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by having more coa 1 haulage business and by earning more bonuses and royalties on its coal assets.

Congress has a long history of recognizing the need to

separate the production and transportation of coal. This has been to the benefit of consumers nationwide as shown by the

current low cost of coal relative to other boiler fuels.


circumstances should cause careful reflection on the need to

"fix" a low that has served the country well.

Thank you for your kind attention.

Senator WARNER. Are you going to tell us what percentage of this Burlington now has tied up in some way?

Mr. TEISSERE. There is a substantial amount of that coal which has been leased to Peabody Coal Co., particularly in this area right here. However, as has also been pointed out, those leases by and large come up for renewal in 1986 to 1990, in that time frame, and they are largely undeveloped.

Senator WARNER. That is a very impressive chart. Perhaps the Burlington witnesses, if they are still present-

Mr. ENNIS. It is impressive.

Senator WARNER. Perhaps at some point, before the record closes, you would like to address this chart.

Mr. ÉNNIS. We have a map like that that has the leasing on it and I think you will find that informative, and we will provide that for you. We have been reluctant to talk about our leases with other people, but I think now that the question is on the record, I will make that response.

Senator WARNER. We are now ready to proceed with the testimony of David Alberswerth of Western Organization of Resource Councils. STATEMENT OF DAVID ALBERSWERTH, WASHINGTON REPRE


Mr. ALBERSWERTH. Thank you, Mr. Chairman. My name is David Alberswerth. I am the Washington representative for the Western Organization of Resource Councils which is made up of three groups in the Northern Great Plains States of Montana, North Dakota, and Wyoming.

Our membership totals approximately 2,300 families in three States, most of whom operate family farming and ranching operations in communities which are being affected by coal development. We are opposed to the enactment of this legislative-

The map

has been retained in the subcommittee files.

Senator WARNER. Would you draw closer to the microphone. There are many who are anxious to hear your comments.

Mr; Alberswerth. My testimony deals, in some respects, with some of the arguments against this that you've heard, so I won't repeat them.

We are, as a matter of public policy, concerned about the anticompetitive aspects as it relates to the Burlington Northern for leasing Federal coal, and I think the previous witnesses have very credibly illustrated what the potential problem is.

The second set of questions pertain to the nature of western railroads, their corporate organization, and their responsibilities to the public under their land grant charters to provide rail transportation service.

We are also concerned that the Justice Department and Interior Department do not have sufficient authority to investigate potential anticompetitive affects of the leases, and we would like to see if this legislation has considered more definite policy guidelines on the type of information that the Department would assess in taking into account in assessing whether or not these issues would be anticompetitive or not.

The second set of problems that we see is simply the nature of the western railroads and their responsibility to provide service.

Burlington Northern has just recently turned into a holding company and its plans to abandon hundreds of miles of spur and branch lines serving agricultural communities in Montana, North Dakota, and Minnesota has raised questions in the minds of many residents and public officials in the region regarding Burlington Northern's responsibility to provide rail service to a variety of shippers.

The land grants that they were given that put them into this position were given for the express purposes of developing a rail transportation network.

We believe that if this legislation, or legislation similar to this, is enacted, then there should be some consideration, or some requirement, that the coal that is developed, the profits from that, should go into the maintenance of transportation services to agricultural communities in the Great Plains.

Those are minimum considerations, because if you look at the history of the land grants, those lands were not given to Burlington Northern

That basically concludes our testimony.
[The prepared statement of Mr. Alberswerth follows:

Western Organization of Resource Councils 419 Stapleton Building

317 Pennsylvania Ave., S.E. Billings, Montana 59101

Washington. D.C. 20003 (406) 248-1154

(202) 547-4466








S. 1542

September 11, 1981


I wish to thank the Subcommittee for the opportunity to testify today on

S. 1542. My name is David Alberswerth. I am the Washington Representative

for the Western Organization of Resource Councils, which is a coalition of three public interest groups in the Northern Great Plains states of Montana, North Dakota, and Wyoming. Our membership totals approximately 2300 families in the three states, most of whom operate family farming and ranching operations

in communities which are being affected by coal development.


We feel that a number of troublesome questions should be addressed and satisfactorily resolved before the Subcommittee recommends action on this

One set of questions we pose relates to the potential anti-competitive aspects of repealing Section 2(c) of the Mineral Leasing Act, especially as this relates to Burlingtion Northern (BN). The second set of questions perta in to the nature of western railroads, their corporate organization,

and their responsibilities to the public under their land grant charters to

provide rail transportation service.

The proponents of this measure are western land grant railroads which possess enormous coal holdings typically found in a "checkerboard" ownership pattern adjacent to sections containing federally owned coal. These companies have pointed to the November, 1980 Department of Justice study, Competition in the Coal Industry, to justify repeal of Section 2(c), essentially arguing that

the provision is an anachronism which serves no useful purpose.

The same

report does, however, point out that in the case of BN,

"... the company was found to have market power, and it was found to be able to restrict the output of transportation services by failing to increase the capacity of its rail network... it seems possible that leasing coal to the Burlington Northern would have an anti-competitive effect.


The report concludes on this point that were such a situation to arise, the
Interior Department could, upon recommendation of the Justice Department,

refuse to issue a

ederal lease.

In the context of the present Administration,

however, which seems at the moment to have no well-defined policy toward anti

trust issues, I believe that it is appropriate for this Subcommittee to

ask Justice and Interior what kind of policies and procedures would be applied

to such situations, and what considerations and information would be taken into

account. Also, the Subcommittee should consider whether or not this proposal should be amended to reflect any such considerations.

Furthermore, I believe that it is critically important to put the "BN problem" in perspective, so that no one has the mistaken impression that it is a minor

flaw in the context of the whole issue.

BN of course is the heir to the Northern

Pacific land grant. The company estimates its strippable coal deposits under

that grant to total over 14 billion tons.

Most of that coal is located in

eastern Montana and western North Dakota in the above mentioned checkerboard

ownership pattern adjacent to federally owned coal. The attached map will give some idea of the extent of BN's coal holdings in eastern Montana (attachment A). The black squares represent sections of BN coal ownership. This ownership

pattern extends for 60 miles on either side of their

main line right

of-way through eastern Montana, a 120 mile wide swath.

Any company desiring to

de ve lop a logical mining unit in these vast checkerboarded areas must obtain

both federal and BN coal leases to do so.

Were BN granted the right to lease

federal coal, it seems quite obvious that in these areas of checkerboarded

ownership patterns, BN could engage in practices which could prevent or inhibit

non-railroad competitors which may have obtained a federal lease from developing coal in such areas. Some of these potential practices include witholding BN coal from the federal lessee in order to (1) negotiate favorable lease

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