UNITED STATES DEPARTMENT OF THEINTERIOR BUREAU OF LAND MANAGEMENT

ENVIRONMENTAL ASSESSMENT for PROPOSED RULE TO REVISE 43 CFR PARTS 3000, 3400, 3430, 3470, and 3480 Lease modifications, Lease and Logical Mining Unit (LMU) diligence, Advance royalty, Royalty rates, Bonds

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EA Nw11ber: W0-320-3400-01 RIN: 1004-AD93

I. Introduction

The Bureau ofLandManagement (BLM) oftheUnited States Department ofthe Interior is proposingto revise the coal management regulations at 43 CFR Parts 3000, 3400, 3430, 3470, and 3480. This document examines the environmental impacts ofthe proposed rule to determine whetherthe proposed rule constitutes a majorFederal action significantly affecting the quality of the human envirom11ent that would requirethe preparation ofan Environmental Impact Statementunderthe National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 etseq.
The BLMis responsible for managing Federal coal resources in accordance with Subchapter II ofthe Mineral LeasingAct (MLA) (30 U.S.C. 201- 209) and other statutory provisions. The surface estate associated with 1hese resources is controlled by the BLM, the United States Forest Service, private land owners, state land owners, or other Federal agencies.

In 2005, Congress amended several provisions ofthe MLA thatpertainto Federal coal leasing. See Title IV, SubtitleD ofthe Energy Policy Act of2005, Public Law 109-58, 119 Stat. 760- 763 (hereinafter EPAct). Theproposed regulations would implement those EPAct amendments
as follows:

• Section 432 an1ended 30 U.S.C. 203 by increasing the maximum acreage for a coal lease modification from 160 acres to 960 acres;
• Section 433 amended 30 U.S.C. 202a(2) by authorizingthe Secretary to extend a logical mining unit (LMU) term beyond tl1e initial term of40 years, upon determining thatthe longerperiod eitl1er will ensure the maximum economic recovery ofa coal deposit; or is in the interest ofthe orderly, efficient, oreconomic develop1nent ofa coal resonrce;
• Section 434 an1ended 30 U.S.C. 207(b), providing for several changes in the processes for application, assessment, and collection ofadvance royalties for Federal coal leases;

• Section 435 amended 30 U.S.C. 207(c) by removing the requirement to submit a resource recovery and protection plan (R2P2) wiiliin 3 years after issuance ofa coal lease; and

• Section 436 amended 30 U.S.C. 20l(a) with respectto financial assnrances associated with bonus bids.

1The enactment ofthese statutory provisions presents an opportunity to update the coal management regulations. In view ofthat opportunity, the BLMhas decided to consider a general overhaul ofthose regulations, and has identified the following actions that would meet the objective ofupdating the coal management regulations:

• Eliminate conflicting BLM internal guidance;
• ClarifY the royalty rate that is applicable for different mining systems used to extract Federal coal;
• Correct several typographical errors in the regulations; and
• Establish filing fees for processing applications for advance royalty, history oftimely payment determinations, and extensions ofthe 40-year LMU period.

II. Proposed Action and Alternatives

A. The Preferred Proposed Action The preferred proposed action would revise 43 CFR Parts 3000, 3400, 3430, 3470, and 3480 for the reasons set out in Section II above. Aspreviously noted, this action is undertalcen in part in response to new statutory requirements imposed by the EPAct. The BLMhas determined that revising 43 CFRParts 3000, 3400, 3430, 3470, and 3480 would implement the EPAct. The BLM would also correct conflicting guidance by revoking the 1985 LMU Guidelines and include those remaining relevant parts ofthe 1985 LMU Guidelines into regulation. Further, the proposed rule would clarify that continuous highwallmining is not considered underground mining for the purpose ofpaying Federal royalty. TheBLM would also correct several teclmical
errors inthe existing regulations and propose new processing fees for three actions that have been added or modified by the EPAct.

B. The No Action Alternative The BLMhas considered as the no-action altemative, that 43 CFRParts 3000, 3400,3430, 3470, and 3480 be left as they cmrenfly exist. The no-action altemative would not: implemelirthe EPAct; revoke the LMU Guidelines that are no longer valid nor incorporate into regulations those parts oftheLMU Guidelines that remain valid; clarify royalty rates for newmining methods; correctknown technical errors inthe existing regulations or implement any new filing fees.

C. The Alternative Proposed Action Like the preferred action, the alternate action would revise 43 CFR Parts 3000, 3400, 3430, 3470, and 3480 for the reasons set out in Section II above. As previously noted, this action is undertalcen in part in response to new statutory requirements imposed by the EPAct. The BLM has determined thatrevising 43 CFR Parts 3000, 3400, 3430, 3470, and 3480 would implement the EPAct. However, in this alternative action, the BLM would notrevoke the 1985 LMU Guidelines and would not include any part of1l1e LMU Guidelines in regulation. The alternative proposed rule would clarify that continuous highwallmining is not considered underground mining for the pmpose ofpaying Federal royalty. The BLM would also correct several technical
errors in the existing regulations and propose new processing fees for three actions that have been added or modified by the EPAct.


### 2

### III. Affected Environment There were 299 active coal leases that encompass 464,380 acres ofFederal coal atthe end of fiscal year 2009 and the BLM was processing 32 applications for competitive lease sales. The number ofcoal leases and acreage underlease as ofSeptember 30, 2009, is as summarized by state as follows:

State Number ofcoal Acreage leases Alabama 4 4,617 Colorado 55 82,576 Kentucky 7 6,841 Montana 30 45,299 New Mexico ]] 25,432 North Dakota 1 5 11,061 Oklahoma 9 16,684 Utah 75 90,279 Washington 2 521 Wyoming 91 181,069 Total 299 464,380

Federal lessees and operators must diligently develop their leases or LMUsbyproducing at least commercial quantities ofcoal within the first 10 years, or else the lease or LMUwill terminate (43 CFR 3483.2). "Commercial quantities" is defined by regulation as one percent ofthe recoverable coal reserve (43 CFR 3480.0-5(a)(6)). After the first 10 years, a lease orLMUmust continue to produce at least commercial quantities ofcoal on an ammal basis (43 CFR 3483.1). This laterrequirement is known as the continued operation requirement ofthe lease orLMU.

AnLMU is commonly used whenthe geological characteristics ofa coal deposit cross lease or ownership boundaries. A logical and efficientmine developmentplan in such cases may extend
across lease or ownership boundaries. An LMU fosters maximum economicrecovery and conservation ofFederal coal reserves by facilitating a logical mining sequencein terms ofthe coal deposits or deposit as a whole, rather than within only a specific lease orproperty boundary. In areas where the coal ownership pattern is disjointed, such as the checkerboard land-ownership patterns in the Western United States, a mine operator may develop several contiguous tracts, which are owned by orleased from different entities, as a single mining operation. Without an LMU, a mine operator may be required to develop the oldest Federal coal lease first, regardless ofthe geology ofthe deposit orthe most logical developmentplan, simply to comply with the diligent development requirements ofthe MLA. A mine development planthat functions to only satisfy the diligent development requirements ofone lease may not foster, for a mine that consists ofmultiple Federal coal leases that are being simultaneously developed, the other MLA requirements such as maximum economic recovery ofFederal coal reserves and conservation of coal and other resources. The LMU provides amechanism for coal produced from non-Federal
orFederal lands that are within the LMUto be credited toward the cumulative diligent development and continued operation requirements ofall the Federal coal leases included inthe 

### 3LMU.

Each Federal coal lease and lease modification is subjectto several levels ofsite-specific envirmm1ental analysis. Section 2(a)(3)(A) ofthe MLA, 30 U.S.C. 201(a)(3)(A), requires that a Federal coal lease, and similarly, lease modifications, may be issued only ifthe lands containing the coal deposit have been included in a comprehensive land use plan and are compatible with such plan. The comprehensive land useplanrequires environmental analysis pursuant to NEPA requirements. For Federal lands to be classified as being suitable for coal leasing in a land use plan, the lands must be screened for 20 unsuitability criteria that are listed at 43 CFR 3461.5. As
an example, the unsuitability criteria include screening to disallow coal leasing under cities or towns or on lands that are critical habitat for threatened or endangered species. Further, Section 2(a)(3)(C) ofthe MLA, 30 U.S.C. 20l(a)(3)(C),requires thatpriorto lease issuance, the Secretary will consider the effects that mitring ofthe proposed lease mighthave on an affected conununity or area, including, but not limited to, impacts on the envirolllllent, on agricultural and other economic activities, and on public services. The MLA also requires a public hearing concerning the maximum economic recovery ofthe Federal coal and the determination ofthe fair market value for prospective Federal coal leases or lease modifications priorto the lease sale. Further, aNEPA analysis is required before the BLM decides to proceed to a competitive Federal coal lease sale or to issue a Federal coal lease modification. A NEPA analysis is also completed prior to consideration ofan LMUto address site-specific and cumulativeimpacts on hUillan health and the envirmm1ent. Proposed and actual mining operations on all lands in an LMU are also subjected to site-specific environmental analysis priorto LMU approval. Environmental review and identification of appropriate mitigationmeasures is required before a miningpermit may be issued underthe Surface Mining Control and ReclamationAct (SMCRA) for the mining operations within a lease
or LMU. These environmental reviews also address site-specific and cumulative impacts on humru1 health and the enviromnent.

