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ST. LOUIS-SAN FRANCISCO RAILWAY CO. EASEMENT

OVER FEDERAL LAND

TUESDAY, JUNE 4, 1968

HOUSE OF REPRESENTATIVES,
COMMITTEE ON AGRICULTURE,

Washington, D.C. The committee met, pursuant to notice, at 10 a.m., in room 1301, Longworth House Office Building, Hon. W. R. Poage, chairman of the committee, presiding.

Present: Representatives Poage, Gathings, Abbitt, Jones of Missouri, de la Garza, Vigorito, Jones of North Carolina, Teague, Miller, Mayne, Zwach, Kleppe, and Myers.

Also Present: Christine S. Gallagher, clerk; William C. Black, general counsel, Hyde H. Murray, assistant general counsel, L. T. Easley, staff consultant.

The CHAIRMAN. The committee will please come to order. We have our colleague from Missouri with us today, Mr. Ichord, who wants to present a bill, H.R. 17320, to authorize the Secretary of Agriculture to grant an easement over certain lands to the Saint Louis-San Francisco Railway Co. (The bill and report follow:)

[H.R. 17320, 90th Cong., second sess.) A BILL To authorize the Secretary of Agriculture to grant an easement over certain

lands to the Saint Louis-San Francisco Railway Company Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That, notwithstanding any other provision of law, the Secretary of Agriculture is authorized, upon such terms as he may deem advisable, to grant, and to convey by proper instrument, a perpetual easement to the Saint Louis-San Francisco Railway Company, its successors and assigns, in, upon, across, and over national forest lands and other lands under the jurisdiction of the Department of Agriculture for the construction, maintenance, and operation of a railway line between a point approximately one and seventy-five one-hundredths miles north of Keysville, Crawford County, Missouri, to a point at or near Buick, Iron County, Missouri, and for any related purpose deemed appropriate by the Secretary. Such easement (1) shall be granted only upon a finding by the Secretary that it will not be incompatible with the public interest, (2) shall not include any more land than is reasonably necessary for the purpose for which granted, (3) shall include provisions for payment of adequate compensation, and (4) may include a right to use from the subject lands materials and products for the construction and maintenance of authorized improvements thereon upon the payment of adequate compensation therefor.

Sec. 2. All or any part of such easement may be annulled or forfeited by declaration of the Secretary for failure to comply with the terms of the grant or for nonuse for a period of two consecutive years or abandonment of rights granted under authority hereof.

(51)

DEPARTMENT OF AGRICULTURE,

Washington, D.C., June 4, 1968. Hon. W. R. POAGE, Chairman, Committee on Agriculture, House of Representatives.

DEAR MR. CHAIRMAN : As requested here is our report on H.R. 17320, "To authorize the Secretary of Agriculture to grant an easement over certain lands to the Saint Louis-San Francisco Railway Company."

The Department of Agriculture recommends enactment of H.R. 17320.

This bill would authorize the Secretary of Agriculture to grant a perpetual easement to the Saint Louis-San Francisco Railway Company, its successors and assigns, for the construction, maintenance, and operation of a railway line on National Forest and other lands administered by the Secretary in Crawford and Iron Counties, Missouri. The easement would be granted upon such terms as the Secretary deems advisable. It could be granted only if the Secretary found it would not be incompatible with the public interest. It could not include more land than is reasonably necessary for the purpose for which granted.

Provisions for payment of adequate compensation would be included in the proposed easement. Also, it could include a right for the Company to use from the easement lands materials and products needed for construction and maintenance of authorized improvements. The Company would be required to pay adequate compensation for the materials and products used.

Section 2 of H.R. 17320 provides for annulment or forfeit of the easement by declaration of the Secretary for noncompliance with the terms of the easement, nonuse for a period of two consecutive years, or for abandonment.

The Saint Louis-San Francisco Railway Company presently operates a railway line over the route referred to in this bill. The portion of the right-of-way, about 14 miles, which is on National Forest land is being temporarily used under a special use permit issued by the Forest Service in this Department. The area of National Forest land occupied by the right-of-way is about 139 acres.

Intensive activity in the mining and processing of lead deposits in this area served by the railroad has resulted in the need for improvements to meet increased traffic on the line. We understand that the lending institution expected to provide the financing for the improvements is requiring that the Company obtain a greater interest in the right-of-way than the revocable special use permit.

There is no present authority to grant easements for a railroad right-of-way across lands acquired under the authority of the Weeks Act of March 1, 1911 (36 Stat. 961). This is the Act under which the concerned lands were acquired. Also the authority of the Secretary to issue special use term permits is limited to an area of 80 acres and a period of 30 years, neither of which is adequate for the purposes of the Company here.

H.R. 17320 is almost identical to Private Law 86–478 (74 Stat. A96), which met a similar situation. As in that case, we believe this bill contains adequate provisions to enable the Secretary to fully protect the public interest.

