[Federal Register Volume 62, Number 161 (Wednesday, August 20, 1997)]
[Rules and Regulations]
[Pages 44354-44371]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-21880]



[[Page 44353]]

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Part IV





Department of the Interior





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Bureau of Land Management



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43 CFR Parts 3400, 3470, and 3480



Logical Mining Units in General, LMU Application Procedures, LMU 
Approval Criteria, LMU Diligence, and LMU Operations Administration; 
Final Rule

  Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / 
Rules and Regulations  

[[Page 44354]]



DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Parts 3400, 3470, and 3480

[WO-320-1320-02-24-1A]
RIN 1004-AD12


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

AGENCY: Bureau of Land Management, Interior.

ACTION: Final rule.

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SUMMARY: The Bureau of Land Management (BLM) is amending the 
regulations that pertain to formation and administration of logical 
mining units (LMUs) by limiting the inclusion in an LMU of Federal coal 
leases that have not produced commercial quantities of coal in the 
first 8 years of their 10-year diligent development periods, setting 
forth the factors BLM will consider in reviewing an LMU application, 
and narrowing the range of possible starting dates for an LMU's 40-year 
mine-out period. BLM is also modifying the definition of ``producing'' 
to limit the circumstances in which it considers a Federal coal lease 
``producing'' and the leaseholder thereby qualified to acquire 
additional Mineral Leasing Act leases and limit the aggregate duration 
of temporary interruptions in coal severance. BLM is taking this action 
to ensure that LMUs are approved and administered only for the purpose 
of developing Federal coal reserves consistent with the goals of the 
Federal Coal Leasing Amendments Act. This action will prevent the use 
of LMUs to extend the diligent development period of a Federal coal 
lease unless the operator or lessee demonstrates measurable and prudent 
progress toward production of the Federal coal reserves. BLM is also 
implementing a ruling by the Federal District Court for the District of 
Columbia that struck down a provision allowing extension of the 3-year 
submission requirement for resource recovery and protection plans.

DATES: This rule is effective September 19, 1997.

FOR FURTHER INFORMATION CONTACT: William Radden-Lesage, Mining 
Engineer, Solid Minerals Group (WO-320), Bureau of Land Management, 
Mail Stop-501LS, 1849 ``C'' Street N.W., Washington, D.C. 20240; or by 
telephone at (202) 452-0350.

SUPPLEMENTARY INFORMATION:

I. Background

II. Discussion of Final Rule and Response to Comments

III. Procedural Matters

I. Background

    The Mineral Leasing Act of 1920 (MLA) gives the Secretary of the 
Interior authority to offer lands containing deposits of coal owned by 
the United States for leasing and award leases (30 U.S.C. 201(a)(1)). 
The Secretary is also authorized to prescribe necessary and proper 
rules and regulations to carry out the purposes of MLA (30 U.S.C. 189). 
Due to concern about the number of Federal coal leases that were being 
held and not developed, Congress amended MLA by passing the Federal 
Coal Leasing Amendments Act of 1976 (FCLAA), Pub. L. 94-377. To 
discourage the speculative holding of Federal coal leases and encourage 
the development of leased coal, FCLAA established production 
requirements for leases and consequences for lessees when those 
requirements are not met. Section 7(a) of MLA, as amended by FCLAA, 
requires that a lessee produce coal in ``commercial quantities'' within 
10 years of a lease's issuance or, for a lease issued before the August 
4, 1976 enactment of FCLAA, within 10 years after the lease becomes 
subject to section 7 (30 U.S.C. 207(a)). Section 7(b) of MLA, as 
amended by FCLAA, requires each lease to be subject to the conditions 
of diligent development and continued operation, except where 
operations under the lease are interrupted by strikes, the elements, or 
casualties not attributable to the lessee (30 U.S.C. 207(b)). BLM has 
interpreted the reference to a condition of diligent development in 
section 7(b) to be satisfied by compliance with the obligation to 
produce in commercial quantities within 10 years in section 7(a). BLM's 
regulations define ``commercial quantities'' as one percent of a 
lease's recoverable coal reserves (43 CFR 3480.0-5(a)(6)). If a lease 
does not achieve commercial production within the 10 years provided in 
section 7(a) of MLA, as amended, the lease terminates.
    The BLM regulations implementing the ``continued operation'' 
requirement of section 7(b) of MLA, as amended by FCLAA, require a 
lessee to annually produce an average of one percent of the recoverable 
reserve base after the lease has achieved diligent development (43 CFR 
3480.0-5(a)(8) and 3483.1(a)). Alternately, the lessee may apply for a 
suspension of the continued operation requirement on the basis of 
payment of advance royalty (43 CFR 3483.4) or on the basis of strikes, 
the elements or casualties not attributable to the lessee (43 CFR 
3483.3) See 30 U.S.C. 207(b).
    Section 2(a)(2)(A) of MLA, as amended by FCLAA, requires that 
holders of coal leases be disqualified from receiving additional 
mineral leases under MLA if the lessee has held and continues to hold 
coal leases for more than 10 years (not counting years prior to passage 
of FCLAA on August 4, 1976) without producing coal in commercial 
quantities (30 U.S.C. 201(a)(2)(A)), except as provided in 30 U.S.C. 
207(b). Pub. L. 99-190 extended the effective date of section 
2(a)(2)(A) of MLA to December 31, 1986. The effect of the reference to 
section 207(b) is to create two exceptions to the producing 
requirement. One is for strikes, the elements, or casualties not 
attributable to the lessee, and the other is when continued operation 
is suspended by the payment of advance royalties.
    Section 2(d) of MLA, as amended by FCLAA, also authorizes the 
formation of LMUs (30 U.S.C. 202a). An LMU is an area of land in which 
the coal resources can be developed in an efficient, economical, and 
orderly manner with due regard to conservation of the coal reserves and 
other resources. An LMU 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. All the lands in an LMU must be 
contiguous, under the effective control of a single operator, and able 
to be developed and operated as a single mining operation. 
Consolidation of leases into an LMU will only take place after a public 
hearing, if requested by any person who may be adversely affected. The 
Secretary of the Interior may approve an LMU if he determines that 
formation of the LMU enhances maximum economic recovery of the Federal 
coal reserve.
    An LMU is commonly used when the geologic characteristics of a coal 
deposit cross lease or ownership boundaries. A logical and efficient 
mining sequence in such cases would also span the lease or ownership 
boundaries. An LMU fosters maximum economic recovery and conservation 
of Federal coal reserves by facilitating a logical mining sequence in 
terms of the coal deposit or deposits as a whole, rather than within 
only a specific lease or property boundary. In areas where the coal 
ownership pattern is disjointed, such as the checkerboard land-
ownership patterns in the western United States, an operator may 
develop several contiguous coal tracts owned by or leased from 
different entities as a single mining operation. Without the LMU, a 
mine operator would, in most

[[Page 44355]]

cases, have to develop the oldest Federal coal lease first, regardless 
of the geology of the deposit or the most logical development plan, 
simply to comply with the diligent development requirements of section 
7(b) of MLA. Inefficient mining sequences do not contribute to the 
goals of maximum economic recovery of Federal coal reserves and 
conservation of the resource. For this reason, section 2(d)(3) of MLA 
authorizes the Secretary to construe diligent development, continued 
operation and production occurring on one lease in the LMU as occurring 
on all of the Federal leases in the LMU (30 U.S.C. 202a(3)).
    LMUs are an important part of the Federal Coal Management Program. 
As of September 30, 1996, BLM has approved 49 LMUs, which include 180 
of the 389 outstanding Federal coal leases. While LMUs are a critical 
tool to efficiently manage Federal coal resources, BLM has determined 
that, in some circumstances, forming LMUs under the existing 
regulations could have the effect of circumventing lease-specific 
production requirements mandated by FCLAA. BLM's existing LMU 
regulations at 43 CFR 3480.0-5(13)(ii) provide that the 10-year 
diligent development requirement for an LMU begins on the effective 
date of the Federal coal lease that was most recently issued or 
readjusted after passage of FCLAA, but preceding approval of the LMU. 
The existing regulations at 43 CFR 3475.6(b) provide that the LMU 
diligence requirements supersede lease-specific diligence requirements 
for the duration of the LMU. Therefore, an operator holding a lease 
that is about to terminate for failure to meet diligent development 
could effectively extend the diligent development period for the lease 
by forming an LMU that combines the older lease with a newer lease. BLM 
believes that forming an LMU for the sole purpose of extending the 
diligent development period of a lease, without evidence that the 
lessee is prudently pursuing development of a mine, is contrary to the 
intent of MLA, as amended by FCLAA.
    In addition, BLM's existing regulations at 43 CFR 3472.1-
2(e)(6)(ii)(E) provide that the holder of a lease in an LMU meets the 
production requirements of section 2(a)(2)(A) of MLA, as amended, 
whenever the LMU is meeting the diligent development or continued 
operation requirements specified in the LMU stipulations of approval. 
Thus, the holder of a non-producing lease could avoid the section 
2(a)(2)(A) prohibition on obtaining additional leases by forming an 
LMU, even if the LMU is not actually producing any coal, as long as the 
LMU stipulations are being met. Forming an LMU supersedes the lease-
specific diligence requirement and starts a new 10-year diligence 
period for the LMU as a whole. A non-producing LMU can be considered to 
be in compliance with its diligent development requirement until the 
end of its 10-year diligence period. It is only when the diligent 
development period ends without the LMU having achieved production of 
commercial quantities that it would be considered out of compliance. 
Such an outcome frustrates the intent of FCLAA by nullifying the 
penalty provided in section 2(a)(2)(A) of MLA for holding a lease 
without producing any coal.
    Out of concern for abuse of the regulations, BLM published an 
advance notice of proposed rulemaking (ANPR) in the Federal Register on 
December 10, 1993 (58 FR 64919), notifying the public that BLM was 
considering revising the regulations relating to LMUs for coal 
operations. The ANPR solicited public comments to assist in the 
preparation of proposed regulatory changes that would place greater 
emphasis on the stewardship of Federal coal resources and ensure that 
they are developed in an efficient, economical, and orderly manner with 
due regard to the conservation of coal reserves and other resources. 
BLM received 17 comments on the ANPR. Based on its analysis of the 
issues and the comments received, BLM determined that:
    (1) the existing regulations that allow LMU diligent development 
requirements to supersede lease-specific diligence implement the intent 
of Congress in enacting the LMU provisions of FCLAA;
    (2) tying the beginning of an LMU's diligent development period to 
the effective date of the most recent Federal lease remains 
appropriate;
    (3) the current procedure of allowing an LMU to be effective as 
early as the date that a complete LMU application is submitted should 
be continued;
    (4) the regulations should not be amended to require that at least 
one Federal lease in an LMU be producing;
    (5) where a 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 administratively complete application or an 
approved application for a Surface Mining Control and Reclamation Act 
(SMCRA) permit in order for BLM to approve the LMU; and
    (6) the definition of ``producing'' at 43 CFR 3400.0-5(rr)(6) needs 
some clarification to minimize the opportunity to circumvent the intent 
of section 2(a)(2)(A) of MLA.
    A complete summary and analysis of the comments on the ANPR is in 
the preamble to the proposed rule published on December 28, 1994 (59 FR 
66874).
    During 1993 and early 1994, the General Accounting Office (GAO) was 
conducting an investigation of BLM's coal leasing program. In September 
1994, GAO published a report of their findings entitled, ``Mineral 
Resources: Federal Coal-Leasing Program Needs Strengthening'' (GAO/
RCED-94-10). The GAO report focused on two actual cases, one involving 
a large non-producing lease that was combined with a much smaller, more 
recently issued lease to form an LMU just before the larger lease would 
have terminated for lack of diligence. The other case involved a holder 
of a non-producing lease included in an LMU that was idle (not 
producing coal) and that had not yet produced sufficient quantities of 
coal to meet the commercial quantities requirement for the LMU. The 
lease holder applied for and obtained a number of other MLA leases 
while the LMU was not producing coal. To address these situations, GAO 
recommended BLM amend existing regulations to (1) ensure that lessees 
holding pre-FCLAA leases will not be issued mineral leases under MLA 
unless they have met the coal production requirements that FCLAA added 
to MLA and (2) provide criteria that BLM can use to determine whether 
the formation of an LMU is consistent with FCLAA's goals of 
discouraging speculation and encouraging the development of Federal 
coal leases. GAO also recommended that, for each LMU approved, BLM 
document how the approved LMU meets these regulatory criteria (GAO/
RCED-94-10, p. 32).
    Subsequently, BLM published the LMU proposed rule in the Federal 
Register on December 28, 1994 (59 FR 66874). Comments were accepted 
through March 29, 1995. BLM received comments from 14 entities as 
follows: Coal industry groups submitted 10 comments, 1 comment was from 
a State governor, 2 comments were from environmental groups, and 1 
comment was from an individual. As discussed in the next part of the 
preamble to this final rule, BLM gave full consideration to all 
comments received. Any substantive changes in the final rule from what 
was proposed are identified in the following detailed discussion of the 
final rule.