IV. Environmental Impacts
A. The Preferred Proposed Action

1. Directandindirect f!:ffects
a. Withdrawthe LMU Guidelines. The BLM proposes to withdraw the Logical MiningUnitApplication and Processing Guidelines (LMU Guidelines), which were promulgated after notice intheFederalRegister and an opportunity for public comment. The LMU Guidelines were finalized onAugust 29, 1985 (50 FR 35145). The LMU Guidelines provided detailed instruction to thepublic and BLMpersollllel concerning the approval and management ofLMUs.

The LMU Guidelines were divided into three categories for analysis. The first category requires
no additional action beyond its withdrawal, because those parts ofthe LMU Guidelines are already in regulations. The second category consists ofthe parts ofthe LMU Guidelines that


### 4now conflict with the MLA as amended by the EPAct. These parts ofthe LMU Guidelines need to be withdrawn and the regulations amended to be consistent with the new statute. The third category includes parts ofthe LMU Guidelines that do not conflict with authorizing statutes, bnt that are not currently included in or separately supported by the BLM coal management regulations. This group needs to be codified in regulation in order to lnaintain valid existing policies when the LMU Guidelines are withdrawn. As a general matter, the BLM could modify the LMU Guidelines instead ofwithdrawing them, buthas determined that regulation ofLMUs would be more effective ifall the LMU guidance were included within the Code ofFederal Regulations.
Therefore, the BLM isproposing to include inregulations those elements ofthe LMU Guidelines that are not currently in regulations and that are not in conflict with statute. Analysis ofthe potential enviromnental effects ofeach newproposed regulation from the LMU Guidelines is included in the section-by-section analysis that follows.

b. Processing fees Underthe authority ofthe Federal LandPolicy m1d Management Act (43 U.S.C. 1734), the BLM is proposing new fixed processing fees for:
• Applications for a history oftimely payment determination;
• Applications to pay advance royalty; m1d

• Applications to extend the 40-year LMUterm.

The BLM would incur unique costs while processing an application for a history oftimely payment determination, as requiredby Section 436 ofthe EPAct and proposed at 43 CFR 3474.10. A history oftimely payment determination only affects the value ofthe bond thatthe lessee is requiredto provide to the BLM, which is an administrative action. This fee would compensate the BLM for anticipated costs inprocessing an application for a history oftimely payment determination, and as such, would have no bearing onm1y decision the BLMwould make concerning the application itself. The BLM has concluded that the imposition ofa fee for applications for a history oftimelypayment determination is solely administrative m1d would not have a significant direct or indirect environmental impact. The BLM would also incur unique costs whileprocessing m1 applicationto pay advance royalty
as provided by Section 434 ofthe EPAct. Processing an application to pay advm1ce royalty is time sensitive, therefore requiring personnel to be diverted from other assigned tasks and duties to process the application. This fee would compensate the BLM for anticipated costs in processing an application to pay advance royalty, m1d as such, would have no bearing on any decision the BLM would make concerning the application itself. The BLMhas concluded that the collection ofaprocessing fee to process a specific request to pay advance royalty would not have a significant direct or indirect enviro1m1ental impact.

The BLMhas determinedthat processing an application to extend the 40-year LMU term, as provided by Section 433 ofthe EPAct and proposed at 43 CFR 3487.10, would require unique processing by the BLM. For each application, the BLM would need to verify the land status of the LMU m1d complete an engineering analysis to determine ifthe extension would ensure the


### 5greatest ultimate recovery ofthe coal resources within the LMU. This fee would compensate the BLMfor anticipated costs in processing an application to extend the 40-year LMU term, and as such, would have no bearing on any decision the BLM would make concerning the application itself. T11e BLMhas concluded that the collection ofprocessing fees to process applications under Section 433 ofthe EPAct, 43 CFR 3487.10 ofthe proposed rule, would not have a significant direct or indirect environmental impact.

c. Definition ofan underground mine Theproposed rule includes a definition ofthe term "underground mine" in 43 CFR 3400.0-5. The definition would provide thattheterm means, for purposes ofestablishing a royalty rate under the terms ofa coal lease, an excavation in the earth for thepurpose ofsevering coal in whichpersons routinely work in an envirmm1ent where undisturbed earth is directly overhead. It would further provide that as defined an underground mine has roofcontrol and ventilation plans that are approved by the Mine Safety and Health Administration, Department ofLabor, that expressly allow regular workby personnel where there is undisturbed earth directly overhead. The definition is proposed to clarify whetherthe statutory minimum royalty rate of 12 'h percent,
or lower underground royalty rate of8percent, is applicable for payment ofroyalty on the sales value ofsevered Federal coal. This proposed definition is administrative in nature.

The environmental impacts from the severance ofFederal or non-Federal coal are analyzed and authorized underthe SMCRA. The payment ofroyalty after the coal is severed from the earth is procedural and has no environment impact. Therefore, the BLM has concluded thatthe implementation ofthe definition of"underground mine" to clarify whenthe undergroundroyalty rate is applicable does nothave a direct or indfrecl environmental impact.

d. Maximum lease modification acreage increased to 960 aces The proposed rule would an1end section 3432.1 to increase the maximum acreage thatmay be added to a coal lease through a lease modification. Atpresent, section 3432.llimits lease modifications to 160 acres. The proposed rule would provide that the acreage added to a lease by modification must not exceed the lesser of960 acres or the acreage ofthe lease when the lease was issued.

A lease modification is a non-competitive process to lease tmdeveloped Federal coall:mdsto the lessee ofan adjoining coal lease such that 

### all the Federal coal may be developed in an orderly
manner. A coal lease modification is used whenthere are small parcels ofFederal coal adjacent to a Federal coal lease that are not ofsutlicient size to merit individual competitive lease sales. These parcels aretypically not identified in the original lease configuration process due to a lack ofdetailed information or a lack ofany competitive interest. As miningprogresses, additional information is obtained concerning the character and extent ofthe coal seam or seams, and by inference, the m1leased Federal coal seam or seams inthe adjoining areas.

A lease modification is initiated by an expression ofinterest or application from an adjoining Federal coal lessee. To reach a decision on an application for a lease modification, the BLM must mal<e a determination that:

6(1) A lease modification serves the interests ofthe United States; (2) There is no other competitive interest in the l;mds or deposits; and (3) The additional lands or deposits catmot be developed as pati ofanotherpotential or existing independent coal mining operation. An affirmative determination thatthe m·ea proposed for a lease modification complies with all three criteria is requiredto modify a lease.

Each lease modification is subject to site-specificNEPA analysis similar to that required for a proposed new competitive Federal coal lease because a lease modification authorizes entry to Federal coal semns within areas that have not beenpreviously leased for coal development. The proposed rule would not change the NEPA analysis requirement. Any commitment ofresources or approval ofdevelopment activities would bebased on future decisions made in compliance withthe BLM's land use planning and NEPA procedures. Further, a lease modification must also satisfy the three specific lease modification criteria described above. Subsequent to finalization ofa lease modification, the lessee is also required to have the additional lands added to their various miningpermits before entry is authorized. With no changes to the NEPA requirements for each leasemodification or in the miningpermit approval process or requirements, and no change to the three lease modification approval criteria, the BLM has concluded that there is no significant direct or indirect effects on the environment from this proposed regulation change.

e. Environmental Impact Statement Section 3435.3-5 contains a referenceto a "draftenvironmental assessment or environmental impact statement." Even though the word "draft" precedes the reference in section 3435.3-5 to
an Environmental Assessment (EA) and an Enviromnental Impact Statement (EIS), the term "draft" was intended to apply exclusively to an EIS rather than to at1 EA. The BLMisproposing to change the regulations to correctthis error.
The proposed deletion ofa reference to draft EAs would recognize that, when an EA is prepared, there will notnecessarily be a public notice ofavailability. That change is consistent withBLM discretionto determine how at1d whento seek public involvement intheprepm·ation ofan EA, in accordance with BLM's Janum·y 2008 NEPA Handbook H-1790-1, Section 8.2, at1d the regulations ofthe Council on Enviromnental Quality. The BLMhas concluded that this proposed change, which is administrative in nature, would have no direct orindirect enviromnental impacts.

f. Minimum Royalty Rate The BLM is proposing to at11end section 3473.3-2(a)(1) to provide that Federal coal leases must specify a royalty rate ofnot less that1 12 

### Yz percent for all coal recovered, except coal recovered from at1 underground mine, as provided by the MLA (30 U.S.C. 207(a)). As additional guidat1ce, the proposed rule would state that among other methods, the royalty rate established under proposed section 3473.3-2(a)(l) would apply to all coal recovered by smface mining, highwallmining systems, including auger mining, continuous highwallmining and other similar systems where personnel do not work in at1 underground mine. This would make clearthat it is not relevat1t whether activities such as continuous highwall mining are considered surface 

### 7mining; what is relevant is that they are not considered underground mining. The 8percent royalty rate for coal recovered from underground mines is contained inproposed section 3473.3- 2(a)(2).

