[Federal Register Volume 59, Number 248 (Wednesday, December 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31925]


[Federal Register: December 28, 1994]


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DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Parts 3400, 3470, and 3480

[WO-600-4120-02-24 1A]
RIN 1004-AC15


Logical Mining Units (LMU's) in General; LMU Application 
Procedures; LMU Approval Criteria; LMU Diligence; and Administration of 
LMU Operations

AGENCY: Bureau of Land Management, Interior.

ACTION: Proposed regulation.

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SUMMARY: This proposed rule has three purposes. First, it would amend 
the regulations relating to logical mining units (LMU's) for coal 
mining operations. The proposed amendments would ensure that, 
consistent with the goals of the Federal Coal Leasing Amendments Act 
(FCLAA) and the Mineral Leasing Act, as amended (MLA), LMU's are 
approved only for the purpose of developing Federal coal resources in 
an ``efficient, economical and orderly manner,'' and not solely for the 
purpose of extending diligent development periods. The amendments would 
also make several minor clarifications.
    Second, the proposed rule would clarify the definition of 
``producing,'' which governs how lessees holding current Federal coal 
leases are qualified to obtain new MLA leases under the law.
    Finally, the proposed rule would remove the provision that allows 
extension of the 3-year deadline for submission of resource recovery 
and protection plans.

DATES: Comments should be submitted by February 27, 1995. Comments 
received or postmarked after this date may not be considered in the 
decisionmaking process on the issuance of the final regulation.

ADDRESSES: Comments should be submitted to: Director (140), Bureau of 
Land Management, Room 5555 MIB, 1849 C Street NW, Washington, DC 20240. 
Comments will be available for public review in room 5555 of the above 
address during regular business hours (7:45 a.m. to 4:15 p.m.), Monday 
through Friday.

FOR FURTHER INFORMATION CONTACT: Harold W. Moritz, (202) 452-0350.

SUPPLEMENTARY INFORMATION:

Background:

    The concept of LMU's was created when FCLAA was enacted on August 
4, 1976. Section 5(b) of FCLAA amended Section 2(d) of the MLA (30 
U.S.C. 202a(1)) so that it provides that the Secretary of the Interior, 
upon determining that maximum economic recovery of the coal deposit or 
deposits is served thereby, may approve the consolidation of coal 
leases into a logical mining unit. Such consolidation may only take 
place after a public hearing, if requested by any person whose interest 
is or may be adversely affected. A logical mining unit is an area of 
land in which the coal resources can be developed in an efficient, 
economical, and orderly manner as a unit with due regard to 
conservation of coal reserves and other resources. A logical mining 
unit may consist of one or more Federal leaseholds, and may include 
intervening or adjacent lands in which the United States does not own 
the coal resources, but all the lands in a logical mining unit must be 
under the effective control of a single operator, be able to be 
developed and operated as a single operation and be contiguous.
    An LMU is a production allocation mechanism, which allows a 
straightforward approach to the logical sequencing of mining operations 
on contiguous lands. The purpose of an LMU is to permit coal to be 
mined in a sequence that makes sense. In the western United States, 
where checkerboard land-ownership patterns are common, an operator may 
develop several contiguous coal leases on lands that are owned by 
different entities and were leased at different times. In some cases, 
requiring the operator to mine the oldest Federal leases first in order 
to meet diligent development requirements would be inefficient and 
would not ensure maximum economic recovery of coal reserves. Similarly, 
requiring an operator to maintain production on multiple contiguous 
leases in order to meet lessee-qualification requirements under Section 
2(a)(2)(A) or continued operation requirements under Section 7 of MLA 
would be inefficient.
    An LMU consolidates two or more Federal leases (or Federal and non-
Federal tracts) and allows the Secretary to credit production from 
anywhere in the LMU to all Federal leases contained in the LMU, for 
purposes of diligent development, continued operation and lessee 
qualification. Thus, formation of an LMU can permit more efficient mine 
sequencing, allowing an operator to progress logically from one lease 
to the next, while also allowing the lessee to meet applicable 
production requirements.
    LMU's are an important part of the Federal Coal Management Program. 
The BLM has approved 39 LMU's to date. These LMU's include 155 of the 
remaining 431 Federal coal leases. For fiscal year 1993, these approved 
LMU's comprised more than 32 percent of the Federal lease acres and 51 
percent of Federal production.
    While LMU's are a legitimate means of managing Federal coal 
resources, BLM has determined that, in some circumstances, the existing 
regulations could be used as a device to circumvent FCLAA-mandated 
lease-specific production requirements. The current LMU regulations 
provide that: (1) An LMU's 10-year diligent development period starts 
on the effective date of the ``most recent Federal lease'' and (2) LMU 
diligence supersedes lease-specific diligence for the duration of the 
LMU. This presents the possibility that an operator holding a lease 
that is about to be terminated for failure to meet diligent development 
could extend the diligent development period for the lease by applying 
for an LMU that combines that old lease with newer leases. The term 
``most recent Federal lease'' is defined at 43 CFR 3480.0-
5(a)(13)(ii)(B) to mean the Federal coal lease that is first made 
subject to the 1982 regulatory diligence system closest to, but 
preceding, the effective date of the approved LMU.
    The BLM believes that the regulations governing the commencement of 
an LMU's diligent development period should be continued without 
change. The BLM believes, however, that a lease that has not met its 
diligent development requirements 8 years after its effective date 
should be included in a new LMU only where the operator is actively 
pursuing development on some portion of the proposed LMU. This 
requirement will help ensure that new LMU's are formed only for the 
purposes intended under FCLAA, and not for the purpose of speculation. 
For further information regarding this proposal see the discussion of 
43 CFR 3487.1(f) below.
    BLM has also concluded that the regulations should provide more 
detailed criteria to guide BLM's review of LMU applications. While the 
factors proposed are ones that LMU applicants have often addressed in 
their applications in the past, BLM has concluded that publication of 
these specific criteria would better ensure that LMU's are approved 
only where appropriate.

