[Federal Register Volume 78, Number 155 (Monday, August 12, 2013)]
[Proposed Rules]
[Pages 49080-49103]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-19198]



[[Page 49079]]

Vol. 78

Monday,

No. 155

August 12, 2013

Part V





Department of the Interior





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Bureau of Land Management





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43 CFR Parts 3000, 3400, 3430, et al.





Lease Modifications, Lease and Logical Mining Unit Diligence, Advance 
Royalty, Royalty Rates, and Bonds; Proposed Rule

  Federal Register / Vol. 78 , No. 155 / Monday, August 12, 2013 / 
Proposed Rules  

[[Page 49080]]


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DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Parts 3000, 3400, 3430, 3470, and 3480

[LLWO32000.L13200000.PP0000.24-1A]
RIN 1004-AD93


Lease Modifications, Lease and Logical Mining Unit Diligence, 
Advance Royalty, Royalty Rates, and Bonds

AGENCY: Bureau of Land Management, Interior.

ACTION: Proposed rule.

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SUMMARY: The Bureau of Land Management (BLM) is proposing to amend its 
regulations pertaining to the administration of Federal coal leases and 
logical mining units (LMUs). The proposed rule would implement Title 
IV, Subtitle D of the Energy Policy Act of 2005; clarify that a royalty 
rate of 12\1/2\ percent will be assessed on all Federal coal except 
coal that is mined from underground mines; withdraw the Logical Mining 
Unit Application and Processing Guidelines (LMU Guidelines); promulgate 
portions of the LMU Guidelines as regulations; establish new processing 
fees; and make technical and editorial corrections to the regulations.

DATES: Send your comments on this proposed rule to the BLM on or before 
October 11, 2013. The BLM is not obligated to consider any comments 
received after the above date in making its decision on the final rule. 
If you wish to comment on the information collection requirements in 
this proposed rule, please note that the Office of Management and 
Budget (OMB) is required to make a decision concerning the collection 
of information contained in this proposed rule between 30 to 60 days 
after publication of this document in the Federal Register. Therefore, 
a comment to OMB is best assured of being considered if OMB receives it 
by September 11, 2013.

ADDRESSES: Mail: U.S. Department of the Interior, Director (630), 
Bureau of Land Management, 1849 C Street NW., Room 2134LM, Washington, 
DC 20240, Attention: 1004-AD93. Personal or messenger delivery: U.S. 
Department of the Interior, Bureau of Land Management, 20 M Street SE., 
Room 2134LM, Washington, DC 20003, Attention: WO630, 1004-AD93. Federal 
eRulemaking Portal: http://www.regulations.gov. Follow the instructions 
at this Web site.
    Comments on the information collection burdens: Fax: Office of 
Management and Budget (OMB), Office of Information and Regulatory 
Affairs, Desk Officer for the Department of the Interior, fax (202) 
395-5806. Electronic mail: [email protected]. Please 
indicate ``Attention: OMB Control Number 1004-XXXX,'' regardless of the 
method used to submit comments on the information collection burdens. 
If you submit comments on the information collection burdens, you 
should provide the BLM with a copy of your comments, at one of the 
addresses shown above, so that the BLM can summarize all written 
comments and address them in the final rule preamble.

FOR FURTHER INFORMATION CONTACT: William Radden-Lesage, Mining 
Engineer, Solid Minerals Division (WO320), Bureau of Land Management, 
at Room 4215, 20 M Street SE., Washington, DC 20003; or at (202) 912-
7116.

SUPPLEMENTARY INFORMATION:

I. Public Comment Procedures
II. Background and Discussion of the Proposed Rule
III. Procedural Matters

I. Public Comment Procedures

    If you wish to comment, you may submit your comments by any one of 
several methods: Mail: You may mail comments to U.S. Department of the 
Interior, Director (630), Bureau of Land Management, 1849 C Street NW., 
Room 2134LM, Washington, DC 20240, Attention: 1004-AD93. Personal or 
messenger delivery: U.S. Department of the Interior, Bureau of Land 
Management, 20 M Street SE., Room 2134LM, Washington, DC 20003, 
Attention: WO630, 1004-AD93. Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions at this Web site.
    You may submit comments on the information collection burdens 
directly to the Office of Management and Budget, Office of Information 
and Regulatory Affairs, Desk Officer for the Department of the 
Interior, fax (202) 395-5806, or [email protected]. Please 
indicate ``Attention: OMB Control Number 1004-XXXX.'' If you submit 
comments on the information collection burdens, you should provide the 
BLM with a copy of your comments, at one of the addresses shown above, 
so that the BLM can summarize all written comments and address them in 
the final rule preamble.
    Please make your comments as specific as possible by confining them 
to issues for which comments are sought in this notice, and explain the 
basis for your comments. The comments and recommendations that will be 
most useful and likely to influence agency decisions are:
    1. Those supported by quantitative information or studies; and
    2. Those that include citations to, and analyses of, the applicable 
laws and regulations.
    The BLM is not obligated to consider or include in the 
Administrative Record for the rule comments received after the close of 
the comment period (see DATES) or comments delivered to an address 
other than those listed above (see ADDRESSES).
    Comments, including names and street addresses of respondents, will 
be available for public review at the address listed under ADDRESSES 
during regular hours (7:45 a.m. to 4:15 p.m.), Monday through Friday, 
except holidays.
    Before including your address, telephone number, email address, or 
other personal identifying information in your comment, be advised that 
your entire comment--including your personal identifying information--
may be made publicly available at any time. While you can ask in your 
comment to withhold from public review your personal identifying 
information, we cannot guarantee that we will be able to do so.

II. Background and Discussion of the Proposed Rule

A. General Background

    1. On August 8, 2005, the President signed into law the Energy 
Policy Act (EPAct) of 2005, Public Law 109-58, 119 Stat. 594. Title IV, 
Subtitle D of the EPAct, is entitled the ``Coal Leasing Amendments Act 
of 2005.'' The BLM proposals to implement provisions of the EPAct that 
require regulatory amendments are discussed in the section-by-section 
analysis that follows.
    The Office of Natural Resources Revenue (ONRR) (formerly the 
Minerals Revenue Management Program of the Minerals Management Service) 
is proposing a companion rule that implements that part of Section 434 
of the EPAct concerning the processes and standards for determining 
value for payment of advance royalties.
    This proposed rule would implement all other Mineral Leasing Act 
(MLA) amendments enacted by Title IV, Subtitle D of the EPAct.
    2. The BLM proposes to withdraw its LMU Guidelines, which were 
published in final form, following public comment, in the Federal 
Register on August 29, 1985 (50 FR 35145). For purposes of withdrawing 
the LMU Guidelines and promulgating parts of them as regulations, the 
BLM analyzed

[[Page 49081]]

the guidelines and divided them into 3 categories. The first category 
requires no additional action beyond withdrawal because those parts of 
the LMU Guidelines remain valid, and are already in regulations. The 
second category consists of the parts of the LMU Guidelines that are 
now inconsistent with the MLA, as amended by the EPAct. These parts of 
the LMU Guidelines need to be withdrawn and replaced by regulations 
that are consistent with the new statute. The third category includes 
parts of the LMU Guidelines that do not conflict with authorizing 
statutes, but are not currently in or separately supported by the BLM's 
coal management regulations. These parts of the LMU Guidelines need to 
be promulgated as regulations so that the BLM can maintain the existing 
policies after the LMU Guidelines are withdrawn. Each proposed 
regulatory addition that originated from the LMU Guidelines is 
described in the section-by-section analysis.

B. Section-by-Section Analysis of Proposed Changes in 43 CFR Part 
3000--Minerals Management: General

    The BLM proposes to amend 43 CFR 3000.12 by adding provisions to 
recover processing costs for 3 actions initiated by coal operators/
lessees under 43 CFR part 3480. Section 304 of the Federal Land Policy 
and Management Act of 1976 (43 U.S.C. 1734) authorizes the BLM to 
establish reasonable fees with respect to applications relating to 
administration of the public lands.
1. Applications for a History of Timely Payments Determination
    The BLM proposes a processing fee for an application for a history 
of timely payments determination. In order to qualify for a waiver of 
the bond requirement for deferred bonus bid installment payments, a 
Federal coal lessee must apply for and obtain a history of timely 
payments determination. Under the proposed ``history of timely 
payments'' provisions at proposed new section 3474.10, the BLM would 
incur unique costs while processing an application for a history of 
timely payments determination, and BLM personnel would be diverted from 
other tasks and duties in order to verify lease ownership. After the 
BLM verifies lease ownership, it would then forward the application to 
the ONRR for an assessment of the applicant's lease payment history.
    The BLM would provide a written approval to an applicant who 
satisfies the criteria for a history of timely payments determination. 
The written determination would be effective for all leases covered by 
the application until the deferred bonus is paid in full in accordance 
with the terms and conditions of the leases.
    Where an applicant fails to satisfy the criteria, the BLM would:
     Reject the application, and immediately require the 
applicant to post a separate bond in an amount equal to one deferred 
bonus payment; or
     increase an existing bond amount that is equal to the 
amount of one deferred bonus payment.
    In either case, a qualifying applicant would gain a special 
benefit. Therefore, the BLM has concluded that it should establish a 
reasonable fee to recover the cost of processing an application for a 
determination of a history of timely payments.
    The BLM has gained experience processing applications for a history 
of timely payments determination since interim guidance (BLM-WO-IM-
2006-045) was issued on November 25, 2005. The BLM's analysis indicates 
that the processing workload does not require case-by-case cost 
recovery determinations. The BLM is therefore proposing a fixed 
processing fee for all history of timely payments applications to cover 
the BLM's reasonable processing costs. The BLM anticipates that 
processing a history of timely payments application would require 2 
hours of staff time at a GS-11, step 5 salary ($31.17 per hour) and 1 
hour of supervision at a GS-13, step 5 salary ($44.43 per hour) (U.S. 
Office of Personnel Management Salary Table 2013-RUS, at: http://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2013/general-schedule/rus_h.pdf). In addition, consistent with current cost 
calculation guidance (WO-IM-2013-015; November 20, 2012), an additional 
19.8 percent would be added to cover the BLM's indirect costs and 30 
percent would be added for employee benefits, for a total of $159.94, 
which was rounded to the nearest $5 for a proposed fee of $160. The BLM 
is therefore proposing a fixed processing fee of $160 for each 
application for a history of timely payments determination. Like other 
fixed processing fees, the proposed fee would be subject to periodic 
adjustment according to the change in the Implicit Price Deflator for 
Gross Domestic Product. See 43 CFR 3000.10(c).
2. Applications To Pay Advance Royalty
    The proposed advance royalty provisions at subpart 3483 will 
require the BLM to incur unique costs, as provided by Section 304 of 
the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1734), 
while processing an application to pay advance royalty. Processing an 
application to pay advance royalty is time-sensitive, requiring 
personnel to be diverted from other tasks and duties to process the 
application in a timely manner. For each application to pay advance 
royalty, the BLM will verify the production history of each lease or 
LMU and determine the number of tons upon which the advance royalty 
payment will be based. The BLM will forward to the ONRR the advance 
royalty application and the BLM's determination of the advance royalty 
tonnage for their determination of the advance royalty value and 
subsequent billing to the applicant for the advance royalty. Upon 
approval by the BLM and ONRR, the applicant would be allowed to pay 
advance royalty to remain in compliance with the continued operation 
requirement of the MLA (30 U.S.C. 207(b)), and as described in the 
analysis of 43 CFR subpart 3483 in this preamble. Approval to pay 
advance royalty is a unique benefit to the applicant, enabling the 
applicant to continue to hold the lease or LMU even while the lease or 
LMU is not in production. Therefore, the BLM has concluded that it 
should establish a reasonable fee to recover the cost of processing an 
application to pay advance royalty.
    The BLM has extensive experience processing applications to pay 
advance royalty. Although Section 434 of the EPAct changed certain 
procedures and standards related to advance royalty, such as when the 
BLM should receive an advance royalty application and how the ONRR 
determines the advance royalty value, the BLM does not foresee any 
significant change in the BLM's fundamental workload once the BLM 
receives such an application. The BLM's workload analysis does not 
indicate a need for case-by-case cost recovery determinations. 
Therefore, the BLM is proposing a fixed fee to recover the BLM's 
reasonable processing costs for each application to pay advance 
royalty. The BLM anticipates that processing an application to pay 
advance royalty would require 1 hour of staff time at a GS-11, step 5 
salary ($31.17 per hour), 1 hour of a mining engineer's time to review 
the production records for the lease or LMU to determine the tonnage, 
as specified in Section 3484.3, on which the advance royalty payment 
will be based, at a GS-12, step 5 level salary ($37.37 per hour), and 1 
hour of supervision at a GS-13, step 5 salary ($44.43 per hour) (U.S. 
Office of Personnel Management Salary Table 2013-RUS, at: http://
www.opm.gov/

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policy-data-oversight/pay-leave/salaries-wages/2013/general-schedule/
rus--h.pdf). In addition, consistent with current cost calculation 
guidance (WO-IM-2013-015; November 20, 2012), an additional 19.8 
percent would be added to cover the BLM's indirect costs, and an 
additional 30 percent would be added for employee benefits, for a total 
of $169.23. After rounding to the nearest $5, the BLM is proposing a 
fixed processing fee of $170 for each application for payment of 
advance royalty. Like other fixed processing fees, the proposed fee 
would be subject to periodic adjustment according to the change in the 
Implicit Price Deflator for Gross Domestic Product. See 43 CFR 
3000.10(c).
3. Applications To Extend an LMU for an Additional 10 Years
    Section 433 of the EPAct provides for the extension of the term of 
an LMU beyond 40 years. As proposed at section 3487.10, applications 
for extension of the 40-year LMU term will require special processing 
by the BLM. For each application, the BLM will need to verify the land 
status of the LMU and complete an engineering analysis to determine 
whether the extension would ensure the greatest ultimate recovery of 
the coal resources within the LMU. A successful applicant would benefit 
by having up to an additional 10 years to maintain the combined 
reserves as an LMU, consistent with the regulations at subpart 3487. 
Therefore, the BLM has concluded that it should recover the cost of 
processing applications to extend the 40-year LMU term, as provided by 
Section 304 of the Federal Land Policy and Management Act of 1976 (43 
U.S.C. 1734).
    The BLM has no experience processing applications to extend the 
term of an LMU, because this is a new process provided by the EPAct. 
Moreover, no LMU is currently near the end of its maximum 40-year term. 
The BLM estimates that the workload to process an application to extend 
the term of an LMU would not be significant. At this time the BLM's 
workload analysis does not indicate a need for case-by-case cost 
recovery determinations. Therefore, the BLM is proposing a fixed fee 
for all applications to extend the term of an LMU that will recover the 
BLM's reasonable processing costs.
    The BLM anticipates that processing an application to extend the 
term of an LMU would require 1 hour of staff time at a GS-11, step 5 
salary ($31.17 per hour), 1 hour of a mining engineer's time to review 
the LMU's resource recovery and protection plan (R2P2) at a GS-12, step 
5 level salary ($37.37 per hour), and 1 hour of supervision at a GS-13, 
step 5 salary ($44.43 per hour) (U.S. Office of Personnel Management 
Salary Table 2013-RUS, at: http://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2013/general-schedule/rus_h.pdf). In 
addition, consistent with current cost calculation guidance (WO-IM-
2013-015; November 20, 2012), an additional 19.8 percent would be added 
to cover the BLM's indirect costs, and an additional 30 percent would 
be added for employee benefits, for a total of $169.23. After rounding 
to the nearest $5, the BLM is proposing a fixed processing fee of $170 
for each application to extend the term of an LMU. Like other fixed 
processing fees, the proposed fee would be subject to periodic 
adjustment according to the change in the Implicit Price Deflator for 
Gross Domestic Product. See 43 CFR 3000.10(c).

C. Section-by-Section Analysis of 43 CFR Part 3400--Coal Management: 
General

    1. The proposed rule would add Title IV, Subtitle D of the EPAct of 
2005 (Pub. L. 109-58) and Section 2505 of the Energy Policy Act of 1992 
(Pub. L. 102-486) to the authorities described in the authority section 
(section 3400.0-3) of the regulations.
    2. Section 3400.0-5 would be amended by removing the lettered 
paragraph designations (a) through (qq) and arranging the definitions 
in alphabetical order, by redesignating the introductory text as 
paragraph (a), and by redesignating paragraph (rr) as paragraph (b).
    3. The proposed rule would add a definition of the term 
``underground mine'' to section 3400.0-5. The new definition would aid 
the BLM in determining when the 8 percent royalty rate for coal 
recovered from an underground mine, as proposed at section 3473.3-
2(a)(2), is applicable. The term ``underground mine'' would mean, for 
the purposes of establishing a royalty rate under the terms of a coal 
lease, an excavation in the earth for the purpose of severing coal in 
which persons routinely work in an environment where undisturbed earth 
is directly overhead, and where there must be roof control and 
ventilation plans approved by the Mine Safety and Health Administration 
(MSHA) that expressly allow persons to work routinely where there is 
undisturbed earth directly overhead. The phrase ``routinely work'' 
means that the persons who will be working underground will be doing so 
whenever they are working on the lease. A possibility that persons 
might, or might not, have to work underground on any given day to 
excavate and sever coal from the mine does not establish that persons 
will ``routinely work'' underground.
    4. The proposed rule would add a new section 3400.7 that describes 
the information collection requirements and burdens associated with 
coal management, and discloses the OMB control number (1004-0073) that 
applies currently, and that the BLM intends will apply to those 
requirements.
    In this proposed rule, the BLM is proposing to revise control 
number 1004-0073. Some of the revisions would modify existing 
collection activities, and others would add new activities.

