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[Senate Report 115-318]
[From the U.S. Government Publishing Office]

 						   Calendar No. 532

115th Congress}                                            { Report
                                 SENATE
  2d Session  }                                            { 115-318

======================================================================
 
             SAN JUAN COUNTY SETTLEMENT IMPLEMENTATION ACT

                                _______
                                

                August 15, 2018.--Ordered to be printed

                                _______
                                

  Ms. Murkowski, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 436]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 436) to authorize the Secretary of the 
Interior to retire coal preference right lease applications for 
which the Secretary has made an affirmative commercial 
quantities determination, to substitute certain land selections 
of the Navajo Nation, to designate certain wilderness areas, 
and for other purposes, having considered the same, reports 
favorably thereon with amendments and recommends that the bill, 
as amended, do pass.

                               AMENDMENTS

    The amendments are as follows: On page 5, strike line 1 and 
insert the following:
    (f) Deadline.--
          (1) In general.--If an existing settlement of coal

    On page 5, between lines 6 and 7, insert the following:
          (2) Date of valuation.--For purposes of the valuation 
        process under paragraph (1), the market price of coal 
        shall be determined as of the date of the settlement.

    On page 6, between lines 21 and 22, insert the following:
                  (D) Land identified as ``Parcels Excluded 
                from Selection'' on the map entitled ``Parcels 
                excluded for selection under the San Juan 
                County Settlement Implementation Act'' and 
                dated May 11, 2018.

    On page 13, after line 10, add the following:

SEC. 6. MAINTENANCE OF ROAD.

    The Secretary of the Interior, acting through the Director 
of the Bureau of Indian Affairs, shall ensure that BIA Route 54 
between I-40 and Alamo, New Mexico, is maintained in a 
condition that is safe for motorized use.

                                PURPOSE

    The purpose of S. 436 is to authorize the Secretary of the 
Interior (Secretary) to retire coal preference right lease 
applications for which the Secretary has made an affirmative 
commercial quantities determination, to substitute certain land 
selections of the Navajo Nation, and to designate certain 
wilderness areas.

                          BACKGROUND AND NEED

    S. 436 seeks to resolve a decades-old Department of the 
Interior (DOI) statutory obligation to the Navajo Nation 
stemming from provisions of the 1974 Navajo and Hopi Settlement 
Act (Public Law 93-531). This Act resolved a boundary dispute 
between the Navajo Nation and the Hopi Tribe. In the 
settlement, the Navajo Nation ceded acreage from its 
reservation to the Hopi Tribe, and many Navajo citizens were 
relocated. In return, the Navajo Nation was allowed to select 
comparable acreage of Federal lands to be taken into trust for 
the Navajo Nation.
    By the early 1980s, the Navajo Nation selected the Federal 
lands it wanted to be taken into trust. However, some of the 
parcels selected in San Juan County, New Mexico, were 
encumbered by preference right lease applications (PRLAs). 
Under preference right leasing, established in the Minerals 
Leasing Act (30 U.S.C. 181 et seq.), the holder of the 
preference right can apply for an explorative or prospecting 
permit to determine if mineral resources are present at a 
public lands site. If the explorative activities are 
successful, the permittee can then exercise their 
``preference''--the first right to lease those mineral 
resources for commercial production.
    In the years after the Navajo Nation made its selections, 
Congress and the Bureau of Land Management (BLM) have subjected 
the parcels to conservation designations such as the Fossil 
Forest Resource Natural Area (Public Law 98-603), the Ah-shi-
sle-pah Wilderness Study Area, and the Ah-shi-sle-pah Road Area 
of Critical Environmental Concern.
    After decades of litigation, BLM, Arch Coal (the holder of 
outstanding preference rights), and the Navajo Nation 
negotiated a settlement to resolve the PRLAs. S. 436 would 
implement the settlement, designate the Ah-shi-sle-pah 
Wilderness Study Area as wilderness, and add wilderness-quality 
lands to the existing Bisti/De-Na-Zin Wilderness.

                          LEGISLATIVE HISTORY

    S. 436 was introduced by Senator Heinrich on February 16, 
2017. The Subcommittee on Public Lands, Forests and Mining held 
a hearing on the bill on July 26, 2017.
    Similar legislation, H.R. 2402, was introduced by 
Representative Lujan in the House of Representatives on May 8, 
2017. The Natural Resources Committee's Subcommittee on Indian, 
Insular, and Alaska Native Affairs held a hearing on H.R. 2402 
on October 4, 2017.
    In the 114th Congress, similar legislation, S. 2681, was 
introduced by Senator Heinrich on March 15, 2016. The Energy 
and Natural Resources Committee held a hearing on S. 2681 on 
September 22, 2016.
    The Committee on Energy and Natural Resources met in open 
business session on May 17, 2018, and ordered S. 436 favorably 
reported as amended.