Advance Notice of Proposed Rulemaking

    On December 10, 1993, BLM published an Advance Notice of Proposed 
Rulemaking (ANPRM) (58 FR 64919). The ANPRM gave notice to the public 
that BLM was considering revision of the regulations at 43 CFR Group 
3400 relating to LMU's for coal operations, in order to improve 
procedures for review of LMU applications and to improve administration 
of LMU operations.
    The ANPRM stated that the purpose of any proposed amendment would 
be to place a greater emphasis on the stewardship of the Federal coal 
resources and to ensure that Federal coal resources are developed in an 
efficient, economical, and orderly manner with due regard to the 
conservation of coal reserves and other resources, as required by the 
MLA. The ANPRM presented only a general description of the actions 
being considered, and included no specific regulatory text. The ANPRM 
requested information and public comments related to 8 general 
questions related to LMU's.
    The ANPRM solicited public comments to assist in the preparation of 
a proposed rule. The public comment period closed on February 8, 1994. 
Seventeen comments were received. Nine comments came from the coal 
industry, all of them from current Federal coal lessees. Three comments 
came from State government offices in the State of Wyoming. Three 
comments came from interest groups; two of these were from industry-
oriented groups and one from an environmental group. Two comments came 
from individuals.
    In general, most of the comments said that there was no 
demonstrated need to change the LMU regulations. Some comments said 
that changing the LMU regulations could place newly approved LMU's at a 
competitive disadvantage compared with LMU's approved under the 
existing regulations. Some comments said that, if BLM does change the 
regulations, the changes should have a prospective effect only.
    The ANPRM requested information and public comments on the 
following 8 questions concerning LMU's. While not every comment 
responded to all of the questions, the summaries below address the 
comments responding to each one.
    1. Is any change in the current regulations related to LMU diligent 
development required or necessary?
    All of the comments answering this question said that no changes 
from the current LMU diligent development regulations were either 
required or necessary. However, BLM believes that some changes relating 
to LMU diligent development are warranted. For example, see the 
detailed discussion relating to the timing of the start of the LMU 
recoverable coal reserves exhaustion period at 43 CFR 3487.1(e)(6).
    2. Is it appropriate for the approval of an LMU to allow for LMU 
diligent development requirements to supersede lease-specific 
diligence?
    All of the comments responding to this question stated that it is 
appropriate for the approval of an LMU to allow for LMU diligent 
development requirements to supersede lease-specific diligence. BLM has 
determined that the current regulations, which allow LMU diligent 
development requirements to supersede lease-specific diligence, 
implement the intent of Congress in enacting the LMU provisions of 
FCLAA. In debates on the bill, one of the co-sponsors of FCLAA 
described LMU's as ``providing an enormous exemption to the 
requirements of due diligence and continuous operation by permitting 
old leases to be consolidated and treated as one . . . .'' 122 Cong. 
Rec. 507 (January 21, 1976) (remarks of Chairwoman Mink).
    3. Is it appropriate to tie LMU diligent development to the date of 
the most recent Federal lease included in the LMU?
    4. What methods should be used to establish LMU diligent 
development requirements?
    5. How should LMU diligent development requirements be related to 
the lease-specific diligent development requirements of those leases 
included in the LMU?
    These questions address essentially the same issue: whether BLM 
should continue the current practice of tying LMU diligent development 
to the date of the most recent Federal lease included in the LMU. All 
of the comments responding to these three questions supported the 
current regulatory approach. BLM has determined that tying the diligent 
development period's start date to the most recent Federal lease 
remains appropriate. The most recent Federal lease in an LMU may be the 
one that should logically be mined first. It is appropriate to provide 
the same lead time for diligent development for a recently issued lease 
when it is part of an LMU as would be required for the lease standing 
alone.
    6. Should the regulations continue to allow an LMU to be effective 
as early as the date that a complete LMU application was submitted?
    All of the comments addressing this question said that the 
regulations should continue to provide BLM the option to allow an LMU 
to be effective as early as the date that a complete LMU application 
was submitted. There are several, often time-consuming, steps involved 
in approving an LMU once an application is received. Having a Federal 
coal lease included in an approved and producing LMU can provide 
protection to a lessee from the disqualification (due to the lessee's 
holding of nonproducing Federal coal leases) that would otherwise occur 
pursuant to Section 2(a)(2)(A). In order to provide this protection in 
a timely manner, it is not appropriate for BLM to delay the effective 
date of an LMU during its processing of an LMU application. Therefore, 
the current procedure of allowing an LMU to be effective as early as 
the date that a complete LMU application was submitted will be 
continued.
    7. Should the regulations require that at least one Federal lease 
be either producing or included in an approved Surface Mining Control 
and Reclamation Act (SMCRA) permit in order to be included in an LMU 
application?
    All of the comments responsive to this question stated that the 
regulations should not be amended to require that at least one Federal 
lease be either producing or included in an approved SMCRA permit in 
order to be included in an LMU application. Based on the public 
comments received, BLM has determined that the regulations should not 
be amended to require that at least one Federal lease be producing. 
However, BLM has determined that, where the proposed LMU would include 
a lease that has not met diligent development requirements within 8 
years after its issuance, it is appropriate to require that at least 
some part of the proposed LMU be covered by a pending or an approved 
application for a SMCRA permit in order for the LMU to be approved. See 
the discussion of 43 CFR 3487.1(f)(7), below.
    8. What would be a viable, working definition of the term 
``producing'' or ``production'' under the Federal Coal Leasing 
Amendments Act and MLA as the term relates to LMU's? Should separate 
definitions of ``producing'' and ``production'' be developed 
specifically for LMU's? If so, what should the definition be?
    All of the comments answering this question said that the 
regulations already contain viable working definitions for the terms 
``producing'' or ``production'' under FCLAA and MLA as the terms relate 
to LMU's. All of these comments further stated that the regulations 
should not contain separate definitions of ``producing'' and 
``production'' specifically for LMU's. None of the comments suggested 
any alternative definitions. Nevertheless, BLM believes that the 
definition of ``producing'' at 43 CFR 3400.0-5(rr)(6) needs some 
clarification. The BLM proposes to clarify the existing provisions of 
and add two new provisions to 43 CFR 3400.0-5(rr)(6). These changes 
would: (1) remove the term ``standard industry operation practices;'' 
(2) address the ``producing'' status of leases that are mined out and 
being held solely for reclamation; and (3) make it clear that market 
conditions do not provide a basis for extended ``temporary'' 
suspensions of severance. See also the discussion on 43 CFR 3400.0-
5(rr)(6), below.
    Finally, the public was invited to raise any additional concerns 
relating to diligent-development requirements for LMU's and to submit 
suggested solutions. None of the comments provided any additional 
insight into diligent development requirements for LMU's. Experience in 
implementing the LMU program over the past 12 years has led BLM to 
consider several additional small changes. See the more detailed 
discussions below.