D. Section-by-Section Analysis of 43 CFR Subpart 3432--Lease 
Modifications

    1. The proposed rule would add Section 13 of the Federal Coal 
Leasing Amendments Act (FCLAA) of 1976 (30 U.S.C. 203); and Section 432 
of the EPAct (Pub. L. 109-58) to the authorities listed in the 
authority section (section 3432.0-3).
    2. Section 432 of the EPAct, amending 30 U.S.C. 203, provides for 
several changes in the statutory standards that apply to the 
modification of a coal lease. The EPAct increased from 160 acres to 960 
acres the maximum acreage that may be added to a Federal coal lease 
through lease modification during the life of the lease. The BLM is 
proposing to delete the last sentence of section 3432.1(a), which 
contains the prior maximum acreage provision, and replace that sentence 
with a new paragraph (c) that would provide that the acreage added to 
the lease by modification after August 4, 1976, must not exceed the 
lesser of 960 acres or the acreage of the lease when the lease was 
issued.
    Section 432 of the EPAct also provides that an approval of a lease 
modification is a finding that the modification would be in the 
interest of the United States; would not displace a competitive 
interest in the lands; and would not include lands or deposits that can 
be developed as part of another potential or existing operation. 
Because the language of existing 43 CFR 3432.2(a) closely resembles the 
language of the EPAct, the BLM has determined that no change to that 
provision is necessary.
    3. The BLM anticipates that Section 432 of the EPAct will generate 
proposals for large lease modification tracts with proportionally 
greater bonus values. The bonus value is a cash payment, in addition to 
production royalties and annual rental payments, that is payable

[[Page 49083]]

during the term of a lease by a successful bidder at a competitive 
lease sale. The BLM also anticipates that lessees will be interested in 
paying the lease modification bonus on a deferred basis, similar to 
that currently offered for competitive coal leases. Further, under 
Section 436 of the EPAct, a lessee with a history of timely payments 
and prior approval by the BLM does not need to provide the BLM a bond 
to assure the BLM of payment for the unpaid deferred bonus. A lessee's 
payment of the fair market value for lease modifications is analogous 
to the payment of deferred bonuses for competitive leases. 
Consequently, the BLM has concluded that it is appropriate, based on 
the discretion of the approving BLM official, that the fair market 
value for lease modifications may be paid on a deferred basis. This 
approach is similar to that which the BLM uses for competitive coal 
leasing. Therefore, the BLM is proposing to amend section 3432.2(c) to 
allow payment of the bonus for a lease modification on a deferred 
basis.

E. Section-by-Section Analysis of 43 CFR Subpart 3435--Lease Exchange

    The regulations at section 3435.3-5 contain a reference to a 
``draft environmental assessment or environmental impact statement.'' 
Although the word ``draft'' precedes the reference in section 3435.3-5 
to an environmental assessment (EA) and an environmental impact 
statement (EIS), the term ''draft'' was intended to apply exclusively 
to an EIS rather than to an EA. The BLM is therefore proposing to 
change the regulations to correct this inaccuracy.
    The proposed deletion of the reference to draft EAs would recognize 
that when an EA is prepared, there will not necessarily be a public 
notice of availability. That change is consistent with the BLM's 
discretion to determine how and when to seek public involvement in the 
preparation of an EA, in accordance with BLM's January 2008 NEPA 
Handbook H-1790-1, section 8.2, and regulations of the Council for 
Environmental Quality at 40 CFR 1500.2(d), 1501.4(b), and 1506.6.

F. Section-by-Section Analysis of 43 CFR Part 3470--Coal Management 
Provisions and Limitations

    The authority citation for 43 CFR Part 3470 is proposed to be 
revised to add a reference to 30 U.S.C. 207, and revise the existing 
reference to 43 U.S.C. 1701 et seq. to read ``43 U.S.C. 1733 and 
1740.''

G. Section-by-Section Analysis of 43 CFR Subpart 3473--Fees, Rentals, 
and Royalties

    In recent years, much dialogue has taken place concerning whether 
various hybrid technologies for mining coal, specifically continuous 
highwall mining and auger mining, constitute underground mining or 
surface mining. In light of this dialogue, the BLM has determined that 
regulations governing applicable royalty rates need to be revised to 
address the current technologies used to extract Federal coal.
    The MLA provides for payment of a royalty of not less than 12\1/2\ 
percent of the value of coal, except that the Secretary may determine a 
lesser rate for underground coal mining (30 U.S.C. 207(a)). The current 
coal management regulations specify that a lease shall require payment 
of a royalty of not less than 12\1/2\ percent of the value of coal 
recovered from a surface mine and 8 percent for coal recovered from an 
underground mine (sections 3473.3-2(a)(1) and (2)).
    The BLM is proposing to clarify those mining activities that 
constitute underground mining and therefore are eligible for the lower 
underground royalty rate. The proposal would continue the current 8 
percent royalty rate for coal recovered from an underground mine at 
section 3473.3-2(a)(2). However, the proposed rule, at section 3473.3-
2(a)(1), would establish that the minimum 12\1/2\ percent royalty rate 
applies to coal recovered by any other extraction method. Currently, by 
regulation, the 12\1/2\ percent minimum royalty rate applies only to 
coal severed from a surface mine. Thus, if a dispute were to arise as 
to the applicable royalty rate under the proposed rule, the BLM would 
only need to establish whether coal is recovered from an underground 
mine or not. If the coal is not extracted from an underground mine, the 
12\1/2\ percent royalty rate would apply.
    The BLM is also proposing to define the term ``underground mine'' 
to add clarity to the determination of the proper royalty rate. A 
discussion of this proposed definition is in this preamble in the 
discussion of part 3400.

H. Section-by-Section Analysis of 43 CFR Subpart 3474--Bonds

    The BLM's requirements for coal lease bonds are contained in 
subpart 3474. This proposed rule contains a number of proposed 
amendments to subpart 3474, some of which relate to Section 436 of the 
EPAct. These proposed amendments are as follows:
    1. Proposed section 3474.1 would be entitled ``Acceptable bonds'' 
to make it clear that it addresses the types of bonds that the BLM will 
accept to cover coal leases. It would continue to contain the 
requirements of existing section 3474.1(a). Paragraph (b) would be 
included to inform the public that bonding requirements for exploration 
licenses are in section 3410.3-4. That text currently appears in 
section 3474.2(b). The substance of existing section 3474.1(c) would be 
moved to proposed section 3474.11 because it relates to LMU bonds.
    2. Proposed section 3474.2 would be entitled ``Filing requirements 
for bonds'' and would include in paragraph (a) the requirement in 
existing section 3474.1(b) that the applicant or bidder must file a 
lease bond in the proper office within 30 days after receiving a notice 
from the BLM. The lease bond must be on a form approved by the BLM. 
Under a new paragraph 3474.2(b), the BLM could approve a brief 
extension to the filing requirement when the applicant or bidder 
experiences delays in securing a bond that are beyond the control of 
the applicant or bidder.
    3. Under proposed section 3474.2(c), the BLM would issue a new 
lease or lease modification only after an adequate lease bond or other 
financial surety is filed, determined to be adequate, and accepted by 
the BLM. Similar requirements are already in the regulations at section 
3474.1(a) and section 3432.3(b). However, neither of these provisions 
contain the requirements found in the BLM 3474 Bond Manual that a 
financial surety must be: (1) Submitted to the proper BLM office; (2) 
found to be adequate by the BLM; and (3) accepted by the BLM.
    4. The proposed rule would redesignate existing sections 3474.3 
through 3474.6 as proposed sections 3474.5 through 3474.8, 
respectively, to allow insertion of two new sections.
    5. New section 3474.3 would address the required amount of lease 
bonds. Under existing regulations at section 3474.2, the BLM 
establishes the amount of the lease bond. Currently, guidance to 
determine the amount of the bond is in the BLM 3474 Bond Manual of 
February 18, 1988, which establishes that the bond value is equal to 
the cumulative value of: (1) The annual rental payment for one year; 
(2) 3 months of production royalty if a lease is producing coal, or 1 
year of advance royalty payment if a lease is not producing coal and 
has achieved diligence; (3) the value of any unpaid bonus payments; and 
(4) 100 percent of the cost of reclamation associated with exploration 
licenses or exploration activities on leases not yet in a Surface 
Mining Control and

[[Page 49084]]

Reclamation Act (SMCRA) mining permit.
    The proposed rule would provide that the lease bond must be 
sufficient to cover the cumulative amount of: (1) 1 year's rental; (2) 
3 months of production royalty or, if advance royalty was paid in the 
prior continued operation year, 1 year's advance royalty; (3) one 
annual deferred bonus payment (if applicable); and (4) 100 percent of 
the cost of reclamation associated with exploration licenses or 
exploration activities on leases not yet in a Surface Mining Control 
and Reclamation Act (SMCRA) mining permit. The minimum bond amount, 
already established in regulations at 43 CFR 3410.3-4(b)(2) for 
exploration licenses and consistent with the BLM M-3474 Bond Manual, is 
$5,000. The minimum bond value is not indexed for inflation. The lease 
bond protects the BLM from an operator/lessee defaulting on its 
financial obligations, including reclamation.
    6. New section 3474.4 addresses the review and adjustment of bond 
amounts. Under the proposed rule, the BLM would review bonds at regular 
intervals, or as changes in conditions warrant, to assure that bond 
amounts remain appropriate under section 3474.3 of these regulations. 
This provision would apply to bonds for leases, exploration licenses, 
and licenses to mine.
    The BLM strives to review bond amounts on an annual basis. The 
exact duration between bond reviews could be more or less than 1 year 
depending on the workload within the responsible BLM office. Conditions 
that might warrant another review would be payment in full of the 
deferred bonus amount, authorization of a lease modification, or a 
partial relinquishment of the lease. This review could result in the 
bond amount being modified upward or downward.
    7. The proposed rule would amend redesignated section 3474.5 
(existing section 3474.3) by removing existing paragraph (a), which 
relates to converting statewide or nationwide bonds to individual 
bonds. That paragraph no longer has relevance for Federal coal leases, 
all of which now have individual lease bonds.
    Existing section 3474.3(b)(1) is proposed to be removed because 30 
CFR 773.16 and 800.11(a) provide that no permit may be issued under 
SMCRA unless the permit applicant posts a performance bond or 
equivalent guarantee to ensure the completion of the reclamation plan 
approved in the permit. This requirement applies to all surface coal 
mining operations under the Office of Surface Mining Reclamation and 
Enforcement's (OSM) permanent regulatory program; and the permanent 
regulatory program applies to all surface coal mining and reclamation 
operations on Federal lands, regardless of whether the OSM and the 
state have entered into a cooperative agreement to regulate mining on 
Federal lands within the state. The BLM also notes that, under 30 CFR 
740.15(b), SMCRA bonds on Federal lands in states with a cooperative 
agreement to regulate mining on Federal lands must be payable to both 
the state and the United States.
    The BLM proposes to redesignate existing paragraph (b)(2) as 
section 3474.5, replace the term ``Surface Mining Officer'' with 
``Office of Surface Mining Reclamation and Enforcement'' to reflect the 
correct title of the bureau, and revise the section heading from ``Bond 
conversions'' to ``Bond Release,'' which is the subject of the section.
    8. The proposed rule would amend redesignated section 3474.6 
(existing section 3474.4), which relates to qualified sureties, to make 
it clear that the BLM would accept bonds only from sureties with 
current certificates of authority from the Secretary of the Treasury.
    9. No changes are proposed for the text or section heading of 
redesignated section 3474.7 (existing section 3474.5).
    10. In redesignated section 3474.8 (existing section 3474.6), a 
sentence would be added from the existing BLM 3474 Bond Manual 
providing that an existing lease bond or other financial surety must 
remain in effect until another bond or other financial surety is filed 
and the BLM accepts it as a replacement. In addition, the proposed rule 
would make it clear that the prior surety or other bond provider 
remains responsible for obligations that accrued during the period of 
liability while the bond was in effect until such liability is released 
by the BLM.
    11. The proposed rule would add new section 3474.9, allowing an 
operator/lessee to combine the bond requirements for all the leases 
that it holds and that are within the boundary of a single SMCRA mine 
permit into a single consolidated lease bond. The amount of the 
consolidated lease bond would be equal to the combined amount of the 
bond requirements for all of the leases within the mine permit 
boundary. This provision would be added for the convenience of both 
coal operators and the BLM to simplify the periodic review and 
adjustment of the cumulative bond amount for all leases covered by the 
consolidated lease bond.
    12. The proposed rule would add new section 3474.10. Proposed 
section 3474.10 would implement Section 436 of the EPAct concerning 
bonds for deferred bonus bid payments.
    The BLM is required to receive fair market value for all acreage 
leased for the development of Federal coal. Fair market value includes 
a bonus bid or payment that is a cash payment in addition to the 
payment of annual rental and production royalties. Except for lease 
modifications, all acreage leased for the development of Federal coal 
is offered for competitive bidding. By statute (30 U.S.C. 201(a)), at 
least 50 percent of the total acreage offered for Federal coal leasing 
in any 1 year must be leased under a system of deferred bonus payment. 
The deferred bonus payment system established by regulation (section 
3422.4(c)) specifies that the lessee will pay the bonus in five equal 
annual installments, with the first payment submitted with the bid at 
the time of the lease sale. The remaining four deferred bonus bid 
payments are paid in equal annual installments on the first, second, 
third, and fourth anniversary dates of the lease.
    Section 436 of the EPAct, codified at 30 U.S.C. 201(a)(4)-(5), adds 
new surety bond requirements for the deferred bonus bid. The EPAct 
provides that:
     For leases issued after August 8, 2005 (the date the EPAct 
was enacted), the Secretary shall not require a surety bond for the 
deferred bonus bid installment payments for any coal lease issued to a 
lessee with a history of timely payment of noncontested production 
royalties, advance royalties, and bonus bid installment payments.
     For leases issued before August 8, 2005, the Secretary may 
waive the financial-assurance requirement if that lessee has a history 
of timely payments.

Thus, the exemption for lessees with a history of timely payments is 
mandatory for leases issued after August 8, 2005. Section 436 makes 
such a waiver discretionary only for leases issued before August 8, 
2005.
    Section 436 also provides that, notwithstanding any other provision 
of law, if a lessee fails to pay any deferred bonus bid installment 
payment on time, the Secretary must provide written notice to the 
lessee that a deferred bonus bid installment payment has not been paid. 
If the lessee fails to pay the deferred bonus bid installment payment 
within 10 days after receipt of the written notification, the coal 
lease will automatically terminate and the lessee will forgo any 
deferred bonus bid installment payments that have already been made.

[[Page 49085]]

