[Federal Register Volume 67, Number 199 (Tuesday, October 15, 2002)]
[Rules and Regulations]
[Pages 63565-63567]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-26064]


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DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Parts 3430 and 3470

[WO-320-1430-PB-24 1A]
RIN 1004-AD43


Coal Management: Noncompetitive Leases; Coal Management 
Provisions and Limitations

AGENCY: Bureau of Land Management, Interior.

ACTION: Final rule.

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SUMMARY: This final rule corrects a technical error relating to coal 
lease modifications made in a 1999 final rule. It also amends the 
regulations to reflect the statutory increase in the maximum acreage of 
Federal leases for coal that an individual or entity may hold in any 
one state and nationally.

EFFECTIVE DATE: November 14, 2002.

ADDRESSES: You may send inquiries or suggestions to Director (320), 
Bureau of Land Management, Eastern States Office, 7450 Boston Blvd., 
Springfield, VA 22153. We will maintain the administrative record for 
this rule at the Bureau of Land Management, Regulatory Affairs Group 
(630), Room 401, 1620 L Street, NW., Washington, DC 20036.

FOR FURTHER INFORMATION CONTACT: Mary Linda Ponticelli at (202) 452-
0350.

SUPPLEMENTARY INFORMATION:

I. Background
II. Discussion of Comments
III. Discussion of the Rule
IV. Procedural Matters

I. Background

A. Lease Modifications

    This rule amends the regulations of the Bureau of Land Management 
(BLM) to reflect correction of a technical error regarding the 
requirement of a public hearing and publication in the Federal Register 
and a general circulation newspaper of a notice of availability of 
environmental analysis documents for coal lease modifications. This 
error was made in conjunction with the BLM's September 1999 regulatory 
revisions incorporating public participation procedures into the 
competitive coal leasing regulations. For a detailed discussion of how 
the error occurred and its effects, see the proposed rule published 
January 18, 2002 (67 FR 2618).

B. Acreage Limitation

    This final rule also changes the regulations on coal lease acreage 
limitations to conform them to a recent statutory change. On October 
23, 2000, the United States Senate passed S. 2300, which became Public 
Law 106-463 on November 7, 2000. This law, known as the Coal 
Competition Act of 2000, amended Section 27(a) of the Mineral Leasing 
Act (30 U.S.C. 184(a)) toincrease the amount of acreage of Federal coal 
leases, or permits that an individual or entity may hold in a single 
state from 46,080 acres to 75,000 acres and raised the national acreage 
limit from 100,000 acres to 150,000 acres. This final rule changes the 
acreage limitations in the regulations to conform to those in the 
statute. For a complete discussion of the reasons for the statutory 
changes and their effects, see the preamble of the proposed rule (67 FR 
2618).

II. Discussion of Comments

    Three letters, one from a law firm and two from state government 
agencies, addressed the proposed rule. All of the comment writers 
either supported the proposed rule generally or stated that they had no 
comment on it.

III. Discussion of the Rule

    In light of the lack of substantive comments suggesting changes in 
the regulations, we are publishing the rule as it was proposed in the 
correction and extension document published April 12, 2002 (67 FR 
17962), without change. That document corrected a drafting error in the 
original proposed rule published on January 18, 2002 (67 FR 2618).

IV. Procedural Matters

National Environmental Policy Act

    BLM prepared an environmental assessment (EA) and found that this 
final rule does not constitute a major Federal action significantly 
affecting the quality of the human environment under section 102(2)(C) 
of the Environmental Protection Act of 1969 (NEPA), 42 U.S.C. 
4332(2)(C). As discussed fully in the proposed rule, this rule 
implements a technical correction to the public participation rule 
completed on September 28, 1999 (64 FR 52239) and a change to the 
Mineral Leasing Act which was made by Congress. The Mineral Leasing Act 
amendment changed the acreage limitations for coal leases. As stated in 
the EA, the final rule should lead to more efficient production and 
economic recovery of the coal resource. However, it should not in and 
of itself lead to new mining. While more efficient mining may have 
environmental consequences, BLM will consider these consequences on a 
case-by-case basis in preparing environmental analyses before issuing a 
new coal lease or modifying an existing one. Therefore, a detailed 
statement under NEPA is not required. We have placed the EA and the 
Finding of No Significant Impact (FONSI) on file in our Administrative 
Record at the address specified in the ADDRESSES section.