                        COMMITTEE RECOMMENDATION

    The Senate Committee on Energy and Natural Resources, in 
open business session on May 17, 2018, by a majority voice vote 
of a quorum present recommends that the Senate pass S. 436, if 
amended as described herein. Senator Lee asked to be recorded 
as voting no.

                          COMMITTEE AMENDMENTS

    During its consideration of S. 436, the Committee adopted 
four joint staff amendments. The amendments added a new 
paragraph (2) to section (2)(f) to clarify the date for a 
market price determination and to make a corresponding 
technical fix. The amendments also added a new subparagraph (D) 
to section (3)(b)(3) to augment the list of excluded lands not 
available for selection and added a new section 6 to govern 
road maintenance. These amendments are further described in the 
section-by-section analysis.

                      SECTION-BY-SECTION ANALYSIS

Section 1. Short title

    Section 1 contains the short title.

Section 2. Exchange of coal Preference Right Lease Applications

    Subsection (a) contains definitions.
    Subsection (b) authorizes the Secretary to retire a coal 
PRLA under the Mineral Leasing Act (MLA, 30 U.S.C. 181 et seq.) 
by issuing a bidding right in exchange for the application's 
relinquishment. The bidding right may then be used in lieu of 
50 percent of the amount owed for monetary payment of a bonus 
in a coal lease sale, or rental or royalty under a Federal coal 
lease. This subsection further requires the Secretary to 
calculate a payment of amounts owed to a relevant State under 
section 35(a) of the MLA based on the combined value of the 
bidding rights and the amount received; only a bidding right 
shall be considered amounts received.
    Subsection (c) directs the Secretary to make payments to a 
relevant State from the monetary payments received by the 
Secretary when bidding rights are exercised under this Act.
    Subsection (d) specifies that payments to a State under 
this section are to be treated as a payment under section 35(a) 
of the MLA.
    Subsection (e) authorizes the transfer of a bidding right 
issued for a coal PRLA, and requires the transferor to notify 
the Secretary of such transfer. This subsection further 
terminates a bidding right seven years from issuance but tolls 
the effective period during any time in which exercise of the 
bidding right is precluded.
    Subsection (f) requires the Secretary to complete the 
bidding rights valuation process no later than 180 days after 
the Act's enactment if an existing settlement of a coal PRLA 
has not yet been implemented. This subsection further clarifies 
that the market price of coal shall be determined as of the 
date of the settlement.

Section 3. Certain land selections of the Navajo Nation

    Subsection (a) cancels land selections made by the Navajo 
Nation pursuant to the 1974 Navajo-Hopi Land Settlement Act, as 
depicted on the April 2, 2015, map entitled ``Navajo-Hopi Land 
Settlement Act Selected Lands.''
    Subsection (b) authorizes the Navajo Nation to make new 
land selections to replace cancelled land selections and limits 
the selection to 15,000 total acres. This subsection also 
excludes from selection any land within the National Landscape 
Conservation System; within the Glade Forest Recreation Area; 
within the Fossil Forest Research Natural Area; within a 
special management area or area of critical environmental 
concern identified in a land use plan under section 202 of the 
Federal Land Policy and Management Act of 1976 (FLPMA, 43 
U.S.C. 1712) in effect as of the Act's enactment; land subject 
to a lease or contract under the MLA or the Materials Act of 
1947 (30 U.S.C. 601 et seq.) as of the date of the selection; 
and land identified on the May 11, 2018, map entitled ``Parcels 
excluded for selection under the San Juan County Settlement 
Improvement Act.'' This subsection also requires that 
selections be made within seven years from the Act's enactment 
and specifies that any selected lands shall be withdrawn from 
disposal, leasing, and development until the selected lands can 
be placed into trust for the Navajo Nation.
    Subsection (c) requires that the selected land and the 
cancelled selections be equal in value, based upon appraisals 
conducted in accordance with applicable standards. This 
subsection further specifies that appraisals for cancelled 
selections be completed within 18 months of the Act's 
enactment, while appraisals for new land selections are to be 
completed as the Navajo Nation finalizes those selections.
    Subsection (d) specifies that the present boundary of the 
Navajo Reservation is depicted on the November 16, 2015, map 
entitled ``Navajo Nation Boundary.''