    The proposed regulations implementing Section 436 are modeled on 
the interim guidance (BLM-WO-IM-2006-045) that the BLM issued on 
November 25, 2005. The regulations in this proposed rule would replace 
that interim guidance and implement this section of the EPAct.
    a. Paragraph (a) of proposed section 3474.10 would introduce the 
concept of a ``history of timely payments'' for Federal coal leases 
issued both before and after enactment of the EPAct. Proposed paragraph 
(a)(1) would provide that for Federal coal leases issued before August 
8, 2005, the BLM may waive the bond requirement for deferred bonus bid 
installment payments if the BLM determines, in consultation with the 
ONRR, that the lessee has a history of timely payments of noncontested 
royalties, advance royalties, and bonus bid installment payments. If 
the BLM decides not to waive the bond requirement, the lessee will be 
required to continue to maintain the value of the bond consistent with 
the regulations.
    b. Proposed paragraph (a)(2) would provide that, for leases and 
lease modifications issued after August 8, 2005, the BLM will not 
require a surety bond or other financial assurance to guarantee payment 
of deferred bonus bid installment payments if the BLM determines, in 
consultation with the ONRR, that the lessee or successor in interest 
has a history of timely payments. If the BLM determines that a 
prospective lessee does not have a history of timely payments, the 
lease or modified lease can be issued only after an amount equal to one 
annual deferred bonus payment is added to the amount of the lease bond, 
LMU bond, or consolidated lease bond. If the required amount of a lease 
bond, LMU bond, or consolidated lease bond includes one annual deferred 
bonus payment, the BLM will reduce the lease bond, LMU bond, or 
consolidated lease bond amount by an amount equal to one deferred bonus 
payment if the BLM, at a later date, determines that the lessee has a 
history of timely payments, or when the deferred bonus is paid in full. 
However, the lessee or mine operator must file an application, as 
described in section 3474.10(b), for a history of timely payments 
determination, before the BLM will initiate an analysis and make a 
determination concerning the lessee's or mine operator's payment 
history.
    c. Proposed section 3474.10(b) would establish an application 
procedure for a history of timely payments determination. This section 
would allow a lessee or successful bidder to apply for a history of 
timely payments determination and it specifies the information required 
in an application.
    For leases issued before the establishment of the history of timely 
payments application process, a lessee can file an application for a 
history of timely payments determination at any time. In the case of a 
lease modification, the lessee could apply for a history of timely 
payments determination only after the lessee and BLM have agreed upon 
the fair market value for the lease modification. For new leases that 
are sold competitively, the successful bidder can apply for a history 
of timely payments determination only after the BLM provides written 
notification to the successful bidder that the BLM has accepted its 
bonus bid as the fair market value for the coal tract. This section 
would also list what must be included in a history of timely payments 
application. When making a determination of a history of timely 
payments, the BLM would rely on existing 43 CFR 3400.0-5(rr)(3) 
(redesignated in this rule as 43 CFR 3400.0-5(b)) in determining 
whether a lease is controlled by or under common control with the 
history of timely payments applicant.
    d. Proposed paragraph (c) would establish the basis for a 
determination of a history of timely payments. The BLM proposes to base 
its determination on the applicant's payment history for the 5 years 
immediately preceding an application for a determination of a history 
of timely payments for all Federal coal leases that are: (1) 
Encompassed by an LMU boundary or SMCRA mining permit boundary; and (2) 
under the control of the applicant during the 5-year period. The 5-year 
period and the inclusion of adjoining or nearby leases would reasonably 
reflect the business unit of a mine and therefore the applicant's 
willingness and ability to pay the deferred bonus payments on time.
    The proposed rule would provide that if the applicant has less than 
5 years of payment history, or there is not an adjoining mine under the 
applicant's control, the BLM may consider the nationwide payment 
history of an applicant's corporate owner and affiliates under common 
control with the applicant. If the applicant, or the applicant's 
corporate owner or affiliates under common control with the applicant, 
do not have a 5-year history of payments for a Federal coal lease, the 
applicant will not meet the criteria to apply for a history of timely 
payments determination.
    The rule would make it clear that to satisfy the history of timely 
payments requirement, every non-contested production royalty, advance 
royalty, and deferred bonus bid payment during the 5-year period must 
have been paid in full on or before the date the payment was due. 
Contested payments, as identified by the ONRR, may be considered if the 
lessee or mine operator provides an assurance of full payment to the 
satisfaction of the ONRR. Partial payment or nonpayment would not 
satisfy this requirement unless the lessee or mine operator has also 
provided an assurance of full payment to the satisfaction of the ONRR.
    e. Proposed section 3474.10(d) provides an informal process for 
resolving disputes over the applicant's payment history. If the ONRR 
informs the BLM that the applicant does not satisfy the criteria for a 
history of timely payments determination, before the BLM makes a final 
determination, the BLM would notify the applicant, and provide the 
applicant 30 days to resolve any differences between the applicant and 
the ONRR regarding the payment history.
    f. Proposed section 3474.10(e) provides that if the applicant 
satisfies the criteria for a history of timely payments determination, 
the BLM will make a written history of timely payments determination 
that will be effective for the leases covered by the application until 
the deferred bonus is paid in full. The proposed rule also provides 
that, if the applicant does not satisfy the criteria for a history of 
timely payments determination, the BLM will reject the application and 
immediately require either: (1) A separate bond in an amount equal to 
one deferred bonus payment; or (2) an increase in an existing bond that 
is equal to the amount of one deferred bonus payment. If the lessee/
operator does not timely pay the deferred bonus bid, it will result in 
cancellation of the history of timely payments determination, and the 
BLM would immediately require either: (1) A separate bond in an amount 
equal to one deferred bonus payment; or (2) an increase in an existing 
bond that is equal to the amount of one deferred bonus payment.
    g. Proposed section 3474.10(f) would establish procedures, as 
required by the EPAct, for lease termination in the event that a lessee 
fails to pay a deferred bonus bid installment within 10 days after the 
BLM gives the lessee notice that a bonus bid installment is past due. 
These procedures would be in addition to any other legal or equitable 
remedies available to BLM in the event of a lessee's breach of its 
obligations under the lease.

[[Page 49086]]

    13. Proposed section 3474.11 would authorize lessees/operators to 
post a bond for an LMU in lieu of individual lease bonds for the coal 
leases in the LMU, if the LMU bond satisfies the requirements for the 
individual lease bonds it would replace.

I. Section-by-Section Analysis of 43 CFR Subpart 3480--Coal Exploration 
and Mining Operations Rules: General

    1. The BLM proposes to remove the numbered paragraph designations 
(1) through (36) from paragraph 3480.0-5(a) and arrange the definitions 
in alphabetical order. Paragraphs (i) through (iv) of the definition of 
``coal reserve base'' would be redesignated as paragraphs (1) through 
(4), respectively. This conforms to Federal Register style preferences.
    2. The BLM is proposing to clarify the definition of ``continued 
operation'' at section 3480.0-5(a). The proposed changes in this 
definition will make it clear that the continued operation requirement 
can be met by either: (1) The production of the required commercial 
quantities (CQ) of coal in any continued operation year; or (2) 
beginning in the third continued operation year, the cumulative 
production for 3 consecutive continued operation years (the continued 
operation year in question and the 2 preceding continued operation 
years) of an amount of coal greater than or equal to the cumulative CQ 
requirement for that 3-year period.
    This definition is consistent with the LMU Guidelines, which 
provided a similar method for determining the amount of coal for which 
the advance royalty must be paid. The definition provides an 
alternative to actual production of CQ during every continued operation 
year to comply with the continued operation requirement. Consistent 
with current BLM policy, this proposed definition would allow an 
operator to credit a year with coal production from a lease of 3 
percent or more of the recoverable coal reserves (3 times the annual CQ 
requirement defined at section 3480.0-5) toward compliance with the 
continued operation requirement for the subsequent 2-year period, even 
if coal is not mined from the lease during the subsequent 2-year 
period. For example, beginning in the third continued operation year 
and assuming that the annual CQ requirement (1 percent of the 
recoverable coal reserve) is 1 million tons, the continued operation 
requirement can alternatively be satisfied for the third continued 
operation year, and the payment of advance royalties avoided, by the 
cumulative production of at least 3 million tons of coal at any time 
during the 3-year period that includes the first, second, and third 
continued operation years. Similarly, the continued operation 
requirement for the fourth continued operation year could be satisfied 
by the cumulative production of at least 3 million tons of coal at any 
time during the 3-year period that includes the second, third, and 
fourth continued operation years.
    3. The proposed rule would amend the definition of ``diligent 
development period'' by redesignating the subordinate paragraphs to be 
consistent with the alphabetical organization of definitions within 
section 3480.0-5.

J. Section-by-Section Analysis of 43 CFR Subpart 3482--Exploration and 
Resource Recovery and Protection Plans

    1. Before August 8, 2005, the MLA required coal lessees to submit 
an operation and reclamation plan within 3 years after the lease was 
issued (30 U.S.C. 207(c)). This provision of the prior law was 
implemented in the regulations at section 3482.1(b), requiring 
submission of an R2P2 (the BLM's terminology for what the MLA calls an 
operation and reclamation plan). Section 435 of the EPAct eliminated 
this 3-year requirement in favor of a requirement for the submission of 
a plan prior to any action which might cause a significant disturbance 
of the environment. The BLM is proposing to remove 3 sentences in this 
section that implemented the 3-year provision of the prior law. Few, if 
any, consequences attach to the removal of the 3-year deadline. Under 
the proposed rule, the BLM would continue to require an approved R2P2 
before a lessee may conduct any development or mining operations on a 
Federal coal lease. Further, detailed operation and reclamation plans 
continue to be required to obtain a Federal coal mining permit under 
the SMCRA.
    2. The BLM is proposing to remove two additional sentences from 
section 3482.1(b). The third sentence of this section provides that the 
BLM will review an R2P2 for completeness and compliance with the MLA. 
This sentence is self-evident and is redundant with detailed MLA 
requirements for an R2P2 that are listed in section 3482.1(c). 
Therefore, we are proposing to delete the third sentence in this 
section. The BLM is also proposing to delete the seventh sentence in 
this section which provides that an R2P2 submitted, but not approved as 
of August 30, 1982, must be revised to comply with the rules as 
modified as of August 30, 1982 (47 FR 33154-195). The BLM is not aware 
of any R2P2 submitted before August 30, 1982, but not yet approved, 
that would need to be revised as provided by this sentence. Therefore, 
we are proposing to delete the seventh sentence of this section.
    3. The BLM proposes to add a new paragraph (b) in section 3482.3 
that would reference the LMU mapping requirements found at existing 
section 3487.1(i) (redesignated as section 3487.8(a), with a new 
section heading).

K. Section-by-Section Analysis of 43 CFR Subpart 3483--Diligence 
Requirements

    1. Section 434 of the EPAct, amending 30 U.S.C. 207(b), provides 
for several changes in the processes for application, assessment, and 
collection of advance royalties for Federal coal leases. The proposed 
rule is modeled on the BLM's interim guidance concerning this section 
of the EPAct (BLM-WO-IM-2006-127 (March 24, 2006)).
    a. The BLM proposes to revise section 3483.3(a)(2) by moving the 
authority to stop accepting advance royalties in lieu of continued 
operation, upon 6 months' notification to the lessee or LMU operator, 
to new paragraph 3483.4(h). Section 3483.3(a)(2) would be modified to 
include a reference to new paragraph 3483.4(h). This is an 
administrative action that will consolidate regulations relative to 
advance royalty under section 3483.4.
    b. The general conditions for paying advance royalty would be 
contained in section 3483.4(a). Under proposed section 3483.4(a)(1), 
the BLM could authorize the payment of advance royalty in lieu of 
continued operation for a lease or LMU if:
    (1) Coal was not produced in sufficient quantity from the lease or 
LMU during a continued operation year to satisfy the continued 
operation requirement of the lease or LMU;
    (2) The aggregate number of continued operation years for accepting 
advance royalties, as determined under section 3483.4(e), has not been 
exceeded; and
    (3) The BLM determines that payment of advance royalty in lieu of 
continued operation will serve the public interest.
    c. Under proposed section 3483.4(a)(2), the continued operation 
requirement for a lease or an LMU for a continued operation year could 
be met by a combination of coal production and payment of advance 
royalty. Also, proposed section 3483.4(a)(3) would make the lessee 
responsible for paying advance royalty for a lease that is not within 
an LMU and the LMU lessee/operator responsible for paying advance 
royalty for an LMU.

[[Page 49087]]

    d. Under the MLA, as amended by the EPAct, after a lessee has 
achieved diligent development, there are no statutory restrictions 
regarding when, during a continued operation year, the lessee must 
apply to pay advance royalty in lieu of continued operation. Under 
existing section 3483.4, applications to pay advance royalty made more 
than 30 days after the beginning of a continued operation year for the 
payment of advance royalty during the same continued operation year are 
subject to late payment charges. Because the provisions for calculation 
of the advance royalty payment in Section 434 of the EPAct provide for 
coal values to be determined at the end of a continued operation year, 
proposed section 3483.4(b) would require the operator to apply to pay 
advance royalty any time during the continued operationb year. Proposed 
section 3483.4(b) would also provide that failure to apply to pay 
advance royalty within the continued operation year to which the 
advance royalty applies may result in: (1) Assessment of late payment 
penalties; (2) failure to qualify for a new lease or the transfer of an 
existing lease as specified in section 3472.1-2(e); or (3) cancellation 
of the lease consistent with section 3483.2(c).
    e. Proposed section 3483.4(c) would provide that the value of coal 
for advance royalty purposes is established in applicable ONRR 
companion regulations.
    f. Proposed section 3483.4(d) would address the royalty rate used 
for the calculation of advance royalty. It provides that the royalty 
rate specified in the lease document will be used for calculation of 
advance royalty for a lease. For LMUs, it would provide that the 
advance royalty rate is 8 percent where the Federal recoverable coal 
reserves in the LMU will be recovered only by underground mining 
operations, and not less than 12\1/2\ percent where the Federal 
recoverable coal reserves contained in the LMU will be recovered by 
mining operations other than an underground mine. For an LMU that 
contains Federal recoverable coal reserves that are recovered by a 
combination of underground and other mining methods, the royalty rate 
for calculation of advance royalty would be not less than 12\1/2\ 
percent.
    g. Proposed section 3483.4(e) would increase from 10 to 20 the 
aggregate number of years for which an operator/lessee may pay advance 
royalty, as required by Section 434 of the EPAct. It would also 
describe how the BLM will determine how many and which years count for 
advance royalty purposes both for leases and LMUs.
    h. A section heading, ``Failure to pay advance royalty,'' would be 
added to proposed section 3483.4(f), which has been redesignated from 
section 3484.4(f) of the current regulations.
    i. Under proposed section 3483.4(g)(1), if the BLM authorizes the 
payment of advance royalty for a lease or LMU, the BLM would determine 
at the end of a continued operation year the amount of coal, measured 
in tons, for the ONRR to use to calculate the value of the advance 
royalty payment.
    j. Under section 3483.4(g)(2), the calculation of advance royalty 
tonnage would include both 1- and 3-year methods, based on the 
definition of ``continued operation'' in section 3480.0-5. During the 
first 2 continued operation years, the BLM would use the 1-year 
calculation method to determine the advance royalty tonnage for a 
lease. Beginning in the third continued operation year, the BLM would 
use both methods, and would provide to the ONRR the lower of the two 
tonnage amounts. The ONRR would then determine the value of the advance 
royalty payment. The maximum advance royalty tonnage for any continued 
operation year for a lease would not exceed the required CQ for the 
lease.
    For LMUs, the calculation methods would recognize that an LMU may 
consist of both Federal and non-Federal coal. In determining advance 
royalty tonnages for LMUs, a proportional reduction would be made to 
the advance royalty tonnage to account for the recoverable coal 
reserves in Federal coal leases as a percentage of the overall 
recoverable coal reserves of the LMU.
    The following example depicts how the advance royalty tonnage would 
be calculated for 9 consecutive years for an LMU containing both 
Federal and non-Federal coal. The advance royalty tonnage is calculated 
using both the 1- and 3-year methods.
    For this example, assume the LMU contains a total of 100,000,000 
tons of recoverable coal reserves, 75,000,000 tons of which are from 
Federal coal leases and 25,000,000 are from non-Federal lands. The CQ 
requirement for the LMU is 1,000,000 tons per year of which 750,000 
tons per year is required by the Federal coal leases in the LMU (see 
existing 43 CFR 3480.0-5(a)(6)). Further assume that the LMU produced 
1,000,000 tons in each of the continued operation years (COYs) 1 and 2; 
5,000,000 tons in COY3; nothing in COY4; 500,000 tons and 1,800,000 
tons in COY5 and COY6, respectively; 800,000 tons in COY7; and 200,000 
tons and 300,000 tons, respectively, in COYs 8 and 9. The determination 
of when advance royalty is required and the advance royalty tonnage is 
summarized in Table 1, below:

                            Table 1--Example of Advance Royalty Tonnage Calculations
                                   [Thousands of tons unless noted otherwise]
----------------------------------------------------------------------------------------------------------------
                                                          Continued operation year (COY)
                                --------------------------------------------------------------------------------
                                    1        2        3        4        5        6        7        8        9
----------------------------------------------------------------------------------------------------------------
CQ for Federal Reserves in the       750      750      750      750      750      750      750      750      750
 LMU...........................
CQ Requirement for the LMU.....    1,000    1,000    1,000    1,000    1,000    1,000    1,000    1,000    1,000
CQ Ratio (Federal CQ tons per       0.75     0.75     0.75     0.75     0.75     0.75     0.75     0.75     0.75
 LMU CQ ton)...................
Total Coal Production from the     1,000    1,000    5,000        0      500    1,800      800      200      300
 LMU...........................
----------------------------------------------------------------------------------------------------------------
                                    1-Year Advance Royalty Calculation Method
----------------------------------------------------------------------------------------------------------------
1-Year LMU CQ Deficiency (LMU          0        0        0    1,000      500        0      200      800      700
 CQ Less Total LMU
 Production)(c)................
 1-Year Advance Royalty Tonnage        0        0        0      750      375        0      150      600      525
         for the LMU(d)
----------------------------------------------------------------------------------------------------------------
                                    3-year Advance Royalty Calculation Method
----------------------------------------------------------------------------------------------------------------
3-year Cumulative LMU CQ.......      (a)      (b)    3,000    3,000    3,000    3,000    3,000    3,000    3,000
3-year Total LMU Production....      (a)      (b)    7,000    6,000    5,500    2,300    3,100    2,800    1,300

[[Page 49088]]

 
3-year CQ Deficiency (3-year         (a)      (b)        0        0        0      700        0      200    1,700
 Total LMU Production Less 3-
 year Cumulative LMU CQ)(e)....
3-year Advance Royalty Tonnage       (a)      (b)        0        0        0      525        0      150    1,275
 for the LMU(f)................
----------------------------------------------------------------------------------------------------------------
                    Advance royalty is payable on the lesser of the 1-year or 3-year method.
----------------------------------------------------------------------------------------------------------------
Tonnage on which Advance               0        0        0        0        0        0        0      150      525
 Royalty Must Be Paid(g).......
----------------------------------------------------------------------------------------------------------------
(a) Advance royalty cannot be paid based on a 3-year average during the first year after achieving continued
  operation (see existing 43 CFR 3480.0-5(a)(8)).
(b) Advance royalty cannot be paid based on a 3-year average during the second year after achieving continued
  operation (see existing 43 CFR 3480.0-5(a)(8)).
(c) LMU CQ requirement less total LMU production. If the answer is zero or negative, no advance royalty is due.
  Values greater than zero represent the amount of additional coal production that would be required to meet the
  annual LMU CQ requirement.
(d) The 1-year advance royalty is calculated by multiplying the 1-year LMU CQ Deficiency by the CQ ratio.
(e) The 3-year cumulative total LMU production is subtracted from the 3-year cumulative LMU CQ. If the answer is
  zero or negative, no advance royalty is due. Values greater than zero represent the amount of additional coal
  production that would be required to meet the annual LMU CQ requirement.
(f) The 3-year advance royalty is calculated by multiplying the 3-year LMU CQ Deficiency by the CQ ratio of
  Federal to non-Federal coal.
(g) Advance royalty is paid on the lesser of the 1-year advance royalty tonnage for the LMU or the 3-year
  advance royalty tonnage for the LMU.