Executive Order 12866, Regulatory Planning and Review

    This final rule is not a significant regulatory action and was not 
subject to review by the Office of Management and Budget under 
Executive Order 12866. This rule will not have an annual effect of $100 
million or more on the economy. The rule affects coal leasing in only 
two ways: shortening the lease modification procedure, and increasing 
lease acreage limitations.
    Further, historically, lease modifications have not had significant 
economic effects on the economy. In Fiscal Year 2001, there were 317 
coal leases of various kinds, generating royalties of $337,750,444 on 
production of 393,509,351 tons of Federal coal, with an average market 
value of $7.85 per ton, from 473,303 acres of public lands. Of these 
leases, in FY 2001, only 2 leases were subjects of lease modification. 
Since a lessee can only add maximum of 160 acres by lease modification 
over the entire term of the lease, it is clear that the economic effect 
of lease modifications is tiny compared with the coal program as a 
whole. The largest number of lease modifications that BLM has processed 
in the past few years has been 6, in FY 1998, affecting a total of 733 
acres. Analyzing this strictly from averages, and using the value from 
FY 2001, the market value of coal affected by these modifications 
should have been about $4,784,701 in FY 1998, assuming, of course, that 
it all would have been immediately available for mining in that year. 
Total value for other recent years, based on the lower numbers and 
acreages of lease modifications shown in the accompanying chart, should 
have been only a fraction of this value. The following table summarizes 
lease modifications over the past few years.

[[Page 63566]]



                                   BLM Coal Lease Modifications, FY1997-FY2001
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                                      FY1997          FY1998          FY1999          FY2000          FY2001
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              State                Lease           Lease           Lease           Lease           Lease
                                   Mods    Acres   Mods    Acres   Mods    Acres   Mods    Acres   Mods    Acres
----------------------------------------------------------------------------------------------------------------
Colorado........................       1     100       1     160  ......  ......       2     288  ......  ......
Kentucky........................  ......  ......  ......  ......  ......  ......  ......  ......       1     160
Montana.........................  ......  ......       3     303       1      10  ......  ......  ......  ......
Utah............................       1     133       2     240       2     200  ......  ......       1     122
                                 ---------
    *Total......................       2     233       6     703       3     210       2     288       2     282
----------------------------------------------------------------------------------------------------------------

Of course, since we do not know precisely how much coal was produced 
from the lease modifications shown, we state the 1998 dollar figures 
only to provide a sense of how small the effect of lease modifications 
is, compared with the threshold in the executive order. Further, the 
effects of the mistake that we are correcting in this rule were--

    [sbull] Somewhat longer time for processing a lease modification,
    [sbull] Somewhat higher cost for processing a lease modification.

(Neither of these effects was required by law or policy; rather, they 
were solely a consequence of the drafting error.)
Therefore, the effects of this final rule amount to a financial benefit 
to the coal industry and BLM due to reducing the time required for 
lease modifications and the administrative cost of processing them.

