[Senate Report 106-490]
[From the U.S. Government Publishing Office]
Calendar No. 939
106th Congress Report
SENATE
2d Session 106-490
======================================================================
POWDER RIVER BASIN RESOURCE DEVELOPMENT ACT OF 1999
_______
October 5 (legislative day September 22), 2000.--Ordered to be printed
_______
Mr. Murkowski, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany S. 1950]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 1950) to amend the Mineral Leasing Act of
1920 to ensure the orderly development of coal, coalbed
methane, natural gas, and oil in the Powder River Basin,
Wyoming and Montana, and for other purposes, having considered
the same, reports favorably thereon with an amendment and an
amendment to the title and recommends that the bill, as
amended, do pass.
The amendments, are as follows:
1. Strike out all after the enacting clause and insert in
lieu thereof the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Powder River Basin Resource
Development Act of 2000''.
SEC. 2. FINDINGS AND PURPOSE.
(a) Findings.--The Congress finds that:
(1) The Powder River Basin in Wyoming and Montana is one of
the world's richest energy resource regions, possessing the
largest reserves of coal in the United States and significant
deposits of oil and natural gas, including coalbed methane.
(2) The coal is predominantly federally-owned--either as part
of the public lands or reserved from public lands that were
sold under homestead laws enacted in 1909, 1910, and 1916--and
may be leased to coal producers by the Bureau of Land
Management, Department of the Interior, under the Mineral
Leasing Act.
(3) The gas and oil are owned by the Federal Government, the
States, and private parties.
(4) the federally-owned gas and oil, like the coal, are part
of the public lands and may be leased to oil and gas lessees by
the Bureau of Land Management under the Mineral Leasing Act.
(5) The privately-owned gas and oil were conveyed with the
public lands purchased under the three homestead laws and may
have been sold or leased to oil and gas producers by the
successors to those original purchasers.
(6) Development of those valuable energy resources is of
critical importance to the American public.
(7) These energy resources provide fuel to heat and light our
homes and power our industries.
(8) Extraction of these energy resources provides royalties,
taxes, and wages that contribute to national, State, and local
treasuries and economies.
(9) Development of both the coal and the gas and oil is
occurring in the Powder River Basin.
(10) In many locations the coal and the gas and oil have been
leased or sold to different parties. These resources are
frequently extracted sequentially, but for safety and
operational reasons typically cannot be extracted
simultaneously, in the same location. Where concurrent
development is impossible and even where it may be possible, in
certain of these locations disputes have arisen among the
different parties concerning plans for, and the course of,
development of these resources.
(11) The development of any one of these resources can result
in loss of another, either by making recovery impossible in the
case of coalbed methane or uneconomic in the case of deep
natural gas, oil, or coal.
(12) The nature, extent, and value of any loss or delay in
development of the gas, oil, or coal resource due to
development of another of these resources in the ``common
areas'' within the Powder River Basin in which disputes between
the resources' developers arise should be ascertained and fair
market value for the loss or delay should be provided by
agreement between the developers or by an expeditious
adjudication procedure.
(13) The Federal law under which most of the coal and much of
the gas and oil in the Powder River Basin are made available
for development should be amended to provide a procedure that
will assure the orderly development of the energy resources,
and fair treatment to the resources' developers, in the
``common areas'' within the Powder River Basin in which
disputes between the developers arise.
(b) Purposes.--The purposes of this Act are to--
(1) amend the Mineral Leasing Act to provide a consistent
procedure to resolve disputes between developers of coal and
developers of natural gas and oil in the ``common areas''
within the Powder River Basin to which this Act applies
concerning the sequence of development of those resources in
the same location, regardless of who owns the resources:
(2) encourage maximum recovery of the resources prior to the
time at which such disputes are likely to occur or thereafter
until the procedure provided by this Act is implemented;
(3) ensure that the procedure provided by this Act is
employed as a last resort if the disputes are not fully
resolved by voluntary agreements between the resources'
developers or administrative policies and actions;
(4) determines fair and just compensation owed for the loss,
or delay, in, the opportunity to develop a resource resulting
from implementation of the procedure provided by this Act; and
(5) provide expressly that the procedure provided by this Act
will neither apply to nor set any precedent for resolution of
disputes between or among resource developers outside of the
``common areas'' within the Powder River Basin to which this
Act applies.
SEC. 3. AMENDMENT TO THE MINERAL LEASING ACT.
The Mineral Leasing Act (30 U.s.C. 181 et seq.) is amended by
renumbering section 44 as section 45 and inserting the following new
section.
``SEC. 44. DEVELOPMENT OF COAL, NATURAL GAS, AND OIL IN THE POWDER
RIVER BASIN.
``(a) Definitions.--As used in this section:
``(1) The term `Powder River Basin' or `Basin' means the area
designated as `Powder River Basin' on a map entitled `MLA
Section 44 Powder River Basin Area', dated July 1, 1999, and on
file in the Wyoming and Montana State Offices of the Bureau of
Land Management, Department of the Interior.
``(2) The term `Subsection (g) Lands' means the area
designated as `Subsection (g) Lands' on the map described in
paragraph (1).
``(3) The term `Secretary' means the Secretary of the
Interior.
``(4) The term `Federal coal lease' means a lease of Federal
coal in the Basin issued pursuant to this Act.
``(5) The term `Federal coal lessee' means the holder of a
Federal coal lease.
``(6) The term `Federal oil and gas lease' means a lease of
Federal oil and gas in the Basin issued pursuant to the Act.
``(7) The term `oil an gas lease or right to develop' means a
Federal oil and gas lease or a lease for or right to develop
oil and gas in the Basin provided by a State or private owner
of the resources.
``(8) The term `non-Federal oil and gas lease or right to
develop' means a lease for or right to develop oil and gas in
the Basin provided by a State or private owner of the
resources.
``(9) The term `oil and gas developer' means the holder of an
oil or gas lease or right to develop.
``(10) The term `oil and gas property' means an area in the
Basin which is subject to an oil or gas lease or right to
develop held by an oil or gas developer.
``(11) The term `common area' means an area in the Basin in
which all or a portion of a Federal coal lease (including any
area of State or private coal within a logical mining unit with
the Federal coal lease) overlaps all or a portion of an oil and
gas property.
``(12) The term `approved or proposed mining plan' means a
mining plan that is approved by, or has been submitted for the
approval, of the Secretary.
``(13) The term `coalbed methane' shall have the meaning
given that term in section 1339(p)(2) of the Energy Policy Act
of 1992 (106 Stat. 2992, 42 U.S.C. 13368(p)(2)).
``(14) the term `owners of any interest in the oil and gas
property' means persons who own the working interest, lease
interest, operating interest, mineral interest, royalty
interest, or any other interest in the oil and gas property,
and any other persons who might receive compensation for
unavoidable fixed expenses under an order concerning the oil
and gas property issued pursuant to subsection (e)(10(E).
``(15) The term `owners of any non-Federal interest in the
oil and gas property' means all owners of any interest in the
oil and gas property except the Federal government or any
agency or department thereof.
``(16) The term `develop' or `development' means to develop
or to produce, or both, or the development or production, or
both, respectively, including all incidental operations.
``(b) Parties Encouraged to Enter Into Written Agreement.--In any
common area, the Federal coal lessee and oil and gas developer, subject
to applicable Federal and State laws, regulations, and lease terms, may
and are encouraged to enter into a written agreement that details
operations and assigns or assesses costs or compensation for the
concurrent or sequential development of those resources.
``(c) Mineral Conservation.--The Secretary shall employ any
authority the Secretary possesses to encourage expedited development of
any oil and gas resources and any coal resource that--
``(1) are leased pursuant to this Act;
``(2) are within common areas; and
``(3) otherwise may be lost or bypassed due to the
development of another of the resources.
``(d) Negotiations Concerning Development Priority for Certain
Operations in the Basin.--
``(1) Obligation to provide written notice of conflict.--
Whenever a Federal coal lessee or an oil and gas developer
determines that its Federal coal lease (or a logical mining
unit including the Federal coal lease) or its oil and gas
property is located in a common area, and, pursuant to an
approved or proposed mining plan, mining operations or
facilities in support of mining for coal on the Federal coal
lease or the logical mining unit will be located within the
common area, the Federal coal lessee or the oil and gas
developer shall deliver written notice of the determination to
the other party and the Secretary no later than 240 days prior
to the date on which the mining operations or construction of
the mine support facilities is projected by the approved or
proposed mining plan to commence in the common area.
``(2) Obligation to negotiate.--Promptly after providing the
notice referred to in paragraph (1), the party which provided
the notice shall seek to negotiate a written agreement with the
other party that resolves any conflict between the development
of gas or oil and development of coal in the common area.
``(e) Compensation Procedures for Assignment of Development
Priority.--
``(1) Petition for relief.--
``(A) If notice is submitted timely pursuant to
subsection (d)(1) and the Federal coal lessee and the
oil and gas developer engage in negotiations, but do
not reach agreement, pursuant to subsection (d)(2), the
Federal coal lessee or the oil and gas developer may
file a petition for relief as described in subparagraph
(C) in the United States district court for the
district in which the common area is located on any
date which is not less than 180 days prior to the date
on which the mining operations or construction of the
mine support facilities is projected by the approved or
proposed mining plan to commence in the common area.
``(B) The petitioner shall serve the oil and gas
developer or the Federal coal lessee, as the case may
be, and the Secretary with a copy of the petition for
relief on the same date upon which the petition is
filed with the court pursuant to subparagraph (A).
``(C) The petition for relief shall include the
following:
``(i) A description and map of the Federal
coal lease, the oil and gas property, and the
common area.
``(ii) A list containing the names and
addresses of all owners of any non-Federal
interest in the oil and gas property and all
owners of any non-Federal interest in the
Federal coal lease or logical mining unit. The
petitioner shall list those owners of any non-
Federal interest in the oil and gas property
and of the Federal coal lease or logical mining
unit whom the petitioner is able to ascertain
from the properly indexed records of the county
recorder of the county or counties in which the
oil and gas property and Federal coal lease or
logical mining unit are located, and the
respondent shall file with the court and serve
on the petitioner and the Secretary any
corrections of, additions to, or deletions from
the list known to the respondent within 10 days
of the date of service of the petition for
relief pursuant to subparagraph (B).
Thereafter, whenever any correction of,
addition to, or deletion from the list becomes
known to either the petitioner or the
respondent, that party shall promptly file with
the court and serve on the other party and the
Secretary the addition, correction, or
deletion. Any person who believes he or she is
an owner of any non-Federal interest in the oil
and gas property or in the Federal coal lease
or logical mining unit and is omitted from the
list may file a motion in the court to be added
to the list at any time prior to the issuance
of an order pursuant to paragraph (10)(E) or
paragraph (11)(C).
``(iii) A certified copy of the notice
described in subsection (d)(1).
``(iv) a sworn statement by a senior officer
of the petitioner with authority to commit the
petitioner in any negotiation under subsection
(d)(2) stating, and all documents
demonstrating, that the petitioner negotiated
or attempted to negotiate in good faith with
the respondent a voluntary agreement, pursuant
to subsection (d)(2).
``(D) The Federal coal lessee shall submit a copy of
the approved or proposed mining plan for the mining
operations or support facilities that are the subject
of the petition for relief--
``(i) with the petition for relief if the
Federal coal lessee is the petitioner; or
``(ii) within 5 days of the date of service
of the petition for relief pursuant to
subparagraph (B) if the Federal coal lessee is
the respondent.
``(2) Joinder of parties.--The Secretary and all owners of
any non-Federal interest in the oil and gas property and in the
Federal coal lease or logical mining unit identified pursuant
to paragraph (1)(C)(ii) shall be joined in the proceedings
established pursuant to this subsection.
``(3) Parties' response to petition.--The non-Federal
respondent or respondents may provide to the Secretary a
response to the petition within 30 days from the date of filing
of the petition for relief pursuant to paragraph (1)(A). The
Secretary may require the petitioner and the respondent or
respondents to submit such documents and/or provide such
testimony as the Secretary deems appropriate within 60 days of
such date of filing.
``(4) Secretary's initial response to petition.--Within 90
days of the date of filing of the petition for relief pursuant
to paragraph (1)(A) the Secretary shall take the following
actions:
``(A) The Secretary shall determine, with petitioner
having the burden of proof--
``(i) whether a common area exists; and
``(ii) whether the approved or proposed
mining plan submitted pursuant to paragraph
(3)(D) provides for the mining operations to
intersect, or the mine support facilities to be
constructed in, any portion of the common area.
``(B)(i) If existence of the common area and
intersection of, or construction in, the common area
are determined pursuant to subparagraph (A), the
Secretary shall determine whether the public interest
is best realized by delaying or foregoing development
of either--
``(I) the oil or gas resource to permit the
mining operations to intersect, or the mine
support facilities to be constructed in, the
common area in accordance with the approved or
proposed mining plan; or
``(II) the coal resource to permit
commencement or continuation of the development
of the oil or gas resource in the common area
after the date on which the mining operations
of construction of the mine support facilities
is projected by the approved or proposed mining
plan to commence in the common area.
``(ii) The Secretary shall make the public interest
determination described in clause (i) solely by the
calculation of the greater economic benefit to be
realized by comparison, on a net present value basis,
of the Federal and State revenues from royalties and
severance taxes likely to be generated from each
resource underlying the common area to which the
petition for relief applies.
``(C)(i) If any portion of the resource for which
delayed or foregone development is determined to be in
the public interest pursuant to subparagraph (B) is
subject to a lease issued pursuant to this Act, the
Secretary shall suspend all or any portion of,
including any geographical area of or zone or reservoir
subject to, the lease to accommodate development of the
other resource in the common area during the period
beginning on a date no later than the commencement date
referred to in paragraph (1)(A) and provided in the
notice submitted pursuant to paragraph (1)(C)(iii) and
ending on the date on which an order is issued pursuant
to paragraph (10)(E) or paragraph (11)(C).
``(ii) The Secretary may refrain from either making
the determinations required by subparagraphs (A) and
(B) or suspending all or any portion of a lease issued
pursuant to this Act as required by clause (i) only if
the Secretary determines that--
``(I) no common area exists; or
``(II) the approved or proposed mining plan
does not provide for the mining operations to
intersect, or the mine support facilities to be
constructed in, the common area.