    The 3-year advance royalty test can only be used beginning in the 
third continued operation year, and therefore in this example it is not 
applicable to continued operation years 1 and 2. In this example, 
advance royalty for the LMU is not due for continued operation years 1 
through 7 because the advance royalty tonnage from either the 1-year or 
3-year advance royalty methods is zero. The LMU in this example, and 
the Federal coal leases included in the LMU, would be considered in 
compliance with the continued operation requirement for COY 1 through 
7. However, advance royalty for the LMU is due in continued operation 
year 8 because both the 1-year and 3-year advance royalty tests result 
in an advance royalty tonnage of greater than zero. The advance royalty 
tonnage in continued operation year 8 is 150,000 tons, which represents 
the result from the 3-year advance royalty test (150,000 tons), which 
is less than the result from the 1-year advance royalty test (600,000 
tons). Similarly, advance royalty is also due in continued operation 
year 9 because both the 1-year and 3-year advance royalty tests result 
in an advance royalty tonnage of greater than zero. The advance royalty 
tonnage in continued operation year 9 is 525,000 tons, which represents 
the result from the 1-year advance royalty test (525,000 tons), which 
is less than the result from the 3-year advance royalty test (1,275,000 
tons). The LMU in this example, and the Federal coal leases included in 
the LMU, would be considered in compliance with the continued operation 
requirement for COY 8 and 9 only after the required advance royalty has 
been paid.
    While this example illustrates the advance royalty calculation for 
an LMU, it also applies to an individual Federal coal lease by making 
the CQ ratio equal to 1 (i.e., 100 percent Federal coal) and using the 
corresponding production and CQ values for the individual lease.
    k. The BLM proposes to add a new paragraph at 3483.4(h) concerning 
BLM's authority to stop accepting advance royalties in lieu of 
continued operation, upon 6 months' notification to the lessee or LMU 
operator. This provision is being moved from 3483.3(a)(2) as an 
administrative action so that regulations relative to advance royalty 
are located under section 3483.4.
    2. The BLM proposes to amend section 3483.6(a) by adding a sentence 
to provide that the production of non-Federal coal from an LMU may be 
credited toward the diligent development requirements of the LMU only 
if such production occurs after the BLM approves inclusion of the non-
Federal resources within the LMU. This issue was addressed in Carbon 
Tech Fuels, Inc., 161 IBLA 147 (April 13, 2004), a case in which the 
Interior Board of Land Appeals upheld the BLM's refusal to credit non-
Federal coal production for LMU diligence purposes where such 
production occurred before the non-Federal coal resources were included 
in the LMU.
    There are two reasons why the BLM proposes to adopt the provision 
to allow crediting of non-Federal production only after the resources 
are in the LMU. First, the BLM is unable to verify the tonnages 
produced from non-Federal resources before inclusion in the LMU; and 
second, the MLA encourages the diligent production of Federal coal. 
Allowing the crediting of production of non-Federal coal resources that 
may have occurred years earlier would not encourage diligent 
development of the Federal coal today and might provide an avenue to 
avoid production of Federal coal, as occurred in the Carbon Tech Fuels 
case.
    3. The proposed rule would amend section 3483.6(b) by removing the 
reference to the submission date for R2P2s. A new paragraph (c) would 
be added to section 3483.6 addressing the relationship of LMU continued 
operation requirements to lease-specific continued operation 
requirements. The proposed rule would require that the LMU continued 
operation requirement be satisfied independently of whether the Federal 
coal leases within the LMU produce sufficient coal to meet the 
individual continued operation requirements that would apply if the 
leases were not in an LMU.

L. Section-by-Section Analysis of 43 CFR Subpart 3487--Logical Mining 
Unit

    1. The proposed rule would divide section 3487.1(b) into three 
subordinate paragraphs to make the provision easier to follow. The 
proposed rule would also add the 40-year LMU term to the list of 
uniform requirements that apply to all pre-August 4, 1976, Federal 
leases that would be included in an LMU.
    2. The proposed rule would redesignate existing section 3487.1(c) 
as proposed section 3487.2 and reorganize it. Redesignated section 
3487.2(b) (currently section 3487.1(c)(2)) would

[[Page 49089]]

be amended to require a complete description of all lands, Federal, 
state, and private, that are to be in an LMU. This provision was 
previously in the LMU Guidelines, 50 FR at 35148 and 35149.
    3. Existing section 3487.1(c)(3) would be expanded in redesignated 
section 3487.2(c) to include a list of specific information required to 
demonstrate that the applicant for an LMU has effective control of all 
coal within the LMU boundary. This provision was previously in the LMU 
Guidelines, 50 FR at 35149.
    4. Existing section 3487.1(c)(4) (new paragraph 3487.2(d)) would be 
revised to cross reference the requirements for submittal of an R2P2 
that are found at section 3482.1. This paragraph is revised to 
structure the LMU application requirements consistent with Section 435 
of the EPAct.
    5. The proposed rule would redesignate existing section 
3487.1(d)(1) as section 3487.3(a) and revise the section to be 
consistent with Section 433 of the EPAct that allows the term of an LMU 
to be extended beyond the current maximum term of 40 years. The 
proposed rule also makes editorial changes in this paragraph.
    6. Existing section 3487.1(e)(1) would be amended in proposed 
redesignated section 3487.4(a) by removing the requirement for 
submission of an R2P2 within 3 years after the effective date of the 
LMU approval. This is parallel to the lease-specific R2P2 requirements 
enacted by Section 435 of the EPAct. The proposal would provide that an 
LMU applicant must submit an R2P2 containing the information required 
by section 3482.1(c) for all Federal and non-Federal lands within the 
LMU, before the LMU or LMU modification would be approved. This earlier 
submission of the R2P2 would provide a basis for the BLM to decide 
whether to approve an LMU. The proposal also provides that the BLM will 
adjust the estimates of an LMU's recoverable coal reserves at the time 
of approving the R2P2.
    7. Similarly, the criteria for establishing the beginning date for 
the initial 40-year term of an LMU found at existing section 
3487.1(g)(6) is proposed to be amended in proposed section 3487.4(e) to 
be consistent with Section 435 of the EPAct. The proposal would begin 
the initial 40-year term of the LMU through two alternatives. First, if 
coal is actively being mined from the LMU when the LMU is established, 
the initial 40-year LMU term would begin on the effective date of the 
LMU. Alternatively, if coal is being produced when the LMU becomes 
effective, the initial 40 year term of the LMU would begin whenever 
coal is first produced from any part of the LMU.
    8. In proposed sections 3487.5(c) and 3487.7(a), corresponding to 
existing sections 3487.1(f)(3) and (h)(1), respectively, the BLM 
proposes to correct an error that appears twice in the regulations. The 
proposed rule would remove both references in the text that make it 
appear that the BLM consults with itself. The proposed rule would 
require, in new paragraph (g) of redesignated section 3487.5 (see 
existing section 3487.1(f)), submission of the R2P2 before the LMU or 
LMU modification is approved in order to establish a basis for the 
agency's approval of the LMU or LMU modification.
    9. Existing section 3487.1(g) is proposed to be redesignated as 
section 3487.6 with a new section heading of ``LMU decision.''
    10. The BLM is proposing to add a new section 3487.7(d) to allow a 
change in the LMU recoverable coal reserve to be effective either when 
the BLM approves an LMU modification, or when the BLM determines that 
the LMU recoverable coal reserves have changed due to new geologic 
information. The LMU Guidelines required that a change in the LMU 
recoverable coal reserve for LMUs that had achieved diligent 
development be effective beginning on the first day of the next LMU 
continued operation year. In contrast, the diligent development or 
continued operation status of the LMU would not be relevant in 
determining whether or not to change the LMU recoverable coal reserve.
    Under the existing rules, advance royalty is determined at the 
beginning of a continued operation year. If the LMU recoverable coal 
reserve were to change during the continued operation year, there would 
be a need for a corresponding adjustment to the LMU continued operation 
requirement, and as needed, the advance royalty payment if advance 
royalty was paid.
    A constant LMU recoverable coal reserve throughout a continued 
operation year, and thereby a fixed LMU continued operation 
requirement, is no longer required because, consistent with the 
provisions of 30 U.S.C. 207(b)(4), which codify amendments made by the 
EPAct, the BLM is proposing to change the period for determining 
advance royalty from the beginning of the year to run through to the 
end of the continued operation year. See proposed section 3483.4(b). 
Only the LMU recoverable coal reserve, and thereby the LMU continued 
operation requirement, that is in effect at the end of the continued 
operation year, will be used to determine the tonnage upon which 
advance royalty is due. Thus, the BLM is proposing to simplify the 
regulations.
    11. The BLM is proposing to add a new section 3487.7(e) similar to 
existing section 3487.1(h)(4) to make it clear that an LMU modification 
will not extend the initial 40-year period of an LMU. It would also 
cross-reference section 3487.10, which would implement Section 433 of 
the EPAct by providing procedures for extending an LMU beyond the 
current maximum term of 40 years.
    12. Existing section 3487.1(i) is proposed to be redesignated as 
section 3487.8 with a new section heading of ``LMU operations.''
    13. The BLM is proposing a new section 3487.9 to provide specific 
standards and procedures for termination of an LMU. Proposed section 
3487.9(a)(5) would be modified from the provisions in the LMU 
Guidelines to be consistent with Section 433 of the EPAct. The BLM is 
also proposing a new provision that states that any Federal coal lease 
in an LMU would continue under the terms and conditions of the lease if 
the LMU is terminated or relinquished. These provisions were previously 
in the LMU Guidelines, 50 FR at 35157.
    14. Section 433 of the EPAct amends 30 U.S.C. 202a(2) and allows 
the Secretary of the Interior (Secretary) to extend the term of an LMU 
to more than the 40 years previously allowed, if specific conditions 
are met. The statute provides that a 40-year LMU mine-out period may be 
extended to a longer period if:
    (1) The extension will ensure the maximum economic recovery of the 
coal deposit; or
    (2) The longer period is in the interest of the orderly, efficient, 
or economic development of a coal resource.
    These standards differ somewhat from the MLA's standards for the 
initial approval of an LMU. Initially, a proposed LMU must meet the 
standards of maximum economic recovery; orderly, efficient, and 
economical development; and ``due regard to conservation of coal 
reserves and other resources.'' 30 U.S.C. 202a(1). As amended by 
Section 433 of the EPAct, the MLA provides that an extension need only 
meet one of the first two standards for initial approval.
    Under proposed section 3487.10, the operator/lessee of an LMU would 
be required to apply to the BLM for an extension of the LMU term and 
provide documentation concerning how the request complies with either 
of the two approval criteria noted above. To ensure that the LMU 
continues to promote the

[[Page 49090]]

maximum economic recovery of Federal and non-Federal resources, the BLM 
is proposing that the term of an LMU be extended in increments of 10 
years or less. The BLM selected a period of 10 years to provide a 
reasonable amount of time for recovery of coal from the LMU while not 
overly burdening the LMU operator/lessee. Increments of 10 years or 
less also would ensure continued BLM review of the circumstances 
surrounding the LMU operation. A lessee or LMU operator would be 
allowed to apply for repeated extensions of its LMU. Since passage of 
the EPAct, the BLM has approved one LMU extension for a period of 10 
years.

III. Procedural Matters

Executive Order 12866, Regulatory Planning and Review

    In accordance with the criteria in Executive Order 12866, the 
Office of Management and Budget has determined that this rule is a 
significant regulatory action.
    The rule will not have an annual effect on the economy of $100 
million or more or adversely affect in a material way the economy, a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or state, local, or Tribal 
governments or communities.
    The change in the royalty rate for highwall mining is the most 
significant proposed provision that would likely increase the cost 
associated with the development of some Federal coal resources. Since 
1998, highwall mining has been used to mine an estimated 6 million tons 
of Federal coal at seven different mines with an estimated difference 
in royalty value between the underground royalty rate and the surface 
royalty rate of nearly $7.3 million. The average annual total 
production since 1998 is about 588,000 tons per year and the average 
difference in royalty value for the same period is about $662,000 per 
year. The BLM estimates an average annual cost difference of $662,000, 
depending on the quantity of coal produced using highwall mining 
techniques.
    With one exception, Federal royalties for coal severed by highwall 
mining have been assessed at the surface mining royalty rate of 12\1/2\ 
percent. One coal company elected to pay royalties at the underground 
royalty rate of 8 percent. In 2006, the Minerals Management Service 
(now the ONRR) and this coal company entered into a settlement 
agreement tolling the statute of limitations for payment of royalties 
until the BLM determines the applicable royalty rate. If BLM determines 
the applicable royalty rate for highwall mining is greater than the 
underground royalty rate of 8 percent, the agreement provides that the 
coal company will pay the difference in royalties between what was paid 
at the underground rate, and the royalty rate established by the BLM. 
The coal company also agreed to waive appeal rights. Therefore, if the 
BLM concludes that the surface royalty rate of 12\1/2\ percent is 
applicable to coal severed by highwall mining methods, there would be 
no practical effect on royalty receipts.
    This proposed rule would implement new processing fees of $170 per 
application for applications to pay advance royalty, and $170 per 
application to extend an LMU, and $160 per application for applications 
to apply for a history of timely payments determination (that will lead 
to a decision not to consider the remaining deferred bonus payments in 
the total bond requirement of a lease). These fees are included in 
Table 4, under the heading ``Paperwork Reduction Act.'' The other 
proposed provisions that implement the EPAct, including lease 
modification acreage, approval of LMUs, payment of advance royalties, 
lease operation and reclamation plan, and bonding for deferred bonus 
bids, will potentially reduce the cost of maintaining Federal coal 
leases by making administrative actions more efficient. The BLM notes 
that any change in costs to the regulated community from changes in the 
way advance royalty is valued will be addressed by the ONRR. Any cost 
savings are, however, case-specific. It is highly unlikely the savings 
would exceed the threshold established by the Executive Order.
    The proposed rule also includes several technical corrections to 
the regulations that will be solely administrative.
    1. The rule will not create inconsistencies with other agencies' 
actions. It will not change the relationships of the BLM to other 
agencies and their actions. We have closely coordinated with the ONRR 
in developing this proposed rule.
    2. The rule will not materially affect entitlements, grants, loan 
programs, or the rights and obligations of their recipients. The rule 
does not address any of these programs.
    3. The rule will implement the EPAct by amending the coal 
management regulations to conform to it. See parts II.A. and B. of the 
SUPPLEMENTARY INFORMATION discussed earlier in this preamble. However, 
the change in the royalty rate for highwall mining, which would be 
codified at 43 CFR 3473.3-2(a), may raise novel policy issues. That 
provision would continue the current 8 percent royalty rate for coal 
recovered from underground mines, and establish that a minimum royalty 
rate of 12\1/2\ percent would apply to coal recovered by any other 
extraction method.

