Coal Management: Noncompetitive Leases; Coal Management Provisions and Limitations

Note: EPA no longer updates this information, but it may be useful as a reference or resource.

[Federal Register: January 18, 2002 (Volume 67, Number 13)]
[Proposed Rules]
[Page 2618-2623]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18ja02-15]

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DEPARTMENT OF THE INTERIOR
Bureau of Land Management
43 CFR Parts 3430 and 3470
[WO-320-1430-PB-24 1A]
RIN 1004-AD43

Coal Management: Noncompetitive Leases; Coal Management
Provisions and Limitations

AGENCY: Bureau of Land Management, Interior.
ACTION: Proposed rule.

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SUMMARY: The purposes of this proposed rule are to correct a technical
error relating to coal lease modifications made in a final rule
published on September 28, 1999 (64 FR 52239)(the 1999 rule), and to
amend the regulations to reflect the statutory increase in the maximum
acreage of Federal leases for coal that may be held by an individual or
entity in any one state as well as nationally.
This rule would revise the regulations of the Bureau of Land
Management (BLM) to reflect correction of a technical error regarding
the requirement of a public hearing and publication (in the Federal
Register and a general circulation newspaper) of a notice of
availability of environmental analysis documents for coal lease
modifications. This error was made in conjunction with the BLM's
September 1999 regulatory revisions incorporating public participation
procedures into the competitive coal leasing regulations.

DATES: Comments on the proposed rule must be received or postmarked by
February 19, 2002, to be assured consideration in developing a final
rule.

ADDRESSES: Mail: Director (630), Bureau of Land Management,
Administrative Record, Room 401 LS, 1849 C Street, NW, Washington, DC
20240. Personal or messenger delivery: Room 401, 1620 L Street, NW,
Washington, DC 20036.
For information about the requirements for filing comments and how
to file comments electronically, see the SUPPLEMENTARY INFORMATION
section under ``Public Comment Procedures and Information.''

FOR FURTHER INFORMATION CONTACT: Mary Linda Ponticelli at (202) 452-
0350.

[[Page 2619]]

SUPPLEMENTARY INFORMATION:

I. Public Comment Procedures and Information
II. Background
III. Discussion of the Rule
IV. Procedural Matters

I. Public Comment Procedures and Information

A. How Do I Comment on the Proposed Rule?

If you wish to comment, you may submit your comments by any one of
several methods.
You may mail comments to Director (630), Bureau of Land
Management, Administrative Record, Room 401 LS, 1849 C Street, NW,
Washington, DC 20240.
You may deliver comments to Room 401, 1620 L Street, NW,
Washington, DC 20036.
Please make your written comments on the proposed rule as specific
as possible, confine them to issues pertinent to the proposed rule, and
explain the reason for any changes you recommend. Where possible, your
comments should reference the specific section or paragraph of the
proposal that you are addressing.
BLM may not necessarily consider or include in the Administrative
Record for the final rule comments that you send after the close of the
comment period (see DATES) or comments delivered to an address other
than those listed above (see ADDRESSES).

B. May I Review Comments Submitted by Others?

Comments, including names and street addresses of respondents, will
be available for public review at the address listed under ``ADDRESSES:
Personal or messenger delivery'' during regular business hours (7:45
a.m. to 4:15 p.m.), Monday through Friday, except holidays.
Individual respondents may request confidentiality, which we will
honor to the extent allowable by law. If you wish to withhold your name
or address, except for the city or town, you must state this
prominently at the beginning of your comment. We will make all
submissions from organizations or businesses, and from individuals
identifying themselves as representatives or officials of organizations
or businesses, available for public inspection in their entirety.

II. Background

On September 28, 1999, in conjunction with a settlement agreement
in the lawsuit, Natural Resources Defense Council, et al. v. Jamison,
et al., Civil No. 82-2763 (D. D.C.), the Bureau of Land Management
(BLM) issued a final rule (64 FR 52239) to establish regulatory
procedures by which the public may participate in the Bureau of Land
Management's regional coal leasing process. We issued the final rule,
which became effective on October 28, 1999, to satisfy terms of a July
1997 settlement agreement (Civil No. 82-2763 (D.C. Circuit No. 93-5029)
in which the Department agreed to identify in BLM's regulations the
points where the public may participate in regional coal leasing
decisions. In addition, the final rule amended the regulations in part
3400 to conform to statutory changes under the Unfunded Mandates Reform
Act of 1995, exempting several types of meetings from Federal Advisory
Committee Act requirements.