``(D) The Secretary shall--
``(i) report the determinations made pursuant
to subparagraphs (A) and (B) or subparagraph
(C)(ii) and any suspension made pursuant to
subparagraph (C)(i), including the
administrative record therefor, with the court
in which the petition for relief is filed
pursuant to paragraph (1)(A); and
``(ii) provide the petitioner and respondent
or respondents with copies of the report and
record.
``(5) Court's initial response to petition.--
``(A)(i) The court in which the petition is filed
pursuant to paragraph (1)(A) shall have exclusive
jurisdiction to receive and review the report of the
Secretary required by paragraph (4)(D), and the
determinations made and any action taken by the
Secretary pursuant to paragraph (4).
``(ii) The petitioner and respondent or respondents
shall have 30 days from the date upon which the report
of the Secretary is filed with the court pursuant to
paragraph (4)(D) in which to file with the court any
objection to any determination of the Secretary
required by paragraph (4).
``(iii) If any objection is filed pursuant to clause
(ii), the court shall, within 60 days of receipt of the
report of the Secretary pursuant to paragraph (4)(D),
make the determination that is the subject of the
objection on the basis of the administrative record
filed with the report and in accordance with the
applicable requirements or standards of subparagraph
(A) or subparagraph (B) of paragraph (4).
``(iv) Any determination made by the court pursuant
to clause (iii) shall be an independent judicial
determination that is de novo, without regard to the
prior determination of the Secretary.
``(v) If no objection is filed pursuant to clause
(ii), the determinations of the Secretary required by
paragraph (4) shall be final and approved by the court
in the order issued pursuant to subparagraph (B) or
subparagraph (E).
``(B) Within 90 days of the date of receipt of the
report of the Secretary pursuant to paragraph (4)(D),
the court, except as provided in subparagraph (E),
shall issue an order that--
``(i) suspends all or any part of, including
any geographical area of or reservoir subject
to, any non-Federal oil and gas lease or right
to develop, or any non-Federal interest in any
logical mining unit that include the Federal
coal lease, in the common area in accordance
with the determination of the Secretary
pursuant to subclause (I) or subclause (II),
respectively, of paragraph (4)(B)(i) or in
accordance with the determination of the court
pursuant to subparagraph (A)(iii), and
``(ii) if required by a determination of the
court pursuant to subparagraph (A)(iii),
terminates a suspension of a lease issued
pursuant to this Act imposed by the Secretary
pursuant to paragraph (4)(C)(i), or imposes a
suspension of a lease issued pursuant to this
Act, or both, in accordance with the
determination; and
``(iii) if all or any part of the oil and gas
lease or right to develop is suspended pursuant
to paragraph (4)(C)(i) or this subparagraph,
fixes the date upon which the Federal coal
lease may commence mining operations or
construction of mine support facilities in the
common area, which may be no later than the
commencement date referred to in paragraph
(1)(A) and provided in the notice submitted
pursuant to paragraph (1)(C)(iii), except for
good cause shown; and
``(iv) if all or any part of the Federal coal
lease and/or any non-Federal interest in the
logical mining unit that includes the Federal
coal lease is suspended pursuant to paragraph
(4)(C)(i) or this subparagraph, prohibits the
mining operations from intersecting, or the
support facilities from being constructed in,
all or a portion of the common area.
``(C) The order of the court issued pursuant
to subparagraph (B) shall expire upon the
issuance of an order pursuant to paragraph
(10)(E) or paragraph (11)(C).
``(D) The court may refrain from issuing the order
required by subparagraph (B), only if--
``(i) the Secretary makes a determination
described in paragraph (4)(C)(ii); or
``(ii) the court, acting on an objection
filed pursuant to subparagraph (A)(ii),
determines that--
``(I) no common area exists; or
``(II) the approved or proposed
mining plan submitted pursuant to
paragraph (1)(D) does not provide for
the mining operations to intersect, or
the mine support facilities to be
constructed in, the common area.
``(E) If the Secretary makes a determination
described in paragraph (4)(C)(ii) or the court makes a
determination described in subparagraph (D)(ii), the
court shall issue an order terminating the proceeding
under this subsection.
``(6) Valuation procedure: appointment of experts.--
``(A) Within 30 days of the date of issuance of an
order pursuant to paragraph (5)(B), to assist the court
in making the determinations pursuant to paragraph (10)
or paragraph (11), the Federal coal lessee and the oil
and gas developer shall each appoint a person who is an
expert in appraising the value of, and right to
develop, gas or oil if all or any part of the oil and
gas lease or right to develop is suspended, or coal if
all or any part of the Federal coal lease and/or any
non-Federal interest in the logical mining unit that
includes the Federal coal lease is suspended, pursuant
to paragraph (4)(C) and/or paragraph (5)(B), and these
persons shall agree upon and appoint a third person
with such expertise. If no agreement is reached on the
date of appointment of a third person, the court shall
make the appointment.
``(B) The Federal coal lessee shall be responsible
for compensation of the expert appointed by it; the oil
and gas developer shall be responsible for compensation
of the expert appointed by it; and the Federal coal
lessee and oil and gas developer shall each pay one-
half of the compensation for the third expert.
``(7) Information and data.--
``(A) The Federal coal lessee, oil and gas developer,
and Secretary shall each submit to the panel of experts
within 30 days of the date of appointment of the panel
pursuant to paragraph (6) all information and data in
the possession of such party that is pertinent to the
determinations to be made pursuant to paragraph (10) or
paragraph (11), and shall each submit to the panel of
experts thereafter any additional pertinent information
and data in the possession of such party that the panel
requests of such party in writing.
``(B) Except as provided in subparagraph (C), the
court shall ensure that any information and data
submitted to the panel of experts pursuant to
subparagraphs (A) and (D) shall have the protection of
confidentiality that is applicable, and may be
accorded, to them by law and the federal rules of civil
procedure and evidence.
``(C) All information and data submitted to the panel
of experts pursuant to subparagraphs (A) and (D) shall
be available for review by all parties unless an ex
parte order is issued by the court.
``(D)(i) The Federal coal lessee may drill for and
otherwise collect data or information on coalbed
methane at any site or sites within the common area
that are not within a spacing unit containing a well
that is producing or capable of producing coalbed
methane under the conditions set forth in clause (ii).
``(ii) The drilling or collection of data or
information authorized by clause (i) shall be for the
sole purpose of submission of information and data
pursuant to this paragraph.
``(iii) The Federal coal lessee shall not produce any
coalbed methane as a result of any drilling authorized
by clause (i) and shall comply with any Federal or
State requirements applicable to such activity.
``(iv) The Federal coal lessee shall submit to the
Secretary an exploration plan to conduct any drilling
pursuant to clause (i). The Secretary shall approve,
approve as modified, or reject the plan, within 15 days
of the date of its submission. The Secretary may modify
or reject the plan only for good cause fully set forth
in writing and provided to the Federal coal lessee. The
Federal coal lessee shall adhere to the plan, as
approved by the Secretary.
``(8) Submission of briefs and hearing.--
``(A) Within 45 days of the date of appointment of
the panel of experts pursuant to paragraph (6), all
parties may submit briefs concerning the determinations
to be made pursuant to paragraph (10) or paragraph
(11).
``(B) Within 60 days of the date of appointment of
the panel of experts pursuant to paragraph (6), the
panel may, or if requested by the petitioner or a
respondent shall, receive testimony from all parties
concerning the determinations to be made pursuant to
paragraph (10) or paragraph (11).
``(9) Experts' report.--Within 120 days of the date of
appointment of the panel of experts pursuant to paragraph (6),
the panel shall submit a written report to the court providing
in detail the panel's recommendations on the determinations to
be made pursuant to paragraph (10) or paragraph (11).
``(10) Court's final response to petition: valuation
concerning economically recoverable oil or gas resources lost
or delayed, suspension or termination, and payment order.--
Within 210 days of the date of issuance of an order pursuant to
paragraph (5)(B), by which, or by any action of the Secretary
pursuant to paragraph (4)(C)(i), all or any part of the oil and
gas lease or right to develop is suspended, the court shall
take the following actions:
``(A)(i) The court shall determine whether, as a
result of the order or any action of the Secretary, all
or any part of, including any geographical area of or
zone or reservoir subject to, the oil and gas lease or
right to develop should be suspended during any
remaining period in which the mining operations or
support facilities occupy the common area or whether
the oil and gas lease or right to develop should be
terminated.
``(ii) Any determination to suspend pursuant to
clause (i) shall, wherever possible or appropriate,
limit the suspension or phase the suspension to permit
the optimum development of the oil or gas prior to the
time at which the mining operations would reach the
area within the common area that is subject to the
suspension or particular phase of the suspension.
``(iii) Any determination to terminate pursuant to
clause (i) shall be made only if the court finds that
the economically recoverable oil and gas resources
subject to compensation pursuant to subparagraph (E)
would be entirely lost or rendered impracticable to
produce as a consequence of the mining operations in
the common area and that such resources constitute all
of the economically recoverable resources within the
oil and gas property.
``(B) If the court makes a determination to suspend
pursuant to subparagraph (A), the court shall
determine--
``(i) the amount of any net income that will
not be realized due to delay in development of
economically recoverable resources of oil or
gas, other than coalbed methane from common
area, whether or not such development has
commenced;
``(ii) the amount of any net income that will
not be realized, whether or not development of
coalbed methane has commenced, that is due to--
``(I) delay in development of
economically recoverable resources of
coalbed methane in the common area; and
``(II) the loss of any economically
recoverable resources of coalbed
methane from the coal to be extracted
by the mining operations in the common
area; and
``(III) the loss of any economically
recoverable resources of coalbed
methane underlying any area that is
within the oil and gas property
associated with the common area and
that extends outward from each exposed
coal face of the mining operations for
a distance from which drainage of such
resource is established to the
satisfaction of the court; and
``(iii) any of the following damages that
will be incurred by the owners of any interest
in the oil and gas property as a consequence of
the suspension: any unavoidable fixed expenses
(including, but not limited to, the expenses of
shutting in production from, maintenance of,
testing of, and redrilling or reconnecting an
existing well; relaying pipeline; and all other
expenses reasonably related to reestablishing
any existing oil or gas production); expenses
associated with stranded costs of drilling
equipment and facilities; any lost royalties on
oil or gas not produced by the oil and gas
developer; and any lost income associated with
temporarily shutting in production from wells
outside of the common area as needed for
reconnection to a gathering system or pipeline
to market.
``(C) The determinations made pursuant to
subparagraph (B) shall not include any decrease in net
income or damages resulting from loss of any oil or gas
resources that occurred before the date of the
determinations and is caused by mining within or
outside of the common area on the Federal coal lease or
logical mining unit that is the subject of the common
area determination made pursuant to paragraph
(4)(A)(i).
``(D) If the court makes a determination to terminate
pursuant to subparagraph (A), the court shall determine
the amount of any net income that will not be realized
and any damages due to the loss of, or impracticability
to produce, the economically recoverable resources of
oil or gas in the oil and gas property in the same
manner as provided in subparagraph (B).
``(E) The court shall issue an order that--
``(i) suspends all or any part of, suspends
in phases parts of, or terminates the oil and
gas lease or right to develop, including any
applicable payment or production obligations,
in accordance with the determination made
pursuant to subparagraph (A); and
``(ii) awards to the oil and gas developer
and all other owners of any interest in the oil
and gas property, as their interests may
appear, a sum of money from the Federal coal
lessee equal to the net income amount and
damages determined pursuant to subparagraph (B)
or subparagraph (D).
``(F) In determining the amount of net income that
will not be realized pursuant to subparagraph (B) or
subparagraph (D) and the sum of money to be awarded
pursuant to subparagraph (E), the court shall ensure to
the best of its ability that the Federal coal lessee is
not required to pay for the same gas lost, delayed in
development, or rendered impracticable to develop to
more than one oil and gas developer or the owners of
any interest in more than one oil and gas property.
``(11) Court's final response to petition; Valuation
concerning economically recoverable coal resources lost or
delayed, suspension or termination and payment order.--Within
210 days of the date of issuance of an order pursuant to
paragraph (5)(B) by which or by any action by the Secretary
pursuant to paragraph (4)(C)(i), the Federal coal lease and/or
any non-Federal interest in the logical mining unit is
suspended, the court--
``(A) shall determine whether, as a result of the
order or any action of the Secretary, the Federal coal
lease and/or any non-Federal interest in the logical
mining unit shall be suspended in whole or in part to
further accommodate oil or gas development in the
common area; and
``(B) shall determine the amount of any net income
that will not be realized from the loss or delay in
development of economically recoverable resources of
coal, and the unavoidable fixed expenses (including,
but not limited to, additional expenses associated with
reclamation, expenses associated with stranded costs of
mining equipment and facilities, a proportionate refund
of the lease bonus, and any lost royalties on coal not
produced by the Federal coal lessee) that will be
incurred, by the Federal coal lessee as a consequence
of the suspension; and
``(C) shall issue an order that--
``(i) suspends, in accordance with the
determination made pursuant to subparagraph
(A), all or any part of the Federal coal lease
and/or any non-Federal interested in the
logical mining unit, including any applicable
payment or production obligations on the lease
or logical mining unit, for the period
necessary for expeditious development in the
common area of the gas or oil that is the
subject of the petition for relief as
demonstrated to the court in a production plan
submitted by the oil and gas developer; and
``(ii) awards to the Federal coal lessee and
all other owners of any interest in the Federal
coal lease or logical mining unit, as their
interests may appear, a sum of money equal to
the net income amount and unavoidable fixed
expenses determined pursuant to subparagraph
(B).
``(12) Review of experts' report.--
``(A) The court shall make the determinations
required by paragraph (10) or paragraph (11) after
reviewing the report of the panel of experts submitted
pursuant to paragraph (9) and the hearing required by
subparagraph (B).
``(B) After submission of the report of the panel of
experts pursuant to paragraph (9) and prior to making
the determinations required by paragraph (10) or
paragraph (11), the court shall hold a hearing in which
the panel of experts shall present their report and the
parties to the proceeding shall have the opportunity to
examine the panel and provide to the court any evidence
or arguments they may have to support or contravene the
recommendations of the report.
``(13) Disbursement of payments.--
``(A)(i) At the election of the oil and gas
developer, the sum of money awarded by the court
pursuant to paragraph (10)(E) shall be--
``(I) paid in full within 60 days of the date
of issuance of the order pursuant to paragraph
(10)(E); or
``(II) divided into the number of tons of
recoverable coal in the common area and paid in
per ton increments as the coal is mined in
accordance with clause (ii) and subparagraph
(C).
