[Federal Register Volume 60, Number 179 (Friday, September 15, 1995)]
[Proposed Rules]
[Pages 47920-47927]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-22698]



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DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Part 3170

[ES-930-05-1310-01-241A]
RIN 1004-AC27


Coalbed Methane

AGENCY: Bureau of Land Management, Interior.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would add a new part to the oil and gas 
leasing regulations. This regulation is intended to encourage the 
production of coalbed 

[[Page 47921]]
methane in States where production has been impeded by conflicts in 
ownership. These regulations are a requirement of section 1339 of the 
Energy Policy Act of 1992, Ownership of Coalbed Methane.

DATES: Comments should be submitted by November 14, 1995. Comments 
received or postmarked after the above date may not be considered in 
the decision making process on the final rule.

ADDRESSES: Comments should be sent to: Director (120), Bureau of Land 
Management, Room 5558, Main Interior Building, 1849 C Street, NW., 
Washington, DC 20240. Comments can also be sent to 
internet!WO[email protected]. Please include ``attn: AC27'' and your name 
and address in your internet message. Comments will be available for 
review at the above address during regular business hours (7:45 a.m. to 
4:15 p.m.), Monday through Friday.

FOR FURTHER INFORMATION CONTACT: David R. Stewart, Bureau of Land 
Management, Eastern States at (703) 440-1728.

SUPPLEMENTARY INFORMATION: This proposed rule is intended to implement 
section 1339 of the Energy Policy Act of 1992 (hereinafter ``the 
Act''), Ownership of Coalbed Methane (Pub. L. 102-486 Section 1339; 106 
Stat. 2986; 42 U.S.C. 13368). The Act requires promulgation of 
regulations by October 24, 1995 to carry out the requirements of the 
Act. This rule is needed to promote the orderly development of coalbed 
methane by removing the impediment that conflicting ownership poses to 
the development of that resource in affected States. The legislative 
history of the Energy Policy Act indicates that Congress intended 
Section 1339 to apply to all lands within affected States, and not just 
Federal lands. See H.R. Rep. 102-474(I) at 147-48 and 214-16 (reprinted 
in 1992 U.S. Code Cong. & Admin. News at 1954); Cong. Rec., Feb. 6, 
1992 at E 232 (Remark of Rep. Rahall that predecessor bill to section 
1339 was offered ``with the hopes that the entire Appalachian region 
will experience the benefits of coalbed methane development.'' (see 
also 58 FR 21589).
    This regulation essentially force-pools conflicting owners of 
coalbed methane. It does this by requiring conflicting owners to enter 
into the development of a drilling unit. The regulation provides that 
any proceeds from a well, where there is a conflict in ownership, will 
be placed in an escrow account until the ownership issue is resolved by 
a State entity of competent jurisdiction. The mechanism of forced 
pooling, coupled with the escrow account requirements, is intended to 
remove the impediment that conflicts in ownership of coalbed methane 
poses to development.
    These regulations will affect the development of coalbed methane in 
five States (Illinois, Indiana, Kentucky, Pennsylvania, and Tennessee). 
The list of affected States was originally published in the Federal 
Register on April 22, 1993 (58 FR 21589). West Virginia and Ohio were 
on the original list of affected States but have complied with the 
requirements of the Act and therefore have been removed from the list. 
West Virginia was removed from the list of affected States because it 
implemented a State program that promoted the production of coalbed 
methane gas within the State. Ohio was removed from the list of 
affected States as a result of a resolution passed by both houses of 
the Ohio Legislature requesting removal from the list. West Virginia 
was removed from the list of affected States on December 8, 1994, (59 
FR 63376), and Ohio was removed from the list of affected States on 
February 8, 1995 (60 FR 7576).
    The principal author of this rule is David R. Stewart of the Bureau 
of Land Management (BLM), Eastern States, assisted by Ian Senio of the 
Regulatory Management Team of BLM. The staff, Fuels Resources 
Management Division, U.S. Department of Energy, Morgantown Energy 
Technology Center, also assisted BLM in drafting this proposed rule. 
BLM interprets Section 1339 of the Act as giving it the primary 
responsibility for making day-to-day decisions necessary to carry out 
the regulations, while also requiring it to consult with and consider 
the view of the Department of Energy regarding the administration of 
this program.
    We have 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. The BLM has determined that this proposed rule 
is categorically excluded from further environmental review pursuant to 
516 Departmental Manual (DM), Chapter 2, Appendix 1, Item 1.10, and 
that the proposal would not meet any of 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 the Department of the Interior, 
``categorical exclusion'' 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 rule was not subject to review by the Office of Management and 
Budget under Executive Order 12866. This rule will not have a 
significant economic effect on the coalbed methane industry. The rule 
will not adversely affect in a material way the economy, a sector of 
the economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local or tribal communities. The rule 
applies to five States not all of which have substantial quantities of 
economically recoverable coalbed methane. Furthermore, BLM anticipates 
that several more States will qualify for removal from the list of 
affected States, further diminishing the already minor economic impact 
of these regulations.
    The regulations regarding the location and spacing of wells will 
have little or no economic impact as all of the States on the list of 
affected States already utilize some method of spacing for gas wells. 
The regulations pertaining to pooling of interests are reasonable and 
reflect standard, good management practices for gas wells and will have 
little economic impact. The section of the regulations that deals with 
the establishment of an escrow account in cases where it is not clear 
who owns the coalbed methane gas will also have little economic impact. 
The escrow account will hold the funds from producing wells while the 
ownership of the coalbed methane is being determined.
    There will be little or no cost increase imposed on the coalbed 
methane industry and therefore there will be no substantial effects on 
government agencies or competition. Further, for the same reasons, the 
Department has determined that under the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.), the rule will not have a significant economic 
impact on a substantial number of small entities. The rule does not 
distinguish between entities based on their size.
    The BLM has determined that this regulation is not significant 
under the Unfunded Mandates Reform Act of 1995 since it will not result 
in the expenditure by State, local and tribal governments, in the 
aggregate, or by the private sector, of $100 million or more in any one 
year. This regulation will not significantly or uniquely affect small 
governments.
    The Department certifies that this proposed rule does not represent 
a 