Regulatory Flexibility Act

    We certify that this rule will not have a significant economic 
effect on a substantial number of small entities as defined under the 
Regulatory Flexibility Act (5 U.S.C. 601 et seq.). The Small Business 
Administration (SBA) has two standards that apply to Federal coal. The 
first standard is found at 13 CFR 121.201 and provides that in the coal 
industry a ``small entity'' is an individual, limited partnership, or 
small company, at ``arm's length'' from the control of any parent 
companies with fewer than 500 employees. The second standard, 13 CFR 
121.509, applies to Federal coal leasing (see companion BLM regulations 
at 43 CFR 3420.1-3(b)(2)) and provides that an entity is considered a 
small business if:
     Together with its affiliates, the entity has no more than 
250 employees;
     The entity maintains management and control of the actual 
mining operations of the Federal coal tract; and
     Agrees that if the entity subleases the Government land, 
it will be to another small business, and that it will require its 
sublessors to agree to the same.
    The BLM has elected to use the SBA standard found at 13 CFR 121.201 
that includes all firms with fewer than 500 employees. The BLM selected 
this standard for its analysis because the collection of firms 
identified as having 500 or fewer employees will include all the firms 
that meet the other standard. Thus, by using the 500-employee standard, 
the BLM has completed this analysis with the more inclusive standard.
    Based on national data, the preponderance of firms involved in 
developing coal are small entities as defined by the SBA. However, this 
proposed rule would affect only those firms leasing and developing coal 
resources on Federal lands, and the makeup of current Federal coal 
lessees does not reflect that of the overall industry. This disparity 
between the composition of the overall industry and that of the subset 
of the industry that holds Federal leases likely reflects the type of 
mine development occurring in the West where most of the Federal 
leasing occurs. Much of the coal currently being produced from Federal 
lands is from extremely large deposits that favor large-scale, capital-
intensive

[[Page 49091]]

development, and requires a large workforce. Therefore, because the 
changes proposed apply primarily to western lease and LMU operations, 
it appears that this rule would not affect a substantial number of 
small entities.
    In addition to determining whether a substantial number of small 
entities are likely to be affected by this rule, the BLM must also 
determine whether the rule is anticipated to have a significant 
economic impact on those small entities. All of the proposed provisions 
will apply to lessees or mine operators regardless of size. The 
proposed changes to the lease modification acreage, approval of payment 
of advance royalties, and lease operation and reclamation plans will 
not subject lessees or mine operators to any new costs. In addition, 
large competitors would not gain any advantage over small entities due 
to these proposed provisions.
    The proposed changes in bonding for deferred bonus bids would not 
increase the costs to current and future lessees. Lessees that have a 
history of timely payments to the government are allowed to make 
deferred bonus payments without providing the agency a bond. This 
benefit would apply to all qualified Federal coal lessees. However, in 
certain situations, the provision could give existing lessees that have 
a history of timely payments a competitive advantage over lessees or 
prospective lessees, including those that are small entities, that 
either do not have a history of timely payments or that have not held a 
Federal coal lease long enough to establish a history of timely 
payments. An entity that does not need to bond for its deferred bonus 
bid will have lower costs than those entities that must pay to provide 
the BLM with the requisite bond.
    Where this advantage would be most acute would be in the 
competitive bidding for a lease associated with a new coal mining 
operation. Prospective lessees would be competing for the right to 
lease the tract through the competitive sale process that requires 
bidding a bonus value for the lease. An entity without a payment 
history would have higher acquisition costs than those entities that 
qualify to defer a bond for future bonus bid payments. The development 
of a new coal mine is not, however, a common scenario. There have only 
been 3 leases, out of 59 leases that the BLM issued in the past 10 
years, which were associated with the development of a new coal mine.
    Any disadvantage small entities may face due to this provision is 
mitigated by the availability of the small business leasing opportunity 
provided under 43 CFR 3420.1-3(b)(2). This regulation provides special 
leasing opportunities for small businesses, where only small entities 
are allowed to bid on Federal coal leases. Larger competitors, who may 
have a competitive advantage, are not allowed to bid for these coal 
tracts set aside for small businesses.
    Proposed section 3473.3-2 would set the royalty rate for highwall 
coal mining at 12\1/2\ percent. Proposed section 3483.4(d) would 
address the royalty rate that would be used for the calculation of 
advance royalty, setting it at 12\1/2\ percent where the Federal LMU 
recoverable coal reserves contained in the LMU would be recovered by 
mining operations other than underground mining. These proposed 
provisions would increase costs to a limited number of operators. As of 
this analysis, 7 operations have or are employing highwall mining 
technology on Federal lands, and all 7 companies are not considered 
small entities as defined by the SBA. At some point in the future, a 
small entity may incorporate highwall mining into its operation. The 
operator would be subject to the higher royalty rate, but it would be 
the same rate large competitors would pay.
    Based on the available information, we conclude that the proposed 
rule would not have a significant impact on a substantial number of 
small entities. Therefore, a final Regulatory Flexibility Analysis is 
not required, and a Small Entity Compliance Guide is not required.

Small Business Regulatory Enforcement Fairness Act

    This rule is not a major rule under 5 U.S.C. 804(2), the Small 
Business Regulatory Enforcement Fairness Act (SBREFA). This rule will 
not have an annual effect on the economy of $100 million or more. As 
explained under the preamble discussion concerning Executive Order 
12866, Regulatory Planning and Review, clarification of the royalty 
rate for non-underground mining may increase the annual cost associated 
with the development of specific Federal coal resources by an estimated 
average of $662,000 per year. However, as all federal coal lessees have 
paid, or have agreed to pay, royalties consistent with this proposed 
rulemaking, there is no practical economic impact. Further, the 
prospective increased cost is limited to specific mining conditions 
that are only found within a few mines, none of which have operators 
that qualify as small business entities. Therefore, the proposed 
clarification in royalty rates will have no effect on small business.
    This rule proposes to implement new processing fees for 
applications to pay advance royalty, extend an LMU, and to avoid 
providing a bond for deferred bonus payment. These proposed fees would 
total an estimated $2,690 per year.
    The other proposed provisions that implement the EPAct, including 
lease modification acreage, approval of LMUs, payment of advance 
royalties, lease operation and reclamation plan, and bonding for 
deferred bonus bids, would potentially reduce the cost of maintaining 
Federal coal leases by making the administration of the coal program 
more efficient. The BLM notes that any changes in costs to the 
regulated community from changes in the way advance royalty is valued 
will be addressed by the ONRR. Any cost savings are, however, case-
specific. It is highly unlikely the savings would exceed the threshold 
established by SBREFA. This rule:
     Will not cause a major increase in costs or prices for 
consumers, individual industries, Federal, state, or local government 
agencies, or geographic regions; and
     Will not have significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
U.S.-based enterprises to compete with foreign-based enterprises.

Unfunded Mandates Reform Act

    In accordance with the Unfunded Mandates Reform Act (2 U.S.C. 1501 
et seq.), we find that:
     This rule will not ``significantly or uniquely'' affect 
small governments. A Small Government Agency Plan is unnecessary.
     This rule will not produce a Federal mandate of $100 
million or greater in any single year.
    The rule is not a ``significant regulatory action'' under the 
Unfunded Mandates Reform Act. The changes proposed in this rule would 
not require anything of any non-Federal governmental entity.

Executive Order 12630, Takings

    In accordance with Executive Order 12630, the BLM finds that the 
rule does not have takings implications. A takings implication 
assessment is not required. This rule does not substantially change BLM 
policy. Nothing in this rule constitutes a compensable taking.

Executive Order 13132, Federalism

    In accordance with Executive Order 13132, the BLM finds that the 
rule does not have significant Federalism effects. A Federalism 
assessment is not required. This rule does not change the

[[Page 49092]]

role of or responsibilities among Federal, state, and local 
governmental entities. It does not relate to the structure and role of 
the states or have direct, substantive, or significant effects on 
states.

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    In accordance with Executive Order 13175, we have found that a 
portion of this proposed rule may include policies that have Tribal 
implications. The proposed rule would make changes to the coal 
management regulations, 43 CFR parts 3000, 3400, 3430, 3470, and 3480. 
As noted below, some of the provisions of 43 CFR part 3480 are 
applicable to ``Indian lands.'' Under the regulations of the Bureau of 
Indian Affairs, the term ``Indian lands'' includes Tribal lands. See 25 
CFR 211.3, 212.3, and 225.3.
    The Bureau of Indian Affairs regulations at 25 CFR 211.4, 212.4, 
and 225.1(c) incorporate, through an explicit cross-reference, the BLM 
regulations at 43 CFR part 3480 and thus, unless expressly exempted, 
the provisions contained in part 3480 apply to Indian lands. The BLM 
coal management regulations at 43 CFR parts 3400 through 3470, are not 
similarly incorporated by cross reference, are not applicable to Indian 
lands, and thus, proposed amendments to regulations in parts 3000, 
3400, 3430, and 3470 are not subject to Tribal consultation.
    The BLM regulations at 43 CFR 3480.0-4 further provide that the 
provisions of part 3480 relating to advance royalty, diligent 
development, continued operation, maximum economic recovery, and LMUs 
do not apply to Indian lands, leases, and permits. Thus, the proposed 
amendments contained in this rule to 43 CFR subpart 3483, Diligence 
Requirements, and subpart 3487, Logical Mining Unit, are excluded from 
Tribal consultation. The proposed definitions of ``continued 
operation'' and ``diligent development period'' are similarly excluded 
from Tribal consultation. A proposed amendment to add a new paragraph 
(h) to section 3482.3 is not subject to Tribal consultation, because 
the proposed paragraph would be specifically limited in its application 
to LMUs.
    As noted above, the BLM regulations at 43 CFR subpart 3482 would be 
generally applicable to Indian lands unless otherwise specifically 
exempted, as noted above for proposed section 3482.3. Since 43 CFR 
3482.1(b) is not similarly specifically exempted from applicability to 
Indian lands, proposed regulatory amendments to that provision would be 
applicable to Indian lands if adopted by the BLM. Accordingly, this 
portion of the proposed rule would be a policy that could have Tribal 
implications.
    Inasmuch as proposed amendments to 43 CFR 3482.1(b) may have Tribal 
implications by reason of its potential applicability to Indian lands, 
the BLM will begin consultation with potentially affected Tribes upon 
publication of the proposed rule. Further, the BLM will continue to 
consult with Tribes during the comment period of the proposed rule.

Executive Order 12988, Civil Justice Reform

    In accordance with Executive Order 12988, we find that the proposed 
rule would not unduly burden the judicial system, and therefore meets 
the requirements of sections 3(a) and 3(b)(2) of the Order. The BLM 
consulted with the Department of the Interior's Office of the Solicitor 
throughout the rule making process.

Executive Order 13352, Facilitation of Cooperative Conservation

    In accordance with Executive Order 13352, the BLM has determined 
that this proposed rule would not impede facilitating cooperative 
conservation; would take appropriate account of and consider the 
interests of persons with ownership or other legally recognized 
interests in land or other natural resources. The rule would properly 
accommodate local participation in the Federal decision-making process, 
and would provide that the programs, projects, and activities are 
consistent with protecting public health and safety.

Paperwork Reduction Act

    This proposed rule contains information collection requirements 
that are subject to review by the OMB under the Paperwork Reduction Act 
(44 U.S.C. 3501-3520). Collections of information include any request 
or requirement that persons obtain, maintain, retain, or report 
information to an agency, or disclose information to a third party or 
to the public (44 U.S.C. 3502(3) and 5 CFR 1320.3(c)).
    The OMB has approved the existing information collection 
requirements associated with coal management, and has assigned control 
number 1004-0073 to those requirements.
    The BLM has requested OMB approval, under a new control number, 
for:
     Modifications of some of the existing information 
collection requirements currently approved under control number 1004-
0073; and
     New information collection requirements.
    After promulgating a final rule and receiving approval from the 
OMB, the BLM intends to request that the new control number be combined 
with existing control number 1004-0073. Therefore, the BLM intends 
that, over the long term, all of the information collection 
requirements and burdens associated with coal management will be 
authorized under control number 1004-0073.
    Both types of proposed changes are described below along with 
estimates of the annual burdens. Included in the burden estimates are 
the time for reviewing instructions, searching existing data sources, 
gathering and maintaining the data needed, and completing and reviewing 
each component of the proposed information collection requirements.
    Title: Coal Management Revisions (43 CFR Parts 3000 and 3400 
through 3480).
    OMB Control Number: 1004-XXXX.
    Abstract: Provisions of this proposed rule that would affect coal 
management information collections are described below. The burdens and 
effects of these provisions are itemized at Tables 2 through 5, below.
    1. The proposed rule would add 3 new fixed processing fees to 43 
CFR 3000.12. One of these new fees would be $170 for each Request for 
Payment of Advance Royalty in Lieu of Continued Operation (43 CFR 
subpart 3483). The OMB has approved this collection activity under 
control number 1004-0073, but has not yet approved the processing fee. 
The other proposed processing fees would be for the following new 
information collection requirements:
     $160 per response for each Application for History of 
Timely Payments Determination (Proposed 43 CFR 3474.10); and
     $170 per response for each Application to Extend an LMU 
Beyond the Initial 40-Year Period (Proposed 43 CFR 3487.10).
    A complete discussion of how the amounts of these 3 fees were 
determined is in the preamble of this proposed rule.
    2. The BLM proposes new 43 CFR 3474.10, which would require a 
lessee or mine operator to submit an application in order to seek a 
determination of a history of timely payments. It would be necessary 
for a lessee or mine operator to obtain such a determination from the 
BLM in order to obtain a waiver of the bond requirement for deferred 
bonus bid

[[Page 49093]]

installment payments. In accordance with Section 436 of the EPAct, the 
BLM may grant (or will grant, in the case of leases issued after August 
8, 2005) such a waiver only after determining, in consultation with the 
ONRR, that the lessee has a history of timely payments of non-contested 
royalties, advance royalties, and bonus bid installment payments. As 
indicated at proposed section 3474.10(b), an applicant for a history of 
timely payments determination would have to submit to the BLM two 
copies of the following information:
     The name, address, and phone number of the applicant and 
the applicant's primary contact person;
     Identification of the lease or leases for which the 
applicant requests a surety bond or other financial guarantee waiver 
for deferred bonus bid installment payments;
     Identification of the surety bonds or other financial 
guarantee instruments, if applicable, that the applicant desires to 
reduce or discontinue;
     The serial numbers and names of the lessee(s) of record of 
all Federal coal leases that constitute the basis for a history of 
timely payments determination under paragraph (c) of this section and 
sufficient documentation to demonstrate that the Federal coal leases 
are under the control of the lessee(s) of record;
     The SMCRA permit number and mine name or the LMU serial 
number and LMU name that are controlled by or under common control 
with, as defined in section 3400.0-5(b) of this chapter, the history of 
timely payments applicant, and that adjoin the leases identified in 
paragraph (b)(2)(ii) of this section; and
     Any other information requested by the BLM.
    The BLM estimates it would take 8 hours to complete a history of 
timely payments application, and there would be on average three such 
applications per year. As noted above, the BLM is proposing a new 
processing fee of $160 for an application for a history of timely 
payments determination. The BLM has decided not to develop a specific 
form to apply for a history of timely payments determination.
    3. Section 433 of the EPAct provides that the Secretary may extend 
the term of an LMU beyond the 40th year. The BLM proposes new 43 CFR 
3487.10, which would provide for applications to extend the term of an 
LMU beyond the initial 40-year period in increments of 10 years or 
less.
    An application to extend an LMU term beyond the initial 40-year 
period must provide sufficient information for the BLM to determine 
whether the extension complies with the provisions at proposed section 
3487.5(b)(1) or proposed Sec.  3487.5(b)(2).
    The text of proposed section 3487.5(b)(1) appears in the existing 
coal management regulations as 43 CFR 3487.1(f)(2)(i), which requires 
respondents to show that mining operations on the LMU would achieve 
maximum economic recovery of Federal recoverable coal reserves within 
the LMU.
    The text of proposed section 3487.5(b)(2) appears in the existing 
coal management regulations at 43 CFR 3487.1(f)(2)(ii), which requires 
respondents to show that mining operations on the LMU would facilitate 
development of the coal reserves in an efficient, economical, and 
orderly manner.
    The BLM does not intend to develop a specific form for applications 
to extend the term of an LMU beyond the initial 40-year period. As 
noted above, the BLM proposes to assess a $170 processing fee for each 
application. The BLM estimates the public burden hours for an 
application to extend an LMU to be 5 hours per response, and 
anticipates one response per year.
    4. Section 435 of the EPAct eliminated the requirement for the 
lessee or mine operator to provide the BLM with an operations and 
reclamation plan under the MLA, as amended (30 U.S.C. 207(c)), within 3 
years of lease issuance. However, the MLA still requires that an 
operations and reclamation plan be approved by the Secretary before 
mining begins (see 43 CFR 3482.1(b)). The BLM implements this statutory 
requirement with its regulatory requirement of a resource recovery and 
protection plan (R2P2).
    The BLM proposes to remove from section 3482.1(b) the requirement 
to submit a 3-year R2P2. This proposal would have the effect of 
adjusting the public burden downward (from 980 responses to 975 
annually) for the information collection activity titled, ``Resource 
Recovery and Protection Plans (43 CFR Part 3480, Subpart 3482).''
    5. The BLM proposes to re-designate existing section 3487.1(c)(2) 
as new section 3487.2(b), and codify a provision of the LMU Guidelines 
that has required a description of other mineral interests within the 
LMU as a part of the LMU application. This proposal would aid the BLM 
in making a determination that the LMU applicant has the right to enter 
and mine coal from all the lands proposed to be within an LMU. Since 
the quantity and quality of the information varies depending to a great 
extent on the geographic location of the LMU, the BLM will not develop 
a specific form to report this information. The BLM estimates this 
requirement would add an average of 5 public burden hours to each of 
the two anticipated LMU applications per year.
    As required by the Paperwork Reduction Act at 44 U.S.C. 3507(d), 
the BLM has submitted an information collection request to the OMB for 
review. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless the 
information collection displays a current OMB control number.
    We invite the public and other Federal agencies to comment on any 
aspect of the reporting burden through the information collection 
process. You may submit comments on the information collection burdens 
directly to the Office of Management and Budget, Office of Information 
and Regulatory Affairs, Desk Officer for the Department of the 
Interior, fax (202-395-5806), or [email protected]. Please 
indicate ``Attention: OMB Control Number 1004-XXXX.'' If you submit 
comments on the information collection burdens, you should provide the 
BLM with a copy of your comments (see ADDRESSES), so that we can 
summarize all written comments and address them in the preamble to the 
final rule.
    The estimated hour burdens of this proposed rule are itemized in 
Tables 2 and 3, and the estimated processing fees are itemized in Table 
4.