Study by the General Accounting Office (GAO)

    Since 1992, GAO has been examining BLM's coal leasing program. In 
the course of its investigation, GAO has raised several issues, 
including two related to LMU's. First, GAO suggested that BLM should 
prepare regulations to provide clear criteria that BLM can use to 
determine whether an LMU will further the efficient, economical and 
orderly development of coal deposits. Second, GAO suggested that the 
definition of producing, as it relates to an approved LMU's ability to 
provide protection from the lessee-qualification sanctions of Section 
2(a)(2)(A) of MLA, could be improved to reduce the possibility of 
speculation. This proposed rule addresses both of these areas.

Section 3400.0-5  Definitions

    The prefatory clause to the list of definitions at 43 CFR 3400.0-5 
presently states ``As used in this part:''. This could be interpreted 
to mean that the definitions are applicable only to the general coal 
management provisions of part 3400, and not to the remainder of group 
3400. This has never been the intention of the regulation, as all of 
the terms defined at section 3400.0-5 appear throughout group 3400. To 
eliminate any possible confusion, the prefatory wording of section 
3400.0-5 would be amended to make it clear that the definitions apply 
to all of the Federal coal management regulations in group 3400.
    The proposed rule would also amend the definition of ``producing'' 
at section 3400.0-5(rr)(6), which defines one of the lessee 
qualifications under MLA. Section 2(a)(2)(A) of the MLA provides that 
no lease may be issued under MLA to any entity that holds, and has held 
for 10 years, a Federal coal lease that is not ``producing'' in 
commercial quantities.
    The BLM has concluded that the present regulation, which defines 
``producing'' to include ``operating an ongoing mining operation in 
accordance with standard industry operation practices,'' has potential 
for abuse. The present language could allow a lessee to claim that it 
is ``producing'' in accordance with standard industry practices even 
though, for reasons that are within its control, coal has not been 
produced for many years. This practice does not well serve a major goal 
of FCLAA: to prevent speculative holding of leases.
    BLM recognizes, however, that operator/lessees may have legitimate 
reasons that are beyond their control for temporarily suspending 
severance of coal. Congress recognized this possibility in Section 
2(a)(2)(A) of MLA, which provides that lessees that are not producing 
are not disqualified from obtaining new leases if the leases meet the 
exception-to-producing requirements in Section 7(b) of MLA (30 U.S.C. 
207(b)). Section 7(b) exempts lessees from diligent development and 
continued operation requirements where operations are interrupted by 
strikes, the elements, or casualties not attributable to the lessee or 
where the operator/lessee is paying advance royalty in lieu of 
continued operation.
    Consequently, the proposed rule would remove the ``standard 
industry operation practices'' language, but would preserve the 
exception permitting temporary suspension of operations for reasons 
beyond the reasonable control of the operator/lessee. BLM believes that 
the examples of reasons for suspending operations that are listed in 
the present regulation account for most ``standard industry operation 
practices'' that might require a temporary suspension. There may be 
other reasons for temporarily suspending operations, but any such 
reasons must also be beyond the reasonable control of the operator/
lessee. BLM solicits public comment on other reasons that may be 
included in this listing.
    The present regulation does not define ``temporary.'' It is 
appropriate to place a definite limit on the duration of temporary 
suspensions of severance for purposes of the meaning of ``producing'' 
under Section 2(a)(2)(A). The BLM would establish 3 months as the 
maximum period of time that would be considered temporary under section 
3400.0-5(rr)(6). Should forces beyond the operator/lessee's control 
require a longer period of suspension, the operator/lessee could apply 
for a force majeure suspension under Section 7(b) of the MLA (30 U.S.C. 
207(b)), as imple-mented by 43 CFR 3483.3. In accordance with the 
exceptions stated in Section 2(a)(2)(A) of the MLA and 43 CFR 3472.1-
2(e)(1)(i), any operator/lessee who has, under 43 CFR 3483.3 an 
approved suspension of the requirement for continued operations found 
in Section 7(b) of the MLA is not barred by Section 2(a)(2)(A) from 
acquiring new leases on account of that suspension.
    The listed examples of reasons for temporary suspension of 
severance remain appropriate, but they require minor clarifications. 
The proposed rule adds to ``sale of stockpiles of coal'' the phrase 
``that was severed from the lease or LMU in question,'' in order to 
make it clear that an operator/lessee's sale of coal from any source 
other than the lease or LMU in question would not be grounds for 
suspending the production requirement for purposes of Section 
2(a)(2)(A).
    Additionally, the phrase ``limited duration of time'' found at the 
end of existing section 3400.0-5(rr)(6)(i) would be removed and 
replaced with a cross-reference to this same temporary period of time 
(i.e., that could not exceed 3 months). This will make it clear that, 
when the coal buyer's operation of its power plants requires the coal 
buyer to stop taking coal shipments for temporary periods of up to 3 
months, the lease or LMU supplying that coal can be viewed as producing 
under these regulations.
    A new paragraph (rr)(6)(ii)(B) would be added to provide that 
market conditions are not considered by BLM to fall within the scope of 
the term ``reasons beyond the reasonable control of the operator/
lessee.'' The Department of the Interior (DOI) takes the position that 
lack of a market or the loss of a contract constitutes a normal 
business risk, and that neither event is a justifiable reason for 
granting a suspension. These situations are distinguishable from 
circumstances where the operator/lessee has temporarily suspended 
further severance of coal for short periods while selling stockpiled 
coal severed from the lease or LMU in question or while the coal 
buyer's operations require it to stop taking coal.
    Section 2(a)(2)(A) of MLA was added principally as an anti-
speculation device for leases in existence at the time of FCLAA's 
enactment. Maintaining a lease in a nonproducing status while waiting 
for a market to develop, or for a contract to be negotiated or 
renegotiated, is the kind of speculation that Congress intended to 
discourage when it enacted FCLAA.
    Because proposed Sec. 3400.0-5(rr)(6)(ii)(A) would limit to 3 
months or less those temporary suspensions not affecting lessee 
eligibility, paragraph (rr)(6)(iii) would be added in order to avoid 
disqualification of lessees whose production is suspended for longer 
periods by orders of governmental authorities and through no fault of 
the operator/lessee. The effect of the rule would be to move the 
exception from the requirement of actual severance, on account of 
suspensions due to the orders of governmental authorities, from the 
existing paragraph (rr)(6)(i) to the proposed paragraph (rr)(6)(iii).
    Paragraph (rr)(6)(iv) would be added to clarify that the term 
operator/lessee as used in paragraphs (rr)(6), (ii) and (iii) would 
have the same meaning as stated in Sec. 3480.0-5(a)(28).
    As presently drafted, the proposed changes in the definition of 
``producing'' would, if adopted in the final rule, take effect 30 days 
after the date when the final rule is published. The BLM solicits 
public comment on whether a longer phase-in period, such as 6 months, 
is necessary and appropriate to allow operators/lessees to come into 
compliance with these changes.

