[Federal Register Volume 81, Number 61 (Wednesday, March 30, 2016)]
[Notices]
[Pages 17720-17728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-07138]


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DEPARTMENT OF THE INTERIOR

Bureau of Land Management

[16X.LLWO320000.L13200000.PP0000]


Notice of Intent To Prepare a Programmatic Environmental Impact 
Statement To Review the Federal Coal Program and To Conduct Public 
Scoping Meetings

AGENCY: Bureau of Land Management, Interior.

ACTION: Notice.

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SUMMARY: In compliance with the National Environmental Policy Act of 
1969, as amended (NEPA), the Bureau of Land Management (BLM), 
Washington Office, intends to prepare a Programmatic Environmental 
Impact Statement (EIS) to review the Federal coal program.
    This Notice of Intent begins the process of defining the scope of 
the Programmatic EIS by providing background on the Federal coal 
program and identifying the issues that may be addressed in the 
Programmatic EIS. This Notice informs the public about: Concerns that 
have been raised about the Federal coal program; issues that are 
expected to be assessed in the Programmatic EIS; and potential 
modifications to the Federal coal program suggested by stakeholders 
during the listening sessions that could be considered in the 
Programmatic EIS. This Notice of Intent also announces plans to conduct 
public scoping meetings, invites public participation in the scoping 
process, and solicits public comments for consideration in establishing 
the scope and content of the Programmatic EIS.

DATES: The BLM will invite interested agencies, States, American Indian 
tribes, local governments, industry, organizations and members of the 
public to submit comments or suggestions to assist in identifying 
significant issues and in determining the scope of this Programmatic 
EIS.
    The BLM will be holding public scoping meetings to obtain comments 
on the Programmatic EIS and plans to hold these meetings in the 
following locations: Casper, WY; Grand Junction, CO; Knoxville, TN; 
Pittsburgh, PA; Salt

[[Page 17721]]

Lake City, UT; and Seattle, WA. The BLM will announce the specific 
dates and locations of the scoping meetings at least 15 days in advance 
through local media, newspapers, and the project Web site at: http://www.blm.gov/wo/st/en/prog/energy/coal_and_non-energy/details_on_coal_peis.html. In addition, the BLM will consider all 
written comments received or postmarked during the public comment 
period on scoping, which will close 30 days after the final public 
meeting.

ADDRESSES: You may submit written comments by the following methods:
     Email: [email protected]. This is 
the preferred method of commenting.
     Mail, personal, or messenger delivery: Coal Programmatic 
EIS Scoping, Bureau of Land Management, 20 M St. SE., Room 2134LM, 
Washington, DC 20003.

FOR FURTHER INFORMATION CONTACT: Mitchell Leverette, Chief, Division of 
Solid Minerals, email: [email protected], telephone: 202-912-7113, or 
visit the Coal Programmatic EIS Web site at: http://www.blm.gov/wo/st/en/prog/energy/coal_and_non-energy/details_on_coal_peis.html.

SUPPLEMENTARY INFORMATION: On January 15, 2016, the Secretary of the 
Interior issued Order No. 3338 directing the BLM to conduct a broad, 
programmatic review of the Federal coal program it administers through 
preparation of a Programmatic EIS under NEPA. 42 U.S.C. 4321 et seq. 
The Order was issued in response to a range of concerns raised about 
the Federal coal program, including, in particular, concerns about 
whether American taxpayers are receiving a fair return from the 
development of these publicly owned resources; concerns about market 
conditions, which have resulted in dramatic drops in coal demand and 
production in recent years, with consequences for coal-dependent 
communities; and concerns about whether the leasing and production of 
large quantities of coal under the Federal coal program is consistent 
with the Nation's goals to reduce greenhouse gas emissions to mitigate 
climate change. In light of these issues, the Programmatic EIS will 
identify and evaluate potential reforms to the Federal coal program. 
This review will enable the Department to consider how to modernize the 
program to allow for the continued development of Federal coal 
resources, as appropriate, while addressing the substantive issues 
raised by the public, other stakeholders, and the Department's own 
review of the comments it has received during recent listening sessions 
held last year in Washington, DC; Billings, Montana; Gillette, Wyoming; 
Denver, Colorado; and Farmington, New Mexico.