The application ofthe 12 Y, percent royalty rate for all Federal coal, except that which is mined by underground means, as provided in the proposed new definition ofan underground mine, may have an adverse effect on the recovery ofsome coal. However, the BLM's experience to date is that the application ofmining systems that bring the royalty rate into dispute is limited to when conventional surface mining is no longer economically viable and underground mining is not yet feasible. This is a very narrow and specific application that could be further limited by the unique geologic conditions ofa lease. Further, ofthe eight mines that have used mining systems that could bring the royaltyrate into dispute, seven have had significant coal recovery while paying royalty at the rate of 12 Y, percent. One mine opted to pay royalties at the lesser undergronnd royalty rate of8percent without appropriate prior BLM approval. Resolution of the appropriate royalty rate for mining systems with a disputed royalty rate would follow finalization ofthis proposed rule. Ifthe application ofa particular mining method is impeded by
a 12 Y, percentroyalty rate, the lessee continuesto have the opportunity to request special consideration and request a lowerroyalty under Section 39 ofthe MLA (30 U.S.C. 209; 43 CFR 3485.2(c)). Therefore, the BLMhas concluded that the proposed rule would nothave a significant impact on overall coal recovery.
The royalty rate is an administrative condition ofevery Federal coal lease and does not by itself authorize any disturbance to the environment. However, the royalty rate may indirectly affect the extent ofdisturbance. This is because a higher royalty rate would require larger royalty payments for a given sales value, potentially indicating a decrease in the maximum economic recovery ofthe Federal coal and consequently disturb less ofthe environment. However, to encourage the greatest ultimate recovery ofthe coal resource, a lessee may apply for a lower royalty rate under Section 39 ofthe MLA (30 U.S.C. 209) ifconditions are such that a lower royalty rate is necessary to promote development, or ifin thejudgmentofthe BLM, the lease cmmot be successfully operated underthe terms ofthe lease. Therefore, a lessee has an established method to redress a high royalty rate a11d the BLM concludesthatthe changes in the royalty rate structure would have no significant direct or indirect impact on the environment.

g. Bonds for deferred bonus payments When a new Federal coal lease is offered for competitive sale, the royalty rate and the annual rental fees are already established. The wil111ing bidder for the new coal lease is selected based
on a bonus bid. The bonus bid is apaymentto tl1e BLMthat is in addition to annual rental fees
orthe royalty due on severed coal. By statute, at least halfoftl1e Federal coal acreage offered for competitive sale in any year must be offered with an option to deferthe bonus bid (30 U.S.C. 201(a)(l)). Typically, all new coal leases that are oftered for competitive sale are offered with a deferred bonus option. The BLM, by regulation, has established that 20 percent oftl1e total bonus bid amount must be provided in cash with the sealed bid for the coal lease (43 CFR 3422.4(c)). The remaining balance ofthe bonus bid is payable in four equal mmual installments on the anniversm·y date oflease issum1ce for the four years following lease issuance. The BLM has historically included the remaining unpaid halm1ce ofthe bonus bid in an ammal review ofthe 

### 8bond amounts. However, this BLM policy has been revised to only require a bond for one deferred bonus payment.

Section 436 ofthe EPAct arnends 30 U.S.C. 20l(a) with respectto bonds for unpaid bonus bids. The revised statute provides thatthe Secretary will not require a bond for deferred bonus payments for a Federal coal lease issued afier enactment ofthe EPAct ifa prospective lessee has
a history oftimelypayment ofnoncontested production royalties, advance royalties, and bonus payments. The Secretary may waive the requirement for a bond for unpaid deferred bonus payments for leases issued before enactment ofthe EPAct that still have deferred bonus payments pending.

This section ofthe EPAct 

### also amends the MLA at 30 U.S.C. 20l(a) by providing that ifa lessee fails to make a deferred bonus payment within 

### 1 0 days after written notification by the Secretary that a deferred bonus paymenthas not been made, the Federal lease for which the deferred bonus is due will terminate and all bonus payments received for the lease will notbe returned to the lessee norcredited to other obligations ofthe lessee.

The BLM is proposingto implement this section ofthe EPAct in a new subpart 43 CFR 3474. In this subpartthe BLM would establish:

• What is timelypayment;
• The applicationprocedures to obtain this newbenefit;

• The standards for maldng a decision that a lessee has a history oftimelypayment;
• A framework to resolve disputed paymenthistories; and
• Guidance fortermination ofa lease for failure to pay a deferred bonus payment. These policies and procedures all involve administration ofa Federal coal lease and do not authorize a new disturbance ofthe environmentnor modify an existing authorization to disturb the enviromnent onthe Federal coal lease.

Itis theoretically possible that ifa lease is terminated for failure to pay a deferredbonus payment, the lessee mayhave already enteredthe lands creating an environmental disturbance that would then be the responsibility ofthe BLM ifthe lessee failed to perform reclamation. However, ifsuchterminationwere to occur, the Jessee would have already obtained a mining permit underthe SMCRA and a bond for full performance ofreclan1ation requirements. The reclamationbond would be used to remediate enviromnental disturbances onthe Federal lease. This wouldmitigate any direct or indirect environment impacts. Further, since it talces about two years after a lease is issued to obtain a mining permitunderthe SMCRA, the lessee by this time will have made three out ofthe five required deferred bonus payments (one at the lease sale and then for two subsequent years after the lease is issued). As the lessee gains a greater economic interest in a leasethroughpayment ofthe deferred bonus payments and obtaining a mining permit'under the SMCRA, theprobability that the lessee will default on subsequent deferred bonus payments significantly decreases. Therefore, the BLM concludes that the proposed rule for implementation ofSection 436 ofthe EPAct would not result in a significant direct or indirect impact to the environment.

9h. Definition ofcontinued operation Under 30 U.S.C. 207(a), a Federal coal lease mustproduce commercial quantities ofcoal within I0 years after lease issuance, or the BLM will terminate the lease. "Conm1ercial quantities" is defined in the BLMregulations at 43 CFR 3480.0-5(a)(6) as one percent ofthe lease recoverable coal reserves or LMU recoverable coal reserves. After the date that commercial quantities of coal are initially produced, the lessee mustthereafter annually maintainthe lease in continued operation. See 30 U.S.C. 207(b)(1) and 43 CPR 3483.1. Under existing rules and this proposal, the ammal continued operation requirement may be satisfied by eitherproducing at least commercial quantities ofcoal atmually, or by maintaining a cumulative production for a 3-year period, consisting ofthe current continued operation year and the previous 2 continued operation years, thatmeets or exceeds the combined atmual commercial quantities requirement for the satne 3-yearperiod. The BLM's interpretation ofthis requirement was discussed at length and affirmed by the Interior Board ofLand Appeals (IBLA) in Caballo Coal Company, 163 IBLA 116 (2004).

The BLM may suspend the condition ofcontinued operation upon the payment ofan advat1ce royalty, ifsuch a payment is determined to be in the public interest. See 43 CPR 3483.4. When coal production resumes, the operator/lessee may recoup the advance royalty itpaid againstthe actual production royalty obligationthat accrues once the coal is produced at1d sold.

The BLM'sLMU Guidelines, which are beingproposed for withdrawal as a part ofthis rulemaldng, provide supplemental guidance on how to implement the 3-yearproduction average referred to in the current definition ofcontinued operation. This proposed rule would chat1ge the regulatory definition of"continued operation" to be consistent with the supplemental guidat1ce from the LMU Guidelines. No additional environmental disturbance is authorized by this proposed regulation chat1ge. Therefore, the BLM has concluded thatthe proposed change to the definition ofcontinued operation is administrative in nature and would nothave a significm1t direct or indirect impact on the environment.