[[Page 47922]]
government action capable of interference with constitutionally 
protected property rights. There will be no private property rights 
impaired as a result of this rule. Therefore, as required by Executive 
Order 12630, the Department of the Interior has determined that the 
rule would not cause a taking of private property.
    The information collection requirements contained in this rule have 
been submitted to the Office of Management and Budget for approval as 
required by 44 U.S.C. 3501 et seq. The collection of this information 
will not be required until it has been approved by the Office of 
Management and Budget.
    The Regulatory Management Team of BLM wrote these regulations in 
plain English. We used plain English in an attempt to effectively 
communicate the information and legal requirements of these 
regulations. In addition to comments on the substance and content of 
these regulations, please comment on the use of plain English in these 
regulations.
List of Subjects for 43 CFR Part 3170

    Public lands--Mineral resources, Reporting and record keeping 
requirements, Coalbed methane.

    For the reasons set out in the preamble, part 3170, Group 3100, 
Subchapter B, Chapter II of Title 43 of the Code of Federal Regulations 
is added to read as follows:

PART 3170--COALBED METHANE

General Provisions

Sec.
3170.0-1  Purpose of these regulations.
3170.0-3  Authority for these regulations.
3170.0-5  Definitions.
3170.0-7  Applicability of these regulations.

States Affected by These Regulations

3171.1  Which States are affected States?
3171.2-1  How does BLM add a State to the list of affected States?
3171.2-2  How does BLM remove a State from the list of affected 
States?

How To Establish a Spacing Unit

3172.1  What distance requirements apply to a spacing unit?
3172.2-1  Who may apply for a spacing unit?
3172.2-2  What must my application for spacing contain?
3172.2-3  What must be in my notice to interest owners required by 
Sec. 3172.2-2(g)?
3172.2-4  As a notified interest owner under Sec. 3172.2-2(f) how do 
I object to spacing?
3172.2-5  What does BLM consider when reviewing my application for 
spacing?
3172.2-6  How does BLM tell me that the spacing unit has been 
approved?

How To Get a Pooling Order

3172.3-1  What is a pooling order?
3172.3-2  Is a pooling order required if there is a voluntary 
agreement between ownership interests in the coalbed methane?
3172.3-3  Who may apply for a pooling order?
3172.3-4  What must my application for pooling order contain?
3172.3-5  Will there be a hearing on my application for pooling?
3172.3-6  How will I know about the pooling order hearing?
3172.3-7  What will the pooling order establish?
3172.3-8  What options do I have in participating in the pooling 
order?
3172.3-9  What if I make no election?

Escrow Accounts

3172.4-1  What is the purpose of the escrow account BLM establishes?
3172.4-2  What funds must I deposit into the escrow account?
3172.4-3  When will I receive my share of the funds paid into the 
escrow account?
3172.4-4  How will the funds from the escrow account be allocated?

Getting Authorization To Drill and Stimulate Coalbed Methane Wells

3172.5-1  After the pooling order is issued may I begin to drill and 
stimulate the coalbed methane well(s)?
3172.5-2  What must I include when applying for authorization to 
drill a coalbed methane well or stimulate a coal seam?
3172.5-3  What if I can't get signed consent from a party identified 
in Sec. 3172.5-2(c)(2)?