Section 3472.1-2  Special leasing qualifications

    Section 3472.1-2 sets forth special qualifications that applicants 
must meet in order to obtain leases. The BLM proposes to make several 
clarifying changes in the section. Paragraph (e)(1)(i) parallels MLA 
Section 2(a)(2)(A), which prohibits issuance of new leases to those who 
have held a Federal coal lease for 10 years that is not producing in 
commercial quantities. The current regulation sets forth exceptions to 
that prohibition, including those provided in ``paragraph (e)(4) or (5) 
of this section.''
    Proposed paragraph (e)(1)(i) would make several minor grammatical 
corrections, and would add a reference to paragraph (e)(6) as another 
exception to the lessee qualification provisions. As the present 
language of the regulation suggests, BLM has always considered 
paragraph (e)(1)(i) to be subject to the exceptions set forth in 
paragraph (e)(6). The proposed change simply clarifies that fact.
    The proposed rule also includes several clarifying changes in 
paragraph 3472.1-2(e)(6)(ii). Paragraphs (A) through (C), which apply 
to pre-FCLAA leases, clearly require that a lease actually be 
``producing'' at the time qualification for new leases is determined. 
Paragraph (D) requires leases subject to diligent development 
requirements to be ``producing in compliance with diligent development 
and continued operation provisions of part 3480.'' Paragraph (E) 
requires that, for a lease contained in a logical mining unit, the LMU 
be producing ``in accordance with the logical mining unit stipulations 
of approval.''
    Under the present wording of paragraph (D), a lessee who has held a 
non-producing lease for more than 10 years could argue that the lease 
is ``producing in compliance with diligent development and continued 
operation provisions of part 3480.'' This could occur where the lessee 
holds a pre-FCLAA lease that did not become subject to diligent 
development until it was readjusted in, for example, 1988. In 1994, the 
lease would be in compliance with diligent development and continued 
operation requirements, because production of commercial quantities 
would not be due until 1998, and continued operation requirements would 
apply only after meeting diligent development. Similarly, under the 
present wording of paragraph (E), a lessee holding non-producing leases 
in a non-producing LMU could argue that the lessee meets the 
``producing'' requirement for purposes of MLA Section 2(a)(2)(A) if the 
LMU is merely in compliance with the diligence provisions of its 
stipulations of approval.
    The BLM believes that a policy under which mere compliance with the 
diligent development requirements of amended Section 7(b) of the MLA is 
adequate to satisfy the ``producing'' requirement of Section 
2(a)(2)(A), where the lease has not yet produced commercial quantities, 
undermines the anti-speculation goal of FCLAA. The two sections have 
separate purposes and their requirements should be implemented 
separately. This interpretation of the relationship between Section 
2(a)(2)(A) and Section 7(b) better serves the anti-speculation goal of 
FCLAA.
    The BLM does believe, however, that once a lessee has actually 
satisfied diligent development and continued operation requirements, a 
lease should be considered to be ``producing'' under Section 
2(a)(2)(A). Accordingly, proposed paragraph (D) would be amended to 
provide that, in order to protect a lessee from disqualification under 
Section 2(a)(2)(A), a lease must be producing or, for a lease that has 
met its diligent development requirements, must have met its continued 
operation requirements for the year. Similarly, proposed paragraph (E) 
would be amended to make it clear that, in order to protect a lessee 
from disqualification, an LMU must be producing, or have satisfied its 
continued operation requirements for the year, in addition to complying 
with the LMU approval stipulations.

Section 3480.0-5  Definitions

    A new paragraph (a)(21) would be added to define the new term 
``logical mining unit (LMU) recoverable coal reserves exhaustion 
period.'' This term would better reflect the requirement in the MLA 
that the maximum mine-out period allowed for each LMU is 40 years. 30 
U.S.C. 202a(2) (1988). Also, see discussions below regarding sections 
3487.1(d)(1), 3487.1(e)(6), and 3487.1(g)(4), where this new term would 
be used in the regulations.
    To allow for the new definition at section 3480.0-5(a)(21), 
existing paragraphs (21) through (36) of section 3480.0-5(a) would be 
renumbered as (22) through (37), respectively.

Section 3483.3  Extension or suspension of continued operation, 3-year 
resource recovery and protection plan submission requirement, and 
operations and production

    In Natural Resources Defense Council v. Jamison, 815 F. Supp. 454, 
470-71 (D.D.C. 1992), the court held that the present provision at 43 
CFR 3483.3(a) that allows extension of the 3-year deadline for 
submission of resource recovery and protection plans is inconsistent 
with the requirements of FCLAA. The court ruled that FCLAA's 
requirement that the operation and reclamation plan must be submitted 
within 3 years of issuance of a lease is mandatory and contains no 
force majeure exception. See 30 U.S.C. 207(c)(1988). Consequently, the 
proposed regulation removes from section 3483.3(a) all references to 
resource recovery and protection plans. Section 3483.3(a) has also been 
edited for clarity of expression.