A. Lease Modifications

Section 3432.3, which addresses the terms and conditions of a coal
lease modification, currently requires compliance with the provisions
of 43 CFR 3425.3. At the time we wrote the regulations in subpart 3432
governing lease modifications, former Sec. 3425.3(a), addressing lease
modification terms and conditions, similarly provided that BLM could
not modify a lease until you met the requirements of Sec. 3425.3.
Former Sec. 3425.3 required BLM to prepare an environmental assessment
or impact statement before approving a lease modification.
To incorporate public participation procedures addressed in BLM's
Competitive Coal Leasing Handbook, the 1999 regulatory revision to 43
CFR 3425.3 included the additional requirements of--
(1) A public hearing, and
(2) publication of notices of availability of the environmental
analysis document for coal leasing.
By means of the cross-reference in Sec. 3432.3(c), these new
requirements imposed on new lease sales in Sec. 3425.3 by the 1999 rule
automatically applied to lease modifications under Sec. 3432.3. We did
not intend this to be the effect of the 1999 rule.
In revising the competitive coal leasing regulations (43 CFR part
3420) to incorporate public participation procedures for competitive
leasing, we intended to impose the requirements of a public hearing and
publication of notices of availability of draft environmental analysis
documents only on new coal lease sales, not on non-competitive coal
lease modifications issued under subpart 3432. Therefore, our failure
to remove the cross reference in Sec. 3432.3(c) to the requirements of
Sec. 3425.3 when we revised the latter in 1999 was a technical error,
which we propose to correct in this rule.
Lease modifications often ensure the recovery and receipt of fair
market value of small areas of unleased Federal coal that may be
discovered during the mining of an adjacent Federal coal lease. In many
cases, BLM must process a modification expeditiously to avoid the
bypass of unleased Federal coal. Unlike competitive coal leasing, where
the lease acreage may be up to 5,120 acres, the maximum allowable
acreage for lease modifications is a total of 160 acres per lease,
regardless of the number of times BLM modifies the lease. Due to
variability in exploration data and the coal geology, these small areas
of unleased Federal coal are not easily identified with the limited
data available when we originally configure a lease. Such areas
typically cannot be developed as an independent lease because of their
size and configuration. Therefore, incorporation of these areas into an
existing coal lease through a coal lease modification facilitates
achieving fair market value and maximum economic recovery of Federal
coal resources.
Section 3432.3(c) provides that BLM cannot approve a lease
modification until the lessee or operator complies with the provisions
of Sec. 3425.3. Although Sec. 3425.3 currently contains specific
procedures relating to the preparation of environmental analysis
documents, its focus is competitive lease sales. Since the 1999 revised
version of Sec. 3425.3 applies exclusively to competitive coal leasing,
it is not intended to apply to a lease modification. The change in this
proposed rule would eliminate the recently imposed requirement of
publication of notices of availability and a public hearing for
environmental analysis documents relating to coal lease modifications.
This is in keeping with the intent of the Natural Resources Defense
Council lawsuit settlement agreement, which did not extend to non-
competitive coal lease modifications. It is also consistent with the
preamble to the existing rule (64 FR 12142, March 11, 1999), which
stated: ``This proposed rule does not substantially change the leasing-
on-application process.''

