8. The Interior Department witness before this subcommittee on September 11, 1981, quoted, with approval and as an authoritative source, the 1980 Justice Department's page 89 recital. We assume, therefore, that Department will accept the reasoning of Justice quoted above from pages 90, 91 and 92 immediately following in

the same report.

9. But Interior need not quote Justice alone. Interior can also quote Interior.

At page 85834 of the Federal Register of Tuesday, December 30, 1980, over the signature of the then Associate Director, BLM, as the introduction to the appendix to the Federal-Private Cooperative Coal Leasing Proposal, the readers of that official government publication could read this:

*

"This Country has vast reserves of coal. Its coal
deposits are widely distributed and vary greatly in
quality and value. Much of this coal is privately
owned and with a few notable exceptions, namely certain
concentrated railroad holdings, private ownership is
widely dispersed. The States also own significant
reserves. However, the most significant single owner
of U.S. coal reserves is the United States Government
and most of these reserves are located in the West.

"The 'checkerboard' pattern of ownership occurs in
some of the richest coal fields in the West, such as
the Green River Basin in Wyoming. This pattern may
have a significant effect on the development of U.S.
coal and competition for Federal coal leases. Checker-
boarding occurs where alternate sections of land are
owned by the United States and a private landowner or
corporation, most often a railroad company or its affil-
iates. Coal deposits in many areas of these checker-
board regions underlie a number of sections of land
owned by the government and private parties, making
efficient development of the deposit as a single econ-
omic unit difficult. Unless these coal deposits are
controlled through lease or ownership by a single
operator, the coal deposit may be mined piecemeal in
a manner that is neither efficient nor economical.

When a coal deposit underlies unleased Federal lands
and adjoining privately owned land, the competitive
interest in the unleased Federal coal may also be
diminished because prospective Federal lessees may
be uncertain of their ability to arrive at satis-
factory contractual agreements with the adjoining
private owner or owners. Also, the time needed to
bring a Federal lease into production in a checker-
board area may be significantly lengthened by the
extra time needed for assembly. In short, the checker-
board pattern of ownership may constitute a significant
impediment to the mining of coal in the checkerboard,
may reduce the value of any Federal lease to a potential
bidder, and may reduce competition as well. The total
effect may be inefficient mining of the coal, a loss
in the Department's effectiveness in meeting leasing
targets, and a significant reduction in Federal leasing
revenues.

For all of the reasons set out above and upon the reasoning adopted by both Justice and Interior with respect to anticompetitive aspects inherent in permitting railroads to lease federal-railroad checkerboarded lands

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we urge this subcommittee

to reject repeal of section 2 (c) of the Mineral Leasing Act of 1920, as is proposed by S. 1542.

as in

Mr. Lawrence, with his neighbors, stands ready now, the past, to fully participate in an approach at cooperative leasing of these checkerboarded areas, with these two qualifications:

First, that the rights and interests of all parties including the private surface owners of split estate lands be fully and equitably recognized and reflected in any final cooperative leasing or pre-leasing plan; and

Second, that the present prohibition of section 2 (c) unqualifiedly construed by Justice to apply to railroads and

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their subsidiaries, directly or by joint venture

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be left as

it has been for more than sixty-one years, at least with respect to checkerboarded lands.

A concluding reminder seems in order: with section 2 (c) still on the books, and enforced as it was intended to be, the land grant railroads can still lease their interspersed coal lands cooperatively, or uncooperatively. And they will then be assured

of both coal production revenues and substantial haulage revenues from transporting the coal produced from the checkerboarded areas. On behalf of my clients and myself, please accept our thanks for the courtesy extended to us by subcommittee members and the staff.

Federal Coal Production Regions in the United States: November 9, 1979