``(ii) The Federal coal lessee shall make the payment
required by clause (i)(II) on a quarterly basis in
advance based on the Federal coal lessee's estimate of
the number of tons of coal to be mined in the common
area during the following quarter, and shall add or
subtract an amount to or from the advance payment for
the next quarter to reflect the coal actually sold or
transferred.
``(B)(i) At the election of the Federal coal lessee,
the sum of money awarded by the court pursuant to
paragraph (11)(C) shall be:
``(I) paid in full within 60 days of the date
of issuance of the order pursuant to paragraph
(11)(C); or
``(II) divided into the number of barrels of
recoverable oil or cubic feet of recoverable
gas in the common area and paid in per barrel
or cubic feet increments as the oil or gas is
produced in accordance with clause (ii) and
subparagraph (C).
``(ii) The oil and gas developer shall make the
payments required by clause (i)(II) on a quarterly
basis in advance based on the oil and gas developer's
estimate of the number of barrels of oil or cubic feet
of gas to be produced in the common area during the
following quarter, and shall add or subtract an amount
to or from the advance payment for the next quarter to
reflect the oil or gas actually produced.
``(C) If the mining or production necessary to make
full payment of the sum of money awarded by the court
in accordance with subparagraph (A)(i)(II) or
subparagraph (B)(i)(II) does not occur within 5 years
of the date of issuance of the court order pursuant to
paragraph (10(E) or paragraph (11)(C), the unpaid
balance shall be paid within 60 days thereafter.
``(14) Termination of oil and gas lease suspension.--
``(A) If the court issues an order to suspend all or
any part of the oil and gas lease or right to develop
pursuant to paragraph (10(E)--
``(i) the Federal coal lessee shall notify
the court and the oil and gas developer when
the portion of the common area subject to the
order issued pursuant to paragraph (10)(E) is
no longer required for mining operations or
support facilities; and
``(ii) within 120 days of the date of receipt
by the court of the notification pursuant to
clause (i) or within 60 days prior to the date
on which the period established by the court in
the order issued pursuant to paragraph (10)(E)
concludes, the oil and gas lessee may petition
the court for an order that terminates the
suspension and fixes the date and terms on
which the oil and gas lessee may resume
operations within the portion of the common
area subject to the order issued pursuant to
paragraph (10)(E).
``(B) The court shall issue the order sought under
subparagraph (A)(ii) within 30 days of the date of
receipt of the petition pursuant to subparagraph
(A)(ii).
``(C)(i) If the oil and gas developer determines
that, as a consequence of the order of the court issued
pursuant to paragraph (5)(B) and an order to suspend
all or any part of the oil and gas lease or right to
develop pursuant to paragraph (10)(E), the conditions
described in paragraph (10)(A)(iii) exist, the oil and
developer may petition the court to terminate the oil
and gas and lease or right to develop.
``(ii) The petition referred to in clause (i) may be
filed any time after issuance of the order of the court
pursuant to paragraph (10)(E) but not later than 120
days after the date of receipt by the court of the
notification pursuant to subparagraph (A)(i).
``(iii) Upon receipt of a petition pursuant to clause
(i), the court shall make a determination whether to
issue an order to terminate the oil and gas lease or
right to develop and award an additional amount from
the Federal coal lessee to the oil or gas developer and
all other owners of any interest in the oil and gas
property, as their interests may appear, in accordance
with the procedures and deadlines established in
paragraphs (1) and (6) through (13).
``(15) Termination of coal lease suspension.--
``(A) If the court issues an order requiring
suspension of all or any part of the Federal coal lease
and/or any non-Federal interest in the logical mining
unit that includes the Federal coal lease pursuant to
paragraph (11)(C)--
``(i) the oil and gas developer shall notify
the court and the Federal coal lessee when the
portion of the common area subject to the order
issued pursuant to paragraph (11)(C) is no
longer required for gas or oil production from
such portion; and
``(ii) within 120 days of the date of receipt
by the court of the notification pursuant to
clause (i) or within 60 days prior to the date
on which the period established by the court in
the order issued pursuant to paragraph (11)(C)
concludes, the Federal coal lessee may petition
the court for an order that fixes the date and
terms on which the Federal coal lessee may
commence mining operations or construction of
support facilities in the portion of the common
area subject to the order issued pursuant to
paragraph (11)(C) and, if all or any part of
the Federal coal lease and/or any non-Federal
interest in the logical mining unit is
suspended, terminates the suspension.
``(B) The court shall issue the order sought under
subparagraph (a)(ii) within 30 days of the date of
receipt of the petition pursuant to subparagraph
(A)(ii).
``(C)(i) If the Federal coal lessee determines that,
as a consequence of the order of the court issued
pursuant to paragraph (11)(C), further development of
all or any part of the Federal coal lease and/or any
non-Federal interest in the logical mining unit is
impracticable, the Federal coal lessee may petition the
court to terminate all or any part of the Federal coal
lease and/or any non-Federal interest in the logical
mining unit.
``(ii) The petition referred to in clause (i) may be
filed any time after issuance of the order of the court
pursuant to paragraph (11)(C) but not later than 120
days after the date of receipt by the court of the
notification pursuant to subparagraph (A)(i).
``(iii) Upon receipt of a petition pursuant to clause
(i), the court shall make a determination whether to
issue an order to terminate all or any part of the
Federal coal lease and/or any non-Federal interest in
the logical mining unit and award an additional amount
from the oil and gas developer to the Federal coal
lessee and all other owners of any interest in the
Federal coal lease or logical mining unit, as their
interests may appear, in accordance with the procedures
and deadlines established in paragraphs (1) and (6)
through (13).
``(16) Supplemental petition for relief.--
``(A) If, at any time after the issuance of an order
pursuant to paragraph (10(E) or paragraph (11)(C), the
mining plan that is the basis of the order is altered
in a manner that may warrant suspension of an
additional part or all of, or termination of, the oil
and gas lease or right to develop or suspension of an
additional part of the Federal coal lease and/or any
non-Federal interest in the local mining unit that
includes the Federal coal lease and/or an increase in
the sum of money that was awarded under the order,
either the Federal coal lessee or the oil and gas
developer may, if necessary after compliance with the
requirements of subsection (d), file a supplemental
petition of relief with the court to amend the order.
``(B) The requirements of paragraphs (1) and (6)
through (13) shall apply to the supplemental petition
submitted pursuant to subparagraph (A).
``(C)(i) Upon completion of the process required by
subparagraph (B), the court shall make a determination
whether to suspend an additional part or all of, or
terminate, the oil and gas lease or right to develop or
to suspend an additional part of the Federal coal lease
and/or any non-Federal interest in the logical mining
unit as described in, and to award an additional sum of
money calculated in accordance with, paragraph (10) or
paragraph (11).
``(ii) The court shall issue any order resulting from
the determinations made pursuant to clause (i) within
90 days of the date of filing of the supplemental
petition for relief.
``(iii) Any award of an additional sum of money shall
be paid in accordance with paragraph (13).
``(17) Appeal of court orders.--
``(A) Any order issued pursuant to paragraph (5)(B),
paragraph (5)(E), paragraph (14(B), or paragraph
(15)(B) is final and may not be appealed.
``(B) Any order issued pursuant to paragraph (10)(E),
paragraph (11)(C), paragraph (14)(C)(iii), paragraph
(15)(C)(iii), or paragraph (16)(C)(ii) may be appealed,
but the appeal, and any disposition thereof, may not
disturb any order referred to in subparagraph (A).
``(18) Suspension term.--
``(A) If all or any part of any lease issued pursuant
to this Act is suspended in whole or in part by the
Secretary or the court under this subsection--
``(i) the lessee shall not be required to pay
any rental for the lease for the period of the
suspension; and
``(ii) if the lease is a Federal oil or gas
lease and is in the primary term or if the
lease is a Federal coal lease, the term of the
lease shall be extended by the length of the
period of the suspension plus one year; or
``(iii) the lease shall not terminate due to
lack of production for the period of the
suspension plus one year.
``(B) If any non-Federal oil and gas lease or right
to develop or any non-Federal interest in a logical
mining unit is suspended in whole or in part by the
court under this subsection, the court shall establish
terms for the suspension comparable to the terms set
forth in subparagraph (A).
``(f) Liability Limitation.--
``(1) Federal coal lessee--Except as provided in a written
agreement reached pursuant to subsection (d)(2) or reached on
or after September 1, 1999, and before the date of enactment of
this section, or as provided by an order of the court pursuant
to subsection (e), neither the holder of a Federal coal lease
subject to the agreement or order nor the United States shall
be liable to the oil and gas developer of, or any owner of an
interest in, any oil and gas property subject to the agreement
or order for any decrease in or depletion of, or any impairment
of the ability to recover, any gas or oil from the property
that may result from the development of any coal on the Federal
coal leasehold or within a logical mining unit that includes
the Federal coal lease.
``(2) Oil and gas developer.--Except as provided in a written
agreement reached pursuant to subsection (d)(2) or reached on
or after September 1, 1999, and before the date of enactment of
this section, or as provided by an order of the court pursuant
to subsection (e), neither the oil and gas developer of an oil
and gas property subject to the agreement or order nor the
United States shall be liable to a holder of a Federal coal
lease subject to the agreement or order, or any owner of any
non-Federal interest in a logical mining unit that includes the
Federal coal lease, or the United States for any impairment of
the ability to recover coal from the Federal coal leasehold or
logical mining unit that may result from the development of gas
or oil on the property.
``(g) Credit Against Royalties.--
``(1) In general.--
``(A) Whenever a holder of a Federal coal lease is
required by a written agreement reached pursuant to
subsection (d)(2) and approved by the Bureau of Land
Management or reached prior to the date of enactment of
this section and approved by the Bureau of Land
Management on or after September 1, 1999, or by a court
order issued pursuant to paragraph (10(E), paragraph
(14)(C)(iii), or paragraph (16)(C)(ii) of subsection
(e), to pay an amount for suspension of all or part of,
or termination of, a Federal oil and gas lease for
coalbed methane located within the Subsection (g)
Lands, the amount so paid shall be credited against any
royalties on production required by section 7(a) or any
other provision of this Act from any lease of Federal
coal issued under this Act to such holder or any
affiliate thereof.
``(B) Whenever a holder of a Federal oil and gas
lease is required by a written agreement reached
pursuant to subsection (d)(2) and approved by the
Bureau of Land Management or reached prior to the date
of enactment of this section and approved by the Bureau
of Land Management on or after September 1, 1999, or by
a court order issued pursuant to paragraph (11)(C),
paragraph (15)(C)(iii), or paragraph (16)(C)(ii) of
subsection (e), to pay an amount for suspension or
termination of all or part of a Federal coal lease
located within the Subsection (g) Lands, the amount so
paid shall be credited against any royalties on
production required by subsection (b)(1)(A) or
subsection (c)(1) of section 17 or any other provision
of this Act from any lease of Federal oil and gas
issued under this Act to such holder or any affiliate
thereof.
``(2) Treatment of royalties to states.--The Secretary shall
pay to the State in which the Federal coal lease or Federal oil
and gas lease referred to in paragraph (1)(A) or paragraph
(1)(B), respectively, is located 50 percent of the amount of
any credit against royalties provided under paragraph (1)(A) or
paragraph (1)(B), respectively,--
``(A) in the same manner as if the credit against
royalties had been paid in money as royalties and
distributed under section 35(a) of this Act; and
``(B) from amounts received as royalties, rentals, or
bonuses derived from leases issued under this Act that
otherwise would be deposited to miscellaneous receipts
under section 35(a) of this Act.
``(B) from amounts received as royalties, rentals, or
bonuses derived from leases issued under this Act that
otherwise would be deposited to miscellaneous receipts
under section 35(a) of this Act.
``(h) Denial of Use as Precedent.--Nothing in this section shall be
applicable to any lease under this Act for any mineral, or shall be
applicable to, or supersede any statutory or common law otherwise
applicable in, any proceeding in any Federal or State court involving
development of any mineral, outside of any common area, as defined in
subsection (a)(11), within or outside of the Powder River Basin, as
defined in subsection (a)(1).''.
SEC. 4. EFFECTIVE DATE.
This Act shall be effective upon the date of its enactment.
2. Amend the title so as to read:
To Amend the Mineral Leasing Act of 1920 to ensure the
orderly development of coal, coalbed methane, natural gas, and
oil in ``common areas'' of the Powder River Basin, Wyoming and
Montana, and for other purposes.
Purpose of the Measure
S. 1950 would amend the Mineral Leasing Act by establishing
a procedure for resolving disputes over the development of coal
and coalbed methane where the development rights are held by
different parties.
Background and Need
The energy-rich Powder River Basin is located in Wyoming
and Montana. It contains the largest reserves of coal in the
United States and significant deposits of oil and natural gas.
Some of the gas, known as coalbed methane, is captured within
the coal seams.
The coal is predominately federally owned and managed by
the Bureau of Land Management (BLM), Department of the
Interior, either as part of the public domain or reserved by
the Government when public domain lands were sold into private
ownership under homestead laws enacted in 1909, 1910, and 1916.
The oil and gas are under mixed Federal, State, and private
ownership. The Federal coal, oil, and gas may be leased for
development by the BLM under the Mineral Leasing Act. The
State-owned oil and gas are also made available by leasing
rights that were conveyed under the three homestead acts. These
rights are typically sold or leased to oil and gas developers
by successors to the original homesteaders. Last year, the
Supreme Court ruled that coalbed methane underlying the
homestead lands was conveyed with them as part of the oil and
gas estate and not retained by the federal government in the
reserved coal estate. Accordingly, rights to develop this
privately-owned coalbed methane are leased or sold in the same
manner as the development rights for private oil and deep gas.
Production of all three minerals, coal, gas, and oil, is
occurring in the Basin. The BLM frequently has issued both coal
leases and oil and gas leases for the same locations, allowing
the minerals to be developed without restrictions or guidance
as to the timing of their respective development processes.
Although these minerals are frequently developed sequentially,
for safety and operational reasons they typically cannot be
developed concurrently. The order of development of the
minerals can be important because production of any one of them
can result in the loss of another. For example, the coalbed
methane will be vented if the coal is mined first; the coal may
be bypassed if the coalbed methane owner fails to produce the
gas before the mine face progresses past the gas lease. Even if
the one resource is not lost, costs can be incurred due to the
delay or interruption in its development to accommodate the
earlier production of the other resource. In such
circumstances, disputes have arisen between the coal developers
and the oil and gas developers over their resource development
plans.