Notice and Objection

3172.6-1  As the unit operator whom must I notify before I drill a 
coalbed methane well?
3172.6-2  How do I prove that I notified all appropriate parties?
3172.6-3  If I am notified of the application to drill a coalbed 
methane well, may I object to the drilling of the well?
3172.6-4  What must I include in my objections to the application to 
drill a coalbed methane well?
3172.6-5  Under what circumstances may BLM refuse to approve the 
drilling of a well?
3172.6-6  Under what circumstances is BLM required to deny approval 
for the drilling of a well?
3172.6-7  If my application to drill a well is unacceptable because 
a notified party objects, may I modify my proposal to mitigate the 
objection?
Hearing and Decision on Objections to Drilling and Stimulation of 
Coalbed Methane Wells
3172.7-1  If I have been notified of the proposal to drill or 
stimulate a coalbed methane well and I object, am I entitled to a 
formal hearing?
3172.7-2  May parties other than notified parties participate in 
these proceedings?
3172.7-3  How will I find out about the informal hearing on 
objections to the drilling and stimulation of the well?
3172.7-4  What if BLM decides not to have a hearing on objections to 
the drilling and stimulation of the well?
3172.7-5  When does BLM decide on my request for approval to drill 
and stimulate the coal seam?
3172.7-6  Do I need only BLM's approval to start operations?

Plugging of Coalbed Methane Wells

3172.8-1  When must I plug a coalbed methane well?

Venting for Safety

3172.9  May I vent coalbed methane for safety reasons?

Appeals

3172.10  What if I have been adversely affected by a decision made 
by BLM under these regulations?

    Authority: 42 U.S.C. 1336; 43 U.S.C. 174.0.

General Provisions


Sec. 3170.0-1  Purpose of these regulations.

    The regulations in this part govern operations associated with the 
development of coalbed methane in those States listed as affected 
States. They seek to promote the orderly and efficient development of 
coalbed methane and preserve the ability to mine coal seams in the 
affected States.


Sec. 3170.0-3  Authority for these regulations

    Section 1339 of the Energy Policy Act of October 24, 1992 (106 
Stat. 2776, 2986; 42 U.S.C. 13368).


Sec. 3170.0-5  Definitions.

    (a) Affected State means a State listed by the Secretary of the 
Interior, with the participation of the Secretary of Energy, as 
published in the Federal Register on April 22, 1993, 58 FR 21589 
(1993), and as subsequently amended.
    (b) Coalbed methane means natural gas that is produced, or may be 
produced, from coalbeds and rock strata associated with the coalbed.
    (c) Coal operator means any person who has the right to operate or 
does operate a coal mine.
    (d) Coal owner means any person who owns or leases a coal seam.
    (e) Coal seam means any layer of coal 20 inches or more in 
thickness. The term also applies to a stratum of less thickness that is 
being commercially worked, or in the Bureau of Land Management's 
judgment can foreseeably be commercially worked and will require 
protection if wells are being drilled through it.
    (f) Nonparticipating working-interest owner means a coalbed methane 
owner who relinquishes his working interest in a well to participating 
working-interest 

[[Page 47923]]
owners until the proceeds allocable to his share equal 300 percent of 
his share of the costs of drilling and equipping the well. Afterwards, 
the nonparticipating working-interest owner becomes a participating 
working-interest owner. Here, proceeds equal gross revenue less 
operating costs.
    (g) Participating working-interest owner means a coalbed methane 
owner who elects to share the risks and costs of drilling, completing, 
equipping, gathering, operating (including any and all disposal costs), 
plugging, and abandoning a well(s) under a pooling order and to receive 
a share of the well's production.
    (h) Pooling means joining of interests for common development 
within an approved spacing unit.
    (i) Spacing unit means an area that may contain one or more coalbed 
methane wells for the purpose of orderly development of coalbed 
methane.
    (j) Stimulate means any action taken to increase the inherent 
productivity of a coalbed methane well such as hydraulic fracturing.
    (k) Unit operator means the party designated in a pooling order to 
develop a spacing unit by the drilling of one or more coalbed methane 
wells.
    (l) Vent means release of coalbed methane into the atmosphere.


Sec. 3170.0-7  Applicability of these regulations.
    The regulations apply to any deposit of coal capable of producing 
coalbed methane in an affected State and are in addition to State 
permitting requirements for individual wells. These regulations don't 
apply to coalbed methane development where there is a voluntary 
agreement between all ownership interests.

States Affected by These Regulations


Sec. 3171.1  Which States are affected States?

    The five affected States are Pennsylvania, Kentucky, Tennessee, 
Indiana, and Illinois. Excluded by statute from any extension or 
revision of the list of affected States are the States of Colorado, 
Montana, New Mexico, Wyoming, Utah, Virginia, Washington, Mississippi, 
Louisiana, and Alabama.