[[Page 49094]]



     Table 2--Estimated Hour Burdens for Proposed Information Collection Changes: New Collection Activities
----------------------------------------------------------------------------------------------------------------
                                                                     Estimated
                                                                     number of       Estimated    Estimated hour
                         Proposed change                             responses       hours per    burden (column
                                                                     annually        response     B x  column C)
A.                                                                            B.              C.              D.
----------------------------------------------------------------------------------------------------------------
Application for History of Timely Payments Determination (New 43               3               8              24
 CFR 3474.10)...................................................
Application to Extend an LMU Beyond the Initial 40-Year Period                 1               5               5
 (New 43 CFR 3487.10)...........................................
----------------------------------------------------------------------------------------------------------------


  Table 3--Estimated Hour Burdens for Proposed Information Collection Changes: Revisions of Existing Collection
                                                   Activities
----------------------------------------------------------------------------------------------------------------
                                  Estimated number of         Estimated hours per        Estimated hour burden
       Proposed change            responses annually               response              (column B x column C)
A.                            B.........................  C.........................  D.
----------------------------------------------------------------------------------------------------------------
Removal of ``3-year R2P2''    975 (5 fewer responses      20........................  19,500 (100 fewer hours
 Requirement from ``43 CFR     than in the IC currently                                than in the IC currently
 Part 3480, Subpart 3482       authorized under control                                authorized under control
 Resource Recovery and         number 1004-0073).                                      number 1004-0073)
 Protection Plans'' (Revised
 43 CFR 3482.1(b)).
Revision of ``43 CFR Part     2 (Same as the number of    175 (5 hours more than in   350 (10 more than in the
 3840, Subpart 3487            responses in the IC         the IC currently            IC currently authorized
 Application for Formation     currently authorized        authorized under control    under control number 1004-
 or Modification of Logical    under control number 1004-  number 1004-0073).          0073)
 Mining Unit'' (Revision of    0073).
 43 CFR 3487.1(c)(2) and re-
 designation as 43 CFR
 3487.2(b)).
----------------------------------------------------------------------------------------------------------------


                                        Table 4--Proposed Processing Fees
----------------------------------------------------------------------------------------------------------------
                                                                                                       Total
                                                                     Estimated     Estimated fee  estimated fees
                         Proposed change                             number of       for each        annually
                                                                     responses       response       (column B x
                                                                     annually                        column C)
A.                                                                            B.              C.              D.
----------------------------------------------------------------------------------------------------------------
New Processing Fee for New IC: Application for History of Timely               3            $160            $480
 Payments Determination (New 43 CFR 3474.10)....................
New Processing Fee for Existing IC: Request for Payment of                    12             170           2,040
 Advance Royalty in Lieu of Continued Operation\ (Revised 43 CFR
 subpart 3483)..................................................
New Processing Fee for New IC: Application to Extend an LMU                    1             170             170
 Beyond the Initial 40-Year Period (New 43 CFR 3487.10).........
                                                                 -----------------------------------------------
    Totals......................................................              16  ..............           2,690
----------------------------------------------------------------------------------------------------------------

    The BLM is requesting comments by the public on these proposed 
changes to:
    (a) Evaluate whether the proposed collection of information is 
necessary for the agency to perform its duties, including whether the 
information is useful;
    (b) Evaluate the accuracy of the agency's estimate of the burden of 
the proposed collection of information;
    (c) Enhance the quality, usefulness, and clarity of the information 
to be collected; and
    (d) Minimize the burden on the respondents, including the use of 
automated collection techniques or other forms of information 
technology.
    The OMB is required to make a decision concerning the collection of 
information contained in these proposed regulations between 30 and 60 
days after publication of this document in the Federal Register. 
Therefore, a comment to OMB is best assured of having its full effect 
if OMB receives it within 30 days after publication. This does not 
affect the deadline for the public to comment to the BLM on the 
proposed rule.

National Environmental Policy Act

    We have analyzed this rule in accordance with the criteria of the 
National Environmental Policy Act (NEPA), BLM's January 2008 NEPA 
Handbook H-1790-1, and 516 DM 1 through 4 and 11. We have prepared an 
Environmental Assessment (EA) and have concluded that this rule would 
not have a significant impact on the quality of the human environment 
under Section 102(2)(C) of NEPA, 42 U.S.C. 4332(2)(C), and therefore an 
Environmental Impact Statement is not required. The EA is available for 
review at the address specified under ADDRESSES.

[[Page 49095]]

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

    This proposed rule would amend the BLM's coal management 
regulations and therefore might have an effect on the supply of coal. 
The effect of each provision is discussed separately as follows:
     The proposed rule would implement the Federal coal 
provisions of the EPAct by amending existing regulations. These 
amendments include: Increasing the maximum acreage for a lease 
modification from 160 acres to 960 acres; new procedures for extending 
the life of an LMU beyond 40 years; changes in the procedures and 
standards for payment of advance royalty for leases and LMUs; 
elimination of the requirement to submit an R2P2 within 3 years after 
lease issuance or establishment of an LMU; and changes in procedures 
and standards for bonds that are used to ensure payment of the 
remaining balance of deferred bonus bids. All of these changes are 
administrative in nature and do not have a direct impact on the cost or 
supply of energy. However, as these changes may reduce the 
administrative cost to hold a Federal coal lease, they likewise might 
indirectly help to increase energy supplies by helping enable otherwise 
uneconomic resources to be recovered.
     Portions of the LMU Guidelines (published in the Federal 
Register on August 29, 1985) are no longer consistent with the statute 
as amended by the EPAct. The BLM is therefore proposing a formal 
withdrawal of the LMU Guidelines and proposing to incorporate into the 
regulations those parts of the guidelines that remain valid, to the 
extent those parts of the LMU Guidelines that are not currently in 
regulations. The LMU Guidelines are administrative in nature and do not 
directly affect the supply of energy. Hence, the BLM anticipates no net 
change in energy supplies from this action.
     The BLM is proposing to make it clear that a royalty rate 
of 12\1/2\ percent will be assessed on all Federal coal except coal 
that is mined from underground mines. The proposed rule will define 
underground mines as mine workings where personnel work with 
undisturbed earth directly overhead and that have authorization from 
MSHA for personnel to work underground. We expect no net change in the 
quantity of coal that is developed from mines that are not underground 
mines, such as auger or continuous highwall mining operations, which 
are conducted on Federal coal leases.

Information Quality Act

    In developing this proposed rule, we did not conduct or use a 
study, experiment, or survey requiring peer review under the 
Information Quality Act (Pub. L. 106-554). In accordance with the 
Information Quality Act, the Department of the Interior has issued 
guidance regarding the quality of information that it relies upon for 
regulatory decisions. This guidance is available at DOI's Web site at 
http://www.doi.gov/ocio/iq.html.

Author

    The principal author of this proposed rule is William Radden-
Lesage, Mining Engineer, Solid Minerals Division, assisted by Jean 
Sonneman, Division of Regulatory Affairs, Washington Office, BLM, and 
Harvey Blank, Office of the Solicitor, Department of the Interior.

List of Subjects

43 CFR Part 3000

    Public lands-mineral resources.

43 CFR Part 3400

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

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.

43 CFR Part 3480

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

Tommy P. Beaudreau,
Acting Assistant Secretary of the Interior, Land and Minerals 
Management.

    For the reasons stated in the preamble, and under the authorities 
listed below, parts 3000, 3400, 3430, 3470, and 3480, Subchapter C, 
Chapter II of Title 43 of the Code of Federal Regulations, are proposed 
to be amended as follows:

PART 3000--MINERALS MANAGEMENT: GENERAL

0
1. The authority citation for part 3000 continues to read as follows:

    Authority: 16 U.S.C. 3101 et seq.; 30 U.S.C. 181 et seq., 301-
306, 351-359, and 601 et seq.; 31 U.S.C. 9701; 40 U.S.C. 471 et 
seq.; 42 U.S.C. 6508; 43 U.S.C. 1701 et seq.; and Pub. L. 97-35, 95 
Stat. 357.

0
2. Section 3000.12 is amended by adding, in the table in paragraph (a), 
after the fee for coal lease or lease interest transfer, three new 
fixed fees for processing applications for particular coal actions to 
read as follows:


Sec.  3000.12  What is the fee schedule for fixed fees?

    (a) * * *

------------------------------------------------------------------------
                                                                FY 2013
                       Document/action                            fee
------------------------------------------------------------------------
 
                                * * * * *
Coal (parts 3400, 3470)......................................  .........
 
                                * * * * *
History of timely payments application.......................        160
Advance royalty application..................................        170
Logical mining unit extension application....................        170
 
                                * * * * *
------------------------------------------------------------------------

* * * * *

PART 3400--COAL MANAGEMENT: GENERAL

0
3. The authority citation for part 3400 continues to read as follows:

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

0
4. Section 3400.0-3 is amended by adding paragraphs (a)(10) and (11) to 
read as follows:


Sec.  3400.0-3  Authority.

    (a) * * *
    (10) The Energy Policy Act of 1992 (Pub. L. 102-486).
    (11) The Energy Policy Act of 2005 (Pub. L. 109-58).
* * * * *
0
5. Amend Sec.  3400.0-5 by:
0
a. Revising the introductory text and redesignating it as paragraph (a) 
introductory text;
0
b. Removing the lettered paragraph designations (a) through (qq) and 
arranging the definitions in alphabetical order;

[[Page 49096]]

0
c. Adding a definition of ``Underground mine'' to paragraph (a) in 
alphabetical order; and
0
d. Redesignating paragraph (rr) as paragraph (b).
    The revision and addition read as follows:


Sec.  3400.0-5  Definitions.

    (a) As used in parts 3400 through 3480 of this chapter:
* * * * *
    Underground mine means, for purposes of establishing the royalty 
rate under the terms of a coal lease, an excavation in the earth for 
the purpose of severing coal in which persons routinely work in an 
environment where undisturbed earth is directly overhead and where roof 
control and ventilation plans are approved by the Mine Health and 
Safety Administration, Department of Labor, to allow persons to work in 
areas where undisturbed earth is directly overhead.
* * * * *
0
6. Add Sec.  3400.7 to read as follows:


Sec.  3400.7  Information collection.

    (a) The Office of Management and Budget (OMB) has approved the 
information collection requirements in parts 3400 through 3480 of this 
chapter in accordance with 44 U.S.C. 3507, and has assigned the 
requirements Control Number 1004-0073.
    (b) Respondents are coal mining applicants, lessees, licensees, and 
operators. The information collection requirements in these parts are 
in accordance with the Mineral Leasing Act of 1920 (30 U.S.C. 181 et 
seq.), the Energy Policy Act of 2005 (Pub. L. 109-58), the Mineral 
Leasing Act for Acquired Lands of 1947 (30 U.S.C. 351-359), and the 
Federal Land Policy and Management Act (FLPMA) of 1976 (43 U.S.C. 1701 
et seq.). A response may be mandatory, voluntary, or required in order 
to obtain or retain a benefit.
    (c) The Paperwork Reduction Act of 1995 requires the BLM to inform 
the public that an agency may not conduct or sponsor, and the public is 
not required to respond to, a collection of information unless it 
displays a currently valid OMB control number. Send comments regarding 
any aspect of the collection of information under these parts, 
including suggestions for reducing the burden, to the Information 
Collection Clearance Officer, Bureau of Land Management, 1849 C Street 
NW., Washington, DC 20240.

PART 3430--NONCOMPETITIVE LEASES

0
7. 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

0
8. Section 3432.0-3 is amended by revising paragraph (b) to read as 
follows:


Sec.  3432.0-3  Authority.

* * * * *
    (b) These regulations primarily implement Section 3 of the Mineral 
Leasing Act of 1920, as amended, by:
    (1) Section 13 of the Federal Coal Leasing Amendments Act (FCLAA) 
of 1976 (30 U.S.C. 203); and
    (2) Section 432 of the Energy Policy Act of 2005 (Pub. L. 109-58).
0
9. Section 3432.1 is amended by removing the second sentence of 
paragraph (a) and adding paragraph (c) to read as follows:


Sec.  3432.1  Application.

* * * * *
    (c) The acreage added to the lease by modification after August 4, 
1976, must not exceed the lesser of 960 acres or the acreage of the 
lease when the lease was issued.
0
10. Section 3432.2 is amended by revising paragraph (c) as follows:


Sec.  3432.2  Availability.

* * * * *
    (c) The lands applied for shall be added to the existing lease 
without competitive bidding. The United States shall receive the fair 
market value of the lands added to a lease either by cash bonus payment 
or by deferred bonus payments as provided at section 3422.4(c).

Subpart 3435--Lease Exchange

0
11. Section 3435.3-5 is amended by revising the last sentence to read 
as follows:


Sec.  3435.3-5  Notice of public hearing.

    * * * Any notice of the availability of an environmental assessment 
or draft environmental impact statement on the exchange may be used to 
comply with this section.

PART 3470--COAL MANAGEMENT PROVISIONS AND LIMITATIONS

0
12. The authority citation for part 3470 is revised to read as follows:

    Authority: 30 U.S.C. 189, 207, and 359; and 43 U.S.C. 1733 and 
1740.

Subpart 3473--Fees, Rentals, and Royalties

0
13. Amend Sec.  3473.2 by adding paragraphs (h), (i), and (j) to read 
as follows:


Sec.  3473.2  Fees.

* * * * *
    (h) An application for a history of timely payments determination 
must include payment of the filing fee found in the fee schedule in 
Sec.  3000.12 of this chapter.
     (i) An application to pay advance royalty in lieu of continued 
operation must include payment of the filing fee found in the fee 
schedule in Sec.  3000.12 of this chapter.
     (j) An application for a 10-year extension to the term of a 
logical mining unit must include payment of the filing fee found in the 
fee schedule in Sec.  3000.12 of this chapter.
0
14. Amend Sec.  3473.3-2 by revising paragraph (a) to read as follows:


Sec.  3473.3-2  Royalties.

    (a)(1) Except as provided in paragraph (a)(2), a lease shall 
require payment of a royalty of not less than 12\1/2\ percent of the 
value of the coal recovered. Among other methods, the royalty rate 
established under this paragraph shall apply to all coal recovered by 
surface mining, highwall mining systems, including auger mining, 
continuous highwall mining and other similar systems where personnel do 
not work in an underground mine.
    (2) A lease shall require payment of a royalty of 8 percent of the 
value of the coal recovered from an underground mine.
    (3) The Office of Natural Resources Revenue (ONRR) determines the 
value of the coal recovered from a mine in accordance with the 
regulations set forth at 30 CFR part 206, subpart F.
* * * * *

Subpart 3474--Bonds

0
15. Amend Sec.  3474.1 by revising the section heading and paragraph 
(b) and by removing paragraph (c).
    The revisions read as follows:


Sec.  3474.1  Acceptable bonds.

* * * * *
    (b) For exploration licenses, a bond shall be furnished in 
accordance with Sec.  3410.3-4 of this chapter.
0
16. Revise Sec.  3474.2 to read as follows:


Sec.  3474.2  Filing requirements for bonds.

    (a) The applicant or bidder must file the lease bond in the proper 
office within 30 days after receiving notice. The lease bond must be 
furnished on a form approved by the BLM.
    (b) The BLM may approve a brief extension to the filing requirement 
when the applicant or bidder experiences delays in securing a bond that 
are beyond the control of the applicant or bidder.

[[Page 49097]]

    (c) The BLM will issue a new lease or lease modification only after 
a lease bond or other financial surety has been submitted to the proper 
BLM office, found adequate by the BLM, and accepted.


Sec. Sec.  3474.3 through 3474.6   [Redesignated as Sec. Sec.  3474.5 
through 3474.8]

0
17. Redesignate Sec. Sec.  3474.3 through 3474.6 as Sec. Sec.  3474.5 
through 3474.8, respectively.
0
18. Add new Sec.  3474.3 to read as follows:


Sec.  3474.3  Required amount of the bond.

    Except as provided in Sec.  3474.5, the authorized officer will 
determine the amount of the required bond. The bond must be sufficient 
to cover the cumulative amount of 1 year's rental, 3 months of 
production royalty or 1 year's advance royalty, 1 annual deferred bonus 
payment, and 100 percent of the cost of reclamation for exploration 
licenses or exploration on leases not yet in a Surface Mining Control 
and Reclamation Act (SMCRA) mining permit. The required bond amount 
must be at least $5,000.
0
19. Add new Sec.  3474.4 to read as follows:


Sec.  3474.4  Review and adjustment of bond amount.

    The bond for a lease, exploration license, or license to mine will 
be reviewed at regular intervals, or as changes in conditions warrant, 
to assure that the bond amount remains appropriate under Sec.  3474.3 
of this part. This review may result in the amount of a bond being 
modified upward or downward.
0
20. Revise newly redesignated Sec.  3474.5 to read as follows:


Sec.  3474.5  Bond Release.

    After consultation with the Office of Surface Mining Reclamation 
and Enforcement, the authorized officer may release the amount of any 
outstanding bond which is related to, and is not necessary to secure, 
the performance of reclamation within a permit area.
0
21. Revise newly redesignated Sec.  3474.6 to read as follows:


Sec.  3474.6  Qualified sureties.

    The Financial Management Service of the Department of the Treasury 
annually publishes in the Federal Register a list of companies that 
hold certificates of authority from the Secretary of the Treasury and 
are, therefore, acceptable sureties for Federal bonds. The BLM will 
accept bonds only from sureties with current certificates of authority 
from the Secretary of the Treasury.
0
22. Amend newly redesignated Sec.  3474.8 by adding two sentences at 
the end to read as follows:


Sec.  3474.8  Termination of the period of liability.

    * * * The surety or other bond provider remains responsible for 
obligations that accrued during the period of liability while the bond 
was in effect and until such liability is released by the BLM. An 
existing lease bond or other financial surety must remain in effect 
until another bond or other financial surety is filed and accepted as a 
replacement.
0
23. Add Sec.  3474.9 to read as follows:


Sec.  3474.9  Consolidated lease bonds.

    An operator/lessee may combine the bond requirements for all the 
leases that it holds and that are within the boundary of a single mine 
permit into a single consolidated lease bond. The amount of the 
consolidated lease bond will be equal to the combined amount of the 
bond requirements for all of the leases within the mine permit 
boundary.
0
24. Add Sec.  3474.10 to read as follows:


Sec.  3474.10  Bonds for deferred bonus.

