Vol. 78 Monday, 

No. 155 August 12, 2013 

Part V 

Department of the Interior 

Bureau of Land Management 

43 CFR Parts 3000, 3400, 3430, et al. 

Lease Modifications, Lease and Logical Mining Unit Diligence, Advance 

Royalty, Royalty Rates, and Bonds; Proposed Rule 


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49080 Federal Register / Vol. 78, No. 155 / Monday, August 12, 2013 / Proposed Rules 

DEPARTMENT OF THE INTERIOR 

Bureau of Land Management 

43 CFR Parts 3000, 3400, 3430, 3470, 

and 3480 

[LLWO32000.L13200000.PP0000.24–1A] 

RIN 1004–AD93 

Lease Modifications, Lease and 

Logical Mining Unit Diligence, Advance 

Royalty, Royalty Rates, and Bonds 

AGENCY: Bureau of Land Management, 

Interior. 

ACTION: Proposed rule. 

SUMMARY: The Bureau of Land 

Management (BLM) is proposing to 

amend its regulations pertaining to the 

administration of Federal coal leases 

and logical mining units (LMUs). The 

proposed rule would implement Title 

IV, Subtitle D of the Energy Policy Act 

of 2005; clarify that a royalty rate of 

121⁄2 percent will be assessed on all 

Federal coal except coal that is mined 

from underground mines; withdraw the 

Logical Mining Unit Application and 

Processing Guidelines (LMU 

Guidelines); promulgate portions of the 

LMU Guidelines as regulations; 

establish new processing fees; and make 

technical and editorial corrections to the 

regulations. 

DATES: Send your comments on this 

proposed rule to the BLM on or before 

October 11, 2013. The BLM is not 

obligated to consider any comments 

received after the above date in making 

its decision on the final rule. If you wish 

to comment on the information 

collection requirements in this proposed 

rule, please note that the Office of 

Management and Budget (OMB) is 

required to make a decision concerning 

the collection of information contained 

in this proposed rule between 30 to 60 

days after publication of this document 

in the Federal Register. Therefore, a 

comment to OMB is best assured of 

being considered if OMB receives it by 

September 11, 2013. 

ADDRESSES: Mail: U.S. Department of 

the Interior, Director (630), Bureau of 

Land Management, 1849 C Street NW., 

Room 2134LM, Washington, DC 20240, 

Attention: 1004–AD93. Personal or 

messenger delivery: U.S. Department of 

the Interior, Bureau of Land 

Management, 20 M Street SE., Room 

2134LM, Washington, DC 20003, 

Attention: WO630, 1004–AD93. Federal 

eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions at this Web site. 

Comments on the information 

collection burdens: Fax: Office of 

Management and Budget (OMB), Office 

of Information and Regulatory Affairs, 

Desk Officer for the Department of the 

Interior, fax (202) 395–5806. Electronic 

mail: oira_submission@omb.eop.gov. 

Please indicate ‘‘Attention: OMB 

Control Number 1004–XXXX,’’ 

regardless of the method used to submit 

comments on the information collection 

burdens. If you submit comments on the 

information collection burdens, you 

should provide the BLM with a copy of 

your comments, at one of the addresses 

shown above, so that the BLM can 

summarize all written comments and 

address them in the final rule preamble. 

FOR FURTHER INFORMATION CONTACT: 

William Radden-Lesage, Mining 

Engineer, Solid Minerals Division 

(WO320), Bureau of Land Management, 

at Room 4215, 20 M Street SE., 

Washington, DC 20003; or at (202) 912– 

7116. 

SUPPLEMENTARY INFORMATION: 

I. Public Comment Procedures 

II. Background and Discussion of the 

Proposed Rule 

III. Procedural Matters 

I. Public Comment Procedures 

If you wish to comment, you may 

submit your comments by any one of 

several methods: Mail: You may mail 

comments to U.S. Department of the 

Interior, Director (630), Bureau of Land 

Management, 1849 C Street NW., Room 

2134LM, Washington, DC 20240, 

Attention: 1004–AD93. Personal or 

messenger delivery: U.S. Department of 

the Interior, Bureau of Land 

Management, 20 M Street SE., Room 

2134LM, Washington, DC 20003, 

Attention: WO630, 1004–AD93. Federal 

eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions at this Web site. 

You may submit comments on the 

information collection burdens directly 

to the Office of Management and 

Budget, Office of Information and 

Regulatory Affairs, Desk Officer for the 

Department of the Interior, fax (202) 

395–5806, or 

oira_submission@omb.eop.gov. Please 

indicate ‘‘Attention: OMB Control 

Number 1004–XXXX.’’ If you submit 

comments on the information collection 

burdens, you should provide the BLM 

with a copy of your comments, at one 

of the addresses shown above, so that 

the BLM can summarize all written 

comments and address them in the final 

rule preamble. 

Please make your comments as 

specific as possible by confining them to 

issues for which comments are sought 

in this notice, and explain the basis for 

your comments. The comments and 

recommendations that will be most 

useful and likely to influence agency 

decisions are: 

1. Those supported by quantitative 

information or studies; and 

2. Those that include citations to, and 

analyses of, the applicable laws and 

regulations. 

The BLM is not obligated to consider 

or include in the Administrative Record 

for the rule comments received after the 

close of the comment period (see DATES) 

or comments delivered to an address 

other than those listed above (see 

ADDRESSES). 

Comments, including names and 

street addresses of respondents, will be 

available for public review at the 

address listed under ADDRESSES during 

regular hours (7:45 a.m. to 4:15 p.m.), 

Monday through Friday, except 

holidays. 

Before including your address, 

telephone number, email address, or 

other personal identifying information 

in your comment, be advised that your 

entire comment—including your 

personal identifying information—may 

be made publicly available at any time. 

While you can ask in your comment to 

withhold from public review your 

personal identifying information, we 

cannot guarantee that we will be able to 

do so. 

II. Background and Discussion of the 

Proposed Rule 

A. General Background 

1. On August 8, 2005, the President 

signed into law the Energy Policy Act 

(EPAct) of 2005, Public Law 109–58, 

119 Stat. 594. Title IV, Subtitle D of the 

EPAct, is entitled the ‘‘Coal Leasing 

Amendments Act of 2005.’’ The BLM 

proposals to implement provisions of 

the EPAct that require regulatory 

amendments are discussed in the 

section-by-section analysis that follows. 

The Office of Natural Resources 

Revenue (ONRR) (formerly the Minerals 

Revenue Management Program of the 

Minerals Management Service) is 

proposing a companion rule that 

implements that part of Section 434 of 

the EPAct concerning the processes and 

standards for determining value for 

payment of advance royalties. 

This proposed rule would implement 

all other Mineral Leasing Act (MLA) 

amendments enacted by Title IV, 

Subtitle D of the EPAct. 

2. The BLM proposes to withdraw its 

LMU Guidelines, which were published 

in final form, following public 

comment, in the Federal Register on 

August 29, 1985 (50 FR 35145). For 

purposes of withdrawing the LMU 

Guidelines and promulgating parts of 

them as regulations, the BLM analyzed 


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the guidelines and divided them into 3 

categories. The first category requires no 

additional action beyond withdrawal 

because those parts of the LMU 

Guidelines remain valid, and are 

already in regulations. The second 

category consists of the parts of the 

LMU Guidelines that are now 

inconsistent with the MLA, as amended 

by the EPAct. These parts of the LMU 

Guidelines need to be withdrawn and 

replaced by regulations that are 

consistent with the new statute. The 

third category includes parts of the LMU 

Guidelines that do not conflict with 

authorizing statutes, but are not 

currently in or separately supported by 

the BLM’s coal management regulations. 

These parts of the LMU Guidelines need 

to be promulgated as regulations so that 

the BLM can maintain the existing 

policies after the LMU Guidelines are 

withdrawn. Each proposed regulatory 

addition that originated from the LMU 

Guidelines is described in the sectionby-section analysis. 

B. Section-by-Section Analysis of 

Proposed Changes in 43 CFR Part 

3000—Minerals Management: General 

The BLM proposes to amend 43 CFR 

3000.12 by adding provisions to recover 

processing costs for 3 actions initiated 

by coal operators/lessees under 43 CFR 

part 3480. Section 304 of the Federal 

Land Policy and Management Act of 

1976 (43 U.S.C. 1734) authorizes the 

BLM to establish reasonable fees with 

respect to applications relating to 

administration of the public lands. 

1. Applications for a History of Timely 

Payments Determination 

The BLM proposes a processing fee 

for an application for a history of timely 

payments determination. In order to 

qualify for a waiver of the bond 

requirement for deferred bonus bid 

installment payments, a Federal coal 

lessee must apply for and obtain a 

history of timely payments 

determination. Under the proposed 

‘‘history of timely payments’’ provisions 

at proposed new section 3474.10, the 

BLM would incur unique costs while 

processing an application for a history 

of timely payments determination, and 

BLM personnel would be diverted from 

other tasks and duties in order to verify 

lease ownership. After the BLM verifies 

lease ownership, it would then forward 

the application to the ONRR for an 

assessment of the applicant’s lease 

payment history. 

The BLM would provide a written 

approval to an applicant who satisfies 

the criteria for a history of timely 

payments determination. The written 

determination would be effective for all 

leases covered by the application until 

the deferred bonus is paid in full in 

accordance with the terms and 

conditions of the leases. 

Where an applicant fails to satisfy the 

criteria, the BLM would: 

• Reject the application, and 

immediately require the applicant to 

post a separate bond in an amount equal 

to one deferred bonus payment; or 

• increase an existing bond amount 

that is equal to the amount of one 

deferred bonus payment. 

In either case, a qualifying applicant 

would gain a special benefit. Therefore, 

the BLM has concluded that it should 

establish a reasonable fee to recover the 

cost of processing an application for a 

determination of a history of timely 

payments. 

The BLM has gained experience 

processing applications for a history of 

timely payments determination since 

interim guidance (BLM–WO–IM–2006– 

045) was issued on November 25, 2005. 

The BLM’s analysis indicates that the 

processing workload does not require 

case-by-case cost recovery 

determinations. The BLM is therefore 

proposing a fixed processing fee for all 

history of timely payments applications 

to cover the BLM’s reasonable 

processing costs. The BLM anticipates 

that processing a history of timely 

payments application would require 2 

hours of staff time at a GS–11, step 5 

salary ($31.17 per hour) and 1 hour of 

supervision at a GS–13, step 5 salary 

($44.43 per hour) (U.S. Office of 

Personnel Management Salary Table 

2013–RUS, at: http://www.opm.gov/ 

policy-data-oversight/pay-leave/ 

salaries-wages/2013/general-schedule/ 

rus_h.pdf). In addition, consistent with 

current cost calculation guidance (WO– 

IM–2013–015; November 20, 2012), an 

additional 19.8 percent would be added 

to cover the BLM’s indirect costs and 30 

percent would be added for employee 

benefits, for a total of $159.94, which 

was rounded to the nearest $5 for a 

proposed fee of $160. The BLM is 

therefore proposing a fixed processing 

fee of $160 for each application for a 

history of timely payments 

determination. Like other fixed 

processing fees, the proposed fee would 

be subject to periodic adjustment 

according to the change in the Implicit 

Price Deflator for Gross Domestic 

Product. See 43 CFR 3000.10(c). 

2. Applications To Pay Advance Royalty 

The proposed advance royalty 

provisions at subpart 3483 will require 

the BLM to incur unique costs, as 

provided by Section 304 of the Federal 

Land Policy and Management Act of 

1976 (43 U.S.C. 1734), while processing 

an application to pay advance royalty. 

Processing an application to pay 

advance royalty is time-sensitive, 

requiring personnel to be diverted from 

other tasks and duties to process the 

application in a timely manner. For 

each application to pay advance royalty, 

the BLM will verify the production 

history of each lease or LMU and 

determine the number of tons upon 

which the advance royalty payment will 

be based. The BLM will forward to the 

ONRR the advance royalty application 

and the BLM’s determination of the 

advance royalty tonnage for their 

determination of the advance royalty 

value and subsequent billing to the 

applicant for the advance royalty. Upon 

approval by the BLM and ONRR, the 

applicant would be allowed to pay 

advance royalty to remain in 

compliance with the continued 

operation requirement of the MLA (30 

U.S.C. 207(b)), and as described in the 

analysis of 43 CFR subpart 3483 in this 

preamble. Approval to pay advance 

royalty is a unique benefit to the 

applicant, enabling the applicant to 

continue to hold the lease or LMU even 

while the lease or LMU is not in 

production. Therefore, the BLM has 

concluded that it should establish a 

reasonable fee to recover the cost of 

processing an application to pay 

advance royalty. 

The BLM has extensive experience 

processing applications to pay advance 

royalty. Although Section 434 of the 

EPAct changed certain procedures and 

standards related to advance royalty, 

such as when the BLM should receive 

an advance royalty application and how 

the ONRR determines the advance 

royalty value, the BLM does not foresee 

any significant change in the BLM’s 

fundamental workload once the BLM 

receives such an application. The BLM’s 

workload analysis does not indicate a 

need for case-by-case cost recovery 

determinations. Therefore, the BLM is 

proposing a fixed fee to recover the 

BLM’s reasonable processing costs for 

each application to pay advance royalty. 

The BLM anticipates that processing an 

application to pay advance royalty 

would require 1 hour of staff time at a 

GS–11, step 5 salary ($31.17 per hour), 

1 hour of a mining engineer’s time to 

review the production records for the 

lease or LMU to determine the tonnage, 

as specified in Section 3484.3, on which 

the advance royalty payment will be 

based, at a GS–12, step 5 level salary 

($37.37 per hour), and 1 hour of 

supervision at a GS–13, step 5 salary 

($44.43 per hour) (U.S. Office of 

Personnel Management Salary Table 

2013–RUS, at: http://www.opm.gov/ 


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policy-data-oversight/pay-leave/ 

salaries-wages/2013/general-schedule/ 

rus_h.pdf). In addition, consistent with 

current cost calculation guidance (WO– 

IM–2013–015; November 20, 2012), an 

additional 19.8 percent would be added 

to cover the BLM’s indirect costs, and 

an additional 30 percent would be 

added for employee benefits, for a total 

of $169.23. After rounding to the nearest 

$5, the BLM is proposing a fixed 

processing fee of $170 for each 

application for payment of advance 

royalty. Like other fixed processing fees, 

the proposed fee would be subject to 

periodic adjustment according to the 

change in the Implicit Price Deflator for 

Gross Domestic Product. See 43 CFR 

3000.10(c). 

3. Applications To Extend an LMU for 

an Additional 10 Years 

Section 433 of the EPAct provides for 

the extension of the term of an LMU 

beyond 40 years. As proposed at section 

3487.10, applications for extension of 

the 40-year LMU term will require 

special processing by the BLM. For each 

application, the BLM will need to verify 

the land status of the LMU and 

complete an engineering analysis to 

determine whether the extension would 

ensure the greatest ultimate recovery of 

the coal resources within the LMU. A 

successful applicant would benefit by 

having up to an additional 10 years to 

maintain the combined reserves as an 

LMU, consistent with the regulations at 

subpart 3487. Therefore, the BLM has 

concluded that it should recover the 

cost of processing applications to extend 

the 40-year LMU term, as provided by 

Section 304 of the Federal Land Policy 

and Management Act of 1976 (43 U.S.C. 

1734). 

The BLM has no experience 

processing applications to extend the 

term of an LMU, because this is a new 

process provided by the EPAct. 

Moreover, no LMU is currently near the 

end of its maximum 40-year term. The 

BLM estimates that the workload to 

process an application to extend the 

term of an LMU would not be 

significant. At this time the BLM’s 

workload analysis does not indicate a 

need for case-by-case cost recovery 

determinations. Therefore, the BLM is 

proposing a fixed fee for all applications 

to extend the term of an LMU that will 

recover the BLM’s reasonable processing 

costs. 

The BLM anticipates that processing 

an application to extend the term of an 

LMU would require 1 hour of staff time 

at a GS–11, step 5 salary ($31.17 per 

hour), 1 hour of a mining engineer’s 

time to review the LMU’s resource 

recovery and protection plan (R2P2) at 

a GS–12, step 5 level salary ($37.37 per 

hour), and 1 hour of supervision at a 

GS–13, step 5 salary ($44.43 per hour) 

(U.S. Office of Personnel Management 

Salary Table 2013–RUS, at: http:// 

www.opm.gov/policy-data-oversight/ 

pay-leave/salaries-wages/2013/generalschedule/rus_h.pdf). In addition, 

consistent with current cost calculation 

guidance (WO–IM–2013–015; November 

20, 2012), an additional 19.8 percent 

would be added to cover the BLM’s 

indirect costs, and an additional 30 

percent would be added for employee 

benefits, for a total of $169.23. After 

rounding to the nearest $5, the BLM is 

proposing a fixed processing fee of $170 

for each application to extend the term 

of an LMU. Like other fixed processing 

fees, the proposed fee would be subject 

to periodic adjustment according to the 

change in the Implicit Price Deflator for 

Gross Domestic Product. See 43 CFR 

3000.10(c). 

C. Section-by-Section Analysis of 43 

CFR Part 3400—Coal Management: 

General 

1. The proposed rule would add Title 

IV, Subtitle D of the EPAct of 2005 (Pub. 

L. 109–58) and Section 2505 of the 

Energy Policy Act of 1992 (Pub. L. 102– 

486) to the authorities described in the 

authority section (section 3400.0–3) of 

the regulations. 

2. Section 3400.0–5 would be 

amended by removing the lettered 

paragraph designations (a) through (qq) 

and arranging the definitions in 

alphabetical order, by redesignating the 

introductory text as paragraph (a), and 

by redesignating paragraph (rr) as 

paragraph (b). 

3. The proposed rule would add a 

definition of the term ‘‘underground 

mine’’ to section 3400.0–5. The new 

definition would aid the BLM in 

determining when the 8 percent royalty 

rate for coal recovered from an 

underground mine, as proposed at 

section 3473.3–2(a)(2), is applicable. 

The term ‘‘underground mine’’ would 

mean, for the purposes of establishing a 

royalty rate under the terms of a coal 

lease, an excavation in the earth for the 

purpose of severing coal in which 

persons routinely work in an 

environment where undisturbed earth is 

directly overhead, and where there must 

be roof control and ventilation plans 

approved by the Mine Safety and Health 

Administration (MSHA) that expressly 

allow persons to work routinely where 

there is undisturbed earth directly 

overhead. The phrase ‘‘routinely work’’ 

means that the persons who will be 

working underground will be doing so 

whenever they are working on the lease. 

A possibility that persons might, or 

might not, have to work underground on 

any given day to excavate and sever coal 

from the mine does not establish that 

persons will ‘‘routinely work’’ 

underground. 