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II. Discussion of Final Rule and Response to Comments

A. Legal Basis for the Final Rule

    Under the MLA, as amended by FCLAA, the Secretary of the Interior 
has the authority to ``prescribe necessary and proper rules and 
regulations and to do any and all things necessary to carry out and 
accomplish the purposes of [the law]'' (30 U.S.C. 189). Under the 
Federal Land Policy and Management Act of 1976 (FLPMA), the Secretary, 
``with respect to public lands, shall promulgate rules and regulations 
to carry out the purposes of this Act and of other laws applicable to 
the public lands'' (43 U.S.C. 1740). For the reasons set forth below, 
BLM believes that this final rule is consistent with the letter and 
intent of sections 2 (a), (b), (d) and 7 of MLA (30 U.S.C. 201, 202a, 
and 207), as well as the general purposes of MLA, FCLAA, and FLPMA.
    With the enactment of FCLAA, the regulations governing the Federal 
coal program must implement the express intent of Congress to 
discourage speculation in Federal coal leases. This intent is embodied 
within 30 U.S.C. 201 and 207. Also, see H.R. Rep. No. 94-681, 94th 
Cong., 1st Sess., 14-15 (1975). The twin goals of encouraging 
development of Federal coal resources and limiting speculation are not 
mutually exclusive. When Federal coal leases are obtained and held for 
long periods without production, or without legitimate steps toward 
production, the efficient, economic and orderly development of the 
resource is precluded. When those who are interested in simply holding 
leases are discouraged from doing so, or are encouraged to relinquish 
their leases, to the extent that others have an opportunity to develop 
those properties, the development goal is met. BLM's goal, and 
challenge, in this rule is to establish some prudent constraints on 
lease holders that will be disincentives to speculation, and at the 
same time, to avoid imposing the kind of constraints that will be 
disincentives to development and production, taking into account the 
dynamic nature of the coal industry.
    There is no question that under BLM's current coal management 
regulations the proportion of Federal leases actually producing coal 
has increased. At the time that FCLAA was passed 20 years ago, only 
about 10 percent of Federal coal leases were producing. Currently, the 
figure is close to 35 percent. BLM believes, however, that the 
aggregate proportion of producing leases is not determinative in 
deciding whether changes to the regulations are necessary. Each lease 
or LMU represents a specific set of unique facts and circumstances 
owing to the geology of the coal deposit, the qualities and 
characteristics of the coal, the proximity to the transportation 
network, the existence of markets, and many other technical and socio-
economic factors. Decisions of lessees whether to form an LMU and 
decisions by BLM approving LMUs are made on a case-by-case basis. BLM 
has to look at the outcomes of individual cases to see whether its 
regulations are working properly.
    Two recent cases shed light on whether our regulations are working 
the way they were intended to work. These are the two cases described 
in the GAO report, discussed above. In the Rocky Butte case, one month 
before a large non-producing lease was scheduled to terminate, it was 
combined with a newer small lease into an LMU, extending the diligence 
date for 10 more years. In the Clovis Point case, the holder of a non-
producing lease that had been held for more than 10 years was found to 
be qualified under section 2(a)(2)(A) to obtain additional leases by 
virtue of the fact that the non-producing lease had been included in an 
LMU that was in compliance with the LMU stipulations of approval. Thus, 
in the first case, application of the statutory penalty for failure to 
achieve diligent development (termination of the lease) was stymied by 
LMU formation that extended the diligent development period. In the 
second case, the statutory penalty for failure to produce coal from 
leases (disqualification from obtaining additional leases) was stymied 
by LMU formation that applied the LMU diligence requirements as 
established by the LMU stipulations of approval to all leases in the 
LMU.
    BLM believes that the outcomes of these two cases are not 
consistent with the spirit and intent of FCLAA. Because its current 
regulations do not prevent this type of outcome from occurring again in 
the future, BLM believes that its regulations should be changed. The 
final rule adopted today is consistent with the view that BLM must 
prevent outcomes such as those described above from happening again. As 
described in the section-by-section analysis that follows, BLM is 
adopting provisions that are focused on preventing specific kinds of 
results while avoiding, to the extent possible and foreseeable, 
unintended negative impacts on legitimate producers of Federal coal. 
Based on BLM's analysis of the issues involved, taking into account the 
purposes of the statutes and the administrative record of this 
rulemaking, including comments received, this final rule is a proper 
and reasonable interpretation of the MLA, as amended.

B. General Comments

    Several comments expressed support for the overall thrust of the 
rules and BLM's effort to clarify and tighten up the current Federal 
coal leasing LMU regulations. One commenter was concerned by BLM's past 
practice of issuing new MLA leases to a lessee who is not in compliance 
with section 2(a)(2)(A) of MLA and concluded that this practice must 
stop. Another comment expressed agreement with the recommendation from 
the GAO report that the Secretary of the Interior cease issuing 
additional MLA leases to companies that are not qualified under FCLAA. 
BLM believes that this rule will significantly reduce the chance that a 
lessee could abuse section 2(a)(2)(A) of MLA, as amended by FCLAA, by 
obtaining additional MLA leases.
    However, most comments, submitted by members of the coal industry, 
were not supportive of the proposed rule. Specific concerns or comments 
are addressed in the analysis of each respective topic or subsection. 
These comments generally requested that the proposed rule be withdrawn. 
BLM remains committed to encouraging diligent development of Federal 
coal and reducing the potential for speculation. However, after 
comprehensive review of all comments, BLM has made some changes to the 
proposed rule. Those changes are discussed in detail below.
    Several comments expressed concern that BLM had not established a 
clear need for the proposed rule change. Several other comments 
expressed an opinion that the current regulations were entirely 
adequate and there was no need for the proposed regulatory changes. 
However, as outlined in the GAO report discussed above, there remains a 
potential for abuse of the current regulations that is not consistent 
with FCLAA's goal of discouraging speculation and encouraging diligent 
development of Federal coal.
    Several comments addressed the relationship of the proposed rule to 
the intent of FCLAA. One comment said that the proposed rule is not 
compatible with FCLAA's intent to reduce the possibility of 
speculation. One comment noted the marked increase in the number of 
Federal coal leases actually producing coal since enactment of FCLAA as 
evidence of the effectiveness of the current regulations and FCLAA to 
reduce speculation. Another comment asserted that the intent of FCLAA 
was confined to preventing the holding of a

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lease without development, and so long as the lease or LMU had been 
developed, the intent of FCLAA was satisfied. Another comment said that 
there is no evidence to indicate that the speculative concerns of 
Congress have not been adequately resolved by FCLAA. BLM agrees that 
FCLAA has reduced the potential for speculation with Federal coal 
reserves. However, questions concerning the effectiveness of FCLAA are 
beyond the scope of this rulemaking. This rulemaking addresses only the 
effectiveness of the regulations to discourage speculation and 
encourage production as intended by FCLAA. As mentioned above, the 
overall percentage of leases that are producing is not determinative as 
to whether the regulations should be changed. BLM disagrees with the 
comment that if a lease or LMU had been developed, FCLAA is satisfied. 
FCLAA contains specific requirements that must be satisfied before 
compliance with FCLAA is achieved. BLM concurs with the GAO findings 
that there are weaknesses in the current regulations that need to be 
addressed.
    One comment discussed the relationship between diligent development 
and speculation. The comment said that the apparent extension of the 
diligence period when an older lease is combined with a younger lease 
in an LMU is not speculation as addressed by FCLAA because formation of 
an LMU often involves tradeoffs such as the 40-year mine-out 
requirement and inclusion of non-Federal coal reserves in determining 
commercial quantities. BLM agrees that for leaseholders who are 
producing or plan to produce Federal coal, there are some tradeoffs 
associated with LMU formation. However, for those who are apparently 
holding leases without any current intention of producing coal, 
imposition of the 40-year mine-out period and increasing the commercial 
quantities amount are not tradeoffs. Clearly, if you have no current 
intention of mining the coal and are holding a lease for the purpose of 
selling it at a profit, you are not going to be greatly concerned about 
how much time you have to mine the coal or the amount of coal you must 
mine each year. You are more concerned, however, about being able to 
hold the lease for 10 more years by including it in an LMU. To the 
speculator, the advantage of substituting a new diligence period vastly 
outweighs any drawbacks associated with the obligation to mine the 
larger reserves of the LMU in 40 years.
    Several comments expressed concern that the proposed rule would 
restrict the flexibility the lessee has under the current regulations. 
One comment noted that ``these unyielding requirements call for more 
flexibility, not less.'' Another comment said ``the Federal regulations 
must provide sufficient flexibility to allow * * * mak[ing] legitimate 
business decisions while still protecting the public interest in the 
coal resources owned by the United States.'' Another comment noted that 
arbitrary limits in the proposed rule ignore the current practical 
realities confronted by the lessee/operator. As addressed in analysis 
of specific sections, some of the ``unyielding requirements'' of the 
proposed rule have been modified to provide some additional 
flexibility. However, such flexibility must be within the limits 
established by the statute. BLM believes the final regulations achieve 
a careful balance between discouraging speculation while at the same 
time encouraging diligent development.
    Several comments expressed concern that the GAO report is, in part, 
a supporting document for this rulemaking. One comment questioned using 
the conclusions of the GAO to support the proposed rule because the 
Department of the Interior's official response to the GAO is not 
consistent with the conclusions of the GAO report. In addition, the 
comment was concerned that the GAO report has not been subject to 
public review and comment sufficient to warrant its serving as the 
primary basis for the proposal. Another comment asserted, ``We have 
concluded that this GAO criticism was ill-advised and unfounded, and it 
appears to have been designed to fulfill a political agenda adverse to 
the interests of * * * federal coal development.'' This comment 
continued, ``We urge BLM not to depend upon the GAO Report to justify 
these new regulations, because it cannot withstand the light of a full 
independent review.''
    The GAO report has been included in the Administrative Record as 
support for this rule. Commenters were free to dispute the foundations 
or conclusions of the report. BLM has considered both the substance of 
the report and criticisms by commenters in formulating this rule. Also, 
this final rule is consistent with the response to GAO from the 
Assistant Secretary, Land and Minerals Management, dated April 12, 
1994. In the response to GAO, the Assistant Secretary noted that 
``BLM's interpretation (of FCLAA) was a matter of policy formulated by 
previous Administrations that met the letter of the law but that 
appeared not to be in concert with the major goal of FCLAA, which was 
to reduce speculation.'' See GAO/RCED-94-10, p. 77. The response also 
stated that ``the policy could be amended prospectively at any time by 
following the normal notice and comment rulemaking process.'' Id. BLM 
considers the final rule to be within the scope of MLA, as amended by 
FCLAA, and BLM's rulemaking authorities.
    One comment asserted that ``defin[ing] `producing' in a manner 
designed to punish a company which has properly suspended mining 
because of poor market conditions'' could have ``takings'' 
implications. BLM does not agree that the rule ``punishes'' companies, 
nor that it has takings implications. Under the commenter's scenario, 
if BLM defined ``producing'' in such a way that a particular company 
was disqualified from obtaining additional leases, no taking would 
occur. BLM's action would preclude the company from obtaining 
additional leases but would not deprive the company from the full 
enjoyment of any rights it already possesses under existing leases. A 
lease holder does not have a contractual or property interest in 
acquiring additional leases at some future time. See Natural Resources 
Defense Council v. Jamison, 815 F.Supp. 454, 470 (1992). To suggest 
that a compensable claim arises from an action that precludes one from 
obtaining additional rights extends the concept of takings beyond the 
scope of current judicial interpretation.
    The same commenter went on to assert that any action ``which could 
result in the taking of leases from competent mine operators * * * 
could in turn represent a taking of potential royalties and tax 
revenues from [State and local governments].'' BLM disagrees. Although 
each takings claim has to be decided on its own merits, BLM believes 
that the rights attendant to a coal lease are conditioned on compliance 
with the law and regulations. When noncompliance occurs, BLM has the 
authority to impose the penalties provided for by MLA. In some cases, 
BLM has no discretion regarding the nature of the penalty. For example, 
MLA provides that ``[a]ny lease which is not producing in commercial 
quantities at the end of ten years shall be terminated'' (30 U.S.C. 
207). As to the question of whether State or local governments have a 
``right'' to the revenue stream associated with a particular lease, the 
commenter construes a possible diminishment of future revenues as a 
compensable taking. BLM does not agree that States have such a claim. 
Under 30 U.S.C. 191, the Secretary has an obligation to pay an 
appropriate share of the money received