B. Acreage Limitation

On October 23, 2000, the United States Senate passed S. 2300, which
became Public Law 106-463 on November 7, 2000. This law, known as the
Coal Competition Act of 2000, amended Section 27(a) of the Mineral
Leasing Act (30 U.S.C. 184(a)) to increase the amount of acreage of

[[Page 2620]]

Federal coal leases, or permits that an individual or entity may hold
in a single state from 46,080 acres to 75,000 acres and raised the
national acreage limit from 100,000 acres to 150,000 acres.
As noted in Public Law 106-463, the Federal lands containing some
of the nation's large commercial deposits of coal are located in Utah,
Montana, and Wyoming. The acreage limitations are causing difficulty
for coal producers in Wyoming and Utah. The sub-bituminous coal from
these mines is low in sulfur, making it the cleanest burning coal for
energy production. The present acreage limitation of 46,080 acres per
state for Federal coal leases has been in place since 1964, and was not
changed with the passage of the Federal Coal Leasing Amendments Act of
1976. Congress recently raised the acreage limits for other minerals.
For example, currently, the single-state lease acreage limit of 46,080
acres for coal is less than the single-state Federal lease limit for
potassium (96,000 acres) and for oil and gas (246,080 acres).
Congress determined that the per-state increase in acreage to
75,000 acres and the national acreage increase to 150,000 acres is
warranted by modern mine technology, changes in industry economics,
greater global competition, and need to conserve the Federal resource.
Increased acreage limits will help existing coal lessees avoid
premature closure, make better long-term business decisions about
infrastructure investments based on the certainty of more available
acreage, and otherwise maintain the vitality of the domestic coal
industry. Furthermore, the increase in acreage limits will ensure
continuation of valuable revenues to Federal and state governments and
energy to the American public from coal production on Federal lands.
The amount of acreage that any lessee or operator controls will
have no effect on the MLA requirement to produce commercial quantities
of coal within 10 years of lease issuance. The statutory penalty for
not having met this requirement is cancellation of the lease (30 U.S.C.
184(h)(1)).

III. Discussion of the Rule

In order to correct the previously discussed technical error
relating to lease modifications, we plan to amend regulation 43 CFR
3432.3 by removing the cross reference to 43 CFR 3425.3 and revising
subsection (c). We have also added a new paragraph (d) to require
review by the Secretary of Agriculture if the proposed coal lease
modification affects National Forest System lands. This is not a new
requirement. It appears in Sec. 3425.3(b) of the current regulations,
where it applies to new leases. The previous Sec. 3432.3 applied this
requirement to modifications as well by means of a cross-reference.
Since this proposed rule removes the cross-reference, we need to add
the requirement itself to Sec. 3432.3. There is no substantive change
in the regulations, other than removing the unintended requirement for
notice and a hearing on proposed coal lease modifications.
This rule also amends Sec. 3472.1-3 to reflect the new coal lease
acreage limits set by Public Law 106-463 by removing the references to
the previous acreage limits, and substituting the new numbers
established by Public Law 106-463.

IV. Procedural Matters

National Environmental Policy Act

BLM has prepared an environmental assessment (EA) and has found
that this proposed rule would not constitute a major Federal action
significantly affecting the quality of the human environment under
section 102(2)(C) of the Environmental Protection Act of 1969 (NEPA),
42 U.S.C. 4332(2)(C). As discussed above, this rule would implement a
technical correction to the public participation rule completed on
September 28, 1999 (64 FR 52239) and a change to the Mineral Leasing
Act which was made by Congress. The amendment of the Mineral Leasing
Act changed the acreage limitations for coal leases. As stated in the
EA, the proposed rule should lead to more efficient production and
economic recovery of the coal resource. However, it should not in and
of itself lead to new mining. While more efficient mining may have
environmental consequences, BLM will consider these consequences on a
case-by-case basis in preparing environmental analyses before issuing a
new coal lease or modifying an existing one. Therefore, a detailed
statement under NEPA is not required. We have placed the EA and the
Finding of No Significant Impact (FONSI) on file in our Administrative
Record at the address specified in the ADDRESSES section. We invite the
public to review these documents and suggest that anyone wishing to
submit comments in response to the EA and FONSI do so in accordance
with the Written Comments section above.