Section 4. Designation of Ah-Shi-Sle-Pah Wilderness

    Subsection (a) designates approximately 7,242 acres of 
land, as depicted on the April 2, 2015, map entitled ``San Juan 
County Wilderness Designations,'' as wilderness and as a 
component of the National Wilderness Preservation System to be 
known as the ``Ah-shi-sle-pah Wilderness'' (Wilderness).
    Subsection (b) authorizes the BLM Director to administer 
the Wilderness subject to valid existing rights, and in 
accordance with the Wilderness Act (16 U.S.C. 1131 et seq.). 
This subsection makes clear that the designation of the 
Wilderness does not create a protective perimeter or buffer 
zone around the Wilderness and that the designation does not 
preclude the conduct of non-wilderness activities or uses 
outside the boundary that can be seen or heard from the 
Wilderness areas. The subsection also requires any land or 
interest in land within the Wilderness boundary and acquired by 
the United States to become part of the Wilderness, and to be 
managed in accordance with the Wilderness Act and applicable 
laws. The subsection further permits the continuation of 
existing livestock grazing in the Wilderness conditioned on 
compliance with section 4(d)(4) of the Wilderness Act and the 
guidelines set forth in the report accompanying H.R. 5487 of 
the 96th Congress (H. Rept. 96-617).
    Subsection (c) releases land within the Ah-shi-sle-pah 
Wilderness Study Area not designated as wilderness from section 
603(c) of FLMPA.

Section 5. Expansion of Bisti/De-Na-Zin Wilderness

    Subsection (a) designates approximately 2,250 acres of 
Federal land as depicted on the April 2, 2015, map entitled 
``San Juan County Wilderness Designations'' as wilderness and 
as a component of the National Wilderness Preservation System 
and incorporates the land into the Bisti/De-Na-Zin Wilderness.
    Subsection (b) authorizes the BLM Director to administer 
the land in accordance with the Wilderness Act and the 1984 San 
Juan Basin Wilderness Protection Act (Public Law 98-603).
    Subsection (c) clarifies that the designation of the land 
as wilderness does not create a protective perimeter or buffer 
zone around the land and that the wilderness designation does 
not preclude the conduct of non-wilderness activities or uses 
outside the boundary that can be seen or heard from the 
wilderness areas.
    Subsection (d) incorporates any land or interest of land 
within the wilderness boundary as part of the Bisti/De-Na-Zin 
Wilderness and directs that it be managed in accordance with 
the Wilderness Act and the 1984 San Juan Basin Wilderness 
Protection Act.
    Subsection (e) permits the continuation of existing 
livestock grazing in the land designated as wilderness 
conditioned on compliance with section 4(d)(4) of the 
Wilderness Act and the guidelines set forth in the report 
accompanying H.R. 5487 of the 96th Congress (H. Rept. 96-617).

Section 6. Maintenance of road

    Section 6 directs the Secretary, acting through the 
Director of the Bureau of Indian Affairs (BIA), to maintain BIA 
Route 54 between I-40 and Alamo, New Mexico, in a condition 
that is safe for motorized use.

                   COST AND BUDGETARY CONSIDERATIONS

    The Congressional Budget Office estimate of the costs of 
this measure has been requested but was not received at the 
time the report was filed. When the report is available, the 
Chairman will request it to be printed in the Congressional 
Record for the advice of the Senate.

                      REGULATORY IMPACT EVALUATION

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 436. The bill is not a regulatory measure in 
the sense of imposing Government-established standards or 
significant economic responsibilities on private individuals 
and businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 436, as ordered reported.

                   CONGRESSIONALLY DIRECTED SPENDING

    S. 436, as ordered reported, does not contain any 
congressionally directed spending items, limited tax benefits, 
or limited tariff benefits as defined in rule XLIV of the 
Standing Rules of the Senate.

