[Federal Register Volume 62, Number 228 (Wednesday, November 26, 1997)]
[Notices]
[Pages 63187-63192]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-31041]


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DEPARTMENT OF THE INTERIOR

Office of Surface Mining Reclamation and Enforcement


Request for Determination of Valid Existing Rights Within the 
Wayne National Forest

AGENCY: Office of Surface Mining Reclamation and Enforcement, Interior.

ACTION: Notice of decision.

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SUMMARY: This notice announces the decision of the Office of Surface 
Mining Reclamation and Enforcement (OSM) on a request by Edward and 
Madeiline Blaire and Buckingham Coal Company, Inc. (Buckingham) for a 
determination of valid existing rights (VER) under section 522(e) of 
the Surface Mining Control and Reclamation Act of 1977 (SMCRA). OSM has 
determined that the requesters do possess VER to mine coal by surface 
methods on 25.2 acres of federal lands within the Wayne National Forest 
in Perry County, Ohio. This decision is based on the ``takings 
standard,'' which requires OSM to evaluate whether a determination that 
the requester does not have VER would result in a compensable taking of 
a property interest under the Fifth Amendment to the U.S. Constitution.

FOR FURTHER INFORMATION CONTACT: Peter Michael, Office of Surface 
Mining Reclamation and Enforcement, Appalachian Regional Coordinating 
Center, Room 218, Three Parkway Center, Pittsburgh, PA 15220. 
Telephone: (412) 937-2867. E-mail address: [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background on VER Requirements for National Forest Lands

    Section 522(e) of SMCRA (30 U.S.C. 1272(e)) prohibits surface coal 
mining operations on certain lands unless a person has VER to conduct 
such operations or unless the operation was in existence on August 3, 
1977, the date of enactment of SMCRA. Section 522(e)(2) in relevant 
part, applies the prohibition to federal lands within the boundaries of 
any national forest unless the Secretary of the Interior finds that (1) 
there are no significant recreational, timber, economic, or other 
values that may be incompatible with surface coal mining operations and 
(2) the surface operations and impacts are incident to an underground 
coal mine.
    Under section 523 of the Act and 30 CFR 740.11, the state 
definition of VER applies to all federal lands in states with 
regulatory programs approved under section 503 of SMCRA. However, under 
30 CFR 745.13, the Secretary has exclusive authority to determine VER 
for surface coal mining and reclamation operations on federal lands 
within the boundaries of the areas specified in paragraphs (e)(1) and 
(e)(2) of section 522 of the Act. OSM reaffirmed these basic principles 
in the preamble to the suspension notice concerning VER published on 
November 20, 1986 (51 FR 41954). However, to be consistent with a 
previous federal court decision concerning OSM's March 13, 1979 
definition of VER, the preamble included the caveat that, in states 
with an all-permits standard for VER, OSM would apply the standard as 
if it contained a good-faith component. In other words, if the state 
program requires that a person obtain all necessary permits prior to 
August 3, 1977, to qualify for VER, OSM will apply the standard as if 
it recognizes that a person also has VER in situations where that 
person has made a good faith effort to obtain all necessary permits by 
that date.
    The approved Ohio program relies primarily upon the all-permits 
standard. Ohio Revised Code 1501:13-3-02(A)(1)(a). However, the United 
States District Court for the Southern District of Ohio has prohibited 
OSM from using the state program definition or the policy set forth in 
the November 20, 1986 suspension notice. Belville Mining Co. v. Lujan, 
No. C-1-89-790 (S.D. Ohio July 22, 1991), modified, Sept. 21, 1992. In 
separate litigation, the same court applied a takings standard to a VER 
determination. Sunday Creek Coal Co. v. Hodel, No. C12-88-0416 (S.D. 
Ohio 1988).
    In the Belville litigation, OSM made a commitment to the court to 
apply a takings standard in determining whether a person possesses VER 
to conduct surface coal mining operations on federal lands within the 
court's jurisdiction, including the Wayne National Forest, until a new 
federal rule defining VER is in place. Therefore, in the Southern 
District of Ohio, under the takings standard, a person has VER if, as 
of the date of the lands come under the protection of section 522(e) of 
SMCRA, application of the prohibitions of section 522(e) would result 
in a compensable taking of property under the Fifth Amendment to the 
U.S. Constitution.