Sec. 3171.2-1  How does BLM add a State to the list of affected States?

    BLM may add to the list of affected States when BLM determines that 
all three of the following conditions apply--
    (a) Development of significant deposits of coalbed methane is being 
impeded by disputes, uncertainty or litigation regarding ownership of 
coalbed methane;
    (b) No statutory or regulatory procedure or existing case law 
permits and encourages the development of coalbed methane within that 
State; and
    (c) No extensive development of coalbed methane exists within that 
State, but the potential for coalbed methane development exists.


Sec. 3171.2-2  How does BLM remove a State from the list of affected 
States?

    BLM will remove a State from the list of affected States when any 
of the following events occurs:
    (a) The Governor of the State petitions the Secretary of the 
Interior for removal, and the State's legislature doesn't object. The 
Governor first must notify the legislature of the petition during a 
legislative session and allow six months for consideration. If, in that 
time, the legislature enacts no law or resolution disapproving the 
petition, the Governor may petition the Secretary to delete the State 
from the list of affected States. The petition must include a copy of 
the Governor's notice to the State legislature and a statement that the 
legislature hasn't disapproved removal of the State from the list of 
affected States;
    (b) The State's legislature passes a law or resolution requesting 
removal from the list of affected States. A representative of the 
legislature must send BLM a copy of the law or resolution; or
    (c) BLM determines that the State no longer meets all of the 
criteria for an affected State listed in Sec. 3171.2-1.

How To Establish a Spacing Unit


Sec. 3172.1  What distance requirements apply to a spacing unit?

    If the State has distance requirements for coalbed methane wells 
those distance requirements apply. Otherwise, a coalbed methane well 
must be both--
    (a) 1,000 feet or more from any other coalbed methane well; and
    (b) 200 feet or more from the boundary of the spacing unit.
    Coalbed methane wells in the gob will be spaced by BLM on an 
individual basis. Gob means an area in an underground mine where mining 
activity has occurred that may be packed with waste rock and in which 
there is a reasonable likelihood of buildup of coalbed methane. 
Exceptions to paragraphs (a) and (b) of this section require BLM's 
prior approval.


Sec. 3172.2-1  Who may apply for a spacing unit?

    You may file an application to establish spacing units for drilling 
and operating coalbed methane wells if you claim a coalbed methane 
ownership interest within a proposed spacing unit.


Sec. 3172.2-2  What must my application for a spacing unit contain?

    You must file with BLM an original and two copies of an application 
to establish or modify spacing. In it--
    (a) Give your name and address and those of any counsel or 
representative;
    (b) If you are applying to vacate or amend an order, identify the 
order you want vacated or amended and state the relief you seek;
    (c) Justify the size and shape of the proposed spacing unit based 
on geologic characteristics of the subject coalbed(s) and the 
engineering and economic characteristics of well(s) within the unit;
    (d) Give a legal description of the area to be spaced relative to a 
known survey point and the total acreage to be included in the order;
    (e) Give a map depicting the boundary of the area to be spaced;
    (f) List the names and addresses of each owner of the surface 
estate, and any oil, gas, coal or other mineral interest underlying the 
land which is the subject of your request; and
    (g) Certify by affidavit that you used due diligence to locate and 
serve notice of the request for spacing to each of the owners 
identified under Sec. 3172.2-2(f).


Sec. 3172.2-3  What must be in my notice to interest owners required by 
Sec. 3172.2-2(g)?

    Your notice must--
    (a) Briefly describe the proposed action;
    (b) Give the address of the BLM office where your application is 
filed;
    (c) Invite interest owners to send written comments to that BLM 
office within 30 calendar days of receiving your notice; and
    (d) Give a general-location map of the area.


Sec. 3172.2-4  As a notified interest owner under Sec. 3172.2-2(f) how 
do I object to the spacing?

    Provide BLM with written objections within 30 calendar days of your 
notification.


Sec. 3172.2-5  What does BLM consider when reviewing my application for 
spacing?

    (a) Besides the information you submitted in your application for 
spacing, BLM considers--
    (1) Proposed mine development plans;
    (2) Existing mine operations;
    (3) Drilling of multiple coalbed methane wells on each spacing 
unit;
    (4) Existing spacing laws or orders; and
    (5) Objections received under Sec. 3172.2-4. 

[[Page 47924]]

    (b) If you don't send enough information for BLM to determine 
spacing unit size or shape, BLM may enter a temporary order 
establishing provisional spacing units for the orderly development of 
the area. The provisional spacing stays in effect until BLM receives 
the information it needs to determine the ultimate spacing for the 
wells.


Sec. 3172.2-6  How does BLM tell me that the spacing unit has been 
approved?