[[Page 44358]]

as a result of the production of coal. The obligation does not arise 
until the Secretary receives the money; no obligation to the States 
exists to maintain the revenue stream associated with Federal mineral 
leasing. Moreover, any impacts of these rules on revenue streams is 
purely speculative.
    Finally, the same commenter went on to assert that a regulation 
that ``would limit the leasing of new federal coal or limit the number 
of potentially qualified bidders for new federal coal represents a 
`taking of potential bonus bid revenues' from [the State] which would 
otherwise be available.'' BLM disagrees. As discussed in response to 
the commenter's first assertion, the courts have interpreted the Fifth 
Amendment prohibition on uncompensated takings as being based on a 
deprivation or limitation of rights that a person already possesses. 
Takings are not based on a potential deprivation or limitation of 
rights that a person may or may not possess at some time in the future. 
In summary, BLM does not believe that the regulations adopted today 
have takings implications.
    Several comments expressed concern that the generally negative 
response to the ANPR appeared to be ignored by BLM. The volume of 
opposing comments does not, in and of itself, overshadow BLM's 
responsibility to implement FCLAA. BLM believes the final rule properly 
takes into account the views of commenters in implementing the 
statutory requirements of FCLAA and MLA.
    One comment said BLM failed to describe the need for the changes or 
how the rule will reduce speculation. The final rule discourages 
speculation in a number of ways. For example, the previous open-ended 
definition of the term ``producing'' allowed speculative holding of 
coal leases without limit on the nature or duration of mine shutdowns. 
BLM believes holding a Federal lease for an extended period while both 
the lease and the LMU which contains the lease fail to produce coal in 
sufficient quantities to meet diligence requirements is speculation 
that Congress intended to reduce by enactment of FCLAA. The promise of 
future severance of coal, as evidenced by the presence of mining 
equipment with the capability of severing coal, is not an acceptable 
substitute for the actual severance of coal without an objective 
standard to assure that severance recommences. In addition, this rule 
discourages the formation of LMUs created to allow speculative holding 
of non-producing coal leases. Regulations that allow formation of an 
LMU consisting of an older Federal coal lease that is close to 
termination for failure to meet diligence requirements with other coal 
reserves which also have not produced coal, without any evidence of 
prudent progress of developing a mine on either area, circumvent 
sections 7(a) and 2(a)(2)(A) of MLA and allow speculation. Chapter 2 of 
the GAO report provides a detailed discussion of the relationship 
between speculation and formation of an LMU. The detailed analysis of 
each section of the final rule provides additional information 
concerning how the final rule will specifically serve to reduce the 
potential for speculation.
    One comment expressed concern that Executive Order 12988 of 
February 11, 1994, entitled ``Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations,'' must be 
considered and implemented in any final rule. This Executive Order 
requires that each Federal agency make achieving environmental justice 
part of its mission by identifying and addressing, as appropriate, 
disproportionately high or adverse human health or environmental 
effects of its programs, policies, and activities on minority 
populations and low income populations in the United States. As 
discussed below, BLM believes that this final rule complies with 
Executive Order 12988.
    A logical mining unit can be formed only after a Federal coal lease 
has been issued. BLM must comply with all applicable environmental and 
procedural requirements, which include many opportunities for public 
comment and collection of environmental data, before the lease is 
issued. This final rule does not alter the lease issuance process. The 
logical mining unit itself cannot be approved without providing ample 
opportunity for public comments and, if requested, a public hearing (43 
CFR 3481.2). The mining operation must have a SMCRA mining permit 
before mining operations can begin (30 U.S.C. 1256(a)). Exploration 
operations, permitted through BLM, must also comply with established 
procedures to safeguard the environment. Once mining operations begin, 
the lessee/operator is generally required to continuously monitor the 
environment in and around the mine for potential adverse effects. These 
provisions for public participation and environmental protection 
adequately ensure consideration of impacts on minority or low-income 
communities. Thus, BLM believes that there are ample requirements and 
safeguards already in place to assure compliance with Executive Order 
12988.
    One commenter said that the proposed regulations were ``at odds 
with the President's Regulatory Reinvention Initiative.'' This comment 
said that the proposed regulation cut against the initiative's 
objectives to eliminate or revise obsolete regulations and seek the 
views of the regulated community. BLM does not agree with this comment. 
This final rule revises the regulations to comply with the letter and 
intent of MLA, as amended by FCLAA, after inviting comment and 
informing the regulated community of our intentions. BLM published an 
ANPR and a proposed rule providing the regulated community ample 
opportunity to provide input into the regulatory process. These 
regulations are written to implement the MLA, as amended by FCLAA, and 
have been modified in response to comments from the regulated 
community. BLM believes that the regulations comply with the 
President's regulatory reinvention initiative which requires ``sensible 
regulations without sacrificing rational and necessary protection.''
    In the proposal, BLM indicated that the changes to the definition 
of ``producing'' would take effect 30 days after the final rule is 
published. BLM specifically solicited comments on whether a longer 
phase-in period, such as 6 months, is necessary (59 FR 66877). One 
commenter was concerned that under the proposed rule, BLM would not 
consider suspension of operations due to loss of a contract or lack of 
a market for coal to be a qualifying temporary suspension. The 
commenter proposed that ``the rule take effect a minimum of six months 
after the final rule is published to allow [the lessee/operator] to 
come into compliance with these proposed changes.''
    As discussed in more detail later in this preamble, the final rule 
that BLM is adopting today differs from this aspect of the proposal in 
important ways. The final rule allows qualifying temporary 
interruptions in coal severance up to one year in aggregate length in 
the immediately preceding five-consecutive-year period. See final 
Sec. 3481.4-4. Under the final rule, an operation could temporarily 
interrupt coal severance for the period specified in final Sec. 3481.4-
4 due to loss of contract or lack of market without being disqualified 
from obtaining additional leases. See final Sec. 3481.4-2(c). The final 
rule provides lessees/operators significantly more flexibility with 
regard to temporary interruptions in coal severance than the proposal, 
which, as the commenter points out, would have excluded suspensions for 
loss of

[[Page 44359]]

contract or lack of market and limited qualifying suspensions to three 
months in length. These changes address the commenter's concern, and 
BLM does not believe it is also necessary to extend the period of time 
between the publication of the final rule and its effective date. Thus, 
the regulations BLM is adopting today take effect in 30 days.
    One commenter objected to the statement in the proposed rule 
preamble that BLM intended to apply the regulations governing approval 
of LMUs, under 43 CFR part 3480, subpart 3487, to all LMU applications 
that were pending or submitted after the date of the proposed rule. The 
commenter argued that implementation of the rules in this manner would 
constitute ``an unlawful retroactive application of changes in 
regulations.'' BLM does not agree that these rules will have 
retroactive effect. Once the rules become effective 30 days after being 
published in the Federal Register, they govern all subsequent decisions 
by BLM concerning approval of LMU applications regardless of whether 
the applications are pending on the effective date of the final rule or 
submitted after that date. BLM applies the regulations that are in 
effect at the time it makes the decision on the application. See  
Bradley v. School Board of City of Richmond, 416 U.S. 696 (1974), cited 
with approval in  Illinois South Project, Inc. v. Hodel, 844 F.2d 1286, 
1289 (7th Cir. 1988). The fact that an LMU application may have been 
submitted prior to the change in the regulation does not entitle the 
applicant to have BLM act on the application on the basis of rules no 
longer in effect. See Hunter v. Morton, 529 F.2d 645, 649 (10th Cir. 
1976); Hannifin v. Morton, 444 F.2d 200, 203 (10th Cir. 1971). In 
response to the comment, however, BLM has decided not to reconsider 
decisions made after the date of the proposed rule, but before the 
effective date of these rules.

C. Section-by-Section Analysis of Final Rule and Specific Comments

Part 3400--Coal Management: General
    Subpart 3400--Introduction: General. Section 3400.0-5 Definitions. 
The prefatory clause previously stated ``As used in this part,'' and 
could be interpreted to mean that the definitions listed in 
Sec. 3400.0-5 applied only to part 3400, and were not applicable to all 
of the regulations in 43 CFR group 3400, which includes parts 3400, 
3410, 3420, 3430, 3440, 3450, 3460, 3470, and 3480. BLM proposed to 
change the clause to read, ``As used in this group,'' to clarify that 
the definitions in section 3400.0-5 apply to all of the regulations in 
Group 3400--Coal Management. BLM is adopting the change to the 
prefatory clause for the list of definitions at 43 CFR 3400.0-5 as 
proposed.
    One comment expressed concern that the change in the prefatory 
clause from ``part'' to ``group'' could extend the definition of 
``producing'' at Sec. 3400.0-5(rr)(6), for section (2)(a)(2)(A) of MLA, 
to include ``continued operations'' under section 7 of MLA. However, 
the prefatory clause at Sec. 3400.0-5(rr) specifically limits this 
paragraph to, ``For the purposes of section 2(a)(2)(A) of the Act.'' 
Thus, BLM does not intend the change in the prefatory clause at 
Sec. 3400.0-5 to extend the definition of ``producing'' under 
Sec. 3400.0-5(rr)(6) to considerations of ``continued operations'' 
under section 7 of the MLA, which is defined at 43 CFR 3480.0-5(a)(8).
    Section 3400.0-5(rr)(6) Definition of producing. Under the previous 
definition of producing, BLM considered a lease to be producing, for 
the purposes of lessee qualification under section 2(a)(2)(A) of MLA, 
whenever coal was actually being severed, or the lessee was operating a 
mine in accordance with standard industry operating practices. The 
previous rule also provided an allowance for ``temporary suspension'' 
of coal severance for reasons that are beyond the reasonable control of 
the mine operator or lessee. The definition contained several examples 
of circumstances under which BLM allowed a non-disqualifying 
``temporary suspension,'' including, but not limited to, factors such 
as dragline or other equipment movement, breakdown, or repair; 
overburden removal; sale of coal from stockpiles; vacations and 
holidays; orders of governmental authorities; coal buyer's operations 
of its power plants that require the coal buyer to stop taking coal 
shipments for a limited duration of time; or severed coal being 
processed, loaded, or transported from the point of severance to the 
point of sale. Although the definition stated that it is limited to 
circumstances beyond the reasonable control of the operator/lessee, 
several of the examples described circumstances within the operator's 
control. Thus the rule contained no effective limit on either the type 
or duration of temporary interruptions under which a mine would be 
considered ``producing.''
    The definition of ``producing'' primarily has relevance for 
operations that have not yet achieved diligent development, that is, 
have not produced in commercial quantities within ten years. Operations 
that have achieved diligence and are subject to continued operation 
cannot be disqualified from receiving additional leases under the 
definition of ``producing'' while they remain in compliance with the 
continued operation requirements. See final Sec. 3472.1-2(e)(6)(D).
    BLM proposed that the definition of ``producing'' at section 
3400.0-5(rr)(6) be changed to limit the circumstances under which BLM 
would consider a Federal coal lessee qualified to obtain additional MLA 
leases. BLM proposed to eliminate the provision that allowed the lease 
to be considered producing, for the purposes of section 2(a)(2)(A) of 
MLA, if a mine were operating on the lease or LMU in accordance with 
standard industry operation practices and proposed limiting temporary 
suspensions to 3 months. In the proposal, BLM indicated that it 
believes that the definition had potential for abuse. A lessee could 
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 from the lease for many years. This result would 
not serve the purpose of FCLAA to prevent speculation. Several comments 
expressed support for this aspect of the proposal. Several other 
comments indicated that removal of the ``standard industry operating 
practices'' clause from the rule would unduly constrain the ability of 
BLM to effectively administer the coal program and would not recognize 
site-specific needs of smaller mines. One comment said that standard 
industry operating practices must continue as the standard by which BLM 
makes many of its management decisions.
    The final rule eliminates the ``standard industry operating 
practices'' clause and provides that producing means actually severing 
coal. Under the final rule, BLM also considers a lease producing when 
the operator/lessee is processing or loading severed coal or 
transporting it from the point of severance to the point of sale, or 
coal severance is temporarily interrupted in accordance with 43 CFR 
3481.4-1 through 4-4. BLM continues to believe that the open-ended 
``standard industry operating practices'' and ``temporary suspension'' 
clauses of the previous rule could be interpreted to extend the 
definition of ``producing'' beyond the scope of FCLAA. ``Standard 
industry operating practices'' and unlimited ``temporary'' suspensions 
could include things that are clearly outside the range of what is 
contemplated under FCLAA, such as an open-ended discretionary mine 
closure.

[[Page 44360]]