No clear statutory or regulatory direction to resolve these
disputes exists. The Federal lessor, the BLM, historically has
taken the position that the disputes must be settled by the
lessees. In some situations, the two resources' developers have
been able to reach agreement on the timing of development of
the multiple minerals in the same location and the equitable
compensation the first developer will pay to the second for its
losses. There are, however, situations in which the resource
developers have not been able to reach an accord. These
unresolved disputes create business uncertainties, may make
conservation of the resource difficult or impossible, and
reduce Federal and State revenues. The legislation is intended
to provide statutory direction and establish procedures for
resolution of these disputes within a well defined period of
time.
Legislative History
S. 1950 was introduced by Senator Enzi for himself and
Senator Thomas and referred to the Committee on Energy and
Natural Resources on November 17, 1999. The Subcommittee on
Forests and Public Land Management held a hearing on S. 1950 on
February 24, 2000.
During the consideration of S. 1950 on June 7, 2000, the
Committee on Energy and Natural Resources adopted an amendment
in the nature of a substitute offered by Senator Thomas after
rejecting a substitute to the Thomas amendment offered by
Senator Bingaman. The Committee on Energy and Natural Resources
then ordered S. 1950, as amended by the Thomas Substitute,
favorably reported.
Committe Recommendations and Tabulation of Votes
The Senate Committee on Energy and Natural Resources, in
open business session on June 7, 2000, by a majority voice vote
of a quorum present recommends that the Senate pass S. 1950 if
amended as described herein.
The rollcall vote on the Bingaman substitute to the Thomas
substitute was not agreed to by a vote of 9 yeas, 11 nays as
follows:
YEAS NAYS
Mr. Bingaman Mr. Murkowski
Mr. Akaka \1\ Mr. Domenici \1\
Mr. Dorgan Mr. Nickles \1\
Mr. Graham Mr. Craig
Mr. Wyden Mr. Campbell
Mr. Johnson \1\ Mr. Thomas
Ms. Landrieu \1\ Mr. Smith
Mr. Bayh \1\ Mr. Bunning
Ms. Lincoln Mr. Fitzgerald
Mr. Gorton
Mr. Burns
\1\ Indicates vote by proxy.
The Committee adopted the Thomas substitute by voice vote,
and ordered S. 1950, as amended, favorably reported by voice
vote, with Senator Bingaman asking that his vote against the
bill as ordered reported by the Committee be recorded.
Committee Amendments
During the consideration of S. 1950, the Committee adopted
an amendment in the nature of a substitute offered by Senator
Thomas. The major changes made by the Thomas substitute are
described in the section-by-section analysis.
Section-by-Section Analysis
Section 1 contains the short title.
Section 2 presents findings and purpose.
Section 3 amends the Mineral Leasing Act by renumbering
section 44 as section 45 and adding a new section 44.
New section 44(a) defines terms used in the Act.
New subsection (b) contains provisions which emphasize that
the bill's dispute resolution proceeding is to be considered
and employed as a last resort.
New subsection (c) urges the Secretary of the Interior to
use the mineral conservation authorities he possesses to
encourage expedited development in the common areas of any
federally leased minerals that otherwise may be lost or
bypassed due to the development of another mineral.
New subsection (d) obligates both the coal developer and
the oil and gas developer to give written notice to each other
and the Secretary if either determines that a common area
exists and that coal mining operations are planned in the
common area. The subsection also requires the party which
provided the notice to attempt to negotiate a written
settlement with the other party of any conflicts regarding
development in the common area.
New subsection (e) establishes the judicial dispute
resolution process that must be used if the negotiations
required by subsection (d) do not result in the voluntary
settlement of differences between the coal developer and the
oil and gas developer.
Paragraph (e)(1) provides that, if the negotiations
required under subsection (d) do not result in an agreement
regarding priority of mineral development, either the coal
developer or the oil and gas developer may file a petition
asking the United States District Court to resolve the
conflict. The mineral developer which is the petitioner is
required to serve the petition on the Secretary and on other
mineral developer and any other owners of interests in the
lease or development right for that mineral.
Paragraph (e)(2) provides that all parties affected by the
petition are automatically joined in the proceedings.
Paragraph (e)(3) allows non-federal respondents to file
their responses to the petition within 30 days after receipt of
service.
Paragraph (e)(4) provides that within 90 days after the
filing of the petition, the Secretary will: (i) verify that a
common area exists; (ii) determine that coal mining operations
are planned in the common area; and (iii) make an initial
determination whether the public interest is best served by
delaying or foregoing the oil and gas development or the coal
development in the common area. The Secretary will make this
decision solely on the basis of which mineral (coal or oil/gas)
will generate federal royalties and state severance taxes
having the largest net present value. If the mineral which will
incur delayed or forgone development is subject to a federal
lease, the Secretary will suspend all or any portion of,
including any geographical area of or zone or reservoir subject
to, the lease to accommodate the development of the other
mineral in the common area. The Secretary will report to the
Federal district court his determinations and any lease
suspension ordered under this paragraph.
Paragraph (e)(5) provides for the District Courts response
to the Secretary's determination. If no objection to the
Secretary's report is made by the parties to the proceeding,
the court shall approve the Secretary's decision. The Court
will also suspend all or part of any non-Federal lease or
development right necessary to accommodate development of the
prevailing mineral interest. If an objection is filed to any
determination or lease suspension decision of the Secretary,
then the Court shall make an independent determination. If the
Secretary's and/or the court's suspension order suspends oil
and gas development, that order will set a date on which the
coal developer may commence activities in the common area. That
date must not be later than the date that the coal developer
plans to commence activities in the common area in accordance
with the developer's mining plan approved, or submitted for
approval, by the BLM. The suspension will last until the court
has determined compensation for lost or foregone oil and gas
development and issued its second order in the dispute
resolution proceeding under paragraph (10). If the Secretary's
and/or the court's order suspends coal development in the
common area, that order will prohibit coal mining activities in
the common area until compensation is determined for the lost
or foregone coal development and a second court order is issued
under paragraph (11). The court may receive briefs and/or
testimony from the parties to assist it in these
determinations.
The Secretary may refrain from issuing a suspension order
and the court may refrain from issuing its first order only if
either finds that no common area exists or that the coal
developer plans no mining operations in the common area. In
such a case, the court will dismiss the petition and the
dispute resolution proceeding terminates.
Paragraph (e)(6) provides that where all or part of leases
are suspended or terminated by order of the Court, the oil and
coal developers shall appoint a panel of three experts in the
valuation of mineral properties to advise the court in the
preparation of the order under paragraph (10) or paragraph
(11). Each party must compensate its own selected panel member
and share the cost of the third member,
Paragraph (e)(7) requires the mineral developers to submit
all relevant data to the expert panel within 30 days of the
panel's appointment. It also ensures confidentiality for the
data outside of the dispute resolution proceeding. Finally, it
allows the coal developer to drill for (but not develop)
coalbed methane in spacing units in the common area that have
not been drilled by the oil and gas developer, and to submit
the drilling information to the panel.
Paragraph (e)(8) provide that, all parties (including the
Secretary) may submit briefs and give testimony to the court on
the valuation issues described in paragraph (10) or (11) within
45 days and 60 days, respectively, after appointment of the
expert panel.
Paragraph (e)(9) requires that within 120 days after the
appointment of the expert panel, the panel must issue a report
to the court with recommendations regarding the valuation
issues described in paragraph (10) or paragraph (11).
Paragraph (e)(10) provides that the court issued an initial
order to suspend or terminate the oil and gas lease or
development right under paragraph (5), within 210 days the
court must make a final determination whether to suspend
further or terminate all or part of the oil and gas lease or
development right while the coal developers's mining operations
occur in the common area. If the court decides to suspend
further or terminate all or part of the oil and gas lease or
development right, the court must issue a second order to that
effect and award to the oil and gas developer and all other
owners of interests in the oil and gas property a sum of money
from the coal developer equal to the net income lost and
unavoidable fixed expenses incurred by the oil/gas interests
owners and certain other parties.
Paragraph (e)(11) states that if the court issued an
initial order to suspend the Federal coal lease under paragraph
(5), within 210 days the court must make a final determination
whether to suspend further the Federal coal lease to
accommodate oil or gas production in the common area. If the
court decides to suspend further the Federal coal lease in the
common area, the court must issue the second order to that
effect and award to the coal developer and all other owners of
interests in the Federal coal lease a sum of money from the oil
and gas developer equal to the net income lost and unavoidable
fixed expenses incurred by the Federal coal lease interest
owners.
Paragraph (e)(12) specifies that prior to making the
determinations required by paragraph (10) or paragraph (11),
the court will receive the report of the panel of experts and
hold a hearing at which the petitioner and the respondents may
question the panel report.
Paragraph (e)(13) provides that the money awarded by the
court under paragraph (10) or paragraph (11) will be provided
in either of two manners, at the option of the mineral
developer which receives the payment. The first manner is full
payment within 60 days of the court's order under paragraph
(10) or paragraph (11). The second manner is quarterly payments
over a five-year period (i) to the oil and gas developer and
the other owners of interests in the oil and gas lease or
development right in per ton increments as coal is mined, if
coal is to be developed first, or (ii) to the to the coal
developer and other owners of interests in the Federal coal
lease in per barrel or cubic feet increments as oil or gas is
extracted, if coal development is delayed.
Paragraphs (e)(14) and (15) provide for conclusion of the
development of the economically superior mineral, and lifting
of the suspension for development of the other mineral.
If the court has suspended the oil and gas lease or
development right in the common area, when the developer
determines that it no longer needs the common area for coal
mining operations, it must notify the court. The oil and gas
developer may then petition the court to terminate the
suspension of the oil and gas lease or development right. The
court will issue an order granting the petition to terminate
the suspension. If the oil and gas developer believes that the
court's suspension of the oil and gas lease or development
right in the common area has made development of the oil or gas
impracticable, the oil and gas developer may petition the court
to terminate its lease or development right in the common area.
Conversely, if the court has suspended a Federal coal lease
in the common area, when the oil and gas developer determines
that it no longer needs the common area for oil or gas
extraction activities, it must so notify the court. The coal
developer may then petition the court to terminate the
suspension of the Federal coal lease. The court will issue an
order granting the petition to terminate the suspension of the
Federal coal lease. If the coal developer believes that the
court's suspension of the lease in the common area makes
development impracticable, the developer may petition the court
to terminate all or part of the lease.
Paragraph (e)(16) provides that if there is a change in the
mine plan that was the basis for the court's order under
paragraph (10) or paragraph (11), either party may petition the
court for additional relief using procedures similar to those
employed in the original petition for relief.
Paragraph (e)(17) provides that lease suspension and
termination orders, or orders approving commencement of
operations or prohibiting operations, or terminating
proceedings, are final and may not be appealed.
New subsection (f) states that, except for certain pre-
existing agreements, the liability of the United States and oil
and gas and coal developers for depletion or impairment in the
ability to recover the resource in question shall be limited to
amounts ordered by the Court under subsection (e).
New subsection (g) provides that when a court order issued
under subsection (e) or an agreement reached under subsection
(d) which the BLM ratifies requires a Federal coal lessee to
pay an amount of money to the owners of any interest in a
Federal oil and gas lease for termination or suspension of
coalbed methane rights, the Federal coal lessee, or any of its
affiliates, will be allowed to take credits in the same amount
against Federal coal royalty payments otherwise due. Likewise,
when a court order or an agreement ratified by BLM requires a
Federal oil and gas lessee to pay an amount of money to owners
of any interest in a Federal coal lease for suspension of the
Federal coal lease, the oil and gas lessee, or any of its
affiliates, shall be entitled to a credit in the same amount
against Federal oil and gas royalty payments otherwise due.
New subsection (h) makes it clear that Congress does not
intend that this legislation apply to or affect any other
mineral development dispute, or to affect how a court should
rule concerning the application of the common law in any such
dispute, that is not subject to the bill's dispute resolution
procedure or that concerns minerals located outside of the
common areas in the Basin.
Section 4 is the effective date and is self explanatory.
Cost and Budgetary Considerations
The following estimate of costs of this measure has been
provided by the Congressional Budget Office.
U.S. Congress,
Congressional Budget Office,
Washington, DC, September 14, 2000.
Hon. Frank H. Murkowski,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1950, the Powder
River Basin Resource Development Act of 2000.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Megan
Carroll (for federal costs), Marjorie Miller and Susan Van
Deventer (for the impact on state, local and tribal
governments), and Gail Cohen (for the impact on the private
sector).
Sincerely,
Barry B. Anderson
(For Dan L. Crippen.)
Enclosure.
Congressional Budget Office Cost Estimate
S. 1950--Powder River Basin Resource Development Act of 2000--As
ordered reported by the Senate Committee on Energy and Natural
Resources on June 7, 2000
SUMMARY
S. 1950 would establish a process for resolving disputes
over the development of coal and coalbed methane in cases where
the rights to develop those resources underlying the same piece
of land are owned by different parties. The bill would apply
only to certain disputes within the Powder River Basin, located
in Wyoming and Montana and depicted on a map identified in the
bill. CBO estimates that enacting this legislation would reduce
offsetting receipts from royalties on federal resources by at
least $13 million over the 2001-2010 period. Because the bill
would affect direct spending (including offsetting receipts),
pay-as-you-go procedures would apply.
S. 1950 contains no intergovernmental mandates as defined
in the Unfunded Mandates Reform Act (UMRA). The bill could
benefit the states of Wyoming and Montana and some tribal
governments within those states if the process for revolving
disputes allows for the timely development of coal, oil, and
gas resources, thereby protecting, and possibly increasing,
revenues collected by those governments. Enactment of this
legislation would have no impact on the budgets of other state,
local and tribal governments.
S. 1950 would impose a private-sector mandate as defined by
UMRA on certain developers of mineral resources involved in
disputes over the sequence of coal and oil or gas development
in the Powder River Basin. CBO estimates that the cost of
complying with the mandate would be well below the threshold
established by UMRA ($109 million in 2000, adjusted annually
for inflation) for any of the first five years that the mandate
is in effect.