    After reviewing your application for spacing, BLM issues a spacing 
order that establishes the following:
    (a) The size and shape of the spacing units;
    (b) The formations to which the order applies;
    (c) The acreage included in the order; and
    (d) Well locations on each unit.

BLM will send you and any parties that request it, a copy of the 
spacing order.

How To Get a Pooling Order


Sec. 3172.3-1  What is a pooling order?

    The pooling order is an order that joins conflicting interests in 
one or more spacing units and spreads their costs and revenues.


Sec. 3172.3-2  Is a pooling order required if there is a voluntary 
agreement between ownership interests in the coalbed methane?

    No pooling order is required if the parties claiming an ownership 
interest in the coalbed methane voluntarily agreed to drill and operate 
the well.


Sec. 3172.3-3  Who may apply for a pooling order?

    You may apply for a pooling order if you are claiming a coalbed 
methane ownership interest and are proposing to drill a coalbed methane 
well.


Sec. 3172.3-4  What must my application for a pooling order contain?

    You must file an original and two copies of your application. In 
it--
    (a) Give your name and address and those of any counsel or 
representative;
    (b) If you are applying to vacate or amend an order, identify the 
order you want vacated or amended and state the relief you seek. If you 
are seeking to amend an order, you may reference information already on 
file with BLM and don't need to send it again;
    (c) Justify the proposed action which may include citing statutes, 
rules, orders, and decided cases;
    (d) Give a legal description of the area to be pooled;
    (e) Include a map that shows the proposed pooling unit boundary and 
the boundaries of individual tracts of ownership in the unit, certified 
by a registered land surveyor or engineer;
    (f) For each tract in the unit, give--
    (1) The acreage and its percentage to the total acreage of the 
pooling area;
    (2) The names, addresses and ownership percentages for all owners 
of the surface, coal, oil and gas. If any owner's name and address is 
unknown, say so;
    (g) Describe the coalbed methane ownership interests to be pooled;
    (h) Give your percentage of the total interest in the proposed 
unit;
    (i) Describe the conflicting claims to ownership of the coalbed 
methane;
    (j) Give the percentages of coalbed methane ownership interests to 
be escrowed and a plan for escrowing the costs of drilling and 
operating the well(s) and the proceeds from the well(s).
    (k) Describe the geology of any coalbeds and adjacent strata from 
which coalbed methane is to be produced;
    (l) Describe the proposed development, including at least--
    (1) The number, location, and depths of proposed wells (with maps 
as appropriate);
    (2) The anticipated drilling schedule;
    (3) A description of production measurement and allocation; and
    (4) Any other unique aspect of the operation;
    (m) Estimate production over the life of well(s) and the total 
reserves of the unit;
    (n) Estimate the allocable costs, providing sufficient detail of 
the types of direct and indirect costs; and
    (o) Certify by affidavit that you used due diligence to locate and 
identify all interest owners.


Sec. 3172.3-5  Will there be a hearing on my application for pooling?

    Yes. BLM holds a hearing 45 calendar days or more after receiving 
an application for pooling.


Sec. 3172.3-6  How will I know about the pooling order hearing?

    BLM provides notice of the hearing by certified mail (return 
receipt requested) or makes a reasonable and diligent effort to provide 
notice to each party claiming an ownership interest in the coalbed 
methane within the proposed pooling area. The notice--
    (a) Will describe the purpose of the hearing;
    (b) Invites each party to submit written objections;
    (c) Invites each party to appear before BLM at the pooling hearing; 
and
    (d) States the anticipated date, time, and place of the hearing.


Sec. 3172.3-7  What will the pooling order establish?

    After reviewing your application for pooling and holding the 
hearing BLM issues a pooling order which, among other things, 
establishes--
    (a) The boundary of the order;
    (b) The coalbed methane ownership interests and formations to be 
pooled;
    (c) The unit operator;
    (d) Escrow provisions as provided in 3172.4; and
    (e) Election options.


Sec. 3172.3-8  What options do I have in participating in the pooling 
order?

    After BLM issues the pooling order, if you are an owner or claim 
ownership of the coalbed methane, you must choose a participation 
option. You must give written notice of your election to BLM and the 
designated unit operator within 30 calendar days after the effective 
date of the pooling order. The participation options are--
    (a) You elect to sell or lease your coalbed methane ownership 
interest to the unit operator at a royalty rate determined by BLM in 
the pooling order;
    (b) You elect to become a participating working-interest owner; or
    (c) You elect to become a nonparticipating working-interest owner.


Sec. 3172.3-9  What if I make no election?
    No election means you have agreed to lease your coalbed methane 
interest to the unit operator under the terms and conditions in the 
pooling order. The pooling order must clearly state that this is what 
no election means.

Escrow Accounts


Sec. 3172.4-1  What is the purpose of the escrow account BLM 
establishes?