### i. Requirement for a Resource Recove1y and Protection Plat1 CR2P2) within 3 years after lease ISSUat1Ce Approval to enter and mine on a Federal coal lease requires multiple authorizations. Before the EPAct, the BLMrequiredtwo submittals. The first was a requirement for a miningplanto be submitted to the BLM within 3 years oflease issuance. This "3-yearminingplan" did not authorize entry or mining. A second authorization is an R2P2. The BLM recommends that the R2P2 be included as a part ofa miningplanunder the SMCRA. The R2P2 is included in at1d authorized in conjunction with the SMCRA miningpermit. The SMCRA mining permitis the authorization that allows mining to begin. The R2P2 provides the BLM with sufficient information to determine ifthe proposed miningplan ofthe lessee will achieve the statutory requirement ofmaximum economic recovery ofthe Federal coal. The "3-yearminingplan"is submitted only to comply with the MLA'srequirement for a plan within 

### 3 years after lease issuance, and it does not provide sufficient detail to approve or authorize disturbat1ce. The level ofdetail to approve mining operations is always provided with the lessee's application for a miningpermit underthe SMCRA.

10The EPAct eliminated the requirement to provide a miningplan to BLM within 3 years oflease issuance and retains the requirementfor an operation and reclamation plan before taking any action on a lease, which might cause a significant disturbance ofthe environment.

The proposed rule at 43 CFR 3482.1(b) would eliminate the requirement for an operation and reclamation plan within 3 years afterlease issuance for a lease. A similarprovision for LMUs is proposed at 43 CFR 3487.4(a). The requirement to have an approved R2P2 and SMCRA permit before mining or reclamationbegins remains unchanged. Therefore, since this change only
serves to eliminate duplicate paperwork and does not authorize new, or modify any existing authorizationthat would disturb the environment, the BLMhas concluded that this change does notpose a direct or indirect impact to the enviromnent. j. LMU maps requirements The BLMproposes to add a newparagraph in section 3482.3 that would cross-referencethe LMU mapping requirements found at existing section 3487.l(i). Underthis provision, coal produced from non-Federal lands that are included in an LMU would be subject to the same mappingrequirements as coal produced from Federal lands. This provision could have an indirect enviromnental consequence inthatthe map ofcoal production from the non-Federal lands would be a Federal record that eventually would be available in the Abandoned Mine Map data base that is maintained by the Office ofSurface Mining. This could havepositive long-term consequences, since it wouldprovidereliable information ofareas ofpast mining to facilitate
more effective future land use decisions by the public and the Federal government. The probability that coal production maps from non-Federal lands could result in a less informed future land use decisions is relatively small. However, nothaving access to suchmaps inthe future increases thepotential for less informed land use decisions and unpredictable environmental impacts. The magnitude or likelihood ofany such positive consequence is impossible to predict. D1erefore, the BLMhas concluded thatthisproposed change could have a small positive to neutral direct or indirect environmental impact.

k. Advance royalty Section 434 ofthe EPAct amended 30 U.S.C. 207(b) relative to the payment ofadvance royalty in lieu ofthe continued operation requirement ofa lease. Similarrequirements have been established by regulation for LMUs. EachFederal coal lease or LMU must be diligently developed within 10 years ofissuance and subsequently annually maintained in continued operation. However, after a Federal coal lease or LMU has achieved diligent development, a lessee may elect to pay advance royalty inlieu ofproducing coal to meetthe continued operation requirement. See 30 U.S.C. 207. The EPAct extends from 10 years to 20 years the number of years that advance royalty may be paid in lieu ofcontinued operation over the life ofa lease. The EPAct amendment further establishes that the coal value for determiningthe amount of advance royalty would be based on the spot marketprice for the sale ofcomparable coal that is produced from the same coal production region during the last month ofthe one yearperiod for which the advance royalty is due. The amendment also repealed the requirement that advance royalty paid in the first twenty years ofthe Federal coal lease could not be applied to production



### 11that occurred afterthe twentieth year ofthe Federal coal lease.

The BLM regulations require that a lessee must apply to the BLM to pay advance royalty. See 43 CFR 3483.4. The processing ofan application to pay advance royalty in lieu ofcontinued operation requires a coordinated effortbetween the BLM and the Office ofNatural Resources Revenue (ONRR) (formerly the Minerals Revenue Management Program ofthe Minerals Management Service. 1 The BLM reviews the application to pay advance royalty and determines, based onthe production history ofthe Federal coal lease or LMU, ifan advance royalty payment is required and the quantity ofcoal upon which the monetary value ofadvance royalty would be determined. Subsequent to the BLM decision whether an advance royalty payment is required, the ONRR determines an appropriate current market value ofthe coal upon which to determine the amount ofadvance royalty that is due, calculates the advance royalty payment, and bills the applicant for the advance royalty paymenttluough a demand letter. The condition ofcontinued operation is only suspended uponreceipt ofthe advance royalty paymentbythe ONRR.

Thepayment ofadvance royalty in lieu ofcontinued operation helps a lessee maintain compliance with the minimum mmual production requirement of30 U.S.C. 207(a) while mining operations onthe lease are curtailed. The lessee continues to have beneficial use ofthe lease during the period for which advance royalty ispaid. After the Federal coal lease or LMU begins to produce coal again, the advm1ce royalty may be used to offset the productionroyalty payments that are due once the coal is sold.

The payment ofadvance royalty cannot occur until after a lease or LMUhas achieved diligent development. "Diligent development"**i~** defined by regulation**a~** the produ<.;tion of<.;OJ11Jnerdal quantities ofcoal. See 43 CFR 3480.0-5(a)(l2). "Commercial quantities" ofcoal is further defined as onepercent ofthe recoverable coal reserve. See 43 CFR 3480.0-5(a)(6).

Failure to continue to annually produce at least commercial quantities ofcoal or pay advance royalty in lieu ofthe continued production requirement may result in the lessee being ineligible to receive additional Federal coal leases tluough either competitive sale or assignment m1d may subject the lease to cancellation. See43 CFR 3472.1-2(e) and 43 CFR 3483.2. Proposed section 3483.4 would eliminatethe description ofhow the advm1ce royalty value would be determined. The regulations concerning howto determine advance royalty value are proposed to be moved to the ONRRregulations. These new regulations would also clarify how

1The Secretary ofthe Interior delegated the responsibilities formerly held by the Minerals Management Service to the Bureau ofOcean Energy Management, Regulation and Enforcement. See Secretarial OrderNos. 3302 and 3299, Amendment No. 1. The Secretary also directed the Assistant Secretary for Land and Minerals Management and the Assistant Secretary for Policy, Management and Budget to develop a schedule for additional delegations, including the establishment ofan Office ofNatural Resources Revenue (ONRR) to take responsibility for the onshore royalty and revenue management function ofthe Minerals Revenue ManagementProgram ofthe former Minerals Management Service. On October 1, 2010, the royalty-managementresponsibilities that are pertinentto the Proposed Rule were delegated to the ONRR, which is under the supervision ofthe Assistant Secretary for Policy, Management and Budget.
12advance royalty years would be credited against the maximum ofnumber ofyems ofadvance royalty can be paid. Theproposed regulation at 43 CFR 3483.4(e) would increase from 10 to 20 the number ofyears that advance royalty maybe paid in lieu ofcontinued operation

The payment ofadvance royalty has not, and under the proposed chm1ges would not, authorize m1y new disturba11ce to the environment. However, the payment ofadvance royalty may delay, but not eliminate, disturbance to the enviromnent with an authorized Federal coal lease that has previously produced coal. Therefore, the BLMconcludes thatmodification ofthe rules to implementthe changes to advance royalty authorized under the EPAct would not result in a significm1t direct or indirect effect on the environment.

The BLM is also proposing several otherrelated regulation changes. These chm1ges are due in pmtto theprovisions ofthe EPAct m1d in partto the proposed withdrawal ofthe LMU Guidelines. TheLMU Guidelines provide instructions concerning how compliance with a Federal coal lease orLMU continued operation requirement is determined and how coal production that is less than the continued operation requirement is used to calculate the mnount ofadvm1ce royalty that mustbepaid so that the continued operationrequirement is suspended
once advance royalty is paid. Determining compliance with the continued operation requirement and determiningthe mnount ofcoal for which advance royalty mustbe paid aTe closely related. Therefore, implementing this section ofthe EPAct requires proposing changes to the regulations in several otherplaces.