    As discussed later in this preamble in connection with final 
Secs. 3481.4-1 through 3481.4-4, BLM is providing the flexibility 
requested by commenters by allowing temporary interruptions not 
exceeding an aggregate of 1 year in the 5-consecutive-year period 
immediately preceding the date of BLM's determination of lessee 
qualifications under 43 CFR 3472.1-2. This provision allows operators 
more flexibility to temporarily interrupt coal severance without 
penalty under section 2(a)(2)(A) than would have been provided under 
the proposal, which would have limited the length of a ``temporary 
suspension'' to 3 months. The final rule also provides flexibility by 
not limiting a temporary interruption in coal severance to 
circumstances beyond the control of the lessee/operator.
    By its own terms, section 7(b) provides an exception for 
interruptions caused by ``strikes, the elements, or casualties not 
attributable to the lessee.'' To the extent that a temporary 
interruption is caused by a circumstance that meets the standards of 
section 7(b), BLM has recognized in the final rule that section 7(b) 
does not afford BLM with the authority to limit that type of 
interruption to either a 3-month or 1-year period. Therefore, that type 
of interruption will not lead to disqualification under section 
2(a)(2)(A). See the preamble discussion of Sec. 3481.4 below.
    However, certain of the circumstances listed in the proposal or 
this final rule as non-disqualifying temporary suspensions do not fall 
within the section 7(b) exception because they are not ``casualties not 
attributable to the lessee.'' Some are not ``casualties'' and some are 
not beyond the lessee's control.
    Nevertheless, BLM continues to believe that such temporary 
suspensions should not lead to a disqualification under section 
2(a)(2)(A). By not defining the term ``producing,'' Congress was silent 
as to whether and the degree to which temporary interruptions in coal 
severance should disqualify a lessee from receiving additional leases 
under section 2(a)(2)(A). BLM has attempted to determine what is 
reasonable and has so provided in this final rule. See section 3481.4, 
discussed below. This final rule eliminates the confusing and 
unnecessary requirement that temporary interruptions be beyond the 
control of the operator.
    As discussed above, BLM's previous rules allowed a lease that is 
not actually severing coal to be considered ``producing'' when severed 
coal is being processed, loaded, or transported from the point of 
severance to the point of sale. BLM proposed to retain this provision 
and received no comments that specifically addressed this issue. BLM is 
adopting this provision in the final rule. BLM recognizes that the 
mining operation consists of more than just the mechanical severance of 
coal. Coal, once severed, requires processing and transportation prior 
to it having value to the coal consumer. Severance, processing, and 
transportation of coal are equally important to the success of the 
lease or LMU in meeting the producing requirements under section 
2(a)(2)(A) of the MLA.
    Both BLM's previous rule and the proposal contained definitions of 
the term ``producing'' that would have delineated the circumstances 
under which a lease could be considered ``producing'' for purposes of 
section 2(a)(2)(A) even though coal severance was temporarily 
suspended. BLM believes that these provisions are regulatory in nature 
and do not belong in a definition. Therefore, BLM has moved the 
provisions governing what in the previous rule was a temporary 
suspension to final Secs. 3481.4-1 through 3481.4-4 and included a 
cross-reference to those sections in the definition of ``producing.'' 
Please refer to that portion of this preamble for a complete discussion 
of comments received on that subject, which BLM has designated 
``temporary interruption in coal severance'' in the final rule. Thus, 
the provision that BLM is adopting today simply lists the three 
circumstances under which a lease may be considered producing: (1) When 
coal is being severed (that is, being physically removed from the 
working face to another location); (2) when severed coal is being 
processed, loaded, or transported from the point of severance to the 
point of sale; and (3) when coal severance is interrupted in accordance 
with 43 CFR 3481.4-1 through 3481.4-4.
    The proposal would have added a provision that, for the purposes of 
the definition of ``producing,'' the term ``operator/lessee'' has the 
meaning set forth in 43 CFR 3480.0-5(a)(28). This was an incorrect 
cross reference; the term ``operator/lessee'' is actually found at 43 
CFR 3480.0-5(a)(27). BLM received no comments concerning this section 
of the proposed rule. However, in the interest of simplifying its 
regulations, BLM has decided that it is not necessary to incorporate 
this cross reference into the final rule. The term ``operator'' is 
defined at Sec. 3400.0-5(cc).
Part 3470--Coal Management Provisions and Limitations
    Subpart 3472--Lease Qualification Requirements. Section 3472.1-2 
Special leasing qualifications. Section 3472.1-2 sets forth special 
qualifications that applicants must meet in order to obtain leases. 
Subparagraph (e)(1)(i) implements section 2(a)(2)(A) of MLA and 
establishes the general prohibition on issuance of new leases to those 
who have held a Federal coal lease for 10 years and who are not 
producing coal from the lease deposits in commercial quantities. The 
previous provision set forth exceptions to the prohibition, including 
those in ``paragraph (e) (4) or (5) of this section.'' BLM proposed to 
revise subparagraph (e)(1)(i) by making some grammatical corrections 
and adding a clarifying reference to paragraph (e)(6) as an exception 
to the prohibition. Several comments generally supported the proposed 
rule. BLM is adopting this provision in the final rule as proposed. 
Final Sec. 3472.1-2(e)(1)(i) contains a reference to the exception 
provisions of part 3480. The reference is intended to include 
suspensions approved under 43 CFR 3483.3 and final Sec. 3481.4-4. See 
the preamble to Sec. 3481.4-4 below.
    BLM also proposed changes to paragraph (e)(6), which contains 
exceptions to the prohibition on issuing new leases to holders of non-
producing leases. In BLM's previous rules, paragraph (e)(6)(ii)(D) 
established an exception from section 2(a)(2)(A) for leases ``producing 
in compliance with the diligent development and continued operation 
provisions of part 3480.'' Paragraph (e)(6)(ii)(E) established a 
corresponding exception for leases contained in an LMU, if the LMU is 
producing ``in accordance with the logical mining unit stipulations of 
approval.'' As explained in the proposed rule preamble, these two 
provisions allowed a lease or LMU to be considered in compliance with 
the producing requirement of section 2(a)(2)(A) during the diligent 
development period, even though the lessee may have held the lease for 
more than 10 years without producing coal (59 FR 66877). This is 
exactly the type of abuse identified in the GAO report. See GAO/RCED-
94-10, pp. 24-25. BLM believes that a policy which allows a non-
producing lease in a non-producing LMU to satisfy the ``producing'' 
requirement of section 2(a)(2)(A) because it complies with the diligent 
development requirements undermines the anti-speculation goal of FCLAA 
and implementation of section 2(a)(2)(A).

[[Page 44361]]

    For these reasons, BLM proposed to change paragraph (e)(6)(ii)(D) 
to provide that, in order to protect a lessee from disqualification 
under section 2(a)(2)(A), a lease must be producing, or a lease that 
has met its diligent development requirements must be in compliance 
with its continued operation requirements. Similarly, BLM proposed to 
change paragraph (e)(6)(ii)(E) to provide that, in order to protect a 
lessee from disqualification, an LMU must be producing, or be in 
compliance with its continued operation requirements, in addition to 
complying with the LMU approval stipulations. BLM is adopting both 
provisions in the final rule as proposed, with the exception of one 
editorial change prompted by a comment (discussed below).
    One comment suggested that the rule should be written in a more 
direct style. The comment suggested replacing the phrase ``has produced 
in satisfaction of'' to ``currently in compliance with'' in both 
paragraph (D) and (E). BLM agrees that the suggested change improves 
the clarity of the rule and recognizes that continued operation is 
based on a rolling 3-year period, for which an operator may be in 
compliance, but the necessary production may not yet have occurred. An 
operator has the flexibility to satisfy continued operation by 
producing a total of 3 percent of the recoverable coal reserves within 
3 years, regardless of when production occurs during that 3-year 
period. Thus, the duration of coal severance is not relevant to meeting 
the continued operation requirement as long as the operator meets the 
production requirement on average. Such production satisfies both the 
continued operation and section 2(a)(2)(A) production requirements. The 
final rule does not affect the operator's flexibility in meeting the 
continued operation requirement, where a degree of flexibility is 
appropriate once diligent development has been achieved. The comment is 
adopted, and the final rule requires leases and LMUs to be producing, 
or currently in compliance with the lease-specific or LMU continued 
operation requirements.
    Under final Sec. 3472.1-2(e)(6)(ii)(E), if a Federal lease that is 
included in an LMU and has been held for more than 10 years is 
producing or is in compliance with its continued operation requirement, 
the lessee would remain qualified under section 2(a)(2)(A) of MLA. If a 
Federal lease that is included in an LMU and has been held for more 
than 10 years is not producing or is not in compliance with continued 
operation, but the LMU is producing or is in compliance with its 
continued operation requirement, the lessee remains qualified under 
section 2(a)(2)(A) of MLA. However, if a Federal lease that is included 
in an LMU and has been held for more than 10 years is not producing and 
is not in compliance with its continued operation requirement, and the 
LMU is not producing and is not in compliance with its continued 
operation requirement, the lessee would be disqualified under section 
(2)(a)(2)(A) of MLA.
    One comment disagreed with ``BLM's assertion that for an LMU with a 
pre-FCLAA lease, [LMU] compliance with [diligent development] is 
inadequate for lease compliance with the ``producing'' requirement of 
Section 2(a)(2)(A).'' BLM did not accept this comment. As discussed 
above, if compliance with the diligent development requirement of 
section 7 were to be construed as satisfying the requirements of 
section 2(a)(2)(A), the holding period for readjusted leases could be 
stretched for an additional 10 years before actual production would 
have to begin. This is because the diligent development period of the 
LMU supersedes the lease-specific diligent development period.
    One comment noted the Department had previously considered FCLAA to 
be silent concerning the interplay between section 2(a)(2)(A) and 2(d) 
of the MLA and concluded that ``the agency's attempt at legislative 
revisionism, by inserting FCLAA's anti-speculation purposes, remains 
unpersuasive.'' BLM believes that, where a statute does not directly 
speak to an issue, the agency that has been delegated rulemaking 
authority, BLM in this case, has the discretion to adopt a reasonable 
interpretation that is consistent with the purposes of the statute. 
Under the discretionary authority granted in section 2(d)(3) of MLA (30 
U.S.C. 202a(3)), BLM chose, as a matter of policy, to provide by 
regulation that production from anywhere within an LMU should be 
construed as occurring on all Federal leases in the LMU for purposes of 
diligent development and continuous operation. BLM also chose, as a 
matter of policy, to provide by regulation that a lessee producing in 
accordance with the LMU stipulations was not disqualified under section 
2(a)(2)(A). For the reasons described above, BLM is now changing its 
interpretation with regard to section 2(a)(2)(A) to better serve the 
anti-speculation goals of FCLAA. BLM believes it has articulated a 
reasonable explanation for why it is doing so. This action is within 
BLM's discretionary rulemaking authority under MLA as amended and 
contains a sufficient basis and purpose as required by the 
Administrative Procedure Act (5 U.S.C. 553).
Part 3480--Coal Exploration and Mining Operations Rules
    Subpart 3480--Coal Exploration and Mining Operations Rules: 
General. Section 3480.0-5 Definitions. The proposed rule would have 
added a new term, ``Logical mining unit recoverable coal reserve 
exhaustion period,'' which would have been defined as the period of 
time beginning upon approval of the LMU resource recovery and 
protection plan and ending when all the recoverable coal reserves are 
mined out, but not more than 40 years. BLM has decided not to include 
the definition in the final rule. Based on comments, BLM is adopting a 
final rule that differs from the proposal with regard to the beginning 
of the 40-year period for mining out the LMU. The final rule provides 
flexibility in beginning the 40-year period, because BLM has concluded 
that a definition that specifies a single beginning point for the 40-
year period is not appropriate. See the preamble discussion below 
concerning Sec. 3487.1 of the final rule.
    Subpart 3481--General Provisions. Section 3481.4 Temporary 
interruption in coal severance. As discussed above, BLM also proposed 
to change the definition of ``producing'' to allow temporary suspension 
of operations for reasons beyond the control of the lessee/operator 
without disqualifying the lease holder from receiving new leases. The 
proposed rule would have restricted a ``temporary suspension'' to not 
more than 3 months in length and provided a list of qualifying 
circumstances similar to those included in the previous rule. BLM has 
decided that the provisions relating to ``temporary suspension,'' which 
has been renamed ``temporary interruption in coal severance'' in the 
final rule, are regulatory in nature and should not be included in a 
definition. Thus, in the final rule adopted today, these provisions are 
located at final Sec. 3481.4, including Secs. 3481.4-1 through 3481.4-
4.
    Some commenters confused a ``temporary suspension'' for the 
purposes of determining lessee qualifications under section 2(a)(2)(A) 
of MLA with lease suspensions authorized under section 7(b) of MLA (30 
U.S.C. 207(b)). BLM believes that some of the confusion may have 
resulted from the proposed ``temporary suspension'' provision which 
combined administrative exceptions to the definition of ``producing'' 
with elements of the section 7(b) suspension criteria.

[[Page 44362]]