    BLM establishes an escrow account to maintain custody of the costs 
and proceeds for the interests described in the pooling order. The 
costs for administering the escrow account come out of the funds 
deposited as proceeds in the escrow account. The escrow account will be 
established at a federally insured bank.


Sec. 3172.4-2  What funds must I deposit into the escrow account?

    (a) If you are a participating working-interest owner but not the 
unit operator, you must deposit into the escrow account your share of 
drilling, equipping, and abandonment costs, as set out in the pooling 
order;
    (b) If you are the unit operator, you must deposit into the escrow 
account all royalties attributable to the conflicting interests of the 
lessees plus all proceeds 

[[Page 47925]]
that exceed ongoing operational expenses (including reasonable overhead 
costs) attributable to conflicting working interests.


Sec. 3172.4-3  When will I receive my share of the funds paid into the 
escrow account?

    BLM orders payment of principal and accrued interest from the 
escrow account within 30 calendar days in one of two ways:
    (a) To all legally entitled parties after BLM receives notification 
of the final legal determination of entitlement. Notification consists 
of certified copies of the order issued by a court or other body of 
competent legal jurisdiction.
    (b) To all parties who claim an ownership in the coalbed methane 
when they voluntarily agree on the ownership of the coalbed methane. 
You must send BLM a copy of the voluntary agreement. This agreement 
must consist of a notarized writing, signed by all parties claiming an 
interest in the coalbed methane, which at a minimum clarifies ownership 
interests in the coalbed methane.


Sec. 3172.4-4  How will the funds from the escrow account be allocated?

    You must give BLM either a certified copy of the order issued by a 
court or other body of competent legal jurisdiction or a copy of the 
agreement between parties claiming ownership in the coalbed methane. 
Then--
    (a) If you are a legally entitled participating working-interest 
owner, you receive a proportionate share of the proceeds attributable 
to your conflicting ownership interest;
    (b) If you are a legally entitled nonparticipating working-interest 
owner, you receive a proportionate share of the proceeds attributable 
to your conflicting ownership interest, less your proportionate share 
of 300 percent of the cost of drilling, equipping and abandoning the 
well;
    (c) If you lease (or are considered to have leased under 
Sec. 3172.3-9) your coalbed methane ownership interest to the unit 
operator, you receive a share of the royalty proceeds attributable to 
the conflicting interests of lessees, as set out in the pooling order; 
or
    (d) If you are the unit operator, you receive the costs each 
legally entitled participating working-interest owner contributed to 
the escrow account.

Getting Authorization To Drill and Stimulate Coalbed Methane Wells


Sec. 3172.5-1  After the pooling order is issued may I begin to drill 
and stimulate the coalbed methane well(s)?

    No. You must send to BLM an application for each well. Each coalbed 
methane well drilled within the area covered by the order must conform 
with approved well spacing. Drilling operations, stimulation of a coal 
seam, or surface disturbance preliminary to drilling may begin only 
after BLM approves the application.


Sec. 3172.5-2  What must I include when applying for authorization to 
drill a coalbed methane well or stimulate a coal seam?

    You must send to BLM an original and two copies of your 
application. Include in it--
    (a) A cover sheet containing the information specified in 
applicable notices or orders, including at least--
    (1) The operator's name, address and telephone number;
    (2) The name of the individual responsible for on-the-ground 
operations;
    (3) The well name, number, location, and the total acreage 
committed to the well;
    (4) The serial number assigned to the pooling order; and
    (5) A statement certifying that you have the right to conduct the 
operations.
    (b) A drilling plan containing the information specified in 
applicable notices or orders, including at least--
    (1) A copy of an approved State permit to drill the well(s);
    (2) A description of the drilling and casing program;
    (3) A general discussion of the local geology;
    (4) A discussion of how you will conform to any mine development 
plan near the proposed coalbed methane well; and
    (5) An explanation of procedures you will follow to protect the 
safety of persons working in underground coal mines near the coalbed 
methane well.
    (c) When proposed, a stimulation plan containing the information 
specified in applicable notices or orders. In it--
    (1) Describe the stimulation procedure;
    (2) Identify all parties who either are operating a coal mine or 
have by virtue of their property rights in the coal the ability to 
operate a coal mine within 750 horizontal feet and 100 vertical feet 
above and below the coal bearing stratum which you propose to 
stimulate;
    (3) Certify that each party identified in Sec. 3172.5-2(c)(2) 
received a stimulation plan and that the plan--
    (i) Tells each notified party that it may witness stimulation 
activity;
    (ii) Explains how you and the notified party will share information 
on the results of stimulation; and
    (iii) States the notified party's right to ask for a hearing before 
BLM;
    (4) Include a signed consent from each party identified in 
Sec. 3172.5-2(c)(2) agreeing to the proposed stimulation plan. The 
required consent to stimulate a coal seam in no way impairs, abridges, 
or affects any rights or obligations arising out of a coalbed methane 
contract or coalbed methane lease in existence as of October 24, 1992, 
between a coalbed methane operator or interest owner and a coal 
operator or interest owner. BLM considers a lease or contractual 
agreement allowing for coalbed methane development and any extensions 
or renewals of a lease or agreement as fully meeting consent 
requirements; and
    (d) Provide any other data BLM may request.