    (a) Introduction to history of timely payments. (1) For Federal 
coal leases issued before August 8, 2005, the BLM may waive the bond 
requirement for deferred bonus bid installment payments if the BLM 
determines, in consultation with the Office of Natural Resources 
Revenue (ONRR), that the lessee has a history of timely payments of 
non-contested royalties, advance royalties, and bonus bid installment 
payments.
    (2) For leases and lease modifications issued after August 8, 2005:
    (i) The BLM will not require a surety bond or other financial 
assurance to guarantee payment of deferred bonus bid installment 
payments if the BLM determines, in consultation with the ONRR, that the 
lessee or successor in interest has a history of timely payments. If 
the BLM determines that the lessee does not have a history of timely 
payments, the lease or modified lease may be issued only if an amount 
sufficient to cover one annual deferred bonus payment is added to the 
lease bond, logical mining unit bond, or consolidated lease bond.
    (ii) When a lease or a lease modification is issued based upon the 
lessee providing a lease bond that includes one annual deferred bonus 
payment, the BLM will reduce the lease bond requirement for that lease 
or lease modification by an amount equal to one deferred bonus payment, 
if:
    (A) At a later date the lessee submits a new history of timely 
payments application and the BLM determines that the lessee has a 
history of timely payments that is in compliance with this subpart; or
    (B) The deferred bonus for the lease or lease modification has been 
paid in full.
    (b) Application requirements for a history of timely payments 
determination. (1) A lessee or successful bidder may apply for a 
history of timely payments determination.
    (i) A current lease holder may apply for a history of timely 
payments determination at any time.
    (ii) In the case of a lease modification, the lessee may apply for 
a history of timely payments determination only after the lessee and 
the BLM have agreed upon the fair market value for the lease 
modification.
    (iii) For new leases, the successful bidder may apply for a history 
of timely payments determination only after the BLM provides written 
notification to the successful bidder that the BLM has accepted its 
bonus bid as the fair market value for a coal tract that was offered 
for competitive sale.
    (2) You must submit to the BLM two copies of a written application 
for the history of timely payments determination. The application must 
include:
    (i) The name, address, and phone number of the applicant and the 
applicant's primary contact person;
    (ii) Identification of the lease or leases for which the applicant 
requests a surety bond or other financial guarantee waiver for deferred 
bonus bid installment payments;
    (iii) Identification of the surety bonds or other financial-
guarantee instruments, if applicable, that the applicant desires to 
reduce or discontinue;
    (iv) The serial numbers and names of the lessee(s) of record of all 
Federal coal leases that constitute the basis for a history of timely 
payments determination under paragraph (c) of this section and 
sufficient documentation to demonstrate that the Federal coal leases 
are under the control of the lessee(s) of record;
    (v) The SMCRA permit number and mine name or the LMU serial number 
and LMU name that are controlled by or under common control with, as 
defined in Sec.  3400.0-5(b) of this chapter, the history of timely 
payments applicant, and that adjoin the leases identified in paragraph 
(b)(2)(ii) of this section; and
    (vi) Any other information requested by the BLM.
    (3) Any confidential data in the application must be marked 
consistent with Sec.  3481.3 of this chapter.

[[Page 49098]]

    (4) The applicant may aggregate into one history of timely payments 
application all leases or lease modifications that have a portion of 
their bonus payments deferred only if all the leases or lease 
modifications are within the same boundary, as described in paragraph 
(c)(1) of this section.
    (c) Basis for a history of timely payments determination. (1) The 
BLM will base its history of timely payments determination on the 
applicant's payment history for the 5 years immediately preceding a 
history of timely payments application for all Federal coal leases that 
are:
    (i) Encompassed by an adjoining LMU boundary or SMCRA mining permit 
boundary; and
    (ii) Under the control of the history of timely payments applicant 
during the 5-year period.
    (2) If the applicant has less than 5 years of payment history, or 
there is not an adjoining mine as provided in paragraph (c)(1) of this 
section, the BLM may consider the nationwide payment history of an 
applicant's corporate owner and affiliates under common control with 
the applicant.
    (3) If the history of timely payments applicant, or the applicant's 
corporate owner or affiliates under common control with the applicant, 
does not have a 5-year history of payments for a Federal coal lease, 
the applicant cannot qualify for a history of timely payments 
determination.
    (4) To satisfy the history of timely payments requirement, every 
non-contested production royalty, advance royalty, and deferred bonus 
bid payment during the 5-year period must have been paid in full on or 
before the date the payment was due. Contested payments may be 
considered if the lessee or mine operator has provided an assurance of 
full payment to the satisfaction of the ONRR. Partial payment or 
nonpayment does not satisfy this requirement unless the lessee or mine 
operator has also provided an assurance of full payment to the 
satisfaction of the ONRR.
    (d) Resolution of disputed payment history. If the ONRR informs the 
BLM that the applicant does not satisfy the criteria for a history of 
timely payments determination, before the BLM makes a final 
determination, the BLM will notify the applicant and provide the 
applicant 30 days to resolve any differences in the payment history 
between the applicant and ONRR.
    (e) The history of timely payments determination. (1) If the 
applicant satisfies the criteria for a history of timely payments 
determination, the BLM will make a written history of timely payments 
determination that will be effective for all leases covered by the 
application until the deferred bonus is paid in full in accordance with 
the terms and conditions of the leases.
    (2) If the applicant fails to satisfy the criteria for a history of 
timely payments determination, the BLM will reject the application, and 
will immediately require:
    (i) A separate bond in an amount equal to one deferred bonus 
payment; or
    (ii) An increase in an existing bond amount that is equal to the 
amount of one deferred bonus payment.
    (3) Failure to make a timely deferred bonus bid payment will result 
in cancellation of the history of timely payments determination and the 
BLM will immediately require:
    (i) A separate bond in an amount equal to one deferred bonus 
payment; or
    (ii) An increase in an existing bond amount that is equal to the 
amount of one deferred bonus payment.
    (f) Lease termination for failure to pay a deferred bonus bid 
installment. (1) The BLM will provide written notice to the lessee that 
an annual deferred bonus bid payment is past due. The notice will 
demand that the lessee, within 10 days beginning on the date of receipt 
of the notice, remit full payment of the deferred bonus payment or 
provide evidence, to the satisfaction of the BLM, to demonstrate that 
the deferred bonus payment was previously made.
    (2) If the lessee provides the BLM with evidence to demonstrate 
that the full amount of the past due bonus payment was paid either 
before receipt or within 10 days after receipt of the notice under 
paragraph (f)(1) of this section, the BLM will review all submitted 
evidence and, in consultation with the ONRR, determine whether full 
payment was made.
    (i) If the BLM concludes that the lessee paid the deferred bonus 
bid payment either before receipt or within the 10 days after receipt 
of the notice under paragraph (f)(1) of this section, the BLM will 
notify the operator/lessee of this conclusion and the lease will not 
terminate.
    (ii) If the BLM concludes that the lessee did not pay the deferred 
bonus bid payment either before receipt or within 10 days after receipt 
of the notice under paragraph (f)(1) of this section, the BLM will 
notify the lessee that the lease is terminated.
    (3) If the lessee does not respond within 10 days after receipt of 
the notice under paragraph (f)(1) of this section, the BLM will consult 
with the ONRR to confirm that the past due bonus payment was not made 
within 10 days after receipt of the notice under paragraph (f)(1) of 
this section, and, upon confirmation, will notify the lessee that the 
lease is terminated as a matter of law.
    (4) If a lease is terminated under paragraph (f)(2) or (f)(3) of 
this section, any bonus payments made to United States with respect to 
the lease:
    (i) Will not be returned to the lessee; and
    (ii) Cannot be credited to any future coal lease sale.
0
25. Add Sec.  3474.11 to read as follows:


Sec.  3474.11  Logical Mining Unit (LMU) bonds.

    (a) Upon approval of an LMU (subpart 3487 of this chapter) the LMU 
operator may, in lieu of individual lease bonds for each Federal coal 
lease in the LMU, furnish and maintain an LMU bond. In addition to all 
the lease bond requirements in this subpart, an LMU bond must also 
comply with the following specific LMU bond requirements:
    (1) The amount of the LMU bond must be sufficient to cover all of 
the lease bond obligations for all Federal leases within the LMU; and
    (2) All LMU bonds must be in an amount not less than that specified 
by the BLM.
    (b) The BLM will review the amount of the LMU bond at regular 
intervals to ensure that the LMU bond continues to meet the bond 
requirements of all the Federal coal leases in the LMU.
    (c) When an LMU is terminated, the period of liability under the 
LMU bond continues until the remaining Federal coal leases that were in 
the LMU are covered by individual lease bonds in the manner prescribed 
by the BLM.

PART 3480--COAL EXPLORATION AND MINING OPERATIONS RULES

0
26. The authority citation for part 3480 continues to read as follows:

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

Subpart 3480--Coal Exploration and Mining Operations Rules: General

0
27. Amend section 3480.0-5 by:
0
a. Removing from paragraph (a) the numbered paragraph designations (1) 
through (36) and arranging the definitions in alphabetical order; and
0
b. Revising the definitions of ``continued operation'' and ``diligent 
development period'' to read as follows:


Sec.  3480.0-5  Definitions.

    (a) * * *
    Continued operation means the annual production of at least

[[Page 49099]]

commercial quantities of recoverable coal reserves following the 
achievement of diligent development. An operator/lessee may achieve 
continued operation in any continued operation year by producing at 
least commercial quantities of coal from a lease or LMU during the 
continued operation year. Beginning in the third continued operation 
year, the operator/lessee may alternatively achieve continued operation 
if its cumulative coal production from a lease or LMU during the 
continued operation year in question and the 2 preceding continued 
operation years (a total of 3 continued operation years) is equal to or 
greater than the sum of the commercial quantities for the same 
continued operation years. Advance royalty may be paid, with approval 
from the BLM, in lieu of continued operation (43 CFR subpart 3483).
* * * * *
    Diligent development period means:
    (i) For Federal leases, a 10-year period that begins on either:
    (A) The effective date of the Federal lease for Federal leases 
issued on or after August 4, 1976; or
    (B) The effective date of the first lease readjustment after August 
4, 1976, for Federal leases issued before August 4, 1976;
    (ii) For LMUs, a 10-year period that begins on either:
    (A) The effective date of the most recent Federal lease issued or 
readjusted before LMU approval; or
    (B) The effective date of the LMU, if the LMU contains a Federal 
lease issued before August 4, 1976, that has not been readjusted after 
August 4, 1976; and
    (iii) For Federal coal leases and LMUs, the diligent development 
period terminates at the end of the royalty reporting period in which 
the production of recoverable coal reserves in commercial quantities 
was achieved, or at the end of 10 years, whichever occurs first.
* * * * *

Subpart 3482--Exploration and Resource Recovery and Protection 
Plans

0
28. Amend Sec.  3482.1 by revising paragraph (b) to read as follows:


Sec.  3482.1  Exploration and resource recovery and protection plans.

* * * * *
    (b) Resource recovery and protection plans. (1) Before conducting 
any development or mining operations on a Federal lease or under a 
license to mine under part 3440 of this chapter, the operator/lessee 
must:
    (i) Submit and obtain approval of a resource recovery and 
protection plan from the BLM; and
    (ii) Submit a permit application package under 30 CFR 740.13 to the 
Office of Surface Mining Reclamation and Enforcement or to the state 
regulatory authority under a Federal/state cooperative agreement 
entered into under 30 CFR part 745, containing, among other documents, 
the operator/lessee's resource recovery and protection plan and the 
BLM's approval of the resource recovery and protection plan.
    (2) A resource recovery and protection plan for an LMU must be 
submitted to the BLM as provided in Sec.  3487.2(d).
* * * * *
0
29. Amend Sec.  3482.3 by adding paragraph (h) to read as follows:


Sec.  3482.3  Mining operations maps.

* * * * *
    (h) Logical mining unit maps. Maps for logical mining units must 
conform to the applicable parts of this section and the requirements at 
Sec.  3487.8(a).

Subpart 3483--Diligence Requirements

0
30. Amend Sec.  3483.3 by revising paragraph (a)(2) to read as follows:


Sec.  3483.3  Suspension of continued operation or operations and 
production.

    (a) * * *
    (2) The authorized officer may suspend the requirement for 
continued operation upon the payment of advance royalty in accordance 
with Sec.  3483.4(h) of this title.
* * * * *
0
31. Amend section 3483.4 by:
0
a. Revising paragraphs (a), (b), and (c);
0
b. Removing paragraph (e) and (f);
0
c. Redesignating paragraphs (d) and (g) as paragraphs (e) and (f), 
respectively;
0
d. Adding new paragraph (d);
0
e. Revising redesignated paragraph (e);
0
f. Adding a paragraph heading to newly redesignated paragraph (f); and
0
g. Adding new paragraphs (g) and (h).
    The revisions and additions read as follows:


Sec.  3483.4  Payment of advance royalty in lieu of continued 
operation.

    (a) Conditions for payment of advance royalty. (1) The BLM may 
authorize the payment of advance royalty in lieu of continued operation 
for a lease or LMU if:
    (i) Coal has not been produced in sufficient quantity from the 
lease or LMU during a continued operation year to satisfy the continued 
operation requirement of the lease or LMU;
    (ii) The aggregate number of continued operation years for 
accepting advance royalties, as determined under paragraph (e) of this 
section, has not been exceeded; and
    (iii) The BLM determines that payment of advance royalty in lieu of 
continued operation will serve the public interest.
    (2) The continued operation requirement for a lease or an LMU for a 
continued operation year may be met by a combination of coal production 
and payment of advance royalty.
    (3) The lessee is responsible for paying advance royalty for a 
lease that is not within an LMU, and the LMU lessee/operator is 
responsible for paying advance royalty for an LMU.
    (b) Application to pay advance royalty. (1) An operator/lessee's 
application to pay advance royalty in lieu of the continued operation 
requirement for a specific continued operation year must be received by 
the BLM during the same specified continued operation year.
    (2) Failure to apply to pay advance royalty in lieu of continued 
operation within the continued operation year to which the advance 
royalty will apply will result in the following:
    (i) The BLM recommending that the ONRR assess late payment 
penalties for the period between the last day of the continued 
operation year to which the advance royalty will apply and the date 
that the application to pay advance royalty in lieu of continued 
operation is actually received;
    (ii) The operator/lessee may not qualify to obtain rights to 
another existing or new lease as described at Sec.  3472.1-2(e); or
    (iii) Cancellation of the lease as provided at Sec.  3483.2(c).
    (c) Calculation of coal value for advance royalty purposes. For 
advance royalty purposes, the value of the Federal coal will be 
calculated by ONRR in accordance with applicable regulations.
    (d) Royalty rate used for calculation of advance royalty. (1) The 
royalty rate specified in the lease document will be used for 
calculation of advance royalty for a lease.
    (2) The advance royalty rate for an LMU is 8 percent where the 
Federal LMU recoverable coal reserves contained in the LMU will be 
recovered only by underground mining operations and not less than 12\1/
2\ percent where the Federal LMU recoverable coal reserves contained in 
the LMU will be recovered by mining operations other than underground 
mining. For an LMU that contains Federal LMU recoverable coal reserves 
that are recoverable by a combination of underground and other