4. The proposed rule would add a 

new section 3400.7 that describes the 

information collection requirements and 

burdens associated with coal 

management, and discloses the OMB 

control number (1004–0073) that 

applies currently, and that the BLM 

intends will apply to those 

requirements. 

In this proposed rule, the BLM is 

proposing to revise control number 

1004–0073. Some of the revisions would 

modify existing collection activities, 

and others would add new activities. 

D. Section-by-Section Analysis of 43 

CFR Subpart 3432—Lease Modifications 

1. The proposed rule would add 

Section 13 of the Federal Coal Leasing 

Amendments Act (FCLAA) of 1976 (30 

U.S.C. 203); and Section 432 of the 

EPAct (Pub. L. 109–58) to the 

authorities listed in the authority 

section (section 3432.0–3). 

2. Section 432 of the EPAct, amending 

30 U.S.C. 203, provides for several 

changes in the statutory standards that 

apply to the modification of a coal lease. 

The EPAct increased from 160 acres to 

960 acres the maximum acreage that 

may be added to a Federal coal lease 

through lease modification during the 

life of the lease. The BLM is proposing 

to delete the last sentence of section 

3432.1(a), which contains the prior 

maximum acreage provision, and 

replace that sentence with a new 

paragraph (c) that would provide that 

the acreage added to the lease by 

modification after August 4, 1976, must 

not exceed the lesser of 960 acres or the 

acreage of the lease when the lease was 

issued. 

Section 432 of the EPAct also 

provides that an approval of a lease 

modification is a finding that the 

modification would be in the interest of 

the United States; would not displace a 

competitive interest in the lands; and 

would not include lands or deposits that 

can be developed as part of another 

potential or existing operation. Because 

the language of existing 43 CFR 

3432.2(a) closely resembles the language 

of the EPAct, the BLM has determined 

that no change to that provision is 

necessary. 

3. The BLM anticipates that Section 

432 of the EPAct will generate proposals 

for large lease modification tracts with 

proportionally greater bonus values. The 

bonus value is a cash payment, in 

addition to production royalties and 

annual rental payments, that is payable 


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during the term of a lease by a 

successful bidder at a competitive lease 

sale. The BLM also anticipates that 

lessees will be interested in paying the 

lease modification bonus on a deferred 

basis, similar to that currently offered 

for competitive coal leases. Further, 

under Section 436 of the EPAct, a lessee 

with a history of timely payments and 

prior approval by the BLM does not 

need to provide the BLM a bond to 

assure the BLM of payment for the 

unpaid deferred bonus. A lessee’s 

payment of the fair market value for 

lease modifications is analogous to the 

payment of deferred bonuses for 

competitive leases. Consequently, the 

BLM has concluded that it is 

appropriate, based on the discretion of 

the approving BLM official, that the fair 

market value for lease modifications 

may be paid on a deferred basis. This 

approach is similar to that which the 

BLM uses for competitive coal leasing. 

Therefore, the BLM is proposing to 

amend section 3432.2(c) to allow 

payment of the bonus for a lease 

modification on a deferred basis. 

E. Section-by-Section Analysis of 43 

CFR Subpart 3435—Lease Exchange 

The regulations at section 3435.3–5 

contain a reference to a ‘‘draft 

environmental assessment or 

environmental impact statement.’’ 

Although the word ‘‘draft’’ precedes the 

reference in section 3435.3–5 to an 

environmental assessment (EA) and an 

environmental impact statement (EIS), 

the term ’’draft’’ was intended to apply 

exclusively to an EIS rather than to an 

EA. The BLM is therefore proposing to 

change the regulations to correct this 

inaccuracy. 

The proposed deletion of the 

reference to draft EAs would recognize 

that when an EA is prepared, there will 

not necessarily be a public notice of 

availability. That change is consistent 

with the BLM’s discretion to determine 

how and when to seek public 

involvement in the preparation of an 

EA, in accordance with BLM’s January 

2008 NEPA Handbook H–1790–1, 

section 8.2, and regulations of the 

Council for Environmental Quality at 40 

CFR 1500.2(d), 1501.4(b), and 1506.6. 

F. Section-by-Section Analysis of 43 

CFR Part 3470—Coal Management 

Provisions and Limitations 

The authority citation for 43 CFR Part 

3470 is proposed to be revised to add a 

reference to 30 U.S.C. 207, and revise 

the existing reference to 43 U.S.C. 1701 

et seq. to read ‘‘43 U.S.C. 1733 and 

1740.’’ 

G. Section-by-Section Analysis of 43 

CFR Subpart 3473—Fees, Rentals, and 

Royalties 

In recent years, much dialogue has 

taken place concerning whether various 

hybrid technologies for mining coal, 

specifically continuous highwall mining 

and auger mining, constitute 

underground mining or surface mining. 

In light of this dialogue, the BLM has 

determined that regulations governing 

applicable royalty rates need to be 

revised to address the current 

technologies used to extract Federal 

coal. 

The MLA provides for payment of a 

royalty of not less than 121⁄2 percent of 

the value of coal, except that the 

Secretary may determine a lesser rate for 

underground coal mining (30 U.S.C. 

207(a)). The current coal management 

regulations specify that a lease shall 

require payment of a royalty of not less 

than 121⁄2 percent of the value of coal 

recovered from a surface mine and 8 

percent for coal recovered from an 

underground mine (sections 3473.3– 

2(a)(1) and (2)). 

The BLM is proposing to clarify those 

mining activities that constitute 

underground mining and therefore are 

eligible for the lower underground 

royalty rate. The proposal would 

continue the current 8 percent royalty 

rate for coal recovered from an 

underground mine at section 3473.3– 

2(a)(2). However, the proposed rule, at 

section 3473.3–2(a)(1), would establish 

that the minimum 121⁄2 percent royalty 

rate applies to coal recovered by any 

other extraction method. Currently, by 

regulation, the 121⁄2 percent minimum 

royalty rate applies only to coal severed 

from a surface mine. Thus, if a dispute 

were to arise as to the applicable royalty 

rate under the proposed rule, the BLM 

would only need to establish whether 

coal is recovered from an underground 

mine or not. If the coal is not extracted 

from an underground mine, the 121⁄2

percent royalty rate would apply. 

The BLM is also proposing to define 

the term ‘‘underground mine’’ to add 

clarity to the determination of the 

proper royalty rate. A discussion of this 

proposed definition is in this preamble 

in the discussion of part 3400. 

H. Section-by-Section Analysis of 43 

CFR Subpart 3474—Bonds 

The BLM’s requirements for coal lease 

bonds are contained in subpart 3474. 

This proposed rule contains a number of 

proposed amendments to subpart 3474, 

some of which relate to Section 436 of 

the EPAct. These proposed amendments 

are as follows: 

1. Proposed section 3474.1 would be 

entitled ‘‘Acceptable bonds’’ to make it 

clear that it addresses the types of bonds 

that the BLM will accept to cover coal 

leases. It would continue to contain the 

requirements of existing section 

3474.1(a). Paragraph (b) would be 

included to inform the public that 

bonding requirements for exploration 

licenses are in section 3410.3–4. That 

text currently appears in section 

3474.2(b). The substance of existing 

section 3474.1(c) would be moved to 

proposed section 3474.11 because it 

relates to LMU bonds. 

2. Proposed section 3474.2 would be 

entitled ‘‘Filing requirements for bonds’’ 

and would include in paragraph (a) the 

requirement in existing section 

3474.1(b) that the applicant or bidder 

must file a lease bond in the proper 

office within 30 days after receiving a 

notice from the BLM. The lease bond 

must be on a form approved by the 

BLM. Under a new paragraph 3474.2(b), 

the BLM could approve a brief 

extension to the filing requirement 

when the applicant or bidder 

experiences delays in securing a bond 

that are beyond the control of the 

applicant or bidder. 

3. Under proposed section 3474.2(c), 

the BLM would issue a new lease or 

lease modification only after an 

adequate lease bond or other financial 

surety is filed, determined to be 

adequate, and accepted by the BLM. 

Similar requirements are already in the 

regulations at section 3474.1(a) and 

section 3432.3(b). However, neither of 

these provisions contain the 

requirements found in the BLM 3474 

Bond Manual that a financial surety 

must be: (1) Submitted to the proper 

BLM office; (2) found to be adequate by 

the BLM; and (3) accepted by the BLM. 

4. The proposed rule would 

redesignate existing sections 3474.3 

through 3474.6 as proposed sections 

3474.5 through 3474.8, respectively, to 

allow insertion of two new sections. 

5. New section 3474.3 would address 

the required amount of lease bonds. 

Under existing regulations at section 

3474.2, the BLM establishes the amount 

of the lease bond. Currently, guidance to 

determine the amount of the bond is in 

the BLM 3474 Bond Manual of February 

18, 1988, which establishes that the 

bond value is equal to the cumulative 

value of: (1) The annual rental payment 

for one year; (2) 3 months of production 

royalty if a lease is producing coal, or 

1 year of advance royalty payment if a 

lease is not producing coal and has 

achieved diligence; (3) the value of any 

unpaid bonus payments; and (4) 100 

percent of the cost of reclamation 

associated with exploration licenses or 

exploration activities on leases not yet 

in a Surface Mining Control and 


ehiers on DSK2VPTVN1PROD with PROPOSALS3
49084 Federal Register / Vol. 78, No. 155 / Monday, August 12, 2013 / Proposed Rules 

Reclamation Act (SMCRA) mining 

permit. 

The proposed rule would provide that 

the lease bond must be sufficient to 

cover the cumulative amount of: (1) 1 

year’s rental; (2) 3 months of production 

royalty or, if advance royalty was paid 

in the prior continued operation year, 1 

year’s advance royalty; (3) one annual 

deferred bonus payment (if applicable); 

and (4) 100 percent of the cost of 

reclamation associated with exploration 

licenses or exploration activities on 

leases not yet in a Surface Mining 

Control and Reclamation Act (SMCRA) 

mining permit. The minimum bond 

amount, already established in 

regulations at 43 CFR 3410.3–4(b)(2) for 

exploration licenses and consistent with 

the BLM M–3474 Bond Manual, is 

$5,000. The minimum bond value is not 

indexed for inflation. The lease bond 

protects the BLM from an operator/ 

lessee defaulting on its financial 

obligations, including reclamation. 

6. New section 3474.4 addresses the 

review and adjustment of bond 

amounts. Under the proposed rule, the 

BLM would review bonds at regular 

intervals, or as changes in conditions 

warrant, to assure that bond amounts 

remain appropriate under section 

3474.3 of these regulations. This 

provision would apply to bonds for 

leases, exploration licenses, and 

licenses to mine. 

The BLM strives to review bond 

amounts on an annual basis. The exact 

duration between bond reviews could 

be more or less than 1 year depending 

on the workload within the responsible 

BLM office. Conditions that might 

warrant another review would be 

payment in full of the deferred bonus 

amount, authorization of a lease 

modification, or a partial 

relinquishment of the lease. This review 

could result in the bond amount being 

modified upward or downward. 

7. The proposed rule would amend 

redesignated section 3474.5 (existing 

section 3474.3) by removing existing 

paragraph (a), which relates to 

converting statewide or nationwide 

bonds to individual bonds. That 

paragraph no longer has relevance for 

Federal coal leases, all of which now 

have individual lease bonds. 

Existing section 3474.3(b)(1) is 

proposed to be removed because 30 CFR 

773.16 and 800.11(a) provide that no 

permit may be issued under SMCRA 

unless the permit applicant posts a 

performance bond or equivalent 

guarantee to ensure the completion of 

the reclamation plan approved in the 

permit. This requirement applies to all 

surface coal mining operations under 

the Office of Surface Mining 

Reclamation and Enforcement’s (OSM) 

permanent regulatory program; and the 

permanent regulatory program applies 

to all surface coal mining and 

reclamation operations on Federal 

lands, regardless of whether the OSM 

and the state have entered into a 

cooperative agreement to regulate 

mining on Federal lands within the 

state. The BLM also notes that, under 30 

CFR 740.15(b), SMCRA bonds on 

Federal lands in states with a 

cooperative agreement to regulate 

mining on Federal lands must be 

payable to both the state and the United 

States. 

The BLM proposes to redesignate 

existing paragraph (b)(2) as section 

3474.5, replace the term ‘‘Surface 

Mining Officer’’ with ‘‘Office of Surface 

Mining Reclamation and Enforcement’’ 

to reflect the correct title of the bureau, 

and revise the section heading from 

‘‘Bond conversions’’ to ‘‘Bond Release,’’ 

which is the subject of the section. 

8. The proposed rule would amend 

redesignated section 3474.6 (existing 

section 3474.4), which relates to 

qualified sureties, to make it clear that 

the BLM would accept bonds only from 

sureties with current certificates of 

authority from the Secretary of the 

Treasury. 

9. No changes are proposed for the 

text or section heading of redesignated 

section 3474.7 (existing section 3474.5). 

10. In redesignated section 3474.8 

(existing section 3474.6), a sentence 

would be added from the existing BLM 

3474 Bond Manual providing that an 

existing lease bond or other financial 

surety must remain in effect until 

another bond or other financial surety is 

filed and the BLM accepts it as a 

replacement. In addition, the proposed 

rule would make it clear that the prior 

surety or other bond provider remains 

responsible for obligations that accrued 

during the period of liability while the 

bond was in effect until such liability is 

released by the BLM. 

11. The proposed rule would add new 

section 3474.9, allowing an operator/ 

lessee to combine the bond 

requirements for all the leases that it 

holds and that are within the boundary 

of a single SMCRA mine permit into a 

single consolidated lease bond. The 

amount of the consolidated lease bond 

would be equal to the combined amount 

of the bond requirements for all of the 

leases within the mine permit boundary. 

This provision would be added for the 

convenience of both coal operators and 

the BLM to simplify the periodic review 

and adjustment of the cumulative bond 

amount for all leases covered by the 

consolidated lease bond. 

12. The proposed rule would add new 

section 3474.10. Proposed section 

3474.10 would implement Section 436 

of the EPAct concerning bonds for 

deferred bonus bid payments. 

The BLM is required to receive fair 

market value for all acreage leased for 

the development of Federal coal. Fair 

market value includes a bonus bid or 

payment that is a cash payment in 

addition to the payment of annual rental 

and production royalties. Except for 

lease modifications, all acreage leased 

for the development of Federal coal is 

offered for competitive bidding. By 

statute (30 U.S.C. 201(a)), at least 50 

percent of the total acreage offered for 

Federal coal leasing in any 1 year must 

be leased under a system of deferred 

bonus payment. The deferred bonus 

payment system established by 

regulation (section 3422.4(c)) specifies 

that the lessee will pay the bonus in five 

equal annual installments, with the first 

payment submitted with the bid at the 

time of the lease sale. The remaining 

four deferred bonus bid payments are 

paid in equal annual installments on the 

first, second, third, and fourth 

anniversary dates of the lease. 

Section 436 of the EPAct, codified at 

30 U.S.C. 201(a)(4)–(5), adds new surety 

bond requirements for the deferred 

bonus bid. The EPAct provides that: 

• For leases issued after August 8, 

2005 (the date the EPAct was enacted), 

the Secretary shall not require a surety 

bond for the deferred bonus bid 

installment payments for any coal lease 

issued to a lessee with a history of 

timely payment of noncontested 

production royalties, advance royalties, 

and bonus bid installment payments. 

• For leases issued before August 8, 

2005, the Secretary may waive the 

financial-assurance requirement if that 

lessee has a history of timely payments. 

Thus, the exemption for lessees with a 

history of timely payments is mandatory 

for leases issued after August 8, 2005. 

Section 436 makes such a waiver 

discretionary only for leases issued 

before August 8, 2005. 

Section 436 also provides that, 

notwithstanding any other provision of 

law, if a lessee fails to pay any deferred 

bonus bid installment payment on time, 

the Secretary must provide written 

notice to the lessee that a deferred 

bonus bid installment payment has not 

been paid. If the lessee fails to pay the 

deferred bonus bid installment payment 

within 10 days after receipt of the 

written notification, the coal lease will 

automatically terminate and the lessee 

will forgo any deferred bonus bid 

installment payments that have already 

been made. 


ehiers on DSK2VPTVN1PROD with PROPOSALS3
Federal Register / Vol. 78, No. 155 / Monday, August 12, 2013 / Proposed Rules 49085 

The proposed regulations 

implementing Section 436 are modeled 

on the interim guidance (BLM–WO–IM– 

2006–045) that the BLM issued on 

November 25, 2005. The regulations in 

this proposed rule would replace that 

interim guidance and implement this 

section of the EPAct. 

a. Paragraph (a) of proposed section 

3474.10 would introduce the concept of 

a ‘‘history of timely payments’’ for 

Federal coal leases issued both before 

and after enactment of the EPAct. 

Proposed paragraph (a)(1) would 

provide that for Federal coal leases 

issued before August 8, 2005, the BLM 

may waive the bond requirement for 

deferred bonus bid installment 

payments if the BLM determines, in 

consultation with the ONRR, that the 

lessee has a history of timely payments 

of noncontested royalties, advance 

royalties, and bonus bid installment 

payments. If the BLM decides not to 

waive the bond requirement, the lessee 

will be required to continue to maintain 

the value of the bond consistent with 

the regulations. 

b. Proposed paragraph (a)(2) would 

provide that, for leases and lease 

modifications issued after August 8, 

2005, the BLM will not require a surety 

bond or other financial assurance to 

guarantee payment of deferred bonus 

bid installment payments if the BLM 

determines, in consultation with the 

ONRR, that the lessee or successor in 

interest has a history of timely 

payments. If the BLM determines that a 

prospective lessee does not have a 

history of timely payments, the lease or 

modified lease can be issued only after 

an amount equal to one annual deferred 

bonus payment is added to the amount 

of the lease bond, LMU bond, or 

consolidated lease bond. If the required 

amount of a lease bond, LMU bond, or 

consolidated lease bond includes one 

annual deferred bonus payment, the 

BLM will reduce the lease bond, LMU 

bond, or consolidated lease bond 

amount by an amount equal to one 

deferred bonus payment if the BLM, at 

a later date, determines that the lessee 

has a history of timely payments, or 

when the deferred bonus is paid in full. 

However, the lessee or mine operator 

must file an application, as described in 

section 3474.10(b), for a history of 

timely payments determination, before 

the BLM will initiate an analysis and 

make a determination concerning the 

lessee’s or mine operator’s payment 

history. 

c. Proposed section 3474.10(b) would 

establish an application procedure for a 

history of timely payments 

determination. This section would 

allow a lessee or successful bidder to 

apply for a history of timely payments 

determination and it specifies the 

information required in an application. 