Section 3487.1  Logical mining units

    The proposed rule would make several changes in the regulations 
governing logical mining units. Once they are effective, BLM intends to 
apply the new regulations to its review of all LMU applications that 
are currently pending, and those that are filed after December 28, 
1994.
    Minor revisions would be made at paragraphs 3487.1(d)(1) and (e)(6) 
to make the regulation consistent with the new definition of ``logical 
mining unit (LMU) recoverable coal reserves exhaustion period'' at 
paragraph 3480.0-5(a)(21).
    Additionally, the proposed rule would amend paragraph 3487.1(e)(6) 
to provide that the LMU recoverable coal reserves exhaustion period 
begins upon approval of the resource recovery and protection plan, in 
accordance with sections 3482.1(b) and 3482.2(a)(2), and to require 
that all recoverable reserves be mined within that period. The current 
regulation establishes the start date as the date on which coal is 
first produced from the LMU on or after the LMU's effective date. The 
MLA does not state expressly when the mine-out period should start. 
Rather, the MLA states that the period that the Secretary establishes 
must be part of the approved ``mining plan'' and cannot exceed 40 
years. See 30 U.S.C. 202a(2). The BLM interprets ``mining plan'' to 
mean the ``operation and reclamation plan'' required under 30 U.S.C. 
207(c), which the implementing regulations, at 43 CFR subpart 3482, 
call the ``resource recovery and protection plan''. This plan, which 
the lessee must submit within 3 years after a lease is issued, provides 
detailed descriptions of how the operator/lessee will mine the coal and 
reclaim the land. Because this plan is approved concurrently with the 
SMCRA permit, the operator/lessee is free to start operations after the 
date of approval. The BLM believes that it best serves the purposes of 
FCLAA to begin the 40-year LMU mine-out period on this date, in order 
to encourage diligent development of Federal coal reserves.
    Paragraph 3487.1(f) would be revised to insert the word ``may'' in 
lieu of the phrase ``shall, except for good cause stated in a decision 
disapproving the application.'' The MLA provides that the Secretary 
``may'' approve an LMU, upon determining that maximum economic recovery 
of coal would be served thereby. See 30 U.S.C. 202a(1). The statute 
gives the Secretary broad discretion to determine whether the public 
interest would be served by approval of an LMU. The present regulation 
unnecessarily limits this discretion by requiring that the authorized 
officer ``shall,'' except for good cause, approve an LMU application 
that meets certain standards. The legislative history of FCLAA 
indicates that Congress never intended that there should be a 
presumption in favor of approving LMU's. See 122 Cong. Rec. 507-08 
(Jan. 21, 1976) (remark of Chairwoman Mink that ``we have agreed to 
permit this limited use of the LMU device''). The proposed new wording 
better reflects the discretion granted by Congress.
    Several additions are proposed to paragraph 3487.1(f)(2) to provide 
authorized officers with more detailed guidance for determining whether 
a proposed LMU would promote efficient, economical, and orderly 
development of coal resources. First, the proposed rule would make it 
clear that the applicant bears the burden of showing that the proposed 
LMU meets the statutory criteria. Second, the proposed rule would list 
the key geologic and engineering factors that the authorized officer 
will use to determine whether an LMU will meet those criteria. The 
proposed rule would not include an exhaustive list of such factors; the 
authorized officer would retain the discretion to consider other 
relevant factors.
    A new subparagraph (f)(7) would be added to limit the circumstances 
under which leases that are nearing the end of their diligent 
development periods may be included in LMU's. The regulation would 
provide that an LMU will not be approved if it includes a lease that 
has not produced commercial quantities by the end of the eighth year of 
its diligent development period, unless some part of the proposed LMU 
is covered by an approved SMCRA permit or an administratively complete 
application for such a permit. (The term ``administratively complete 
application'' is defined at 30 CFR 701.5.) This requirement will help 
ensure that LMU's are formed only for the purposes intended by Congress 
when it enacted FCLAA.
    Under FCLAA, any lease that is not producing coal in commercial 
quantities after 10 years must be terminated. The regulations define 
``commercial quantities'' to mean one percent of the recoverable coal 
