[Federal Register Volume 69, Number 109 (Monday, June 7, 2004)]
[Notices]
[Pages 31838-31839]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-12751]


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DEPARTMENT OF THE INTERIOR

[MT-921-2004-1320-EM]


Establishment of Category 5 Royalty Rate at 2.2 Percent in Fort 
Union Federal Coal Production Region

AGENCY: Bureau of Land Management, Interior.

ACTION: Notice.

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SUMMARY: This notice is issued for the purpose of announcing the 
reassessment of the Category 5 Royalty Rate to 2.2 percent within the 
Fort Union Federal Coal Producing Region in the Counties of McLean, 
Mercer, and Oliver, North Dakota, and Richland County, Montana. This 
reassessment was conducted pursuant to the Bureau of Land Management 
Royalty Reduction Guidelines for Coal and Solid Leasable Minerals which 
requires a periodic review of the prevailing non-Federal royalty rate 
in the producing region.

DATES: Effective Date: June 7, 2004.

FOR FURTHER INFORMATION CONTACT: Randy D. Heuscher, Chief, Branch of 
Solid Minerals, telephone (406) 896-5118, Montana State Office, Bureau 
of Land Management, P.O. Box 36800, Billings, Montana 59107-6800.

SUPPLEMENTARY INFORMATION: Section 2505 of the Energy Policy Act of 
1992 afforded royalty relief in the Fort Union Coal region for coal 
lease applicants, for lessees with royalty reductions approved after 
March 29, 1990, and for lessees whose royalty reduction applications 
are approved in the future.
    Section 39 of the Mineral Leasing Act of 1920, as amended and 
supplemented,

[[Page 31839]]

authorizes the Secretary of Interior to reduce royalty rates to a rate 
lower than the legal minimum for Federal minerals. This authority to 
reduce the royalty rate for coal leases is defined in 43 CFR 
3485.2(c)(1). The purpose of a royalty reduction must be to encourage 
the greatest ultimate recovery of Federal coal and to conserve the 
resource; i.e., to prevent Federal coal from being bypassed. Royalty 
reduction is warranted when it is necessary to promote development or 
if the Federal lease cannot be successfully operated under the terms of 
the lease.
    The ``Fort Union Category 5 Royalty Rate Reduction Study'' 
requested by the State Director, Montana State Office, Bureau of Land 
Management, was completed by the Northwest Regional Evaluation Team of 
the Bureau of Land Management of the Department of Interior in 1991. 
The 1991 study recommended that a Category 5 Royalty Rate Reduction be 
granted for the Fort Union Coal Region. The study determined that all 
five (5) criteria for a Category 5 reduction were met. Based on royalty 
rate information at that time, the study recommended that the Federal 
royalty rate be set at 2.0 percent. The rate took effect on 
applications filed, beginning in 1992.
    The BLM Royalty Reduction Guidelines for Coal and Solid Leasable 
Minerals require that a review of the competitive non-Federal coal 
royalty rate, within the Qualified Geographic Area, be completed every 
2 years in order to determine if the rate is still appropriate. 
Subsequent review studies, by the Bureau of Land Management, Montana 
State Office, determined that the prevailing rates remained at 2.0 
percent from 1991 through 1996; increased to 2.6 percent from 1997 
through 2000; and decreased to 2.4 percent from 2001 through 2003. The 
most recent study, completed in March 2004, is the basis for the 
following determinations.
    A. Geographic Area Qualification--The Counties of McLean, Mercer, 
and Oliver, North Dakota, and Richland County, Montana, continue to 
meet the established five (5) criteria to qualify under Category 5 for 
royalty rate differentials as follows: (1) The Federal Government is 
not market dominant in this area; (2) Federal royalty rates are above 
the current market royalty rate for non-Federal rates in the area; (3) 
Based on a mine-by-mine examination, it is apparent that there are 
instances where Federal coal can be expected to be bypassed in the near 
future due to the royalty rate differential between Federal and non-
Federal coal; (4) All three (3) previous criteria considerations have 
been found to exist throughout the region; and (5) A Category 5 Royalty 
Rate Reduction is not likely to result in undue competitive advantages 
over neighboring areas.
    B. Establishment of Competitive Royalty Rates--The competitive 
royalty rate of 2.2 percent is established to promote development of 
Federal coal reserves situated in the Counties of McLean, Mercer, and 
Oliver, North Dakota, and Richland County, Montana, that may otherwise 
be bypassed in favor of non-Federal coal having a lower royalty rate.
    C. Category 5 Reduction in Royalty Applications--Federal lease-
specific applications for Category 5 Reduction in Royalty for Coal 
deposits within the Counties in North Dakota and Montana named above 
will be accepted by the Montana State Office, Bureau of Land 
Management, P.O. Box 36800, Billings, Montana 59107-6800. The Category 
5 Royalty Rate of 2.2 percent will be effective upon publication of 
this notice. Applications will be processed pursuant to the regulations 
at 43 CFR part 3485 as established by the ``Royalty Rate Reduction 
Guidelines for the Solid Leasable Minerals.''
    The geographic area qualification and the establishment of the 
competitive royalty rate under Category 5 of the ``Royalty Rate 
Reduction Guidelines for the Solid Leasable Minerals'' will be reviewed 
again and updated 2 years from the effective date hereof.

    Dated: May 11, 2004.
Randy D. Heuscher,
Chief, Branch of Solid Minerals.
[FR Doc. 04-12751 Filed 6-4-04; 8:45 am]
BILLING CODE 4310-$$-P