The comments make it evident that using the same or similar terminology 
for different circumstances is confusing. Therefore, in the final rule, 
BLM uses the term ``temporary interruption in coal severance'' to refer 
to periods when a lease or LMU is not severing coal, but the lease 
holder is still considered to be producing and thus qualified under 
section 2(a)(2)(A) of MLA to receive additional leases.
    Section 3481.4-1 Can I temporarily interrupt coal severance and 
still be qualified as producing? Final Sec. 3481.4-1 provides that an 
interruption in coal severance allows a lessee/operator to temporarily 
halt the extraction of coal for a limited period of time without 
jeopardizing the lessee/operator's qualifications under section 
(2)(a)(2)(A) of MLA to receive additional leases. During the period of 
an interruption in coal severance, BLM still considers a lease or LMU 
to be producing so as not to preclude the lessee/operator from 
receiving a new or transferred lease. This section corresponds to the 
first sentence of proposed Sec. 3400.0-5(rr)(6)(ii)(A), but without the 
proposed 3-month limit and the restriction to reasons beyond the 
reasonable control of the operator/lessee. The time limit for temporary 
interruptions in coal severance is prescribed in final Sec. 3481.4-4 
(discussed below).
    BLM decided not to restrict temporary interruptions in coal 
severance to circumstances beyond the reasonable control of the lessee/
operator. BLM believes that proposed Sec. 3400.0-5(rr)(6)(ii)(A) was 
confusing in that it included in the examples of circumstances beyond 
the lessee/operator's control things that could be within the control 
of the lessee/operator. For example, equipment movement, overburden 
removal, and vacations would all appear to be, generally, within a 
lessee/operator's control.
    To remedy the confusion, the final rule allows temporary 
interruptions in coal severance for any reason, up to the 1-year limit. 
See final Sec. 3481.4-4. As discussed below, BLM believes that limiting 
the aggregate duration of interruptions is a much clearer and more 
effective way to regulate than limiting the types or causes of 
interruptions. If adopted, the proposal might have resulted in 
disagreements over whether or not an interruption was caused by a 
factor beyond an operator's control. Such disagreements are difficult 
to resolve and rarely increase understanding of, or compliance with, a 
regulation.
    Because the term ``producing'' in section 2(a)(2)(A) of MLA, as 
amended, (30 U.S.C. 201(a)(2)(A)) is not defined in the statute, BLM 
has the authority under MLA (30 U.S.C. 189), the MLA for Acquired Lands 
(30 U.S.C. 359), and FLPMA (43 U.S.C. 1733 and 1740) to adopt a 
provision defining the term, provided we establish a reasonable 
connection between the provision and the purposes of the statutes. In 
this case, the final rule fosters maximum economic recovery of Federal 
coal reserves and facilitates development of coal reserves in an 
efficient, economical, and orderly manner by giving operators the 
flexibility to temporarily interrupt coal severance as necessary due to 
the unique and dynamic circumstances of each coal mining operation. In 
addition, the final rule limits abuse through the aggregate time limit. 
See the preamble discussion of final Sec. 3481.4-4 below. Readers 
should note that some of the circumstances beyond a lessee/operator's 
control correspond to the ``casualties not attributable to the lessee'' 
set forth in section 7(b) of MLA (30 U.S.C. 207(b)). As discussed 
above, to the extent that an operation is forced to temporarily 
interrupt coal severance due to casualties not attributable to the 
lessee, BLM has additional authority under section 7(b) of MLA to 
consider the interruption a non-disqualifying event under section 
2(a)(2)(A)'s producing requirement.
    Section 3481.4-2 What are some examples of circumstances that 
qualify for a temporary interruption of coal severance? Final 
Sec. 3481.4-2 provides some examples of circumstances that qualify for 
an interruption in coal severance, including movement, failure, or 
repair of major equipment, such as draglines or longwalls; overburden 
removal; adverse weather; employee absences; inability to sever coal 
due to orders issued by governmental authorities for cessation or 
relocation of the coal severance operations; and inability to sell or 
distribute coal severed from the lease or LMU out of or away from the 
lease or LMU. This section corresponds to proposed Secs. 3400.0-
5(rr)(6) (ii) and (iii). The final rule differs from the proposal in 
that we added ``adverse weather'' to the list of qualifying 
circumstances based on the fact that coal operations sometimes have to 
temporarily interrupt operations in the winter. We also substituted the 
term ``employee absences'' in the final rule for ``vacations and 
holidays'' in the proposal in the belief that a more inclusive term is 
preferable. For example, ``employee absences'' takes into account 
situations where employee illness is a factor.
    In response to BLM's request in the proposed rule, several 
commenters suggested additional circumstances in which an interruption 
in coal severance could be allowed. These additional circumstances 
included fires, explosions, storms, floods, boycotts, court orders, 
damage to support facilities or systems, interruptions in coal 
transportation, strikes, material shortages, and interruptions in 
delivery of coal initiated by the coal customer. Several comments 
stated that any attempt to exhaustively list all potential exceptions 
to ``producing'' is misplaced. One comment suggested that the rule 
appeared to rely on ``events'' while there might be ``conditions'' that 
could be the basis of an interruption to operations.
    BLM agrees that a list of potential exceptions to ``producing'' can 
never capture all possible qualifying circumstances. Rather than 
attempting to establish an exhaustive list of events or conditions that 
justify a temporary interruption, BLM has decided to adopt in principle 
the proposed approach by limiting the duration of interruptions. 
Limiting the duration of interruptions in coal severance is a reliable 
means that eliminates the complexities of interpretation, is not 
excessively burdensome, and captures all possible circumstances. 
Administratively, BLM believes it to be more efficient to regulate the 
duration of the interruption in coal severance rather than listing all 
the possible combinations of qualifying criteria. Thus, the final rule 
simply lists several examples of qualifying circumstances, all of which 
are subject to the limit established by final Sec. 3481.4-4, discussed 
below, except for temporary interruptions of less than 14-day duration 
and section 7(b) suspensions.
    Several comments on proposed Sec. 3400.0-5(rr)(6)(ii)(A), which 
would have included ``dragline or other equipment movement,'' requested 
that BLM also include examples of underground mining equipment and 
methods. BLM believes that it would be cumbersome to provide examples 
applicable to every mining method and all varieties of mining 
equipment. However, BLM has modified the list of example methods and 
equipment in corresponding final Sec. 3481.4-2(a) to include examples 
of both surface (draglines) and underground (longwall) mining 
equipment. Thus, the item in the proposed rule that read ``dragline or 
other equipment movement, breakdown, or repair'' is changed to 
``movement, failure, or repair of major equipment, such as draglines or 
longwalls * * *.'' The term ``major equipment'' includes draglines, 
longwalls, haulage trucks, and conveyor belts, the failure of which

[[Page 44363]]

would directly impede coal severance. Dozers, graders, and utility 
trucks are not examples of major equipment.
    Many comments expressed opposition to proposed Sec. 3400.0-
5(rr)(6)(ii)(B), which would have added a provision to exclude a lack 
or loss of market and a lack or loss of a contract as qualifying 
circumstances for an interruption of coal severance. BLM included this 
provision in the proposal to address abuses such as maintaining a lease 
in non-producing status while waiting for a market to develop or for a 
contract to be negotiated. The comments asserted that the proposed rule 
would force a lessee/operator to capitulate to a buyer's demands, which 
could result in the potential bypass of Federal coal reserves. For 
simplicity and streamlining and based on the commenter's concerns, BLM 
has decided not to include the proposed provision in this final rule. 
BLM believes the limit on the duration of interruptions will curb any 
abuse. BLM continues to believe, however, that loss of a coal contract 
or market does not constitute a ``casualty'' that would qualify for a 
suspension under section 7(b) of MLA, as amended. Thus, an operator who 
stops severing coal because of the loss of a contract or market can 
qualify as ``producing'' subject to the 1 year in 5 aggregate maximum 
for temporary interruptions, but would not be entitled to a section 
7(b) suspension for loss of a coal contract or market.
    Section 3400.0-5(rr)(6)(iii) of the proposal would have included 
orders by governmental agencies for suspension of coal severance for 
reasons that are beyond the control and not the fault of the lessee/
operator as an example of a qualifying circumstance for an interruption 
in coal severance. One comment indicated that the proposed rule had a 
narrow definition and could tend to defeat the purpose for which it was 
intended. For example, orders of government authorities to relocate 
coal severance can have as much impact on a lease or LMU as orders for 
suspension of coal severance. In response to this comment, BLM has 
added to final Sec. 3481.4-2(b) a provision for cessation or relocation 
of coal severance operations due to governmental order. We substitute 
the term ``cessation'' in the final rule for the proposed 
``suspension'' to avoid any possible confusion with suspensions 
authorized under 43 CFR 3483.3.
    One commenter objected to language in proposed Sec. 3400.0-
5(rr)(6)(iii) that would have allowed a non-disqualifying suspension 
ordered by governmental authorities for reasons beyond the control of 
the lessee/operator and not the fault of the [lessee /operator] 
(Emphasis added). The commenter asserted that the proposal would invite 
needless disputes over what was, or was not, the fault of the lessee/
operator. BLM agrees and has deleted the reference to reasons beyond 
the reasonable control and not the fault of the operator/lessee from 
final Sec. 3481.4-2(b).
    Section 3481.4-3 Does a temporary interruption in coal severance 
affect the diligence requirements applicable to my lease or LMU? Final 
Sec. 3481.4-3 specifies that an interruption in coal severance does not 
change the diligence requirements of 43 CFR subpart 3483 applicable to 
a lease or LMU. There was confusion among the commenters concerning the 
distinction between an interruption in coal severance under the 
proposed definition of ``producing'' and the lease suspension 
provisions located at 43 CFR 3483.3. BLM is including this section in 
the final rule to clarify that a qualifying interruption in coal 
severance, which maintains eligibility to receive future leases, does 
not affect the diligence requirements of a lease or LMU. Such 
interruptions do not constitute suspensions under 43 CFR 3483.3, which 
implements sections 7(b) and 39 of MLA (30 U.S.C. 207(b) and 209). A 
lessee who seeks such a suspension or extension of lease terms must 
apply to BLM for approval.
    Section 3481.4-4 What is the aggregate amount of time I can 
temporarily interrupt coal severance and have BLM consider my lease or 
LMU producing? Based on commenter opposition to the proposed 3-month 
limit on temporary interruptions, BLM has modified the final rule to 
provide substantially more flexibility to operators, but without being 
completely open-ended, as was the previous rule. BLM believes that the 
approach selected in the final rule appropriately balances the 
legitimate operational needs of lessees with the goal of curbing abuse 
of the exception from the requirement to sever coal. Thus, final 
Sec. 3481.4-4 adopts a provision that limits the aggregate of all 
interruptions in coal severance to 1 year in the 5-consecutive-year 
period immediately preceding the date of BLM's determination of lessee 
qualifications under 43 CFR 3472.1-2, except that BLM will not count 
any interruption that is 14 days or less in duration or any suspension 
approved by BLM pursuant to section 7(b) of MLA (30 U.S.C. 207(b)). In 
other words, if BLM were looking, on June 30, 1997, at the eligibility 
of a particular lease holder who is reliant upon the temporary 
interruption provision, we would look at the aggregate of interruptions 
between July 1, 1992, and June 30, 1997. If the aggregate of 
interruptions during that period exceeded 365 days, not counting 
interruptions of 14 days or less or approved section 7(b) suspensions, 
the lease holder would not be qualified to obtain additional leases. 
With each passing day, the 5-year period that BLM looks at rolls 
forward.
    In the proposed rule, BLM stated that section 7(b) provides an 
exception from the diligent development requirements (59 FR 66876). 
However, the last sentence of section 7(b) makes it clear that the 
section 7(b) exceptions do not apply to the requirement to produce 
commercial quantities at the end of ten years in section 7(a). Thus the 
rule implementing the section 7(b) exceptions provides an opportunity 
to seek a suspension of the continuous operation requirement, but does 
not mention a suspension of the diligent development requirements. See 
43 CFR Sec. 3483.3(a). Therefore when the proposed rule preamble 
suggested that an operator/lessee could seek a force majeure exception 
under section 7(b) for temporary suspensions of greater than three 
months in accordance with 43 CFR Sec. 3483.3, that statement was 
accurate under the previous regulations only for operations which have 
achieved diligent development and are in a continuous operation mode, 
and for circumstances which would qualify under section 7(b).
    Although the section 7(b) exception from producing requirement in 
section 2(a)(2)(A) applies to leases which have not achieved diligent 
development, no existing regulatory provision implements the statutory 
provision. Thus, we are adopting in the final rule a conforming 
provision at Sec. 3481.4-4(b)(3) to recognize that MLA, as amended, 
provides a force majeure exception to the section 2(a)(2)(A) producing 
requirement (30 U.S.C. 201(a)(2)(A)) for operations that are subject to 
diligent development. In circumstances that meet the force majeure 
exceptions described in section 7(b) of MLA, BLM will approve 
suspensions for operations subject to diligent development for the 
purpose of compliance with section 2(a)(2)(A).
    Most of the commenters were concerned about the proposed 3-month 
limitation for temporary suspensions and the circumstances under which 
a temporary suspension could be authorized. To adequately address the 
volume and detail of the comments received, the comments applicable to 
these topics are discussed individually below.

[[Page 44364]]