The general conditions for paying advance royalty would be contained in proposed section 3483.4(a). Underproposed section3483.4(a)(l), the BLM could authorize thepayment of advance royalty in lieu ofcontinued operation for a lease orLMU if:

(1) Coal has notbeenproduced in sufficientqum1tity from the lease or LMU during a continued operation yem to satisfy the continued operation requirement ofthe lease or LMU; (2) The aggregate number ofcontinued operation yeaTs for accepting advance royalties, as determined under paragraph (e), has notbeen exceeded; and (3) The BLM determines thatpayment ofadvance royalty in lieu ofcontinued operation will
serve the public interest.

Underproposed section 3483.4(a)(2), the continued operation requirement for a Federal coal lease or an LMUfor a continued operation yemcould bemetby a combination ofcoal production and payment ofadvance royalty. Also, proposed section3483.4(a)(3) would provide that the lessee is responsible for paying advanceroyalty for a lease that is not within an LMU, m1d the LMU lessee/operator is responsible for paying advance royalty for an LMU.

Under the revised statute, after a lessee has achieved diligent development, there m·e no statutory restrictions as to when, during a continued operation year, the lessee may applyto pay advm1ce royalty in lieu ofcontinued operation. Under existing 43 CFR 3483.4, applications to pay adva11cc royalty made laterthm1 30 days after the beginning ofa continued operation year me subject to late payment chm·ges. Because the provisions for calculation ofthe advance royalty


### 13payment in Section 434 ofthe EPActprovide for coal values to be determined during theperiod running through to the end ofa continued operation year, proposed section 3483.4(b) would allow applications to pay advance royalty to be filed any time during the continued operation year. Failure to apply to pay advance royalty within the same continued operation yearthatthe advance royalty would apply, may result in cancellation ofthe lease consistent with 43 CFR 3483.2(c) or the lessee may fail to qualify for a newFederal coal lease, or transfer ofan existing Federal coal lease, as specified in 43 CFR 3472.1-2(e).
Proposed section 3483.4(c) would specify thatthe value ofcoal for advance royalty purposes would be established in accordance with applicable ONRRregulations. Therefore, any environmental impacts due to the determination ofthe value ofthe advance royalty payment, and the actual payment ofadvance royalty, would be addressed by the ONRRrule.
Proposed section 3483.4(d) would address the royalty rate that would be used for calculating advance royalty. Itwould provide that the royalty rate specifi.ed inthe lease document will be used to calculate the advance royalty for a lease. For LMUs, it would provide thatthe advm1ce royalty rate is 8percent where the Federal LMU recoverable coal reserves contained in the LMU will berecovered only by underground mining operations m1d not less than 12 

### Yz percent where ti1e Federal LMU recoverable coal reserves contained in the LMU will berecovered by mining operations otherthan underground mining. For a11 LMU that contains Federal LMU recoverable coal reserves that would berecovered by a combination ofunderground a11d other mining meti10ds, the advmce royaltyrate would be notless than 12 

### Yz percent. This is ti1e smne as the currentregulations at 3483.4(c). Therefore the royalty rate at which the adva11ce royalty payment is calculated does nothave a significant direct orindirect environment impact.

Undertheproposed rule, ifthe BLM authorizedthepayment ofadvance royalty for a lease or LMU, the BLM would determine at the end ofa continued operation year the amount ofcoal, measured in tons, which the ONRR would use to calculate the value ofthe advm1ceroyalty payment. A description ofthe calculation procedures for determining complimcewith diligence mdto determine ifadvmce royalty needs to be paid are currently only included inthe BLM's LMU Guidelines. Incorporation ofthe diligence calculationprocedures from the LMU Guidelines into regulation is discussed in greater detail below.

I. Calculations for continued operation Under the proposed rule, ifthe BLM authorized thepayment ofadvm1ce royalty for a Federal coal lease or LMU, the BLM would determine 

### at the end ofa continued operation yearthe mnount ofcoal, measured intons, for the ONRRto use to calculatethe value ofthe advance royalty payment. The BLM's LMU Guidelines describe in great detail howto determine ti1e a111ount ofcoal upon which the advance royalty is calculated (50 FR 35154 through 35156). There are no similm· provisions in the existing BLM coal regulations. Therefore, the BLM is proposing to incorporate into proposed 43 CFR 3483.4(h) the processes established in the LMU Guidelines for calculating the amount ofcoal 

### for which advm1ce royalty is due. The proposed regulations explain the calculation processes for Federal coal leases and LMUs.

14Under proposed 43 CFR 3483.4(g), the calculation ofadvance royalty tonnages would include both !-year and 3-yeartests, based on the definition ofthe continued operations requirement. These are the same calculation methods provided inthe LMU Guidelines which are proposed to be withdrawn. The tonnage derived from the calculation method thatresults inthe lower tonnage would be thetonnage to be used in determining advance royalty. The maximum advance royalty tonnage for any continued operation year for a Federal coal lease would not exceed the commercial quantities amount for the lease.

For LMUs, the calculation methods would recognize that an LMU may consist ofboth Federal and non-Federal coal and are based onthe calculation methods described in the LMU Guidelines. In determining advance royalty tonnage for an LMU, a proportional reduction would be made to account for thepercentage ofthe Federal recoverable coal reserve for Federal coal leases inthe LMU to the overall recoverable coal reserves ofthe entire LMU. Compliance withthe continued operation requirement orpayment ofadvance royalty does not change the scope or extent ofenvironmental disturbance. The calculation methods for determining the tonnage ofcoal upon which advance royalty is due have not changed. The payment ofadvance royalty in lieu ofcontinued operation only extends the duration of disturbance and notthe amount ofdisturbance. Therefore, the BLM concludes that guidance for calculation ofthe tmmage on which advance royalty is due isprocedural and does nothave a significant direct or indirect enviromnent impact.

m. Special LMU rules

The BLMproposes to add a sentence to section 3483.6(a) thatpertains to the diligent development requirements for LMUs. This issue was addressedby the IBLA in Carbon Tech Fuels, Inc., 161 IBLA 147 (2004). Inthat case, the IBLA upheld the BLM'srefusal to credit non-Federal coal production for LMU diligencepurposes where such production occurred before the non-Federal coal resources were included inthe LMU. The IBLA held that no statute or regulation obligated the BLMto creditproduction from private lands which pre-dated the LMU at issue inthe case. 161 IBLA at 166 n.14.

Atpresent, the regulations do not expresslyprohibit or authorize crediting ofpriorproduction of non-Federal coal. Section 3483.6(a) provides thatproduction anywhere within an LMU will be applied toward satisfaction ofthe diligent development and continued operation requirements. The proposed amendment would clarify thatproduction ofnon-Federal coal will be credited towal'd the diligent developmentrequirement only ifsuch production occurs afterthe BLM approves inclusion ofthe non-Federal resources within the LMU.

The reasons for this proposed change are twofold. First, the BLM is llilable to verify the tmmages produced from non-Federal resources before they are included in an LMU. Second, the diligent development requirement is intended to encourage the diligentproduction ofFederal coal that is yet to be mined. Allowing the crediting ofproduction ofnon-Federal coal resources that may have occurred years earlier does not encourage diligent production ofthe Federal coal


### 15that remains unmined. In fact, it may provide an avenue to allow theavoidance ofcoal production, as could have occurred in the Carbon Tech Fuels situation discussed above.

This proposal is administrative in nature. The BLM has no control or authority concerning nonFederal coal resources unless they are included in an LMU. Further, the BLM's approval ofan LMU does not authorize any entry into any ofthe lands or severance ofcoal from any ofthe lands included inthe LMU. An LMU allows production from any ofthe lands that are included in the LMU to be administratively credited toward the diligence requirement ofthe LMU, and thereby, each Federal coal lease included in the LMU. Therefore, this change does nothave a direct orindirect impact on the enviromnent.

Atpresent, section 3483.6(b) provides that the dates for submission ofR2P2s, and for achievement ofdiligent development, will not be changed by increasing or decreasing the size of the LMU. The proposed rule would remove thereference to the submission date for R2P2s. As amended by the proposed rule, the regulations pertinent to LMUs would require an operatorto submit an R2P2 only when applying for the establishment ofan LMU or a11 LMU modification. While Section435 ofthe EPAct does not specifically remove the subsequentrequirement for an R2P2 3 years after establishment ofan LMU, the BLMhas determined that this proposal would be consistentwith Section 435 oftl1e EPAct. As discussed in the section concerning implementation ofSection 435 ofthe EPAct, this administrative change wouldnot have a significru1t direct orindirect environmental impact.

