44354 Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations

DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Parts 3400, 3470, and 3480

[WO–320–1320–02–24–1A]

RIN 1004–AD12

Logical Mining Units in General; LMU

Application Procedures; LMU Approval

Criteria; LMU Diligence; and

Administration of LMU Operations

AGENCY: Bureau of Land Management,

Interior.

ACTION: Final rule.

SUMMARY: The Bureau of Land

Management (BLM) is amending the

regulations that pertain to formation and

administration of logical mining units

(LMUs) by limiting the inclusion in an

LMU of Federal coal leases that have not

produced commercial quantities of coal

in the first 8 years of their 10-year

diligent development periods, setting

forth the factors BLM will consider in

reviewing an LMU application, and

narrowing the range of possible starting

dates for an LMU’s 40-year mine-out

period. BLM is also modifying the

definition of ‘‘producing’’ to limit the

circumstances in which it considers a

Federal coal lease ‘‘producing’’ and the

leaseholder thereby qualified to acquire

additional Mineral Leasing Act leases

and limit the aggregate duration of

temporary interruptions in coal

severance. BLM is taking this action to

ensure that LMUs are approved and

administered only for the purpose of

developing Federal coal reserves

consistent with the goals of the Federal

Coal Leasing Amendments Act. This

action will prevent the use of LMUs to

extend the diligent development period

of a Federal coal lease unless the

operator or lessee demonstrates

measurable and prudent progress

toward production of the Federal coal

reserves. BLM is also implementing a

ruling by the Federal District Court for

the District of Columbia that struck

down a provision allowing extension of

the 3-year submission requirement for

resource recovery and protection plans.

DATES: This rule is effective September

19, 1997.

FOR FURTHER INFORMATION CONTACT:

William Radden-Lesage, Mining

Engineer, Solid Minerals Group (WO–

320), Bureau of Land Management, Mail

Stop-501LS, 1849 ‘‘C’’ Street N.W.,

Washington, D.C. 20240; or by

telephone at (202) 452–0350.

SUPPLEMENTARY INFORMATION:

I. Background

II. Discussion of Final Rule and Response to

Comments

III. Procedural Matters

I. Background

The Mineral Leasing Act of 1920

(MLA) gives the Secretary of the Interior

authority to offer lands containing

deposits of coal owned by the United

States for leasing and award leases (30

U.S.C. 201(a)(1)). The Secretary is also

authorized to prescribe necessary and

proper rules and regulations to carry out

the purposes of MLA (30 U.S.C. 189).

Due to concern about the number of

Federal coal leases that were being held

and not developed, Congress amended

MLA by passing the Federal Coal

Leasing Amendments Act of 1976

(FCLAA), Pub. L. 94–377. To discourage

the speculative holding of Federal coal

leases and encourage the development

of leased coal, FCLAA established

production requirements for leases and

consequences for lessees when those

requirements are not met. Section 7(a) of

MLA, as amended by FCLAA, requires

that a lessee produce coal in

‘‘commercial quantities’’ within 10

years of a lease’s issuance or, for a lease

issued before the August 4, 1976

enactment of FCLAA, within 10 years

after the lease becomes subject to

section 7 (30 U.S.C. 207(a)). Section 7(b)

of MLA, as amended by FCLAA,

requires each lease to be subject to the

conditions of diligent development and

continued operation, except where

operations under the lease are

interrupted by strikes, the elements, or

casualties not attributable to the lessee

(30 U.S.C. 207(b)). BLM has interpreted

the reference to a condition of diligent

development in section 7(b) to be

satisfied by compliance with the

obligation to produce in commercial

quantities within 10 years in section

7(a). BLM’s regulations define

‘‘commercial quantities’’ as one percent

of a lease’s recoverable coal reserves (43

CFR 3480.0–5(a)(6)). If a lease does not

achieve commercial production within

the 10 years provided in section 7(a) of

MLA, as amended, the lease terminates.

The BLM regulations implementing

the ‘‘continued operation’’ requirement

of section 7(b) of MLA, as amended by

FCLAA, require a lessee to annually

produce an average of one percent of the

recoverable reserve base after the lease

has achieved diligent development (43

CFR 3480.0–5(a)(8) and 3483.1(a)).

Alternately, the lessee may apply for a

suspension of the continued operation

requirement on the basis of payment of

advance royalty (43 CFR 3483.4) or on

the basis of strikes, the elements or

casualties not attributable to the lessee

(43 CFR 3483.3) See 30 U.S.C. 207(b).

Section 2(a)(2)(A) of MLA, as

amended by FCLAA, requires that

holders of coal leases be disqualified

from receiving additional mineral leases

under MLA if the lessee has held and

continues to hold coal leases for more

than 10 years (not counting years prior

to passage of FCLAA on August 4, 1976)

without producing coal in commercial

quantities (30 U.S.C. 201(a)(2)(A)),

except as provided in 30 U.S.C. 207(b).

Pub. L. 99–190 extended the effective

date of section 2(a)(2)(A) of MLA to

December 31, 1986. The effect of the

reference to section 207(b) is to create

two exceptions to the producing

requirement. One is for strikes, the

elements, or casualties not attributable

to the lessee, and the other is when

continued operation is suspended by

the payment of advance royalties.

Section 2(d) of MLA, as amended by

FCLAA, also authorizes the formation of

LMUs (30 U.S.C. 202a). An LMU is an

area of land in which the coal resources

can be developed in an efficient,

economical, and orderly manner with

due regard to conservation of the coal

reserves and other resources. An LMU

may consist of one or more Federal

leaseholds and may include intervening

or adjacent lands in which the United

States does not own the coal resources.

All the lands in an LMU must be

contiguous, under the effective control

of a single operator, and able to be

developed and operated as a single

mining operation. Consolidation of

leases into an LMU will only take place

after a public hearing, if requested by

any person who may be adversely

affected. The Secretary of the Interior

may approve an LMU if he determines

that formation of the LMU enhances

maximum economic recovery of the

Federal coal reserve.

An LMU is commonly used when the

geologic characteristics of a coal deposit

cross lease or ownership boundaries. A

logical and efficient mining sequence in

such cases would also span the lease or

ownership boundaries. An LMU fosters

maximum economic recovery and

conservation of Federal coal reserves by

facilitating a logical mining sequence in

terms of the coal deposit or deposits as

a whole, rather than within only a

specific lease or property boundary. In

areas where the coal ownership pattern

is disjointed, such as the checkerboard

land-ownership patterns in the western

United States, an operator may develop

several contiguous coal tracts owned by

or leased from different entities as a

single mining operation. Without the

LMU, a mine operator would, in most
Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations 44355

cases, have to develop the oldest

Federal coal lease first, regardless of the

geology of the deposit or the most

logical development plan, simply to

comply with the diligent development

requirements of section 7(b) of MLA.

Inefficient mining sequences do not

contribute to the goals of maximum

economic recovery of Federal coal

reserves and conservation of the

resource. For this reason, section 2(d)(3)

of MLA authorizes the Secretary to

construe diligent development,

continued operation and production

occurring on one lease in the LMU as

occurring on all of the Federal leases in

the LMU (30 U.S.C. 202a(3)).

LMUs are an important part of the

Federal Coal Management Program. As

of September 30, 1996, BLM has

approved 49 LMUs, which include 180

of the 389 outstanding Federal coal

leases. While LMUs are a critical tool to

efficiently manage Federal coal

resources, BLM has determined that, in

some circumstances, forming LMUs

under the existing regulations could

have the effect of circumventing leasespecific production requirements

mandated by FCLAA. BLM’s existing

LMU regulations at 43 CFR 3480.0–

5(13)(ii) provide that the 10-year

diligent development requirement for an

LMU begins on the effective date of the

Federal coal lease that was most

recently issued or readjusted after

passage of FCLAA, but preceding

approval of the LMU. The existing

regulations at 43 CFR 3475.6(b) provide

that the LMU diligence requirements

supersede lease-specific diligence

requirements for the duration of the

LMU. Therefore, an operator holding a

lease that is about to terminate for

failure to meet diligent development

could effectively extend the diligent

development period for the lease by

forming an LMU that combines the

older lease with a newer lease. BLM

believes that forming an LMU for the

sole purpose of extending the diligent

development period of a lease, without

evidence that the lessee is prudently

pursuing development of a mine, is

contrary to the intent of MLA, as

amended by FCLAA.

In addition, BLM’s existing

regulations at 43 CFR 3472.1–

2(e)(6)(ii)(E) provide that the holder of

a lease in an LMU meets the production

requirements of section 2(a)(2)(A) of

MLA, as amended, whenever the LMU

is meeting the diligent development or

continued operation requirements

specified in the LMU stipulations of

approval. Thus, the holder of a nonproducing lease could avoid the section

2(a)(2)(A) prohibition on obtaining

additional leases by forming an LMU,

even if the LMU is not actually

producing any coal, as long as the LMU

stipulations are being met. Forming an

LMU supersedes the lease-specific

diligence requirement and starts a new

10-year diligence period for the LMU as

a whole. A non-producing LMU can be

considered to be in compliance with its

diligent development requirement until

the end of its 10-year diligence period.

It is only when the diligent

development period ends without the

LMU having achieved production of

commercial quantities that it would be

considered out of compliance. Such an

outcome frustrates the intent of FCLAA

by nullifying the penalty provided in

section 2(a)(2)(A) of MLA for holding a

lease without producing any coal.

Out of concern for abuse of the

regulations, BLM published an advance

notice of proposed rulemaking (ANPR)

in the Federal Register on December 10,

1993 (58 FR 64919), notifying the public

that BLM was considering revising the

regulations relating to LMUs for coal

operations. The ANPR solicited public

comments to assist in the preparation of

proposed regulatory changes that would

place greater emphasis on the

stewardship of Federal coal resources

and ensure that they are developed in

an efficient, economical, and orderly

manner with due regard to the

conservation of coal reserves and other

resources. BLM received 17 comments

on the ANPR. Based on its analysis of

the issues and the comments received,

BLM determined that:

(1) the existing regulations that allow

LMU diligent development

requirements to supersede lease-specific

diligence implement the intent of

Congress in enacting the LMU

provisions of FCLAA;

(2) tying the beginning of an LMU’s

diligent development period to the

effective date of the most recent Federal

lease remains appropriate;

(3) the current procedure of allowing

an LMU to be effective as early as the

date that a complete LMU application is

submitted should be continued;

(4) the regulations should not be

amended to require that at least one

Federal lease in an LMU be producing;

(5) where a proposed LMU would

include a lease that has not met diligent

development requirements within 8

years after its issuance, it is appropriate

to require that at least some part of the

proposed LMU be covered by a pending

administratively complete application

or an approved application for a Surface

Mining Control and Reclamation Act

(SMCRA) permit in order for BLM to

approve the LMU; and

(6) the definition of ‘‘producing’’ at 43

CFR 3400.0–5(rr)(6) needs some

clarification to minimize the

opportunity to circumvent the intent of

section 2(a)(2)(A) of MLA.

A complete summary and analysis of

the comments on the ANPR is in the

preamble to the proposed rule

published on December 28, 1994 (59 FR

66874).

During 1993 and early 1994, the

General Accounting Office (GAO) was

conducting an investigation of BLM’s

coal leasing program. In September

1994, GAO published a report of their

findings entitled, ‘‘Mineral Resources:

Federal Coal-Leasing Program Needs

Strengthening’’ (GAO/RCED–94–10).

The GAO report focused on two actual

cases, one involving a large nonproducing lease that was combined with

a much smaller, more recently issued

lease to form an LMU just before the

larger lease would have terminated for

lack of diligence. The other case

involved a holder of a non-producing

lease included in an LMU that was idle

(not producing coal) and that had not

yet produced sufficient quantities of

coal to meet the commercial quantities

requirement for the LMU. The lease

holder applied for and obtained a

number of other MLA leases while the

LMU was not producing coal. To

address these situations, GAO

recommended BLM amend existing

regulations to (1) ensure that lessees

holding pre-FCLAA leases will not be

issued mineral leases under MLA unless

they have met the coal production

requirements that FCLAA added to

MLA and (2) provide criteria that BLM

can use to determine whether the

formation of an LMU is consistent with

FCLAA’s goals of discouraging

speculation and encouraging the

development of Federal coal leases.

GAO also recommended that, for each

LMU approved, BLM document how the

approved LMU meets these regulatory

criteria (GAO/RCED–94–10, p. 32).

Subsequently, BLM published the

LMU proposed rule in the Federal

Register on December 28, 1994 (59 FR

66874). Comments were accepted

through March 29, 1995. BLM received

comments from 14 entities as follows:

Coal industry groups submitted 10

comments, 1 comment was from a State

governor, 2 comments were from

environmental groups, and 1 comment

was from an individual. As discussed in

the next part of the preamble to this

final rule, BLM gave full consideration

to all comments received. Any

substantive changes in the final rule

from what was proposed are identified

in the following detailed discussion of

the final rule.
44356 Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations

II. Discussion of Final Rule and

Response to Comments

A. Legal Basis for the Final Rule

Under the MLA, as amended by

FCLAA, the Secretary of the Interior has

the authority to ‘‘prescribe necessary

and proper rules and regulations and to

do any and all things necessary to carry

out and accomplish the purposes of [the

law]’’ (30 U.S.C. 189). Under the Federal

Land Policy and Management Act of

1976 (FLPMA), the Secretary, ‘‘with

respect to public lands, shall

promulgate rules and regulations to

carry out the purposes of this Act and

of other laws applicable to the public

lands’’ (43 U.S.C. 1740). For the reasons

set forth below, BLM believes that this

final rule is consistent with the letter

and intent of sections 2 (a), (b), (d) and

7 of MLA (30 U.S.C. 201, 202a, and

207), as well as the general purposes of

MLA, FCLAA, and FLPMA.