Background and Need for Agency Action

A. Overview of Federal Coal Program

    Under the Mineral Leasing Act of 1920, as amended, 30 U.S.C. 181 et 
seq., and the Mineral Leasing Act for Acquired Lands of 1947, as 
amended, 30 U.S.C. 351 et seq., the BLM is responsible for the leasing 
of Federal coal and regulation of the development of that coal on 
approximately 570 million acres of the 700 million acres of mineral 
estate that is owned by the Federal government. This includes Federal 
mineral rights on Federal lands and Federal mineral rights located 
under surface lands with non-Federal ownership. Under the authority of 
the Mineral Leasing Act, the BLM administers leasing and monitors coal 
production. Other Departmental bureaus, in particular the Office of 
Surface Mining Reclamation and Enforcement (OSMRE) and the Office of 
Natural Resources Revenue (ONRR), also take actions related to coal 
mining on Federal lands. The OSMRE, and those States that have 
regulatory primacy under the Surface Mining Control and Reclamation Act 
of 1977 (SMCRA), permit coal mining and reclamation activities, and 
monitor reclamation and reclamation bonding actions. The ONRR collects 
and audits all payments required under the lease, including bonus bids, 
royalties, and rental payments, and distributes those funds between the 
Federal Treasury and the States where coal resources are located.
1. Federal Coal Leasing and Production
    On average, over the last few years, about 41 percent of the 
Nation's annual coal production came from Federal land. Federal coal 
produced from the Powder River Basin in Montana and Wyoming accounts 
for over 85 percent of all Federal coal production. Federal coal was 
used to generate an estimated 14 percent of the Nation's electricity in 
2015. Coal is also used for other critical processes, including making 
steel (metallurgical coal).
    As of FY2015, the BLM administered 306 coal leases, covering 
482,691 acres in 11 States, with an estimated 7.75 billion tons of 
recoverable Federal coal. Over the last decade (2006-2015), the BLM 
sold 32 coal leases and managed leases that produced approximately 4.3 
billion tons of coal and resulted in $9.55 billion in revenue 
collections by the United States.
    The U.S. Energy Information Administration (EIA) estimates total 
U.S. coal production in 2015 was about 895 million short tons (MMst), 
10 percent lower than in 2014 and the lowest level since 1986.\1\ EIA 
projects that coal production will fall by another 12 percent in 2016, 
then rise by 2 percent in 2017.\2\ The approximately 7.75 billion tons 
of recoverable reserves of Federal coal currently under lease is 
estimated to be sufficient to continue production at current levels for 
20 years, averaged across all leases, and these reserves would be 
sufficient to cover production, on average, for even longer if coal 
production declines, as is projected.
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    \1\ U.S. EIA, Short Term Energy Outlook: Coal (Mar. 8, 2016) 
(http://www.eia.gov/forecasts/steo/report/coal.cfm); U.S. EIA, Today 
in Energy: Coal Production and Prices Decline in 2015 (Jan. 8, 2016) 
(http://www.eia.gov/todayinenergy/detail.cfm?id=24472). Note that 
the EIA data referenced in this Notice is more recent than the EIA 
data referenced in the Secretarial Order.
    \2\ U.S. EIA, Short Term Energy Outlook: Coal (Mar. 8, 2016) 
(http://www.eia.gov/forecasts/steo/report/coal.cfm).
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    EIA estimates that U.S. coal exports decreased 23 MMst (24 percent) 
from 2014 levels to 74 MMst in 2015, and EIA expects the current global 
coal market trends to continue.\3\ EIA forecasts that coal exports will 
decline by an additional 10 MMst (13 percent) in 2016 and by 1 MMst (2 
percent) in 2017.\4\
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    \3\ U.S. EIA, Short Term Energy Outlook: Coal (Mar. 8, 2016) 
(http://www.eia.gov/forecasts/steo/report/coal.cfm).
    \4\ U.S. EIA, Short Term Energy Outlook: Coal (Mar. 8, 2016) 
(http://www.eia.gov/forecasts/steo/report/coal.cfm).
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    In terms of employment and revenues to the States, coal mining 
employed almost 90,000 people in 2012. More recently, there were an 
estimated 74,000 direct jobs in coal mining as of May 2014, including 
roughly 6,500 in Wyoming.\5\ Revenues from Federal coal provided 
Wyoming approximately $556 million in FY2014. Other States received the 
following approximate amounts: Utah--$44 million; Montana--$43 million; 
Colorado--$36 million; and New Mexico--$16 million.
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    \5\ Bureau of Labor Statistics, May 2014 National Industry-
Specific Occupational Employment and Wage Estimates; NAICS 212100--
Coal Mining (http://www.bls.gov/oes/current/naics4_212100.htm); 
Wyoming Department of Workforce Services, Wyoming Labor Market 
Information (http://doe.state.wy.us/lmi/CES/nawy14.htm).
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2. Federal Coal Program
    The current BLM coal leasing program includes land use planning, 
processing applications (e.g., for exploration licenses and lease 
sales), estimating the value of proposed leases, holding lease

