and I think you suggested 100 million tons of coal. Mathematically, that runs to about 1.5 million tons of coal per acre. Is that average in the West?

Mr. BAILEY. It is not an average but you have three deposits. What I said was surface mineable coal. But there are so many bare spaces in between the outcrops when you mine to the high wall you can come here, you have to move to another seam. So you do not say you have the whole 60,000 acres solid mineable. You may have coal under these, but it is not economical to mine underground or go deeper by surface mining.

Mr. RUPPE. Is this a fairly technical situation where you have several seams and you have a dispersal of coal over a bigger area? I keep thinking about composite sections of coal and million acres per unit and I guess it really does not work that way. Is this more typical than not, that the coal is spread over a wide area and several seams are mineable?

Mr. BAILEY. In many places it is that way. In some places you have solid seams where you can mine but maybe not this big.

Mr. RUPPE. So it is difficult to generalize as to how the mining of the coal is done in the West. It is difficult to generalize what makes

a logical mining unit because the amount of coal and how it lies varies. from area to area in the West?

Dr. Ross. Yes, I would say so.

Mr. STEIGER. That is right.
Mr. BAILEY. Yes.

Mr. RUPPE. Mr. Turcott?

Mr. TURCOTT. I never fully answered your question on whether we had any suggestions on exchange. I mentioned the administration's bill and the work that another subcommittee of the full committee here is working on and then the Senate, the other body, is working on the organic act. I have all that here.

I have some working drafts of possible legislation on exchanging of mineral interests that are personal, they are not approved by the Department, but I could furnish them and I could furnish the solicitor's opinion on the matter of exchanging only mineral interests in land rather than the full fee.

Mrs. MINK. If those opinions by the solicitor can be made available to the committee it would be most helpful.

Those documents that you have there will be inserted in the record at this point.

[The documents referred to follow:]

EXCHANGE PROVISIONS OF EXISTING LAW, AS CONTAINED IN RELEVANT PORTION OF SECTION 8 OF THE TAYLOR GRAZING ACT (43 U.S.C. 315g) $315g. Acceptance of donations of land; exchange of lands; notice of contemplated exchange; reservation of minerals, easements or rights of use; fee for exchange. (a) Where such action will promote the purposes of a district or facilitate the administration of the public lands, the Secretary is authorized to accept on behalf of the United States any lands within or without the exterior boundaries of a grazing district as a gift.

(b) When public interests will be benefited thereby the Secretary is authorized to accept on behalf of the United States title to any privately owned lands within or without the boundaries of a grazing district, and in exchange therefor to issue patent for not to exceed an equal value of surveyed grazing district land or of unreserved surveyed public land in the same State or within a distance of not more than fifty miles within the adjoining State nearest the base lands.

(c) Upon application of any State to exchange lands within or without the boundaries of a grazing district the Secretary of the Interior shall, and is directed to proceed with such exchange at the earliest practicable date and to cooperate fully with the State to that end, but no State shall be permitted to select lieu lands in another State. The Secretary of the Interior shall accept on behalf of the United States title to any State-owned lands within or without the boundaries of a grazing district, and in exchange therefor issue patent to surveyed grazing district land not otherwise reserved or appropriated or unappropriated and unreserved surveyed public land; and in making such exchange the Secretary is authorized to patent to such State, land either of equal value or of equal acreage: Provided, That no State shall select public lands in a grazing district in furtherance of any exchange unless the lands offered by the State in such exchange lie within such grazing district and the selected lands lie in a reasonably compact body which is so located as not to interfere with the administration or value of the remaining land in such district for grazing purposes as set forth in this subchapter. When an exchange is based on lands of equal acreage and the selected lands are mineral in character, the patent thereto shall contain a reservation of all minerals to the United States; and in making exchanges of equal acreage the Secretary of the Interior is authorized to accept title to offered lands which are mineral in character, with a mineral reservation to the State.

For the purpose of effecting exchanges based on lands of equal acreage the identification and area of unsurveyed school sections may be determined by protraction or otherwise. The selection by the State of lands in lieu of any such protracted school sections shall be a waiver of all of its right to such sections.