With the enactment of FCLAA, the

regulations governing the Federal coal

program must implement the express

intent of Congress to discourage

speculation in Federal coal leases. This

intent is embodied within 30 U.S.C. 201

and 207. Also, see H.R. Rep. No. 94–

681, 94th Cong., 1st Sess., 14–15 (1975).

The twin goals of encouraging

development of Federal coal resources

and limiting speculation are not

mutually exclusive. When Federal coal

leases are obtained and held for long

periods without production, or without

legitimate steps toward production, the

efficient, economic and orderly

development of the resource is

precluded. When those who are

interested in simply holding leases are

discouraged from doing so, or are

encouraged to relinquish their leases, to

the extent that others have an

opportunity to develop those properties,

the development goal is met. BLM’s

goal, and challenge, in this rule is to

establish some prudent constraints on

lease holders that will be disincentives

to speculation, and at the same time, to

avoid imposing the kind of constraints

that will be disincentives to

development and production, taking

into account the dynamic nature of the

coal industry.

There is no question that under BLM’s

current coal management regulations

the proportion of Federal leases actually

producing coal has increased. At the

time that FCLAA was passed 20 years

ago, only about 10 percent of Federal

coal leases were producing. Currently,

the figure is close to 35 percent. BLM

believes, however, that the aggregate

proportion of producing leases is not

determinative in deciding whether

changes to the regulations are necessary.

Each lease or LMU represents a specific

set of unique facts and circumstances

owing to the geology of the coal deposit,

the qualities and characteristics of the

coal, the proximity to the transportation

network, the existence of markets, and

many other technical and socioeconomic factors. Decisions of lessees

whether to form an LMU and decisions

by BLM approving LMUs are made on

a case-by-case basis. BLM has to look at

the outcomes of individual cases to see

whether its regulations are working

properly.

Two recent cases shed light on

whether our regulations are working the

way they were intended to work. These

are the two cases described in the GAO

report, discussed above. In the Rocky

Butte case, one month before a large

non-producing lease was scheduled to

terminate, it was combined with a

newer small lease into an LMU,

extending the diligence date for 10 more

years. In the Clovis Point case, the

holder of a non-producing lease that had

been held for more than 10 years was

found to be qualified under section

2(a)(2)(A) to obtain additional leases by

virtue of the fact that the non-producing

lease had been included in an LMU that

was in compliance with the LMU

stipulations of approval. Thus, in the

first case, application of the statutory

penalty for failure to achieve diligent

development (termination of the lease)

was stymied by LMU formation that

extended the diligent development

period. In the second case, the statutory

penalty for failure to produce coal from

leases (disqualification from obtaining

additional leases) was stymied by LMU

formation that applied the LMU

diligence requirements as established by

the LMU stipulations of approval to all

leases in the LMU.

BLM believes that the outcomes of

these two cases are not consistent with

the spirit and intent of FCLAA. Because

its current regulations do not prevent

this type of outcome from occurring

again in the future, BLM believes that its

regulations should be changed. The

final rule adopted today is consistent

with the view that BLM must prevent

outcomes such as those described above

from happening again. As described in

the section-by-section analysis that

follows, BLM is adopting provisions

that are focused on preventing specific

kinds of results while avoiding, to the

extent possible and foreseeable,

unintended negative impacts on

legitimate producers of Federal coal.

Based on BLM’s analysis of the issues

involved, taking into account the

purposes of the statutes and the

administrative record of this

rulemaking, including comments

received, this final rule is a proper and

reasonable interpretation of the MLA, as

amended.

B. General Comments

Several comments expressed support

for the overall thrust of the rules and

BLM’s effort to clarify and tighten up

the current Federal coal leasing LMU

regulations. One commenter was

concerned by BLM’s past practice of

issuing new MLA leases to a lessee who

is not in compliance with section

2(a)(2)(A) of MLA and concluded that

this practice must stop. Another

comment expressed agreement with the

recommendation from the GAO report

that the Secretary of the Interior cease

issuing additional MLA leases to

companies that are not qualified under

FCLAA. BLM believes that this rule will

significantly reduce the chance that a

lessee could abuse section 2(a)(2)(A) of

MLA, as amended by FCLAA, by

obtaining additional MLA leases.

However, most comments, submitted

by members of the coal industry, were

not supportive of the proposed rule.

Specific concerns or comments are

addressed in the analysis of each

respective topic or subsection. These

comments generally requested that the

proposed rule be withdrawn. BLM

remains committed to encouraging

diligent development of Federal coal

and reducing the potential for

speculation. However, after

comprehensive review of all comments,

BLM has made some changes to the

proposed rule. Those changes are

discussed in detail below.

Several comments expressed concern

that BLM had not established a clear

need for the proposed rule change.

Several other comments expressed an

opinion that the current regulations

were entirely adequate and there was no

need for the proposed regulatory

changes. However, as outlined in the

GAO report discussed above, there

remains a potential for abuse of the

current regulations that is not consistent

with FCLAA’s goal of discouraging

speculation and encouraging diligent

development of Federal coal.

Several comments addressed the

relationship of the proposed rule to the

intent of FCLAA. One comment said

that the proposed rule is not compatible

with FCLAA’s intent to reduce the

possibility of speculation. One comment

noted the marked increase in the

number of Federal coal leases actually

producing coal since enactment of

FCLAA as evidence of the effectiveness

of the current regulations and FCLAA to

reduce speculation. Another comment

asserted that the intent of FCLAA was

confined to preventing the holding of a
Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations 44357

lease without development, and so long

as the lease or LMU had been

developed, the intent of FCLAA was

satisfied. Another comment said that

there is no evidence to indicate that the

speculative concerns of Congress have

not been adequately resolved by

FCLAA. BLM agrees that FCLAA has

reduced the potential for speculation

with Federal coal reserves. However,

questions concerning the effectiveness

of FCLAA are beyond the scope of this

rulemaking. This rulemaking addresses

only the effectiveness of the regulations

to discourage speculation and encourage

production as intended by FCLAA. As

mentioned above, the overall percentage

of leases that are producing is not

determinative as to whether the

regulations should be changed. BLM

disagrees with the comment that if a

lease or LMU had been developed,

FCLAA is satisfied. FCLAA contains

specific requirements that must be

satisfied before compliance with FCLAA

is achieved. BLM concurs with the GAO

findings that there are weaknesses in the

current regulations that need to be

addressed.

One comment discussed the

relationship between diligent

development and speculation. The

comment said that the apparent

extension of the diligence period when

an older lease is combined with a

younger lease in an LMU is not

speculation as addressed by FCLAA

because formation of an LMU often

involves tradeoffs such as the 40-year

mine-out requirement and inclusion of

non-Federal coal reserves in

determining commercial quantities.

BLM agrees that for leaseholders who

are producing or plan to produce

Federal coal, there are some tradeoffs

associated with LMU formation.

However, for those who are apparently

holding leases without any current

intention of producing coal, imposition

of the 40-year mine-out period and

increasing the commercial quantities

amount are not tradeoffs. Clearly, if you

have no current intention of mining the

coal and are holding a lease for the

purpose of selling it at a profit, you are

not going to be greatly concerned about

how much time you have to mine the

coal or the amount of coal you must

mine each year. You are more

concerned, however, about being able to

hold the lease for 10 more years by

including it in an LMU. To the

speculator, the advantage of substituting

a new diligence period vastly outweighs

any drawbacks associated with the

obligation to mine the larger reserves of

the LMU in 40 years.

Several comments expressed concern

that the proposed rule would restrict the

flexibility the lessee has under the

current regulations. One comment noted

that ‘‘these unyielding requirements call

for more flexibility, not less.’’ Another

comment said ‘‘the Federal regulations

must provide sufficient flexibility to

allow * * * mak[ing] legitimate

business decisions while still protecting

the public interest in the coal resources

owned by the United States.’’ Another

comment noted that arbitrary limits in

the proposed rule ignore the current

practical realities confronted by the

lessee/operator. As addressed in

analysis of specific sections, some of the

‘‘unyielding requirements’’ of the

proposed rule have been modified to

provide some additional flexibility.

However, such flexibility must be

within the limits established by the

statute. BLM believes the final

regulations achieve a careful balance

between discouraging speculation while

at the same time encouraging diligent

development.

Several comments expressed concern

that the GAO report is, in part, a

supporting document for this

rulemaking. One comment questioned

using the conclusions of the GAO to

support the proposed rule because the

Department of the Interior’s official

response to the GAO is not consistent

with the conclusions of the GAO report.

In addition, the comment was

concerned that the GAO report has not

been subject to public review and

comment sufficient to warrant its

serving as the primary basis for the

proposal. Another comment asserted,

‘‘We have concluded that this GAO

criticism was ill-advised and

unfounded, and it appears to have been

designed to fulfill a political agenda

adverse to the interests

of * * * federal coal development.’’

This comment continued, ‘‘We urge

BLM not to depend upon the GAO

Report to justify these new regulations,

because it cannot withstand the light of

a full independent review.’’

The GAO report has been included in

the Administrative Record as support

for this rule. Commenters were free to

dispute the foundations or conclusions

of the report. BLM has considered both

the substance of the report and

criticisms by commenters in formulating

this rule. Also, this final rule is

consistent with the response to GAO

from the Assistant Secretary, Land and

Minerals Management, dated April 12,

1994. In the response to GAO, the

Assistant Secretary noted that ‘‘BLM’s

interpretation (of FCLAA) was a matter

of policy formulated by previous

Administrations that met the letter of

the law but that appeared not to be in

concert with the major goal of FCLAA,

which was to reduce speculation.’’ See

GAO/RCED–94–10, p. 77. The response

also stated that ‘‘the policy could be

amended prospectively at any time by

following the normal notice and

comment rulemaking process.’’ Id. BLM

considers the final rule to be within the

scope of MLA, as amended by FCLAA,

and BLM’s rulemaking authorities.

One comment asserted that

‘‘defin[ing] ‘producing’ in a manner

designed to punish a company which

has properly suspended mining because

of poor market conditions’’ could have

‘‘takings’’ implications. BLM does not

agree that the rule ‘‘punishes’’

companies, nor that it has takings

implications. Under the commenter’s

scenario, if BLM defined ‘‘producing’’ in

such a way that a particular company

was disqualified from obtaining

additional leases, no taking would

occur. BLM’s action would preclude the

company from obtaining additional

leases but would not deprive the

company from the full enjoyment of any

rights it already possesses under

existing leases. A lease holder does not

have a contractual or property interest

in acquiring additional leases at some

future time. See Natural Resources

Defense Council v. Jamison, 815 F.Supp.

454, 470 (1992). To suggest that a

compensable claim arises from an action

that precludes one from obtaining

additional rights extends the concept of

takings beyond the scope of current

judicial interpretation.

The same commenter went on to

assert that any action ‘‘which could

result in the taking of leases from

competent mine operators * * * could

in turn represent a taking of potential

royalties and tax revenues from [State

and local governments].’’ BLM

disagrees. Although each takings claim

has to be decided on its own merits,

BLM believes that the rights attendant to

a coal lease are conditioned on

compliance with the law and

regulations. When noncompliance

occurs, BLM has the authority to impose

the penalties provided for by MLA. In

some cases, BLM has no discretion

regarding the nature of the penalty. For

example, MLA provides that ‘‘[a]ny

lease which is not producing in

commercial quantities at the end of ten

years shall be terminated’’ (30 U.S.C.

207). As to the question of whether State

or local governments have a ‘‘right’’ to

the revenue stream associated with a

particular lease, the commenter

construes a possible diminishment of

future revenues as a compensable

taking. BLM does not agree that States

have such a claim. Under 30 U.S.C. 191,

the Secretary has an obligation to pay an

appropriate share of the money received
44358 Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations

as a result of the production of coal. The

obligation does not arise until the

Secretary receives the money; no

obligation to the States exists to

maintain the revenue stream associated

with Federal mineral leasing. Moreover,

any impacts of these rules on revenue

streams is purely speculative.

Finally, the same commenter went on

to assert that a regulation that ‘‘would

limit the leasing of new federal coal or

limit the number of potentially qualified

bidders for new federal coal represents

a ‘taking of potential bonus bid

revenues’ from [the State] which would

otherwise be available.’’ BLM disagrees.

As discussed in response to the

commenter’s first assertion, the courts

have interpreted the Fifth Amendment

prohibition on uncompensated takings

as being based on a deprivation or

limitation of rights that a person already

possesses. Takings are not based on a

potential deprivation or limitation of

rights that a person may or may not

possess at some time in the future. In

summary, BLM does not believe that the

regulations adopted today have takings

implications.

Several comments expressed concern

that the generally negative response to

the ANPR appeared to be ignored by

BLM. The volume of opposing

comments does not, in and of itself,

overshadow BLM’s responsibility to

implement FCLAA. BLM believes the

final rule properly takes into account

the views of commenters in

implementing the statutory

requirements of FCLAA and MLA.

One comment said BLM failed to

describe the need for the changes or

how the rule will reduce speculation.

The final rule discourages speculation

in a number of ways. For example, the

previous open-ended definition of the

term ‘‘producing’’ allowed speculative

holding of coal leases without limit on

the nature or duration of mine

shutdowns. BLM believes holding a

Federal lease for an extended period

while both the lease and the LMU

which contains the lease fail to produce

coal in sufficient quantities to meet

diligence requirements is speculation

that Congress intended to reduce by

enactment of FCLAA. The promise of

future severance of coal, as evidenced

by the presence of mining equipment

with the capability of severing coal, is

not an acceptable substitute for the

actual severance of coal without an

objective standard to assure that

severance recommences. In addition,

this rule discourages the formation of

LMUs created to allow speculative

holding of non-producing coal leases.