[[Page 17722]]

sales, and post-leasing actions (e.g., production verification, lease 
and production inspection and enforcement, royalty reductions, and bond 
review).
    The Federal Government receives revenue from coal leasing in three 
ways: (1) A bonus that is paid at the time BLM issues a lease; (2) 
Rental fees; and (3) Production royalties. The royalty rates are set by 
regulation at a fixed 8 percent for underground mines and not less than 
12.5 percent for surface mines. All receipts from a lease are shared 
with the State in which the lease is located (51 percent to the Federal 
Government and 49 percent to the State).
    The BLM's planning process for Resource Management Plans, supported 
by environmental analysis under NEPA, identifies areas that are 
potentially available to be considered for coal leasing. The planning 
process considers, among other things, the impacts of a ``reasonably 
foreseeable development scenario,'' but it does not directly authorize 
any coal leasing or determine which coal will actually be leased.
    The Federal Coal Leasing Amendments Act of 1976 (FCLAA), which 
amended Section 2 of the Mineral Leasing Act of 1920, requires that, 
with limited exceptions, Federal lands available for coal leasing be 
sold by competitive bid, with the BLM receiving ``fair market value'' 
for the lease. While multiple bids are not required, all successful 
bids must equal or exceed the estimated pre-sale fair market value for 
the lease, as calculated by the BLM. Competitive leasing is not 
required for: (1) Preference right lease applications for owners of 
pre-FCLAA prospecting permits; and (2) Modifications of existing 
leases, where Congress has authorized the Secretary to allow up to 960 
acres (increased from 160 acres by the Energy Policy Act of 2005) of 
contiguous lands for noncompetitive leasing by modifying an existing 
lease.
    The BLM issued coal leasing regulations in 1979 that provided for 
two separate competitive coal leasing processes: (1) Regional leasing, 
where the BLM selects tracts within a region for competitive sale; and 
(2) Leasing by application, where an industry applicant nominates a 
particular tract of coal for competitive sale.
    Regional coal leasing requires the BLM to select potential coal 
leasing tracts based on land use planning, expected coal demand, and 
potential environmental and economic impacts.\6\ This process includes 
use of a Federal/State advisory board known as a Regional Coal Team,\7\ 
to provide input on leasing decisions. The regional leasing system has 
not been used since 1990, and currently all BLM coal leasing is done by 
application.\8\ Leasing by application begins with the submission of an 
application to lease a tract of coal identified by the applicant.\9\ 
The BLM reviews the application for completeness, to ensure that it 
conforms to existing land use plans, and to ensure that it contains 
sufficient geologic data to determine the fair market value of the 
coal. The agency then prepares an analysis under NEPA (either an 
Environmental Assessment or an EIS) and seeks public comment on the 
proposed lease sale. Through this process, the BLM evaluates 
alternative tract configurations to maximize competitiveness and value, 
and to avoid bypassing Federal coal. The BLM also consults with other 
appropriate Federal, State, and tribal government agencies, and the BLM 
determines whether the surface owner consents to leasing in situations 
where the surface is not administered by the BLM. Preparations for the 
actual lease sale begin with the BLM formulating, after obtaining 
public comment, a pre-sale estimate of the fair market value of the 
coal. This estimate is kept confidential and is used to evaluate the 