II. Request for VER Determination

    On August 14, 1995, James F. Graham of Buckingham requested that 
OSM determine whether the company has VER to remove the No. 6 coal 
seam, using block cut, contour, and area mining methods, from 25.2 
acres of federal lands within the authorized boundaries of the Wayne 
National Forest in Perry County, Ohio. Buckingham previously submitted 
an application for a permit to conduct surface mining and reclamation 
operations on this parcel and an adjoining 10.7 acres of land in 
private ownership to the Ohio Department of Natural Resources (ODNR), 
Division of Reclamation on March 8, 1995. Of the 35.9 acres in the 
permit application, Buckingham proposes to mine a total of 12.6 acres 
of coal. The federal government owns the surface overlying 9.8 of these 
acres.
    The lands included in the request lie along the eastern edge of a 
134-acre parcel for which the United States of America purchased the 
surface rights from Daniel C. Jenkins, Jr. and other interested parties 
on April 24, 1967, and the Blaires on May 1, 1967. The U.S. Department 
of Agriculture, Forest Service (USFS) currently manages the land as 
part of the Wayne National Forest. The Blaires own the mineral estate 
and Mr. Graham is the lessee of all coal within that estate.
    The property extends from north to south along an ephemeral 
tributary of Pine Run and is about 1.8 miles northeast of the city of 
Shawnee, Ohio. Its southern limit is adjacent to County

[[Page 63188]]

Route 43. The center of the property lies on the boundary between 
Sections 11 and 14 on the New Straightsville, Ohio USGS Quadrangle.
    The proposed permit area, including the federal lands, has been 
affected by past surface and underground mining of the No. 6 coal seam. 
Two unreclaimed highwalls and an impoundment remain on 5.1 acres at the 
southern end of the property. The coal which the requester proposes to 
surface mine comprises a line of barrier pillars in an abandoned 
underground mine beneath the Pine Run tributary. The requester 
estimates that the extractable coal reserves total 88,200 tons.
    On August 28, 1995, OSM notified the USFS that it had received a 
request for a VER determination from Buckingham and requested that the 
USFS provide a title opinion and any related information concerning 
Buckingham's property right to mine coal by the methods proposed. By 
letter dated April 24, 1996, the USFS submitted a report from the U.S. 
Department of Agriculture's General Counsel that concluded that the 
Blaires do have the property right to remove the coal by surface mining 
methods. (A person must possess the right to conduct the proposed 
activity under state property law before OSM can issue a positive VER 
determination under SMCRA.)
    In a notice published in the March 1, 1996 Federal Register (61 FR 
8074), OSM provided opportunity for public comment on the Buckingham 
request. In response to a request for a public hearing from the Buckeye 
Forest Council, OSM reopened the public comment period by notice 
published in the July 16, 1996 Federal Register (61 FR 37078). The 
public hearing took place at the Ohio University Inn in Athens, Ohio on 
August 8, 1996. The comment period closed on August 16, 1996.
    On September 16, 1996, OSM requested additional information from 
Buckingham. Buckingham forwarded supplemental information on September 
17 and October 3, 1996. The October 3 submittal also added the Blaires 
as persons requesting the VER determination.
    On May 27, 1997, OSM again requested that Buckingham and the 
Blaires provide additional information relating to the economic 
viability of the proposed surface mining operation and other potential 
uses for the property. On August 7, 1997, Buckingham and the Blaires 
supplied information responsive to the request after OSM agreed to 
treat the information as presumptively confidential and protected 
commercial or financial information within the limitations of the 
Freedom of Information Act.