Regulations that allow formation of an

LMU consisting of an older Federal coal

lease that is close to termination for

failure to meet diligence requirements

with other coal reserves which also have

not produced coal, without any

evidence of prudent progress of

developing a mine on either area,

circumvent sections 7(a) and 2(a)(2)(A)

of MLA and allow speculation. Chapter

2 of the GAO report provides a detailed

discussion of the relationship between

speculation and formation of an LMU.

The detailed analysis of each section of

the final rule provides additional

information concerning how the final

rule will specifically serve to reduce the

potential for speculation.

One comment expressed concern that

Executive Order 12988 of February 11,

1994, entitled ‘‘Federal Actions To

Address Environmental Justice in

Minority Populations and Low-Income

Populations,’’ must be considered and

implemented in any final rule. This

Executive Order requires that each

Federal agency make achieving

environmental justice part of its mission

by identifying and addressing, as

appropriate, disproportionately high or

adverse human health or environmental

effects of its programs, policies, and

activities on minority populations and

low income populations in the United

States. As discussed below, BLM

believes that this final rule complies

with Executive Order 12988.

A logical mining unit can be formed

only after a Federal coal lease has been

issued. BLM must comply with all

applicable environmental and

procedural requirements, which include

many opportunities for public comment

and collection of environmental data,

before the lease is issued. This final rule

does not alter the lease issuance

process. The logical mining unit itself

cannot be approved without providing

ample opportunity for public comments

and, if requested, a public hearing (43

CFR 3481.2). The mining operation

must have a SMCRA mining permit

before mining operations can begin (30

U.S.C. 1256(a)). Exploration operations,

permitted through BLM, must also

comply with established procedures to

safeguard the environment. Once

mining operations begin, the

lessee/operator is generally required to

continuously monitor the environment

in and around the mine for potential

adverse effects. These provisions for

public participation and environmental

protection adequately ensure

consideration of impacts on minority or

low-income communities. Thus, BLM

believes that there are ample

requirements and safeguards already in

place to assure compliance with

Executive Order 12988.

One commenter said that the

proposed regulations were ‘‘at odds

with the President’s Regulatory

Reinvention Initiative.’’ This comment

said that the proposed regulation cut

against the initiative’s objectives to

eliminate or revise obsolete regulations

and seek the views of the regulated

community. BLM does not agree with

this comment. This final rule revises the

regulations to comply with the letter

and intent of MLA, as amended by

FCLAA, after inviting comment and

informing the regulated community of

our intentions. BLM published an ANPR

and a proposed rule providing the

regulated community ample

opportunity to provide input into the

regulatory process. These regulations

are written to implement the MLA, as

amended by FCLAA, and have been

modified in response to comments from

the regulated community. BLM believes

that the regulations comply with the

President’s regulatory reinvention

initiative which requires ‘‘sensible

regulations without sacrificing rational

and necessary protection.’’

In the proposal, BLM indicated that

the changes to the definition of

‘‘producing’’ would take effect 30 days

after the final rule is published. BLM

specifically solicited comments on

whether a longer phase-in period, such

as 6 months, is necessary (59 FR 66877).

One commenter was concerned that

under the proposed rule, BLM would

not consider suspension of operations

due to loss of a contract or lack of a

market for coal to be a qualifying

temporary suspension. The commenter

proposed that ‘‘the rule take effect a

minimum of six months after the final

rule is published to allow [the

lessee/operator] to come into

compliance with these proposed

changes.’’

As discussed in more detail later in

this preamble, the final rule that BLM is

adopting today differs from this aspect

of the proposal in important ways. The

final rule allows qualifying temporary

interruptions in coal severance up to

one year in aggregate length in the

immediately preceding fiveconsecutive-year period. See final

§ 3481.4–4. Under the final rule, an

operation could temporarily interrupt

coal severance for the period specified

in final § 3481.4–4 due to loss of

contract or lack of market without being

disqualified from obtaining additional

leases. See final § 3481.4–2(c). The final

rule provides lessees/operators

significantly more flexibility with regard

to temporary interruptions in coal

severance than the proposal, which, as

the commenter points out, would have

excluded suspensions for loss of
Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations 44359

contract or lack of market and limited

qualifying suspensions to three months

in length. These changes address the

commenter’s concern, and BLM does

not believe it is also necessary to extend

the period of time between the

publication of the final rule and its

effective date. Thus, the regulations

BLM is adopting today take effect in 30

days.

One commenter objected to the

statement in the proposed rule preamble

that BLM intended to apply the

regulations governing approval of

LMUs, under 43 CFR part 3480, subpart

3487, to all LMU applications that were

pending or submitted after the date of

the proposed rule. The commenter

argued that implementation of the rules

in this manner would constitute ‘‘an

unlawful retroactive application of

changes in regulations.’’ BLM does not

agree that these rules will have

retroactive effect. Once the rules become

effective 30 days after being published

in the Federal Register, they govern all

subsequent decisions by BLM

concerning approval of LMU

applications regardless of whether the

applications are pending on the

effective date of the final rule or

submitted after that date. BLM applies

the regulations that are in effect at the

time it makes the decision on the

application. See Bradley v. School

Board of City of Richmond, 416 U.S. 696

(1974), cited with approval in Illinois

South Project, Inc. v. Hodel, 844 F.2d

1286, 1289 (7th Cir. 1988). The fact that

an LMU application may have been

submitted prior to the change in the

regulation does not entitle the applicant

to have BLM act on the application on

the basis of rules no longer in effect. See

Hunter v. Morton, 529 F.2d 645, 649

(10th Cir. 1976); Hannifin v. Morton,

444 F.2d 200, 203 (10th Cir. 1971). In

response to the comment, however,

BLM has decided not to reconsider

decisions made after the date of the

proposed rule, but before the effective

date of these rules.

C. Section-by-Section Analysis of Final

Rule and Specific Comments

Part 3400—Coal Management: General

Subpart 3400—Introduction: General.

Section 3400.0–5 Definitions. The

prefatory clause previously stated ‘‘As

used in this part,’’ and could be

interpreted to mean that the definitions

listed in § 3400.0–5 applied only to part

3400, and were not applicable to all of

the regulations in 43 CFR group 3400,

which includes parts 3400, 3410, 3420,

3430, 3440, 3450, 3460, 3470, and 3480.

BLM proposed to change the clause to

read, ‘‘As used in this group,’’ to clarify

that the definitions in section 3400.0–5

apply to all of the regulations in Group

3400—Coal Management. BLM is

adopting the change to the prefatory

clause for the list of definitions at 43

CFR 3400.0–5 as proposed.

One comment expressed concern that

the change in the prefatory clause from

‘‘part’’ to ‘‘group’’ could extend the

definition of ‘‘producing’’ at § 3400.0–

5(rr)(6), for section (2)(a)(2)(A) of MLA,

to include ‘‘continued operations’’

under section 7 of MLA. However, the

prefatory clause at § 3400.0–5(rr)

specifically limits this paragraph to,

‘‘For the purposes of section 2(a)(2)(A)

of the Act.’’ Thus, BLM does not intend

the change in the prefatory clause at

§ 3400.0–5 to extend the definition of

‘‘producing’’ under § 3400.0–5(rr)(6) to

considerations of ‘‘continued

operations’’ under section 7 of the MLA,

which is defined at 43 CFR 3480.0–

5(a)(8).

Section 3400.0–5(rr)(6) Definition of

producing. Under the previous

definition of producing, BLM

considered a lease to be producing, for

the purposes of lessee qualification

under section 2(a)(2)(A) of MLA,

whenever coal was actually being

severed, or the lessee was operating a

mine in accordance with standard

industry operating practices. The

previous rule also provided an

allowance for ‘‘temporary suspension’’

of coal severance for reasons that are

beyond the reasonable control of the

mine operator or lessee. The definition

contained several examples of

circumstances under which BLM

allowed a non-disqualifying ‘‘temporary

suspension,’’ including, but not limited

to, factors such as dragline or other

equipment movement, breakdown, or

repair; overburden removal; sale of coal

from stockpiles; vacations and holidays;

orders of governmental authorities; coal

buyer’s operations of its power plants

that require the coal buyer to stop taking

coal shipments for a limited duration of

time; or severed coal being processed,

loaded, or transported from the point of

severance to the point of sale. Although

the definition stated that it is limited to

circumstances beyond the reasonable

control of the operator/lessee, several of

the examples described circumstances

within the operator’s control. Thus the

rule contained no effective limit on

either the type or duration of temporary

interruptions under which a mine

would be considered ‘‘producing.’’

The definition of ‘‘producing’’

primarily has relevance for operations

that have not yet achieved diligent

development, that is, have not produced

in commercial quantities within ten

years. Operations that have achieved

diligence and are subject to continued

operation cannot be disqualified from

receiving additional leases under the

definition of ‘‘producing’’ while they

remain in compliance with the

continued operation requirements. See

final § 3472.1–2(e)(6)(D).

BLM proposed that the definition of

‘‘producing’’ at section 3400.0–5(rr)(6)

be changed to limit the circumstances

under which BLM would consider a

Federal coal lessee qualified to obtain

additional MLA leases. BLM proposed

to eliminate the provision that allowed

the lease to be considered producing, for

the purposes of section 2(a)(2)(A) of

MLA, if a mine were operating on the

lease or LMU in accordance with

standard industry operation practices

and proposed limiting temporary

suspensions to 3 months. In the

proposal, BLM indicated that it believes

that the definition had potential for

abuse. A lessee could claim that it is

producing in accordance with standard

industry practices even though, for

reasons that are within its control, coal

has not been produced from the lease

for many years. This result would not

serve the purpose of FCLAA to prevent

speculation. Several comments

expressed support for this aspect of the

proposal. Several other comments

indicated that removal of the ‘‘standard

industry operating practices’’ clause

from the rule would unduly constrain

the ability of BLM to effectively

administer the coal program and would

not recognize site-specific needs of

smaller mines. One comment said that

standard industry operating practices

must continue as the standard by which

BLM makes many of its management

decisions.

The final rule eliminates the

‘‘standard industry operating practices’’

clause and provides that producing

means actually severing coal. Under the

final rule, BLM also considers a lease

producing when the operator/lessee is

processing or loading severed coal or

transporting it from the point of

severance to the point of sale, or coal

severance is temporarily interrupted in

accordance with 43 CFR 3481.4–1

through 4–4. BLM continues to believe

that the open-ended ‘‘standard industry

operating practices’’ and ‘‘temporary

suspension’’ clauses of the previous rule

could be interpreted to extend the

definition of ‘‘producing’’ beyond the

scope of FCLAA. ‘‘Standard industry

operating practices’’ and unlimited

‘‘temporary’’ suspensions could include

things that are clearly outside the range

of what is contemplated under FCLAA,

such as an open-ended discretionary

mine closure.
44360 Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations

As discussed later in this preamble in

connection with final §§ 3481.4–1

through 3481.4–4, BLM is providing the

flexibility requested by commenters by

allowing temporary interruptions not

exceeding an aggregate of 1 year in the

5-consecutive-year period immediately

preceding the date of BLM’s

determination of lessee qualifications

under 43 CFR 3472.1–2. This provision

allows operators more flexibility to

temporarily interrupt coal severance

without penalty under section 2(a)(2)(A)

than would have been provided under

the proposal, which would have limited

the length of a ‘‘temporary suspension’’

to 3 months. The final rule also provides

flexibility by not limiting a temporary

interruption in coal severance to

circumstances beyond the control of the

lessee/operator.

By its own terms, section 7(b)

provides an exception for interruptions

caused by ‘‘strikes, the elements, or

casualties not attributable to the lessee.’’

To the extent that a temporary

interruption is caused by a circumstance

that meets the standards of section 7(b),

BLM has recognized in the final rule

that section 7(b) does not afford BLM

with the authority to limit that type of

interruption to either a 3-month or 1-

year period. Therefore, that type of

interruption will not lead to

disqualification under section

2(a)(2)(A). See the preamble discussion

of § 3481.4 below.

However, certain of the circumstances

listed in the proposal or this final rule

as non-disqualifying temporary

suspensions do not fall within the

section 7(b) exception because they are

not ‘‘casualties not attributable to the

lessee.’’ Some are not ‘‘casualties’’ and

some are not beyond the lessee’s

control.

Nevertheless, BLM continues to

believe that such temporary suspensions

should not lead to a disqualification

under section 2(a)(2)(A). By not defining

the term ‘‘producing,’’ Congress was

silent as to whether and the degree to

which temporary interruptions in coal

severance should disqualify a lessee

from receiving additional leases under

section 2(a)(2)(A). BLM has attempted to

determine what is reasonable and has so

provided in this final rule. See section

3481.4, discussed below. This final rule

eliminates the confusing and

unnecessary requirement that temporary

interruptions be beyond the control of

the operator.

As discussed above, BLM’s previous

rules allowed a lease that is not actually

severing coal to be considered

‘‘producing’’ when severed coal is being

processed, loaded, or transported from

the point of severance to the point of

sale. BLM proposed to retain this

provision and received no comments

that specifically addressed this issue.

BLM is adopting this provision in the

final rule. BLM recognizes that the

mining operation consists of more than

just the mechanical severance of coal.

Coal, once severed, requires processing

and transportation prior to it having

value to the coal consumer. Severance,

processing, and transportation of coal

are equally important to the success of

the lease or LMU in meeting the

producing requirements under section

2(a)(2)(A) of the MLA.