Executive Order 12866, Regulatory Planning and Review

This proposed rule is not a significant regulatory action and was
not subject to review by Office of Management and Budget under
Executive Order 12866. This rule will not have an annual effect of $100
million or more on the economy. The rule affects coal leasing in only
two ways: shortening the lease modification procedure, and increasing
lease acreage limitations.
Further, historically, lease modifications have not had significant
economic effects on the economy. In Fiscal Year 2000, there were 311
coal leases of various kinds, generating royalties of $315,166,348 on
production of 392,943,074 tons of federal coal, with an average market
value of $7.92 per ton, from 461,883 acres of public lands. Of these
leases, in FY 2000, only 2 leases were subjects of lease modification.
Since the maximum acreage that can be added by a modification is 160
for the life of the lease, it is clear that the economic effect of
lease modifications is tiny compared with the coal program as a whole.
The largest number of lease modifications that BLM has processed in the
past few years has been 6, in FY 1998, affecting a total of 733 acres.
Analyzing this strictly from averages, and using the value from FY
2000, the market value of coal affected by these modifications should
have been about $4,738,000 in FY 1998, assuming, of course, that it all
would have been immediately available for mining in that year. Total
value for other recent years, based on the lower numbers and acreages
of lease modifications shown in the accompanying chart, should have
been only a fraction of this value. The following table summarizes
lease modifications over the past few years.

[[Page 2621]]

BLM Coal Lease Modifications, FY1997-FY2001
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY1997 FY1998 FY1999 FY2000 FY2001 (through
------------------------------------------------------------------------ 06-30-2001)
State -----------------
Lease Acres Lease Acres Lease Acres Lease Acres Lease
mods mods mods mods mods Acres
--------------------------------------------------------------------------------------------------------------------------------------------------------
Colorado...................................................... 1 100 1 160 ....... ....... 2 288 ....... .......
Kentucky...................................................... ....... ....... ....... ....... ....... ....... ....... ....... 1 160
Montana....................................................... ....... ....... 3 303 1 10 ....... ....... ....... .......
Utah.......................................................... 1 133 2 240 2 200 ....... ....... 1 122
-----------------------------------------------------------------------------------------
Total................................................... 2 233 6 703 3 210 2 288 2 282
--------------------------------------------------------------------------------------------------------------------------------------------------------

Of course, since we do not know precisely how much coal was
produced from the lease modifications shown, we state these dollar
figures only to provide a sense of how small the effect of lease
modifications is, compared with the threshold in the executive order.
Further, the effect of the mistake that we are correcting in this rule
was only to extend the time required and increase the cost of
processing a lease modification. Therefore, the effects of this
proposed rule amount to a financial benefit to the coal industry due to
reducing the time required for lease modifications and the
administrative cost of processing them for both industry and BLM, which
will be something less than the value of the modification itself.
The estimated additional costs to the lessee for processing a lease
modification application inadvertently imposed by the 1999 rule were
based on a delay of 2 to 3 months for allowing public input. The
reduced costs to BLM and the lease modification applicant from avoiding
these delays are difficult to segregate and quantify. As a minimum, we
estimate the savings in processing costs (for Federal Register
processing and document preparation) will approach $10,000 per lease
modification application. Assuming a average number of lease
modification applications per year of 3, the total savings may be
nearly $30,000.
The other element of savings created by this proposed rule is the
reduction in opportunity costs. The unintended consequence of the 1999
rule was that some operators may not have been able to develop the
resources contained in the lease modifications in a timely manner, or
at all. Those costs would have been imposed if, due to the additional
processing time, the lease modification could not be completed in time
to allow recovery of the resources. If the lease modification is not
processed in time for the coal it contains to be mined with the rest of
the coal in the lease, the public will lose revenues from bonus
payments and royalties. We estimate that this proposed rule will enable
the public to avoid bonus and royalty revenue losses of about $2,200
per acre on average, and with an expected 3 modifications at a maximum
of 160 acres each, the total revenue impact is about $1,056,000 per
year, which, though substantial, is less than 1 percent of the total
coal royalty revenues for FY 2000, and far less than the $100 million
annual threshold in the Executive Order.
The second change only matches our regulations to what the law
already requires BLM to do. We cannot quantify the economic impact of
increasing the acreage limitations, because it would involve what would
amount to speculation about future coal leases or mergers of current
coal lessees. We do, however, see this a positive for industry in that
it will allow greater flexibility for coal operators to maintain coal
reserves that are readily available for production and consumption.
Currently, lessees can be required to wait as long as 10 years before
they can relinquish a lease after production has ended to allow for
proof of successful reclamation. The acreage in a lease that has been
mined out but not reclaimed counts the same to the state and national
acreage limitations as a new lease that has never been mined.
The rule will not adversely affect in a material way the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local, or tribal governments or communities. Economic
recovery of coal will be enhanced, bypasses will be minimized, and
efficiency of mining will be improved. This rule will not create a
serious inconsistency or otherwise interfere with an action taken or
planned by another agency. This rule does not alter the budgetary
effects of entitlements, grants, user fees, or loan programs or the
right or obligations of their recipients; nor does it raise novel legal
or policy issues.