BACKGROUND
In the Powder River Basin, as in many parts of the west,
ownership of the subsurface estate is split: the coal estate,
oil and gas estate, and hardrock mineral estate may all be
separately owned. Thus, conflicts may arise when overlapping
rights to develop those resources are owned by different
parties. Historically, lessees of coal rights and lessees of
oil and gas rights have been able to develop both resources
without significant loss of either resource because traditional
oil and gas deposits lie far below the coal resources.
In the past several years conflicts have developed,
however, between those who own the right to develop coal
resources and those who own the right to develop oil and gas
resources, including coalbed methane, underlying the same piece
of land. These conflicts mostly concern a recent increase in
oil and gas producers' interest in developing coalbed methane,
a type of natural gas that is found within coal reserves. Coal
and coalbed methane cannot be produced simultaneously, and
initial development of one resource can make recovery of the
other more expensive, or even impossible.
In response to these types of conflicts between federal
lessees, the Bureau of Land Management (BLM) developed a
policy, in February 2000, aimed at optimizing the development
of both resources. Historically, conflicts between federal
lessees tended to be resolved by allowing the lessee with the
older lease to proceed with production ahead of junior lease.
In the Powder River Basin, such a policy would tend to favor
oil and gas, and hence, coalbed methane producers, whose leases
were issued before many federal coal leases. Under BLM's new
policy, however, the agency uses its authority under existing
law and lease terms to require the optimal sequential recovery
of coalbed methane and coal.
MAJOR PROVISIONS
S. 1950 would establish a process for resolving disputes
over the development of coal and coalbed methane in cases where
the rights to develop those resources underlying the same land
are owned by different parties. The bill would apply only to
disputes that occur in ``common areas'' within the Powder River
Basin as defined by the bill.
Under S. 1950, coal and oil and gas developers within
common areas would be required, at least 240 days prior to the
date when their operations are expected to intersect, to notify
each other and the Secretary of the Interior of the anticipated
conflict. If the parties cannot negotiate a voluntary agreement
to settle the conflict, either party could file a petition
asking the U.S. District Court to resolve it. The Secretary of
the Interior would have 90 days to recommend to the court
whether either lease should be suspended to allow production
under the other lease to proceed. Within 90 days of receiving
the Secretary's recommendations, the District Court would
review any objections to those recommendations and, if
necessary, issue an order to suspend any federal or nonfederal
lease. S. 1950 would require the Secretary and the District
Court to make such decisions on the basis of maximizing the net
present value of the federal and state income from royalties
and severance taxes that would be generated from the production
of both resources.
Once the District Court orders or confirms an initial
suspension of a lease, S. 1950 would require the court, within
210 days, to determine the amount of compensation to be awarded
to the lessee (and all other owners of any interest in the
resource) whose lease is suspended or terminated. A panel of
experts would advise the court on that amount, which would be
based on the amount of net income that would be forgone by
owners of any interest in the resource whose production would
be delayed as well as the amount of any unavoidable fixed costs
incurred by those parties. Decisions regarding compensation
awards would be subject to appeal. Under the bill, compensation
costs must be paid by the lessee who is permitted to proceed to
develop a resource within 62 months of the court order to pay
such costs.
S. 1950 would allow certain federal lessees who are ordered
by the court to pay compensation to credit such compensation
costs against federal royalty payments that would otherwise be
due under current law. That provision of the bill also would
apply to federal lessees who must pay compensation costs
pursuant to certain voluntarily negotiated settlement
agreements ratified by BLM on or after September 1, 1999. The
royalty credit provision would apply only to conflicts
involving federally owned resources that occur within areas
identified in the bill.
estimated cost to the federal government
For this estimate, CBO assumes that S. 1950 will be enacted
near the start of fiscal year 2001. The estimated budgetary
impact of S. 1950 on direct spending is shown in the following
table. The legislation also would affect spending subject to
appropriation, but CBO estimates that any such changes would be
less than $500,000 a year. The costs of this legislation fall
within budget function 300 (natural resources and environment).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars
--------------------------------------------
2001 2002 2003 2004 2005
----------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING \1\
Estimated Budget Authority......................................... 3 4 1 2 2
Estimated Outlays.................................................. 3 4 1 2 2
----------------------------------------------------------------------------------------------------------------
\1\ Implementing S. 1950 also would increase discretionary spending by less than $500,000 a year to conduct the
new dispute resolution process.
basis of estimate
CBO estimates that allowing certain federal lessees to
credit their compensation costs against federal royalty
payments would reduce federal receipts from those payments. The
provisions allowing for royalty credits to pay compensation
costs in S. 1950 would apply to a major settlement agreement
between a coal operator and an oil and gas operator that has
already been resolved. Based on information from BLM and
parties to that agreement, CBO estimates that enactment of the
bill would allow the operator to claim royalty credits
amounting to about $13 million over the 2001-2006 period.
Forgone royalty payments under S. 1950 could be higher over
the next 10 years if additional disputes arise between
different resource developers, and more compensation costs must
be paid. However, the cost of any future compensation paid
through royalty credits could be at least partially offset, on
a net present value basis, by an increase in receipts from
bonus bids paid by companies to secure new leases for federal
resources. According to BLM and industry experts, there is
considerable uncertainty regarding the number of disputes that
may occur in the future. Hence, CBO has no basis for predicting
the amount of compensation that may be ordered to be paid in
the future, or the effect this might have on bonus bids for
land that has not yet been leased.
Royalty payments and compensation credits
Under current law, when federally owned resources are
produced, the federal government collects royalty payments from
those who lease the right to develop those resources. States
generally receive about 50 percent of those receipts. S. 1950
would allow certain federal lessees to take as a credit against
royalties due to the federal government the costs of
compensation pursuant to a court order issued under S. 1950 or
a settlement agreement approved by BLM on or after September 1,
1999. That provision would apply only to conflicts between
federal lessees operating within lands referenced in the bill.
S. 1950 provides that subsequent payments to states would not
be reduced as a result of that provision.
Under S. 1950, certain producers that already have paid
bonus bids to secure leases for federal resources within the
Powder River Basin could qualify for credits against federal
royalty payments. CBO estimates that allowing those lessees to
credit their compensation costs against federal royalties would
result in forgone offsetting receipts totaling at least $13
million over the 2001-2010 period. That amount is based on
information provided by parties to one major recently
negotiated settlement agreement that would be included under
the royalty credit provisions in S. 1950. Under that agreement,
we estimate that the amount of compensation costs that could be
credited against royalty payments would be about $3 million in
2001, and $10 million over the 2002-2006 period.
The total amount of forgone receipts from S. 1950's royalty
credit provision could be greater depending on whether other
eligible settlement agreements or court orders involving
existing or future federal leases occur. Because any such
effects depend on the outcome of court proceedings or
negotiations in involving nonfederal parties, CBO cannot
estimate the timing or magnitude of any additional forgone
receipts under S. 1950. Although the number of conflicts that
might occur is uncertain, we expect that, on average, there
would be a couple such conflicts each year. Based on
information from BLM and industry representatives, we expect
that few, if any, of those conflicts would result in
compensation costs as large as those that resulted from the
settlement agreement referenced above. Other recent settlement
agreements in the region have involved compensation payments of
less than $1 million.
Bonus bids
CBO estimates that allowing some federal lessees to take
royalty credits could affect bonus bids paid by producers to
secure new leases for federal resources, particularly for coal.
A bonus bid reflects a company's willingness to pay for the
right to develop a federal resource, based on the estimated net
present value of that lease to that company. Under current law,
coal companies typically take the estimated cost of resolving
conflicts with oil and gas producers that may arise into
consideration when preparing bonus bids. We expect that
allowing certain producers to credit those costs against
royalty payments under some future leases would increase the
value of those leases to the companies that would bid on them.
Enacting S. 1950 could result in an increase in offsetting
receipts from higher bonus bids for coal lease within the areas
of the Powder River Basin where the bill's royalty credit
provisions would apply. Any higher bonus bids would partially
offset, on a present value basis, the cost to the government of
forgone royalty payments from those provisions. CBO cannot
estimate the timing or magnitude of any increases in bonus bids
because such a change would depend on the judgments of resource
developers about the likelihood of any future disputes in the
Powder River Basin and the outcomes of such disputes. As
mentioned above, and based on information from BLM and industry
experts, we expect that any increases to bonus bids under S.
1950 would involve leases where compensation costs are likely
to range from less than $1 million to no more than $13 million
per conflict.
pay-as-you-go considerations
The Balanced Budget and Emergency Deficit Control Act sets
up pay-as-you-go procedures for legislation affecting direct
spending or recipes. Because S. 1950 would affect federal
offsetting receipts from royalties and bonus bids, pay-as-you-
go procedures would apply. The changes in outlays that are
subject to pay-as-you-go procedures are shown in the following
table. For the purposes of enforcing pay-as-you-go procedures,
only the effects in the current year, the budget year, and the
succeeding four years are counted.
----------------------------------------------------------------------------------------------------------------
By fiscal year (in millions of dollars)
----------------------------------------------------------------------------
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
----------------------------------------------------------------------------------------------------------------
Changes in outlays................. 0 3 4 1 2 2 1 0 0 0 0
Changes in receipts................ Not applicable
----------------------------------------------------------------------------------------------------------------
estimated impact on state, local, and tribal governments
S. 1950 contains no intergovernmental mandates as defined
in UMRA. Coal, oil and gas development generates revenues for
state and tribal governments from bonus bids, rents, royalties,
and taxes. States received revenues from the development of
state-owned resources and share in bonus bids, rentals, and
royalties paid to the federal government for federally owned
resources. CBO expects that enactment of this legislation could
benefit the states of Wyoming, Montana, and some tribal
governments within those states insofar as it promotes the
timely development of coal, oil, and gas resources in the
Powder River Basin.
In a few specific cases, S. 1950 could result in a decrease
in revenues to state or tribal governments. Such a decrease
could occur if mining of resources owned by states or tribes
were delayed or forgone in order to allow mining under a
federal lease to proceed, and if the compensation the states or
tribal governments received failed to cover their litigation
costs.
estimated impact on the private sector
S. 1950 would impose a private-sector mandate as defined by
UMRA on certain developers of mineral resources involved in
disputes over the sequence of coal and oil or gas development
in the Powder River Basin. CBO estimates that the cost of
complying with the mandate would be well below the threshold
established by UMRA ($109 million in 2000, adjusted annually
for inflation) for any of the first five years that the mandate
is in effect.
The bill would require certain resource developers to
participate in a new dispute resolution process when a resource
developer with interests that conflict with another developer
files a written notice of conflict with the Secretary of the
Interior. Typically, conflicts that arise in the Powder River
Basin occur when different parties own overlapping rights to
develop coal and oil or gas and the two resources cannot be
developed simultaneously. Currently, such conflicts between
resource developers are settled (with a negotiated settlement
or by a court judgment) with one developer compensating the
other for lost production or delays in production. The bill's
dispute resolution process would require the parties involved
in such a dispute to adhere to time lines, procedures, and
compensation mechanisms that differ from practices under
current law. Moreover, under the new resolution process,
developers would not be able to appeal a court order to suspend
or terminate their right to develop a resource. According to
most industry experts, the amount of compensation under the
bill's dispute resolution process would tend to be less than it
would be in the absence of the bill. The cost of the mandate
would be the difference between the settlements or judgments
(net compensation) that certain developers of mineral resources
would be able to obtain under current law and under S. 1950.
Based on information from various industry representatives
and state and private geologists, CBO estimates that the
current net income of developers of mineral resources who would
most likely be subject to compensation under the bill is less
than $20 million annually. Further, CBO estimates that net
income of those developers would be less than the private-
sector threshold even if production and prices of those mineral
were to increase significantly over the next five years as some
industry observers predict. CBO expects that only a subset of
those developers would be affected by the mandate and thus, the
cost of the mandate would be some fraction of the net income of
the group as a whole. Consequently, CBO estimates that the
direct costs of the mandate would be well below the private-
sector threshold for at least the first five years that the
mandate is in effect. Over time, the potential area of conflict
under the bill would expand as mineral producers continue to
develop in more areas of the Powder River Basin. Thus, to the
extent that conflicts among developers arise in those expanded
areas, more developers in those areas would be subject to the
bill's dispute resolution process.
estimate prepared by
Federal Costs: Megan Carroll.
Impact on State, Local, and Tribal Governments: Susan Van
Deventer and Marjorie Miller.
Impact on the Private Sector: Gail Cohen.
estimate approved by
Peter H. Fontaine, Deputy Assistant Director for Budget
Analysis
Regulatory Impact Evaluation
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee makes the following
evaluation of the regulatory impact which would be incurred in
carrying out S. 1950.
The bill is not a regulatory measure in the sense of
imposing Government-established standards or significant
economic responsibilities on private individuals and
businesses.
No personal information would be collected in administering
the program. Therefore, there would be no impact on personal
privacy.
Little, if any, additional paperwork would result from the
enactment of S. 1950, as ordered reported.
Executive Communications
On June 7, 2000 the Committee on Energy and Natural
Resources requested legislative reports from the Department of
the Interior and the Office of Management and budget setting
forth Executive agency recommendations on S. 1950. These
reports had not been received at the time the report on S. 1950
was filed. When the reports become available, the Chairman will
request that they be printed in the Congressional Record for
the advice of the Senate. The testimony provided by the Bureau
of Land Management at the Subcommittee hearing follows:
Statement of John Northington, Senior Advisor to the Director, Bureau
of Land Management, Department of the Interior
Mr. Chairman, Members of the Committee, thank you for the
opportunity to come before you to provide the Administration's
views on S. 1950, another amendment to the Mineral Leasing Act
which seeks to ensure the orderly development of coal, coalbed
methane, natural gas, and oil in the Powder River Basin of
Wyoming and Montana.
Regarding S. 1950, the Bureau of Land Management (BLM) has
sought to address the increasing demand for coalbed methane
gas. We thank the Members for their assistance as we have dealt
with various aspects of this issue. While we appreciate the
Committee's interest and effort in attempting to resolve the
conflicts between federal oil and gas, coal and coalbed methane
interests through S. 1950, we believe this legislation does not
provide the most effective remedy to resolve these issues.
Consequently, the Department of the Interior cannot support
this bill.