reserves. The current regulations also provide that an LMU's 10-year 
diligent development period starts either on the effective date of the 
LMU or the effective date of the most recent Federal lease, depending 
on the age and status of the leases to be included in the LMU. See 43 
CFR 3480.0-5(a)(13)(ii). This presents the possibility that an operator 
holding an older lease that is about to be terminated for failure to 
produce in commercial quantities could seek to postpone the lease 
termination date by applying for an LMU that combines the older lease 
with a more recently issued one. This would not well serve FCLAA's goal 
of preventing speculation in Federal coal reserves.
    The BLM believes that the existing regulatory provisions for the 
commencement of an LMU's diligent development period should not be 
changed. The BLM has concluded, however, that a lease that has not met 
diligent development requirements after 8 years should not be included 
in a new LMU unless the operator is actively pursuing development of 
some portion of the proposed LMU. The BLM believes that, as a lease 
nears the end of its diligent development period without having 
produced in commercial quantities, the likelihood increases that the 
operator/lessee has included it in an LMU application merely for the 
purpose of delaying the lease's termination, and not for achieving 
efficient, economical, and orderly development of coal. Preparation of 
a new SMCRA permit application, however, requires a significant 
expenditure of time and money, indicating that the operator/lessee 
intends in good faith to pursue development.
    A new paragraph 3487.1(g) would require BLM's authorized officer to 
make a written record of the basis of his or her decision on the LMU 
application.
    As a result of the addition of new paragraph 3487.1(g), existing 
paragraphs 3487.1(g)-(h) would be redesignated as 3487.1(h)-(i), 
respectively. A minor revision would be made at redesignated 
3487.1(h)(4) to ensure consistent usage with the term: ``Logical mining 
unit (LMU) recoverable coal reserves exhaustion period,'' newly defined 
at section 3480.0-5(a)(21).
    The principal author of this proposed rule is Harold W. Moritz, 
Senior Technical Specialist, Division of Solid Minerals, Bureau of Land 
Management (BLM); assisted by Allen B. Agnew, Senior Mining Engineer of 
the BLM's Division of Solid Minerals located in the Oregon State 
Office, and staff of the Division of Legislation and Regulatory 
Management, BLM.
    It is hereby determined that this proposed rule does not constitute 
a major Federal action significantly affecting the quality of the human 
environment, and that no detailed statement pursuant to Section 
102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 
4332(2)(C)) is required. BLM has determined that this regulation is 
categorically excluded from further environmental review pursuant to 
516 Departmental Manual, Chapter 2, Appendix 1, Item 1.10, and that the 
regulation will not significantly affect the 10 criteria for exceptions 
listed in 516 DM 2, Appendix 2. Pursuant to the Council on 
Environmental Quality regulations (40 CFR 1508.4) and environmental 
policies and procedures of DOI, ``categorical exclusions'' means a 
category of actions that do not individually or cumulatively have a 
significant effect on the human environment and that have been found to 
have no such effect in procedures adopted by a Federal Agency and for 
which neither an environmental assessment nor an environmental impact 
statement is required.''
    This regulation has been reviewed under Executive Order 12866.
    DOI also certifies that this document will not have a significant 
economic effect on a substantial number of small entities under the 
Regulatory Flexibility Act (5 U.S.C. 601 et seq.). LMU's have 
historically not been within the purview of small entities. There are 
currently no small entities that hold either an approved LMU or pending 
LMU application.
    As required by Executive Order 12630, DOI has determined that the 
regulation would not cause a taking of private property.
    DOI has certified to the Office of Management and Budget that these 
regulations meet the applicable standards provided in sections 2(a) and 
2(b)(2) of Executive Order 12778.
    The provisions for collection of information contained at 43 CFR 
Group 3400, Parts 3400, 3470, and 3480 have previously been approved by 
the Office of Management and Budget and assigned clearance number 1004-
0073. This rule does not contain information collection requirements 
that require approval by the Office of Management and Budget under 44 
U.S.C. 3501 et seq.