[[Page 49100]]

mining methods, the advance royalty rate is not less than 12\1/2\ 
percent.
    (e) Allowable number of years to pay advance royalty. (1) The 
aggregate number of continued operation years during which the BLM may 
accept advance royalty in lieu of continued operation for a Federal 
coal lease or LMU may not exceed 20. For any continued operation year 
when advance royalty is paid in lieu of continued operation, regardless 
of the amount of the advance royalty paid, the BLM will count such 
continued operation year against the 20-year maximum number of 
continued operation years for which advance royalty may be paid.
    (2)(i) When an LMU is formed, the BLM will determine the maximum 
number of continued operation years for which advance royalty in lieu 
of continued operation during the term of the LMU may be accepted. 
Subsequent modification of the LMU does not change this number. The 
number of continued operation years for which the BLM may approve an 
LMU operator to pay advance royalty in lieu of continued operation is 
equal to number of continued operation years for the Federal coal lease 
in the LMU that has the greatest number of remaining continued 
operation years. For example, if an LMU is formed that contains two 
Federal coal leases. One Federal coal lease has 20 remaining continued 
operation years for which the BLM will accept advance royalty, and the 
other Federal coal lease has already paid advance royalty for 7 
continued operation years, with 13 additional continued operation years 
for which the BLM will accept advance royalty. In this example, the LMU 
would have a maximum of 20 continued operation years for which the BLM 
may accept advance royalty.
    (ii) A continued operation requirement that has been met by the 
payment of advance royalty in lieu of continued operation for a Federal 
lease before the lease's inclusion in an LMU will be credited to the 
LMU's continued operation requirement. However, the advance royalty 
paid in lieu of continued operation will be credited to the LMU only if 
it has not already been credited against production royalty for the 
Federal lease as provided at 30 CFR part 1218.
    (f) Failure to pay advance royalty. * * *
    (g) Tonnage basis for advance royalty payment. (1) Determination of 
the tonnage base. If the payment of advance royalty has been authorized 
by the BLM for a lease or LMU, the BLM will determine at the end of a 
continued operation year the amount of coal, measured in tons, which 
the ONRR will use to calculate the value of the advance royalty 
payment. The amount of coal that the BLM determines and authorizes as 
the basis for paying advance royalty for a continued operation year is 
called the advance royalty tonnage.
    (2) Calculation methods for a lease. During the first 2 continued 
operation years, the BLM will use a 1-year calculation method to 
determine the advance royalty tonnage for a lease, as described in 
paragraph (g)(2)(i) of this section. The BLM will provide the advance 
royalty tonnage information to the ONRR for determining the value of 
the advance royalty payment. Beginning in the third continued operation 
year, the BLM will use two calculation methods to determine the advance 
royalty tonnage for a lease. The tonnage derived from the calculation 
method that results in the lesser tonnage will then be provided to the 
ONRR for determining the value of the advance royalty payment. The 
maximum advance royalty tonnage for any continued operation year will 
not exceed the commercial quantities amount for the lease. The two 
calculation methods are:
    (i) The 1-year method. The advance royalty tonnage is determined by 
subtracting the amount of coal actually produced from a lease during 
the continued operation year from the commercial quantities amount for 
the lease for the same continued operation year.
    (ii) The 3-year method. The advance royalty tonnage is determined 
by adding the amount of coal produced from a lease during a continued 
operation year for which payment of advance royalty is authorized to 
the amount of coal produced in each of the 2 previous continued 
operation years and subtracting that amount from the sum of the annual 
commercial quantities amounts for the lease for the same 3 continued 
operation years.
    (3) Calculation methods for an LMU. The BLM will use two 
calculation methods to determine the advance royalty tonnage for an 
LMU, except that the calculation of advance royalty tonnage will be 
prorated to reflect the percentage of the total LMU recoverable coal 
reserves that are Federal recoverable coal reserves. The BLM will 
provide to the ONRR the tonnage derived from the calculation method 
that results in the lowest advance royalty tonnage for determining the 
value of the advance royalty payment. The maximum advance royalty 
tonnage for any continued operation year for an LMU will not exceed the 
sum of the commercial quantities amounts for all the Federal coal 
leases in the LMU. The two calculation methods are:
    (i) The 1-year method. The advance royalty tonnage is determined by 
first subtracting the amount of coal produced from the LMU during the 
LMU continued operation year, including all coal production from 
Federal coal leases and non-Federal lands in the LMU, from the LMU 
commercial quantities amount for the same continued operation year. To 
account for the recoverable coal reserve under Federal coal leases, 
take the difference between the LMU commercial quantities amount and 
LMU production from the previous calculation and multiply that by the 
sum of the commercial quantities amounts for all the Federal coal 
leases within the LMU. This amount is then divided by the commercial 
quantities amount for the entire LMU.
    (ii) The 3-year method. The advance royalty tonnage is determined 
by adding the amount of coal produced from the LMU during the continued 
operation year for which the payment of advance royalty is authorized 
and the amount of coal produced in the 2 previous continued operation 
years and subtracting that amount from the sum of the commercial 
quantities amounts for the LMU for the continued operation year for 
which the payment of advance royalty is authorized and the 2 previous 
continued operation years. To account for the recoverable coal reserve 
under Federal coal leases only, take the difference between the sum of 
the LMU commercial quantities amounts for the 3 specified continued 
operation years and the cumulative actual LMU production during the 
same 3 years from the previous calculation and multiply that by the sum 
of the commercial quantities amounts for all the Federal coal leases 
within the LMU during the same 3 years. This amount is then divided by 
the sum of the commercial quantities amounts for the entire LMU during 
the same 3 years.
    (h) Ceasing to accept advance royalties in lieu of continued 
operation. The authorized officer may disallow the payment of advance 
royalty in lieu of continued operation for a lease or LMU after giving 
the lessee or LMU operator 6-months' advance notice.
0
32. Revise Sec.  3483.6 to read as follows:


Sec.  3483.6  Special logical mining unit rules.

    (a) Production requirement. The BLM will apply production of either 
Federal or non-Federal recoverable coal reserves, or a combination 
thereof, from anywhere within an LMU toward satisfaction of the 
requirements for achieving diligent development and continued operation 
for the LMU.

[[Page 49101]]

Production from non-Federal resources may be credited toward diligent 
development of the LMU only if such production occurs after the non-
Federal resources are approved by the BLM to be included in the LMU.
    (b) Diligence date. Increasing or decreasing the size of an LMU 
will not change the date for achieving diligent development.
    (c) Relationship to lease-specific continued operation 
requirements. The LMU continued operation requirement must be satisfied 
independently of whether the Federal coal leases within the LMU produce 
sufficient coal to meet the individual lease's continued operation 
requirements that would apply if the leases were not in the LMU.

Subpart 3487--Logical Mining Unit

0
33. Revise Sec.  3487.1 to read as follows:


Sec.  3487.1  Logical mining units (LMU)--general considerations.

    (a) An LMU shall become effective only upon approval of the 
authorized officer. The effective date for an LMU may be established by 
the authorized officer between the date that the authorized officer 
receives an application for LMU approval and the date the authorized 
officer approves the LMU. The effective date of the LMU approval shall 
be determined by the authorized officer in consultation with the LMU 
applicant. An LMU may be enlarged by the addition of other Federal coal 
leases or with interests in non-Federal coal deposits, or both, in 
accordance with paragraph (g) of this section. An LMU may be diminished 
by creation of other separate Federal leases or LMU's in accordance 
with Sec.  3487.6 of this subpart.
    (b) (1) The BLM may direct, or an operator/lessee may initiate, the 
establishment of an LMU containing only Federal coal leases issued 
after August 4, 1976.
    (2) The BLM may direct, or an operator/lessee may initiate, the 
establishment of an LMU containing Federal coal leases issued before 
August 4, 1976, provided that the operators/lessees consent to making 
all such Federal leases within the LMU subject to the LMU stipulations 
and the regulations of this part, for:
    (i) Submission of a resource recovery and protection plan;
    (ii) An initial LMU term of 40 years;
    (iii) Exhaustion of LMU recoverable coal reserves;
    (iv) Diligent development;
    (v) Continued operation;
    (vi) Maximum economic recovery;
    (vii) Advance royalty; and
    (viii) Royalty reporting periods (but not royalty rates).
    (3) The terms of a Federal lease in an LMU will be amended so that 
the lease terms and conditions are consistent with the stipulations 
required for the approval of the LMU under section 3487.4.
0
34. Add Sec. Sec.  3487.2 through 3487.10 to read as follows:

Sec.
* * * * *
3487.2 LMU application.
3487.3 LMU Consultation.
3487.4 Stipulations.
3487.5 LMU approval criteria.
3487.6 LMU decision.
3487.7 LMU modifications.
3487.8 LMU operations.
3487.9 LMU termination.
3487.10 Extension of the period of an LMU.


Sec.  3487.2  LMU application.

    An operator/lessee must submit five copies of an LMU application to 
the authorized officer if the operator/lessee is applying on his own 
initiative to combine lands into an LMU, or if directed to establish an 
LMU by the authorized officer in accordance with paragraph (b) of this 
section. Such application shall include the following:
    (a) Name and address of the designated operator/lessee of the LMU.
    (b) A list of all lands to be included in the LMU; and
    (1) The names and addresses of all surface land owners that hold an 
interest in the lands within the LMU and the legal land description of 
their respective tracts;
    (2) The names and addresses of all entities that hold or control an 
interest in the mineral rights to the land that are within the LMU, a 
description of the mineral rights, and the legal land description of 
their respective mineral rights or interests, including identification 
of each lease or agreement by serial number or other identifier;
    (3) Identification of the coal beds proposed to be included in and 
excluded from the LMU;
    (4) A narrative that describes and quantifies the coal reserve 
base, the minable reserve base, and the recoverable coal reserves 
within the LMU, categorized by coal bed and mineral ownership for all 
minable coal within the LMU boundary. The applicant must also provide a 
narrative describing how the minability of the coal was determined; and
    (5) A narrative that describes and quantifies Federal coal that is 
proposed to be excluded from the LMU, including a discussion of the 
rationale for excluding particular coal beds or areas.
    (c) Documents and related information supporting a finding of 
effective control of the lands to be included in the LMU.
    (1) For all of the lands that are within the proposed LMU boundary, 
the applicant must submit copies of all of the surface owner 
agreements.
    (2) For all of the lands within the proposed LMU that include 
recoverable coal reserves, the applicant must submit copies of all 
documents that show that the LMU applicant has effective control of the 
surface and the right to enter and mine.
    (d) A resource recovery and protection plan that includes all lands 
that are proposed for inclusion in the LMU and which complies with the 
requirements of Sec.  34821.
    (e) Any other information required by the authorized officer.
    (f) If any confidential information is included in the submittal 
and is identified as such by the operator/lessee, it shall be treated 
in accordance with Sec.  3481.3 of this title.


Sec.  3487.3  LMU Consultation.

    (a) Prior to approval, the authorized officer shall consult with 
the operator/lessee about any Federal recoverable coal reserves within 
the LMU that the operator/lessee does not intend to mine and any 
Federal recoverable coal reserves that the operator/lessee intends to 
relinquish. The authorized officer shall also consult with the 
operator/lessee about Federal lease revisions to make the time periods 
for resource recovery and protection plan submittals, the 40-year LMU 
recoverable coal reserves exhaustion requirement, and diligent 
development, continued operation, advance royalty and Federal rental 
and royalty collection requirements applicable to each producing 
Federal lease consistent with the LMU stipulations. The BLM will also 
consult with the operator/lessee about Federal lease revisions to make 
the time periods for resource recovery and protection plan submissions, 
the LMU initial 40-year term, and diligent development, continued 
operation, advance royalty, and Federal rental and royalty collection 
requirements applicable to each producing Federal lease in the LMU, 
consistent with the LMU stipulations.
    (b) The public participation procedures of Sec.  3481.2 of this 
title shall be completed prior to approval of an LMU.


Sec.  3487.4  Stipulations.

    Prior to the approval of an LMU, the authorized officer shall 
notify the operator/lessee and responsible officer

[[Page 49102]]

of the surface managing agency of stipulations required for the 
approval of the proposed LMU. The LMU stipulations shall provide for:
    (a) A schedule for the achievement of diligent development and 
continued operation for the LMU. The schedule shall reflect the date 
for achieving diligent development and maintaining continued operation 
of the individual Federal leases included in the LMU, consistent with 
the rules of this part. An operator/lessee may request to pay advance 
royalty in lieu of continued operation in accordance with Sec.  
3482.1(a) of this title.
    (b) Uniform reporting periods for Federal rental and royalty on 
Federal leases.
    (c) The revision, if necessary, of terms and conditions of the 
individual Federal leases included in the LMU. The terms and conditions 
of the Federal lease, except for Federal royalty rates, must be amended 
so that they are consistent with the stipulations of the LMU.
    (d) Estimates of the Federal LMU recoverable coal reserves, and 
non-Federal LMU recoverable coal reserves, using data acquired by 
generally acceptable exploration methods.
    (e) Beginning the 40-year period in which the reserves of the 
entire LMU must be mined, on one of the following dates--
    (1) The effective date of the LMU, if any portion of the LMU is 
producing on that date; or
    (2) After the LMU is approved, the date coal is first produced from 
any portion of the LMU.
    (f) Any other condition that the authorized officer determines to 
be necessary for the efficient and orderly operation of the LMU.


Sec.  3487.5  LMU approval criteria.

    The authorized officer may approve an LMU if it meets the following 
criteria:
    (a) The LMU fully meets the LMU definition.
    (b) The LMU application demonstrates that mining operations on the 
LMU, which may consist of a series of excavations, will:
    (1) Achieve maximum economic recovery of Federal recoverable coal 
reserves within the LMU. In determining whether the proposed LMU meets 
this requirement, BLM, as appropriate, will consider:
    (i) The amount of coal reserves recoverable from the proposed LMU 
compared to the amount recoverable if each lease were developed 
individually; and
    (ii) Any other factors BLM finds relevant to this requirement;
    (2) Facilitate development of the coal reserves in an efficient, 
economical, and orderly manner. In determining whether the proposed LMU 
meets this requirement, BLM, as appropriate, will consider:
    (i) The potential for independent development of each lease 
proposed to be included in the LMU;
    (ii) The potential for inclusion of the leases in question in 
another LMU;
    (iii) The availability and utilization of transportation and access 
facilities for development of the LMU as a whole compared to 
development of each lease separately;
    (iv) The mining sequence for the LMU as a whole compared to 
development of each lease separately; and
    (v) Any other factors BLM finds relevant to this requirement; and
    (3) Provide due regard to conservation of coal reserves and other 
resources. In determining whether the proposed LMU meets this 
requirement, BLM, as appropriate, will consider:
    (i) The effects of developing and operating the LMU as a unit; and
    (ii) Any other factors BLM finds relevant to this requirement.
    (c) All single Federal leases, portions of which are included in 
more than one LMU, must be segregated into two or more Federal leases. 
If only a portion of a Federal lease is included in an LMU, the 
remaining land must be segregated into another Federal lease. The 
operator/lessee may apply to relinquish any such portion of a Federal 
lease under 43 CFR 3452.1.
    (d) The operator/lessee has agreed to the LMU stipulations required 
by the authorized officer for approval of the LMU.
    (e) The LMU does not exceed 25,000 acres, including both Federal 
and non-Federal lands.
    (f) A lease that has not produced commercial quantities of coal 
during the first 8 years of its diligent development period can be 
included in an LMU only if at the time the LMU application is 
submitted:
    (1) A portion of the LMU under consideration is included in a SMCRA 
permit approved under 30 U.S.C. 1256; or
    (2) A portion of the LMU under consideration is included in an 
administratively complete application for a SMCRA permit.
    (g) A resource recovery and protection plan for the LMU or LMU 
modification must be approved by the BLM at the same time as or before 
the LMU that it supports.


Sec.  3487.6  LMU decision.

    The authorized officer will state in writing the reasons for the 
decision on an LMU application.


Sec.  3487.7  LMU modifications.

    (a) The boundaries of an LMU may be modified either upon 
application by the operator/lessee and approval of the authorized 
officer after consultation with the responsible officer of the surface 
managing agency, or by direction of the authorized officer.
    (b) Upon application by the operator/lessee, an LMU may be enlarged 
by the addition of other Federal coal leases or with interests in non-
Federal coal deposits, or both. The LMU boundaries may also be enlarged 
as the result of the enlargement of a Federal lease in the LMU, 
pursuant to 43 CFR part 3432. An LMU may be diminished by creation of 
other separate Federal leases or LMU's or by the relinquishment of a 
Federal lease or portion thereof, pursuant to 43 CFR part 3452.
    (c) In considering an application for the modification of an LMU, 
the authorized officer must consider modifying the LMU stipulations, 
including the production requirement for commercial quantities.
    (d) A change in the LMU recoverable coal reserves will be effective 
either:
    (1) When the BLM approves an LMU modification; or
    (2) When the BLM determines that the LMU recoverable coal reserves 
have changed due to new geologic information.
    (e) The 40-year period of an LMU is not extended by a modification 
of the LMU. The period of an LMU may only be extended by application 
under Sec.  3487.10.


Sec.  3487.8  LMU operations.

    An LMU shall be administered in accordance with the following 
criteria:
    (a) Where production from non-Federal lands in the LMU is the 
basis, in whole or in part, for satisfaction of the requirements for 
diligent development or continued operation, the operator/lessee shall 
provide a certified report of such production, as determined by the 
authorized officer. The certified report shall include a map showing 
the area mined and the amount of coal mined.
    (b) Operators/lessees must comply with the diligent development, 
continued operation, and advance royalty requirements contained at 
Sec. Sec.  3483.1 through 3483.6 of this title.
    (c) Operators/lessees must comply with the LMU stipulations.

[[Page 49103]]

Sec.  3487.9  LMU termination.

    (a) The BLM may terminate an LMU by administrative decision if the 
operator/lessee or LMU operator:
    (1) Fails to comply with the LMU stipulations;
    (2) Fails to submit a resource recovery and protection plan or a 
required resource recovery and protection plan modification:
    (3) Fails to achieve diligent development within the 10-year 
diligent development period;
    (4) Fails to maintain the LMU in continued operation or to pay 
advance royalty in lieu of continued operation;
    (5) Fails to secure an extension of the 40-year mine out period, 
while continuing to sever coal beyond the 40th year of the LMU 
agreement;
    (6) Fails to comply with other requirements of the LMU agreement, 
such as the requirement to pay royalty or to comply with a notice of 
noncompliance; or
    (7) Produces all recoverable Federal coal within the LMU.
    (b) The BLM will not terminate an LMU under paragraph (a) of this 
section unless it first provides the LMU operator/lessee and other 
persons with an interest in the LMU an opportunity to submit their 
views, together with supporting documentation, on whether the LMU 
should be terminated.
    (c) Once an LMU is terminated, any Federal coal lease that was in 
the LMU will revert to the terms and conditions of the lease as if the 
LMU never existed.


Sec.  3487.10  Extension of the period of an LMU.

    (a) The designated LMU operator/lessee may apply to the BLM to 
extend the term of an LMU beyond the initial 40-year period.
    (b) An application to extend an LMU term beyond the initial 40-year 
period must provide sufficient information for the BLM to determine 
whether the extension complies with the provisions at either Sec.  
3487.5(b)(1) or (b)(2). The BLM may require additional information from 
the applicant to make the determination.
    (c) The BLM may approve an extension of the LMU term whenever such 
an extension complies with either Sec.  3487.5(b)(1) or (b)(2).
    (d) The LMU term may be extended by increments of not more than 10 
years.

[FR Doc. 2013-19198 Filed 8-9-13; 8:45 am]
BILLING CODE 4310-84-P