    The reduced costs to BLM and the lease modification applicant from 
avoiding a 2 to 3 month delay to allow the public participation 
inadvertently required by the 1999 rule are difficult to segregate and 
quantify. As a minimum, we estimate the savings in processing costs 
(for Federal Register processing and document preparation) will 
approach $10,000 per lease modification application. Assuming an 
average number of lease modification applications per year of 3, the 
total savings may be nearly $30,000.
    The other element of savings created by this final rule is the 
reduction in opportunity costs. The unintended consequence of the 1999 
rule was that some operators may not have been able to develop the 
resources contained in the lease modifications in a timely manner, or 
at all. Those costs would have been imposed if, due to the additional 
processing time, BLM could not approve the lease modification in time 
to allow recovery of the resources. If the lease modification is not 
processed in time for the coal it contains to be mined with the rest of 
the coal in the lease, the public will lose revenues from bonus 
payments and royalties. We estimate that this final rule will enable 
the public to avoid bonus and royalty revenue losses of about $2,200 
per acre on average, and with an expected 3 modifications at a maximum 
of 160 acres each, the total revenue impact is about $1,056,000 per 
year, which, though substantial, is less than 1 percent of the total 
coal royalty revenues for FY 2001, and far less than the $100 million 
annual threshold in the Executive Order.
    The second change amends our regulations to reflect acreage 
limitations changed by Public Law 106-463. We cannot quantify the 
economic impact of increasing the acreage limitations, because it would 
involve what would amount to speculation about future coal leases or 
mergers of current coal lessees. We do, however, see this as positive 
for industry in that it will allow greater flexibility for coal 
operators to maintain coal reserves that are readily available for 
production and consumption. Currently, to allow for proof of successful 
reclamation, lessees must wait as long as 10 years before they can 
relinquish a lease after production has ended. The acreage in a lease 
that has been mined out but not reclaimed counts the same to the state 
and national acreage limitations as a new lease that has never been 
mined.
    The rule will not--
    [sbull] Adversely affect in a material way the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or state, local, or tribal governments or communities. It will 
enhance economic recovery of coal, minimize bypasses, and improve 
mining efficiency.
    [sbull] Create a serious inconsistency or otherwise interfere with 
an action taken or planned by another agency.
    [sbull] Alter the budgetary effects of entitlements, grants, user 
fees, or loan programs or the right or obligations of their recipients.
    [sbull] Raise novel legal or policy issues.

Regulatory Flexibility Act

    Congress enacted the Regulatory Flexibility Act of 1980 (RFA), as 
amended, 5 U.S.C. 601-612, 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. This rule, as described above, 
merely implements a statutory change to the regulations that apply to 
leasing Federal coal resources, and the rule change itself will not 
have a significant impact on any small entities. Rather, it is the 
legislation which affects these entities. The regulations make no 
substantive change beyond what Congress has already enacted. Further, 
the rule corrects a technical error in the final rule published on 
September 28, 1999 (64 FR 52239), which was fully analyzed for RFA 
compliance when published. Therefore, BLM has determined under the RFA 
that this final rule does not have a significant economic impact on a 
substantial number of small entities.

Small Business Regulatory Enforcement Fairness Act (SBREFA)

    This final rule is not a ``major rule'' as defined at 5 U.S.C. 
804(2). This rule merely makes a technical correction in the final rule 
published on September 28, 1999 (64 FR 52239), and implements a change 
to the state acreage limits that has been made by Congress. This rule 
is limited to making BLM's regulations consistent with the law.

Unfunded Mandates Reform Act

    This final rule does not impose an unfunded mandate on state, 
local, or tribal governments or the private sector of more than $100 
million per year; nor will the rule have a significant or unique effect 
on state, local, or tribal governments or the private sector. As 
discussed above, this rule merely changes BLM's coal leasing 
regulations regarding acreage limitations to comply with Public Law 
106-463 and makes a technical correction to the coal leasing 
regulations regarding lease modifications. Therefore, BLM is not 
required to prepare a statement

[[Page 63567]]

containing the information required by the Unfunded Mandates Reform Act 
(2 U.S.C. 1531 et seq.).

Executive Order 12630, Governmental Actions and Interference with 
Constitutionally Protected Property Rights (Takings)

    This rule does not represent a government action capable of 
interfering with constitutionally protected property rights. The rule 
is limited to changes reflecting Congress's amendment raising the state 
and nationwide acreage limits for coal leases, and correcting a 
technical error relating to regulations governing coal lease 
modifications. Therefore, the Department of the Interior has determined 
that the rule will not cause a taking of private property or require 
further discussion of takings implications under this Executive Order.