For leases issued before the 

establishment of the history of timely 

payments application process, a lessee 

can file an application for a history of 

timely payments determination at any 

time. In the case of a lease modification, 

the lessee could apply for a history of 

timely payments determination only 

after the lessee and BLM have agreed 

upon the fair market value for the lease 

modification. For new leases that are 

sold competitively, the successful 

bidder can apply for a history of timely 

payments determination only after the 

BLM provides written notification to the 

successful bidder that the BLM has 

accepted its bonus bid as the fair market 

value for the coal tract. This section 

would also list what must be included 

in a history of timely payments 

application. When making a 

determination of a history of timely 

payments, the BLM would rely on 

existing 43 CFR 3400.0–5(rr)(3) 

(redesignated in this rule as 43 CFR 

3400.0–5(b)) in determining whether a 

lease is controlled by or under common 

control with the history of timely 

payments applicant. 

d. Proposed paragraph (c) would 

establish the basis for a determination of 

a history of timely payments. The BLM 

proposes to base its determination on 

the applicant’s payment history for the 

5 years immediately preceding an 

application for a determination of a 

history of timely payments for all 

Federal coal leases that are: (1) 

Encompassed by an LMU boundary or 

SMCRA mining permit boundary; and 

(2) under the control of the applicant 

during the 5-year period. The 5-year 

period and the inclusion of adjoining or 

nearby leases would reasonably reflect 

the business unit of a mine and 

therefore the applicant’s willingness 

and ability to pay the deferred bonus 

payments on time. 

The proposed rule would provide that 

if the applicant has less than 5 years of 

payment history, or there is not an 

adjoining mine under the applicant’s 

control, the BLM may consider the 

nationwide payment history of an 

applicant’s corporate owner and 

affiliates under common control with 

the applicant. If the applicant, or the 

applicant’s corporate owner or affiliates 

under common control with the 

applicant, do not have a 5-year history 

of payments for a Federal coal lease, the 

applicant will not meet the criteria to 

apply for a history of timely payments 

determination. 

The rule would make it clear that to 

satisfy the history of timely payments 

requirement, every non-contested 

production royalty, advance royalty, 

and deferred bonus bid payment during 

the 5-year period must have been paid 

in full on or before the date the payment 

was due. Contested payments, as 

identified by the ONRR, may be 

considered if the lessee or mine operator 

provides an assurance of full payment to 

the satisfaction of the ONRR. Partial 

payment or nonpayment would not 

satisfy this requirement unless the 

lessee or mine operator has also 

provided an assurance of full payment 

to the satisfaction of the ONRR. 

e. Proposed section 3474.10(d) 

provides an informal process for 

resolving disputes over the applicant’s 

payment history. If the ONRR informs 

the BLM that the applicant does not 

satisfy the criteria for a history of timely 

payments determination, before the 

BLM makes a final determination, the 

BLM would notify the applicant, and 

provide the applicant 30 days to resolve 

any differences between the applicant 

and the ONRR regarding the payment 

history. 

f. Proposed section 3474.10(e) 

provides that if the applicant satisfies 

the criteria for a history of timely 

payments determination, the BLM will 

make a written history of timely 

payments determination that will be 

effective for the leases covered by the 

application until the deferred bonus is 

paid in full. The proposed rule also 

provides that, if the applicant does not 

satisfy the criteria for a history of timely 

payments determination, the BLM will 

reject the application and immediately 

require either: (1) A separate bond in an 

amount equal to one deferred bonus 

payment; or (2) an increase in an 

existing bond that is equal to the 

amount of one deferred bonus payment. 

If the lessee/operator does not timely 

pay the deferred bonus bid, it will result 

in cancellation of the history of timely 

payments determination, and the BLM 

would immediately require either: (1) A 

separate bond in an amount equal to one 

deferred bonus payment; or (2) an 

increase in an existing bond that is 

equal to the amount of one deferred 

bonus payment. 

g. Proposed section 3474.10(f) would 

establish procedures, as required by the 

EPAct, for lease termination in the event 

that a lessee fails to pay a deferred 

bonus bid installment within 10 days 

after the BLM gives the lessee notice 

that a bonus bid installment is past due. 

These procedures would be in addition 

to any other legal or equitable remedies 

available to BLM in the event of a 

lessee’s breach of its obligations under 

the lease. 


ehiers on DSK2VPTVN1PROD with PROPOSALS3
49086 Federal Register / Vol. 78, No. 155 / Monday, August 12, 2013 / Proposed Rules 

13. Proposed section 3474.11 would 

authorize lessees/operators to post a 

bond for an LMU in lieu of individual 

lease bonds for the coal leases in the 

LMU, if the LMU bond satisfies the 

requirements for the individual lease 

bonds it would replace. 

I. Section-by-Section Analysis of 43 CFR 

Subpart 3480—Coal Exploration and 

Mining Operations Rules: General 

1. The BLM proposes to remove the 

numbered paragraph designations (1) 

through (36) from paragraph 3480.0–5(a) 

and arrange the definitions in 

alphabetical order. Paragraphs (i) 

through (iv) of the definition of ‘‘coal 

reserve base’’ would be redesignated as 

paragraphs (1) through (4), respectively. 

This conforms to Federal Register style 

preferences. 

2. The BLM is proposing to clarify the 

definition of ‘‘continued operation’’ at 

section 3480.0–5(a). The proposed 

changes in this definition will make it 

clear that the continued operation 

requirement can be met by either: (1) 

The production of the required 

commercial quantities (CQ) of coal in 

any continued operation year; or (2) 

beginning in the third continued 

operation year, the cumulative 

production for 3 consecutive continued 

operation years (the continued 

operation year in question and the 2 

preceding continued operation years) of 

an amount of coal greater than or equal 

to the cumulative CQ requirement for 

that 3-year period. 

This definition is consistent with the 

LMU Guidelines, which provided a 

similar method for determining the 

amount of coal for which the advance 

royalty must be paid. The definition 

provides an alternative to actual 

production of CQ during every 

continued operation year to comply 

with the continued operation 

requirement. Consistent with current 

BLM policy, this proposed definition 

would allow an operator to credit a year 

with coal production from a lease of 3 

percent or more of the recoverable coal 

reserves (3 times the annual CQ 

requirement defined at section 3480.0– 

5) toward compliance with the 

continued operation requirement for the 

subsequent 2-year period, even if coal is 

not mined from the lease during the 

subsequent 2-year period. For example, 

beginning in the third continued 

operation year and assuming that the 

annual CQ requirement (1 percent of the 

recoverable coal reserve) is 1 million 

tons, the continued operation 

requirement can alternatively be 

satisfied for the third continued 

operation year, and the payment of 

advance royalties avoided, by the 

cumulative production of at least 3 

million tons of coal at any time during 

the 3-year period that includes the first, 

second, and third continued operation 

years. Similarly, the continued 

operation requirement for the fourth 

continued operation year could be 

satisfied by the cumulative production 

of at least 3 million tons of coal at any 

time during the 3-year period that 

includes the second, third, and fourth 

continued operation years. 

3. The proposed rule would amend 

the definition of ‘‘diligent development 

period’’ by redesignating the 

subordinate paragraphs to be consistent 

with the alphabetical organization of 

definitions within section 3480.0–5. 

J. Section-by-Section Analysis of 43 CFR 

Subpart 3482—Exploration and 

Resource Recovery and Protection Plans 

1. Before August 8, 2005, the MLA 

required coal lessees to submit an 

operation and reclamation plan within 3 

years after the lease was issued (30 

U.S.C. 207(c)). This provision of the 

prior law was implemented in the 

regulations at section 3482.1(b), 

requiring submission of an R2P2 (the 

BLM’s terminology for what the MLA 

calls an operation and reclamation 

plan). Section 435 of the EPAct 

eliminated this 3-year requirement in 

favor of a requirement for the 

submission of a plan prior to any action 

which might cause a significant 

disturbance of the environment. The 

BLM is proposing to remove 3 sentences 

in this section that implemented the 3- 

year provision of the prior law. Few, if 

any, consequences attach to the removal 

of the 3-year deadline. Under the 

proposed rule, the BLM would continue 

to require an approved R2P2 before a 

lessee may conduct any development or 

mining operations on a Federal coal 

lease. Further, detailed operation and 

reclamation plans continue to be 

required to obtain a Federal coal mining 

permit under the SMCRA. 

2. The BLM is proposing to remove 

two additional sentences from section 

3482.1(b). The third sentence of this 

section provides that the BLM will 

review an R2P2 for completeness and 

compliance with the MLA. This 

sentence is self-evident and is 

redundant with detailed MLA 

requirements for an R2P2 that are listed 

in section 3482.1(c). Therefore, we are 

proposing to delete the third sentence in 

this section. The BLM is also proposing 

to delete the seventh sentence in this 

section which provides that an R2P2 

submitted, but not approved as of 

August 30, 1982, must be revised to 

comply with the rules as modified as of 

August 30, 1982 (47 FR 33154–195). The 

BLM is not aware of any R2P2 

submitted before August 30, 1982, but 

not yet approved, that would need to be 

revised as provided by this sentence. 

Therefore, we are proposing to delete 

the seventh sentence of this section. 

3. The BLM proposes to add a new 

paragraph (b) in section 3482.3 that 

would reference the LMU mapping 

requirements found at existing section 

3487.1(i) (redesignated as section 

3487.8(a), with a new section heading). 

K. Section-by-Section Analysis of 43 

CFR Subpart 3483—Diligence 

Requirements 

1. Section 434 of the EPAct, amending 

30 U.S.C. 207(b), provides for several 

changes in the processes for application, 

assessment, and collection of advance 

royalties for Federal coal leases. The 

proposed rule is modeled on the BLM’s 

interim guidance concerning this 

section of the EPAct (BLM–WO–IM– 

2006–127 (March 24, 2006)). 

a. The BLM proposes to revise section 

3483.3(a)(2) by moving the authority to 

stop accepting advance royalties in lieu 

of continued operation, upon 6 months’ 

notification to the lessee or LMU 

operator, to new paragraph 3483.4(h). 

Section 3483.3(a)(2) would be modified 

to include a reference to new paragraph 

3483.4(h). This is an administrative 

action that will consolidate regulations 

relative to advance royalty under 

section 3483.4. 

b. The general conditions for paying 

advance royalty would be contained in 

section 3483.4(a). Under proposed 

section 3483.4(a)(1), the BLM could 

authorize the payment of advance 

royalty in lieu of continued operation 

for a lease or LMU if: 

(1) Coal was not produced in 

sufficient quantity from the lease or 

LMU during a continued operation year 

to satisfy the continued operation 

requirement of the lease or LMU; 

(2) The aggregate number of 

continued operation years for accepting 

advance royalties, as determined under 

section 3483.4(e), has not been 

exceeded; and 

(3) The BLM determines that payment 

of advance royalty in lieu of continued 

operation will serve the public interest. 

c. Under proposed section 

3483.4(a)(2), the continued operation 

requirement for a lease or an LMU for 

a continued operation year could be met 

by a combination of coal production and 

payment of advance royalty. Also, 

proposed section 3483.4(a)(3) would 

make the lessee responsible for paying 

advance royalty for a lease that is not 

within an LMU and the LMU lessee/ 

operator responsible for paying advance 

royalty for an LMU. 


ehiers on DSK2VPTVN1PROD with PROPOSALS3
Federal Register / Vol. 78, No. 155 / Monday, August 12, 2013 / Proposed Rules 49087 

d. Under the MLA, as amended by the 

EPAct, after a lessee has achieved 

diligent development, there are no 

statutory restrictions regarding when, 

during a continued operation year, the 

lessee must apply to pay advance 

royalty in lieu of continued operation. 

Under existing section 3483.4, 

applications to pay advance royalty 

made more than 30 days after the 

beginning of a continued operation year 

for the payment of advance royalty 

during the same continued operation 

year are subject to late payment charges. 

Because the provisions for calculation of 

the advance royalty payment in Section 

434 of the EPAct provide for coal values 

to be determined at the end of a 

continued operation year, proposed 

section 3483.4(b) would require the 

operator to apply to pay advance royalty 

any time during the continued 

operationb year. Proposed section 

3483.4(b) would also provide that 

failure to apply to pay advance royalty 

within the continued operation year to 

which the advance royalty applies may 

result in: (1) Assessment of late payment 

penalties; (2) failure to qualify for a new 

lease or the transfer of an existing lease 

as specified in section 3472.1–2(e); or 

(3) cancellation of the lease consistent 

with section 3483.2(c). 

e. Proposed section 3483.4(c) would 

provide that the value of coal for 

advance royalty purposes is established 

in applicable ONRR companion 

regulations. 

f. Proposed section 3483.4(d) would 

address the royalty rate used for the 

calculation of advance royalty. It 

provides that the royalty rate specified 

in the lease document will be used for 

calculation of advance royalty for a 

lease. For LMUs, it would provide that 

the advance royalty rate is 8 percent 

where the Federal recoverable coal 

reserves in the LMU will be recovered 

only by underground mining operations, 

and not less than 121⁄2 percent where 

the Federal recoverable coal reserves 

contained in the LMU will be recovered 

by mining operations other than an 

underground mine. For an LMU that 

contains Federal recoverable coal 

reserves that are recovered by a 

combination of underground and other 

mining methods, the royalty rate for 

calculation of advance royalty would be 

not less than 121⁄2 percent. 

g. Proposed section 3483.4(e) would 

increase from 10 to 20 the aggregate 

number of years for which an operator/ 

lessee may pay advance royalty, as 

required by Section 434 of the EPAct. It 

would also describe how the BLM will 

determine how many and which years 

count for advance royalty purposes both 

for leases and LMUs. 

h. A section heading, ‘‘Failure to pay 

advance royalty,’’ would be added to 

proposed section 3483.4(f), which has 

been redesignated from section 3484.4(f) 

of the current regulations. 

i. Under proposed section 

3483.4(g)(1), if the BLM authorizes the 

payment of advance royalty for a lease 

or LMU, the BLM would determine at 

the end of a continued operation year 

the amount of coal, measured in tons, 

for the ONRR to use to calculate the 

value of the advance royalty payment. 

j. Under section 3483.4(g)(2), the 

calculation of advance royalty tonnage 

would include both 1- and 3-year 

methods, based on the definition of 

‘‘continued operation’’ in section 

3480.0–5. During the first 2 continued 

operation years, the BLM would use the 

1-year calculation method to determine 

the advance royalty tonnage for a lease. 

Beginning in the third continued 

operation year, the BLM would use both 

methods, and would provide to the 

ONRR the lower of the two tonnage 

amounts. The ONRR would then 

determine the value of the advance 

royalty payment. The maximum 

advance royalty tonnage for any 

continued operation year for a lease 

would not exceed the required CQ for 

the lease. 

For LMUs, the calculation methods 

would recognize that an LMU may 

consist of both Federal and non-Federal 

coal. In determining advance royalty 

tonnages for LMUs, a proportional 

reduction would be made to the 

advance royalty tonnage to account for 

the recoverable coal reserves in Federal 

coal leases as a percentage of the overall 

recoverable coal reserves of the LMU. 

The following example depicts how 

the advance royalty tonnage would be 

calculated for 9 consecutive years for an 

LMU containing both Federal and nonFederal coal. The advance royalty 

tonnage is calculated using both the 1- 

and 3-year methods. 

For this example, assume the LMU 

contains a total of 100,000,000 tons of 

recoverable coal reserves, 75,000,000 

tons of which are from Federal coal 

leases and 25,000,000 are from nonFederal lands. The CQ requirement for 

the LMU is 1,000,000 tons per year of 

which 750,000 tons per year is required 

by the Federal coal leases in the LMU 

(see existing 43 CFR 3480.0–5(a)(6)). 

Further assume that the LMU produced 

1,000,000 tons in each of the continued 

operation years (COYs) 1 and 2; 

5,000,000 tons in COY3; nothing in 

COY4; 500,000 tons and 1,800,000 tons 

in COY5 and COY6, respectively; 

800,000 tons in COY7; and 200,000 tons 

and 300,000 tons, respectively, in COYs 

8 and 9. The determination of when 

advance royalty is required and the 

advance royalty tonnage is summarized 

in Table 1, below: 

TABLE 1—EXAMPLE OF ADVANCE ROYALTY TONNAGE CALCULATIONS

[Thousands of tons unless noted otherwise] 

Continued operation year (COY) 

1 2 3 4 5 6 7 8 9 

CQ for Federal Reserves in the LMU .............................. 750 750 750 750 750 750 750 750 750 

CQ Requirement for the LMU .......................................... 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 

CQ Ratio (Federal CQ tons per LMU CQ ton) ................ 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 

Total Coal Production from the LMU ............................... 1,000 1,000 5,000 0 500 1,800 800 200 300 

1-Year Advance Royalty Calculation Method 

1-Year LMU CQ Deficiency (LMU CQ Less Total LMU 

Production)(c) ............................................................... 0 0 0 1,000 500 0 200 800 700 

1-Year Advance Royalty Tonnage for the LMU(d) 0 0 0 750 375 0 150 600 525 

3-year Advance Royalty Calculation Method 

3-year Cumulative LMU CQ ............................................. (a) (b) 3,000 3,000 3,000 3,000 3,000 3,000 3,000 

3-year Total LMU Production ........................................... (a) (b) 7,000 6,000 5,500 2,300 3,100 2,800 1,300 


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TABLE 1—EXAMPLE OF ADVANCE ROYALTY TONNAGE CALCULATIONS—Continued 

[Thousands of tons unless noted otherwise] 

Continued operation year (COY) 

1 2 3 4 5 6 7 8 9 

3-year CQ Deficiency (3-year Total LMU Production 

Less 3-year Cumulative LMU CQ)(e) ........................... (a) (b) 0 0 0 700 0 200 1,700 

3-year Advance Royalty Tonnage for the LMU(f) ............ (a) (b) 0 0 0 525 0 150 1,275 

Advance royalty is payable on the lesser of the 1-year or 3-year method. 

Tonnage on which Advance Royalty Must Be Paid(g) .... 0 0 0 0 0 0 0 150 525 

(a) Advance royalty cannot be paid based on a 3-year average during the first year after achieving continued operation (see existing 43 CFR 

3480.0–5(a)(8)). 

(b) Advance royalty cannot be paid based on a 3-year average during the second year after achieving continued operation (see existing 43 

CFR 3480.0–5(a)(8)). 

(c) LMU CQ requirement less total LMU production. If the answer is zero or negative, no advance royalty is due. Values greater than zero represent the amount of additional coal production that would be required to meet the annual LMU CQ requirement. 