List of Subjects

43 CFR Part 3400

    Administrative practice and procedure, Coal, Government contracts, 
Public lands-mineral resources, Reporting and recordkeeping 
requirements.

43 CFR Part 3470

    Coal, Government contracts, Lease and LMU diligence requirements 
Leases, Lessee qualification, Logical mining units, Mineral royalties, 
Mines, Producing requirements, Public lands-mineral resources, 
Reporting and recordkeeping requirements.

43 CFR Part 3480

    Coal, Government contracts, Intergovernmental relations, Logical 
mining units, Mineral royalties, Mines, Public lands-mineral resources, 
Reporting and recordkeeping requirements, Suspensions.

    For the reasons stated in the preamble, and under the authorities 
cited below, parts 3400, 3470, 3480, Group 3400, Subchapter C, Chapter 
II of Title 43 of the Code of Federal Regulations are proposed to be 
amended as follows:

PART 3400--COAL MANAGEMENT: GENERAL

    1. The authority citation for part 3400 is revised to read as 
follows:

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

    2. Section 3400.0-5 is amended by revising the introductory text 
and paragraph (rr)(6) to read as follows:


Sec. 3400.0-5  Definitions.

    As used in this group:
* * * * *
    (rr) * * *
    (6) Producing means actually severing coal. A lease is also 
considered to be producing when:
    (i) The operator/lessee is processing or loading severed coal, or 
transporting it from the point of severance to the point of sale; or
    (ii)(A) The operator/lessee temporarily suspends severance of coal, 
for a period not to exceed 3 months, for reasons beyond the reasonable 
control of the operator/lessee. Circumstances allowing such suspension 
include but are not limited to: dragline or other equipment movement, 
breakdown, or repair; overburden removal; sale from stockpiles of coal 
that was severed from the lease or LMU in question; vacations and 
holidays; coal buyer's operations of its power plants that require the 
coal buyer to stop taking coal shipments for a similar temporary period 
(not to exceed 3 months);
    (B) Provided, however, that neither a lack or loss of market nor a 
lack or loss of a contract shall be considered ``reasons beyond the 
reasonable control of the operator/lessee'' for purposes of paragraph 
(rr)(6)(ii)(A) of this section; or
    (iii) Governmental authorities order a suspension of the severance 
of coal by the operator/lessee for reasons beyond the reasonable 
control and not the fault of the operator/lessee.
    (iv) For the purposes of this paragraph (rr)(6), the term 
``operator/lessee'' has the meaning set forth in Sec. 3480.0-5(a)(28) 
of this title.
* * * * *

Part 3470--Coal Management Provisions and Limitations

    3. The authority citation for part 3470 is revised to read as 
follows:

    Authority: 30 U.S.C. 181 et seq., and 30 U.S.C. 351-359.

    4. Section 3472.1-2 is amended by revising paragraphs (e)(1)(i) and 
(e)(6)(ii)(D) and (E) to read as follows:


Sec. 3472.1-2  Special leasing qualifications.