The Bureau of the Budget advises that there is no objection to the submission of this report from the standpoint of the Administration's program. Sincerely yours,

ORVILLE L. FREEMAN, Secretary. The CHAIRMAN. Mr. Ichord, do you wish to open the discussion, or would you prefer to have Mr. Nelson, or how would you like to proceed?

Mr. ICHORD. If it please the Chair, I can briefly explain the bill to the Chair.

The CHAIRMAN. Very well. We will be happy to hear you.

STATEMENT OF HON. RICHARD ICHORD, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF MISSOURI

Mr. ICHORD. Mr. Chairman and members of the committee, I might conserve time by briefly summarizing the statement which I have.

(The statement in full follows:)

STATEMENT OF HON. RICHARD H. ICHORD, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF MISSOURI

H.R. 17320 authorizes the Secretary of Agriculture to grant St. Louis-San Francisco Railway Company (Frisco), its successors and assigns a perpetual easement over national forest lands in the counties of Crawford and Iron, in the State of Missouri. The prompt enactment of this bill is of the utmost importance to the district which I represent and to the entire State of Missouri.

Frisco is a Missouri corporatiop which operates railroad lines in Missouri, Oklahoma, Kansas, Texas, Arkansas, Tennessee, Mississippi, Alabama and

Florida. It operates approximately 25% of the rail mileage in the State of Missouri. In recent years the Frisco has been one of the railroads which has fared remarkably well and has improved its rail road and at the same time been able to pay its owners a reasonable return on their investment.

In 1964 it became public knowledge that a number of mining companies had discovered sizable lead deposits in the south central part of Missouri, including Crawford and Iron Counties. These discoveries were sufficient to attract the interest of a number of substantial mining companies and to justify their commitment to expend approximately $150,000,000 on mining and smelting facilities in the area. There was no rail transportation available in this area and these mining and smelting facilities would have had to depend upon the winding and hilly roads in this mountainous area for their transportation.

After consultation with the mining companies and surveys of the area, Frisco was satisfied that construction of a line of railroad to serve this area was feasible both from an engineering and an economic standpoint. It therefore applied to the Interstate Commerce Commission for authority to construct 32.7 miles of track from a connection with one of its lines into this lead belt area and received authority to begin construction on November 4, 1964.

After extensive engineering surveys of the area construction was begun in January of 1966 and was completed in July of 1967. The construction of this new line of railroad has required a capital expenditure by the Frisco of approximately $6,600,000. It is one of the longest lines of new railroad to be built in the United States in many years.

As a part of this project, it was necessary for the Frisco to obtain sufficient right of way for the construction. All of the right of way which was not located in the Clark National Forest was obtained by either purchase or condemnation. However, approximately 14 miles of the new railroad had to necessarily traverse the National Forest and after consultation with the Forest Service, Frisco obtained the standard Special Use Permit covering the proposed route from the Forest Service. This Special Use Permit was all that the Forest Service could grant without special authority such as is provided in H.R. 17320 because the Clark National Forest is "acquired forest land” and was not part of the public domain. The Forest Service likewise could not grant a Term Permit because there were more than eighty acres of land involved.

The Special Use Permit was satisfactory to the railroad and was used as the basis for the construction. When the line was nearing completion, the railroad made arrangements for long term financing of the project. Under the arrangements which have been made, a group of eight institutional lenders will lend $6,000,000 secured by a purchase money mortgage upon the line of railroad. The railroad's stockholders authorized the borrowing and the Interstate Commerce Commission has approved the transaction.

In the negotiations leading up to the closing of the loan, the lenders raised an objection to the Special Use Permit on the grounds that it was, by its terms, not transferrable and one of the provisions provided for the revocation of the Permit at the discretion of the Regional Forester. The lenders felt that these provisions were not compatible with the 25-year loan which they were making. Examination of the operation of these provisions has indicated that they have seldom, if ever, been used, but this practice was not sufficient to satisfy the lenders. In order to resolve this objection raised by the lenders, Frisco seeks the enactment of H.R. 17320 which will enable the Secretary of Agriculture to grant Frisco, its successors and assigns a perpetual easement over the land traversed by this new line of railroad.

This new railroad, which is called the Lead Belt Line, is a valuable asset to the communities which it serves. This undeveloped rural area in the Ozark mountain region has been one of the forgotten spots in our country. Economically it has not developed for many years and the mining operations which are now operating in the area will give the economy of the entire area a terrific boost. The investment of approximately $150,000,000 in the area, together with the new jobs for approximately 2,000 people, will have a lasting effect. This is in an area where the total population was only approximately 10,000 and where no industry previously existed. The expansion and the construction of the mining facilities and the construction of the railroad has helped to provide many new jobs and will in the future provide many new jobs and has transformed this formerly depressed area into a stable mining community. The overall project will aid the Forest Service's objective of creating a rural renaissance whereby rural areas will become attractive and people will stay in them or move into them and assist in the restoration of a rural-urban balance.