(d) The 1-year advance royalty is calculated by multiplying the 1-year LMU CQ Deficiency by the CQ ratio. 

(e) The 3-year cumulative total LMU production is subtracted from the 3-year cumulative LMU CQ. If the answer is zero or negative, no advance royalty is due. Values greater than zero represent the amount of additional coal production that would be required to meet the annual LMU 

CQ requirement. 

(f) The 3-year advance royalty is calculated by multiplying the 3-year LMU CQ Deficiency by the CQ ratio of Federal to non-Federal coal. 

(g) Advance royalty is paid on the lesser of the 1-year advance royalty tonnage for the LMU or the 3-year advance royalty tonnage for the 

LMU. 

The 3-year advance royalty test can 

only be used beginning in the third 

continued operation year, and therefore 

in this example it is not applicable to 

continued operation years 1 and 2. In 

this example, advance royalty for the 

LMU is not due for continued operation 

years 1 through 7 because the advance 

royalty tonnage from either the 1-year or 

3-year advance royalty methods is zero. 

The LMU in this example, and the 

Federal coal leases included in the 

LMU, would be considered in 

compliance with the continued 

operation requirement for COY 1 

through 7. However, advance royalty for 

the LMU is due in continued operation 

year 8 because both the 1-year and 3- 

year advance royalty tests result in an 

advance royalty tonnage of greater than 

zero. The advance royalty tonnage in 

continued operation year 8 is 150,000 

tons, which represents the result from 

the 3-year advance royalty test (150,000 

tons), which is less than the result from 

the 1-year advance royalty test (600,000 

tons). Similarly, advance royalty is also 

due in continued operation year 9 

because both the 1-year and 3-year 

advance royalty tests result in an 

advance royalty tonnage of greater than 

zero. The advance royalty tonnage in 

continued operation year 9 is 525,000 

tons, which represents the result from 

the 1-year advance royalty test (525,000 

tons), which is less than the result from 

the 3-year advance royalty test 

(1,275,000 tons). The LMU in this 

example, and the Federal coal leases 

included in the LMU, would be 

considered in compliance with the 

continued operation requirement for 

COY 8 and 9 only after the required 

advance royalty has been paid. 

While this example illustrates the 

advance royalty calculation for an LMU, 

it also applies to an individual Federal 

coal lease by making the CQ ratio equal 

to 1 (i.e., 100 percent Federal coal) and 

using the corresponding production and 

CQ values for the individual lease. 

k. The BLM proposes to add a new 

paragraph at 3483.4(h) concerning 

BLM’s authority to stop accepting 

advance royalties in lieu of continued 

operation, upon 6 months’ notification 

to the lessee or LMU operator. This 

provision is being moved from 

3483.3(a)(2) as an administrative action 

so that regulations relative to advance 

royalty are located under section 3483.4. 

2. The BLM proposes to amend 

section 3483.6(a) by adding a sentence 

to provide that the production of nonFederal coal from an LMU may be 

credited toward the diligent 

development requirements of the LMU 

only if such production occurs after the 

BLM approves inclusion of the nonFederal resources within the LMU. This 

issue was addressed in Carbon Tech 

Fuels, Inc., 161 IBLA 147 (April 13, 

2004), a case in which the Interior Board 

of Land Appeals upheld the BLM’s 

refusal to credit non-Federal coal 

production for LMU diligence purposes 

where such production occurred before 

the non-Federal coal resources were 

included in the LMU. 

There are two reasons why the BLM 

proposes to adopt the provision to allow 

crediting of non-Federal production 

only after the resources are in the LMU. 

First, the BLM is unable to verify the 

tonnages produced from non-Federal 

resources before inclusion in the LMU; 

and second, the MLA encourages the 

diligent production of Federal coal. 

Allowing the crediting of production of 

non-Federal coal resources that may 

have occurred years earlier would not 

encourage diligent development of the 

Federal coal today and might provide an 

avenue to avoid production of Federal 

coal, as occurred in the Carbon Tech 

Fuels case. 

3. The proposed rule would amend 

section 3483.6(b) by removing the 

reference to the submission date for 

R2P2s. A new paragraph (c) would be 

added to section 3483.6 addressing the 

relationship of LMU continued 

operation requirements to lease-specific 

continued operation requirements. The 

proposed rule would require that the 

LMU continued operation requirement 

be satisfied independently of whether 

the Federal coal leases within the LMU 

produce sufficient coal to meet the 

individual continued operation 

requirements that would apply if the 

leases were not in an LMU. 

L. Section-by-Section Analysis of 43 

CFR Subpart 3487—Logical Mining Unit 

1. The proposed rule would divide 

section 3487.1(b) into three subordinate 

paragraphs to make the provision easier 

to follow. The proposed rule would also 

add the 40-year LMU term to the list of 

uniform requirements that apply to all 

pre-August 4, 1976, Federal leases that 

would be included in an LMU. 

2. The proposed rule would 

redesignate existing section 3487.1(c) as 

proposed section 3487.2 and reorganize 

it. Redesignated section 3487.2(b) 

(currently section 3487.1(c)(2)) would 


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be amended to require a complete 

description of all lands, Federal, state, 

and private, that are to be in an LMU. 

This provision was previously in the 

LMU Guidelines, 50 FR at 35148 and 

35149. 

3. Existing section 3487.1(c)(3) would 

be expanded in redesignated section 

3487.2(c) to include a list of specific 

information required to demonstrate 

that the applicant for an LMU has 

effective control of all coal within the 

LMU boundary. This provision was 

previously in the LMU Guidelines, 50 

FR at 35149. 

4. Existing section 3487.1(c)(4) (new 

paragraph 3487.2(d)) would be revised 

to cross reference the requirements for 

submittal of an R2P2 that are found at 

section 3482.1. This paragraph is 

revised to structure the LMU 

application requirements consistent 

with Section 435 of the EPAct. 

5. The proposed rule would 

redesignate existing section 3487.1(d)(1) 

as section 3487.3(a) and revise the 

section to be consistent with Section 

433 of the EPAct that allows the term of 

an LMU to be extended beyond the 

current maximum term of 40 years. The 

proposed rule also makes editorial 

changes in this paragraph. 

6. Existing section 3487.1(e)(1) would 

be amended in proposed redesignated 

section 3487.4(a) by removing the 

requirement for submission of an R2P2 

within 3 years after the effective date of 

the LMU approval. This is parallel to 

the lease-specific R2P2 requirements 

enacted by Section 435 of the EPAct. 

The proposal would provide that an 

LMU applicant must submit an R2P2 

containing the information required by 

section 3482.1(c) for all Federal and 

non-Federal lands within the LMU, 

before the LMU or LMU modification 

would be approved. This earlier 

submission of the R2P2 would provide 

a basis for the BLM to decide whether 

to approve an LMU. The proposal also 

provides that the BLM will adjust the 

estimates of an LMU’s recoverable coal 

reserves at the time of approving the 

R2P2. 

7. Similarly, the criteria for 

establishing the beginning date for the 

initial 40-year term of an LMU found at 

existing section 3487.1(g)(6) is proposed 

to be amended in proposed section 

3487.4(e) to be consistent with Section 

435 of the EPAct. The proposal would 

begin the initial 40-year term of the 

LMU through two alternatives. First, if 

coal is actively being mined from the 

LMU when the LMU is established, the 

initial 40-year LMU term would begin 

on the effective date of the LMU. 

Alternatively, if coal is being produced 

when the LMU becomes effective, the 

initial 40 year term of the LMU would 

begin whenever coal is first produced 

from any part of the LMU. 

8. In proposed sections 3487.5(c) and 

3487.7(a), corresponding to existing 

sections 3487.1(f)(3) and (h)(1), 

respectively, the BLM proposes to 

correct an error that appears twice in the 

regulations. The proposed rule would 

remove both references in the text that 

make it appear that the BLM consults 

with itself. The proposed rule would 

require, in new paragraph (g) of 

redesignated section 3487.5 (see existing 

section 3487.1(f)), submission of the 

R2P2 before the LMU or LMU 

modification is approved in order to 

establish a basis for the agency’s 

approval of the LMU or LMU 

modification. 

9. Existing section 3487.1(g) is 

proposed to be redesignated as section 

3487.6 with a new section heading of 

‘‘LMU decision.’’ 

10. The BLM is proposing to add a 

new section 3487.7(d) to allow a change 

in the LMU recoverable coal reserve to 

be effective either when the BLM 

approves an LMU modification, or when 

the BLM determines that the LMU 

recoverable coal reserves have changed 

due to new geologic information. The 

LMU Guidelines required that a change 

in the LMU recoverable coal reserve for 

LMUs that had achieved diligent 

development be effective beginning on 

the first day of the next LMU continued 

operation year. In contrast, the diligent 

development or continued operation 

status of the LMU would not be relevant 

in determining whether or not to change 

the LMU recoverable coal reserve. 

Under the existing rules, advance 

royalty is determined at the beginning of 

a continued operation year. If the LMU 

recoverable coal reserve were to change 

during the continued operation year, 

there would be a need for a 

corresponding adjustment to the LMU 

continued operation requirement, and 

as needed, the advance royalty payment 

if advance royalty was paid. 

A constant LMU recoverable coal 

reserve throughout a continued 

operation year, and thereby a fixed LMU 

continued operation requirement, is no 

longer required because, consistent with 

the provisions of 30 U.S.C. 207(b)(4), 

which codify amendments made by the 

EPAct, the BLM is proposing to change 

the period for determining advance 

royalty from the beginning of the year to 

run through to the end of the continued 

operation year. See proposed section 

3483.4(b). Only the LMU recoverable 

coal reserve, and thereby the LMU 

continued operation requirement, that is 

in effect at the end of the continued 

operation year, will be used to 

determine the tonnage upon which 

advance royalty is due. Thus, the BLM 

is proposing to simplify the regulations. 

11. The BLM is proposing to add a 

new section 3487.7(e) similar to existing 

section 3487.1(h)(4) to make it clear that 

an LMU modification will not extend 

the initial 40-year period of an LMU. It 

would also cross-reference section 

3487.10, which would implement 

Section 433 of the EPAct by providing 

procedures for extending an LMU 

beyond the current maximum term of 40 

years. 

12. Existing section 3487.1(i) is 

proposed to be redesignated as section 

3487.8 with a new section heading of 

‘‘LMU operations.’’ 

13. The BLM is proposing a new 

section 3487.9 to provide specific 

standards and procedures for 

termination of an LMU. Proposed 

section 3487.9(a)(5) would be modified 

from the provisions in the LMU 

Guidelines to be consistent with Section 

433 of the EPAct. The BLM is also 

proposing a new provision that states 

that any Federal coal lease in an LMU 

would continue under the terms and 

conditions of the lease if the LMU is 

terminated or relinquished. These 

provisions were previously in the LMU 

Guidelines, 50 FR at 35157. 

14. Section 433 of the EPAct amends 

30 U.S.C. 202a(2) and allows the 

Secretary of the Interior (Secretary) to 

extend the term of an LMU to more than 

the 40 years previously allowed, if 

specific conditions are met. The statute 

provides that a 40-year LMU mine-out 

period may be extended to a longer 

period if: 

(1) The extension will ensure the 

maximum economic recovery of the coal 

deposit; or 

(2) The longer period is in the interest 

of the orderly, efficient, or economic 

development of a coal resource. 

These standards differ somewhat from 

the MLA’s standards for the initial 

approval of an LMU. Initially, a 

proposed LMU must meet the standards 

of maximum economic recovery; 

orderly, efficient, and economical 

development; and ‘‘due regard to 

conservation of coal reserves and other 

resources.’’ 30 U.S.C. 202a(1). As 

amended by Section 433 of the EPAct, 

the MLA provides that an extension 

need only meet one of the first two 

standards for initial approval. 

Under proposed section 3487.10, the 

operator/lessee of an LMU would be 

required to apply to the BLM for an 

extension of the LMU term and provide 

documentation concerning how the 

request complies with either of the two 

approval criteria noted above. To ensure 

that the LMU continues to promote the 


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maximum economic recovery of Federal 

and non-Federal resources, the BLM is 

proposing that the term of an LMU be 

extended in increments of 10 years or 

less. The BLM selected a period of 10 

years to provide a reasonable amount of 

time for recovery of coal from the LMU 

while not overly burdening the LMU 

operator/lessee. Increments of 10 years 

or less also would ensure continued 

BLM review of the circumstances 

surrounding the LMU operation. A 

lessee or LMU operator would be 

allowed to apply for repeated extensions 

of its LMU. Since passage of the EPAct, 

the BLM has approved one LMU 

extension for a period of 10 years. 

III. Procedural Matters 

Executive Order 12866, Regulatory 

Planning and Review 

In accordance with the criteria in 

Executive Order 12866, the Office of 

Management and Budget has 

determined that this rule is a significant 

regulatory action. 

The rule will not have an annual 

effect on the economy of $100 million 

or more or adversely affect in a material 

way the economy, a sector of the 

economy, productivity, competition, 

jobs, the environment, public health or 

safety, or state, local, or Tribal 

governments or communities. 

The change in the royalty rate for 

highwall mining is the most significant 

proposed provision that would likely 

increase the cost associated with the 

development of some Federal coal 

resources. Since 1998, highwall mining 

has been used to mine an estimated 6 

million tons of Federal coal at seven 

different mines with an estimated 

difference in royalty value between the 

underground royalty rate and the 

surface royalty rate of nearly $7.3 

million. The average annual total 

production since 1998 is about 588,000 

tons per year and the average difference 

in royalty value for the same period is 

about $662,000 per year. The BLM 

estimates an average annual cost 

difference of $662,000, depending on 

the quantity of coal produced using 

highwall mining techniques. 

With one exception, Federal royalties 

for coal severed by highwall mining 

have been assessed at the surface 

mining royalty rate of 121⁄2 percent. One 

coal company elected to pay royalties at 

the underground royalty rate of 8 

percent. In 2006, the Minerals 

Management Service (now the ONRR) 

and this coal company entered into a 

settlement agreement tolling the statute 

of limitations for payment of royalties 

until the BLM determines the applicable 

royalty rate. If BLM determines the 

applicable royalty rate for highwall 

mining is greater than the underground 

royalty rate of 8 percent, the agreement 

provides that the coal company will pay 

the difference in royalties between what 

was paid at the underground rate, and 

the royalty rate established by the BLM. 

The coal company also agreed to waive 

appeal rights. Therefore, if the BLM 

concludes that the surface royalty rate of 

121⁄2 percent is applicable to coal 

severed by highwall mining methods, 

there would be no practical effect on 

royalty receipts. 

This proposed rule would implement 

new processing fees of $170 per 

application for applications to pay 

advance royalty, and $170 per 

application to extend an LMU, and $160 

per application for applications to apply 

for a history of timely payments 

determination (that will lead to a 

decision not to consider the remaining 

deferred bonus payments in the total 

bond requirement of a lease). These fees 

are included in Table 4, under the 

heading ‘‘Paperwork Reduction Act.’’ 

The other proposed provisions that 

implement the EPAct, including lease 

modification acreage, approval of LMUs, 

payment of advance royalties, lease 

operation and reclamation plan, and 

bonding for deferred bonus bids, will 

potentially reduce the cost of 

maintaining Federal coal leases by 

making administrative actions more 

efficient. The BLM notes that any 

change in costs to the regulated 

community from changes in the way 

advance royalty is valued will be 

addressed by the ONRR. Any cost 

savings are, however, case-specific. It is 

highly unlikely the savings would 

exceed the threshold established by the 

Executive Order. 

The proposed rule also includes 

several technical corrections to the 

regulations that will be solely 

administrative. 

1. The rule will not create 

inconsistencies with other agencies’ 

actions. It will not change the 

relationships of the BLM to other 

agencies and their actions. We have 

closely coordinated with the ONRR in 

developing this proposed rule. 

2. The rule will not materially affect 

entitlements, grants, loan programs, or 

the rights and obligations of their 

recipients. The rule does not address 

any of these programs. 

3. The rule will implement the EPAct 

by amending the coal management 

regulations to conform to it. See parts 

II.A. and B. of the SUPPLEMENTARY

INFORMATION discussed earlier in this 

preamble. However, the change in the 

royalty rate for highwall mining, which 

would be codified at 43 CFR 3473.3– 

2(a), may raise novel policy issues. That 

provision would continue the current 8 

percent royalty rate for coal recovered 

from underground mines, and establish 

that a minimum royalty rate of 121⁄2

percent would apply to coal recovered 

by any other extraction method. 

Regulatory Flexibility Act 

We certify that this rule will not have 

a significant economic effect on a 

substantial number of small entities as 

defined under the Regulatory Flexibility 

Act (5 U.S.C. 601 et seq.). The Small 

Business Administration (SBA) has two 

standards that apply to Federal coal. 

The first standard is found at 13 CFR 

121.201 and provides that in the coal 

industry a ‘‘small entity’’ is an 

individual, limited partnership, or small 

company, at ‘‘arm’s length’’ from the 

control of any parent companies with 

fewer than 500 employees. The second 

standard, 13 CFR 121.509, applies to 

Federal coal leasing (see companion 

BLM regulations at 43 CFR 3420.1– 

3(b)(2)) and provides that an entity is 

considered a small business if: 

• Together with its affiliates, the 

entity has no more than 250 employees; 

• The entity maintains management 

and control of the actual mining 

operations of the Federal coal tract; and 

• Agrees that if the entity subleases 

the Government land, it will be to 

another small business, and that it will 

require its sublessors to agree to the 

same. 

The BLM has elected to use the SBA 

standard found at 13 CFR 121.201 that 

includes all firms with fewer than 500 

employees. The BLM selected this 

standard for its analysis because the 

collection of firms identified as having 

500 or fewer employees will include all 

the firms that meet the other standard. 

Thus, by using the 500-employee 

standard, the BLM has completed this 

analysis with the more inclusive 

standard. 

Based on national data, the 

preponderance of firms involved in 

developing coal are small entities as 

defined by the SBA. However, this 

proposed rule would affect only those 

firms leasing and developing coal 

resources on Federal lands, and the 

makeup of current Federal coal lessees 

does not reflect that of the overall 

industry. This disparity between the 

composition of the overall industry and 

that of the subset of the industry that 

holds Federal leases likely reflects the 

type of mine development occurring in 

the West where most of the Federal 

leasing occurs. Much of the coal 

currently being produced from Federal 

lands is from extremely large deposits 

that favor large-scale, capital-intensive 


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development, and requires a large 

workforce. Therefore, because the 

changes proposed apply primarily to 

western lease and LMU operations, it 

appears that this rule would not affect 

a substantial number of small entities. 