A newparagraph (c) would be added to section 3483.6 addressingthe relationship ofLMU continued operationrequirements to lease-specific contiriued operation requirements. The proposed rule would provide that LMU continued operation requirement mustbe satisfied independently ofwhetherthe Federal coal leases within the LMUproduce sufficient coal to meet the individual continued operations requirements that would apply ifthe leases are not in an LMU. The continued operation requirementfor both Federal coal leases and LMUs is an administrative tool used to assure compliru1ce witl1 the production requirements of30 U.S.C. 207. Therefore, similar to other changes to the administrativeprocesses concerning the continued operationrequirement, this change would not have a significa11t direct or indirect impact on the environment.

n. Subpart 3487renumbered Subpali 3487- Logical Mining Unit, which currently consists ofone long section, would be reorgallized into multiple sections. This is all administrative change to facilitate use ofthe regulations and therefore would not have any direct or indirect environmental effect.

o. LMU Applications Proposed section3487.2(b) (currently section3487.l(c)(2)) would be amended to require that LMU applications include a complete description ofall Federal, state, and private lal1ds that are to be included in an LMU. This is consistent with the current LMU Guidelines as described at 50 FR35148 alld 35149. The change would modify the application requirements for all LMU. An LMU is formed to serve as a tool through which coal production from non-Federal lands may
16be used to meet the continued operation requirement ofFederal lands and to promote a logical, efficient, and orderly development ofthe coal resource. As already established above, the continued operation requirement for a lease or LMU does not create a direct or indirect impact
on the environment. Therefore, the BLMhas concluded that this proposed change does not have
a significant direct or indirect impact onthe environment. Existing section 3487.l(c)(3) would be expanded in proposed 3487.2(c) by adding a list of

. specificinformation that will demonstrate thatthe applicant for an LMU has effective control of

all coal withinthe LMU boundary. This is consistent with the cmTent LMU Guidelines as described at 50 FR 35149. This requirement would ensure that, by cooperating with the LMU operator, the BLM would be able to verify production throughoutthe LMU. Since this is merely
an application requirementthat enables the BLM to make an informed decision concerning approval ofan LMU application, there is no on-the-gronnd environmental impact. Therefore, the BLM has concluded that this proposed change to the regulations would notresult in a significant direct or indirect impact onthe environment.

p. LMUR2P2 The provisions in existing section 3487.l(e)(1) would be amended in proposed section 3487.4(a) to eliminate the requirement for submission ofan R2P2 within 3 years after the effective date of the LMU approval. This is consistent with Section 435 ofthe EPAct, which eliminated this requirement. Instead, the proposal would provide that an LMU applicant must submit an R2P2 containingthe informationrequired by section 3482.1(c) for

### .all Federal and non-Federal lands within the LMU, before the LMU or LMU modification canbe approved. The R2P2 for the LMU is proposed to become 

### arequirement ofthe LMU application in proposed section 3487.2(d). This earlier submittal ofthe R2P2 would provide a basis for theBLMto analyze whetherthe LMU should be approved. The R2P2 for an LMU is a hybrid mining plan that combines the R2P2 for all the Federal coal leases in the LMU and similar miningplans for all non-Federal lands proposed to be included in the LMU. Theproposed rule would also-provide that the BLM will adjustthe estimates ofthe Federal and non-Federal LMU recoverable coal
reserves at the time ofR2P2 approval. Regardless ofwhen the BLMreceives or approves the R2P2 for an LMU, authorizationto begin mining requires amyriad ofother specific permits and authorizations, ofwhich the approved R2P2 is but one. There are other authorizations required fi·om the Mine Safety and Health Administration and other Federal and state agencies. The R2P2 in and ofitselfdoes not authorize any environmental disturbances. Therefore, this change does notpose a significant direct orindirect environmental impact.



### g. LMU Recoverable Coal Reserves The BLM is proposing to add a new section 3487.7(d) to specify when a change in the LMU recoverable coal reserves would be effective. However, because the date when the lesseemust apply for advance royalty has changed from the beginning ofa continued operation year to the end ofthe continued operation yeaT (see proposed rule changes for section 3483.4(b)), there is no need to maintain a constant continued operation requirement throughoutthe continued operation

17year. Therefore, the BLM has proposed to allow any change in the LMU's recoverable coal reserve, and hence the continued operation requirement, to be effective upon the BLM's approval. This is a change from the current LMU Guidelines described at 50 FR 35154. Changes to the LMU recoverable coal reserves are a routine matter and do not determine when, where, or how coal is actually mined. Therefore, the BLMhas concluded thatthis change does not have a significant direct or indirect impact on the environment.



### r. LMU Termination The BLM is proposing a new section 3487.9 to provide specific stm1dards m1d procedures for termination ofm1 LMU. This paragraphwould include theprovisionspreviously found in the LMU Guidelines at 50 FR 35157. Proposed section 3487.9(a)(5) would bemodified from the LMU Guidelines to reflect that an LMUmay be extended beyond the LMU's initial40-year term, as provided by Section433 ofthe EPAct. The BLM is also proposing a new provision that any Federal coal lease included in m1 LMU would continue underthe terms and conditions ofthe lease when the LMU is terminated or relinquished. This is consistent withthe LMU Guidelines at 50 FR34157. An LMU does not authorize allY physical disturbance to the enviromnent. Similarly, the termination ofan LMU does not authorize any additional disturballceto the environment. Reclamation after mining is completed continues to bereqnired under the SMCRA. The LMU only provides the administrative tool through which coal produced from non-Federal lands may beused to comply with the diligent development and continued operation requirements ofFederal coal leases alld to promote a logical, efficient, m1d orderly development ofthe coal resource. Therefore, since all LMU is an administrative action without any impactto the environment, there is no significant directorindirect impact on the enviromnent from this change.

s. LMU Extension Section 433 ofthe EPAct alllended the MLA at 30 U.S.C. 202a(2) to authorize the BLMto. extend theterm ofan LMU ifsuch m1 extensionwonld ensure the maximum economic recovery ofthe coal deposit and the extended period is in the interest ofthe orderly, efficient, or economic development ofa coal resource. The maximum initial term ofall LMU remains no more thilll 40 years.
The BLM is proposing to add a new section 3487.I0 that would pertain to extending the term of
allLMU. The regulation would require an LMU operatorto submit an application describing how the requested LMU extension would ensurethe maximun1 economic recovery ofthe coal deposit m1d how the extended period would be in the interest ofthe orderly, efficient, or economic development ofa coal resource. The proposed regulation would authorize the BLM to require the operator to submit additional information as needed. The BLM would notbe obligated to approve an application to extend an LMU, butupon approval, the term ofan LMU could be extended by increments ofnot more thall 10 years.

An LMU is all administrative device to allow coal production from anywhere within the LMUto be credited toward the diligent development and continued operation requirements ofall Federal coal leases within the LMU. This will not change ifthe term ofthe LMU is extended by I0

18years. While an extension ofan LMU would provide more time to mine the coal resource, it does not imply that any more coal than would have been mined under the mine plan for which a previous environmental analysis has been conducted. The quantity ofthe coal does not change, butthe LMU extension promotes a logical, efficient, and orderly development ofthe coal
resource. Therefore, the environmental effects would remain unchanged relative to approval of the initial LMU. Coal resources may be added to an LMU only by modification ofthe LMU, which is not at issue in this rulemaldng. Therefore, the BLM has concluded thatthe proposed rule does nothave a significant direct or indirect impact on the environment.

In addition to proposed section at 3487.10, implementation ofSection 433 ofthe EPAct will require several other rule modifications to assure other sections ofthe coal management rule do not conflict as follows:
• The BLMproposes to replaceparagraph (h)(4) ofexisting section 3487.1, which states that the 40-yearperiod for mining the reserves ofan LMU will notbe extended. This paragraphwould bereplaced because Section 433 ofti1e EPAct allows an LMU to be extended to a life in excess of40 years. This proposed modification would simply modify currentregulatory text that conflicts with Section 433 ofthe EPAct. Similarto extending ti1e life ofan LMU, ti1is proposed change does nothave a significant direct or indirect impact on the environment. This change would implement the provisions ofti1e EPActby makingthe BLM'sregulations consistentwith the EPAct. The BLM's regulations cannot explicitlypreclude what the EPAct would allow.
• The BLMis also proposing to add anew section 3487.7(e) to cross-reference the proposed rule at section 3487.10, which would implement Section433 ofti1e EPAct by providingprocedures for extending an LMU beyond the currentmaximumterm of40 years. As previously established, regulatory changes relatedto implementation of Section433 ofilieEPAct only extend the term ofan LMU, and thereby when disturbance to the environment might occur, but do not change or extend the scope or geographic extent ofany environmental impact from coal mining. Therefore, thisproposed change does not have a significant direct or indirect impact on the environment.

t. Authorized Officer Inproposed sections 3487.5(c) and 3487.7(a), correspondingto existing sections 3487.1(f)(3) and (h)(1 ), the BLMproposes to correct an errorti1at appears in each oftheseparagraphs. The proposed rule would remove the reference in bothparagraphs timt makes it appear that ti1e BLM consults with itself. This was an errorthat occmTed when the lease operationregulations were moved from the ONRRregulations to the BLMregulations in 1982. This is an administrative correction thathas no direct or indirect impact on the environment.