Both BLM’s previous rule and the

proposal contained definitions of the

term ‘‘producing’’ that would have

delineated the circumstances under

which a lease could be considered

‘‘producing’’ for purposes of section

2(a)(2)(A) even though coal severance

was temporarily suspended. BLM

believes that these provisions are

regulatory in nature and do not belong

in a definition. Therefore, BLM has

moved the provisions governing what in

the previous rule was a temporary

suspension to final §§ 3481.4–1 through

3481.4–4 and included a cross-reference

to those sections in the definition of

‘‘producing.’’ Please refer to that portion

of this preamble for a complete

discussion of comments received on

that subject, which BLM has designated

‘‘temporary interruption in coal

severance’’ in the final rule. Thus, the

provision that BLM is adopting today

simply lists the three circumstances

under which a lease may be considered

producing: (1) When coal is being

severed (that is, being physically

removed from the working face to

another location); (2) when severed coal

is being processed, loaded, or

transported from the point of severance

to the point of sale; and (3) when coal

severance is interrupted in accordance

with 43 CFR 3481.4–1 through 3481.4–

4.

The proposal would have added a

provision that, for the purposes of the

definition of ‘‘producing,’’ the term

‘‘operator/lessee’’ has the meaning set

forth in 43 CFR 3480.0–5(a)(28). This

was an incorrect cross reference; the

term ‘‘operator/lessee’’ is actually found

at 43 CFR 3480.0–5(a)(27). BLM

received no comments concerning this

section of the proposed rule. However,

in the interest of simplifying its

regulations, BLM has decided that it is

not necessary to incorporate this cross

reference into the final rule. The term

‘‘operator’’ is defined at § 3400.0–5(cc).

Part 3470—Coal Management Provisions

and Limitations

Subpart 3472—Lease Qualification

Requirements. Section 3472.1–2 Special

leasing qualifications. Section 3472.1–2

sets forth special qualifications that

applicants must meet in order to obtain

leases. Subparagraph (e)(1)(i)

implements section 2(a)(2)(A) of MLA

and establishes the general prohibition

on issuance of new leases to those who

have held a Federal coal lease for 10

years and who are not producing coal

from the lease deposits in commercial

quantities. The previous provision set

forth exceptions to the prohibition,

including those in ‘‘paragraph (e) (4) or

(5) of this section.’’ BLM proposed to

revise subparagraph (e)(1)(i) by making

some grammatical corrections and

adding a clarifying reference to

paragraph (e)(6) as an exception to the

prohibition. Several comments generally

supported the proposed rule. BLM is

adopting this provision in the final rule

as proposed. Final § 3472.1–2(e)(1)(i)

contains a reference to the exception

provisions of part 3480. The reference is

intended to include suspensions

approved under 43 CFR 3483.3 and final

§ 3481.4–4. See the preamble to

§ 3481.4–4 below.

BLM also proposed changes to

paragraph (e)(6), which contains

exceptions to the prohibition on issuing

new leases to holders of non-producing

leases. In BLM’s previous rules,

paragraph (e)(6)(ii)(D) established an

exception from section 2(a)(2)(A) for

leases ‘‘producing in compliance with

the diligent development and continued

operation provisions of part 3480.’’

Paragraph (e)(6)(ii)(E) established a

corresponding exception for leases

contained in an LMU, if the LMU is

producing ‘‘in accordance with the

logical mining unit stipulations of

approval.’’ As explained in the

proposed rule preamble, these two

provisions allowed a lease or LMU to be

considered in compliance with the

producing requirement of section

2(a)(2)(A) during the diligent

development period, even though the

lessee may have held the lease for more

than 10 years without producing coal

(59 FR 66877). This is exactly the type

of abuse identified in the GAO report.

See GAO/RCED–94–10, pp. 24–25. BLM

believes that a policy which allows a

non-producing lease in a non-producing

LMU to satisfy the ‘‘producing’’

requirement of section 2(a)(2)(A)

because it complies with the diligent

development requirements undermines

the anti-speculation goal of FCLAA and

implementation of section 2(a)(2)(A).
Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations 44361

For these reasons, BLM proposed to

change paragraph (e)(6)(ii)(D) to provide

that, in order to protect a lessee from

disqualification under section

2(a)(2)(A), a lease must be producing, or

a lease that has met its diligent

development requirements must be in

compliance with its continued

operation requirements. Similarly, BLM

proposed to change paragraph

(e)(6)(ii)(E) to provide that, in order to

protect a lessee from disqualification, an

LMU must be producing, or be in

compliance with its continued

operation requirements, in addition to

complying with the LMU approval

stipulations. BLM is adopting both

provisions in the final rule as proposed,

with the exception of one editorial

change prompted by a comment

(discussed below).

One comment suggested that the rule

should be written in a more direct style.

The comment suggested replacing the

phrase ‘‘has produced in satisfaction of’’

to ‘‘currently in compliance with’’ in

both paragraph (D) and (E). BLM agrees

that the suggested change improves the

clarity of the rule and recognizes that

continued operation is based on a

rolling 3-year period, for which an

operator may be in compliance, but the

necessary production may not yet have

occurred. An operator has the flexibility

to satisfy continued operation by

producing a total of 3 percent of the

recoverable coal reserves within 3 years,

regardless of when production occurs

during that 3-year period. Thus, the

duration of coal severance is not

relevant to meeting the continued

operation requirement as long as the

operator meets the production

requirement on average. Such

production satisfies both the continued

operation and section 2(a)(2)(A)

production requirements. The final rule

does not affect the operator’s flexibility

in meeting the continued operation

requirement, where a degree of

flexibility is appropriate once diligent

development has been achieved. The

comment is adopted, and the final rule

requires leases and LMUs to be

producing, or currently in compliance

with the lease-specific or LMU

continued operation requirements.

Under final § 3472.1–2(e)(6)(ii)(E), if a

Federal lease that is included in an

LMU and has been held for more than

10 years is producing or is in

compliance with its continued

operation requirement, the lessee would

remain qualified under section

2(a)(2)(A) of MLA. If a Federal lease that

is included in an LMU and has been

held for more than 10 years is not

producing or is not in compliance with

continued operation, but the LMU is

producing or is in compliance with its

continued operation requirement, the

lessee remains qualified under section

2(a)(2)(A) of MLA. However, if a Federal

lease that is included in an LMU and

has been held for more than 10 years is

not producing and is not in compliance

with its continued operation

requirement, and the LMU is not

producing and is not in compliance

with its continued operation

requirement, the lessee would be

disqualified under section (2)(a)(2)(A) of

MLA.

One comment disagreed with ‘‘BLM’s

assertion that for an LMU with a preFCLAA lease, [LMU] compliance with

[diligent development] is inadequate for

lease compliance with the ‘‘producing’’

requirement of Section 2(a)(2)(A).’’ BLM

did not accept this comment. As

discussed above, if compliance with the

diligent development requirement of

section 7 were to be construed as

satisfying the requirements of section

2(a)(2)(A), the holding period for

readjusted leases could be stretched for

an additional 10 years before actual

production would have to begin. This is

because the diligent development

period of the LMU supersedes the leasespecific diligent development period.

One comment noted the Department

had previously considered FCLAA to be

silent concerning the interplay between

section 2(a)(2)(A) and 2(d) of the MLA

and concluded that ‘‘the agency’s

attempt at legislative revisionism, by

inserting FCLAA’s anti-speculation

purposes, remains unpersuasive.’’ BLM

believes that, where a statute does not

directly speak to an issue, the agency

that has been delegated rulemaking

authority, BLM in this case, has the

discretion to adopt a reasonable

interpretation that is consistent with the

purposes of the statute. Under the

discretionary authority granted in

section 2(d)(3) of MLA (30 U.S.C.

202a(3)), BLM chose, as a matter of

policy, to provide by regulation that

production from anywhere within an

LMU should be construed as occurring

on all Federal leases in the LMU for

purposes of diligent development and

continuous operation. BLM also chose,

as a matter of policy, to provide by

regulation that a lessee producing in

accordance with the LMU stipulations

was not disqualified under section

2(a)(2)(A). For the reasons described

above, BLM is now changing its

interpretation with regard to section

2(a)(2)(A) to better serve the antispeculation goals of FCLAA. BLM

believes it has articulated a reasonable

explanation for why it is doing so. This

action is within BLM’s discretionary

rulemaking authority under MLA as

amended and contains a sufficient basis

and purpose as required by the

Administrative Procedure Act (5 U.S.C.

553).

Part 3480—Coal Exploration and Mining

Operations Rules

Subpart 3480—Coal Exploration and

Mining Operations Rules: General.

Section 3480.0–5 Definitions. The

proposed rule would have added a new

term, ‘‘Logical mining unit recoverable

coal reserve exhaustion period,’’ which

would have been defined as the period

of time beginning upon approval of the

LMU resource recovery and protection

plan and ending when all the

recoverable coal reserves are mined out,

but not more than 40 years. BLM has

decided not to include the definition in

the final rule. Based on comments, BLM

is adopting a final rule that differs from

the proposal with regard to the

beginning of the 40-year period for

mining out the LMU. The final rule

provides flexibility in beginning the 40-

year period, because BLM has

concluded that a definition that

specifies a single beginning point for the

40-year period is not appropriate. See

the preamble discussion below

concerning § 3487.1 of the final rule.

Subpart 3481—General Provisions.

Section 3481.4 Temporary interruption

in coal severance. As discussed above,

BLM also proposed to change the

definition of ‘‘producing’’ to allow

temporary suspension of operations for

reasons beyond the control of the lessee/

operator without disqualifying the lease

holder from receiving new leases. The

proposed rule would have restricted a

‘‘temporary suspension’’ to not more

than 3 months in length and provided

a list of qualifying circumstances similar

to those included in the previous rule.

BLM has decided that the provisions

relating to ‘‘temporary suspension,’’

which has been renamed ‘‘temporary

interruption in coal severance’’ in the

final rule, are regulatory in nature and

should not be included in a definition.

Thus, in the final rule adopted today,

these provisions are located at final

§ 3481.4, including §§ 3481.4–1 through

3481.4–4.

Some commenters confused a

‘‘temporary suspension’’ for the

purposes of determining lessee

qualifications under section 2(a)(2)(A) of

MLA with lease suspensions authorized

under section 7(b) of MLA (30 U.S.C.

207(b)). BLM believes that some of the

confusion may have resulted from the

proposed ‘‘temporary suspension’’

provision which combined

administrative exceptions to the

definition of ‘‘producing’’ with elements

of the section 7(b) suspension criteria.
44362 Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations

The comments make it evident that

using the same or similar terminology

for different circumstances is confusing.

Therefore, in the final rule, BLM uses

the term ‘‘temporary interruption in coal

severance’’ to refer to periods when a

lease or LMU is not severing coal, but

the lease holder is still considered to be

producing and thus qualified under

section 2(a)(2)(A) of MLA to receive

additional leases.

Section 3481.4–1 Can I temporarily

interrupt coal severance and still be

qualified as producing? Final § 3481.4–

1 provides that an interruption in coal

severance allows a lessee/operator to

temporarily halt the extraction of coal

for a limited period of time without

jeopardizing the lessee/operator’s

qualifications under section (2)(a)(2)(A)

of MLA to receive additional leases.

During the period of an interruption in

coal severance, BLM still considers a

lease or LMU to be producing so as not

to preclude the lessee/operator from

receiving a new or transferred lease.

This section corresponds to the first

sentence of proposed § 3400.0–

5(rr)(6)(ii)(A), but without the proposed

3-month limit and the restriction to

reasons beyond the reasonable control

of the operator/lessee. The time limit for

temporary interruptions in coal

severance is prescribed in final

§ 3481.4–4 (discussed below).

BLM decided not to restrict temporary

interruptions in coal severance to

circumstances beyond the reasonable

control of the lessee/operator. BLM

believes that proposed § 3400.0–

5(rr)(6)(ii)(A) was confusing in that it

included in the examples of

circumstances beyond the lessee/

operator’s control things that could be

within the control of the lessee/

operator. For example, equipment

movement, overburden removal, and

vacations would all appear to be,

generally, within a lessee/operator’s

control.

To remedy the confusion, the final

rule allows temporary interruptions in

coal severance for any reason, up to the

1-year limit. See final § 3481.4–4. As

discussed below, BLM believes that

limiting the aggregate duration of

interruptions is a much clearer and

more effective way to regulate than

limiting the types or causes of

interruptions. If adopted, the proposal

might have resulted in disagreements

over whether or not an interruption was

caused by a factor beyond an operator’s

control. Such disagreements are difficult

to resolve and rarely increase

understanding of, or compliance with, a

regulation.

Because the term ‘‘producing’’ in

section 2(a)(2)(A) of MLA, as amended,

(30 U.S.C. 201(a)(2)(A)) is not defined in

the statute, BLM has the authority under

MLA (30 U.S.C. 189), the MLA for

Acquired Lands (30 U.S.C. 359), and

FLPMA (43 U.S.C. 1733 and 1740) to

adopt a provision defining the term,

provided we establish a reasonable

connection between the provision and

the purposes of the statutes. In this case,

the final rule fosters maximum

economic recovery of Federal coal

reserves and facilitates development of

coal reserves in an efficient, economical,

and orderly manner by giving operators

the flexibility to temporarily interrupt

coal severance as necessary due to the

unique and dynamic circumstances of

each coal mining operation. In addition,

the final rule limits abuse through the

aggregate time limit. See the preamble

discussion of final § 3481.4–4 below.