    Many comments took issue with the 3-month limit on the duration of 
a temporary suspension in proposed Sec. 3400.0-5(rr)(6)(ii)(A). Most of 
these comments considered a 3-month period to be too brief. Several 
comments noted that the duration of most qualifying conditions could be 
longer than 3 months, for example, the time to repair a damaged steam 
turbine or the time needed to negotiate alternative sales agreements. 
Several comments said they thought the 3-month duration was arbitrary 
and would serve little useful purpose, suggesting instead to retain the 
former provision which did not limit the duration. Another comment 
stated that the word ``temporary'' speaks for itself, thereby 
eliminating the need for a specified duration. One comment was 
concerned about how frequently 3-month temporary suspensions could be 
granted and if such suspensions could be granted for consecutive 3-
month periods. One comment suggested as an alternative that a temporary 
suspension could continue until the end of the next continued operation 
year.
    BLM believes the duration of an interruption in coal severance must 
be explicitly limited to preclude abuse. BLM recognizes that in the 
normal course of business, a lessee/operator may be confronted with 
circumstances in which prudent business practice demands a cessation of 
coal production for an abbreviated period. It is in the best interest 
of both the lessee/operator and BLM to work together to ensure prudent 
resource management is maintained through periods when coal is not 
produced. However, BLM's experience has shown, as documented by the GAO 
report discussed above, that allowance of an interruption in coal 
severance for an unspecified duration will not necessarily achieve the 
intent of FCLAA. BLM believes that the duration of any interruption in 
coal severance must be limited to reduce opportunities for abuse and 
speculation.
    The comment that suggested allowing extension of an interruption in 
coal severance until the end of the next continued operation year 
assumes that the lease or LMU is subject to continued operation. As 
discussed earlier in this preamble in connection with Sec. 3472.1-2, 
the holder of a lease subject to continued operation will not be 
disqualified from obtaining additional leases if the lease is producing 
or in compliance with the continued operation requirements. Thus, a 
standard for temporary interruptions based on continued operation year 
would not be applicable to the type of situation identified in the GAO 
report, that is, where the holder of a non-producing lease subject to 
diligent development obtains additional leases. Extending the duration 
of an interruption in coal severance must also be considered in light 
of the explicit production requirements of section 2(a)(2)(A) of MLA 
and the goals of FCLAA to deter speculation. However, in response to 
the comments, BLM considers it reasonable to allow the aggregate length 
of temporary interruptions in coal severance to exceed 3 months. Thus, 
final Sec. 3481.4-4 adopts a maximum aggregate for temporary 
interruptions in coal severance of not more than 1 year in the 5-
consecutive-year period immediately preceding the date of BLM's 
determination of lessee qualifications under 43 CFR 3472.1-2.
    One comment on the proposed rule expressed concern that the 
proposed rule did not explicitly establish if the proposed 3-month 
limit would be applied for each qualified event, or only once within 
the lease term, or if a lessee/operator could receive consecutive 3-
month interruptions for an indefinite period. BLM agrees that the 
proposed rule inadequately defined when and how the 3-month limit would 
be applied. This concern is addressed in the final rule at Sec. 3481.4-
4(a) which provides that the lessee/operator may interrupt coal 
severance for up to 1 year, in aggregate, during the immediately 
preceding 5-consecutive-year period. BLM believes that allowing an 
aggregate of 1 year of interrupted coal severance in the immediately 
preceding 5-consecutive-year period will provide a needed balance 
between operating flexibility for the lessee/operator as well as 
enforcement of FCLAA's anti-speculative intent. A quantifiable standard 
for temporary interruptions in coal severance eliminates the need for 
an exhaustive listing of qualified events. BLM believes that simple and 
predictable criteria are the only way to provide consistent and uniform 
outcomes. The workload associated with tracking the aggregate days of 
interrupted coal severance is negligible when compared to the workload 
that would be associated with determining if each temporary 
interruption in coal severance is a qualified event or not. Additional 
discussion of qualified events is located under the portion of the 
preamble associated with final Sec. 3481.4-2.
    Final Sec. 3481.4-4(b)(1) provides that BLM will not count any 
interruption in coal severance that is 14 days or less in duration. BLM 
added this provision to the final rule for the convenience of the 
regulated community and ease of administration. BLM is primarily 
concerned with interruptions that evince speculative intent, not in 
short-term stoppages of a few days duration. Also, it would be onerous 
for BLM and lessee/operators to track each time production ceased for a 
day or two. It would be difficult for BLM to maintain records of this 
information and to enforce this requirement. BLM believes not 
regulating interruptions of 14 days or less achieves a reasonable 
balance between discouraging speculation and avoiding an administrative 
burden. Also, BLM expects that this provision will allow lessee/
operators to take into account vacations and holidays. The previous 
rule and the proposed rule both addressed vacations and holidays by 
including them in the list of circumstances allowing temporary 
suspension of production.
    Final Sec. 3481.4-4(b)(2) provides that BLM will not count any 
suspension granted under 43 CFR 3483.3 toward the aggregate of 
temporary interruptions in coal severance. The referenced provision is 
the one that implements the section 7(b) of MLA exception from 
continued operation for strikes, the elements, and casualties not 
attributable to the lessee. Final Sec. 3481.4-4(b)(3) provides that BLM 
will not count toward the aggregate of temporary interruptions any BLM-
approved suspension of the 43 CFR 3472.1-2(e)(1) requirement for 
reasons of strikes, the elements, or casualties not attributable to the 
lessee before diligent development is achieved. This provision 
implements the section 7(b) of MLA exception from diligent development. 
A suspension granted under this provision is for the limited purpose of 
implementing section 2(a)(2)(A) and does not affect the section 7(a) 
requirement to produce commercial quantities in 10 years. BLM added 
these provisions to the final rule in recognition of the fact that the 
so-called force majeure exceptions contained in section 7(b) are open 
ended and cannot be limited by BLM's regulatory provisions applicable 
to temporary interruptions in coal severance.
    Subpart 3483--Diligence Requirements. Section 3483.3 Suspension of 
continued operation or operations and production. BLM's previous rules 
allowed extension of the deadline for submission of a resource recovery 
and protection plan (R2P2) beyond 3 years. In  Natural Resources 
Defense Council v. Jamison, 815 F. Supp. 454 (D.D.C. 1992), the court 
held that the requirement to submit an R2P2 within 3 years is an 
unambiguous deadline that cannot be extended. Consequently, BLM 
proposed to eliminate this provision. BLM also

[[Page 44365]]

proposed some minor edits for clarity of expression. BLM is adopting 
the provisions as proposed.
    Several comments supported removal of the provision for extending 
the time for submitting an R2P2 beyond 3 years. One comment suggested 
an editorial change in the last sentence of proposed Sec. 3483.3(a). 
The comment suggested changing the word ``and'' to ``or'' so that the 
last sentence would read, ``The authorized officer, if he or she 
determines an application to be in the public interest, may approve the 
application or terminate suspensions that have been or may be 
granted.'' (Emphasis added.) This comment is adopted in the final rule.
    Subpart 3487--Logical Mining Unit. Section 3487.1 Logical mining 
units. Paragraph (e) of this section contains the stipulations required 
for the approval of a proposed LMU. Paragraph (e)(6) is the stipulation 
that sets the beginning of the 40-year period in which the coal 
reserves of the LMU must be mined. This provision is derived from 
section 2(d)(2) of MLA, which provides in pertinent part that ``the 
reserves of the entire unit will be mined within a period established 
by the Secretary which shall not be more than forty years'' (30 U.S.C. 
202a(2)). (Emphasis added.) Because MLA does not specify when the 40-
year period starts, BLM has the discretion to establish a reasonable 
starting date(s). BLM's previous regulations provided that the 40-year 
period begins on the date that coal is first produced from the LMU, 
after LMU approval, as determined during the first royalty reporting 
period after such date. See 43 CFR 3487.1(e)(6) (1995). The proposed 
rule would have begun the 40-year period when the R2P2 for the LMU is 
approved. BLM explained that this change would encourage diligent 
development of Federal coal reserves because the lessee/operator is 
``free to start'' mining operations after LMU approval (59 FR 66878, 
Dec. 28, 1994).
    As discussed in the preamble of the proposed rule, the MLA states 
that the mine-out 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). 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 Part 3482 call the resource recovery 
and protection plan, or ``R2P2.'' This plan, which the lessee must 
submit within 3 years after a lease or LMU is approved, provides a 
detailed description of how the lessee/operator will mine the coal and 
reclaim the land. Because this plan is customarily approved 
concurrently with, or subsequent to, the mining permit issued under the 
Surface Mining Control and Reclamation Act (SMCRA), the lessee/operator 
can proceed with development operations after the date of R2P2 and 
permit approval. See 30 CFR 746.13. Although MLA does not state 
expressly when the mine-out period should start, BLM believes that in 
situations where R2P2 approval for the LMU precedes coal production on 
the LMU, it best serves the purposes of MLA to begin the 40-year LMU 
mine-out period on the date of R2P2 approval to encourage diligent 
development of Federal coal reserves. Otherwise, in the absence of such 
a provision, the lessee/operator could delay the beginning of the 40-
year LMU mine-out period.
    BLM is adopting in the final rule a provision that sets the 
beginning of the 40-year period at the effective date of the LMU, if 
any portion of the LMU is then producing. If not, then the beginning 
date is either the date of approval of the R2P2 for the LMU or, if coal 
production begins before R2P2 approval, the date coal production begins 
after LMU approval. This approach takes into account the three coal-
production scenarios that are possible at the time of LMU formation and 
effectively continues the previous rule in situations where coal 
production precedes approval of the R2P2. First, if coal production is 
occurring within the area covered by the LMU when the LMU is formed, it 
is reasonable to begin the 40-year mine-out period on the date of LMU 
approval. Second, if coal is not being produced anywhere within the LMU 
at the time it is approved, the 40-year mine-out period begins when the 
R2P2 for the LMU is approved. In the third scenario, it is possible 
that the LMU could begin to produce coal before the R2P2 for the LMU is 
approved. For example, production could occur from a lease in the LMU 
that has an approved lease-specific R2P2 or from non-Federal resources 
within the LMU under a separate SMCRA permit. The final rule takes into 
account this scenario by providing that the 40-year mine-out period 
begins on the date coal production begins after LMU approval. Final 
Sec. 3487.1(e)(6) does not affect the beginning date of the 40-year 
mine-out period for LMUs approved before the effective date of this 
final rule.
    Several comments said the 40-year mine-out provision for an LMU 
should be flexible to allow, upon reasonable justification, mine-out 
periods longer than 40 years. BLM does not agree. Amended section 
2(d)(2) of MLA explicitly limits the period for mining all recoverable 
coal reserves in an LMU to not more than 40 years. See 30 U.S.C. 
202a(2). BLM does not have the authority to change statutory provisions 
through notice and comment rulemaking.
    Many comments opposed beginning the 40-year mine-out period for an 
LMU upon the approval date of the R2P2 for the LMU. Several comments 
asserted it is not correct to assume that a lessee is ``free to start'' 
mining operation after the R2P2 is approved just because the R2P2 is 
approved in connection with the SMCRA permit. Other commenters opposed 
the proposal because the R2P2 is a proposed action for the leasehold 
rather than being explicitly tied to the actual commencement of mining 
operations which could be several years later.
    BLM does not agree with these comments. Under existing rules, which 
define the mining plan as the R2P2, approval of the mining plan by the 
Assistant Secretary constitutes approval under section 7(c) of MLA for 
a lessee to enter and disturb the leasehold (30 U.S.C. 207(c)). The 
SMCRA permit is an authorization to enter the permit area and commence 
mining operations (30 U.S.C. 1256). BLM recognizes that pre-production 
activities consume a certain amount of time. However, given the amount 
of time and effort needed to obtain a permit, its limited term, and the 
fact that it will self-terminate if no activity occurs within 3 years 
of issuance (30 CFR 773.19(e)), there are a number of incentives to 
expedite pre-production activities and begin production once a permit 
is issued. From BLM's perspective, the portion of the 40-year mine-out 
period that will elapse during the pre-production phase is small in 
relation to the total length of the 40-year period. BLM believes that 
this provision is fully in accord with the statutory requirement to 
encourage diligent development (30 U.S.C. 202a(2)).
    Several other comments said that absent explicit evidence to the 
contrary, beginning the LMU recovery period based on the R2P2 approval 
date is contrary to the statutory requirement of FCLAA that an LMU must 
promote the efficient, economical, and orderly development of the 
resource. BLM does not agree. The law provides that, ``[an LMU] 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.'' (Emphasis added.) 
See 30 U.S.C. 202(a)(1). The 1976 amendments to MLA (FCLAA) were 
intended to address the problem of Federal leases being held for 
speculative purposes

[[Page 44366]]

without any production occurring. BLM believes that starting the 40-
year mine-out period upon R2P2 approval, which can occur several years 
after LMU approval, will spur efficient, economical, and orderly 
development without allowing undesirable speculation. Without such a 
provision, lessee/operators can continue to delay the beginning of 
production without penalty as long as the diligent development and 
section 2(a)(2)(A) requirements are satisfied. Beginning the 40-year 
period upon R2P2 approval will provide an appropriate incentive to 
commence production.
    One comment expressed concern about a situation where an existing 
mining operation that has an approved lease-specific R2P2 is included 
in an LMU. The commenter inquired whether the 40-year mine-out period 
would begin when the lease-specific R2P2 was approved or when the LMU 
R2P2 was approved, even though the LMU R2P2 is not required to be 
submitted until up to 3 years after the LMU approval. Under the 
proposed rule, the 40-year mine-out period would have begun upon 
approval of the LMU R2P2. The R2P2 does not have to be submitted for 3 
years and may not be approved for an additional time period. To extend 
the mine-out period by that amount of time for an LMU that is already 
producing would not contribute to the goal of encouraging diligent 
development. For the above reason and to ensure compliance with 30 
U.S.C. 202a(2), the final rule provides that if any portion of the LMU 
is producing when the LMU is approved, the 40-year mine-out period 
begins on the effective date of the LMU.
    The final rule also addresses the situation where a lease that is 
included in an LMU and has an approved lease-specific R2P2 begins 
production after LMU approval, but prior to LMU R2P2 approval. In this 
case, the final rule provides that the 40-year mine-out period begins 
on the date coal is first produced from an approved LMU in advance of 
LMU R2P2 approval.
    Several comments expressed concern that the proposed rule did not 
address whether the change in the beginning date for the LMU 40-year 
mine-out period would be applied to LMUs that have already been 
approved. In the December 28, 1994, proposed rule (59 FR 66878), BLM 
indicated that the proposed rule would apply to all LMU applications 
that were under review on December 28, 1994, and all LMU applications 
received after December 28, 1994. However, since the final rule BLM is 
adopting today differs from the proposal, BLM has decided that the 
rules adopted today should apply prospectively. That is, any decisions 
on pending LMU applications that BLM makes after the effective date of 
these rules will be based on the rules adopted today regardless of when 
the LMU application was submitted. Any decisions BLM has made or makes 
prior to the effective date of the rules adopted today will be based on 
the rules in effect on the date the decision is made. Thus, this final 
rule does not affect the beginning date of the 40-year mine-out period 
for LMUs approved before the effective date of this rule.
    Several comments asserted that changing the beginning date of the 
LMU 40-year mine-out period unduly constrains and restricts the 
flexibility of the LMU lessee/operator. BLM does not agree with this 
characterization of the rule. Section 2(d)(2) of MLA, as amended, 
requires the Secretary to establish the 40-year mine-out period (30 
U.S.C. 202a(2)). This final rule establishes the beginning of the 40-
year period and provides a degree of flexibility by accounting for the 
various scenarios under which coal production may occur in an LMU. This 
provision is in contrast to the former regulation which tied the 
beginning to initiation of coal production, essentially allowing the 
lessee/operator total control over setting the beginning point.
    Section 3487.1(f) Criteria for approving the establishment of an 
LMU. BLM's previous regulations provided that, ``The authorized officer 
shall, except for good cause stated in a decision disapproving the 
application, approve an LMU if it meets the following criteria * * *.'' 
See 43 CFR 3487.1(f) (1995). The proposed rule would have changed the 
obligatory ``shall'' to the permissive ``may'' while retaining the 
requirement for putting the decision on the LMU application in writing. 
See proposed Sec. 3487.1 (f) and (g). As discussed below, BLM is 
adopting the word ``may'' and the requirement for a written decision in 
final Secs. 3487.1 (f) and (g) respectively.
    There were many comments that opposed changing the criteria for 
approving an LMU from ``The authorized officer shall, except for good 
cause stated in a decision disapproving the application, approve * * 
*'' in the previous rule to ``The authorized officer may approve * * 
*.'' The comments generally perceived the change as allowing the 
authorized officer (BLM) or special interest groups the opportunity to 
delay approval of an LMU for any reason. One comment said that an 
entity that is willing and able to absorb the significant expense 
necessary to initiate a coal mining operation to develop Federal coal 
resources should be granted the presumption that BLM would approve an 
LMU application unless good cause is documented for not approving the 
application. Several commenters were concerned that the rule would be 
prone to abuse in that an LMU could be denied for any arbitrary reason 
however unjustified. One comment concluded that the MLA does not 
support this rule, and the applicant should not bear the burden of 
showing that a proposed LMU complies with the statutory requirements. 
One comment said, ``the focus of approval determinations has always 
been upon the ability of the applicant to meet the criteria specified 
within the regulations, and this has constituted demonstration of the 
lack of a good cause to disapprove the application.''
    BLM believes that the final rule is fully consistent with the 
statute. Section 2(d) of FCLAA (30 U.S.C. 202a(1)) states that, ``The 
Secretary, 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.'' (Emphasis added.) Use of the 
word ``may'' gives the Secretary broad discretion to determine whether 
the public interest would be served by approval of an LMU. The 
legislative history of FCLAA shows no Congressional intent to create a 
presumption in favor of approving an LMU. See 122 Cong. Rec. 507-8 
(Jan. 21, 1976). Thus, MLA does not require that the Secretary approve 
an LMU.
    BLM believes that the concern about abuse of the rule is misplaced. 
Final Sec. 3487.1(f)(2) sets forth factors that BLM will consider in 
determining whether a proposed LMU meets the statutory requirements. 
Any potential for abuse is checked by the requirement in final 
Sec. 3487.1(g) for BLM to make a written statement of the reasons for 
its decision concerning an LMU application. As with any BLM decision, 
it cannot be arbitrary. In addition, aggrieved persons may seek 
administrative review from the Interior Board of Land Appeals. Thus, 
the rule provides an appropriate balancing of BLM's and an applicant's 
interests. The applicant's responsibility to provide sufficient 
justification that the LMU application conforms to the requirements of 
MLA and applicable regulation is balanced by BLM's obligation to state 
and explain, in writing, the reasons for the decision on the LMU 
application.
    Section 3487.1(f)(2). BLM's previous rules provided that an LMU 
would be approved if mining operations on the LMU will achieve maximum 
economic recovery of Federal recoverable coal reserves within the LMU. 
See 43 CFR

