[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