One of the most definite advantages to the United States is that under these projects royalty agreements in the areas served by this railroad are presently amounting to approximately $400,000 per year and these are expected to increase to approximately $1,000,000 for the year 1969 and every year thereafter. Twenty-five percent of this amount is to be distributed to the various counties in the area upon a prorated basis depending upon the amount of governmentowned land of the Clark National Forest in each county.

The representatives of the Frisco have informed me that throughout the handling of this project they have received the fullest cooperation from the representatives of the Forest Service who have attempted to assist them in every way in the construction of the line and in attempting to satisfy the objections of the lenders.

The passage of H.R. 17320 is of utmost importance to the Frisco and to the communities served by this line of railroad. I therefore earnestly request that the committee give this bill favorable consideration. Since it is important to the Frisco and to the institutions who have agreed to lend money on this project that the long term financing arrangements be consummated at the earliest possible date, I request that you give this bill immediate and special consideration so that those financing arrangements can be finally closed before the end of the month.

Mr. ICHORD. H.R. 17320 is for the purpose of permitting the Department of Agriculture, specifically the Forest Service, to grant a perpetual easement to the St. Louis-San Francisco Railway Co., commonly known as the Frisco Railway, in my district over 30 some odd miles of land-32.7 miles long, but only 14 miles through the Forest Service lands in my district.

Mr. Chairman, this area is still one of the hottest mineral developing areas in the United States with the recent discovery of magnetic iron ore and also large lead deposits. As a matter of fact, there are better than 150 million dollars of investment already made in mines and smelters. The exploratory developments are still going on. Several additional mines are being constructed.

At the present time there are two new smelters in the area under construction for the smelting of lead mined in the area. The Frisco Railroad in 1966 surveyed for a construction of a railroad to serve the mines and the smelters in the area and they completed this construction in July 1967, under a temporary or special-use permit granted by the Forest Service.

The difficulty arose when Frisco Railroad started to close its loan with its lenders back in New York City. The lenders refused to complete the loan on a special-use permit. As the Chair and the members of

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the committee well know, the Forest Service cannot dispose of any lands permanently. It can exchange lands, but it cannot permanently dispose of them. The Forest Service had granted a special permit, but that would not be sufficient for the lenders to complete the loan. So this is a bill to authorize the Department of Agriculture to grant a permanent easement.

I would point out to the Chair and to the members of the committee, that this follows an act, Public Law 86-478, a bill passed by this committee and by the Congress on September 13, 1960, Public Law 86–478, which granted a perpetual easement to the Cincinnati and Southern Railway over Forest Service land. This is almost identical. I think there was one change in wording from the 1960 act that was suggested by the Forest Service in order to conform with some of their policies.

At the present time the Frisco Railroad is paying about $650 a year for the special-use permit, but I understand that the Department of Agriculture, the Forest Service, is going to insist upon the payment of a lump sum for the perpetual easement.

This is extremely important, Mr. Chairman, to Missouri and particularly to my area, and I would respectfully request that the committee in its wisdom expedite the matter as quickly as possible. I would be very happy to answer any questions that you might have about the matter.

The CHAIRMAN. Mr. Ichord, we are always delighted to have you come before this committee, whether it be on a matter relating to crops or whether it be on a matter relating to property.

You did make mention of something that I did not have clearly in mind. You said that the Forest Service would require the railroad to make a lump sum payment. How much of a lump sum payment?

Mr. ICHORD. I just asked the representatives of the Forest Service what would be the amount. They told me that had not been established as yet.

The witnesses from the Forest Service are here and perhaps they can give the committee some idea what the sum will be. This will involve about 138.7 acres of Forest Service land.

There are 14 miles of land through Forest Service lands, and the right-of-way will average about 100 feet, and probably a little less. The CHAIRMAN. The railroad is already built.

Mr. ICHORD. The railroad is already built under a special use permit. But the difficulty arose, and I think the members of the committee can see why-I know if I were a lender, I would not want to lend money on the railroad property which would be revocable at will by the Government. So in the closing of the loan, they required a perpetual easement. As I stated, apparently railroads have encountered this difficulty previously as in 1960 we granted a perpetual to the Cincinnati and Southern Railway by the passage of Public Law 86–478.

The CHAIRMAN. Are there any other questions of Mr. Ichord ?
Mr. TEAGUE. I have no questions, Mr. Chairman.
Mr. ZWACH, Mr. Chairman.
The CHAIRMAN. Yes, Mr. Zwach.

Mr. ZWACH. I presume, Mr. Ichord, the lease arrangement would protect against fire and all other hazards that are involved.

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