III. The Applicable Standard

    Pursuant to OSM's commitment to the court in the Southern District 
of Ohio, as set forth in the portion of this notice entitled 
``Background on VER Requirements for National Forest Lands,'' OSM 
evaluated Buckingham's request in accordance with judicial case law 
involving takings and the Attorney General's Guidelines for the 
Evaluation of Risk and Avoidance of Unanticipated Takings, issued June 
30, 1988. See 56 FR 33165 (July 18, 1991). Specifically, OSM relied 
upon a three-part regulatory takings analysis commonly used by the 
courts in deciding whether governmental action has effected a 
compensable taking of private property. This analysis includes a 
determination of: (1) The economic impact of the proposed government 
policy or action on the property interest involved, (2) the extent to 
which the action or regulation interferes with any reasonable, 
investment-backed expectations of the owner of the property interest, 
and (3) the character of the government action. Under the standard for 
compensable takings, OSM will not find that the Blaires have VER unless 
OSM makes either of two sets of findings. First, OSM could find that 
the Blaires have demonstrated that, as of August 3, 1977, application 
of the prohibition would preclude all economic use of the property. In 
the alternative, OSM could find that prohibition would not 
substantially advance a legitimate public purpose of SMCRA. Under the 
latter option, OSM would also have to find that the Blaires have 
demonstrated either that prohibition of surface coal mining would 
significantly diminish the property's value, or that prohibition would 
substantially interfere with the Blaires' investment-backed 
expectations. If the Blaires have VER to surface mine the 25.2 acres, 
then the lease to Buckingham would also convey VER to Buckingham.

IV. Application of the Standard

    This matter involves a situation where governmental regulation has 
the potential to result in a taking of private property. The rights of 
property owners are not absolute and government may, within limits, 
regulate the use of property. But, the United States Supreme Court has 
long held that regulation that affects the value, use, or transfer of 
property may constitute a taking if it goes too far. Pennsylvania Coal 
Co. v. Mahon, 260 U.S. 393 (1922). In making the VER determination, OSM 
must decide whether prohibiting surface coal mining on the property 
would cause economic impacts on the property or interfere with 
reasonable, investment-backed expections of the persons with an 
interest in the property to the extent that justice and fairness would 
require that the public, rather than the private property owners, pay 
for the public use of the property. Armstrong v. United States, 364 
U.S. 40, 49 (1959).
    When regulation goes too far in infringing on private property 
rights is not precisely definable. The Supreme Court has consistently 
``eschewed any `set formula' for determining how far is too far, 
preferring to `engage in * * * essentially ad hoc, factual inquiries.' 
'' Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015 (1992), 
quoting Penn Central Transportation Co, v. New York City, 438 U.S. 104, 
124 (1978). To aid in this determination, however, the Court has 
identified the three factors referenced in Part III above as having 
``particular significance.'' Connolly v. Pension Benefit Guaranty 
Corp., 475 U.S. 211, 224-25 (1986).

A. Protected Property Interest

    In Lucas, the Supreme Court recognized what it characterized as a 
``logically antecedent inquiry'' into a takings claimant's title prior 
to the inquiry into whether the government has interfered with rights 
inherent in that title in a manner that rises to the level of a Fifth 
Amendment taking. Id. at 1027. Thus, OSM starts with this inquiry.
    The Court notes in Lucas that its takings jurisprudence ``has 
traditionally has been guided by the understandings of our citizens 
regarding the content of, and the State's power over the `bundle of 
rights' that they acquire when they obtain title to property.'' Id. at 
1027. Thus, the Court continues, some regulation of rights should be 
expected. ``In the case of personal property, by reason of the State's 
traditionally high degree of control over commercial dealings,'' the 
possibility of significant impacts should be anticipated. Id. at 1027-
28. But, the Court indicated that interests in land have greater 
expectations of protection. Id. at 1028. Further, the Court suggested 
that an ``owner's reasonable expectations'' may be critical to a 
takings determination. Id. at 1016 n. 7. These expectations are those 
that ``have been shaped by the State's law of property--i.e., whether 
and to what degree the State's law has accorded legal recognition and 
protection to the particular interest in land with respect to which the 
takings claimant alleges a diminution (or elimination of) value.'' Id. 
at 1016 n. 7.

[[Page 63189]]

    In this case, the critical property interest is the mineral estate 
held by the Blaires. This is an interest in land historically accorded 
recognition and protection by the courts of Ohio, as well as all other 
states. This is not the type of interest that might normally be 
expected to be subject to deprivation without compensation. Thus, the 
Blaires possess title to an interest subject to Fifth Amendment 
protection.