Clarity of the Regulations

Executive Order 12866 requires each agency to write regulations
that are simple and easy to understand. We invite your comments on how
to make this rule easier to understand, including answers to questions
such as the following:
(1) Are the requirements in the regulations clearly stated?
(2) Does the rule contain technical language or jargon that
interferes with its clarity?
(3) Does the format of the rule (grouping and order of sections,
use of headings, paragraphing, etc.) aid or reduce its clarity?
(4) Would the rule be easier to understand if it were divided into
more (but shorter) sections? (A ``section'' appears in bold type and is
preceded by the symbol ``Sec. '' and a numbered heading.)
(5) Is the description of the rule in the SUPPLEMENTARY INFORMATION
section of this preamble helpful in understanding the rule? How could
this description be more helpful in making the rule easier to
understand? Please send any comments you have on the clarity of the
regulations to the address specified in the ADDRESSES section.

Regulatory Flexibility Act

Congress enacted the Regulatory Flexibility Act of 1980 (RFA), as
amended, 5 U.S.C. 601-612, to ensure that government regulations do not
unnecessarily or disproportionately burden small entities. The RFA
requires a regulatory flexibility analysis if a rule would have a
significant economic impact, either detrimental or beneficial, on a
substantial number of small entities. This rule, as described above,
merely implements a statutory change to the regulations that apply to
leasing Federal coal resources, and the rule change itself will not
have a significant impact on any small entities. Rather, it is the
legislation which affects these entities. The regulations make no
substantive change beyond what

[[Page 2622]]

Congress has already enacted. Further, the rule corrects a technical
error in the final rule published on September 28, 1999 (64 FR 52239),
which was fully analyzed for RFA compliance when published. Therefore,
BLM has determined under the RFA that this proposed rule would not have
a significant economic impact on a substantial number of small
entities.

Small Business Regulatory Enforcement Fairness Act (SBREFA)

This proposed rule is not a ``major rule'' as defined at 5 U.S.C.
804(2). This rule merely makes a technical correction in the final rule
published on September 28, 1999 (64 FR 52239), and implements a change
to the state acreage limits that has been made by Congress. This rule
is limited to making BLM's regulations consistent with the law.

Unfunded Mandates Reform Act

This proposed rule would not impose an unfunded mandate on state,
local, or tribal governments or the private sector of more than $100
million per year; nor would this proposed rule have a significant or
unique effect on state, local, or tribal governments or the private
sector. As discussed above, this rule would merely change BLM's coal
leasing regulations regarding acreage limitations to comply with Public
Law 106-463 and make a technical correction to the coal leasing
regulations regarding lease modifications. Therefore, BLM is not
required to prepare a statement containing the information required by
the Unfunded Mandates Reform Act (2 U.S.C. 1531 et seq.).

Executive Order 12630, Governmental Actions and Interference With
Constitutionally Protected Property Rights (Takings)

This rule would not represent a government action capable of
interfering with constitutionally protected property rights. The rule
would be limited to changes reflecting Congress's amendment raising the
state and nationwide acreage limits for coal leases, and correcting a
technical error relating to regulations governing coal lease
modifications. Therefore, the Department of the Interior has determined
that the rule would not cause a taking of private property or require
further discussion of takings implications under this Executive Order.

