209 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

Federal Natural Resources Other than Oil and Gas

Federal Natural Resources Other than Oil and Gas as of September 30, 2020, and 2019

(In billions of dollars) 2020 2019

Coal royalties .......................................................................................... 7.9 8.9

Total..................................................................................................... 7.9 8.9

The ONRR within DOI is responsible for the management and collection of revenues associated with federal coal leases

which are managed by the BLM within DOI. The ONRR achieves optimal value by ensuring that all natural resource

revenues are efficiently and accurately collected as well as disbursed to recipients in a timely manner by performing audit and

revenue compliance activities.

The Mineral Leasing Act of 1920, as amended, and the Mineral Leasing Act for Acquired Lands of 1947, as amended,

gives DOI the responsibility for coal leasing on approximately 700 million acres of federal mineral estate which includes 570

million of acres where coal development is allowed. The surface estate of these lands may be under the control of BLM, the

U.S. Forest Service (within USDA), private or state landowners, or other federal entities.

Public lands are available for coal leasing after the lands have been evaluated through a multiple-use planning process.

DOI receives coal leasing revenues from a bonus paid at the time of the lease, an annual rent payment of $3.00 per acre, and

royalties paid on the value of the coal after it has been mined. The royalty rate for surface-mining methods is 12.50 percent

and is 8.00 percent for underground mining, and the BLM can approve reduced royalty rates based on maximum economic

recovery. Regulations that govern BLM’s coal leasing program are contained in Title 43, Groups 3000 and 3400 of the Code

of Federal Regulations.

The above table presents the estimated PV of federal coal royalties under lease contract or other long-term arrangements

as of September 30, 2020 and 2019. The federal government’s estimated coal royalties have as their basis the DOI’s BLM

estimates of recoverable reserves. The federal recoverable reserves are then further adjusted to correspond with the effective

date of the analysis and then are projected over time to simulate a schedule of when the reserves would be produced. Future

royalties are then calculated by applying future price estimates and effective royalty rates, adjusted for transportation

allowances and other allowable deductions. The PV of these royalties are then determined by discounting the revenue stream

back to the effective date at a public discount rate assumed to be equal to the OMB’s estimates of future 30-year Treasury bill

rates. The 30-year rate was chosen because this maturity life most closely approximates the productive lives of the

recoverable reserves estimates.

In addition to the coal resources discussed above, the federal government has other natural resources under lease

contract whereby the lessee is required to pay royalties on the sale of the natural resource. These natural resources include

soda ash, potash muriates of potash and langbeinite phosphate, lead concentrate, copper concentrate, and zinc concentrate.

Soda ash and potash have the largest estimated PV of future royalties. The federal government also owns coal resources and

certain other natural resources that are not currently under lease. For additional details on federal natural resources-other than

oil and gas, refer to the financial statements of DOI.