Conflicts between federal oil and gas and Federal coal
lessees have historically involved oil and gas resources
contained in reservoirs much deeper than the coal, thereby
allowing for development of one resource without loss of the
other. Heightened interest in coalbed methane development has
prompted the BLM to take a second look at these conflicts and
put into place a policy which coincides with our mandate to
maximize recovery of all the resources. The BLM has existing
authority under the Mineral Leasing Act and federal regulations
to resolve the conflicts presented in such instances. In
rectifying these disputes, we have three goals in mind--(1)
protect the rights of its lessee under the terms of its lease
and the Mineral Leasing Act, including implementing regulations
and those concerning conservation of natural resources; (2)
optimize the recovery of both resources, thereby maximizing the
return to the public; and, (3) optimize the return to the
public while protecting public safety and the environment and
minimizing impacts on local communities.
Our policy provides that the initial course of action is to
facilitate an agreement between the lessees. However, absent a
settlement, we can and will utilize existing law and
regulations in conjunction with the lease provisions to
optimize recovery of both resources. We expect a vast number of
oil and gas operators will readily comply with the BLM's
regulatory and statutory orders. As a reinforcement measure, we
would not oppose legislation which seeks to strengthen our
sanctioning power in cases where such operators fail to comply.
The BLM believes this approach will allow for needed
flexibility and use of judgment in individual circumstances.
While the BLM has sought to work diligently with Committee
staff to craft legislation to appropriately address this issue,
S. 1950 deprives the Bureau and industry of these options.
First, the bill is limited to the Powder River Basin of
Wyoming and Montana. As noted in the bill, the Powder River
Basin is indeed one of the world's richest energy resource
regions with significant deposits of oil and natural gas,
including coalbed methane. However, it is not the only area of
potential conflict. As development occurs in coalbed methane
basins throughout the United States--specifically, Utah,
Colorado and New Mexico, the potential for conflict remains.
These disputes can be resolved by BLM under our current
regulatory and statutory authority. Were S. 1950 to become law,
unwarranted and unnecessary precedent could be set for
additional legislation to resolve similar conflicts in other
areas.
Second, the legislation usurps the regulatory authority of
the Secretary of the Interior and the BLM with regard to such
matters as suspension of leases, termination of leases, and
public interest determinations and diligence, by placing these
responsibilities under the jurisdiction of the courts. Further,
any financial loss incurred by the dominant coal or oil and gas
lessee as a result of the court's decision or an agreed upon
settlement rests with the American taxpayer. The prevailing
party can recapture any costs incurred through credit against
future royalty. In addition, the bill mandates that the
taxpayer bears the cost of compensating the state for its share
of loss royalties--requiring the Secretary to compensate the
state for 50% of any credit against royalties provided.
Fundamental fairness dictates that the state share equally in
the risk associated with such conflicts by sharing in the
expense of compensating one of the lessees. For taxpayers to
bear these costs while states remain financially whole is
neither a standard nor a precedent we wish to set.
Finally, Federal laws, regulations and lease terms
applicable to federal mineral development provide authority to
the Secretary, upon determination that it is in the public
interest, to conserve natural resources, to encourage the
greatest ultimate recovery, and to protect the interests of the
United States. Accordingly, the BLM is vested with authority to
require cooperative development and the power to suspend
operations of oil and gas leases, and to direct the rate of oil
and gas development. Likewise for coal, BLM has authority to
suspend lease operations, to ensure Maximum Economic Recovery
through approval of a Resource Recovery and Protection Plan,
and to order immediate cessation of mining operations for non-
compliance with the regulations or lease terms. Under these
existing laws and authorities, the BLM is able to promote
orderly, environmentally sound development of all of the
resources in the Powder River Basin and elsewhere without
detriment to the others.
The best case scenario provides that both coal and oil and
gas producers will converge and develop a production agreement
which promotes the greatest recovery of the coalbed methane,
coal, natural gas and oil resources. The BLM stands ready to
assist and foster this effort. However, in cases where these
entities cannot agree, the BLM is also poised to exercise its
existing authority to ensure optimized production of each
resource.
Coalbed methane development and production has increased at
an unprecedented rate, and we appreciate the Committee's
support and assistance as the BLM has sought to address the
many issues surrounding this boom. We look forward to
continuing to work with you as we operate within our current
authorities to promote orderly development of these resources
in conflict areas.
Thank you for the opportunity to testify before you today.
I welcome any questions the Committee may have.
MINORITY VIEWS OF SENATOR BINGAMAN ON S. 1950
S. 1950 turns over the Federal Government's power of
eminent domain to private mining companies so that they might
take the private property rights of other mining companies. To
the best of my knowledge, this measure is unprecedented. While
some of the states have extended state eminent domain authority
to mining companies, I am not aware of any instance in which
Congress has farmed out the federal eminent domain power to
private mining company to use for its economic advantage.
To make matters worse, the bill abandons the traditional,
constitutional ``public interest'' test for when the United
States may take private property in favor of a new economic
test that simply measures which source is more valuable. It
replaces the traditional fair market value measure of just
compensation with a new loss of income plus consequential
damages standard and passes the entire expense on to the
Federal Treasure and, ultimately, the taxpayers. And, instead
of relying on traditional condemnation law and procedures, it
erects a complex and cumbersome new system.
Although I strongly disagree with the approach taken in S.
1950, I recognize that the bill is a well intended effort to
resolve a serious conflict between the owners of coal beds in
the Powder River Basin and the owners of the coalbed methane
imbedded with in the coal. Ownership of the two resources often
lies in separate hands and one resource cannot be extracted
without loss of interference with the other.
The Supreme Court recognized the possibility of this
conflict when it ruled little more than a year ago that coalbed
methane was not part of the coal estate. ``Were a case arise in
which there are two commercially valuable estates and one is to
be damaged in the course of extracting the other,'' the Court
said, ``a dispute might result, but it could be resolved in the
ordinary course of negotiation or adjudication.'' Time has
proved the Court correct. The two major conflicts between coal
and coalbed methane producers in the Powder River Basin have
been resolved by the parties without legislation, without the
use of eminent domain, and without taxpayer subsidies.
Even so, I was willing in Committee to agree to a
reasonable legislation solution to the problem. I offered a
substitute to Senator Thomas's substitute, which would have
allowed the Secretary of the Interior to begin eminent domain
proceedings to acquire the rights to coalbed methane deposits
on behalf of the coal owner where the Secretary determined that
the public interest in the timely and orderly development of
the coal outweighed the public interest in the development of
the coalbed methane. Unlike S. 1950 and Senator Thomas's
substitute, my proposal would have made use of existing
condemnation law and procedures. Regrettably, the Committee
voted down my substitute on a party-line vote and adopted
Senator Thomas's substitute, which retains the serious problems
inherent in S. 1950 as originally introduced.
Jeff Bingaman.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
the bill S. 1950, as ordered reported, are shown as follows
(existing law proposed to be omitted is enclosed in black
brackets, new matter is printed in italic, existing law in
which no change is proposed is shown in roman):
MINERAL LEASING ACT
* * * * * * *
SEC. 44. DEVELOPMENT OF COAL, NATURAL GAS, AND OIL IN THE POWDER RIVER
BASIN.
(a) Definitions.--As used in this section:
(1) The term ``Powder River Basin'' or ``Basin''
means the area designated as ``Powder River Basin'' on
a map entitled ``MLA Section 44 Powder River Basin
Area,'' dated July 1, 1999, and on file in the Wyoming
and Montana State Offices of the Bureau of Land
Management, Department of the Interior.
(2) The term ``Subsection (g) Lands'' means the area
designated as ``Subsection (g) Lands'' on the map
described in paragraph (1).
(3) The term ``Secretary'' means the Secretary of the
Interior.
(4) The term ``Federal coal lease'' means a lease of
Federal coal in the Basin issued pursuant to this Act.
(5) The term ``Federal coal lessee'' means the holder
of a Federal coal lease.
(6) The term ``Federal oil and gas lease'' means a
lease of Federal oil and gas in the Basin issued
pursuant to the Act.
(7) The term ``oil and gas lease or right to
develop'' means a Federal oil and gas lease or a lease
for or right to develop oil and gas in the Basin
provided by a State or private owner of the resources.
(8) The term ``non-Federal oil and gas lease or right
to develop'' means a lease for or right to develop oil
and gas in the Basin provided by a State or private
owner of the resources.
(9) The term ``oil and gas developer'' means the
holder of an oil or gas lease or right to develop.
(10) The term ``oil and gas property'' means an area
in the Basin which is subject to an oil or gas lease or
right to develop held by an oil or gas developer.
(11) The term ``common area'' means an area in the
Basin in which all or a portion of a Federal coal lease
(including any area of State or private coal within a
logical mining unit with the Federal coal lease)
overlaps all or a portion of an oil and gas property.
(12) The term ``approved or proposed mining plan''
means a mining plan that is approved by, or has been
submitted for the approval of, the Secretary.
(13) The term ``coalbed methane'' shall be the
meaning given that term in section 1339(p)(2) of the
Energy Policy Act of 1992 (106 Stat. 2992, 42 U.S.C
13368(p)(2)).
(14) The term ``owners of any interest in the oil and
gas property'' means persons who own the working
interest, lease interest, operating interest, mineral
interest, royalty interest, or any other interest in
the oil and gas property, and any other persons who
might receive compensation for unavoidable fixed
expense under an order concerning the oil and gas
property issued pursuant to subsection (e)(10)(E).
(15) The term ``owners of any non-Federal interest in
the oil and gas property'' means all owners of any
interest in the oil and gas property except the Federal
government or any agency or department thereof.
(16) The term ``develop'' or ``development'' means to
develop or to produce, or both, or the development or
production, or both, respectively, including all
incidental operations.
(b) Parties Encouraged to Enter Into Written Agreement.--In
any common area, the Federal coal lessee and oil and gas
developer, subject to applicable Federal and State laws,
regulations, and lease terms, may and are encouraged to enter
into a written agreement that details operations and assigns or
assesses costs or compensation for the concurrent or sequential
development of those resources.
(c) Mineral Conservation.--The Secretary shall employ any
authority the Secretary possesses to encourage expedited
development of any oil and gas resources and any coal resource
that--
(1) are leased pursuant to this Act;
(2) are within common areas; and
(3) otherwise may be lost or bypassed due to the
development of another of the resources.
(d) Negotiations Concerning Development Priority for
Certain Operations in the Basin.--
(1) Obligation to provide written notice of
conflict.--Whenever a Federal coal lessee or an oil and
gas developer determines that its Federal coal lease
(or a logical mining unit including the Federal coal
lease) or its oil and gas property is located in a
common area, and, pursuant to an approved or proposed
mining plan, mining operations or facilities in support
of mining for coal on the Federal coal lease or the
logical mining unit will be located within the common
area, the Federal coal lessee or the oil and gas
developer shall deliver written notice of the
determination to the other party and the Secretary no
later than 240 days prior to the date on which the
mining operations or construction of the mine support
facilities is projected by the approved or proposed
mining plan to commence in the common area.
(2) Obligation to negotiate.--Promptly after
providing the notice referred to in paragraph (1), the
party which provided the notice shall seek to negotiate
a written agreement with the other party that resolves
any conflict between the development of gas or oil and
development of coal in the common area.
(e) Compensation Procedures for Assignment of Development
Priority.--
(1) Petition for relief.--
(A) If notice is submitted timely pursuant to
subsection (d)(1) and the Federal coal lessee
and the oil and gas developer engage in
negotiations, but do not reach agreement,
pursuant to subsection (d)(2), the Federal coal
lessee or the oil and gas developer may file a
petition for relief as described in
subparagraph (C) in the United States district
court for the district in which the common area
is located on any date which is not less than
180 days prior to the date on which the mining
operations or construction of the mine support
facilities is projected by the approved or
proposed mining plan to commence in the common
area.
(B) The petitioner shall serve the oil and
gas developer or the Federal coal lessee, as
the case may be, and the Secretary with a copy
of the petition for relief on the same date
upon which the petition is filed with the court
pursuant to subparagraph (A).
(C) The petition for relief shall include the
following:
(i) A description and map of the
Federal coal lease, the oil and gas
property, and the common area.
(ii) A list containing the names and
addresses of all owners of any non-
Federal interest in the oil and gas
property and all owners of any non-
Federal interest in the Federal coal
lease or logical mining unit. The
petitioner shall list those owners of
any non-Federal interest in the oil and
gas property and of the Federal coal
lease or logical mining unit whom the
petitioner is able to ascertain from
the properly indexed records of the
county recorder of the county or
counties in which the oil and gas
property and Federal coal lease or
logical mining unit are located, and
the respondent shall file with the
court and serve on the petitioner and
the Secretary any corrections of,
additions to, or deletions from the
list known to the respondent within 10
days of the date of service of the
petition for relief pursuant to
subparagraph (B). Thereafter, whenever
any correction of, addition to, or
deletion from the list becomes known to
either the petitioner or the
respondent, that party shall promptly
file with the court and serve on the
other party and the Secretary the
addition, correction, or deletion. Any
person who believes he or she is an
owner of any non-Federal interest in
the oil and gas property or in the
Federal coal lease or logical mining
unit and is omitted from the list may
file a motion in the court to be added
to the list at any time prior to the
issuance of an order pursuant to
paragraph (10)(E) or paragraph (11)(C).
(iii) A certified copy of the notice
described in subsection (d)(1).
(iv) A sworn statement by a senior
officer of the petitioner with
authority to commit the petitioner in
any negotiation under subsection (d)(2)
stating, and all documents
demonstrating, that the petitioner
negotiated or attempted to negotiate in
good faith with the respondent a
voluntary agreement, pursuant to
subsection (d)(2).
(D) The Federal coal lessee shall submit a
copy of the approved or proposed mining plan
for the mining operations or support facilities
that are the subject of the petition for
relief--
(i) with the petition for relief if
the Federal coal lessee is the
petitioner; or
(ii) within 5 days of the date of
service of the petition for relief
pursuant to subparagraph (B) if the
Federal coal lessee is the respondent.
(2) Joinder of parties.--The Secretary and all owners
of any non-Federal interest in the oil and gas property
and in the Federal coal lease or logical mining unit
identified pursuant to paragraph (1)(C)(ii) shall be
joined in the proceedings established pursuant to this
subsection.
(3) Parties' response to petition.--The non-Federal
respondent or respondents may provide to the Secretary
a response to the petition within 30 days from the date
of filing of the petition for relief pursuant to
paragraph (1)(A). The Secretary may require the
petitioner and the respondent or respondents to submit
such documents and/or provide such testimony as the
Secretary deems appropriate within 60 days of such date
of filing.