B. Economic Impact of the Prohibition

    Evaluation of the economic impact of a government action on a 
property interest involves determination of the economic and property 
interest or interests affected, the degree of the economic impact on 
the property interests, the character and present use of the property, 
the duration of the proposed governmental action, and whether the 
proposed government action carries benefits to the private property 
owner that offset or mitigate any adverse economic impact.
    With respect to the property interest affected, OSM considers the 
relevant unit of property for analysis to be the land for which VER is 
requested and all other contiguous units of property under the same 
ownership and/or same use. See 56 FR 33161 (July 18, 1991). In this 
case, the relevant unit of property is the 134-acre tract of property 
for which the Blaires own the mineral estate.
    The VER determination requested by the Blaires and Buckingham 
includes only 25.2 acres of this unit. The economic interest in this 
coal has been split, since the Blaires have leased the right to mine 
the coal at issue to Buckingham in return for a one dollar royalty per 
ton of the coal mined. Hence, the Blaires' place the value of their 
interest in the coal at $88,200, based on an estimated 88,200 tons of 
recoverable coal. OSM's analysis confirms the requesters' estimate of 
the recoverable coal reserves. Administrative Record No. 206 
(hereinafter, ``A.R. ____''). Furthermore, OSM's evaluation of 
information provided by Buckingham concerning coal quality and 
overburden ratios confirms the proposed operation is economically 
viable, which means that the Blaires' royalty interest has economic 
value. (A.R. 219.)
    With respect to Buckingham's interest, the company contends that 
the coal is a necessary and integral part of a larger operation. 
Specifically, the company states that it needs the low-sulfur coal from 
this property to blend with higher-sulfur coal from its other mines to 
meet contractual supply obligations with a local utility. Buckingham 
further contends that it will suffer losses amounting to approximately 
3.5 million dollars if it cannot mine the coal in question. This 
contention is based upon the assumption Buckingham will be unable to 
market the coal from its other reserves if it cannot blend this coal 
with the coal from the national forest tract.
    OSM's analysis, however, finds that Buckingham may have other 
options with far less dramatic financial implications. (A.R. 220.) For 
example, obtaining low-sulfur coal from another source could reduce the 
projected financial impact by 90% or more. Alternatively, Buckingham 
might be able to renegotiate its supply contract and acquire sulfur 
dioxide emission allowances to package with its higher sulfur coat, 
which would reduce the potential losses by 67-90 percent. Under either 
option, OSM agrees that the company likely would sustain some lost 
profit potential if it cannot develop the proposed mine. However, it is 
not clear from the record what the loss in market value of the leased 
coal would be, as distinguished from lost profits in Buckingham's 
business dealings.\1\
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    \1\ In any case, as noted below, OSM did not base its decision 
on the economic impacts of prohibition of mining on Buckingham's 
current property interests, but rather on the property interests 
that existed on August 3, 1977.
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    Analysis of the economic impact of a prohibition on surface mining 
involves a number of factors. First, there cannot be a compensable 
taking unless there is a diminution in the value of the requesters' 
property rights. Thus, if the coal could be extracted by some other 
method, there may be no taking issue. If this is not possible, any 
value allegedly taken must be compared to other value in the property 
that has accrued or will accrue to the owners. If a prohibition would 
affect merely one strand of a bundle of property rights and would not 
be significant, there may be no taking. Thus, it must be determined 
whether the property proposed surface coal mining.
    With respect to alternative methods of mining, the requesters claim 
that the absence of competent rock above the coal seam precludes 
underground mining. The requesters also dismiss auger mining as a 
viable alternative, because they contend that method is not suitable 
for the removal of pillars from abandoned underground mine workings.
    After a technical review, OSM finds that underground mining is not 
feasible for this site because of stress relief fracturing, roof 
stability and water inflow problems. (A.R. 206.) In addition, because 
of the need to establish a face-up to perform auger mining and due to 
the irregular shape of the remaining block of coal and the fact that 
entries have been cut through it in the past so that it is not solid, 
OSM agrees that auger mining is an unviable option for mining the coal.
    Since alternative methods of mining are not possible here, other 
benefits derived from the property or other potential uses for the 
property are relevant. The 134-acre tract for which the Blaires own the 
mineral interest has previously been underground and/or surface mined. 
Maps in OSM's mine map repository indicate this mining was completed 
prior to 1940, which predates the current owners' acquisition of the 
property. Thus, the bulk of the use of the coal interest in this 
property has already been derived from the property by the Blaires' 
predecessors in interest. Prohibition of mining the remainder of the 
coal, then, would only deprive the Blaires of the use of the unmined 
pillars of coal.
    OSM's investigation indicate there may be other recoverable coal 
from the No. 6 seam within the 134-acre tract. (A.R. 222). The maps in 
OSM's mine map repository show barrier pillars along Pine Run which, if 
still existing, may be surface mineable. The record provides no further 
information on the value of that coal. In addition, the 1961 New 
Straightsville USGS topographic quadrangle indicates that surface 
mining has already occurred along both sides of the run. In any event, 
any remaining coal could not be surface mined absent a VER 
determination. Underground extraction of the remainder of the workings 
appears infeasible because of mine-stability and safety considerations, 
as well as the low percentage of coal remaining. (A.R. 222.)
    Published geologic maps and cross sections for Ohio indicate the 
potential existence of other seams below the No. 6 coal seam. However, 
there has been little interest in mining these seams to date and ODNR 
has no records of marketable coal beneath the No. 6 seam in Perry 
County. (A.R. 222.) An ODNR geologist advised that the occurrence of 
these coal beds is spotty and, where present, the quality of the coal 
can change significantly between locations. (A.R. 222.) Thus, there is 
no data to indicate any value in lower coal seams in which the Blaires 
may have an interest.
    Other potential uses of the mineral estate include oil and gas 
production. The Blaires receive royalties from two wells operating 
since 1987 on the 134-acre tract of land. Another well drilled on the 
property proved economically unproductive. The wells tap the Clinton