Sec. 3172.5-3  What if I can't get signed consent from a party 
identified in Sec. 3172.5-2(c)(2)?

    (a) If all parties identified above haven't given signed consent, 
you must file a request with BLM for a determination whether to approve 
or deny the proposed stimulation of the coal seam(s) described in 
Sec. 3172.5-2(c)(1). In your request--
    (1) Say you lack written consent from a party from whom consent is 
required;
    (2) Detail your efforts to obtain written consent;
    (3) Offer any reasons you know for the lack of consent; and
    (4) Give prima facie evidence that the method of stimulation 
proposed by the coalbed methane operator won't cause unreasonable loss 
or damage to the coal seam. For this section, prima facie evidence is 
evidence that proves a particular fact but might be overcome by other 
evidence that proves a contradictory fact. This evidence should 
consider all factors, including the possibility that coal seams for 
which no actual or proposed mining plans exists may be mined at some 
future date. This evidence should also take into consideration the 
economics of the coal industry and mine safety requirements.
    (b) If a coal operator denies consent for reasons of safety, BLM 
seeks the views and recommendations of the appropriate State and 
Federal coal mine safety agencies. BLM then makes a determination which 
is in accordance with Federal and State coal mine safety laws and 
recommendations of Federal and State coal mine safety agencies.

Notice and Objection


Sec. 3172.6-1  As the unit operator, whom must I notify before I drill 
a coalbed methane well?

    You must notify--
    (a) All parties who either are operating a coal mine or have, by 
virtue of their property rights in the coal, the ability to operate a 
coal mine within 750 

[[Page 47926]]
horizontal feet and 100 vertical feet above and below the coal-bearing 
stratum which you propose to stimulate; and
    (b) All parties claiming an interest in the coalbed methane in the 
spacing unit.


Sec. 3172.6-2  How do I prove that I notified all appropriate parties?

    You must send BLM a copy of--
    (a) A signed receipt of delivery of notice by certified mail;
    (b) A signed receipt acknowledging personal delivery of the notice; 
or
    (c) The mailing log or other proof of the date you sent the notice 
by certified mail, return receipt requested, if all receipts of 
delivery of notice by certified mail haven't been signed and returned 
to you within 15 calendar days of mailing.


Sec. 3172.6-3  If I am notified of the application to drill a coalbed 
methane well, may I object to the drilling of the well?

    Yes. You may submit to the BLM office where the application was 
filed your written objections about drilling the well within 30 
calendar days after you receive a notice from the unit operator of the 
coalbed methane well.


Sec. 3172.6-4  What must I include in my objections to the application 
to drill a coalbed methane well?

    Your objections to an application must contain--
    (a) Your name, address and telephone number;
    (b) The date you received notice of the application to drill;
    (c) A description of the proposed activity you object to;
    (d) A statement of the specific reason(s) you object;
    (e) Conditions under which the permit would be acceptable; and
    (f) Any other information you wish to provide including but not 
limited to mine maps, structural maps, mine plans, and stratigraphic 
information.


Sec. 3172.6-5  Under what circumstances may BLM refuse to approve the 
drilling of the well?

    BLM may refuse to approve the drilling of the well if BLM 
determines that the proposed activity would--
    (a) Cause unreasonable loss or damage to any operating, inactive or 
abandoned coal mine, including any coal mine already projected but not 
yet being operated, due to its proximity to any coal mine opening, 
shaft, underground workings, or to any proposed extension of the coal 
mine;
    (b) Not conform with a coal operator's development plan for an 
existing or proposed operation;
    (c) Interfere unreasonably with present or future coal mining 
operations, including the ability to comply with other applicable laws 
and regulations;
    (d) Possibly be unsafe, considering the dangers of creeps, squeezes 
or other disturbances because of the extraction of coal;
    (e) Interfere unreasonably with the safe recovery of coal, oil, and 
gas; or
    (f) Impinge directly upon the notified parties' coalbed methane 
interest.


Sec. 3172.6-6  Under what circumstances is BLM required to deny 
approval for the drilling of a well?