2. Cumulative 

### effects

As discussed above, the proposed regulations would not affect the environmental impact of current leasing and mining practices. Substantial portions ofthe proposed regulatory package would implementthe statutory mandates and authorizations ofthe EPAct. The BLM's regulations need to be consistent with ti1e provisions ofthe EPAct. Theproposedrule largely
19affects the administrative process required for maintenance ofFederal coal leases and LMUs. Any new environmental disturbance will be authorized under separate authority and in compliance withNEPA requirements for each action. The direct, indirect, and cumulative environmental impacts ofeach new enviromnental disturbance will not occur before such disturbance is authorized in full compliance with the BLM's land use planning and NEPA processes. The proposed rule, iffinalized, would not change the processes for analyzingthe environmental consequences ofany new environmental disturbance. Therefore, since the proposed rule does not change the methods by which new disturbance is authorized, the cumulative envirmm1ental effects oftheproposed rule onhuman health, safety, and the environment, would be negligible. Administratively, the BLM anticipates greater compliance withthe regulations due to improved clarity in the regulations, and therefore improved enforcement ofthe Congressional intent ofthe EPAct and the MLA. Site-specific and cumulative effects ofauthorizations thatmightlead to
new enviromnental disturbance would be fully evaluated when a new Federal coal lease or lease modification, or a SMCRA mining permit, is considered.

3. ResidualEffects

This proposed action is expected to affect administration ofFederal coal leases and LMUs. As discussed above, the BLM does not anticipate adverse environmental impacts from the proposed action. Established enviromnental protection requirements that are mandatory for development ofthe coal reserves covered by a Federal 

### coal lease orLMU are not affected by the proposed action. Mitigation measures are indentified during the environmental analysis completed for approval for issuance ofa lease and for starting actual mining operations. Therefore, we conclude thatthe proposed action does not require any new or unique mitigation measures m1d that there are no residual effects whichrequire future analysis.

We also conclude thatthere is no significant impact on any ofthe following elements ofthe human environment:

o Air quality;

o Areas ofcritical environmental concern (ACECs);

o Climate change;

o Flood plains;

o Historic or cultural resources;

o Hazardous or solid waste;

o Migratory birds;

o Nationalmonuments;

o National natural landmarks;

o Native American religions;

o Park, recreation or refuge lands;

o Prime farm]ands;

o Riparian zones;

o Sole orprincipal drinking water aquifers; 

### 20• Threatened or endangered species;

• Water quality;

• Wetlands;
• Wild and scenic rivers;

• Wilderness; and
• Other ecologically significant or critical areas

B. TheNo-Action Alternative

The changes proposed in the preferred alternative are all administrative innature and do nothave significant direct environmental impacts. The no-action alternative would notpromulgate new regulations and would leave 43 CFR Parts 3000, 3400, 3430, 3470, and 3480 as they currently exist, thereby not implementing the administrative changes mandated by 1he EPAct. Itwould likewise not impactthe critical environ111ental elements described in the preferred alternative. The no-action alternative would not implement the provisions oftl1e EPAct and would not comply with the intent ofthe EPAct. The no-action alternative would not correcttl1e known deficiencies in the currentregulations and inconsistencies between the currentregulations and the statutoryprovisions ofthe EPA ct. The no-action alternative would continue tl1e risk that regulatory requirements may contradict the authorizing statute, thereby resulting in a greaterrisk ofadministrative errors orlitigation. Therefore, the BLM finds that while theno-action alternative does threaten significanlundesirable administrative impacts, the no-action alternative does notpose a possibility ofsignificant environmental impact.

C. The Alternative Proposed Action The alternative proposed action wouldnot withdrawthe 1985 Logical Mining Unit Application and Processing Guidelines and would not include any part ofthe LMU Guidelines in the regulations, but would implement all oftl1e otl1er proposed regulatory changes as described in the preferred alternative. Therefore, all the environmental impacts from new orrevised regulations under the alternative proposed action would be unchanged from the preferred alternative.
However, retainingthe LMU Guidelines could cause significant confusion for the BLM andtl1e public. Eventhoughthe LMU Guidelines were promulgated tln·ough a notice and public commentprocess, and were published in the FederalRegister on August 29, 1985 (50 FR 35145 to 35163), thepublic currently is generally unaware ofthem due to tl1eir age and because the LMU Guidelines do not appem intl1e formal BLMregulatory system. The regulations governing LMUs were modified onAugust 20, 1997 (62 FR44370) and as described in tl1e preferred alternative, me proposed to be modified yet again. These regulatory changes, in some cases, are significantly different from the LMU Guidelines. Conflicts between the LMU Guidelines and theregulations would most likely beresolved on a case-by-case basis which may, or may not, be elevated for national policy decisions. Any confusion or conflicting guidm1ce is anticipated to be detrimental to the coal managementprogrmn, as it will divert scarce resources to repeatedly interpret conflicts betweenthe regulations andthe guidelines. There is a riskthat local policy interpretations could be different, thereby leading to different application ofthe rules
21in various localjurisdictions.

The LMU Guidelines are notpart ofthe BLM's existing internal guidance system ofManuals and Handbooks. The LMU Guidelines provide requirements that are binding on both the BLM and lessees, whereas the BLM's internal guidance system is only binding onthe BLM. Therefore, conversion ofthe LMU Guidelines into the BLM's internal manual and handbook system would notprovide an equal level ofregulatory control ofthe Federal coal lessees. The BLM considers this to be an unacceptable risk.

Continued conflicts between the LMU Guidelines and the regulations could have a detrimental effect onthe enviromnent. This is in partbecause time and resources may be lost in resolution of conflicts that otherwise could have beenused to mitigate real enviromnental problems. The resolution ofconflicts could cause delays in taking on-the-ground actions that would mitigate or resolve environmental impacts from previously authorized mining. Finally, the conflicts could lead to improper management ofthe coal resource by causing premature termination ofan LMU.

V. Tribes, Individuals, Organizations, orAgencies Consulted

The author ofthe proposed rule and BLMpersonnel were consulted in the preparation ofthis Environmental Assessment. The BLM Colorado State Office in Denver and the BLM Wyoming State Office in Cheyem1e were also consulted.

In accordance with E.O. 13175, wehave found that aportion ofthis proposed rule may include policies that have Tribal implications. The proposed rule would make changes to the Coal Managementregulations, 43 CPR parts 3000, 3400, 3430, 3470, and 3480. As noted below,
some ofthe provisions of43 CPRpart 3480 are applicable to "India11lands." Under the regulations ofthe Bureau oflndianAffairs, the term "India11lill1ds" includes Tribal lands. See 25 CFR 211.3, 212.3, and 225.l(c).

The Bureau ofindianAffairs regulations, at25 CFR 211.4, 212.4, a11d 225.l(c), incorporate, through an explicit cross-reference, the BLMregulations at 43 CPRpart 3480 a11d thus, unless expressly exempted, the provisions contained inpart 3480 apply to Indian lands. The BLM coal management regulations, at 43 CFRparts 3400 tln·ough 3470, are not similarly incorporated by
cross reference, are not applicable to Indian la11ds, and thus, proposed amendments to regulations in parts 3000, 3400, 3430, and 3470 are not subject to Tribal consultation.

The BLM regulations at 43 CFR 3480.0-4 further provide thatthe provisions ofpart 3480 relating to adva11ce royalty, diligent development, continued operation, maximum economic recovery, a11d LMUs do not apply to Indiill1lands, leases, and permits. Thus, the proposed a1nendments contained in this rule to 43 CPR subpart 3483, Diligence Requirements, and subpa1i 3487, Logical Mining Unit, are excluded from Tribal consultation. The proposed definitions of continued operation a11d diligent development period are similarly excluded from Tribal consultation. A proposed amendmentto add a newparagraph (h) to section 3482.3 is not subject

22to Tribal consultation, because the proposed paragraph would be specifically limited in its application to LMUs.

As noted above, the BLM regulations at 43 CPR subpart 3482 would be generally applicable to Indian lands unless otherwise specifically exempted, as noted above for proposed section 3482.3. Since 43 CPR 3482.1(b) is not similarly specifically exempted from applicability to Indian lands, proposed regulatory amendments, ifadopted by theBLM, would be applicable to Indian lands. Accordingly, this portion ofthe proposed rule would be a policy that could have Tribal implications.