In addition to determining whether a 

substantial number of small entities are 

likely to be affected by this rule, the 

BLM must also determine whether the 

rule is anticipated to have a significant 

economic impact on those small 

entities. All of the proposed provisions 

will apply to lessees or mine operators 

regardless of size. The proposed changes 

to the lease modification acreage, 

approval of payment of advance 

royalties, and lease operation and 

reclamation plans will not subject 

lessees or mine operators to any new 

costs. In addition, large competitors 

would not gain any advantage over 

small entities due to these proposed 

provisions. 

The proposed changes in bonding for 

deferred bonus bids would not increase 

the costs to current and future lessees. 

Lessees that have a history of timely 

payments to the government are allowed 

to make deferred bonus payments 

without providing the agency a bond. 

This benefit would apply to all qualified 

Federal coal lessees. However, in certain 

situations, the provision could give 

existing lessees that have a history of 

timely payments a competitive 

advantage over lessees or prospective 

lessees, including those that are small 

entities, that either do not have a history 

of timely payments or that have not held 

a Federal coal lease long enough to 

establish a history of timely payments. 

An entity that does not need to bond for 

its deferred bonus bid will have lower 

costs than those entities that must pay 

to provide the BLM with the requisite 

bond. 

Where this advantage would be most 

acute would be in the competitive 

bidding for a lease associated with a 

new coal mining operation. Prospective 

lessees would be competing for the right 

to lease the tract through the 

competitive sale process that requires 

bidding a bonus value for the lease. An 

entity without a payment history would 

have higher acquisition costs than those 

entities that qualify to defer a bond for 

future bonus bid payments. The 

development of a new coal mine is not, 

however, a common scenario. There 

have only been 3 leases, out of 59 leases 

that the BLM issued in the past 10 years, 

which were associated with the 

development of a new coal mine. 

Any disadvantage small entities may 

face due to this provision is mitigated 

by the availability of the small business 

leasing opportunity provided under 43 

CFR 3420.1–3(b)(2). This regulation 

provides special leasing opportunities 

for small businesses, where only small 

entities are allowed to bid on Federal 

coal leases. Larger competitors, who 

may have a competitive advantage, are 

not allowed to bid for these coal tracts 

set aside for small businesses. 

Proposed section 3473.3–2 would set 

the royalty rate for highwall coal mining 

at 121⁄2 percent. Proposed section 

3483.4(d) would address the royalty rate 

that would be used for the calculation 

of advance royalty, setting it at 121⁄2

percent where the Federal LMU 

recoverable coal reserves contained in 

the LMU would be recovered by mining 

operations other than underground 

mining. These proposed provisions 

would increase costs to a limited 

number of operators. As of this analysis, 

7 operations have or are employing 

highwall mining technology on Federal 

lands, and all 7 companies are not 

considered small entities as defined by 

the SBA. At some point in the future, a 

small entity may incorporate highwall 

mining into its operation. The operator 

would be subject to the higher royalty 

rate, but it would be the same rate large 

competitors would pay. 

Based on the available information, 

we conclude that the proposed rule 

would not have a significant impact on 

a substantial number of small entities. 

Therefore, a final Regulatory Flexibility 

Analysis is not required, and a Small 

Entity Compliance Guide is not 

required. 

Small Business Regulatory Enforcement 

Fairness Act 

This rule is not a major rule under 5 

U.S.C. 804(2), the Small Business 

Regulatory Enforcement Fairness Act 

(SBREFA). This rule will not have an 

annual effect on the economy of $100 

million or more. As explained under the 

preamble discussion concerning 

Executive Order 12866, Regulatory 

Planning and Review, clarification of 

the royalty rate for non-underground 

mining may increase the annual cost 

associated with the development of 

specific Federal coal resources by an 

estimated average of $662,000 per year. 

However, as all federal coal lessees have 

paid, or have agreed to pay, royalties 

consistent with this proposed 

rulemaking, there is no practical 

economic impact. Further, the 

prospective increased cost is limited to 

specific mining conditions that are only 

found within a few mines, none of 

which have operators that qualify as 

small business entities. Therefore, the 

proposed clarification in royalty rates 

will have no effect on small business. 

This rule proposes to implement new 

processing fees for applications to pay 

advance royalty, extend an LMU, and to 

avoid providing a bond for deferred 

bonus payment. These proposed fees 

would total an estimated $2,690 per 

year. 

The other proposed provisions that 

implement the EPAct, including lease 

modification acreage, approval of LMUs, 

payment of advance royalties, lease 

operation and reclamation plan, and 

bonding for deferred bonus bids, would 

potentially reduce the cost of 

maintaining Federal coal leases by 

making the administration of the coal 

program more efficient. The BLM notes 

that any changes in costs to the 

regulated community from changes in 

the way advance royalty is valued will 

be addressed by the ONRR. Any cost 

savings are, however, case-specific. It is 

highly unlikely the savings would 

exceed the threshold established by 

SBREFA. This rule: 

• Will not cause a major increase in 

costs or prices for consumers, 

individual industries, Federal, state, or 

local government agencies, or 

geographic regions; and 

• Will not have significant adverse 

effects on competition, employment, 

investment, productivity, innovation, or 

the ability of U.S.-based enterprises to 

compete with foreign-based enterprises. 

Unfunded Mandates Reform Act 

In accordance with the Unfunded 

Mandates Reform Act (2 U.S.C. 1501 et 

seq.), we find that: 

• This rule will not ‘‘significantly or 

uniquely’’ affect small governments. A 

Small Government Agency Plan is 

unnecessary. 

• This rule will not produce a Federal 

mandate of $100 million or greater in 

any single year. 

The rule is not a ‘‘significant 

regulatory action’’ under the Unfunded 

Mandates Reform Act. The changes 

proposed in this rule would not require 

anything of any non-Federal 

governmental entity. 

Executive Order 12630, Takings 

In accordance with Executive Order 

12630, the BLM finds that the rule does 

not have takings implications. A takings 

implication assessment is not required. 

This rule does not substantially change 

BLM policy. Nothing in this rule 

constitutes a compensable taking. 

Executive Order 13132, Federalism 

In accordance with Executive Order 

13132, the BLM finds that the rule does 

not have significant Federalism effects. 

A Federalism assessment is not 

required. This rule does not change the 


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role of or responsibilities among 

Federal, state, and local governmental 

entities. It does not relate to the 

structure and role of the states or have 

direct, substantive, or significant effects 

on states. 

Executive Order 13175, Consultation 

and Coordination With Indian Tribal 

Governments 

In accordance with Executive Order 

13175, we have found that a portion of 

this proposed rule may include policies 

that have Tribal implications. The 

proposed rule would make changes to 

the coal management regulations, 43 

CFR parts 3000, 3400, 3430, 3470, and 

3480. As noted below, some of the 

provisions of 43 CFR part 3480 are 

applicable to ‘‘Indian lands.’’ Under the 

regulations of the Bureau of Indian 

Affairs, the term ‘‘Indian lands’’ 

includes Tribal lands. See 25 CFR 211.3, 

212.3, and 225.3. 

The Bureau of Indian Affairs 

regulations at 25 CFR 211.4, 212.4, and 

225.1(c) incorporate, through an explicit 

cross-reference, the BLM regulations at 

43 CFR part 3480 and thus, unless 

expressly exempted, the provisions 

contained in part 3480 apply to Indian 

lands. The BLM coal management 

regulations at 43 CFR parts 3400 

through 3470, are not similarly 

incorporated by cross reference, are not 

applicable to Indian lands, 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 that the 

provisions of part 3480 relating to 

advance royalty, diligent development, 

continued operation, maximum 

economic recovery, and LMUs do not 

apply to Indian lands, leases, and 

permits. Thus, the proposed 

amendments contained in this rule to 43 

CFR subpart 3483, Diligence 

Requirements, and subpart 3487, 

Logical Mining Unit, are excluded from 

Tribal consultation. The proposed 

definitions of ‘‘continued operation’’ 

and ‘‘diligent development period’’ are 

similarly excluded from Tribal 

consultation. A proposed amendment to 

add a new paragraph (h) to section 

3482.3 is not subject to Tribal 

consultation, because the proposed 

paragraph would be specifically limited 

in its application to LMUs. 

As noted above, the BLM regulations 

at 43 CFR subpart 3482 would be 

generally applicable to Indian lands 

unless otherwise specifically exempted, 

as noted above for proposed section 

3482.3. Since 43 CFR 3482.1(b) is not 

similarly specifically exempted from 

applicability to Indian lands, proposed 

regulatory amendments to that 

provision would be applicable to Indian 

lands if adopted by the BLM. 

Accordingly, this portion of the 

proposed rule would be a policy that 

could have Tribal implications. 

Inasmuch as proposed amendments to 

43 CFR 3482.1(b) may have Tribal 

implications by reason of its potential 

applicability to Indian lands, the BLM 

will begin consultation with potentially 

affected Tribes upon publication of the 

proposed rule. Further, the BLM will 

continue to consult with Tribes during 

the comment period of the proposed 

rule. 

Executive Order 12988, Civil Justice 

Reform 

In accordance with Executive Order 

12988, we find that the proposed rule 

would not unduly burden the judicial 

system, and therefore meets the 

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

of the Order. The BLM consulted with 

the Department of the Interior’s Office of 

the Solicitor throughout the rule making 

process. 

Executive Order 13352, Facilitation of 

Cooperative Conservation 

In accordance with Executive Order 

13352, the BLM has determined that 

this proposed rule would not impede 

facilitating cooperative conservation; 

would take appropriate account of and 

consider the interests of persons with 

ownership or other legally recognized 

interests in land or other natural 

resources. The rule would properly 

accommodate local participation in the 

Federal decision-making process, and 

would provide that the programs, 

projects, and activities are consistent 

with protecting public health and safety. 

Paperwork Reduction Act 

This proposed rule contains 

information collection requirements that 

are subject to review by the OMB under 

the Paperwork Reduction Act (44 U.S.C. 

3501–3520). Collections of information 

include any request or requirement that 

persons obtain, maintain, retain, or 

report information to an agency, or 

disclose information to a third party or 

to the public (44 U.S.C. 3502(3) and 5 

CFR 1320.3(c)). 

The OMB has approved the existing 

information collection requirements 

associated with coal management, and 

has assigned control number 1004–0073 

to those requirements. 

The BLM has requested OMB 

approval, under a new control number, 

for: 

• Modifications of some of the 

existing information collection 

requirements currently approved under 

control number 1004–0073; and 

• New information collection 

requirements. 

After promulgating a final rule and 

receiving approval from the OMB, the 

BLM intends to request that the new 

control number be combined with 

existing control number 1004–0073. 

Therefore, the BLM intends that, over 

the long term, all of the information 

collection requirements and burdens 

associated with coal management will 

be authorized under control number 

1004–0073. 

Both types of proposed changes are 

described below along with estimates of 

the annual burdens. Included in the 

burden estimates are the time for 

reviewing instructions, searching 

existing data sources, gathering and 

maintaining the data needed, and 

completing and reviewing each 

component of the proposed information 

collection requirements. 

Title: Coal Management Revisions (43 

CFR Parts 3000 and 3400 through 3480). 

OMB Control Number: 1004–XXXX. 

Abstract: Provisions of this proposed 

rule that would affect coal management 

information collections are described 

below. The burdens and effects of these 

provisions are itemized at Tables 2 

through 5, below. 

1. The proposed rule would add 3 

new fixed processing fees to 43 CFR 

3000.12. One of these new fees would 

be $170 for each Request for Payment of 

Advance Royalty in Lieu of Continued 

Operation (43 CFR subpart 3483). The 

OMB has approved this collection 

activity under control number 1004– 

0073, but has not yet approved the 

processing fee. The other proposed 

processing fees would be for the 

following new information collection 

requirements: 

• $160 per response for each 

Application for History of Timely 

Payments Determination (Proposed 43 

CFR 3474.10); and 

• $170 per response for each 

Application to Extend an LMU Beyond 

the Initial 40-Year Period (Proposed 43 

CFR 3487.10). 

A complete discussion of how the 

amounts of these 3 fees were 

determined is in the preamble of this 

proposed rule. 

2. The BLM proposes new 43 CFR 

3474.10, which would require a lessee 

or mine operator to submit an 

application in order to seek a 

determination of a history of timely 

payments. It would be necessary for a 

lessee or mine operator to obtain such 

a determination from the BLM in order 

to obtain a waiver of the bond 

requirement for deferred bonus bid 


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installment payments. In accordance 

with Section 436 of the EPAct, the BLM 

may grant (or will grant, in the case of 

leases issued after August 8, 2005) such 

a waiver only after determining, in 

consultation with the ONRR, that the 

lessee has a history of timely payments 

of non-contested royalties, advance 

royalties, and bonus bid installment 

payments. As indicated at proposed 

section 3474.10(b), an applicant for a 

history of timely payments 

determination would have to submit to 

the BLM two copies of the following 

information: 

• The name, address, and phone 

number of the applicant and the 

applicant’s primary contact person; 

• Identification of the lease or leases 

for which the applicant requests a 

surety bond or other financial guarantee 

waiver for deferred bonus bid 

installment payments; 

• Identification of the surety bonds or 

other financial guarantee instruments, if 

applicable, that the applicant desires to 

reduce or discontinue; 

• The serial numbers and names of 

the lessee(s) of record of all Federal coal 

leases that constitute the basis for a 

history of timely payments 

determination under paragraph (c) of 

this section and sufficient 

documentation to demonstrate that the 

Federal coal leases are under the control 

of the lessee(s) of record; 

• The SMCRA permit number and 

mine name or the LMU serial number 

and LMU name that are controlled by or 

under common control with, as defined 

in section 3400.0–5(b) of this chapter, 

the history of timely payments 

applicant, and that adjoin the leases 

identified in paragraph (b)(2)(ii) of this 

section; and 

• Any other information requested by 

the BLM. 

The BLM estimates it would take 8 

hours to complete a history of timely 

payments application, and there would 

be on average three such applications 

per year. As noted above, the BLM is 

proposing a new processing fee of $160 

for an application for a history of timely 

payments determination. The BLM has 

decided not to develop a specific form 

to apply for a history of timely 

payments determination. 

3. Section 433 of the EPAct provides 

that the Secretary may extend the term 

of an LMU beyond the 40th year. The 

BLM proposes new 43 CFR 3487.10, 

which would provide for applications to 

extend the term of an LMU beyond the 

initial 40-year period in increments of 

10 years or less. 

An application to extend an LMU 

term beyond the initial 40-year period 

must provide sufficient information for 

the BLM to determine whether the 

extension complies with the provisions 

at proposed section 3487.5(b)(1) or 

proposed § 3487.5(b)(2). 

The text of proposed section 

3487.5(b)(1) appears in the existing coal 

management regulations as 43 CFR 

3487.1(f)(2)(i), which requires 

respondents to show that mining 

operations on the LMU would achieve 

maximum economic recovery of Federal 

recoverable coal reserves within the 

LMU. 

The text of proposed section 

3487.5(b)(2) appears in the existing coal 

management regulations at 43 CFR 

3487.1(f)(2)(ii), which requires 

respondents to show that mining 

operations on the LMU would facilitate 

development of the coal reserves in an 

efficient, economical, and orderly 

manner. 

The BLM does not intend to develop 

a specific form for applications to 

extend the term of an LMU beyond the 

initial 40-year period. As noted above, 

the BLM proposes to assess a $170 

processing fee for each application. The 

BLM estimates the public burden hours 

for an application to extend an LMU to 

be 5 hours per response, and anticipates 

one response per year. 

4. Section 435 of the EPAct 

eliminated the requirement for the 

lessee or mine operator to provide the 

BLM with an operations and 

reclamation plan under the MLA, as 

amended (30 U.S.C. 207(c)), within 3 

years of lease issuance. However, the 

MLA still requires that an operations 

and reclamation plan be approved by 

the Secretary before mining begins (see 

43 CFR 3482.1(b)). The BLM 

implements this statutory requirement 

with its regulatory requirement of a 

resource recovery and protection plan 

(R2P2). 

The BLM proposes to remove from 

section 3482.1(b) the requirement to 

submit a 3-year R2P2. This proposal 

would have the effect of adjusting the 

public burden downward (from 980 

responses to 975 annually) for the 

information collection activity titled, 

‘‘Resource Recovery and Protection 

Plans (43 CFR Part 3480, Subpart 

3482).’’ 

5. The BLM proposes to re-designate 

existing section 3487.1(c)(2) as new 

section 3487.2(b), and codify a 

provision of the LMU Guidelines that 

has required a description of other 

mineral interests within the LMU as a 

part of the LMU application. This 

proposal would aid the BLM in making 

a determination that the LMU applicant 

has the right to enter and mine coal 

from all the lands proposed to be within 

an LMU. Since the quantity and quality 

of the information varies depending to 

a great extent on the geographic location 

of the LMU, the BLM will not develop 

a specific form to report this 

information. The BLM estimates this 

requirement would add an average of 5 

public burden hours to each of the two 

anticipated LMU applications per year. 

As required by the Paperwork 

Reduction Act at 44 U.S.C. 3507(d), the 

BLM has submitted an information 

collection request to the OMB for 

review. An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless the information collection 

displays a current OMB control number. 

We invite the public and other 

Federal agencies to comment on any 

aspect of the reporting burden through 

the information collection process. You 

may submit comments on the 

information collection burdens directly 

to the Office of Management and 

Budget, Office of Information and 

Regulatory Affairs, Desk Officer for the 

Department of the Interior, fax (202– 

395–5806), or 

oira_submission@omb.eop.gov. Please 

indicate ‘‘Attention: OMB Control 

Number 1004–XXXX.’’ If you submit 

comments on the information collection 

burdens, you should provide the BLM 

with a copy of your comments (see 

ADDRESSES), so that we can summarize 

all written comments and address them 

in the preamble to the final rule. 

The estimated hour burdens of this 

proposed rule are itemized in Tables 2 

and 3, and the estimated processing fees 

are itemized in Table 4. 


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TABLE 2—ESTIMATED HOUR BURDENS FOR PROPOSED INFORMATION COLLECTION CHANGES: NEW COLLECTION

ACTIVITIES

Proposed change 

Estimated 

number of 

responses 

annually 

Estimated 

hours per 

response 

Estimated 

hour burden 

(column B × 

column C) 

A. B. C. D. 

Application for History of Timely Payments Determination (New 43 CFR 3474.10) .................. 3 8 24 

Application to Extend an LMU Beyond the Initial 40-Year Period (New 43 CFR 3487.10) ....... 1 5 5 

TABLE 3—ESTIMATED HOUR BURDENS FOR PROPOSED INFORMATION COLLECTION CHANGES: REVISIONS OF EXISTING

COLLECTION ACTIVITIES

Proposed change Estimated number of 

responses annually 

Estimated hours per 

response 

Estimated 

hour burden 

(column B × column 

C) 

A. B. C. D. 

Removal of ‘‘3-year R2P2’’ Requirement from ‘‘43 CFR Part 3480, 

Subpart 3482 Resource Recovery and Protection Plans’’ (Revised 

43 CFR 3482.1(b)).

975 (5 fewer responses than in the 

IC currently authorized under control 

number 1004–0073).