[[Page 44367]]

3487.1(f)(2) (1995). Paragraph (f)(2) also provided that a single 
operation may include a series of excavations. Proposed 
Sec. 3487.1(f)(2) (i)-(vii) would have listed seven specific factors 
BLM would consider in determining if an LMU application meets the 
statutory requirements: (1) the amount of coal reserves recoverable 
from the LMU, compared with the amount recoverable if each lease were 
developed individually; (2) the mining sequence; (3) the potential for 
independent development of each lease proposed to be included in the 
LMU; (4) the advantages of developing and operating the LMU as a unit; 
(5) the potential for inclusion of the leases in question into another 
LMU; (6) the availability of transportation and access facilities; and 
(7) other factors that the authorized officer finds relevant to 
achievement of maximum economic recovery in an efficient, economical, 
and orderly manner.
    In the final rule, we are adopting the seven criteria, with minor 
editorial changes, in a slightly revised form that indicates the 
relationship of the criteria to the statutory requirements. Thus, the 
final rule provides that in determining whether the proposed LMU will 
meet the requirement to achieve maximum economic recovery of Federal 
coal reserves, BLM, as appropriate, will consider the amount of coal 
reserves recoverable from the proposed LMU compared to the amount 
recoverable if each lease were developed individually and any other 
factors BLM finds relevant to this requirement.
    In determining whether the proposed LMU meets the requirement to 
facilitate development of coal reserves in an efficient, economical, 
and orderly manner, BLM, as appropriate, will consider the potential 
for independent development of each lease proposed to be included in 
the LMU, the potential for inclusion of the leases in question in 
another LMU, the availability and utilization of transportation and 
access facilities for development of the LMU as a whole compared to 
development of each lease separately, the mining sequence for the LMU 
as a whole compared to development of each lease separately, and any 
other factors BLM finds relevant to this requirement.
    Finally, in determining whether the proposed LMU meets the 
requirement to provide due regard to conservation of coal reserves and 
other resources, BLM, as appropriate, will consider the effects of 
developing and operating the LMU as a unit and any other factors BLM 
finds relevant to this requirement. BLM believes that by explicitly 
linking the factors we will consider with the statutory requirements 
each LMU must meet, the regulated community will have a better 
understanding of what an LMU application must demonstrate.
    One of the factors that BLM will consider in determining whether a 
proposed LMU meets the requirement to provide due regard to 
conservation of coal reserves and other resources is the effects of 
developing and operating the LMU as a unit. See final 
Sec. 3487.1(f)(2)(iii)(A). This language is a change from proposed 
Sec. 3487.1(f)(2)(iv), which would have given consideration to the 
advantages of developing and operating the LMU as a unit. (Emphasis 
added.) BLM made this change due to a concern that considering only the 
advantages of developing and operating the LMU as a unit would unduly, 
and perhaps unwisely, narrow the scope of review of the LMU 
application. BLM believes that it is appropriate to consider both the 
advantages and disadvantages of developing and operating the LMU as a 
unit, as well as any associated impacts.
    One commenter supported establishment of specific criteria for 
approval of an LMU application, but was concerned that the proposed LMU 
application approval criteria were confined to geologic and engineering 
considerations. The commenter favored criteria that would relate to the 
statutory requirement that the LMU should provide ``due regard to the 
conservation of coal reserves and other resources,'' particularly water 
resources. BLM does not necessarily agree that the proposed criteria 
were confined to geologic and engineering considerations. However, 
final Sec. 3487.1(f)(2)(iii) clarifies BLM's position that we will 
consider the conservation of coal reserves and other resources. In 
addition, the substitution of ``effects'' for ``advantages'' in final 
Sec. 3487.1(f)(2)(iii)(A), as discussed above, addresses the 
commenter's concern. Further, in response to this comment, the final 
rule organizes the factors BLM will consider before approving a 
proposed LMU according to the statutory criteria the LMU must meet.
    Some comments asserted that the LMU approval criteria should be 
confined to the statutory criteria. Several comments were concerned 
that the proposed criteria do not appear to be related to, nor serve 
implementation of, the statutory criteria. One comment said BLM failed 
to adequately explain how the proposed approval criteria related to the 
statutory criteria. In response to these comments, BLM changed the 
organization of the final rule to indicate the relationship between the 
statutory criteria and the factors used in determining that proposed 
LMUs will meet them. The final rule groups the factors according to the 
applicable statutory criteria. BLM has not changed the statutory 
criteria that each LMU must meet. We have merely identified factors 
that we will use in determining whether LMU applications meet the 
criteria. For example, in determining whether a proposed LMU will 
facilitate efficient, economical, and orderly development of the coal 
reserves, it is entirely appropriate to consider the potential for 
independent development of each lease proposed for inclusion in the 
LMU. If a lease is not likely to be mined unless included in the 
proposed LMU, that is, the lease will be bypassed, then it would make 
sense in this case to include it in the proposed LMU.
    Several commenters took issue with the proposed additional criteria 
for approval of an LMU application. One commenter said BLM lacked good 
cause to change the LMU application criteria. Other comments said the 
proposed criteria were unwarranted and of little use for approval of an 
LMU application. As discussed earlier in this preamble, BLM believes 
that there is a need to establish guidance for approving the 
establishment of LMUs. This is one of the specific recommendations of 
the GAO report. The seven factors provide guidance to the regulated 
community for preparing LMU applications and to BLM officials for 
analyzing them. This guidance will help to ensure that LMUs are only 
approved after demonstrating they will meet the statutory criteria and 
will help to ensure that LMUs are not formed merely for the purpose of 
allowing the leaseholder to continue to hold the lease without any coal 
production, an outcome that conflicts with the anti-speculative intent 
of FCLAA.
    Section 3487.1(f)(6). Under the proposed rule, BLM would have added 
a new provision to limit the circumstances under which a lease that is 
nearing the end of its diligent development period may be included in 
an LMU. Proposed Sec. 3487.1(f)(7) would have required that a Federal 
coal lease that has not met its diligent development requirement prior 
to the end of the eighth lease year can only be included in an LMU if 
either a portion of the LMU is included in a SMCRA permit or a portion 
of the LMU is included in an administratively complete SMCRA 
application. This provision corresponds to final Sec. 3487.1(f)(6), 
which differs from the proposal only by clarifying that a portion of 
the LMU must be included in a SMCRA permit or administratively complete 
permit application at the time the LMU application is submitted.

[[Page 44368]]

    Although several comments indicated support for the 8-year 
requirement as proposed, BLM received many comments opposed to the 
proposed rule. Most of the comments said the rule effectively reduced 
the diligence period for a lease from 10 years to 8 years. Several 
comments said the proposed rule would reduce the incentive to develop 
new mines on Federal lands. Some comments said BLM had not offered 
sufficient justification for this rule.
    BLM does not agree with these opposing comments. The final rule 
does not set an absolute barrier to inclusion in an LMU for leases 
where 8 years of the diligent development period have elapsed. Leases 
in the ninth and tenth years of their diligent development periods are 
still eligible for inclusion in an LMU if a portion of the area to be 
covered by the LMU is included in a SMCRA permit or administratively 
complete permit application. As explained in the proposed rule 
preamble, under the current regulations, an LMU's 10-year diligent 
development period starts on the effective date of either the LMU or 
the most recent Federal lease, depending on the age and status of the 
leases to be included in the LMU. This provision gives a lessee/
operator holding an older lease that is about to be terminated for 
failure to produce in commercial quantities an opportunity to postpone 
the lease termination date by applying for an LMU that combines the 
older lease with a more recently issued one. This situation occurred in 
the Rocky Butte case described in the GAO report. In this way, FCLAA's 
goal of preventing speculation in Federal coal reserves can be 
frustrated. A lease proposed to be included in an LMU that is nearing 
the end of its diligent development period without having produced in 
commercial quantities is likely to have been included in an LMU 
application merely for the purpose of delaying the leases's 
termination, and not for achieving efficient, economical, and orderly 
development of coal, and thus does not satisfy one of the statutory 
criteria for approval of an LMU.
    To address this opportunity for frustration and circumvention of 
FCLAA's goals, BLM is adopting at final Sec. 3487.1(f)(6) the provision 
limiting eligibility for inclusion in an LMU as proposed, with minor 
editorial changes, including a change that clarifies that the SMCRA 
permit must be in place or SMCRA permit application must have been 
submitted at the time the lessee submits the LMU application. BLM 
believes that the requirement to have a SMCRA permit or have applied 
for one is a significant indication that the LMU applicant is pursuing 
coal development in good faith.
    One comment said this rule would impose an additional restriction 
on leases that are proposed to be included in a LMU in that the lease 
must demonstrate production in commercial quantities by the eighth 
diligent development year to qualify for inclusion in an LMU. BLM does 
not agree. The final rule does not affect the diligent development 
period of a Federal coal lease, which remains 10 years. The rule 
requires a lessee to demonstrate minimal progress toward development of 
the lease within the statutorily required diligence period as a 
condition for inclusion in an LMU after the eighth year of the lease. 
Significant flexibility remains for the lessee/operator in that only a 
portion of the LMU needs to be covered by an administratively complete 
SMCRA permit application or approved SMCRA permit. All leases proposed 
to be included in an LMU need not meet this requirement, but at least a 
portion of the area proposed to be included in the LMU must meet the 
requirement to obtain BLM's approval for the LMU. BLM believes this 
rule implements the anti-speculative intent of FCLAA and comports with 
the language of section 2(d) of MLA, as amended (30 U.S.C. 202a), 
which, as discussed above, affords BLM discretion in deciding whether 
to approve an LMU. This exercise of discretion is being codified in 
regulations to ensure consistent application and to inform the public 
of BLM policy. BLM has exercised its discretion and chosen to exclude 
from LMU those leases where there has not been sufficient progress to 
suggest a good-faith intention to timely achieve diligence. The 
benefits provided by formation of an LMU (for example, sheltering a 
lease from lease-specific diligence requirements) should only be 
approved upon demonstrating that the lessee is prudently working toward 
developing commercial quantities of coal. The rule only limits a 
lease's eligibility to be included in an LMU based on activity within 
the LMU boundary and does not affect lease-specific requirements.
    One comment suggested an alternative to the proposed requirement 
that a portion of the LMU be covered by an approved SMCRA permit or an 
administratively complete SMCRA permit application. The commenter 
suggested that some portion of the LMU be covered by a SMCRA permit 
application submitted prior to expiration of the diligent development 
period. BLM did not accept this comment because we believe that 
adoption of this suggestion could create an unmanageable situation. An 
LMU must be approved prior to the expiration of the diligent 
development period because a lease will be terminated at the end of the 
period if it has not produced commercial quantities. Thus, a situation 
could be created where BLM would be faced with a decision to approve an 
LMU based on the expectation that a SMCRA permit application will be 
submitted, determined administratively complete, and approved by the 
regulatory authority some time in the future, but before the expiration 
of the diligent development period. If all these things did not occur, 
BLM might be faced with retroactively invalidating the LMU.
    We also note that submittal of an administratively complete permit 
application for a portion of the LMU under consideration is not 
excessively burdensome. The SMCRA regulations at 30 CFR 701.5 limit the 
amount of information for an administratively complete application to 
that information necessary to initiate processing and public review. 
This standard is distinct from the higher standard for permit approval, 
which must be based on a ``complete and accurate'' application. See 30 
CFR 773.15(c)(1).
    Section 3487.1(g). As discussed above in the preamble to 
Sec. 3487.1(f), BLM is adopting a provision that the authorized officer 
will state in writing the reasons for the decision on an LMU 
application.
    One commenter suggested adding at the end of the sentence after the 
word ``application,'' the following clause: ``including how the 
decision meets regulatory criteria.'' BLM did not accept this comment 
and is adopting the provision as proposed. Stating the reasons for a 
decision is contingent upon establishing the relationship between the 
facts of an LMU application and the statutory and regulatory criteria. 
BLM believes such a requirement is implicit in the rule as written.
    Section 3487.1(h)(4).  Proposed Sec. 3480.0-5(a)(21) would have 
included a definition for ``logical mining unit recoverable coal 
reserves exhaustion period.'' In the proposed rule preamble, BLM stated 
that the term would better reflect the requirement in MLA that the 
maximum mine-out period allowed for each LMU is 40 years (59 FR 66878). 
However, BLM is not adopting this definition in the final rule. We 
believe that the phrase ``40-year period in which the reserves of the 
entire LMU must be mined'' is clearer and more descriptive. It is self-
explanatory and eliminates the need for a separate definition. 
Moreover, it is the same

[[Page 44369]]

phrase used in FCLAA. See 30 U.S.C. 202a(2). Therefore, the final rule 
for this section has been modified to substitute the term ``40-year 
period in which the reserves of the entire LMU must be mined'' for the 
term ``logical mining unit recoverable coal reserves exhaustion 
period.'' The cross reference to Sec. 3487.1(e)(6), which was proposed 
to be eliminated, is retained in the final rule.