Readers should note that some of the

circumstances beyond a lessee/

operator’s control correspond to the

‘‘casualties not attributable to the

lessee’’ set forth in section 7(b) of MLA

(30 U.S.C. 207(b)). As discussed above,

to the extent that an operation is forced

to temporarily interrupt coal severance

due to casualties not attributable to the

lessee, BLM has additional authority

under section 7(b) of MLA to consider

the interruption a non-disqualifying

event under section 2(a)(2)(A)’s

producing requirement.

Section 3481.4–2 What are some

examples of circumstances that qualify

for a temporary interruption of coal

severance? Final § 3481.4–2 provides

some examples of circumstances that

qualify for an interruption in coal

severance, including movement, failure,

or repair of major equipment, such as

draglines or longwalls; overburden

removal; adverse weather; employee

absences; inability to sever coal due to

orders issued by governmental

authorities for cessation or relocation of

the coal severance operations; and

inability to sell or distribute coal

severed from the lease or LMU out of or

away from the lease or LMU. This

section corresponds to proposed

§§ 3400.0–5(rr)(6) (ii) and (iii). The final

rule differs from the proposal in that we

added ‘‘adverse weather’’ to the list of

qualifying circumstances based on the

fact that coal operations sometimes have

to temporarily interrupt operations in

the winter. We also substituted the term

‘‘employee absences’’ in the final rule

for ‘‘vacations and holidays’’ in the

proposal in the belief that a more

inclusive term is preferable. For

example, ‘‘employee absences’’ takes

into account situations where employee

illness is a factor.

In response to BLM’s request in the

proposed rule, several commenters

suggested additional circumstances in

which an interruption in coal severance

could be allowed. These additional

circumstances included fires,

explosions, storms, floods, boycotts,

court orders, damage to support

facilities or systems, interruptions in

coal transportation, strikes, material

shortages, and interruptions in delivery

of coal initiated by the coal customer.

Several comments stated that any

attempt to exhaustively list all potential

exceptions to ‘‘producing’’ is misplaced.

One comment suggested that the rule

appeared to rely on ‘‘events’’ while

there might be ‘‘conditions’’ that could

be the basis of an interruption to

operations.

BLM agrees that a list of potential

exceptions to ‘‘producing’’ can never

capture all possible qualifying

circumstances. Rather than attempting

to establish an exhaustive list of events

or conditions that justify a temporary

interruption, BLM has decided to adopt

in principle the proposed approach by

limiting the duration of interruptions.

Limiting the duration of interruptions in

coal severance is a reliable means that

eliminates the complexities of

interpretation, is not excessively

burdensome, and captures all possible

circumstances. Administratively, BLM

believes it to be more efficient to

regulate the duration of the interruption

in coal severance rather than listing all

the possible combinations of qualifying

criteria. Thus, the final rule simply lists

several examples of qualifying

circumstances, all of which are subject

to the limit established by final

§ 3481.4–4, discussed below, except for

temporary interruptions of less than 14-

day duration and section 7(b)

suspensions.

Several comments on proposed

§ 3400.0–5(rr)(6)(ii)(A), which would

have included ‘‘dragline or other

equipment movement,’’ requested that

BLM also include examples of

underground mining equipment and

methods. BLM believes that it would be

cumbersome to provide examples

applicable to every mining method and

all varieties of mining equipment.

However, BLM has modified the list of

example methods and equipment in

corresponding final § 3481.4–2(a) to

include examples of both surface

(draglines) and underground (longwall)

mining equipment. Thus, the item in the

proposed rule that read ‘‘dragline or

other equipment movement, breakdown,

or repair’’ is changed to ‘‘movement,

failure, or repair of major equipment,

such as draglines or longwalls * * *.’’

The term ‘‘major equipment’’ includes

draglines, longwalls, haulage trucks,

and conveyor belts, the failure of which
Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations 44363

would directly impede coal severance.

Dozers, graders, and utility trucks are

not examples of major equipment.

Many comments expressed opposition

to proposed § 3400.0–5(rr)(6)(ii)(B),

which would have added a provision to

exclude a lack or loss of market and a

lack or loss of a contract as qualifying

circumstances for an interruption of

coal severance. BLM included this

provision in the proposal to address

abuses such as maintaining a lease in

non-producing status while waiting for

a market to develop or for a contract to

be negotiated. The comments asserted

that the proposed rule would force a

lessee/operator to capitulate to a buyer’s

demands, which could result in the

potential bypass of Federal coal

reserves. For simplicity and

streamlining and based on the

commenter’s concerns, BLM has

decided not to include the proposed

provision in this final rule. BLM

believes the limit on the duration of

interruptions will curb any abuse. BLM

continues to believe, however, that loss

of a coal contract or market does not

constitute a ‘‘casualty’’ that would

qualify for a suspension under section

7(b) of MLA, as amended. Thus, an

operator who stops severing coal

because of the loss of a contract or

market can qualify as ‘‘producing’’

subject to the 1 year in 5 aggregate

maximum for temporary interruptions,

but would not be entitled to a section

7(b) suspension for loss of a coal

contract or market.

Section 3400.0–5(rr)(6)(iii) of the

proposal would have included orders by

governmental agencies for suspension of

coal severance for reasons that are

beyond the control and not the fault of

the lessee/operator as an example of a

qualifying circumstance for an

interruption in coal severance. One

comment indicated that the proposed

rule had a narrow definition and could

tend to defeat the purpose for which it

was intended. For example, orders of

government authorities to relocate coal

severance can have as much impact on

a lease or LMU as orders for suspension

of coal severance. In response to this

comment, BLM has added to final

§ 3481.4–2(b) a provision for cessation

or relocation of coal severance

operations due to governmental order.

We substitute the term ‘‘cessation’’ in

the final rule for the proposed

‘‘suspension’’ to avoid any possible

confusion with suspensions authorized

under 43 CFR 3483.3.

One commenter objected to language

in proposed § 3400.0–5(rr)(6)(iii) that

would have allowed a non-disqualifying

suspension ordered by governmental

authorities for reasons beyond the

control of the lessee/operator and not

the fault of the [lessee /operator]

(Emphasis added). The commenter

asserted that the proposal would invite

needless disputes over what was, or was

not, the fault of the lessee/operator.

BLM agrees and has deleted the

reference to reasons beyond the

reasonable control and not the fault of

the operator/lessee from final § 3481.4–

2(b).

Section 3481.4–3 Does a temporary

interruption in coal severance affect the

diligence requirements applicable to my

lease or LMU? Final § 3481.4–3 specifies

that an interruption in coal severance

does not change the diligence

requirements of 43 CFR subpart 3483

applicable to a lease or LMU. There was

confusion among the commenters

concerning the distinction between an

interruption in coal severance under the

proposed definition of ‘‘producing’’ and

the lease suspension provisions located

at 43 CFR 3483.3. BLM is including this

section in the final rule to clarify that a

qualifying interruption in coal

severance, which maintains eligibility to

receive future leases, does not affect the

diligence requirements of a lease or

LMU. Such interruptions do not

constitute suspensions under 43 CFR

3483.3, which implements sections 7(b)

and 39 of MLA (30 U.S.C. 207(b) and

209). A lessee who seeks such a

suspension or extension of lease terms

must apply to BLM for approval.

Section 3481.4–4 What is the

aggregate amount of time I can

temporarily interrupt coal severance

and have BLM consider my lease or

LMU producing? Based on commenter

opposition to the proposed 3-month

limit on temporary interruptions, BLM

has modified the final rule to provide

substantially more flexibility to

operators, but without being completely

open-ended, as was the previous rule.

BLM believes that the approach selected

in the final rule appropriately balances

the legitimate operational needs of

lessees with the goal of curbing abuse of

the exception from the requirement to

sever coal. Thus, final § 3481.4–4 adopts

a provision that limits the aggregate of

all interruptions in coal severance to 1

year in the 5-consecutive-year period

immediately preceding the date of

BLM’s determination of lessee

qualifications under 43 CFR 3472.1–2,

except that BLM will not count any

interruption that is 14 days or less in

duration or any suspension approved by

BLM pursuant to section 7(b) of MLA

(30 U.S.C. 207(b)). In other words, if

BLM were looking, on June 30, 1997, at

the eligibility of a particular lease

holder who is reliant upon the

temporary interruption provision, we

would look at the aggregate of

interruptions between July 1, 1992, and

June 30, 1997. If the aggregate of

interruptions during that period

exceeded 365 days, not counting

interruptions of 14 days or less or

approved section 7(b) suspensions, the

lease holder would not be qualified to

obtain additional leases. With each

passing day, the 5-year period that BLM

looks at rolls forward.

In the proposed rule, BLM stated that

section 7(b) provides an exception from

the diligent development requirements

(59 FR 66876). However, the last

sentence of section 7(b) makes it clear

that the section 7(b) exceptions do not

apply to the requirement to produce

commercial quantities at the end of ten

years in section 7(a). Thus the rule

implementing the section 7(b)

exceptions provides an opportunity to

seek a suspension of the continuous

operation requirement, but does not

mention a suspension of the diligent

development requirements. See 43 CFR

§ 3483.3(a). Therefore when the

proposed rule preamble suggested that

an operator/lessee could seek a force

majeure exception under section 7(b) for

temporary suspensions of greater than

three months in accordance with 43

CFR § 3483.3, that statement was

accurate under the previous regulations

only for operations which have

achieved diligent development and are

in a continuous operation mode, and for

circumstances which would qualify

under section 7(b).

Although the section 7(b) exception

from producing requirement in section

2(a)(2)(A) applies to leases which have

not achieved diligent development, no

existing regulatory provision

implements the statutory provision.

Thus, we are adopting in the final rule

a conforming provision at § 3481.4–

4(b)(3) to recognize that MLA, as

amended, provides a force majeure

exception to the section 2(a)(2)(A)

producing requirement (30 U.S.C.

201(a)(2)(A)) for operations that are

subject to diligent development. In

circumstances that meet the force

majeure exceptions described in section

7(b) of MLA, BLM will approve

suspensions for operations subject to

diligent development for the purpose of

compliance with section 2(a)(2)(A).

Most of the commenters were

concerned about the proposed 3-month

limitation for temporary suspensions

and the circumstances under which a

temporary suspension could be

authorized. To adequately address the

volume and detail of the comments

received, the comments applicable to

these topics are discussed individually

below.
44364 Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations

Many comments took issue with the

3-month limit on the duration of a

temporary suspension in proposed

§ 3400.0–5(rr)(6)(ii)(A). Most of these

comments considered a 3-month period

to be too brief. Several comments noted

that the duration of most qualifying

conditions could be longer than 3

months, for example, the time to repair

a damaged steam turbine or the time

needed to negotiate alternative sales

agreements. Several comments said they

thought the 3-month duration was

arbitrary and would serve little useful

purpose, suggesting instead to retain the

former provision which did not limit

the duration. Another comment stated

that the word ‘‘temporary’’ speaks for

itself, thereby eliminating the need for

a specified duration. One comment was

concerned about how frequently 3-

month temporary suspensions could be

granted and if such suspensions could

be granted for consecutive 3-month

periods. One comment suggested as an

alternative that a temporary suspension

could continue until the end of the next

continued operation year.

BLM believes the duration of an

interruption in coal severance must be

explicitly limited to preclude abuse.

BLM recognizes that in the normal

course of business, a lessee/operator

may be confronted with circumstances

in which prudent business practice

demands a cessation of coal production

for an abbreviated period. It is in the

best interest of both the lessee/operator

and BLM to work together to ensure

prudent resource management is

maintained through periods when coal

is not produced. However, BLM’s

experience has shown, as documented

by the GAO report discussed above, that

allowance of an interruption in coal

severance for an unspecified duration

will not necessarily achieve the intent of

FCLAA. BLM believes that the duration

of any interruption in coal severance

must be limited to reduce opportunities

for abuse and speculation.

The comment that suggested allowing

extension of an interruption in coal

severance until the end of the next

continued operation year assumes that

the lease or LMU is subject to continued

operation. As discussed earlier in this

preamble in connection with § 3472.1–

2, the holder of a lease subject to

continued operation will not be

disqualified from obtaining additional

leases if the lease is producing or in

compliance with the continued

operation requirements. Thus, a

standard for temporary interruptions

based on continued operation year

would not be applicable to the type of

situation identified in the GAO report,

that is, where the holder of a nonproducing lease subject to diligent

development obtains additional leases.

Extending the duration of an

interruption in coal severance must also

be considered in light of the explicit

production requirements of section

2(a)(2)(A) of MLA and the goals of

FCLAA to deter speculation. However,

in response to the comments, BLM

considers it reasonable to allow the

aggregate length of temporary

interruptions in coal severance to

exceed 3 months. Thus, final § 3481.4–

4 adopts a maximum aggregate for

temporary interruptions in coal

severance of not more than 1 year in the

5-consecutive-year period immediately

preceding the date of BLM’s

determination of lessee qualifications

under 43 CFR 3472.1–2.

One comment on the proposed rule

expressed concern that the proposed

rule did not explicitly establish if the

proposed 3-month limit would be

applied for each qualified event, or only

once within the lease term, or if a

lessee/operator could receive

consecutive 3-month interruptions for

an indefinite period. BLM agrees that

the proposed rule inadequately defined

when and how the 3-month limit would

be applied. This concern is addressed in

the final rule at § 3481.4–4(a) which

provides that the lessee/operator may

interrupt coal severance for up to 1 year,

in aggregate, during the immediately

preceding 5-consecutive-year period.

BLM believes that allowing an aggregate

of 1 year of interrupted coal severance

in the immediately preceding 5-

consecutive-year period will provide a

needed balance between operating

flexibility for the lessee/operator as well

as enforcement of FCLAA’s antispeculative intent. A quantifiable

standard for temporary interruptions in

coal severance eliminates the need for

an exhaustive listing of qualified events.