20 .............................. 19,500 (100 fewer 

hours than in the IC 

currently authorized 

under control number 1004–0073) 

Revision of ‘‘43 CFR Part 3840, Subpart 3487 Application for Formation or Modification of Logical Mining Unit’’ (Revision of 43 CFR 

3487.1(c)(2) and re-designation as 43 CFR 3487.2(b)).

2 (Same as the number of responses in 

the IC currently authorized under control number 1004– 

0073).

175 (5 hours more 

than in the IC currently authorized 

under control number 1004–0073).

350 (10 more than in 

the IC currently authorized under control number 1004– 

0073) 

TABLE 4—PROPOSED PROCESSING FEES

Proposed change 

Estimated 

number of 

responses 

annually 

Estimated fee 

for each 

response 

Total 

estimated 

fees annually 

(column B × 

column C) 

A. B. C. D. 

New Processing Fee for New IC: Application for History of Timely Payments Determination 

(New 43 CFR 3474.10) ............................................................................................................ 3 $160 $480 

New Processing Fee for Existing IC: Request for Payment of Advance Royalty in Lieu of 

Continued Operation\ (Revised 43 CFR subpart 3483) .......................................................... 12 170 2,040 

New Processing Fee for New IC: Application to Extend an LMU Beyond the Initial 40-Year 

Period (New 43 CFR 3487.10) ................................................................................................ 1 170 170 

Totals .................................................................................................................................... 16 ........................ 2,690 

The BLM is requesting comments by 

the public on these proposed changes 

to: 

(a) Evaluate whether the proposed 

collection of information is necessary 

for the agency to perform its duties, 

including whether the information is 

useful; 

(b) Evaluate the accuracy of the 

agency’s estimate of the burden of the 

proposed collection of information; 

(c) Enhance the quality, usefulness, 

and clarity of the information to be 

collected; and 

(d) Minimize the burden on the 

respondents, including the use of 

automated collection techniques or 

other forms of information technology. 

The OMB is required to make a 

decision concerning the collection of 

information contained in these 

proposed regulations between 30 and 60 

days after publication of this document 

in the Federal Register. Therefore, a 

comment to OMB is best assured of 

having its full effect if OMB receives it 

within 30 days after publication. This 

does not affect the deadline for the 

public to comment to the BLM on the 

proposed rule. 

National Environmental Policy Act 

We have analyzed this rule in 

accordance with the criteria of the 

National Environmental Policy Act 

(NEPA), BLM’s January 2008 NEPA 

Handbook H–1790–1, and 516 DM 1 

through 4 and 11. We have prepared an 

Environmental Assessment (EA) and 

have concluded that this rule would not 

have a significant impact on the quality 

of the human environment under 

Section 102(2)(C) of NEPA, 42 U.S.C. 

4332(2)(C), and therefore an 

Environmental Impact Statement is not 

required. The EA is available for review 

at the address specified under 

ADDRESSES. 


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Executive Order 13211, Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use 

This proposed rule would amend the 

BLM’s coal management regulations and 

therefore might have an effect on the 

supply of coal. The effect of each 

provision is discussed separately as 

follows: 

• The proposed rule would 

implement the Federal coal provisions 

of the EPAct by amending existing 

regulations. These amendments include: 

Increasing the maximum acreage for a 

lease modification from 160 acres to 960 

acres; new procedures for extending the 

life of an LMU beyond 40 years; changes 

in the procedures and standards for 

payment of advance royalty for leases 

and LMUs; elimination of the 

requirement to submit an R2P2 within 

3 years after lease issuance or 

establishment of an LMU; and changes 

in procedures and standards for bonds 

that are used to ensure payment of the 

remaining balance of deferred bonus 

bids. All of these changes are 

administrative in nature and do not 

have a direct impact on the cost or 

supply of energy. However, as these 

changes may reduce the administrative 

cost to hold a Federal coal lease, they 

likewise might indirectly help to 

increase energy supplies by helping 

enable otherwise uneconomic resources 

to be recovered. 

• Portions of the LMU Guidelines 

(published in the Federal Register on 

August 29, 1985) are no longer 

consistent with the statute as amended 

by the EPAct. The BLM is therefore 

proposing a formal withdrawal of the 

LMU Guidelines and proposing to 

incorporate into the regulations those 

parts of the guidelines that remain valid, 

to the extent those parts of the LMU 

Guidelines that are not currently in 

regulations. The LMU Guidelines are 

administrative in nature and do not 

directly affect the supply of energy. 

Hence, the BLM anticipates no net 

change in energy supplies from this 

action. 

• The BLM is proposing to make it 

clear that a royalty rate of 121⁄2 percent 

will be assessed on all Federal coal 

except coal that is mined from 

underground mines. The proposed rule 

will define underground mines as mine 

workings where personnel work with 

undisturbed earth directly overhead and 

that have authorization from MSHA for 

personnel to work underground. We 

expect no net change in the quantity of 

coal that is developed from mines that 

are not underground mines, such as 

auger or continuous highwall mining 

operations, which are conducted on 

Federal coal leases. 

Information Quality Act 

In developing this proposed rule, we 

did not conduct or use a study, 

experiment, or survey requiring peer 

review under the Information Quality 

Act (Pub. L. 106–554). In accordance 

with the Information Quality Act, the 

Department of the Interior has issued 

guidance regarding the quality of 

information that it relies upon for 

regulatory decisions. This guidance is 

available at DOI’s Web site at http:// 

www.doi.gov/ocio/iq.html. 

Author 

The principal author of this proposed 

rule is William Radden-Lesage, Mining 

Engineer, Solid Minerals Division, 

assisted by Jean Sonneman, Division of 

Regulatory Affairs, Washington Office, 

BLM, and Harvey Blank, Office of the 

Solicitor, Department of the Interior. 

List of Subjects 

43 CFR Part 3000 

Public lands-mineral resources. 

43 CFR Part 3400 

Administrative practice and 

procedure, Coal, Government contracts, 

Intergovernmental relations, Mines, 

Public lands-mineral resources. 

43 CFR Part 3430 

Administrative practice and 

procedure, Coal, Government contracts, 

Intergovernmental relations, Mines, 

Public lands-mineral resources, Public 

lands-rights-of-way, reporting and 

recordkeeping requirements. 

43 CFR Part 3470 

Coal, Government contracts, Mineral 

royalties, Mines, Public lands-mineral 

resources, Reporting and recordkeeping 

requirements. 

43 CFR Part 3480 

Government contracts, 

Intergovernmental relations, Mineral 

royalties, Mines, Public lands-mineral 

resources, Reporting and recordkeeping 

requirements. 

Tommy P. Beaudreau, 

Acting Assistant Secretary of the Interior, 

Land and Minerals Management. 

For the reasons stated in the 

preamble, and under the authorities 

listed below, parts 3000, 3400, 3430, 

3470, and 3480, Subchapter C, Chapter 

II of Title 43 of the Code of Federal 

Regulations, are proposed to be 

amended as follows: 

PART 3000—MINERALS 

MANAGEMENT: GENERAL 

■ 1. The authority citation for part 3000 

continues to read as follows: 

Authority: 16 U.S.C. 3101 et seq.; 30 U.S.C. 

181 et seq., 301–306, 351–359, and 601 et 

seq.; 31 U.S.C. 9701; 40 U.S.C. 471 et seq.; 

42 U.S.C. 6508; 43 U.S.C. 1701 et seq.; and 

Pub. L. 97–35, 95 Stat. 357. 

■ 2. Section 3000.12 is amended by 

adding, in the table in paragraph (a), 

after the fee for coal lease or lease 

interest transfer, three new fixed fees for 

processing applications for particular 

coal actions to read as follows: 

§ 3000.12 What is the fee schedule for 

fixed fees? 

(a) * * * 

Document/action FY 2013 

fee 

***

* *

Coal (parts 3400, 3470) ............... ................

***

* *

History of timely payments application ......................................... 160 

Advance royalty application .......... 170 

Logical mining unit extension application ..................................... 170 

***

* *

* * * * * 

PART 3400—COAL MANAGEMENT: 

GENERAL 

■ 3. The authority citation for part 3400 

continues to read as follows: 

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

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

and 1740. 

■ 4. Section 3400.0–3 is amended by 

adding paragraphs (a)(10) and (11) to 

read as follows: 

§ 3400.0–3 Authority. 

(a) * * * 

(10) The Energy Policy Act of 1992 

(Pub. L. 102–486). 

(11) The Energy Policy Act of 2005 

(Pub. L. 109–58). 

* * * * * 

■ 5. Amend § 3400.0–5 by: 

■ a. Revising the introductory text and 

redesignating it as paragraph (a) 

introductory text; 

■ b. Removing the lettered paragraph 

designations (a) through (qq) and 

arranging the definitions in alphabetical 

order; 


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■ c. Adding a definition of 

‘‘Underground mine’’ to paragraph (a) in 

alphabetical order; and 

■ d. Redesignating paragraph (rr) as 

paragraph (b). 

The revision and addition read as 

follows: 

§ 3400.0–5 Definitions. 

(a) As used in parts 3400 through 

3480 of this chapter: 

* * * * * 

Underground mine means, for 

purposes of establishing the royalty rate 

under the terms of a coal lease, an 

excavation in the earth for the purpose 

of severing coal in which persons 

routinely work in an environment 

where undisturbed earth is directly 

overhead and where roof control and 

ventilation plans are approved by the 

Mine Health and Safety Administration, 

Department of Labor, to allow persons 

to work in areas where undisturbed 

earth is directly overhead. 

* * * * * 

■ 6. Add § 3400.7 to read as follows: 

§ 3400.7 Information collection. 

(a) The Office of Management and 

Budget (OMB) has approved the 

information collection requirements in 

parts 3400 through 3480 of this chapter 

in accordance with 44 U.S.C. 3507, and 

has assigned the requirements Control 

Number 1004–0073. 

(b) Respondents are coal mining 

applicants, lessees, licensees, and 

operators. The information collection 

requirements in these parts are in 

accordance with the Mineral Leasing 

Act of 1920 (30 U.S.C. 181 et seq.), the 

Energy Policy Act of 2005 (Pub. L. 109– 

58), the Mineral Leasing Act for 

Acquired Lands of 1947 (30 U.S.C. 351– 

359), and the Federal Land Policy and 

Management Act (FLPMA) of 1976 (43 

U.S.C. 1701 et seq.). A response may be 

mandatory, voluntary, or required in 

order to obtain or retain a benefit. 

(c) The Paperwork Reduction Act of 

1995 requires the BLM to inform the 

public that an agency may not conduct 

or sponsor, and the public is not 

required to respond to, a collection of 

information unless it displays a 

currently valid OMB control number. 

Send comments regarding any aspect of 

the collection of information under 

these parts, including suggestions for 

reducing the burden, to the Information 

Collection Clearance Officer, Bureau of 

Land Management, 1849 C Street NW., 

Washington, DC 20240. 

PART 3430—NONCOMPETITIVE 

LEASES 

■ 7. The authority citation for part 3430 

continues to read as follows: 

Authority: 30 U.S.C. 181 et seq.; 30 U.S.C. 

351–359; 30 U.S.C. 521–531; 30 U.S.C. 1201 

et seq.; and 43 U.S.C. 1701 et seq. 

Subpart 3432—Lease Modifications 

■ 8. Section 3432.0–3 is amended by 

revising paragraph (b) to read as follows: 

§ 3432.0–3 Authority. 

* * * * * 

(b) These regulations primarily 

implement Section 3 of the Mineral 

Leasing Act of 1920, as amended, by: 

(1) Section 13 of the Federal Coal 

Leasing Amendments Act (FCLAA) of 

1976 (30 U.S.C. 203); and 

(2) Section 432 of the Energy Policy 

Act of 2005 (Pub. L. 109–58). 

■ 9. Section 3432.1 is amended by 

removing the second sentence of 

paragraph (a) and adding paragraph (c) 

to read as follows: 

§ 3432.1 Application. 

* * * * * 

(c) The acreage added to the lease by 

modification after August 4, 1976, must 

not exceed the lesser of 960 acres or the 

acreage of the lease when the lease was 

issued. 

■ 10. Section 3432.2 is amended by 

revising paragraph (c) as follows: 

§ 3432.2 Availability. 

* * * * * 

(c) The lands applied for shall be 

added to the existing lease without 

competitive bidding. The United States 

shall receive the fair market value of the 

lands added to a lease either by cash 

bonus payment or by deferred bonus 

payments as provided at section 

3422.4(c). 

Subpart 3435—Lease Exchange 

■ 11. Section 3435.3–5 is amended by 

revising the last sentence to read as 

follows: 

§ 3435.3–5 Notice of public hearing. 

* * * Any notice of the availability of 

an environmental assessment or draft 

environmental impact statement on the 

exchange may be used to comply with 

this section. 

PART 3470—COAL MANAGEMENT 

PROVISIONS AND LIMITATIONS 

■ 12. The authority citation for part 

3470 is revised to read as follows: 

Authority: 30 U.S.C. 189, 207, and 359; 

and 43 U.S.C. 1733 and 1740. 

Subpart 3473—Fees, Rentals, and 

Royalties 

■ 13. Amend § 3473.2 by adding 

paragraphs (h), (i), and (j) to read as 

follows: 

§ 3473.2 Fees. 

* * * * * 

(h) An application for a history of 

timely payments determination must 

include payment of the filing fee found 

in the fee schedule in § 3000.12 of this 

chapter. 

(i) An application to pay advance 

royalty in lieu of continued operation 

must include payment of the filing fee 

found in the fee schedule in § 3000.12 

of this chapter. 

(j) An application for a 10-year 

extension to the term of a logical mining 

unit must include payment of the filing 

fee found in the fee schedule in 

§ 3000.12 of this chapter. 

■ 14. Amend § 3473.3–2 by revising 

paragraph (a) to read as follows: 

§ 3473.3–2 Royalties. 

(a)(1) Except as provided in paragraph 

(a)(2), a lease shall require payment of 

a royalty of not less than 121⁄2 percent 

of the value of the coal recovered. 

Among other methods, the royalty rate 

established under this paragraph shall 

apply to all coal recovered by surface 

mining, highwall mining systems, 

including auger mining, continuous 

highwall mining and other similar 

systems where personnel do not work in 

an underground mine. 

(2) A lease shall require payment of a 

royalty of 8 percent of the value of the 

coal recovered from an underground 

mine. 

(3) The Office of Natural Resources 

Revenue (ONRR) determines the value 

of the coal recovered from a mine in 

accordance with the regulations set 

forth at 30 CFR part 206, subpart F. 

* * * * * 

Subpart 3474—Bonds 

■ 15. Amend § 3474.1 by revising the 

section heading and paragraph (b) and 

by removing paragraph (c). 

The revisions read as follows: 

§ 3474.1 Acceptable bonds. 

* * * * * 

(b) For exploration licenses, a bond 

shall be furnished in accordance with 

§ 3410.3–4 of this chapter. 

■ 16. Revise § 3474.2 to read as follows: 

§ 3474.2 Filing requirements for bonds. 

(a) The applicant or bidder must file 

the lease bond in the proper office 

within 30 days after receiving notice. 

The lease bond must be furnished on a 

form approved by the BLM. 

(b) The BLM may approve a brief 

extension to the filing requirement 

when the applicant or bidder 

experiences delays in securing a bond 

that are beyond the control of the 

applicant or bidder. 


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(c) The BLM will issue a new lease or 

lease modification only after a lease 

bond or other financial surety has been 

submitted to the proper BLM office, 

found adequate by the BLM, and 

accepted. 

§§ 3474.3 through 3474.6 [Redesignated as 

§§ 3474.5 through 3474.8] 

■ 17. Redesignate §§ 3474.3 through 

3474.6 as §§ 3474.5 through 3474.8, 

respectively. 

■ 18. Add new § 3474.3 to read as 

follows: 

§ 3474.3 Required amount of the bond. 

Except as provided in § 3474.5, the 

authorized officer will determine the 

amount of the required bond. The bond 

must be sufficient to cover the 

cumulative amount of 1 year’s rental, 3 

months of production royalty or 1 year’s 

advance royalty, 1 annual deferred 

bonus payment, and 100 percent of the 

cost of reclamation for exploration 

licenses or exploration on leases not yet 

in a Surface Mining Control and 

Reclamation Act (SMCRA) mining 

permit. The required bond amount must 

be at least $5,000. 

■ 19. Add new § 3474.4 to read as 

follows: 

§ 3474.4 Review and adjustment of bond 

amount. 

The bond for a lease, exploration 

license, or license to mine will be 

reviewed at regular intervals, or as 

changes in conditions warrant, to assure 

that the bond amount remains 

appropriate under § 3474.3 of this part. 

This review may result in the amount of 

a bond being modified upward or 

downward. 

■ 20. Revise newly redesignated 

§ 3474.5 to read as follows: 

§ 3474.5 Bond Release. 

After consultation with the Office of 

Surface Mining Reclamation and 

Enforcement, the authorized officer may 

release the amount of any outstanding 

bond which is related to, and is not 

necessary to secure, the performance of 

reclamation within a permit area. 

■ 21. Revise newly redesignated 

§ 3474.6 to read as follows: 

§ 3474.6 Qualified sureties. 

The Financial Management Service of 

the Department of the Treasury annually 

publishes in the Federal Register a list 

of companies that hold certificates of 

authority from the Secretary of the 

Treasury and are, therefore, acceptable 

sureties for Federal bonds. The BLM 

will accept bonds only from sureties 

with current certificates of authority 

from the Secretary of the Treasury. 

■ 22. Amend newly redesignated 

§ 3474.8 by adding two sentences at the 

end to read as follows: 

§ 3474.8 Termination of the period of 

liability. 

* * * The surety or other bond 

provider remains responsible for 

obligations that accrued during the 

period of liability while the bond was in 

effect and until such liability is released 

by the BLM. An existing lease bond or 

other financial surety must remain in 

effect until another bond or other 

financial surety is filed and accepted as 

a replacement. 

■ 23. Add § 3474.9 to read as follows: 

§ 3474.9 Consolidated lease bonds. 

An operator/lessee may combine the 

bond requirements for all the leases that 

it holds and that are within the 

boundary of a single mine permit into 

a single consolidated lease bond. The 

amount of the consolidated lease bond 

will be equal to the combined amount 

of the bond requirements for all of the 

leases within the mine permit boundary. 