(4) Secretary's initial response to petition.--Within
90 days of the date of filing of the petition for
relief pursuant to paragraph (1)(A) the Secretary shall
take the follow actions:
(A) The Secretary shall determine, with
petitioner having the burden of proof--
(i) whether a common area exists; and
(ii) whether the approved or proposed
mining plan submitted pursuant to
paragraph (3)(D) provides for the
mining operations to intersect, or the
mine support facilities to be
constructed in, any portion of the
common area.
(B)(i) If existence of the common area and
intersection of, or construction in, the common
area are determined pursuant to subparagraph
(A), the Secretary shall determine whether the
public interest is best realized by delaying or
forgoing development of either--
(I) the oil or gas resource to permit
the mining operations to intersect, or
the mine support facilities to be
constructed in, the common area in
accordance with the approved or
proposed mining plan; or
(II) the coal resource to permit
commencement or continuation of the
development of the oil or gas resource
in the common area after the date on
which the mining operations or
construction of the mine support
facilities is projected by the approved
or proposed mining plan to commence in
the common area.
(ii) The Secretary shall make the public
interest determination described in clause (i)
solely by the calculation of the greater
economic benefit to be realized by comparison,
on a net present value basis, of the Federal
and State revenues from royalties and severance
taxes likely to be generated from each resource
underlying the common area to which the
petition for relief applies.
(C)(i) If any portion of the resource for
which delayed or forgone development is
determined to be in the public interest
pursuant to subparagraph (B) is subject to a
lease issued pursuant to this Act, the
Secretary shall suspend all or any portion of,
including any geographical area of or zone or
reservoir subject to, the lease to accommodate
development of the other resource in the common
area during the period beginning on a date no
later than the commencement date referred to in
paragraph (1)(A) and provided in the notice
submitted pursuant to paragraph (1)(C)(iii) and
ending on the date on which an order is issued
pursuant to paragraph (10)(E) or paragraph
(11)(C).
(ii) The Secretary may refrain from either
making the determinations required by
subparagraphs (A) and (B) or suspending all or
any portion of a lease issued pursuant to this
Act as required by clause (i) only if the
Secretary determines that--
(I) no common area exists; or
(II) the approved or proposed mining
plan does not provide for the mining
operations to intersect, or the mine
support facilities to be constructed
in, the common area.
(D) The Secretary shall--
(i) report the determinations made
pursuant to subparagraph (A) and (B) or
subparagraph (C)(ii) and any suspension
made pursuant to subparagraph (C)(i),
including the administrative record
therefor, with the court in which the
petition for relief is filed pursuant
to paragraph (1)(A); and
(ii) provide the petitioner and
respondent or respondents with copies
of the report and record.
(5) Court initial response to petition.--
(A)(i) The court in which the petition is
filed pursuant to paragraph (1)(A) shall have
exclusive jurisdiction to receive and review
the report of the Secretary required by
paragraph (4)(D), and the determinations made
and any action taken by the Secretary pursuant
to paragraph (4).
(ii) The petitioner and respondent or
respondents shall have 30 days from the date
upon which the report of the Secretary is filed
with the court pursuant to paragraph (4)(D) in
which to file with the court any objection to
any determination of the Secretary required by
paragraph (4).
(iii) If any objection is filed pursuant to
clause (ii), the court shall, within 60 days of
receipt of the report of the Secretary pursuant
to paragraph (4)(D), make the determination
that is the subject of the objection on the
basis of the administrative record filed with
the report and in accordance with the
applicable requirements or standards of
subparagraph (A) or subparagraph (B) of
paragraph (4).
(iv) Any determination made by the court
pursuant to clause (iii) shall be an
independent judicial determination that is de
novo, without regard to the prior determination
of the Secretary.
(v) If no objection is filed pursuant to
clause (ii), the determinations of the
Secretary required by paragraph (4) shall be
final and approved by the court in the order
issued pursuant to subparagraph (B) or
subparagraph (E).
(B) Within 90 days of the date of receipt of
the report of the Secretary pursuant to
paragraph (4)(D), the court, except as provided
in subparagraph (E), shall issue an order
that--
(i) suspends all or any part of, including
any geographical area of or reservoir subject
to, any non-Federal oil and gas lease or right
to develop, or any non-Federal interest in any
logical mining unit that includes the Federal
coal lease, in the common area in accordance
with the determination of the Secretary
pursuant to subclause (I) or subclause (II),
respectively, of paragraph (4)(B)(i) or in
accordance with the determination of the court
pursuant to subparagraph (A)(iii); and
(ii) if required by a determination of the
court pursuant to subparagraph (A)(iii),
terminates a suspension of a lease issued
pursuant to this Act imposed by the Secretary
pursuant to paragraph (4)(C)(i), or imposes a
suspension of a lease issued pursuant to this
Act, or both, in accordance with the
determination; and
(iii) if all or any part of the oil and gas
lease or right to develop is suspended pursuant
to paragraph (4)(C)(i) or this subparagraph,
fixes the date upon which the Federal coal
lessee may commence mining operations or
construction of mine supported facilities in
the common area, which may be no later than the
commencement date referred to in paragraph
(1)(A) and provided in the notice submitted
pursuant to paragraph (1)(c)(iii), except for
good cause shown; and
(iv) if all or any part of the Federal coal
lease and/or any non-Federal interest in the
logical mining unit that includes the Federal
coal lease is suspended pursuant to paragraph
(4)(C)(i) or this paragraph, prohibits the
mining operations from intersecting, or the
support facilities from being constructed in,
all or a portion of the common area.
(C) The order of the court issued pursuant to
subparagraph (B) shall expire upon the issuance
of an order pursuant to paragraph (10)(E) or
paragraph (11)(C).
(D) The court may refrain from issuing the
order required by subparagraph (B), only if--
(i) the Secretary makes a
determination described in paragraph
(4)(C)(ii); or
(ii) the court, acting on an
objection filed pursuant to
subparagraph (A)(ii), determines that--
(I) no common area exists; or
(II) the approved or proposed
mining plan submitted pursuant
to paragraph (1)(D) does not
provide for the mining
operations to intersect, or the
mine support facilities to be
constructed in, the common
area.
(E) If the Secretary makes a determination
described in paragraph (4)(C)(ii) or the court
makes a determination described in subparagraph
(D)(ii), the court shall issue an order
terminating the proceeding under this
subsection.
(6) Valuation procedure: appointment of experts.--
(A) Within 30 days of the date of issuance of
an order pursuant to paragraph (5)(B), to
assist the court in making the determinations
pursuant to paragraph (10) or paragraph (11),
the Federal coal lessee and the oil and gas
developer shall each appoint a person who is an
expert in appraising the value of, and right to
develop, gas or oil if all or any part of the
oil and gas lease or right to develop is
suspended, or coal if all or any part of the
Federal coal lease and/or any non-Federal
interest in the logical mining unit that
includes the Federal coal lease is suspended,
pursuant to paragraph (4)(C) and/or paragraph
(5)(B), and these persons shall agree upon and
appoint a third person with such expertise. If
no agreement is reached on the date of
appointment of a third person, the court shall
make the appointment.
(B) The Federal coal lessee shall be
responsible for compensation of the expert
appointed by it; the oil and gas developer
shall be responsible for compensation of the
expert appointed by it; and the Federal coal
lessee and oil and gas developer shall each pay
one-half of the compensation for the third
expert.
(7) Information and data.--
(A) The Federal coal lessee, oil and gas
developer, and Secretary shall each submit to
the panel of experts within 30 days of the date
of appointment of the panel pursuant to
paragraph (6) all information and data in the
possession of such party that is pertinent to
the determinations to be made pursuant to
paragraph (10) or paragraph (11), and shall
each submit to the panel of experts thereafter
any additional pertinent information and data
in the possession of such party that the panel
requests of such party in writing.
(B) Except as provided in subparagraph (C),
the court shall ensure that any information and
data submitted to the panel of experts pursuant
to subparagraphs (A) and (D) shall have the
protection of confidentiality that is
applicable, and may be accorded, to them by and
the federal rules of civil procedure and
evidence.
(C) All information and data submitted to the
panel of experts pursuant to subparagraphs (A)
and (D) shall be available for review by all
parties unless an ex parte order is issued by
the court.
(D)(i) The Federal coal lessee may drill for
an otherwise collect data or information on
coalbed methane at any site or sites within the
common area that are not within a spacing unit
containing a well that is producing or capable
of producing coalbed methane under the
conditions set forth in clause (ii).
(ii) The drilling or collection of data or
information authorized by clause (i) shall be
for the sole purpose of submission of
information and data pursuant to this
paragraph.
(iii) The Federal coal lessee shall not
produce any coalbed methane as a result of any
drilling authorized by clause (i) and shall
comply with any Federal or State requirements
applicable to such activity.
(iv) The Federal coal lessee shall submit to
the Secretary an exploration plan to conduct
any drilling pursuant to clause (i). The
Secretary shall approve, approve as modified,
or reject the plan, within 15 days of the date
of its submission. The Secretary may modify or
reject the plan only for good cause fully set
forth in writing and provided to the Federal
coal lessee. The Federal coal lessee shall
adhere to the plan, as approved by the
Secretary.
(8) Submission of briefs and hearing.--
(A) Within 45 days of the date of appointment
of the panel of experts pursuant to paragraph
(6), all parties may submit briefs concerning
the determinations to be made pursuant to
paragraph (10) or paragraph (11).
(B) Within 60 days of the date of appointment
of the panel of experts pursuant to paragraph
(6), the panel may, or if requested by the
petitioner or a respondent shall, receive
testimony from all parties concerning the
determination to be made pursuant to paragraph
(10) or paragraph (11).
(9) Experts report.--Within 120 days of the date of
appointment of the panel of experts pursuant to
paragraph (6), the panel shall submit a written report
to the court providing in detail the panel's
recommendations on the determinations to be made
pursuant to paragraph (10) or paragraph (11).
(10) Court's final response to petition: Valuation
concerning economically recoverable oil or gas
resources lost or delayed, suspension or termination,
and payment order.--Within 210 days of the date of
issuance of an order pursuant to paragraph (5)(B), by
which, or by any action of the Secretary pursuant to
paragraph (4)(C)(i), all or any part of the oil and gas
lease or right to develop is suspended, the court shall
take the following actions:
(A)(i) The court shall determine whether, as
a result of the order or any action of the
Secretary, all or any part of, including any
geographical area of or zone or reservoir
subject to, the oil and gas lease or right to
develop should be suspended during any
remaining period in which the mining operations
or support facilities occupy the common area or
whether the oil and gas lease or right to
develop should be terminated.
(ii) Any determination to suspend pursuant to
clause (i) shall, wherever possible or
appropriate, limit the suspension or phase the
suspension to permit the optimum development of
the oil or gas prior to the time at which the
mining operations would reach the area within
the common area that is subject to the
suspension or particular phase of the
suspension.
(iii) Any determination to terminate pursuant
to clause (i) shall be made only if the court
finds that the economically recoverable oil and
gas resources subject to compensation pursuant
to subparagraph (E) would be entirely lost or
rendered impracticable to produce as a
consequence of the mining operations in the
common area and that such resources constitute
all of the economically recoverable resources
within the oil and gas property.
(B) If the court makes a determination to
suspend pursuant to subparagraph (A), the court
shall determine--
(i) the amount of any net income that
will not be realized due to delay in
development of economically recoverable
resources of oil or gas, other than
coalbed methane, from the common area,
whether or not such development has
commenced;
(ii) the amount of any net income
that will not be realized, whether or
not development of coalbed methane has
commenced, that is due to--
(I) delay in development of
economically recoverable
resources of coalbed methane in
the common area; and
(II) the loss of any
economically recoverable
resources of coalbed methane
from the coal to be extracted
by the mining operations in the
common area; and
(III) the loss of any
economically recoverable
resources of coalbed methane
underlying any area that is
within the oil and gas property
associated with the common area
and that extends outward from
each exposed coal face of the
mining operations for a
distance from which drainage of
such resources is established
to the satisfaction of the
court; and
(iii) any of the following damages
that will be incurred by the owners of
any interest in the oil and gas
property as a consequence of the
suspension: any unavoidable fixed
expenses (including, but not limited
to, the expense of shutting in
production from, maintenance of,
testing of, and redrilling or
reconnecting an existing well; relaying
pipeline; and all other expenses
reasonably related to reestablishing
any existing oil or gas production);
expenses associated with stranded costs
of drilling equipment and facilities;
any lost royalties on oil or gas not
produced by the oil and gas developer;
and any lost income associated with
temporarily shutting in production from
wells outside of the common area as
needed for reconnection to a gathering
system or pipeline to market.
(C) The determinations made pursuant to
subparagraph (B) shall not include any decrease
in net income or damages resulting from loss of
any oil or gas resources that occurred before
the date of the determinations and is caused by
mining within or outside of the common area on
the Federal coal lease or logical mining unit
that is the subject of the common area
determination made pursuant to paragraph
(4)(A)(i).
(D) If the court makes a determination to
terminate pursuant to subparagraph (A), the
court shall determine the amount of any net
income that will not be realized and any
damages due to the loss of, or impracticability
to produce the economically recoverable
resources of oil or gas in the oil and gas
property in the same manner as provided in
subparagraph (B).
(E) The court shall issue an order that--
(i) suspends all or any part of,
suspends in phases parts of, or
terminates the oil and gas lease or
right to develop, including any
applicable payment or production
obligations, in accordance with the
determination made pursuant to
subparagraph (A); and
(ii) awards to the oil and gas
developer and all other owners of any
interest in the oil and gas property,
as their interests may appear, a sum of
money from the Federal coal lessee
equal to the net income amount and
damages determined pursuant to
subparagraph (B) or subparagraph (D).
(F) In determining the amount of net income
that will not be realized pursuant to
subparagraph (B) or subparagraph (D) and the
sum of money to be awarded pursuant to
subparagraph (E), the court shall ensure to the
best of its ability that the Federal coal
lessee is not required to pay for the same gas
lost, delayed in development, or rendered
impracticable to develop to more than one oil
and gas developer or the owners of any interest
in more than one oil and gas property.