BLM believes that simple and

predictable criteria are the only way to

provide consistent and uniform

outcomes. The workload associated

with tracking the aggregate days of

interrupted coal severance is negligible

when compared to the workload that

would be associated with determining if

each temporary interruption in coal

severance is a qualified event or not.

Additional discussion of qualified

events is located under the portion of

the preamble associated with final

§ 3481.4–2.

Final § 3481.4–4(b)(1) provides that

BLM will not count any interruption in

coal severance that is 14 days or less in

duration. BLM added this provision to

the final rule for the convenience of the

regulated community and ease of

administration. BLM is primarily

concerned with interruptions that

evince speculative intent, not in shortterm stoppages of a few days duration.

Also, it would be onerous for BLM and

lessee/operators to track each time

production ceased for a day or two. It

would be difficult for BLM to maintain

records of this information and to

enforce this requirement. BLM believes

not regulating interruptions of 14 days

or less achieves a reasonable balance

between discouraging speculation and

avoiding an administrative burden.

Also, BLM expects that this provision

will allow lessee/operators to take into

account vacations and holidays. The

previous rule and the proposed rule

both addressed vacations and holidays

by including them in the list of

circumstances allowing temporary

suspension of production.

Final § 3481.4–4(b)(2) provides that

BLM will not count any suspension

granted under 43 CFR 3483.3 toward the

aggregate of temporary interruptions in

coal severance. The referenced

provision is the one that implements the

section 7(b) of MLA exception from

continued operation for strikes, the

elements, and casualties not attributable

to the lessee. Final § 3481.4–4(b)(3)

provides that BLM will not count

toward the aggregate of temporary

interruptions any BLM-approved

suspension of the 43 CFR 3472.1–2(e)(1)

requirement for reasons of strikes, the

elements, or casualties not attributable

to the lessee before diligent

development is achieved. This

provision implements the section 7(b) of

MLA exception from diligent

development. A suspension granted

under this provision is for the limited

purpose of implementing section

2(a)(2)(A) and does not affect the section

7(a) requirement to produce commercial

quantities in 10 years. BLM added these

provisions to the final rule in

recognition of the fact that the so-called

force majeure exceptions contained in

section 7(b) are open ended and cannot

be limited by BLM’s regulatory

provisions applicable to temporary

interruptions in coal severance.

Subpart 3483—Diligence

Requirements. Section 3483.3

Suspension of continued operation or

operations and production. BLM’s

previous rules allowed extension of the

deadline for submission of a resource

recovery and protection plan (R2P2)

beyond 3 years. In Natural Resources

Defense Council v. Jamison, 815 F.

Supp. 454 (D.D.C. 1992), the court held

that the requirement to submit an R2P2

within 3 years is an unambiguous

deadline that cannot be extended.

Consequently, BLM proposed to

eliminate this provision. BLM also
Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations 44365

proposed some minor edits for clarity of

expression. BLM is adopting the

provisions as proposed.

Several comments supported removal

of the provision for extending the time

for submitting an R2P2 beyond 3 years.

One comment suggested an editorial

change in the last sentence of proposed

§ 3483.3(a). The comment suggested

changing the word ‘‘and’’ to ‘‘or’’ so that

the last sentence would read, ‘‘The

authorized officer, if he or she

determines an application to be in the

public interest, may approve the

application or terminate suspensions

that have been or may be granted.’’

(Emphasis added.) This comment is

adopted in the final rule.

Subpart 3487—Logical Mining Unit.

Section 3487.1 Logical mining units.

Paragraph (e) of this section contains the

stipulations required for the approval of

a proposed LMU. Paragraph (e)(6) is the

stipulation that sets the beginning of the

40-year period in which the coal

reserves of the LMU must be mined.

This provision is derived from section

2(d)(2) of MLA, which provides in

pertinent part that ‘‘the reserves of the

entire unit will be mined within a

period established by the Secretary

which shall not be more than forty

years’’ (30 U.S.C. 202a(2)). (Emphasis

added.) Because MLA does not specify

when the 40-year period starts, BLM has

the discretion to establish a reasonable

starting date(s). BLM’s previous

regulations provided that the 40-year

period begins on the date that coal is

first produced from the LMU, after LMU

approval, as determined during the first

royalty reporting period after such date.

See 43 CFR 3487.1(e)(6) (1995). The

proposed rule would have begun the 40-

year period when the R2P2 for the LMU

is approved. BLM explained that this

change would encourage diligent

development of Federal coal reserves

because the lessee/operator is ‘‘free to

start’’ mining operations after LMU

approval (59 FR 66878, Dec. 28, 1994).

As discussed in the preamble of the

proposed rule, the MLA states that the

mine-out period that the Secretary

establishes must be part of the approved

‘‘mining plan’’ and cannot exceed 40

years. See 30 U.S.C. 202a(2). BLM

interprets ‘‘mining plan’’ to mean the

‘‘operation and reclamation plan’’

required under 30 U.S.C. 207(c), which

the implementing regulations at 43 CFR

Part 3482 call the resource recovery and

protection plan, or ‘‘R2P2.’’ This plan,

which the lessee must submit within 3

years after a lease or LMU is approved,

provides a detailed description of how

the lessee/operator will mine the coal

and reclaim the land. Because this plan

is customarily approved concurrently

with, or subsequent to, the mining

permit issued under the Surface Mining

Control and Reclamation Act (SMCRA),

the lessee/operator can proceed with

development operations after the date of

R2P2 and permit approval. See 30 CFR

746.13. Although MLA does not state

expressly when the mine-out period

should start, BLM believes that in

situations where R2P2 approval for the

LMU precedes coal production on the

LMU, it best serves the purposes of

MLA to begin the 40-year LMU mineout period on the date of R2P2 approval

to encourage diligent development of

Federal coal reserves. Otherwise, in the

absence of such a provision, the

lessee/operator could delay the

beginning of the 40-year LMU mine-out

period.

BLM is adopting in the final rule a

provision that sets the beginning of the

40-year period at the effective date of

the LMU, if any portion of the LMU is

then producing. If not, then the

beginning date is either the date of

approval of the R2P2 for the LMU or, if

coal production begins before R2P2

approval, the date coal production

begins after LMU approval. This

approach takes into account the three

coal-production scenarios that are

possible at the time of LMU formation

and effectively continues the previous

rule in situations where coal production

precedes approval of the R2P2. First, if

coal production is occurring within the

area covered by the LMU when the LMU

is formed, it is reasonable to begin the

40-year mine-out period on the date of

LMU approval. Second, if coal is not

being produced anywhere within the

LMU at the time it is approved, the 40-

year mine-out period begins when the

R2P2 for the LMU is approved. In the

third scenario, it is possible that the

LMU could begin to produce coal before

the R2P2 for the LMU is approved. For

example, production could occur from a

lease in the LMU that has an approved

lease-specific R2P2 or from non-Federal

resources within the LMU under a

separate SMCRA permit. The final rule

takes into account this scenario by

providing that the 40-year mine-out

period begins on the date coal

production begins after LMU approval.

Final § 3487.1(e)(6) does not affect the

beginning date of the 40-year mine-out

period for LMUs approved before the

effective date of this final rule.

Several comments said the 40-year

mine-out provision for an LMU should

be flexible to allow, upon reasonable

justification, mine-out periods longer

than 40 years. BLM does not agree.

Amended section 2(d)(2) of MLA

explicitly limits the period for mining

all recoverable coal reserves in an LMU

to not more than 40 years. See 30 U.S.C.

202a(2). BLM does not have the

authority to change statutory provisions

through notice and comment

rulemaking.

Many comments opposed beginning

the 40-year mine-out period for an LMU

upon the approval date of the R2P2 for

the LMU. Several comments asserted it

is not correct to assume that a lessee is

‘‘free to start’’ mining operation after the

R2P2 is approved just because the R2P2

is approved in connection with the

SMCRA permit. Other commenters

opposed the proposal because the R2P2

is a proposed action for the leasehold

rather than being explicitly tied to the

actual commencement of mining

operations which could be several years

later.

BLM does not agree with these

comments. Under existing rules, which

define the mining plan as the R2P2,

approval of the mining plan by the

Assistant Secretary constitutes approval

under section 7(c) of MLA for a lessee

to enter and disturb the leasehold (30

U.S.C. 207(c)). The SMCRA permit is an

authorization to enter the permit area

and commence mining operations (30

U.S.C. 1256). BLM recognizes that preproduction activities consume a certain

amount of time. However, given the

amount of time and effort needed to

obtain a permit, its limited term, and the

fact that it will self-terminate if no

activity occurs within 3 years of

issuance (30 CFR 773.19(e)), there are a

number of incentives to expedite preproduction activities and begin

production once a permit is issued.

From BLM’s perspective, the portion of

the 40-year mine-out period that will

elapse during the pre-production phase

is small in relation to the total length of

the 40-year period. BLM believes that

this provision is fully in accord with the

statutory requirement to encourage

diligent development (30 U.S.C.

202a(2)).

Several other comments said that

absent explicit evidence to the contrary,

beginning the LMU recovery period

based on the R2P2 approval date is

contrary to the statutory requirement of

FCLAA that an LMU must promote the

efficient, economical, and orderly

development of the resource. BLM does

not agree. The law provides that, ‘‘[an

LMU] is an area of land in which the

coal resources can be developed in an

efficient, economical, and orderly

manner as a unit with due regard to

conservation of coal reserves and other

resources.’’ (Emphasis added.) See 30

U.S.C. 202(a)(1). The 1976 amendments

to MLA (FCLAA) were intended to

address the problem of Federal leases

being held for speculative purposes
44366 Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations

without any production occurring. BLM

believes that starting the 40-year mineout period upon R2P2 approval, which

can occur several years after LMU

approval, will spur efficient,

economical, and orderly development

without allowing undesirable

speculation. Without such a provision,

lessee/operators can continue to delay

the beginning of production without

penalty as long as the diligent

development and section 2(a)(2)(A)

requirements are satisfied. Beginning

the 40-year period upon R2P2 approval

will provide an appropriate incentive to

commence production.

One comment expressed concern

about a situation where an existing

mining operation that has an approved

lease-specific R2P2 is included in an

LMU. The commenter inquired whether

the 40-year mine-out period would

begin when the lease-specific R2P2 was

approved or when the LMU R2P2 was

approved, even though the LMU R2P2 is

not required to be submitted until up to

3 years after the LMU approval. Under

the proposed rule, the 40-year mine-out

period would have begun upon

approval of the LMU R2P2. The R2P2

does not have to be submitted for 3

years and may not be approved for an

additional time period. To extend the

mine-out period by that amount of time

for an LMU that is already producing

would not contribute to the goal of

encouraging diligent development. For

the above reason and to ensure

compliance with 30 U.S.C. 202a(2), the

final rule provides that if any portion of

the LMU is producing when the LMU is

approved, the 40-year mine-out period

begins on the effective date of the LMU.

The final rule also addresses the

situation where a lease that is included

in an LMU and has an approved leasespecific R2P2 begins production after

LMU approval, but prior to LMU R2P2

approval. In this case, the final rule

provides that the 40-year mine-out

period begins on the date coal is first

produced from an approved LMU in

advance of LMU R2P2 approval.

Several comments expressed concern

that the proposed rule did not address

whether the change in the beginning

date for the LMU 40-year mine-out

period would be applied to LMUs that

have already been approved. In the

December 28, 1994, proposed rule (59

FR 66878), BLM indicated that the

proposed rule would apply to all LMU

applications that were under review on

December 28, 1994, and all LMU

applications received after December 28,

1994. However, since the final rule BLM

is adopting today differs from the

proposal, BLM has decided that the

rules adopted today should apply

prospectively. That is, any decisions on

pending LMU applications that BLM

makes after the effective date of these

rules will be based on the rules adopted

today regardless of when the LMU

application was submitted. Any

decisions BLM has made or makes prior

to the effective date of the rules adopted

today will be based on the rules in effect

on the date the decision is made. Thus,

this final rule does not affect the

beginning date of the 40-year mine-out

period for LMUs approved before the

effective date of this rule.

Several comments asserted that

changing the beginning date of the LMU

40-year mine-out period unduly

constrains and restricts the flexibility of

the LMU lessee/operator. BLM does not

agree with this characterization of the

rule. Section 2(d)(2) of MLA, as

amended, requires the Secretary to

establish the 40-year mine-out period

(30 U.S.C. 202a(2)). This final rule

establishes the beginning of the 40-year

period and provides a degree of

flexibility by accounting for the various

scenarios under which coal production

may occur in an LMU. This provision is

in contrast to the former regulation

which tied the beginning to initiation of

coal production, essentially allowing

the lessee/operator total control over

setting the beginning point.

Section 3487.1(f) Criteria for

approving the establishment of an LMU.

BLM’s previous regulations provided

that, ‘‘The authorized officer shall,

except for good cause stated in a

decision disapproving the application,

approve an LMU if it meets the

following criteria * * *.’’ See 43 CFR

3487.1(f) (1995). The proposed rule

would have changed the obligatory

‘‘shall’’ to the permissive ‘‘may’’ while

retaining the requirement for putting the

decision on the LMU application in

writing. See proposed § 3487.1 (f) and

(g). As discussed below, BLM is

adopting the word ‘‘may’’ and the

requirement for a written decision in

final §§ 3487.1 (f) and (g) respectively.