Executive Order 13132, Federalism

This rule would not have a substantial direct effect on the states,
on the relationship between the national government and the states, or
on the distribution of power and responsibilities among the various
levels of government. The rule would be limited to changes to reflect
Congress's amendment raising the acreage limits for coal leases and to
correct a technical error pertaining to coal lease modifications.
Therefore, in accordance with Executive Order 13132, BLM has determined
that this rule would not have sufficient Federalism implications to
warrant preparation of a Federalism Assessment.

Executive Order 12988, Civil Justice Reform

Under Executive Order 12988, the Office of the Solicitor has
determined that this proposed rule would not unduly burden the judicial
system and that it meets the requirements of sections 3(a) and 3(b)(2)
of the Order.

Executive Order 13211, Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use

This rule would not be a significant energy action. It will not
have an adverse effect on energy supplies. The rule should have a
favorable effect on energy production. It should improve efficiency in
production by increasing acreage limitations and by removing procedural
requirements inadvertently and erroneously applied to lease
modifications in an earlier rule.

Paperwork Reduction Act

This rule would not contain information collection requirements
that the Office of Management and Budget must approve under the
Paperwork Reduction Act of 1995, 44 U.S.C. 3501 et seq.

Consultation and Coordination With Indian Tribal Governments (E.O.
13175)

In accordance with E.O. 13175, we have found that this proposed
rule would not include policies that have tribal implications. Since
this rule would not propose significant changes to BLM policy and would
not specifically involve Indian reservation lands, we have determined
that the government-to-government relationships should remain
unaffected.

Principal Author

The principal author of this rule is Mary Linda Ponticelli of the
Solid Minerals Group, assisted by Ted Hudson of the Regulatory Affairs
Group, Bureau of Land Management, Washington, DC.

List of Subjects

43 CFR Part 3430

Administrative practice and procedure; Coal; Government contracts;
Intergovernmental relations; Mines; Public lands--mineral resources;
Public lands--rights-of-way; Reporting and recordkeeping requirements.

43 CFR Part 3470

Coal; Government contracts; Mineral royalties; Mines; Public
lands--mineral resources; Reporting and recordkeeping requirements;
Surety bonds.

Dated: January 2, 2002.
J. Steven Griles,
Deputy Secretary of the Interior.

Under the authorities cited below, and for the reasons stated in
the Supplementary Information, BLM proposes to amend Subchapter C,
Chapter II, Subtitle B of Title 43 of the Code of Federal Regulations,
as follows:

PART 3430--NONCOMPETITIVE LEASES

1. The authority citation for part 3430 continues to read as
follows:

Authority: 30 U.S.C. 181 et seq.; 30 U.S.C. 351-359; 30 U.S.C.
521-531; 30 U.S.C. 1201 et seq.; and 43 U.S.C. 1701 et seq.

Subpart 3432--Lease Modifications

2. Amend Sec. 3432.3 by revising paragraph (c) and adding a new
paragraph (d) to read as follows:

Sec. 3432.3 Terms and conditions.

* * * * *
(c) Before modifying a lease, BLM will prepare an environmental
assessment or environmental impact statement covering the proposed
lease area in accordance with 40 CFR parts 1500 through 1508.
(d) For coal lease modification applications involving lands in the
National Forest System, BLM will submit the lease modification
application to the Secretary of Agriculture for consent, for completion
or consideration of an environmental assessment, for the attachment of
appropriate lease stipulations, and for making any other findings
prerequisite to lease issuance.

PART 3470--COAL MANAGEMENT PROVISIONS AND LIMITATIONS

3. The authority citation for part 3470 continues to read as
follows:

Authority: 30 U.S.C. 189 and 359 and 43 U.S.C. 1733 and 1740.

Subpart 3472--Lease Qualification Requirements

4. Amend Sec. 3472.1-3 by--
a. removing from paragraph (a)(1) the terms ``46,080 acres'' and
``100,000 acres'', and adding in their place the terms ``75,000 acres''
and ``150,000 acres'', respectively; and

[[Page 2623]]

b. removing from the second sentence of paragraph (a)(2) the term
``100,000 acres'' and adding in its place the term ``150,000 acres.''

[FR Doc. 02-1339 Filed 1-17-02; 8:45 am]
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