III. Procedural Matters

National Environmental Policy Act

    BLM has prepared an environmental assessment (EA) and has found 
that the final rule does not constitute a major Federal action 
significantly affecting the quality of the human environment under 
section 102(2)(C) of the National Environmental Policy Act of 1969, 42 
U.S.C. 4332(2)(C). BLM has placed the EA and the Finding of No 
Significant Impact (FONSI) on file in the BLM Administrative Record. 
BLM invites the public to review these documents by contacting the 
individual identified under FOR FURTHER INFORMATION CONTACT.

Paperwork Reduction Act

    This rule does not contain information collection requirements that 
the Office of Management and Budget must approve under the Paperwork 
Reduction Act, 44 U.S.C. 3501 et seq.

Regulatory Flexibility Act

    Congress enacted the Regulatory Flexibility Act (RFA) of 1980, 5 
U.S.C. 601 et seq., to ensure that Government regulations do not 
unnecessarily or disproportionately burden small entities. The RFA 
requires a regulatory flexibility analysis if a rule would have a 
significant economic impact, either detrimental or beneficial, on a 
substantial number of small entities. BLM anticipates that this final 
rule will have no significant impact on small entities. Historically, 
due to the substantial capital investment requirements for lease 
acquisition and mine development, LMUs have not been within the purview 
of small entities. The size standard established by the Small Business 
Administration for small entities engaged in coal mining, including 
surface, underground, and anthracite operations, is 500 employees (61 
FR 3280, Jan. 31, 1996). However, BLM currently has one pending LMU 
application from a small entity. Analysis of this LMU application 
indicates that the final rule will have no effect on the outcome of the 
review process for this proposed LMU. Therefore, BLM has determined 
under the RFA that this final rule would not have a significant 
economic impact on a substantial number of small entities.

Unfunded Mandates Reform Act

    BLM has determined that this final rule will not result in any 
unfunded mandate to State, local, or tribal governments in the 
aggregate, or to the private sector, of $100 million or more in any one 
year.

Executive Order 12612

    The final rule will not have a substantial direct effect on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. Therefore, in accordance with Executive 
Order 12612, BLM has determined that this final rule does not have 
sufficient federalism implications to warrant preparation of a 
Federalism Assessment.

Executive Order 12630 (Takings)

    As discussed in the foregoing preamble, the final rule does not 
represent a government action that is likely to interfere significantly 
with constitutionally protected property rights. Therefore, the 
Department of the Interior has determined that the rule would not cause 
a taking of private property or require further discussion of takings 
implications under this Executive Order.

Executive Order 12866 (Regulatory Planning and Review)

    According to the criteria listed in section 3(f) of Executive Order 
12866, BLM has determined that the final rule is not a significant 
regulatory action. As such, the final rule is not subject to Office of 
Management and Budget review under section 6(a)(3) of the order.

Executive Order 12988 (Civil Justice Reform)

    The Department of the Interior has determined that this rule meets 
the applicable standards provided in sections 3(a) and 3(b)(2) of 
Executive Order 12988.

Authors

    The authors of this rule are William Radden-Lesage and Patrick W. 
Boyd, Bureau of Land Management, 1849 C Street, NW., Washington, DC 
20240; Telephone: 202-452-0350 or 5030, respectively (Commercial or 
FTS).

List of Subjects

43 CFR Part 3400

    Administrative practice and procedure, Coal, Government contracts, 
Intergovernmental relations, Mines, Public land-mineral resources.

43 CFR Part 3470

    Coal, Government contracts, Mineral royalties, Mines, Public lands-
mineral resources, Reporting and recordkeeping requirements, Surety 
bonds.

43 CFR Part 3480

    Government contracts, Intergovernmental relations, Mineral 
royalties, Mines, Public lands-mineral resources, Reporting and 
recordkeeping requirements.

    Dated: August 12, 1997.
Bob Armstrong,
Assistant Secretary--Land and Minerals Management.

    For the reasons set forth in the preamble, BLM is amending 43 CFR 
parts 3400, 3470, and 3480 as set forth below:

PART 3400--COAL MANAGEMENT: GENERAL

    1. Revise the authority citation for part 3400 to read as follows:

    Authority: 30 U.S.C. 189, 359, 1211, 1251, 1266, and 1273; and 
43 U.S.C. 1461, 1733, and 1740.

    2. Amend Sec. 3400.0-5 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 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) Coal severance is temporarily interrupted in accordance with 
Secs. 3481.4-1 through 4-4 of this chapter.

PART 3470--COAL MANAGEMENT PROVISIONS AND LIMITATIONS

    3. Revise the authority citation for part 3470 to read as follows:

    Authority: 30 U.S.C. 189 and 359 and 43 U.S.C. 1733 and 1740.

Subpart 3472--Lease Qualification Requirements

    4. Amend Sec. 3472.1-2(e) by revising paragraphs (e)(1)(i), 
(e)(6)(ii)(D), and (e)(6)(ii)(E) to read as follows:

[[Page 44370]]

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 chapter, or 
paragraph (e) (4), (5), or (6) of this section.
* * * * *
    (6)(i) * * *
    (ii) * * *
    (D) Producing, or currently in compliance with the continued 
operation requirements of part 3480 of this chapter, 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 chapter;
    (E) Contained in an approved logical mining unit that is:
    (1) Producing or currently in compliance with the LMU continued 
operation requirements of part 3480 of this chapter; and
    (2) In compliance with the logical mining unit stipulations of 
approval under Sec. 3487.1(e) and (f) of this chapter; or
* * * * *

PART 3480--COAL EXPLORATION AND MINING OPERATIONS RULES

    5. Revise the authority citation for part 3480 to read as follows:

    Authority: 30 U.S.C. 189, 359, 1211, 1251, 1266, and 1273; and 
43 U.S.C. 1461, 1733, and 1740.

Subpart 3481--General Provisions

    6. Amend subpart 3481 by adding new Secs. 3481.4 through 3481.4-4 
to read as follows:


Sec. 3481.4  Temporary interruption in coal severance.


Sec. 3481.4-1  Can I temporarily interrupt coal severance and still be 
qualified as producing?

    Yes, a temporary interruption in coal severance allows you (the 
lessee/operator) to halt the extraction of coal for a limited period of 
time without jeopardizing your qualifications under section 
(2)(a)(2)(A) of MLA to receive additional leases. During the period of 
a temporary interruption in coal severance, BLM still considers your 
lease or LMU to be producing so as not to preclude you from receiving a 
new or transferred lease.


Sec. 3481.4-2  What are some examples of circumstances that qualify for 
a temporary interruption of coal severance?

    (a) Movement, failure, or repair of major equipment, such as 
draglines or longwalls; overburden removal; adverse weather; employee 
absences;
    (b) Inability to sever coal due to orders issued by governmental 
authorities for cessation or relocation of the coal severance 
operations; and
    (c) Inability to sell or distribute coal severed from the lease or 
LMU out of or away from the lease or LMU.


Sec. 3481.4-3  Does a temporary interruption in coal severance affect 
the diligence requirements applicable to my lease or LMU?

    No, a temporary interruption in coal severance covered by 
Secs. 3481.4-1 to 3481.4-4 does not change the diligence requirements 
of subpart 3483 applicable to your lease or LMU.


Sec. 3481.4-4  What is the aggregate amount of time I can temporarily 
interrupt coal severance and have BLM consider my lease or LMU 
producing?

    (a) If you (the lessee/operator) want BLM to consider your lease or 
LMU to be producing, the aggregate of all temporary interruptions in 
coal severance from your lease or LMU must not exceed 1 year in the 5-
consecutive-year period immediately preceding the date of BLM's 
determination of lessee qualifications under Sec. 3472.1-2 of this 
chapter.
    (b) BLM will not count toward the aggregate interruption limit 
described in paragraph (a) of this section:
    (1) Any interruption in coal severance that is 14 days or less in 
duration;
    (2) Any suspension granted under Sec. 3483.3 of this part; and
    (3) Any BLM-approved suspension of the requirements of Sec. 3472.1-
2(e)(1) of this part for reasons of strikes, the elements, or 
casualties not attributable to the operator/lessee before diligent 
development is achieved.

Subpart 3483--Diligence Requirements

    7. Amend Sec. 3483.3 by revising the heading and paragraphs (a) 
introductory text 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 or she determines an application to be in the 
public interest, may approve the application or 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. Amend Sec. 3487.1 by revising paragraphs (e)(6), (f) 
introductory text, and (f)(2); redesignating existing paragraphs (g) 
and (h) as (h) and (i), respectively; adding new paragraphs (f)(6) and 
(g); and revising newly redesignated paragraph (h)(4) to read as 
follows:


Sec. 3487.1  Logical mining units.

* * * * *
    (e) * * *
    (6) Beginning the 40-year period in which the reserves of the 
entire LMU must be mined, on one of the following dates--
    (i) The effective date of the LMU, if any portion of the LMU is 
producing on that date;
    (ii) The date of approval of the resource recovery and protection 
plan for the LMU if no portion of the LMU is producing on the effective 
date of the LMU; or
    (iii) The date coal is first produced from any portion of the LMU, 
if the LMU begins production after the effective date of the LMU but 
prior to approval of the resource recovery and protection plan for the 
LMU.
* * * * *
    (f) The authorized officer may approve an LMU if it meets the 
following criteria:
    (1) * * *
    (2) The LMU application demonstrates that mining operations on the 
LMU, which may consist of a series of excavations, will:
    (i) Achieve maximum economic recovery of Federal recoverable coal 
reserves within the LMU. In determining whether the proposed LMU meets 
this requirement, BLM, as appropriate, will consider:
    (A) The amount of coal reserves recoverable from the proposed LMU 
compared to the amount recoverable if each lease were developed 
individually; and
    (B) Any other factors BLM finds relevant to this requirement;
    (ii) Facilitate development of the coal reserves in an efficient, 
economical, and orderly manner. In determining whether the proposed LMU 
meets this requirement, BLM, as appropriate, will consider:

[[Page 44371]]

    (A) The potential for independent development of each lease 
proposed to be included in the LMU;
    (B) The potential for inclusion of the leases in question in 
another LMU;
    (C) The availability and utilization of transportation and access 
facilities for development of the LMU as a whole compared to 
development of each lease separately;
    (D) The mining sequence for the LMU as a whole compared to 
development of each lease separately; and
    (E) Any other factors BLM finds relevant to this requirement; and
    (iii) Provide due regard to conservation of coal reserves and other 
resources. In determining whether the proposed LMU meets this 
requirement, BLM, as appropriate, will consider:
    (A) The effects of developing and operating the LMU as a unit; and
    (B) Any other factors BLM finds relevant to this requirement.
* * * * *
    (6) A lease that has not produced commercial quantities of coal 
during the first 8 years of its diligent development period can be 
included in an LMU only if at the time the LMU application is 
submitted:
    (i) A portion of the LMU under consideration is included in a SMCRA 
permit approved under 30 U.S.C. 1256; or,
    (ii) A portion of the LMU under consideration is included in an 
administratively complete application for a SMCRA permit.
    (g) The authorized officer will state in writing the reasons for 
the decision on an LMU application.
    (h) * * *
    (4) The authorized officer will not extend the 40-year period in 
which the reserves of the entire LMU must be mined, as specified at 
paragraph (e)(6) of this section, because of the enlargement of an LMU 
or because of the modification of a resource recovery and protection 
plan.
* * * * *
[FR Doc. 97-21880 Filed 8-19-97; 8:45 am]
BILLING CODE 4310-84-P