There were many comments that

opposed changing the criteria for

approving an LMU from ‘‘The

authorized officer shall, except for good

cause stated in a decision disapproving

the application, approve * * *’’ in the

previous rule to ‘‘The authorized officer

may approve * * *.’’ The comments

generally perceived the change as

allowing the authorized officer (BLM) or

special interest groups the opportunity

to delay approval of an LMU for any

reason. One comment said that an entity

that is willing and able to absorb the

significant expense necessary to initiate

a coal mining operation to develop

Federal coal resources should be

granted the presumption that BLM

would approve an LMU application

unless good cause is documented for not

approving the application. Several

commenters were concerned that the

rule would be prone to abuse in that an

LMU could be denied for any arbitrary

reason however unjustified. One

comment concluded that the MLA does

not support this rule, and the applicant

should not bear the burden of showing

that a proposed LMU complies with the

statutory requirements. One comment

said, ‘‘the focus of approval

determinations has always been upon

the ability of the applicant to meet the

criteria specified within the regulations,

and this has constituted demonstration

of the lack of a good cause to disapprove

the application.’’

BLM believes that the final rule is

fully consistent with the statute. Section

2(d) of FCLAA (30 U.S.C. 202a(1)) states

that, ‘‘The Secretary, upon determining

that maximum economic recovery of the

coal deposit or deposits is served

thereby, may approve the consolidation

of coal leases into a logical mining

unit.’’ (Emphasis added.) Use of the

word ‘‘may’’ gives the Secretary broad

discretion to determine whether the

public interest would be served by

approval of an LMU. The legislative

history of FCLAA shows no

Congressional intent to create a

presumption in favor of approving an

LMU. See 122 Cong. Rec. 507–8 (Jan. 21,

1976). Thus, MLA does not require that

the Secretary approve an LMU.

BLM believes that the concern about

abuse of the rule is misplaced. Final

§ 3487.1(f)(2) sets forth factors that BLM

will consider in determining whether a

proposed LMU meets the statutory

requirements. Any potential for abuse is

checked by the requirement in final

§ 3487.1(g) for BLM to make a written

statement of the reasons for its decision

concerning an LMU application. As

with any BLM decision, it cannot be

arbitrary. In addition, aggrieved persons

may seek administrative review from

the Interior Board of Land Appeals.

Thus, the rule provides an appropriate

balancing of BLM’s and an applicant’s

interests. The applicant’s responsibility

to provide sufficient justification that

the LMU application conforms to the

requirements of MLA and applicable

regulation is balanced by BLM’s

obligation to state and explain, in

writing, the reasons for the decision on

the LMU application.

Section 3487.1(f)(2). BLM’s previous

rules provided that an LMU would be

approved if mining operations on the

LMU will achieve maximum economic

recovery of Federal recoverable coal

reserves within the LMU. See 43 CFR
Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations 44367

3487.1(f)(2) (1995). Paragraph (f)(2) also

provided that a single operation may

include a series of excavations.

Proposed § 3487.1(f)(2) (i)–(vii) would

have listed seven specific factors BLM

would consider in determining if an

LMU application meets the statutory

requirements: (1) the amount of coal

reserves recoverable from the LMU,

compared with the amount recoverable

if each lease were developed

individually; (2) the mining sequence;

(3) the potential for independent

development of each lease proposed to

be included in the LMU; (4) the

advantages of developing and operating

the LMU as a unit; (5) the potential for

inclusion of the leases in question into

another LMU; (6) the availability of

transportation and access facilities; and

(7) other factors that the authorized

officer finds relevant to achievement of

maximum economic recovery in an

efficient, economical, and orderly

manner.

In the final rule, we are adopting the

seven criteria, with minor editorial

changes, in a slightly revised form that

indicates the relationship of the criteria

to the statutory requirements. Thus, the

final rule provides that in determining

whether the proposed LMU will meet

the requirement to achieve maximum

economic recovery of Federal coal

reserves, BLM, as appropriate, will

consider the amount of coal reserves

recoverable from the proposed LMU

compared to the amount recoverable if

each lease were developed individually

and any other factors BLM finds

relevant to this requirement.

In determining whether the proposed

LMU meets the requirement to facilitate

development of coal reserves in an

efficient, economical, and orderly

manner, BLM, as appropriate, will

consider the potential for independent

development of each lease proposed to

be included in the LMU, the potential

for inclusion of the leases in question in

another LMU, the availability and

utilization of transportation and access

facilities for development of the LMU as

a whole compared to development of

each lease separately, the mining

sequence for the LMU as a whole

compared to development of each lease

separately, and any other factors BLM

finds relevant to this requirement.

Finally, in determining whether the

proposed LMU meets the requirement to

provide due regard to conservation of

coal reserves and other resources, BLM,

as appropriate, will consider the effects

of developing and operating the LMU as

a unit and any other factors BLM finds

relevant to this requirement. BLM

believes that by explicitly linking the

factors we will consider with the

statutory requirements each LMU must

meet, the regulated community will

have a better understanding of what an

LMU application must demonstrate.

One of the factors that BLM will

consider in determining whether a

proposed LMU meets the requirement to

provide due regard to conservation of

coal reserves and other resources is the

effects of developing and operating the

LMU as a unit. See final

§ 3487.1(f)(2)(iii)(A). This language is a

change from proposed § 3487.1(f)(2)(iv),

which would have given consideration

to the advantages of developing and

operating the LMU as a unit. (Emphasis

added.) BLM made this change due to

a concern that considering only the

advantages of developing and operating

the LMU as a unit would unduly, and

perhaps unwisely, narrow the scope of

review of the LMU application. BLM

believes that it is appropriate to

consider both the advantages and

disadvantages of developing and

operating the LMU as a unit, as well as

any associated impacts.

One commenter supported

establishment of specific criteria for

approval of an LMU application, but

was concerned that the proposed LMU

application approval criteria were

confined to geologic and engineering

considerations. The commenter favored

criteria that would relate to the statutory

requirement that the LMU should

provide ‘‘due regard to the conservation

of coal reserves and other resources,’’

particularly water resources. BLM does

not necessarily agree that the proposed

criteria were confined to geologic and

engineering considerations. However,

final § 3487.1(f)(2)(iii) clarifies BLM’s

position that we will consider the

conservation of coal reserves and other

resources. In addition, the substitution

of ‘‘effects’’ for ‘‘advantages’’ in final

§ 3487.1(f)(2)(iii)(A), as discussed above,

addresses the commenter’s concern.

Further, in response to this comment,

the final rule organizes the factors BLM

will consider before approving a

proposed LMU according to the

statutory criteria the LMU must meet.

Some comments asserted that the

LMU approval criteria should be

confined to the statutory criteria.

Several comments were concerned that

the proposed criteria do not appear to be

related to, nor serve implementation of,

the statutory criteria. One comment said

BLM failed to adequately explain how

the proposed approval criteria related to

the statutory criteria. In response to

these comments, BLM changed the

organization of the final rule to indicate

the relationship between the statutory

criteria and the factors used in

determining that proposed LMUs will

meet them. The final rule groups the

factors according to the applicable

statutory criteria. BLM has not changed

the statutory criteria that each LMU

must meet. We have merely identified

factors that we will use in determining

whether LMU applications meet the

criteria. For example, in determining

whether a proposed LMU will facilitate

efficient, economical, and orderly

development of the coal reserves, it is

entirely appropriate to consider the

potential for independent development

of each lease proposed for inclusion in

the LMU. If a lease is not likely to be

mined unless included in the proposed

LMU, that is, the lease will be bypassed,

then it would make sense in this case to

include it in the proposed LMU.

Several commenters took issue with

the proposed additional criteria for

approval of an LMU application. One

commenter said BLM lacked good cause

to change the LMU application criteria.

Other comments said the proposed

criteria were unwarranted and of little

use for approval of an LMU application.

As discussed earlier in this preamble,

BLM believes that there is a need to

establish guidance for approving the

establishment of LMUs. This is one of

the specific recommendations of the

GAO report. The seven factors provide

guidance to the regulated community

for preparing LMU applications and to

BLM officials for analyzing them. This

guidance will help to ensure that LMUs

are only approved after demonstrating

they will meet the statutory criteria and

will help to ensure that LMUs are not

formed merely for the purpose of

allowing the leaseholder to continue to

hold the lease without any coal

production, an outcome that conflicts

with the anti-speculative intent of

FCLAA.

Section 3487.1(f)(6). Under the

proposed rule, BLM would have added

a new provision to limit the

circumstances under which a lease that

is nearing the end of its diligent

development period may be included in

an LMU. Proposed § 3487.1(f)(7) would

have required that a Federal coal lease

that has not met its diligent

development requirement prior to the

end of the eighth lease year can only be

included in an LMU if either a portion

of the LMU is included in a SMCRA

permit or a portion of the LMU is

included in an administratively

complete SMCRA application. This

provision corresponds to final

§ 3487.1(f)(6), which differs from the

proposal only by clarifying that a

portion of the LMU must be included in

a SMCRA permit or administratively

complete permit application at the time

the LMU application is submitted.
44368 Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations

Although several comments indicated

support for the 8-year requirement as

proposed, BLM received many

comments opposed to the proposed

rule. Most of the comments said the rule

effectively reduced the diligence period

for a lease from 10 years to 8 years.

Several comments said the proposed

rule would reduce the incentive to

develop new mines on Federal lands.

Some comments said BLM had not

offered sufficient justification for this

rule.

BLM does not agree with these

opposing comments. The final rule does

not set an absolute barrier to inclusion

in an LMU for leases where 8 years of

the diligent development period have

elapsed. Leases in the ninth and tenth

years of their diligent development

periods are still eligible for inclusion in

an LMU if a portion of the area to be

covered by the LMU is included in a

SMCRA permit or administratively

complete permit application. As

explained in the proposed rule

preamble, under the current regulations,

an LMU’s 10-year diligent development

period starts on the effective date of

either the LMU or the most recent

Federal lease, depending on the age and

status of the leases to be included in the

LMU. This provision gives a lessee/

operator holding an older lease that is

about to be terminated for failure to

produce in commercial quantities an

opportunity to postpone the lease

termination date by applying for an

LMU that combines the older lease with

a more recently issued one. This

situation occurred in the Rocky Butte

case described in the GAO report. In

this way, FCLAA’s goal of preventing

speculation in Federal coal reserves can

be frustrated. A lease proposed to be

included in an LMU that is nearing the

end of its diligent development period

without having produced in commercial

quantities is likely to have been

included in an LMU application merely

for the purpose of delaying the leases’s

termination, and not for achieving

efficient, economical, and orderly

development of coal, and thus does not

satisfy one of the statutory criteria for

approval of an LMU.

To address this opportunity for

frustration and circumvention of

FCLAA’s goals, BLM is adopting at final

§ 3487.1(f)(6) the provision limiting

eligibility for inclusion in an LMU as

proposed, with minor editorial changes,

including a change that clarifies that the

SMCRA permit must be in place or

SMCRA permit application must have

been submitted at the time the lessee

submits the LMU application. BLM

believes that the requirement to have a

SMCRA permit or have applied for one

is a significant indication that the LMU

applicant is pursuing coal development

in good faith.

One comment said this rule would

impose an additional restriction on

leases that are proposed to be included

in a LMU in that the lease must

demonstrate production in commercial

quantities by the eighth diligent

development year to qualify for

inclusion in an LMU. BLM does not

agree. The final rule does not affect the

diligent development period of a

Federal coal lease, which remains 10

years. The rule requires a lessee to

demonstrate minimal progress toward

development of the lease within the

statutorily required diligence period as

a condition for inclusion in an LMU

after the eighth year of the lease.

Significant flexibility remains for the

lessee/operator in that only a portion of

the LMU needs to be covered by an

administratively complete SMCRA

permit application or approved SMCRA

permit. All leases proposed to be

included in an LMU need not meet this

requirement, but at least a portion of the

area proposed to be included in the

LMU must meet the requirement to

obtain BLM’s approval for the LMU.

BLM believes this rule implements the

anti-speculative intent of FCLAA and

comports with the language of section

2(d) of MLA, as amended (30 U.S.C.

202a), which, as discussed above,

affords BLM discretion in deciding

whether to approve an LMU. This

exercise of discretion is being codified

in regulations to ensure consistent

application and to inform the public of

BLM policy. BLM has exercised its

discretion and chosen to exclude from

LMU those leases where there has not

been sufficient progress to suggest a

good-faith intention to timely achieve

diligence. The benefits provided by

formation of an LMU (for example,

sheltering a lease from lease-specific

diligence requirements) should only be

approved upon demonstrating that the

lessee is prudently working toward

developing commercial quantities of

coal. The rule only limits a lease’s

eligibility to be included in an LMU

based on activity within the LMU

boundary and does not affect leasespecific requirements.

One comment suggested an

alternative to the proposed requirement

that a portion of the LMU be covered by

an approved SMCRA permit or an

administratively complete SMCRA

permit application. The commenter

suggested that some portion of the LMU

be covered by a SMCRA permit

application submitted prior to

expiration of the diligent development

period. BLM did not accept this

comment because we believe that

adoption of this suggestion could create

an unmanageable situation. An LMU

must be approved prior to the expiration

of the diligent development period

because a lease will be terminated at the

end of the period if it has not produced

commercial quantities. Thus, a situation

could be created where BLM would be

faced with a decision to approve an

LMU based on the expectation that a

SMCRA permit application will be

submitted, determined administratively

complete, and approved by the

regulatory authority some time in the

future, but before the expiration of the

diligent development period. If all these

things did not occur, BLM might be

faced with retroactively invalidating the

LMU.

We also note that submittal of an

administratively complete permit

application for a portion of the LMU

under consideration is not excessively

burdensome. The SMCRA regulations at

30 CFR 701.5 limit the amount of

information for an administratively

complete application to that information

necessary to initiate processing and

public review. This standard is distinct

from the higher standard for permit

approval, which must be based on a

‘‘complete and accurate’’ application.