[[Page 63190]]

sandstone, which is the most productive oil and gas deposit in the 
region. Income from the two economically productive wells has been 
modest. Based on the state's regulatory restrictions on spacing of oil 
and gas wells and information provided by the Blaires concerning 
performance of the existing wells, OSM determined that the Blaires 
could potentially develop two or three additional wells on the 
property, the value of which, with the existing wells, would likely be 
approximately the same as the value of the coal royalties the Blaires 
expect to receive from their coal interest. (A.R. 221.) Other deposits 
may exist, but their presence and recoverability are entirely 
speculative.
    Clay also exists on the property, with the shallowest deposit 
located immediately underneath the No. 6 coal seam. However, the market 
for clay is limited (Perry County produced less than 18,000 tons in the 
last two years combined) and its value is low, generally about one-
fifth that of coal. (A.R. 222.) Most clay mining occurs in conjunction 
with coal mining and is secondary to the coal mining. In addition, the 
requesters state that the type of clay on the property is not in 
demand, so no market exists. Therefore, OSM finds that the record 
(including available market and geologic information) indicates that 
the clay on the property is not economically recoverable and that clay 
mining does not constitute a reasonable alternative use of the 
property.
    Based on the record before it and on the analysis in this decision, 
OSM finds that application of the 552(e)(2) prohibition to the Blaires 
property (the mineral estate of the 134-acre parcel) would not deny the 
Blaires all economic use of the property in question. In particular, 
OSM finds that predecessors in interest to the Blaires have already 
made reasonable economic use of the coal rights on the 134 acres, 
because the record shows that the coal on this property has already 
been underground and surface mined. Further, OSM finds that the Blaires 
are making economic use of the oil and gas rights they hold in the 134 
acres by means of two operating oil and gas wells and available 
information indicates the Blaires could potentially operate as many as 
three more wells on their property.
    However, because the remaining coal on the Blaires property can 
only be mined by surface methods, OSM also concludes that a negative 
VER determination would preclude recovery of the remaining coal, and 
therefore would cause diminution in the value of the Blaires' property.

