Once again, however, the emotional charge has been made that the railroad land-grant coal reserves are so vast and strategically located that, if railroads are ever permitted to participate in competitive federal leasing, they will dominate and monopolize Western coal production. That charge is simply false and unsupportable.

First, the railroad land-grant coal is at a

disadvantage in competing with coal controlled by the major coal companies from other areas. The coal from the Powder River Basin which has proven to be cheaper to mine and more desirable to customers than most railroad land-grant coal, is expected to dominate the market for new utility plants for the forseeable future. This coal, located far from any railroad land-grant, is largely controlled by the energy giants who are opposing repeal of Section 2 (c). In fact, most of the federal coal for which my company intends to bid is located off the land-grant checkerboards.

Second, the individual railroad holdings are in

fact much smaller than reserves controlled by some of the

companies who currently dominate Western coal production and hold a large share of federal leases.

Third, enormous portions of the railroad reserves

are already committed by lease to companies like Peabody and Consolidation, the nation's first and second largest coal

producers. These two companies are leading the fight

against repeal of Section 2 (c).

Fourth, unlike the reserves of major coal com

panies, only a small fraction of railroad reserves can be developed by their owners. Because they are interspersed

among federal reserves in land-grant checkerboards, railroad reserves can be developed only where the Interior Department is willing to lease. Even where Interior is willing to lease, no railroad can develop more than a small number of coal projects in its land-grant checkerboard before it runs up against the statutory acreage restrictions of 46,080 acres on the federal lease holdings permitted to any one company in one state.

Fifth, both the Interior Department and Justice Department can prevent railroads from acquiring a monopoly position in Western coal production. The Interior Department can prevent the unlocking of all or any part of the land-grant checkerboard by simply declining to offer coal for lease in those areas. Further, the Attorney General can effectively veto any federal coal lease to a

railroad whenever he finds the lease may create a situation inconsistent with antitrust laws.

Each of these reasons standing alone is sufficient

to foreclose any threat of railroad monopoly of Western coal production. Taken together, they make the threat of

railroad domination wholly impossible.

Opponents of repeal also argue that railroads

might achieve a coal monopoly by abusing their position as major transporters of coal. That possibility has been extensively analyzed by the Antitrust Division, who began their analysis with the conviction that Section 2(c) might be justified by a danger of just that sort of abuse. But in the 1980 Justice Department Report, the Antitrust Division found they had been wrong in this concern. With only one possible exception, they found that the Western railroads would not be able to engage in an anticompetitive use of their transportation positions.

so.

Further, they found that no

Western railroad would find it profitable to misuse its position as a railroad, even assuming it had the power to do The Justice Department's study concluded it was unnecessary and, in fact, anticompetitive to exclude the entire railroad industry from competing for federal coal leases because of the unlikely possibility that a single

railroad might act anticompetitively, especially when the Justice Department may veto any federal coal lease which threatens competition.

The Justice Department's conclusions do not

reflect any newly permissive philosophy of antitrust enforcement. They were reached originally by the Carter Administration's Antitrust Division, who were as aggressive as anyone in Government in perceiving and pursuing potential threats to competition. They were reached by the same people who initially held that permitting railroads to hold federal coal leases might present some threat to competition. The Antitrust Division's unequivocal rejection of that possibility after thorough study is the best possible evidence that the danger does not exist.

As Assistant Attorney General Baxter testified on September 11, the Justice Department's conclusions are unaffected by railroad rate deregulation Congress enacted in the Staggers Act. The Justice Department's analysis assumed railroads would be free of effective regulatory restraints against anticompetitive conduct. It concluded that even on that assumption federal leasing to railroads would not threaten competition so as to justify the blanket prohibition of Section 2(c). The fast is that, even with some rate

deregulation, railroads are still subject to continuing regulatory requirements. Any attempt by railroads to use their transportation services to control Western coal production would subject them to very serious risks of criminal and treble damage liability under the antitrust laws.

Furthermore, any railroad inclined to flaunt the law and risk such grave consequences would also face denial of any further federal leases. This comes under the Attorney General's statutory power to recommend against any federal lease likely to present a threat to competition.

With respect to the leasing process, the opponents of repeal have asked Members of this Committee to believe that railroads will achieve a monopoly by dominating the bidding for future federal coal leases. However, it would be absolutely impossible for railroads to achieve a dominant reserve position through the leasing process. The Conoco witness, speaking for MARC, asserted that "if Section 2 (c) is repealed, the railroads will acquire the remaining federal coal lands." That statement is demonstrably untrue. The statutory acreage limitations would prohibit every railroad, like any other lessee from acquiring more than 46,000 acres of federal leases in any one state. In southern Wyoming, the acreage limitation would limit Rocky Mountain Energy Company to acquiring leases for two or three