                        EXECUTIVE COMMUNICATIONS

    The testimony provided by the Department of the Interior at 
the July 26, 2017, hearing on S. 436 follows:

 Statement of John Ruhs, Acting Deputy Director for Operations, Bureau 
          of Land Management, U.S. Department of the Interior

    Thank you for the opportunity to present the views of the 
Department of the Interior (Department) on S. 436, which would 
authorize the Secretary of the Interior to retire a certain 
type of Federal coal lease rights--preference right lease 
applications (PRLA)--in exchange for issuance of equivalent 
value coal bidding rights which the PRLA holder could use 
elsewhere on Federal lands; authorize the Navajo Nation to 
substitute certain land selections; and designate wilderness 
areas in northern New Mexico.
    The Department appreciates the work of Senators Heinrich 
and Udall to address concerns on previous versions of this 
legislation. While we support the bill's proposed resolution to 
longstanding issues concerning mineral development and tribal 
land selection, we believe that its wilderness designation 
components could be best achieved through standalone 
legislation. The Department notes that this type of approach 
could accommodate additional stakeholder perspectives 
concerning the most appropriate method of protecting the 
important resources and uses on these lands. We would also like 
to continue discussions with the sponsors and the Committee on 
a few remaining issues.
    Background Exchange of Coal Preference Right Lease 
Applications Prior to 1976, the Secretary was authorized by the 
Mineral Leasing Act (MLA) to issue permits to prospect for coal 
on public lands in areas where no known coal deposits existed. 
If coal was discovered, the prospector could file a preference 
right lease application (PRLA). If commercial quantities of 
coal were demonstrated, the prospector was entitled to a 
``preference right lease,''--a noncompetitive, exclusive right 
to mine coal on these public lands for an initial 20-year term.
    The Federal Coal Leasing Amendments Act of 1976 repealed 
the Secretary's authority to issue prospecting permits and 
terminated the preference right leasing program for coal, 
subject to valid existing rights. However, coal prospecting 
permittees who had filed a PRLA prior to 1976 continue to be 
recognized as having valid existing rights that require 
adjudication by the BLM. In 1982 and 1987, the BLM promulgated 
regulations exclusively for processing these pre-1976 PRLAs.
    To date, all coal PRLAs have been processed, except for 
eleven held by the Ark Land Company (Ark Land), covering 
approximately 21,000 acres in northern New Mexico. These PRLAs 
are within three miles of Chaco Culture National Historical 
Park and in the Ah-shi-sle-pah Wilderness Study Area (WSA), 
Fossil Forest Research Natural Area, and North Road and Ah-shi-
sle-pah Road Areas of Critical Environmental Concern (ACECs). 
These areas are not an ideal site for commercial development of 
the coal because they have cultural, archaeological, 
paleontological (dinosaur fossils), and primitive recreational 
significance. In the interest of protecting the important 
resources in the area, in 2012, after extensive investigation, 
litigation and negotiation, the BLM and Ark Land signed a 
settlement agreement that would seek to exchange the eleven 
PRLAs for an equal value in Federal bidding rights for Federal 
coal within the border of the State of Wyoming. S. 436 
clarifies that the bidding rights would be applied to 50 
percent of a bonus bid or a royalty payment. This language 
seeks to ensure that use of the Federal bidding rights will not 
interfere with payment of the State's share of bonus, rentals, 
or royalties that would be paid from Federal receipts to the 
State of Wyoming or any other State under the bid-sharing 
formula in the Mineral Leasing Act (30 U.S.C. 191).
    Navajo-Hopi Land Settlement Act. As part of the Navajo-Hopi 
Land Settlement Act (P.L. 93-531), the Navajo Nation selected 
approximately 12,000 acres of lands which overlap the PRLAs and 
are within protected areas such as the Ah-shi-sle-pah WSA and 
south of the Bisti/De-Na-Zin Wilderness and the Ah-shi-sle-pah 
Road ACEC. These selections have not yet been completed due to 
the encumbrance of the PRLAs. The Navajo Nation has sought to 
``deselect'' these lands and select others, but is unable to 
complete the action without further legislation. The new 
legislative authority in S. 436 would allow the Navajo Nation 
to finalize its land selections authorized under the Settlement 
Act.
    Ah-Shi-Sle-Pah WSA & Bisti/De-Na-Zin Wilderness. The Ah-
Shi-Sle-Pah Wilderness Study Area (WSA), comprising 6,563-acres 
located about 40 miles south of Farmington, New Mexico, is rich 
in petrified wood, fossils, and exposed geologic formations and 
is popular for day hikers and photographers who enjoy its 
unique geologic history.
    The Bisti/De-Na-Zin Wilderness, an area of approximately 
41,170-acres located 28 miles south of Farmington, New Mexico, 
offers some of the most unusual scenery found in the Four 
Corners Region. Natural sandstone weathering has created 
hoodoos--tall, thin spires of rock rising up out of the 
ground--pinnacles, cap rocks, and other unusual formations. 
This area recently received national attention following the 