Inasmuch as proposed amendments to 43 CPR 3482.1(b) may have Tribal implications by
reason oftheir potential applicability to Indian lands, the BLM will begin consultation with potentially affected Tribes upon publication ofthe proposed rule. Further, the BLMwill continueto consult with Tribes during the commentperiod ofthe proposed rule.



### VI. Preparer

This Environmental Assessmentwas preparedby William Radden-Lesage, Bureau ofLand Management, Department ofthe Interior, 1849 C Street, NW, mail stop 510LS, Washington, D.C. 20240; telephone 202/91217116.



### VII. References Logical Mining Unit Application and Processing Guidelines (LMU Guidelines), August 29, 1985 (50 FR 35145 to 35163).

23U.S. DEPARTMENT OF THE INTERIOR BUREAU OF LAND MANAGEMENT

FINDING OF NO SIGNIFICANT IMPACT for PROPOSED RULE to REVISE 43 CFRPARTS 3000, 3400, 3430, 3470, and 3480 Lease modifications, Lease and Logical Mining Unit diligence, Advance royalty, Royalty rates, Bonds

A. INTRODUCTION EA Number: W0-320-3400-01 RIN 1004-AD93

The Bureau ofLand Management (BLM) ofthe United States Department ofthe Interior proposes to amend existing regulations pertaining to Coal Management at 43 CFR Parts 3000, 3400, 3430,3470, and 3480 that pertain to formation and administration ofFederal coal leases and logical mining units (LMUs). The amended rule would implement the provisions ofTitle IV, SubtitleD ofthe Energy Policy Act of2005 (Public Law 109-58) which include: (1) increasingthe maximwn acreage for a lease modification from 160 acres to 960 acres; (2) new procedures for extending the life ofan LMU beyond 40 years; (3) chm1ges in the procedures and standm·ds for payment ofadvm1ce royalty for leases m1d LMUs; (4) elimination ofthe requirementto submit a resource recovery and protection plan within 3 years after lease issuance
or establishment ofan LMU; and (5) changes inprocedures and stm1dards for bonds that are used to assure payment ofthe remaining balance ofdeferred bonus bids. In addition, the BLM is proposingto clarify what royalty rate would apply to continuous highwallmining operations that
are conducted onFederal coal leases. Finally;the Energy Policy Act of2005 has rendered the LMU Guidelines (published in theFederalRegister on August 29, 1985) obsolete. The BLM is therefore proposing a formal withdrawal ofthe LMU Guidelines and incorporation ofthoseparts ofthe guidelines that remain valid into the regulations.

B. STATEMENT OF ENVIRONMENTAL SIGNIFICANCE OF THE PROPOSED ACTION For the reasons stated below, the undersigned person has determined that the above-nilllled proposed action would have no significant impact on tl1e quality ofthe human enviromnent under Section 102(2)(C) oftheNational Environmental Policy Act of 1969 (NEPA), 42 U.S.C.4332(2)(C), m1d therefore an Environmental Impact Statementis not required.

C. REASONS This finding ofno significant impact is based onthe attached Environmental Assessment, which identifies and discusses the enviromnental impacts oftheproposed action. Itis not anticipated that the proposed chm1ges to existing regulations would result in adverse environmental impacts. The BLM finds that the proposed action would have no significm1t impact ofm1y kind on the environment.

DateU.S. DEPARTMENT OF THEINTERIOR BUREAU OF LAND MANAGEMENT

FINDING OF NO SIGNIFICANT IMPACT for PROPOSED RULE to REVISE 43 CFR PARTS 3000, 3400, 3430, 3470, and 3480 Lease modifications, Lease and Logical Mining Unit diligence, Advance royalty, Royalty rates, Bonds

A. INTRODUCTION EA Number: W0-320-3400-01 RIN 1004-AD93

The Bureau ofLm1d Management (BLM) ofthe United States Depm·hnent ofthe Interior proposes·to mnend existing regulations pertaining to Coal Management at 43 CPR Parts 3000, 3400, 3430, 3470, and 3480 thatpertain to formation m1d administration ofFederal coal leases m1d logical mining units (LMUs). The amended rule would implement the provisions ofTitle IV, SubtitleD ofthe Energy Policy Act of2005 (Public Law I09-58) which include: (I) increasing tl1e maximwn acreage for 

## alease modification from 160 acres to 960 acres; (2) new procedures for extending the life ofm1 LMU beyond 40 yem·s; (3) chm1ges in the procedures m1d stm1dards for payment ofadvance royalty for leases and LMUs; (4) elimination ofthe requirement to submit a resource recovery and protection plan within 3 years after lease issum1ce
or establishment ofan LMU; and (5) changes in procedures m1d standards for bonds that are used to assure payment ofthe remainingbalance ofdeferredbonus bids. In addition, the BLM is proposingto clarify what royalty rate would apply to continuous highwall mining operations that
are conducted onFederal coal leases. Finally, the Energy Policy Act of2005 has rendered the LMU Guidelines (published in the FederalRegister on August 29, 1985) obsolete. The BLM is therefore proposing a formal withdmwal ofthe LMU Guidelines and incorporation ofthose parts ofthe guidelines tl1at remain valid into the regulations.

B. STATEMENT O.F ENVIRONMENTAL SIGNIFICANCE OF THE PROPOSED ACTION For the reasons statedbelow, the w1dersigned person has determined that the above-nmned proposed action wouldhave no significant impact on the quality ofthe human environment under Section 1 02(2)(C) ofthe National Environmental Policy Act of 1969 (NEPA), 42 U.S.C.4332(2)(C), and therefore m1 Environmental Impact Statement is not required.

C. REASONS This finding ofno significant impact is based on the attached Environmental Assessment, which identifies m1d discusses the environmental impacts ofthe proposed action. Itis not anticipated that the proposed chm1ges to existingregulations would result in adverse environmental impacts. The BLM finds that the proposed action would have no significant impact ofm1y kind onthe environment.

# /~ Date Michael Nedd, A 1stant DirectorU.S. DEPARTMENT OF THE INTERIOR BUREAU OF LAND MANAGEMENT

FINDING OF NO SIGNIFICANT IMPACT for PROPOSED RULE to REVISE 43 CFR PARTS 3000, 3400, 3430, 3470, and 3480 Lease modifications, Lease and Logical Mining Unit diligence, Advance royalty, Royalty rates, Bonds

A. INTRODUCTION EA Number: W0-320-3400-01 RIN 1004-AD93

The Bureau ofLand Management (BLM) ofthe United States Department oftl1e Interior proposes to amend existing regulations pe1iaining to Coal Management at 43 CFR Parts 3000, 3400, 3430, 3470, and 3480 tlmtpertain to formation and administration ofFederal coal leases and logical mining units (LMUs). The amended rule would implementtheprovisions ofTitle IV, SubtitleD ofthe Energy Policy Act of2005 (Public Law 109-58) which include: (I) increasing the maximum acreage for a lease modification from 160 acres to 960 acres; (2) new procedures for extending the life ofan LMU beyond 40 years; (3) changes in the procedures and standards for payment ofadvance royalty for leases and LMUs; ( 4) elimination ofthe requirementto submit a resource recovery andprotectionplan within 3 years after lease issuance
or establishment ofan LMU; and (5) changes inprocedures and standards for bonds that are used to assure payment oftl1e remainingbalance ofdeferred bonus bids. In addition, the BLM is proposing to clarify what royalty rate would apply to continuous highwall mining operations that
are conducted onFederal coal leases. Finally, me Energy Policy Act of2005 has rendered the LMU Guidelines (published inthe FederalRegister onAugust 29, 1985) obsolete. The BLM is therefore proposing a formal witl1drawal ofthe LMU Guidelines and incorporation ofthose parts ofthe guidelines that remain valid into the regulations.

B. STATEMENT OF ENVIRONMENTAL SIGNIFICANCE OF THE PROPOSED ACTION For me reasons stated below, the undersigned person has determined thatthe above-named proposed action would have no significant impact on tl1e quality ofthe human environment under Section 102(2)(C) ofthe National Environmental Policy Act of 1969 (NEPA), 42 U.S.C.4332(2)(C), and thereforeanEnvir01m1ental Impact Statement is notrequired.

C. REASONS This finding ofno significant impact is based on tl1e attached Environmental Assessment, which identifies and discusses the environmental impacts ofthe proposed action. Itis not anticipated that theproposed changes to existing regulations would result in adverse environmental impacts. The BLM finds tlmt the proposed action would have no significant impact ofany kind on the enviromnent.

Date