(11) Court's final response to petition: valuation
concerning economically recoverable coal resources lost
or delayed, suspension or termination and payment
order.--Within 210 days of the date of issuance of an
order pursuant to paragraph (5)(B) by which, or by any
action by the Secretary pursuant to paragraph
(4)(C)(i), the Federal coal lease and/or any non-
Federal interest in the logical mining unit is
suspended, the court--
(A) shall determine whether, as a result of
the order or any action of the Secretary, the
Federal coal lease and/or any non-Federal
interest in the logical mining unit shall be
suspended in whole or in part to further
accommodate oil or gas development in the
common area; and
(B) shall determine the amount of any net
income that will not be realized from the loss
or delay in development of economically
recoverable resources of coal, and the
unavoidable fixed expenses (including, but not
limited to, additional expenses associated with
reclamation, expenses associated with stranded
costs of mining equipment and facilities, a
proportionate refund of the lease bonus, and
any lost royalties on coal not produced by the
Federal coal lessee) that will be incurred, by
the Federal coal lessee as a consequence of the
suspension; and
(C) shall issue an order that--
(i) suspends, in accordance with the
determination made pursuant to
subparagraph (A), all or any part of
the Federal coal lease and/or any non-
Federal interest in the logical mining
unit, including any applicable payment
or production obligations on the lease
or logical mining unit, for the period
necessary for expeditious development
in the common area of the gas or oil
that is the subject of the petition for
relief as demonstrated to the court in
a production plan submitted by the oil
and gas developer; and
(ii) awards to the Federal coal
lessee and all other owners of any
interest in the Federal coal lease or
logical mining unit, as their interests
may appear, a sum of money equal to the
net income amount and unavoidable fixed
expenses determined pursuant to
subparagraph (B).
(12) Review of experts' report.--
(A) The court shall make the determinations
required by paragraph (10) or paragraph (11)
after reviewing the report of the panel of
experts submitted pursuant to paragraph (9) and
the hearing required by subparagraph (B).
(B) After submission of the report of the
panel of experts pursuant to paragraph (9) and
prior to making the determinations required by
paragraph (10) or paragraph (11), the court
shall hold a hearing in which the panel of
experts shall present their report and the
parties to the proceeding shall have the
opportunity to examine the panel and provide to
the court any evidence or arguments they may
have to support or contravene the
recommendations of the report.
(13) Disbursement of payments.--
(A)(i) At the election of the oil and gas
developer, the sum of money awarded by the
court pursuant to paragraph (10)(E) shall be--
(I) paid in full within 60 days of
the date of issuance of the order
pursuant to paragraph (10)(E); or
(II) divided into the number of tons
of recoverable coal in the common area
and paid in per ton increments as the
coal is mined in accordance with clause
(ii) and subparagraph (C).
(ii) The Federal coal lessee shall make the
payments required by clause (i)(II) on a
quarterly basis in advance based on the Federal
coal lessee's estimate of the number of tons of
coal to be mined in the common area during the
following quarter, and shall add or subtract an
amount to or from the advance payment for the
next quarter to reflect the coal actually sold
or transferred.
(B)(i) At the election of the Federal coal
lessee, the sum of money awarded by the court
pursuant to paragraph (11)(C) shall be:
(I) paid in full within 60 days of
the date of issuance of the order
pursuant to paragraph (11)(C); or
(II) divided into the number of
barrels of recoverable oil or cubic
feet of recoverable gas in the common
area and paid in per barrel or cubic
feet increments as the oil or gas is
produced in accordance with clause (ii)
and subparagraph (C).
(ii) The oil and gas developer shall make the
payments required by clause (i)(II) on a
quarterly basis in advance based on the oil and
gas developer's estimate of the number of
barrels of oil or cubic feet of gas to be
produced in the common area during the
following quarter, and shall add or subtract an
amount to or from the advance payment for the
next quarter to reflect the oil or gas actually
produced.
(C) If the mining or production necessary to
make full payment of the sum of money awarded
by the court in accordance with subparagraph
(A)(i)(II) or subparagraph (B)(i)(II) does not
occur within 5 years of the date of issuance of
the court order pursuant to paragraph (10)(E)
or paragraph (11)(C), the unpaid balance shall
be paid within 60 days thereafter.
(14) Termination of oil and gas lease suspension.--
(A) If the court issues an order to suspend
all or any part of the oil and gas lease or
right to develop pursuant to paragraph
(10)(E)--
(i) the Federal coal lessee shall
notify the court and the oil and gas
developer when the portion of the
common area subject to the order issued
pursuant to paragraph (10)(E) is no
longer required for mining operations
or support facilities; and
(ii) within 120 days of the date of
receipt by the court of the
notification pursuant to clause (i) or
within 60 days prior to the date on
which the period established by the
court in the order issued pursuant to
paragraph (10)(E) concludes, the oil
and gas lessee may petition the court
for an order that terminates the
suspension and fixes the date and terms
on which the oil and gas lessee may
resume operations within the portion of
the common area subject to the order
issued pursuant to paragraph (10)(E).
(B) The court shall issue the order sought
under subparagraph (A)(ii) within 30 days of
the date of receipt of the petition pursuant to
subparagraph (A)(ii).
(C)(i) If the oil and gas developer
determines that, as a consequence of the order
of the court issued pursuant to paragraph
(5)(B) and an order to suspend all or any part
of the oil and gas lease or right to develop
pursuant to paragraph (10)(E), the conditions
described in paragraph (10)(A)(iii) exist, the
oil and gas developer may petition the court to
terminate the oil and gas lease or right to
develop.
(ii) The petition referred to in clause (i)
may be filed any time after issuance of the
order of the court pursuant to paragraph
(10)(E) but not later than 120 days after the
date of receipt by the court of the
notification pursuant to subparagraph (A)(i).
(iii) Upon receipt of a petition pursuant to
clause (i), the court shall make a
determination whether to issue an order to
terminate the oil and gas lease or right to
develop and award an additional mount from the
Federal coal lessee to the oil or gas developer
and all other owners of any interest in the oil
and gas property, as their interests may
appear, in accordance with the procedures and
deadlines established in paragraphs (1) and (6)
through (13).
(15) Termination of coal lease suspension.--
(A) If the court issues an order requiring
suspension of all or any part of the Federal
coal lease and/or any non-Federal interest in
the logical mining unit that includes the
Federal coal lease pursuant to paragraph
(11)(C)--
(i) the oil and gas developer shall
notify the court and the Federal coal
lessee when the portion of the common
area subject to the order issued
pursuant to paragraph (11)(C) is no
longer required for gas or oil
production from such portion; and
(ii) within 120 days of the date of
receipt by the court of the
notification pursuant to clause (i) or
within 60 days prior to the date on
which the period established by the
court in the order issued pursuant to
paragraph (11)(C) concludes, the
Federal coal lessee may petition the
court for an order that fixes the date
and terms on which the Federal coal
lessee may commence mining operations
or construction of support facilities
in the portion of the common area
subject to the order issued pursuant to
paragraph (11)(C) and, if all or any
part of the Federal coal lease and/or
non-Federal interest in the logical
mining unit is suspended, terminates
the suspension.
(B) The court shall issue the order sought
under subparagraph (A)(ii) within 30 days of
the date of receipt of the petition pursuant to
subparagraph (A)(ii).
(C)(i) If the Federal coal lessee determines
that, as a consequence of the order of the
court issued pursuant to paragraph (11)(C),
further development of all or any part of the
Federal coal lease and/or any non-Federal
interest in the logical mining unit is
impracticable, the Federal coal lessee may
petition the court to terminate all or part of
the Federal coal lease and/or any non-Federal
interest in the logical mining unit.
(ii) The petition referred to in clause (i)
may be filed any time after issuance of the
order of the court pursuant to paragraph
(11)(C) but not later than 120 days after the
date of receipt by the court of the
notification pursuant to subparagraph (A)(i).
(iii) Upon receipt of a petition pursuant to
clause (i), the court shall make a
determination whether to issue an order to
terminate all or any part of the Federal coal
lease and/or any non-Federal interest in the
logical mining unit and award an additional
amount from the oil and gas developer to the
Federal coal lease and all other owners of any
interest in the Federal coal lease or logical
mining unit, as their interests may appear, in
accordance with the procedures and deadlines
established in paragraphs (1) and (6) through
(13).
(16) Supplemental petition for relief.--
(A) If, at any time after the issuance of an
order pursuant to paragraph (10)(E) or
paragraph (11)(C), the mining plan that is the
basis of the order is altered in a manner that
may warrant suspension of an additional part or
all of, or termination of, the oil and gas
lease or right to develop or suspension of an
additional part of the Federal coal lease and/
or any non-Federal interest in the logical
mining unit that includes the Federal coal
lease and/or an increase in the sum of money
that was awarded under the order, either the
Federal coal lessee or the oil and gas
developer may, if necessary after compliance
with the requirements of subsection (d), file a
supplemental petition for relief with the court
to amend the order.
(B) The requirements of paragraphs (1) and
(6) through (13) shall apply to the
supplemental petition submitted pursuant to
subparagraph (A).
(C)(i) Upon completion of the process
required by subparagraph (B), the court shall
make a determination whether to suspend an
additional part or all of, or terminate, the
oil and gas lease or right to develop or to
suspend an additional part of the Federal coal
lease and/or any non-Federal interest in the
logical mining unit as described in, and to
award an additional sum of money calculated in
accordance with, paragraph (10) or paragraph
(11).
(ii) The court shall issue any order
resulting from the determinations made pursuant
to clause (i) within 90 days of the date of
filing of the supplemental petition for relief.
(iii) Any award of an additional sum of money
shall be paid in accordance with paragraph
(13).
(17) Appeal of court orders.--
(A) Any order issued pursuant to paragraph
(5)(B), paragraph (5)(E), paragraph (14)(B), or
paragraph (15)(B) is final and may not be
appealed.
(B) Any order issued pursuant to paragraph
(10)(E) paragraph (11)(C), paragraph
(14)(C)(iii), paragraph (15)(C)(iii), or
paragraph (16)(C)(ii) may be appealed, but the
appeal, and any disposition thereof, may not
disturb any order referred to in subparagraph
(A).
(18) Suspension term.--
(A) If all or any part of any lease issued
pursuant to this Act is suspended in whole or
in part by the Secretary or the court under
this subsection--
(i) the lessee shall not be required
to pay any rental for the lease for the
period of the suspension; and
(ii) if the lease is a Federal oil or
gas lease and is in the primary term or
if the lease is a Federal coal lease,
the term of the lease shall be extended
by the length of the period of the
suspension plus one year; or
(iii) the lease shall not terminate
due to lack of production for the
period of the suspension plus one year.
(B) If any non-Federal oil and gas lease or
right to develop or any non-Federal interest in
a logical mining unit is suspended in whole or
in part by the court under this subsection, the
court shall establish terms for the suspension
comparable to the terms set forth in
subparagraph (A).
(f) Liability Limitation.--
(1) Federal coal lessee.--Except as provided in a
written agreement reached pursuant to subsection (d)(2)
or reached on or after September 1, 1999, and before
the date of enactment of this section, or as provided
by an order of the court pursuant to subsection (e),
neither the holder of a Federal coal lease subject to
the agreement or order nor the United States shall be
liable to the oil and gas developer of, or any owner of
an interest in, any oil and gas property subject to the
agreement or order for any decrease in or depletion of,
or any impairment of the ability to recover, any gas or
oil from the property that may result from the
development of any coal on the Federal coal leasehold
or within a logical mining unit that includes the
Federal coal lease.
(2) Oil and gas developer.--Except as provided in a
written agreement reached pursuant to subsection (d)(2)
or reached on or after September 1, 1999, and before
the date of enactment of this section, or as provided
by an order of the court pursuant to subsection (e),
neither the oil and gas developer of an oil and gas
property subject to the agreement or order nor the
United States shall be liable to a holder of a Federal
coal lease subject to the agreement or order, or any
owner of any non-Federal interest in a logical mining
unit that includes the Federal coal lease, or the
United States for any impairment of the ability to
recover coal from the Federal coal leasehold or logical
mining unit that may result from the development of gas
or oil on the property.
(g) Credit Against Royalties.--
(1) In general.--
(A) Whenever a holder of a Federal coal lease
is required by a written agreement reached
pursuant to subsection (d)(2) and approved by
the Bureau of Land Management or reached prior
to the date of enactment of this section and
approved by the Bureau of Land Management on or
after September 1, 1999, or by a court order
issued pursuant to paragraph (10)(E), paragraph
(14)(C)(iii), or paragraph (16)(C)(ii) of
subsection (e), to pay an amount of suspension
of all or part of, or termination of, a Federal
oil and gas lease for coalbed methane located
within the Subsection (g) Lands, the amount so
paid shall be credited against any royalties on
production required by section 7(a) or any
other provision of this Act from any lease of
Federal coal issued under this Act to such
holder or any affiliate thereof.
(B) Whenever a holder of a Federal oil and
gas lease is required by a written agreement
reached pursuant to subsection (d)(2) and
approved by the Bureau of Land Management or
reached prior to the date of enactment of this
section and approved by the Bureau of Land
Management on or after September 1, 1999, or by
a court order issued pursuant to paragraph
(11)(C), paragraph (15)(C)(iii), or paragraph
(16)(C)(ii) of subsection (e), to pay an amount
for suspension or termination of all or part of
a Federal coal lease located within the
Subsection (g) Lands, the amount so paid shall
be credited against any royalties on production
required by subsection (b)(1)(A) or subsection
(c)(1) of section 17 or any other provision of
this Act from any lease of Federal oil and gas
issued under this Act to such holder or any
affiliate thereof.
(2) Treatment of royalties to states.--The Secretary
shall pay to the State in which the Federal coal lease
or Federal oil and gas lease referred to in paragraph
(1)(A) or paragraph (1)(B), respectively, is located 50
percent of the amount of any credit against royalties
provided under paragraph (1)(A) or paragraph (1)(B)
respectively,--
(A) in the same manner as if the credit
against royalties had been paid in money as
royalties and distributed under section 35(a)
of this Act; and
(B) from amounts received as royalties,
rentals, or bonuses derived from leases issued
under this Act that otherwise would be
deposited to miscellaneous receipts under
section 35(a) of this Act.
(h) Denial of use as precedent.--Nothing in this section
shall be applicable to any lease under this Act for any
mineral, or shall be applicable to, or supersede any statutory
or common law otherwise applicable in, any proceeding in any
Federal or State court involving development of any mineral,
outside of any common area, as defined in subsection (a)(11),
within or outside of the Powder River Basin, as defined in
subsection (a)(1).
[SEC. [44] 45. SHORT TITLE