discovery of two fossilized Pentaceratops dinosaur skeletons.
    S. 436 Exchange of Coal Preference Right Lease Applications 
(Section 2). S. 436 would authorize the Secretary to retire 
coal PRLAs by issuing bidding rights in exchange for 
relinquishment of the PRLAs. The bill defines a ``bidding 
right'' as an appropriate legal instrument that may be used in 
lieu of a monetary payment for 50 percent of a bonus bid in a 
coal sale under the MLA, or as monetary credit against 50 
percent of a rental or royalty payment due under a Federal coal 
lease. Thus, a bidding right could be used in lieu of cash for 
part of a winning bonus bid in a subsequent coal lease sale, or 
used in lieu of cash for part of rental or royalty owed under a 
Federal coal lease.
    S. 436 further provides for payment in cash of 50 percent 
of the amount of the bidding right used in the state where the 
new coal lease is issued--or where the royalty payment is made. 
The revenue sharing obligation of the MLA to the state would be 
made from the cash payments received by the Secretary when 
bidding rights are exercised under this Act. Under S. 436, 
bidding rights would be fully transferrable to any other person 
and the bidding rights holder would have to notify the 
Secretary of the transfer. The bidding rights would terminate 
after seven years, unless the rights could not be exercised 
within the 7-year period under certain conditions outlined in 
the bill.
    The Department supports the goal of S. 436 to provide 
legislative authority for a solution to the long-standing coal 
PRLA issue in northern New Mexico. However, the Administration 
is concerned about the likely costs associated with this 
legislation as drafted. Based on the terms of the legislation, 
and in the context of the Ark Land settlement agreement, it 
appears these costs could be substantial, which raises 
significant challenges for identifying suitable offsets. The 
BLM would like to work with the sponsors and the Committee on 
language regarding the timing of the valuation of the coal 
within the PRLAs, and ensure the Department's Office of 
Valuation Services and BLM will determine the fair market value 
of the resources consistent with standard valuation practices.
    Navajo Nation Land Selection (Section 3). Section 3 of S. 
436 would cancel certain land selections made by the Navajo 
Nation pursuant to the Navajo-Hopi Land Settlement Act of 1974, 
and would authorize the Navajo Nation to make new selections of 
equal value to replace those canceled. S. 436 adds the Fossil 
Forest Outstanding Natural Area (formerly known as the Fossil 
Forest Research Natural Area) to the lands ineligible for 
selection.
    The Department supports the bill's provisions to allow for 
new land selections by the Navajo Nation and providing for the 
deselection of the lands now encumbered by the PRLAs. We would 
like to continue to work with the sponsors and Committee on 
language to ensure consistency with the original intent of the 
Navajo-Hopi Settlement Act.
    Ah-Shi-Sle-Pah Designation & Bisti/De-Na-Zin Wilderness 
Expansion (Secs. 4 & 5). Section 4 of S. 436 would designate 
approximately 7,250 acres of BLM-managed lands in northwestern 
New Mexico as the Ah-shi-sle-pah Wilderness, including nearly 
all of the existing Ah-shi-sle-pah WSA and releasing the 
remainder from WSA status. Section 5 of the bill would enlarge 
the existing Bisti/De-Na-Zin Wilderness by adding approximately 
2,250 acres of BLM-managed lands directly south of the area.
    The Department supports Congressional action to resolve 
wilderness designation and WSA release issues on public lands 
across the West, and we welcome opportunities to further those 
efforts. Only Congress can determine whether to designate WSAs 
as wilderness or to release them for other multiple uses. We 
stand ready to work cooperatively with Congress to achieve this 
goal.
    We believe that the wilderness designations proposed by S. 
436 could be best achieved through a standalone legislative 
proposal, similar to the approach taken in the bipartisan 
Washington County, Utah, and Owyhee County, Idaho, public lands 
legislation advanced during the 110th Congress. Secretary Zinke 
is focused on restoring full collaboration and coordination 
with local communities and making the Department a better 
neighbor. We recognize the significant work of the sponsors on 
this proposal. As a general matter, the Department believes 
that wilderness decisions are best made as part of a locally 
driven process that incorporates the views of a wide range of 
stakeholders. In reaching consensus, stakeholders could 
ultimately determine that alternative management approaches are 
the best mechanism for protecting important resources of these 
areas while still accommodating the broad number of uses and 
activities permitted on other BLM-managed lands.
    Conclusion. Thank you for this opportunity to present 
testimony on S. 436. The Department thanks the sponsors and the 
Committee for their dedication to this issue. We look forward 
to continuing to work with the sponsors to achieve these goals.

                        CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes that no 
changes in existing law are made by the bill as ordered 
reported.

                                  [all]
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