C. Interference With Reasonable, Investment-Backed Expectations

    This element of the standard taking analysis requires an evaluation 
of (1) the owner's demonstrated expectations for use of the property, 
(2) whether the expectations are reasonable and investment-backed, and 
(3) the degree to which the government action interferes with these 
expectations.
    The Blaires cite the acquisition of the property with an 
expectation of mining, contending that the coal was the principal value 
of the mineral estate. Buckingham points to its investment of resources 
in preparation of a permit application, as well as significant 
additional investments in an integrated mining operation that it claims 
relies upon access to the high sulfur coal under the national forest 
tract. Buckingham invested significant resources (several million 
dollars) in both acquiring the contract to be served by the integrated 
operation, and in establishing the mining operation.\2\
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    \2\ OSM did not base its decision on evaluation of the 
investment-backed expectations of Buckingham, because Buckingham did 
not hold the coal rights on August 3, 1977.
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    While the Blaires may have had expectations of exploiting the 
mineral interest when they acquired the property, it appears their 
acquisition was by inheritance and, consequently involved no 
investment. Presumably, the purchase they cite was the original 
purchase by the predecessor in interest. OSM does not consider this an 
investment by the Blaires, and therefore concludes that the record does 
not demonstrate that the Blaires have investment-backed expectations.

D. Character of the Government Action

    This element of the takings analysis requires an evaluation of (1) 
the intended purpose of the enabling statute, (2) whether the action 
will substantially advance a legitimate public purpose, and (3) the 
degree to which the regulated activity contributes to a harm that the 
governmental action is designed to address.
    The public purpose in this matter is Congress' intent to protest 
federal lands in national forests from the harmful affects of surface 
coal mining operations. The prohibition, specified in section 522(e)(2) 
of SMCRA, is based on Congress' determination that federal lands in the 
national forests are places that are generally incompatible with 
surface coal mining operations. See S. Rep. No. 95-128, at 55 (1977). 
Congress was concerned that mining might destroy the land's potential 
for other equally or more desirable land uses. Id. For purposes of this 
takings analysis, OSM will assess the degree to which the mining of 
this specific property would contribute to the harm Congress proposed 
to address by prohibiting mining. This determination, then, must 
address the intended uses, purposes and values of this particular 
national forest land.
    The United States acquired the surface rights to this parcel 
pursuant to the Weeks Forestry Act of 1911, 16 U.S.C. Sec. 515. The 
Weeks Act authorized the Secretary of Agriculture to ``purchase such 
forested, cut-over, or denuded lands within the watersheds of navigable 
streams as in his judgment may be necessary to the regulation of the 
flow of navigable streams or for the production of timber.'' Id. Thus, 
the principal purposes for acquiring land for the national forests 
under this Act were to provide watershed control and to ensure a 
national timber supply. But, over time, the uses, purposes and values 
of the national forests have expanded. In the Multiple-Use Sustained-
Yield Act of 1960, Congress expressed its policy ``that the national 
forests are established and shall be administered for outdoor 
recreation, range, timber, watershed, and wildlife and fish purposes.'' 
16 U.S.C. Sec. 528. The Secretary of Agriculture was further ``directed 
to develop and administer the renewable surface resources of the 
national forests for multiple use and sustained yield of the several 
products and services obtained therefrom.'' 16 U.S.C. Sec. 529. 
Accordingly, the current purpose of national forest lands is to provide 
a diversified, multiple use of the forest resources. Pursuant to the 
Forest and Rangeland Renewable Resources Planning Act of 1974, as 
amended by the National Forest Management Act, national forest 
administrators are required to prepare forest management plans. 16 
U.S.C. Sec. 1604. The Wayne National Forest has such a plan. This plan 
provides guidance on the uses, purposes and values of lands within the 
forest. The tract at issue here is included in Management Area 3.3, 
which has a designated management goal of providing (1) high-quality 
hardwoods on a sustained-yield basis; (2) wildlife habitat diversity, 
favoring species that require mature and overmature hardwoods; and (3) 
dispersed recreational activities, such as hiking, horseback riding and 
hunting. Forest areas managed for these purposes are intended to be in 
blocks of 1,000 acres or larger. Provision is made for mineral 
exploration and extraction.
    More general statements in the forest plan recognize the existence 
of considerable private mineral ownership