See 30 CFR 773.15(c)(1).

Section 3487.1(g). As discussed above

in the preamble to § 3487.1(f), BLM is

adopting a provision that the authorized

officer will state in writing the reasons

for the decision on an LMU application.

One commenter suggested adding at

the end of the sentence after the word

‘‘application,’’ the following clause:

‘‘including how the decision meets

regulatory criteria.’’ BLM did not accept

this comment and is adopting the

provision as proposed. Stating the

reasons for a decision is contingent

upon establishing the relationship

between the facts of an LMU application

and the statutory and regulatory criteria.

BLM believes such a requirement is

implicit in the rule as written.

Section 3487.1(h)(4). Proposed

§ 3480.0–5(a)(21) would have included a

definition for ‘‘logical mining unit

recoverable coal reserves exhaustion

period.’’ In the proposed rule preamble,

BLM stated that the term would better

reflect the requirement in MLA that the

maximum mine-out period allowed for

each LMU is 40 years (59 FR 66878).

However, BLM is not adopting this

definition in the final rule. We believe

that the phrase ‘‘40-year period in

which the reserves of the entire LMU

must be mined’’ is clearer and more

descriptive. It is self-explanatory and

eliminates the need for a separate

definition. Moreover, it is the same
Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations 44369

phrase used in FCLAA. See 30 U.S.C.

202a(2). Therefore, the final rule for this

section has been modified to substitute

the term ‘‘40-year period in which the

reserves of the entire LMU must be

mined’’ for the term ‘‘logical mining

unit recoverable coal reserves

exhaustion period.’’ The cross reference

to § 3487.1(e)(6), which was proposed to

be eliminated, is retained in the final

rule.

III. Procedural Matters

National Environmental Policy Act

BLM has prepared an environmental

assessment (EA) and has found that the

final rule does not constitute a major

Federal action significantly affecting the

quality of the human environment

under section 102(2)(C) of the National

Environmental Policy Act of 1969, 42

U.S.C. 4332(2)(C). BLM has placed the

EA and the Finding of No Significant

Impact (FONSI) on file in the BLM

Administrative Record. BLM invites the

public to review these documents by

contacting the individual identified

under FOR FURTHER INFORMATION

CONTACT.

Paperwork Reduction Act

This rule does not contain

information collection requirements that

the Office of Management and Budget

must approve under the Paperwork

Reduction Act, 44 U.S.C. 3501 et seq.

Regulatory Flexibility Act

Congress enacted the Regulatory

Flexibility Act (RFA) of 1980, 5 U.S.C.

601 et seq., 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.

BLM anticipates that this final rule will

have no significant impact on small

entities. Historically, due to the

substantial capital investment

requirements for lease acquisition and

mine development, LMUs have not been

within the purview of small entities.

The size standard established by the

Small Business Administration for small

entities engaged in coal mining,

including surface, underground, and

anthracite operations, is 500 employees

(61 FR 3280, Jan. 31, 1996). However,

BLM currently has one pending LMU

application from a small entity.

Analysis of this LMU application

indicates that the final rule will have no

effect on the outcome of the review

process for this proposed LMU.

Therefore, BLM has determined under

the RFA that this final rule would not

have a significant economic impact on

a substantial number of small entities.

Unfunded Mandates Reform Act

BLM has determined that this final

rule will not result in any unfunded

mandate to State, local, or tribal

governments in the aggregate, or to the

private sector, of $100 million or more

in any one year.

Executive Order 12612

The final rule will 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. Therefore, in

accordance with Executive Order 12612,

BLM has determined that this final rule

does not have sufficient federalism

implications to warrant preparation of a

Federalism Assessment.

Executive Order 12630 (Takings)

As discussed in the foregoing

preamble, the final rule does not

represent a government action that is

likely to interfere significantly with

constitutionally protected property

rights. 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 12866 (Regulatory

Planning and Review)

According to the criteria listed in

section 3(f) of Executive Order 12866,

BLM has determined that the final rule

is not a significant regulatory action. As

such, the final rule is not subject to

Office of Management and Budget

review under section 6(a)(3) of the

order.

Executive Order 12988 (Civil Justice

Reform)

The Department of the Interior has

determined that this rule meets the

applicable standards provided in

sections 3(a) and 3(b)(2) of Executive

Order 12988.

Authors

The authors of this rule are William

Radden-Lesage and Patrick W. Boyd,

Bureau of Land Management, 1849 C

Street, NW., Washington, DC 20240;

Telephone: 202–452–0350 or 5030,

respectively (Commercial or FTS).

List of Subjects

43 CFR Part 3400

Administrative practice and

procedure, Coal, Government contracts,

Intergovernmental relations, Mines,

Public land-mineral resources.

43 CFR Part 3470

Coal, Government contracts, Mineral

royalties, Mines, Public lands-mineral

resources, Reporting and recordkeeping

requirements, Surety bonds.

43 CFR Part 3480

Government contracts,

Intergovernmental relations, Mineral

royalties, Mines, Public lands-mineral

resources, Reporting and recordkeeping

requirements.

Dated: August 12, 1997.

Bob Armstrong,

Assistant Secretary—Land and Minerals

Management.

For the reasons set forth in the

preamble, BLM is amending 43 CFR

parts 3400, 3470, and 3480 as set forth

below:

PART 3400—COAL MANAGEMENT:

GENERAL

1. Revise the authority citation for

part 3400 to read as follows:

Authority: 30 U.S.C. 189, 359, 1211, 1251,

1266, and 1273; and 43 U.S.C. 1461, 1733,

and 1740.

2. Amend § 3400.0–5 by revising the

introductory text and paragraph (rr)(6)

to read as follows:

§ 3400.0–5 Definitions.

As used in this group:

* * * * *

(rr) * * *

(6) Producing means actually severing

coal. A lease is also considered

producing when:

(i) The operator/lessee is processing

or loading severed coal, or transporting

it from the point of severance to the

point of sale; or

(ii) Coal severance is temporarily

interrupted in accordance with

§§ 3481.4–1 through 4–4 of this chapter.

PART 3470—COAL MANAGEMENT

PROVISIONS AND LIMITATIONS

3. Revise the authority citation for

part 3470 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 § 3472.1–2(e) by revising

paragraphs (e)(1)(i), (e)(6)(ii)(D), and

(e)(6)(ii)(E) to read as follows:
44370 Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations

§ 3472.1–2 Special leasing qualifications.

* * * * *

(e)(1)(i) On or after December 31,

1986, no lease shall be issued and no

existing lease shall be transferred to any

entity that holds and has held for 10

years any lease from which the entity is

not producing coal in commercial

quantities, except as authorized under

the advance royalty or suspension

provisions of part 3480 of this chapter,

or paragraph (e) (4), (5), or (6) of this

section.

* * * * *

(6)(i) * * *

(ii) * * *

(D) Producing, or currently in

compliance with the continued

operation requirements of part 3480 of

this chapter, for leases that began their

first production of coal—

(1) On or after August 4, 1976; and

(2) After becoming subject to the

diligence provisions of part 3480 of this

chapter;

(E) Contained in an approved logical

mining unit that is:

(1) Producing or currently in

compliance with the LMU continued

operation requirements of part 3480 of

this chapter; and

(2) In compliance with the logical

mining unit stipulations of approval

under § 3487.1(e) and (f) of this chapter;

or

* * * * *

PART 3480—COAL EXPLORATION

AND MINING OPERATIONS RULES

5. Revise the authority citation for

part 3480 to read as follows:

Authority: 30 U.S.C. 189, 359, 1211, 1251,

1266, and 1273; and 43 U.S.C. 1461, 1733,

and 1740.

Subpart 3481—General Provisions

6. Amend subpart 3481 by adding

new §§ 3481.4 through 3481.4–4 to read

as follows:

§ 3481.4 Temporary interruption in coal

severance.

§ 3481.4–1 Can I temporarily interrupt coal

severance and still be qualified as

producing?

Yes, a temporary interruption in coal

severance allows you (the lessee/

operator) to halt the extraction of coal

for a limited period of time without

jeopardizing your qualifications under

section (2)(a)(2)(A) of MLA to receive

additional leases. During the period of

a temporary interruption in coal

severance, BLM still considers your

lease or LMU to be producing so as not

to preclude you from receiving a new or

transferred lease.

§ 3481.4–2 What are some examples of

circumstances that qualify for a temporary

interruption of coal severance?

(a) Movement, failure, or repair of

major equipment, such as draglines or

longwalls; overburden removal; adverse

weather; employee absences;

(b) Inability to sever coal due to

orders issued by governmental

authorities for cessation or relocation of

the coal severance operations; and

(c) Inability to sell or distribute coal

severed from the lease or LMU out of or

away from the lease or LMU.

§ 3481.4–3 Does a temporary interruption

in coal severance affect the diligence

requirements applicable to my lease or

LMU?

No, a temporary interruption in coal

severance covered by §§ 3481.4–1 to

3481.4–4 does not change the diligence

requirements of subpart 3483 applicable

to your lease or LMU.

§ 3481.4–4 What is the aggregate amount

of time I can temporarily interrupt coal

severance and have BLM consider my lease

or LMU producing?

(a) If you (the lessee/operator) want

BLM to consider your lease or LMU to

be producing, the aggregate of all

temporary interruptions in coal

severance from your lease or LMU must

not exceed 1 year in the 5-consecutiveyear period immediately preceding the

date of BLM’s determination of lessee

qualifications under § 3472.1–2 of this

chapter.

(b) BLM will not count toward the

aggregate interruption limit described in

paragraph (a) of this section:

(1) Any interruption in coal severance

that is 14 days or less in duration;

(2) Any suspension granted under

§ 3483.3 of this part; and

(3) Any BLM-approved suspension of

the requirements of § 3472.1–2(e)(1) of

this part for reasons of strikes, the

elements, or casualties not attributable

to the operator/lessee before diligent

development is achieved.

Subpart 3483—Diligence Requirements

7. Amend § 3483.3 by revising the

heading and paragraphs (a) introductory

text and (a)(1) to read as follows:

§ 3483.3 Suspension of continued

operation or operations and production.

(a) Applications for suspensions of

continued operation must be filed in

triplicate in the office of the authorized

officer. The authorized officer, if he or

she determines an application to be in

the public interest, may approve the

application or terminate suspensions

that have been or may be granted.

(1) The authorized officer must

suspend the requirement for continued

operation by the period of time he or

she determines that strikes, the

elements, or casualties not attributable

to the operator/lessee have interrupted

operations under the Federal coal lease

or LMU.

* * * * *

Subpart 3487—Logical Mining Unit

8. Amend § 3487.1 by revising

paragraphs (e)(6), (f) introductory text,

and (f)(2); redesignating existing

paragraphs (g) and (h) as (h) and (i),

respectively; adding new paragraphs

(f)(6) and (g); and revising newly

redesignated paragraph (h)(4) to read as

follows:

§ 3487.1 Logical mining units.

* * * * *

(e) * * *

(6) Beginning the 40-year period in

which the reserves of the entire LMU

must be mined, on one of the following

dates—

(i) The effective date of the LMU, if

any portion of the LMU is producing on

that date;

(ii) The date of approval of the

resource recovery and protection plan

for the LMU if no portion of the LMU

is producing on the effective date of the

LMU; or

(iii) The date coal is first produced

from any portion of the LMU, if the

LMU begins production after the

effective date of the LMU but prior to

approval of the resource recovery and

protection plan for the LMU.

* * * * *

(f) The authorized officer may

approve an LMU if it meets the

following criteria:

(1) * * *

(2) The LMU application

demonstrates that mining operations on

the LMU, which may consist of a series

of excavations, will:

(i) Achieve maximum economic

recovery of Federal recoverable coal

reserves within the LMU. In

determining whether the proposed LMU

meets this requirement, BLM, as

appropriate, will consider:

(A) The amount of coal reserves

recoverable from the proposed LMU

compared to the amount recoverable if

each lease were developed individually;

and

(B) Any other factors BLM finds

relevant to this requirement;

(ii) Facilitate development of the coal

reserves in an efficient, economical, and

orderly manner. In determining whether

the proposed LMU meets this

requirement, BLM, as appropriate, will

consider:
Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations 44371

(A) The potential for independent

development of each lease proposed to

be included in the LMU;

(B) The potential for inclusion of the

leases in question in another LMU;

(C) The availability and utilization of

transportation and access facilities for

development of the LMU as a whole

compared to development of each lease

separately;

(D) The mining sequence for the LMU

as a whole compared to development of

each lease separately; and

(E) Any other factors BLM finds

relevant to this requirement; and

(iii) Provide due regard to

conservation of coal reserves and other

resources. In determining whether the

proposed LMU meets this requirement,

BLM, as appropriate, will consider:

(A) The effects of developing and

operating the LMU as a unit; and

(B) Any other factors BLM finds

relevant to this requirement.

* * * * *

(6) A lease that has not produced

commercial quantities of coal during the

first 8 years of its diligent development

period can be included in an LMU only

if at the time the LMU application is

submitted:

(i) A portion of the LMU under

consideration is included in a SMCRA

permit approved under 30 U.S.C. 1256;

or,

(ii) A portion of the LMU under

consideration is included in an

administratively complete application

for a SMCRA permit.

(g) The authorized officer will state in

writing the reasons for the decision on

an LMU application.

(h) * * *

(4) The authorized officer will not

extend the 40-year period in which the

reserves of the entire LMU must be

mined, as specified at paragraph (e)(6)

of this section, because of the

enlargement of an LMU or because of

the modification of a resource recovery

and protection plan.

* * * * *

[FR Doc. 97–21880 Filed 8–19–97; 8:45 am]

BILLING CODE 4310–84–P