Executive Order 13132, Federalism

    This 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. The rule is limited to changes to reflect 
Congress's amendment raising the acreage limits for coal leases and to 
correct a technical error pertaining to coal lease modifications. 
Therefore, in accordance withExecutive Order 13132, BLM has determined 
that this rule does not have sufficient Federalism implications to 
warrant preparation of a Federalism Assessment.

Executive Order 12988, Civil Justice Reform

    Under Executive Order 12988, the Office of the Solicitor has 
determined that this final rule does not unduly burden the judicial 
system and that it meets the requirements of sections 3(a) and 3(b)(2) 
of the Order.

Executive Order 13211, Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    This rule is not a significant energy action. It will not have an 
adverse effect on energy supplies. The rule should have a favorable 
effect on energy production. It should improve efficiency in production 
by increasing acreage limitations and by removing procedural 
requirements inadvertently and erroneously applied to lease 
modifications in an earlier rule.

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 of 1995, 44 U.S.C. 3501 et seq.

Consultation and Coordination With Indian Tribal Governments (Executive 
Order 13175)

    In accordance with Executive Order 13175, we have found that this 
final rule does not include policies that have tribal implications. 
Since this rule does not make significant changes to BLM policy and 
does not specifically involve Indian reservation lands, we have 
determined that the government-to-government relationships should 
remain unaffected.

Principal Author

    The principal author of this rule is Mary Linda Ponticelli of the 
Solid Minerals Group, assisted by Ted Hudson of the Regulatory Affairs 
Group, Bureau of Land Management, Washington, DC.

List of Subjects

43 CFR Part 3430

    Administrative practice and procedure, Coal, Government contracts, 
Intergovernmental relations, Mines, Public lands--mineral resources, 
Public lands--rights-of-way, Reporting and recordkeeping requirements.

43 CFR Part 3470

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

    Dated: September 26, 2002.
Rebecca W. Watson,
Assistant Secretary of the Interior.

    Under the authorities cited below, and for the reasons stated in 
the Supplementary Information, BLM amends Subchapter C, Chapter II, 
Subtitle B of Title 43 of the Code of Federal Regulations, as follows:

PART 3430--NONCOMPETITIVE LEASES

    1. The authority citation for part 3430 continues to read as 
follows:

    Authority: 30 U.S.C. 181 et seq.; 30 U.S.C. 351--359; 30 U.S.C. 
521--531; 30 U.S.C. 1201 et seq.; and 43 U.S.C. 1701 et seq.

Subpart 3432--Lease Modifications

    2. Amend Sec.  3432.3 by revising paragraph (c) and adding a new 
paragraph (d) to read as follows:


Sec.  3432.3  Terms and conditions.

* * * * *
    (c) Before modifying a lease, BLM will prepare an environmental 
assessment or environmental impact statement covering the proposed 
lease area in accordance with 40 CFR parts 1500 through 1508.
    (d) For coal lease modification applications involving lands in the 
National Forest System, BLM will submit the lease modification 
application to the Secretary of Agriculture for consent, for completion 
or consideration of an environmental assessment, for the attachment of 
appropriate lease stipulations, and for making any other findings 
prerequisite to lease issuance.

PART 3470--COAL MANAGEMENT PROVISIONS AND LIMITATIONS

    3. The authority citation for part 3470 continues 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


Sec.  3472.1-3  [Amended]

    4. Amend Sec.  3472.1-3 by--
    a. removing from paragraph (a)(1) the terms ``46,080 acres'' and 
``100,000 acres'', and adding in their place the terms ``75,000 acres'' 
and ``150,000 acres'', respectively; and
    b. removing from the first sentence of paragraph (a)(2) the date 
``August 4, 1976,'' and adding in its place the date ``November 7, 
2000,'' and removing from each place it appears in paragraph (a)(2) the 
term ``100,000 acres'' and adding in its place the term ``150,000 
acres''.

[FR Doc. 02-26064 Filed 10-11-02; 8:45 am]
BILLING CODE 4310-84-P