* * * * *
    (e)(1)(i) On or after December 31, 1986, no lease shall be issued 
and no existing lease shall be transferred to any entity that holds and 
has held for 10 years any lease from which the entity is not producing 
coal in commercial quantities, except as authorized under the advance 
royalty or suspension provisions of part 3480 of this title, or 
paragraph (e)(4), (5), or (6) of this section.
* * * * *
    (6) * * *
    (ii) * * *
    (D) Producing, or has produced in satisfaction of the continued 
operation requirements of part 3480 of this title, for leases that 
began their first production of coal--
    (1) On or after August 4, 1976; and
    (2) After becoming subject to the diligence provisions of part 3480 
of this title;
    (E) Contained in an approved logical mining unit that is--
    (1) Producing, or has produced in satisfaction of the continued 
operation requirements of part 3480 of this title; and
    (2) In compliance with the logical mining unit stipulations of 
approval under Sec. 3487.1(e) and (f) of this title; or
* * * * *

PART 3480--COAL EXPLORATION AND MINING OPERATIONS RULES

    5. The authority citation for part 3480 is revised to read as 
follows:

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

Subpart 3480--Coal Exploration and Mining Operations Rules: General

    6. Section 3480.0-5 is amended by redesignating paragraphs (a)(21) 
through (a)(36) as paragraphs (a)(22) through (a)(37), respectively, 
and adding paragraph (a)(21) to read as follows:


Sec. 3480.0-5  Definitions.

    (a) * * *
    (21) Logical mining unit (LMU) recoverable coal reserves exhaustion 
period means the period of time that begins upon the approval of the 
LMU resource recovery and protection plan and ends when all the LMU 
recoverable coal reserves have been mined out. This period must not be 
more than 40 years.
* * * * *

SUBPART 3483--DILIGENCE REQUIREMENTS

    7. Section 3483.3 is amended by revising the heading and paragraphs 
(a) and (a)(1) to read as follows:


Sec. 3483.3  Suspension of continued operation or operations and 
production.

    (a) Applications for suspensions of continued operation must be 
filed in triplicate in the office of the authorized officer. The 
authorized officer, if he determines an application to be in the public 
interest, may approve the application and terminate suspensions that 
have been or may be granted.
    (1) The authorized officer must suspend the requirement for 
continued operation by the period of time he or she determines that 
strikes, the elements, or casualties not attributable to the operator/
lessee have interrupted operations under the Federal coal lease or LMU.
* * * * *

SUBPART 3487--LOGICAL MINING UNIT

    8. Section 3487.1 is amended by redesignating paragraphs (f)(2) 
through (f)(5) as paragraphs (f)(3) through (f)(6), respectively, by 
redesignating paragraphs (g) and (h) as paragraphs (h) and (i), 
respectively, by revising paragraph (e)(6), by adding new paragraphs 
(f)(2), (f)(7), and (g), and by revising newly designated paragraph 
(h)(4) to read as follows:


Sec. 3487.1  Logical mining units.

* * * * *
    (e) * * *
    (6) Beginning the LMU recoverable coal reserves exhaustion period 
on the date the LMU resource recovery and protection plan is approved, 
and requiring that the operator/lessee mine all LMU recoverable coal 
reserves within 40 years of that date.
* * * * *
    (f) Criteria for approving the establishment of an LMU. The 
authorized officer may approve an LMU if it meets the following 
criteria:
* * * * *
    (2) The application demonstrates that mining operations on the LMU 
will achieve maximum economic recovery of Federal recoverable coal 
reserves within the LMU in an efficient, economical, and orderly manner 
with due regard to conservation of coal reserves and other resources. A 
single operation may include a series of excavations. In determining 
whether the proposed LMU meets these requirements, the authorized 
officer will consider the following factors:
    (i) The amount of coal reserves recoverable from the LMU, compared 
with the amount recoverable if each lease were developed individually;
    (ii) The mining sequence;
    (iii) The potential for independent development of each lease 
proposed to be included in the LMU;
    (iv) The advantages of developing and operating the LMU as a unit;
    (v) The potential for inclusion of the leases in question into 
another LMU;
    (vi) The availability of transportation and access facilities; and
    (vii) Other factors that the authorized officer finds relevant to 
achievement of maximum economic recovery in an efficient, economical, 
and orderly manner.
* * * * *
    (7) The LMU does not include a lease that has not produced coal in 
commercial quantities by the end of the eighth year of its diligent 
development period, unless a portion of the LMU is covered by a SMCRA 
permit approved under 30 U.S.C. 1256 or by an administratively complete 
application for such a permit.
    (g) The authorized officer will state in writing the reasons for 
the decision on the LMU application.
* * * * *
    (h) * * *
    (4) The authorized officer will not extend the LMU recoverable coal 
reserves exhaustion period because of the enlargement of an LMU or 
because of the modification of a resource recovery and protection plan.

    Dated: October 14, 1994.
Bob Armstrong,
Assistant Secretary of the Interior.
[FR Doc. 94-31925 Filed 12-27-94; 8:45 am]
BILLING CODE 4310-84-P