[[Page 63191]]

on federal lands within the national forest. The plan does not 
specifically address surface coal mining, but it does refer to the 
possibility of surface mining and recognizes that mineral extraction 
will occur throughout the forest. With respect to minerals, the forest 
management goal provides that the USFS administer private mineral 
rights so that all activities and operations are prudently consistent 
with the best private management practices.
    The persons requesting the VER determination claim that the 
proposed surface coal mining operation would not adversely impact these 
uses, purposes and values. They state that the land in its current 
condition has no significant recreational, timber, or economic values 
incompatible with the proposed surface mining. They point out that the 
USFS has not developed the land for recreation. There are no camp 
sites, picnic sites or hiking trails. Further, it is noted that the 
tract is not contiguous with any other USFS property and only 
approximately twenty acres of relatively undisturbed timber is at 
issue. They also assert that development of the property as a resource 
is limited by the topography, soil conditions, shape of the area and 
timber quality. Finally, the requesters contend that the proposed 
mining and reclamation would improve the land in some respects by 
eliminating highwalls and subsidence depressions resulting from 
previous surface and underground mining operations.
    OSM's examination of the property confirms that the requesters have 
accurately portrayed the condition of the property. In particular, the 
size of the subject property and its isolated location render it of 
limited current use and value for the purposes specified by the USFS. 
As indicated, the size of the property is small for the intended uses 
and the USFS has not developed the property. Also, it is approximately 
three-fourths of a mile from any other national forest tract, with 
properties owned by a number of other persons separating the forest 
tracts, making consolidation in the near future unlikely. In addition, 
the quality of the timber does not appear to be consistent with the 
purposes delineated for the property. It has been characterized as low 
to medium quality by the USFS. (A.R. 223.) Further, the property 
exhibits scars of previous mining that would benefit from reclamation, 
as claimed.
    Finally, the USFS has not asserted that any governmental interest 
in the national forest would be significantly impacted by the proposed 
mining. (A.R. 223.) Rather, the USFS has confirmed that the proposed 
operation likely would have no significant impact on the current uses, 
purposes and values of this land. In addition, the USFS has provided 
input to the state regulatory authority concerning the proposed 
reclamation plan for the site and has stated that the agency will work 
closely with the state to ensure that reclamation fully returns the 
land to its planned use under the USFS management plan for this area. 
(A.R. 112.) Thus, OSM finds that mining the subject tract would have no 
significant impact on the current uses, purposes and values of the 
national forest.

V. Summary and Disposition of Comments

    As discussed in Part II of this notice, OSM solicited public 
comments and held a public hearing on the request for a VER 
determination. Approximately 175 people attended the public hearing and 
OSM received approximately 150 comments. With two exceptions, all 
commenters opposed a positive VER determination. Most of the comments 
are addressed in the foregoing analysis of this matter. The following, 
however, are more specific responses to the comments made.
    A number of commenters argued that OSM should rely upon the good-
faith all-permits standard rather than the takings standard in making 
the VER determination. As discussed in Part I of this notice, as a 
result of litigation, OSM must use the takings standard when making VER 
determinations in the Southern District of Ohio.
    One commenter proposed delaying a decision on the request until OSM 
adopts a final federal rule defining VER. OSM finds no support in law 
or regulation for this course of action. The agency has an obligation 
to execute its responsibilities with due diligence.
    Several commenters questioned the propriety of Buckingham 
requesting the VER determination, since it did not own the coal in 
question. As noted in Part II of this notice, the owners of the mineral 
estate (the Blaires) subsequently joined Buckingham in requesting the 
VER determination. OSM notes, however, that Buckingham, as the lessee 
of the coal, also possesses an interest in the coal and is 
appropriately a part of the determination.
    Some commenters emphasized SMCRA's expressed intent to protect 
public lands and urged OSM to accord preference to the public interest 
over the private interests when conducting the takings analysis. As 
discussed in Parts III and IV of this notice, OSM has conducted its 
takings analysis in accordance with its understanding of applicable 
takings jurisprudence.
    Many commenters expressed concern about Buckingham's ability to 
reclaim the site and avoid adverse impacts to soil, water, wildlife 
habitats and ecosystems. While these concerns are not pertinent to the 
VER determination process, the regulatory authority must address them 
as part of its review of the permit application. Under both SMCRA and 
the Ohio program, the regulatory authority may not approve a permit 
application unless it finds that reclamation in accordance with the 
requirements of the approved program is feasible and that the operation 
has been designed to ensure compliance with these requirements. In 
addition, the USFS has provided input to the state concerning the 
proposed reclamation plan for the operation, and has stated that it 
does not anticipate that the proposed surface coal mining operation 
would significantly affect the current use of value of the affected 
lands for national forest purposes.
    A few commenters also expressed concern that a positive VER 
determination in this case could establish an adverse precedent for 
allowing surface coal mining in the national forests. Since all takings 
analyses are fact-specific and limited to the unique circumstances of 
each case, OSM does not consider this case to have precedential value 
of the nature feared by the commenters.