■ 24. Add § 3474.10 to read as follows: 

§ 3474.10 Bonds for deferred bonus. 

(a) Introduction to history of timely 

payments. (1) For Federal coal leases 

issued before August 8, 2005, the BLM 

may waive the bond requirement for 

deferred bonus bid installment 

payments if the BLM determines, in 

consultation with the Office of Natural 

Resources Revenue (ONRR), that the 

lessee has a history of timely payments 

of non-contested royalties, advance 

royalties, and bonus bid installment 

payments. 

(2) For leases and lease modifications 

issued after August 8, 2005: 

(i) The BLM will not require a surety 

bond or other financial assurance to 

guarantee payment of deferred bonus 

bid installment payments if the BLM 

determines, in consultation with the 

ONRR, that the lessee or successor in 

interest has a history of timely 

payments. If the BLM determines that 

the lessee does not have a history of 

timely payments, the lease or modified 

lease may be issued only if an amount 

sufficient to cover one annual deferred 

bonus payment is added to the lease 

bond, logical mining unit bond, or 

consolidated lease bond. 

(ii) When a lease or a lease 

modification is issued based upon the 

lessee providing a lease bond that 

includes one annual deferred bonus 

payment, the BLM will reduce the lease 

bond requirement for that lease or lease 

modification by an amount equal to one 

deferred bonus payment, if: 

(A) At a later date the lessee submits 

a new history of timely payments 

application and the BLM determines 

that the lessee has a history of timely 

payments that is in compliance with 

this subpart; or 

(B) The deferred bonus for the lease 

or lease modification has been paid in 

full. 

(b) Application requirements for a 

history of timely payments 

determination. (1) A lessee or successful 

bidder may apply for a history of timely 

payments determination. 

(i) A current lease holder may apply 

for a history of timely payments 

determination at any time. 

(ii) In the case of a lease modification, 

the lessee may apply for a history of 

timely payments determination only 

after the lessee and the BLM have 

agreed upon the fair market value for 

the lease modification. 

(iii) For new leases, the successful 

bidder may apply for a history of timely 

payments determination only after the 

BLM provides written notification to the 

successful bidder that the BLM has 

accepted its bonus bid as the fair market 

value for a coal tract that was offered for 

competitive sale. 

(2) You must submit to the BLM two 

copies of a written application for the 

history of timely payments 

determination. The application must 

include: 

(i) The name, address, and phone 

number of the applicant and the 

applicant’s primary contact person; 

(ii) Identification of the lease or leases 

for which the applicant requests a 

surety bond or other financial guarantee 

waiver for deferred bonus bid 

installment payments; 

(iii) Identification of the surety bonds 

or other financial-guarantee 

instruments, if applicable, that the 

applicant desires to reduce or 

discontinue; 

(iv) The serial numbers and names of 

the lessee(s) of record of all Federal coal 

leases that constitute the basis for a 

history of timely payments 

determination under paragraph (c) of 

this section and sufficient 

documentation to demonstrate that the 

Federal coal leases are under the control 

of the lessee(s) of record; 

(v) The SMCRA permit number and 

mine name or the LMU serial number 

and LMU name that are controlled by or 

under common control with, as defined 

in § 3400.0–5(b) of this chapter, the 

history of timely payments applicant, 

and that adjoin the leases identified in 

paragraph (b)(2)(ii) of this section; and 

(vi) Any other information requested 

by the BLM. 

(3) Any confidential data in the 

application must be marked consistent 

with § 3481.3 of this chapter. 


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(4) The applicant may aggregate into 

one history of timely payments 

application all leases or lease 

modifications that have a portion of 

their bonus payments deferred only if 

all the leases or lease modifications are 

within the same boundary, as described 

in paragraph (c)(1) of this section. 

(c) Basis for a history of timely 

payments determination. (1) The BLM 

will base its history of timely payments 

determination on the applicant’s 

payment history for the 5 years 

immediately preceding a history of 

timely payments application for all 

Federal coal leases that are: 

(i) Encompassed by an adjoining LMU 

boundary or SMCRA mining permit 

boundary; and 

(ii) Under the control of the history of 

timely payments applicant during the 5- 

year period. 

(2) If the applicant has less than 5 

years of payment history, or there is not 

an adjoining mine as provided in 

paragraph (c)(1) of this section, the BLM 

may consider the nationwide payment 

history of an applicant’s corporate 

owner and affiliates under common 

control with the applicant. 

(3) If the history of timely payments 

applicant, or the applicant’s corporate 

owner or affiliates under common 

control with the applicant, does not 

have a 5-year history of payments for a 

Federal coal lease, the applicant cannot 

qualify for a history of timely payments 

determination. 

(4) To satisfy the history of timely 

payments requirement, every noncontested production royalty, advance 

royalty, and deferred bonus bid 

payment during the 5-year period must 

have been paid in full on or before the 

date the payment was due. Contested 

payments may be considered if the 

lessee or mine operator has provided an 

assurance of full payment to the 

satisfaction of the ONRR. Partial 

payment or nonpayment does not satisfy 

this requirement unless the lessee or 

mine operator has also provided an 

assurance of full payment to the 

satisfaction of the ONRR. 

(d) Resolution of disputed payment 

history. If the ONRR informs the BLM 

that the applicant does not satisfy the 

criteria for a history of timely payments 

determination, before the BLM makes a 

final determination, the BLM will notify 

the applicant and provide the applicant 

30 days to resolve any differences in the 

payment history between the applicant 

and ONRR. 

(e) The history of timely payments 

determination. (1) If the applicant 

satisfies the criteria for a history of 

timely payments determination, the 

BLM will make a written history of 

timely payments determination that will 

be effective for all leases covered by the 

application until the deferred bonus is 

paid in full in accordance with the 

terms and conditions of the leases. 

(2) If the applicant fails to satisfy the 

criteria for a history of timely payments 

determination, the BLM will reject the 

application, and will immediately 

require: 

(i) A separate bond in an amount 

equal to one deferred bonus payment; or 

(ii) An increase in an existing bond 

amount that is equal to the amount of 

one deferred bonus payment. 

(3) Failure to make a timely deferred 

bonus bid payment will result in 

cancellation of the history of timely 

payments determination and the BLM 

will immediately require: 

(i) A separate bond in an amount 

equal to one deferred bonus payment; or 

(ii) An increase in an existing bond 

amount that is equal to the amount of 

one deferred bonus payment. 

(f) Lease termination for failure to pay 

a deferred bonus bid installment. (1) 

The BLM will provide written notice to 

the lessee that an annual deferred bonus 

bid payment is past due. The notice will 

demand that the lessee, within 10 days 

beginning on the date of receipt of the 

notice, remit full payment of the 

deferred bonus payment or provide 

evidence, to the satisfaction of the BLM, 

to demonstrate that the deferred bonus 

payment was previously made. 

(2) If the lessee provides the BLM 

with evidence to demonstrate that the 

full amount of the past due bonus 

payment was paid either before receipt 

or within 10 days after receipt of the 

notice under paragraph (f)(1) of this 

section, the BLM will review all 

submitted evidence and, in consultation 

with the ONRR, determine whether full 

payment was made. 

(i) If the BLM concludes that the 

lessee paid the deferred bonus bid 

payment either before receipt or within 

the 10 days after receipt of the notice 

under paragraph (f)(1) of this section, 

the BLM will notify the operator/lessee 

of this conclusion and the lease will not 

terminate. 

(ii) If the BLM concludes that the 

lessee did not pay the deferred bonus 

bid payment either before receipt or 

within 10 days after receipt of the notice 

under paragraph (f)(1) of this section, 

the BLM will notify the lessee that the 

lease is terminated. 

(3) If the lessee does not respond 

within 10 days after receipt of the notice 

under paragraph (f)(1) of this section, 

the BLM will consult with the ONRR to 

confirm that the past due bonus 

payment was not made within 10 days 

after receipt of the notice under 

paragraph (f)(1) of this section, and, 

upon confirmation, will notify the 

lessee that the lease is terminated as a 

matter of law. 

(4) If a lease is terminated under 

paragraph (f)(2) or (f)(3) of this section, 

any bonus payments made to United 

States with respect to the lease: 

(i) Will not be returned to the lessee; 

and 

(ii) Cannot be credited to any future 

coal lease sale. 

■ 25. Add § 3474.11 to read as follows: 

§ 3474.11 Logical Mining Unit (LMU) 

bonds. 

(a) Upon approval of an LMU (subpart 

3487 of this chapter) the LMU operator 

may, in lieu of individual lease bonds 

for each Federal coal lease in the LMU, 

furnish and maintain an LMU bond. In 

addition to all the lease bond 

requirements in this subpart, an LMU 

bond must also comply with the 

following specific LMU bond 

requirements: 

(1) The amount of the LMU bond 

must be sufficient to cover all of the 

lease bond obligations for all Federal 

leases within the LMU; and 

(2) All LMU bonds must be in an 

amount not less than that specified by 

the BLM. 

(b) The BLM will review the amount 

of the LMU bond at regular intervals to 

ensure that the LMU bond continues to 

meet the bond requirements of all the 

Federal coal leases in the LMU. 

(c) When an LMU is terminated, the 

period of liability under the LMU bond 

continues until the remaining Federal 

coal leases that were in the LMU are 

covered by individual lease bonds in the 

manner prescribed by the BLM. 

PART 3480—COAL EXPLORATION 

AND MINING OPERATIONS RULES 

■ 26. The authority citation for part 

3480 continues to read as follows: 

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

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

and 1740. 

Subpart 3480—Coal Exploration and 

Mining Operations Rules: General 

■ 27. Amend section 3480.0–5 by: 

■ a. Removing from paragraph (a) the 

numbered paragraph designations (1) 

through (36) and arranging the 

definitions in alphabetical order; and 

■ b. Revising the definitions of 

‘‘continued operation’’ and ‘‘diligent 

development period’’ to read as follows: 

§ 3480.0–5 Definitions. 

(a) * * * 

Continued operation means the 

annual production of at least 


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commercial quantities of recoverable 

coal reserves following the achievement 

of diligent development. An operator/ 

lessee may achieve continued operation 

in any continued operation year by 

producing at least commercial 

quantities of coal from a lease or LMU 

during the continued operation year. 

Beginning in the third continued 

operation year, the operator/lessee may 

alternatively achieve continued 

operation if its cumulative coal 

production from a lease or LMU during 

the continued operation year in 

question and the 2 preceding continued 

operation years (a total of 3 continued 

operation years) is equal to or greater 

than the sum of the commercial 

quantities for the same continued 

operation years. Advance royalty may 

be paid, with approval from the BLM, in 

lieu of continued operation (43 CFR 

subpart 3483). 

* * * * * 

Diligent development period means: 

(i) For Federal leases, a 10-year period 

that begins on either: 

(A) The effective date of the Federal 

lease for Federal leases issued on or 

after August 4, 1976; or 

(B) The effective date of the first lease 

readjustment after August 4, 1976, for 

Federal leases issued before August 4, 

1976; 

(ii) For LMUs, a 10-year period that 

begins on either: 

(A) The effective date of the most 

recent Federal lease issued or readjusted 

before LMU approval; or 

(B) The effective date of the LMU, if 

the LMU contains a Federal lease issued 

before August 4, 1976, that has not been 

readjusted after August 4, 1976; and 

(iii) For Federal coal leases and 

LMUs, the diligent development period 

terminates at the end of the royalty 

reporting period in which the 

production of recoverable coal reserves 

in commercial quantities was achieved, 

or at the end of 10 years, whichever 

occurs first. 

* * * * * 

Subpart 3482—Exploration and 

Resource Recovery and Protection 

Plans 

■ 28. Amend § 3482.1 by revising 

paragraph (b) to read as follows: 

§ 3482.1 Exploration and resource 

recovery and protection plans. 

* * * * * 

(b) Resource recovery and protection 

plans. (1) Before conducting any 

development or mining operations on a 

Federal lease or under a license to mine 

under part 3440 of this chapter, the 

operator/lessee must: 

(i) Submit and obtain approval of a 

resource recovery and protection plan 

from the BLM; and 

(ii) Submit a permit application 

package under 30 CFR 740.13 to the 

Office of Surface Mining Reclamation 

and Enforcement or to the state 

regulatory authority under a Federal/ 

state cooperative agreement entered into 

under 30 CFR part 745, containing, 

among other documents, the operator/ 

lessee’s resource recovery and 

protection plan and the BLM’s approval 

of the resource recovery and protection 

plan. 

(2) A resource recovery and protection 

plan for an LMU must be submitted to 

the BLM as provided in § 3487.2(d). 

* * * * * 

■ 29. Amend § 3482.3 by adding 

paragraph (h) to read as follows: 

§ 3482.3 Mining operations maps. 

* * * * * 

(h) Logical mining unit maps. Maps 

for logical mining units must conform to 

the applicable parts of this section and 

the requirements at § 3487.8(a). 

Subpart 3483—Diligence Requirements 

■ 30. Amend § 3483.3 by revising 

paragraph (a)(2) to read as follows: 

§ 3483.3 Suspension of continued 

operation or operations and production. 

(a) * * * 

(2) The authorized officer may 

suspend the requirement for continued 

operation upon the payment of advance 

royalty in accordance with § 3483.4(h) 

of this title. 

* * * * * 

■ 31. Amend section 3483.4 by: 

■ a. Revising paragraphs (a), (b), and (c); 

■ b. Removing paragraph (e) and (f); 

■ c. Redesignating paragraphs (d) and 

(g) as paragraphs (e) and (f), 

respectively; 

■ d. Adding new paragraph (d); 

■ e. Revising redesignated paragraph (e); 

■ f. Adding a paragraph heading to 

newly redesignated paragraph (f); and 

■ g. Adding new paragraphs (g) and (h). 

The revisions and additions read as 

follows: 

§ 3483.4 Payment of advance royalty in 

lieu of continued operation. 

(a) Conditions for payment of advance 

royalty. (1) The BLM may authorize the 

payment of advance royalty in lieu of 

continued operation for a lease or LMU 

if: 

(i) Coal has not been produced in 

sufficient quantity from the lease or 

LMU during a continued operation year 

to satisfy the continued operation 

requirement of the lease or LMU; 

(ii) The aggregate number of 

continued operation years for accepting 

advance royalties, as determined under 

paragraph (e) of this section, has not 

been exceeded; and 

(iii) The BLM determines that 

payment of advance royalty in lieu of 

continued operation will serve the 

public interest. 

(2) The continued operation 

requirement for a lease or an LMU for 

a continued operation year may be met 

by a combination of coal production and 

payment of advance royalty. 

(3) The lessee is responsible for 

paying advance royalty for a lease that 

is not within an LMU, and the LMU 

lessee/operator is responsible for paying 

advance royalty for an LMU. 

(b) Application to pay advance 

royalty. (1) An operator/lessee’s 

application to pay advance royalty in 

lieu of the continued operation 

requirement for a specific continued 

operation year must be received by the 

BLM during the same specified 

continued operation year. 

(2) Failure to apply to pay advance 

royalty in lieu of continued operation 

within the continued operation year to 

which the advance royalty will apply 

will result in the following: 

(i) The BLM recommending that the 

ONRR assess late payment penalties for 

the period between the last day of the 

continued operation year to which the 

advance royalty will apply and the date 

that the application to pay advance 

royalty in lieu of continued operation is 

actually received; 

(ii) The operator/lessee may not 

qualify to obtain rights to another 

existing or new lease as described at 

§ 3472.1–2(e); or 

(iii) Cancellation of the lease as 

provided at § 3483.2(c). 

(c) Calculation of coal value for 

advance royalty purposes. For advance 

royalty purposes, the value of the 

Federal coal will be calculated by ONRR 

in accordance with applicable 

regulations. 

(d) Royalty rate used for calculation of 

advance royalty. (1) The royalty rate 

specified in the lease document will be 

used for calculation of advance royalty 

for a lease. 

(2) The advance royalty rate for an 

LMU is 8 percent where the Federal 

LMU recoverable coal reserves 

contained in the LMU will be recovered 

only by underground mining operations 

and not less than 121⁄2 percent where 

the Federal LMU recoverable coal 

reserves contained in the LMU will be 

recovered by mining operations other 

than underground mining. For an LMU 

that contains Federal LMU recoverable 

coal reserves that are recoverable by a 

combination of underground and other 


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mining methods, the advance royalty 

rate is not less than 121⁄2 percent. 

(e) Allowable number of years to pay 

advance royalty. (1) The aggregate 

number of continued operation years 

during which the BLM may accept 

advance royalty in lieu of continued 

operation for a Federal coal lease or 

LMU may not exceed 20. For any 

continued operation year when advance 

royalty is paid in lieu of continued 

operation, regardless of the amount of 

the advance royalty paid, the BLM will 

count such continued operation year 

against the 20-year maximum number of 

continued operation years for which 

advance royalty may be paid. 

(2)(i) When an LMU is formed, the 

BLM will determine the maximum 

number of continued operation years for 

which advance royalty in lieu of 

continued operation during the term of 

the LMU may be accepted. Subsequent 

modification of the LMU does not 

change this number. The number of 

continued operation years for which the 

BLM may approve an LMU operator to 

pay advance royalty in lieu of continued 

operation is equal to number of 

continued operation years for the 

Federal coal lease in the LMU that has 

the greatest number of remaining 

continued operation years. For example, 

if an LMU is formed that contains two 

Federal coal leases. One Federal coal 

lease has 20 remaining continued 

operation years for which the BLM will 

accept advance royalty, and the other 

Federal coal lease has already paid 

advance royalty for 7 continued 

operation years, with 13 additional 

continued operation years for which the 

BLM will accept advance royalty. In this 

example, the LMU would have a 

maximum of 20 continued operation 

years for which the BLM may accept 

advance royalty. 

(ii) A continued operation 

requirement that has been met by the 

payment of advance royalty in lieu of 

continued operation for a Federal lease 

before the lease’s inclusion in an LMU 

will be credited to the LMU’s continued 

operation requirement. However, the 

advance royalty paid in lieu of 

continued operation will be credited to 

the LMU only if it has not already been 

credited against production royalty for 

the Federal lease as provided at 30 CFR 

part 1218. 

(f) Failure to pay advance royalty. 

* * * 

(g) Tonnage basis for advance royalty 

payment. (1) Determination of the 

tonnage base. If the payment of advance 

royalty has been authorized by the BLM 

for a lease or LMU, the BLM will 

determine at the end of a continued 

operation year the amount of coal, 

measured in tons, which the ONRR will 

use to calculate the value of the advance 

royalty payment. The amount of coal 

that the BLM determines and authorizes 

as the basis for paying advance royalty 

for a continued operation year is called 

the advance royalty tonnage. 