    BLM must deny approval for the drilling of a well if BLM determines 
that--
    (a) The well would not comply with applicable spacing or other 
requirements;
    (b) The unit operator hasn't notified, or hasn't made a diligent 
effort to notify, all entities that claim ownership of coalbed methane 
to be drained by the well;
    (c) The unit operator hasn't provided entities that claim ownership 
of coalbed methane to be drained by the well an opportunity to object 
in accordance with these rules; or
    (d) Conflicting interests exist that haven't been resolved by 
voluntary agreement or by final determination by a court or other body 
of competent legal jurisdiction and BLM has not issued a pooling order.


Sec. 3172.6-7  If my application to drill a well is unacceptable 
because a notified party objects, may I modify my proposal to mitigate 
the objection?

    Yes. BLM considers whether drilling is acceptable if you modify the 
proposed activity so that--
    (a) You can reasonably drill through an existing or planned pillar 
of coal, or are close to an existing well, taking into consideration 
surface topography;
    (b) You can instead move the drilling to a mined-out area, or to 
some other feasible area;
    (c) You can agree to a drilling moratorium of not more than two 
years to complete coal mining operations in the subject area; or
    (d) You can locate the spacing unit or well in a uniform pattern 
with other spacing units or wells.

Hearing and Decision on Objections to Drilling and Stimulation of 
Coalbed Methane Wells


Sec. 3172.7-1  If I have been notified of the proposal to drill or 
stimulate a coalbed methane well and I object, am I entitled to a 
formal hearing?

    No. However, BLM may decide to hold an informal fact-finding 
hearing on any objection filed about an application for drilling or 
stimulation, or both, of a coalbed methane well. In determining whether 
to have an informal hearing, BLM takes into account at least--
    (a) Whether the party objecting to the application has standing to 
object. Only parties entitled to notice under Sec. 3172.6-1 have 
standing;
    (b) Whether the objection was filed on time; and
    (c) Whether the objection contains all of the information required 
under Sec. 3172.6-4.


Sec. 3172.7-2  May parties other than notified parties participate in 
these proceedings?

    Yes. Other interested parties may comment on the stimulation plan 
only. You must submit comments in writing to the BLM office where the 
proposed plan was filed before the close of the objection period.


Sec. 3172.7-3  How will I find out about the informal hearing on 
objections to the drilling and/or stimulation of the well?
    If BLM determines that a hearing is warranted, the hearing takes 
place within 30 calendar days after the close of the objection period. 
BLM notifies the applicant and each party with standing to object 
within ten calendar days after the objection period closes. The notice 
states the time and place of the hearing, all objections, and who made 
them.


Sec. 3172.7-4  What if BLM decides not to have a hearing on objections 
to the drilling and/or stimulation of the well?

    If BLM decides not to hold a hearing on any objections filed with 
BLM, we explain why we are not holding a hearing in writing to the 
party who objects and the permit applicant and advise the objecting 
party of the right to appeal the decision.


Sec. 3172.7-5  When does BLM decide on my request for approval to drill 
and/or stimulate the coal seam?

    Not later than 45 calendar days after receiving your request for 
approval to drill and/or stimulate, BLM--
    (a) Approves your request as submitted or with appropriate 
modifications or conditions;
    (b) Denies your request and advises you of the reasons for 
disapproval; or
    (c) Advises you, either in writing or orally with later written 
confirmation, of the reasons why final action will be delayed along 
with the date you can expect the final action.


Sec. 3172.7-6  Do I need only BLM's approval to start operations?

    No. Approval of drilling locations by BLM doesn't relieve you of 
obtaining the necessary permits from other appropriate State or Federal 
regulatory 

[[Page 47927]]
authorities and surface managing agencies.

Plugging of Coalbed Methane Wells


Sec. 3172.8-1  When must I plug a coalbed methane well?

    You must promptly plug and abandon each coalbed methane well that 
isn't commercially producible and not otherwise required for any other 
use. If the well you are abandoning--
    (a) Penetrates a minable coal seam with remaining reserves, you 
must provide for safe mining later. When you abandon and plug a well, 
you must consult with BLM and any Federal or State agencies with 
authority over coal mine safety; or
    (b) Is associated with mined-out or unminable coal seams, you must 
consult with any Federal or State agencies with authority over coal 
mine safety.

Venting for Safety


Sec. 3172.9  May I vent coalbed methane for safety reasons?

    Yes. Nothing in this section prevents or inhibits a party who has 
the right to develop and mine coal from venting coalbed methane to 
ensure safe mine operations in accordance with any applicable Federal 
and State requirements.

Appeals


Sec. 3172.10  What if I have been adversely affected by a decision made 
by BLM under these regulations?

    You may appeal that decision to the Interior Board of Land Appeals 
under the regulations in part 4 of this title.

    Dated: July 17, 1995.
Sylvia V. Baca,
Acting Assistant Secretary of the Interior.
[FR Doc. 95-22698 Filed 9-14-95; 8:45 am]
BILLING CODE 4310-GJ-P