VI. Conclusion

    OSM deems the Blaires' interest to be key to this VER 
determination. If the Blaires had VER on August 3, 1977, they could 
transfer it under the lease to Buckingham. Conversely, if the Blaires 
did not possess VER as of that date, then VER could not be created by 
transferring one small portion of the coal rights to Buckingham.
    As of August 3, 1977, if OSM applied the section 522(e)(2) 
prohibition to the Blaires' property, the Blaires would be deprived of 
the right to conduct surface coal mining on federal lands portion of 
the proposed permit area, which would mean that they could not recover 
approximately 88,200 tons of coal. This deprivation is slight, because 
the majority of the coal on the entire 134-acre parcel has already been 
exploited by predecessors of the Blaires. In addition, the Blaires also 
have a remaining use of their mineral estate in the form of oil and gas 
production. The value of the remaining oil and gas interest is probably 
about equivalent to the value of the coal interest. Thus, OSM finds 
that (1) most of the economic use of the Blaires' coal interest has 
already been made by previous exploitation; (2) the Blaires retain

[[Page 63192]]

substantial remaining use of their mineral property interests in the 
form of oil and gas production; (3) prohibition of the proposed surface 
coal mining would cause a diminution in value of the Blaires' property; 
and (4) the Blaires have no reasonable, investment-backed expectations 
of surface mining this land.
    Finally, the agency finds that mining of this national forest tract 
would not contribute significantly to the harm Congress addressed 
through the prohibition of mining on federal lands within national 
forests. Because of its small size, isolated location relative to other 
national forest lands, and previously mined condition, the tract is of 
limited current use for the designated national forest purposes. The 
proposed surface coal mining operation would have only minimal short-
term impacts on the current use and value of the land. There are no 
anticipated adverse long-term impacts. Thus, mining the tract would 
have no significant impact on the forest and reclamation will restore 
the land to the planned uses under the management plan. Therefore, OSM 
concludes that the record does not demonstrate that prohibition of 
surface coal mining of the property in question would substantially 
advance the section 522(e) prohibition.
    OSM also finds that, because most of the coal on this property has 
already been mined, the use of that part of the Blaires' property 
interest has already occurred. Therefore, a prohibition on surface 
mining the remaining coal would not totally abrogate a property 
interest historically viewed as an essential stick in the bundle of 
property rights. However, because prohibition would diminish the value 
of the Blaires' property and would not substantially advance a 
legitimate public purpose of SMCRA, OSM finds that application of the 
statutory prohibition on surface mining the Blaires' property would 
constitute a compensable taking of the Blaires' property interests 
under the Fifth Amendment to the U.S. Constitution. Therefore, OSM 
finds that the Blaires have VER for the lands in question and that 
Buckingham acquired VER for the same lands by virtue of its lease of 
the Blaires' coal rights.

VII. Appeals

    Any person who is or may be adversely affected by this decision may 
appeal to the Interior Board of Land Appeals under 43 CFR 4.1390 et 
seq. (1988). Notice of intent to appeal must be filed within 30 days 
from the date of publication of this notice of decision in a local 
newspaper with circulation in Perry County, Ohio.

    Dated: November 19, 1997.
John A. Holbrook, II,
Acting Regional Director, Appalachian Regional Coordinating Center.
[FR Doc. 97-31041 Filed 11-25-97; 8:45 am]
BILLING CODE 4310-05-M