(2) Calculation methods for a lease. 

During the first 2 continued operation 

years, the BLM will use a 1-year 

calculation method to determine the 

advance royalty tonnage for a lease, as 

described in paragraph (g)(2)(i) of this 

section. The BLM will provide the 

advance royalty tonnage information to 

the ONRR for determining the value of 

the advance royalty payment. Beginning 

in the third continued operation year, 

the BLM will use two calculation 

methods to determine the advance 

royalty tonnage for a lease. The tonnage 

derived from the calculation method 

that results in the lesser tonnage will 

then be provided to the ONRR for 

determining the value of the advance 

royalty payment. The maximum 

advance royalty tonnage for any 

continued operation year will not 

exceed the commercial quantities 

amount for the lease. The two 

calculation methods are: 

(i) The 1-year method. The advance 

royalty tonnage is determined by 

subtracting the amount of coal actually 

produced from a lease during the 

continued operation year from the 

commercial quantities amount for the 

lease for the same continued operation 

year. 

(ii) The 3-year method. The advance 

royalty tonnage is determined by adding 

the amount of coal produced from a 

lease during a continued operation year 

for which payment of advance royalty is 

authorized to the amount of coal 

produced in each of the 2 previous 

continued operation years and 

subtracting that amount from the sum of 

the annual commercial quantities 

amounts for the lease for the same 3 

continued operation years. 

(3) Calculation methods for an LMU. 

The BLM will use two calculation 

methods to determine the advance 

royalty tonnage for an LMU, except that 

the calculation of advance royalty 

tonnage will be prorated to reflect the 

percentage of the total LMU recoverable 

coal reserves that are Federal 

recoverable coal reserves. The BLM will 

provide to the ONRR the tonnage 

derived from the calculation method 

that results in the lowest advance 

royalty tonnage for determining the 

value of the advance royalty payment. 

The maximum advance royalty tonnage 

for any continued operation year for an 

LMU will not exceed the sum of the 

commercial quantities amounts for all 

the Federal coal leases in the LMU. The 

two calculation methods are: 

(i) The 1-year method. The advance 

royalty tonnage is determined by first 

subtracting the amount of coal produced 

from the LMU during the LMU 

continued operation year, including all 

coal production from Federal coal leases 

and non-Federal lands in the LMU, from 

the LMU commercial quantities amount 

for the same continued operation year. 

To account for the recoverable coal 

reserve under Federal coal leases, take 

the difference between the LMU 

commercial quantities amount and LMU 

production from the previous 

calculation and multiply that by the 

sum of the commercial quantities 

amounts for all the Federal coal leases 

within the LMU. This amount is then 

divided by the commercial quantities 

amount for the entire LMU. 

(ii) The 3-year method. The advance 

royalty tonnage is determined by adding 

the amount of coal produced from the 

LMU during the continued operation 

year for which the payment of advance 

royalty is authorized and the amount of 

coal produced in the 2 previous 

continued operation years and 

subtracting that amount from the sum of 

the commercial quantities amounts for 

the LMU for the continued operation 

year for which the payment of advance 

royalty is authorized and the 2 previous 

continued operation years. To account 

for the recoverable coal reserve under 

Federal coal leases only, take the 

difference between the sum of the LMU 

commercial quantities amounts for the 3 

specified continued operation years and 

the cumulative actual LMU production 

during the same 3 years from the 

previous calculation and multiply that 

by the sum of the commercial quantities 

amounts for all the Federal coal leases 

within the LMU during the same 3 

years. This amount is then divided by 

the sum of the commercial quantities 

amounts for the entire LMU during the 

same 3 years. 

(h) Ceasing to accept advance 

royalties in lieu of continued operation. 

The authorized officer may disallow the 

payment of advance royalty in lieu of 

continued operation for a lease or LMU 

after giving the lessee or LMU operator 

6-months’ advance notice. 

■ 32. Revise § 3483.6 to read as follows: 

§ 3483.6 Special logical mining unit rules. 

(a) Production requirement. The BLM 

will apply production of either Federal 

or non-Federal recoverable coal 

reserves, or a combination thereof, from 

anywhere within an LMU toward 

satisfaction of the requirements for 

achieving diligent development and 

continued operation for the LMU. 


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Production from non-Federal resources 

may be credited toward diligent 

development of the LMU only if such 

production occurs after the non-Federal 

resources are approved by the BLM to 

be included in the LMU. 

(b) Diligence date. Increasing or 

decreasing the size of an LMU will not 

change the date for achieving diligent 

development. 

(c) Relationship to lease-specific 

continued operation requirements. The 

LMU continued operation requirement 

must be satisfied independently of 

whether the Federal coal leases within 

the LMU produce sufficient coal to meet 

the individual lease’s continued 

operation requirements that would 

apply if the leases were not in the LMU. 

Subpart 3487—Logical Mining Unit 

■ 33. Revise § 3487.1 to read as follows: 

§ 3487.1 Logical mining units (LMU)— 

general considerations. 

(a) An LMU shall become effective 

only upon approval of the authorized 

officer. The effective date for an LMU 

may be established by the authorized 

officer between the date that the 

authorized officer receives an 

application for LMU approval and the 

date the authorized officer approves the 

LMU. The effective date of the LMU 

approval shall be determined by the 

authorized officer in consultation with 

the LMU applicant. An LMU may be 

enlarged by the addition of other 

Federal coal leases or with interests in 

non-Federal coal deposits, or both, in 

accordance with paragraph (g) of this 

section. An LMU may be diminished by 

creation of other separate Federal leases 

or LMU’s in accordance with § 3487.6 of 

this subpart. 

(b) (1) The BLM may direct, or an 

operator/lessee may initiate, the 

establishment of an LMU containing 

only Federal coal leases issued after 

August 4, 1976. 

(2) The BLM may direct, or an 

operator/lessee may initiate, the 

establishment of an LMU containing 

Federal coal leases issued before August 

4, 1976, provided that the operators/ 

lessees consent to making all such 

Federal leases within the LMU subject 

to the LMU stipulations and the 

regulations of this part, for: 

(i) Submission of a resource recovery 

and protection plan; 

(ii) An initial LMU term of 40 years; 

(iii) Exhaustion of LMU recoverable 

coal reserves; 

(iv) Diligent development; 

(v) Continued operation; 

(vi) Maximum economic recovery; 

(vii) Advance royalty; and 

(viii) Royalty reporting periods (but 

not royalty rates). 

(3) The terms of a Federal lease in an 

LMU will be amended so that the lease 

terms and conditions are consistent 

with the stipulations required for the 

approval of the LMU under section 

3487.4. 

■ 34. Add §§ 3487.2 through 3487.10 to 

read as follows: 

Sec. 

* * * * * 

3487.2 LMU application. 

3487.3 LMU Consultation. 

3487.4 Stipulations. 

3487.5 LMU approval criteria. 

3487.6 LMU decision. 

3487.7 LMU modifications. 

3487.8 LMU operations. 

3487.9 LMU termination. 

3487.10 Extension of the period of an 

LMU. 

§ 3487.2 LMU application. 

An operator/lessee must submit five 

copies of an LMU application to the 

authorized officer if the operator/lessee 

is applying on his own initiative to 

combine lands into an LMU, or if 

directed to establish an LMU by the 

authorized officer in accordance with 

paragraph (b) of this section. Such 

application shall include the following: 

(a) Name and address of the 

designated operator/lessee of the LMU. 

(b) A list of all lands to be included 

in the LMU; and 

(1) The names and addresses of all 

surface land owners that hold an 

interest in the lands within the LMU 

and the legal land description of their 

respective tracts; 

(2) The names and addresses of all 

entities that hold or control an interest 

in the mineral rights to the land that are 

within the LMU, a description of the 

mineral rights, and the legal land 

description of their respective mineral 

rights or interests, including 

identification of each lease or agreement 

by serial number or other identifier; 

(3) Identification of the coal beds 

proposed to be included in and 

excluded from the LMU; 

(4) A narrative that describes and 

quantifies the coal reserve base, the 

minable reserve base, and the 

recoverable coal reserves within the 

LMU, categorized by coal bed and 

mineral ownership for all minable coal 

within the LMU boundary. The 

applicant must also provide a narrative 

describing how the minability of the 

coal was determined; and 

(5) A narrative that describes and 

quantifies Federal coal that is proposed 

to be excluded from the LMU, including 

a discussion of the rationale for 

excluding particular coal beds or areas. 

(c) Documents and related 

information supporting a finding of 

effective control of the lands to be 

included in the LMU. 

(1) For all of the lands that are within 

the proposed LMU boundary, the 

applicant must submit copies of all of 

the surface owner agreements. 

(2) For all of the lands within the 

proposed LMU that include recoverable 

coal reserves, the applicant must submit 

copies of all documents that show that 

the LMU applicant has effective control 

of the surface and the right to enter and 

mine. 

(d) A resource recovery and 

protection plan that includes all lands 

that are proposed for inclusion in the 

LMU and which complies with the 

requirements of § 34821. 

(e) Any other information required by 

the authorized officer. 

(f) If any confidential information is 

included in the submittal and is 

identified as such by the operator/ 

lessee, it shall be treated in accordance 

with § 3481.3 of this title. 

§ 3487.3 LMU Consultation. 

(a) Prior to approval, the authorized 

officer shall consult with the operator/ 

lessee about any Federal recoverable 

coal reserves within the LMU that the 

operator/lessee does not intend to mine 

and any Federal recoverable coal 

reserves that the operator/lessee intends 

to relinquish. The authorized officer 

shall also consult with the operator/ 

lessee about Federal lease revisions to 

make the time periods for resource 

recovery and protection plan submittals, 

the 40-year LMU recoverable coal 

reserves exhaustion requirement, and 

diligent development, continued 

operation, advance royalty and Federal 

rental and royalty collection 

requirements applicable to each 

producing Federal lease consistent with 

the LMU stipulations. The BLM will 

also consult with the operator/lessee 

about Federal lease revisions to make 

the time periods for resource recovery 

and protection plan submissions, the 

LMU initial 40-year term, and diligent 

development, continued operation, 

advance royalty, and Federal rental and 

royalty collection requirements 

applicable to each producing Federal 

lease in the LMU, consistent with the 

LMU stipulations. 

(b) The public participation 

procedures of § 3481.2 of this title shall 

be completed prior to approval of an 

LMU. 

§ 3487.4 Stipulations. 

Prior to the approval of an LMU, the 

authorized officer shall notify the 

operator/lessee and responsible officer 


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of the surface managing agency of 

stipulations required for the approval of 

the proposed LMU. The LMU 

stipulations shall provide for: 

(a) A schedule for the achievement of 

diligent development and continued 

operation for the LMU. The schedule 

shall reflect the date for achieving 

diligent development and maintaining 

continued operation of the individual 

Federal leases included in the LMU, 

consistent with the rules of this part. An 

operator/lessee may request to pay 

advance royalty in lieu of continued 

operation in accordance with § 3482.1(a) 

of this title. 

(b) Uniform reporting periods for 

Federal rental and royalty on Federal 

leases. 

(c) The revision, if necessary, of terms 

and conditions of the individual Federal 

leases included in the LMU. The terms 

and conditions of the Federal lease, 

except for Federal royalty rates, must be 

amended so that they are consistent 

with the stipulations of the LMU. 

(d) Estimates of the Federal LMU 

recoverable coal reserves, and nonFederal LMU recoverable coal reserves, 

using data acquired by generally 

acceptable exploration methods. 

(e) Beginning the 40-year period in 

which the reserves of the entire LMU 

must be mined, on one of the following 

dates— 

(1) The effective date of the LMU, if 

any portion of the LMU is producing on 

that date; or 

(2) After the LMU is approved, the 

date coal is first produced from any 

portion of the LMU. 

(f) Any other condition that the 

authorized officer determines to be 

necessary for the efficient and orderly 

operation of the LMU. 

§ 3487.5 LMU approval criteria. 

The authorized officer may approve 

an LMU if it meets the following 

criteria: 

(a) The LMU fully meets the LMU 

definition. 

(b) The LMU application 

demonstrates that mining operations on 

the LMU, which may consist of a series 

of excavations, will: 

(1) Achieve maximum economic 

recovery of Federal recoverable coal 

reserves within the LMU. In 

determining whether the proposed LMU 

meets this requirement, BLM, as 

appropriate, will consider: 

(i) The amount of coal reserves 

recoverable from the proposed LMU 

compared to the amount recoverable if 

each lease were developed individually; 

and 

(ii) Any other factors BLM finds 

relevant to this requirement; 

(2) Facilitate development of the coal 

reserves in an efficient, economical, and 

orderly manner. In determining whether 

the proposed LMU meets this 

requirement, BLM, as appropriate, will 

consider: 

(i) The potential for independent 

development of each lease proposed to 

be included in the LMU; 

(ii) The potential for inclusion of the 

leases in question in another LMU; 

(iii) The availability and utilization of 

transportation and access facilities for 

development of the LMU as a whole 

compared to development of each lease 

separately; 

(iv) The mining sequence for the LMU 

as a whole compared to development of 

each lease separately; and 

(v) Any other factors BLM finds 

relevant to this requirement; and 

(3) Provide due regard to conservation 

of coal reserves and other resources. In 

determining whether the proposed LMU 

meets this requirement, BLM, as 

appropriate, will consider: 

(i) The effects of developing and 

operating the LMU as a unit; and 

(ii) Any other factors BLM finds 

relevant to this requirement. 

(c) All single Federal leases, portions 

of which are included in more than one 

LMU, must be segregated into two or 

more Federal leases. If only a portion of 

a Federal lease is included in an LMU, 

the remaining land must be segregated 

into another Federal lease. The 

operator/lessee may apply to relinquish 

any such portion of a Federal lease 

under 43 CFR 3452.1. 

(d) The operator/lessee has agreed to 

the LMU stipulations required by the 

authorized officer for approval of the 

LMU. 

(e) The LMU does not exceed 25,000 

acres, including both Federal and nonFederal lands. 

(f) A lease that has not produced 

commercial quantities of coal during the 

first 8 years of its diligent development 

period can be included in an LMU only 

if at the time the LMU application is 

submitted: 

(1) A portion of the LMU under 

consideration is included in a SMCRA 

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

or 

(2) A portion of the LMU under 

consideration is included in an 

administratively complete application 

for a SMCRA permit. 

(g) A resource recovery and protection 

plan for the LMU or LMU modification 

must be approved by the BLM at the 

same time as or before the LMU that it 

supports. 

§ 3487.6 LMU decision. 

The authorized officer will state in 

writing the reasons for the decision on 

an LMU application. 

§ 3487.7 LMU modifications. 

(a) The boundaries of an LMU may be 

modified either upon application by the 

operator/lessee and approval of the 

authorized officer after consultation 

with the responsible officer of the 

surface managing agency, or by 

direction of the authorized officer. 

(b) Upon application by the operator/ 

lessee, an LMU may be enlarged by the 

addition of other Federal coal leases or 

with interests in non-Federal coal 

deposits, or both. The LMU boundaries 

may also be enlarged as the result of the 

enlargement of a Federal lease in the 

LMU, pursuant to 43 CFR part 3432. An 

LMU may be diminished by creation of 

other separate Federal leases or LMU’s 

or by the relinquishment of a Federal 

lease or portion thereof, pursuant to 43 

CFR part 3452. 

(c) In considering an application for 

the modification of an LMU, the 

authorized officer must consider 

modifying the LMU stipulations, 

including the production requirement 

for commercial quantities. 

(d) A change in the LMU recoverable 

coal reserves will be effective either: 

(1) When the BLM approves an LMU 

modification; or 

(2) When the BLM determines that the 

LMU recoverable coal reserves have 

changed due to new geologic 

information. 

(e) The 40-year period of an LMU is 

not extended by a modification of the 

LMU. The period of an LMU may only 

be extended by application under 

§ 3487.10. 

§ 3487.8 LMU operations. 

An LMU shall be administered in 

accordance with the following criteria: 

(a) Where production from nonFederal lands in the LMU is the basis, 

in whole or in part, for satisfaction of 

the requirements for diligent 

development or continued operation, 

the operator/lessee shall provide a 

certified report of such production, as 

determined by the authorized officer. 

The certified report shall include a map 

showing the area mined and the amount 

of coal mined. 

(b) Operators/lessees must comply 

with the diligent development, 

continued operation, and advance 

royalty requirements contained at 

§§ 3483.1 through 3483.6 of this title. 

(c) Operators/lessees must comply 

with the LMU stipulations. 


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§ 3487.9 LMU termination. 

(a) The BLM may terminate an LMU 

by administrative decision if the 

operator/lessee or LMU operator: 

(1) Fails to comply with the LMU 

stipulations; 

(2) Fails to submit a resource recovery 

and protection plan or a required 

resource recovery and protection plan 

modification: 

(3) Fails to achieve diligent 

development within the 10-year diligent 

development period; 

(4) Fails to maintain the LMU in 

continued operation or to pay advance 

royalty in lieu of continued operation; 

(5) Fails to secure an extension of the 

40-year mine out period, while 

continuing to sever coal beyond the 

40th year of the LMU agreement; 

(6) Fails to comply with other 

requirements of the LMU agreement, 

such as the requirement to pay royalty 

or to comply with a notice of 

noncompliance; or 

(7) Produces all recoverable Federal 

coal within the LMU. 

(b) The BLM will not terminate an 

LMU under paragraph (a) of this section 

unless it first provides the LMU 

operator/lessee and other persons with 

an interest in the LMU an opportunity 

to submit their views, together with 

supporting documentation, on whether 

the LMU should be terminated. 

(c) Once an LMU is terminated, any 

Federal coal lease that was in the LMU 

will revert to the terms and conditions 

of the lease as if the LMU never existed. 

§ 3487.10 Extension of the period of an 

LMU. 

(a) The designated LMU operator/ 

lessee may apply to the BLM to extend 

the term of an LMU beyond the initial 

40-year period. 

(b) An application to extend an LMU 

term beyond the initial 40-year period 

must provide sufficient information for 

the BLM to determine whether the 

extension complies with the provisions 

at either § 3487.5(b)(1) or (b)(2). The 

BLM may require additional 

information from the applicant to make 

the determination. 

(c) The BLM may approve an 

extension of the LMU term whenever 

such an extension complies with either 

§ 3487.5(b)(1) or (b)(2). 

(d) The LMU term may be extended 

by increments of not more than 10 

years. 

[FR Doc. 2013–19198 Filed 8–9–13; 8:45 am] 

BILLING CODE 4310–84–P 


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