bids for the lease ``bonus'' received during the sale. Sealed bids are 
accepted prior to the date of the sale and are publicly announced 
during the sale. The winning bid is the highest bid that meets or 
exceeds the coal tract's presale estimated fair market value, assuming 
that the bidder meets all eligibility requirements and has paid the 
appropriate fees and payments.
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    \6\ 43 CFR part 3420.
    \7\ The BLM regulations require a Regional Coal Team to be 
established for each coal production region, comprised of 
representatives from the BLM and the Governors of each State in the 
region. The Regional Coal Teams are to guide the coal planning 
process for each coal production region, serve as the forum for BLM 
and State consultation, and make recommendations on coal leasing 
levels. 43 CFR 3400.4.
    \8\ While the Powder River Basin (PRB) coal production region 
was decertified in 1992, the PRB regional coal team is still in 
place and meets periodically to review regional activity and make 
recommendations on coal leasing in the region.
    \9\ See 43 CFR subpart 3425.
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    There are two separate bonding requirements for Federal coal 
leases. The BLM requires a bond adequate to ensure compliance with the 
terms and conditions of the lease, which must cover a portion of 
potential liabilities associated with the bonus bid, rental fees, and 
royalties. In addition, under SMCRA, the OSMRE or the State with 
regulatory primacy requires sufficient bonding to cover anticipated 
reclamation costs.
    A Federal coal lease has an initial term of 20 years, but it may be 
terminated after 10 years if the coal resources are not diligently 
developed. 30 U.S.C. 207. Existing leases that have met their diligence 
requirements may be renewed for additional 10 year terms following the 
initial 20 year term.
3. Previous Comprehensive Reviews
    The Department has previously conducted two separate, comprehensive 
reviews of the Federal coal program. In the late 1960s, there were 
serious concerns about speculation in the coal leasing program. A BLM 
study discovered a sharp increase in the total Federal acreage under 
lease and a consistent decline in coal production. In response, the 
Department undertook the development of a planning system to determine 
the size, timing, and location of future coal leases, and the 
preparation of a Programmatic EIS for the entire Federal coal leasing 
program. Beginning in February 1973, the short-term actions included a 
complete moratorium on the issuance of new coal prospecting permits, 
and a moratorium with limited exceptions on the issuance of new Federal 
coal leases. New leases were issued only to maintain existing mines or 
to supply reserves for production in the near future, where ``near 
future'' meant that development and production were to commence within 
3 and 5 years, respectively. The moratorium was scaled back over time, 
but was not completely lifted until 1981, after the Programmatic EIS 
had been completed, a new leasing system had been adopted through 
regulation, and litigation was resolved.
    In 1982, concerns about the Federal coal program arose again, this 
time related to allegations that the Government did not receive fair 
market value from a large lease sale in the Powder River Basin under 
the new procedures adopted as part of the programmatic review in the 
1970s. Among other reports on the issue, in May 1983, the Government 
Accountability Office (GAO) issued a report concluding that the 
Department had received roughly $100 million less than it should have 
for the leases sold. In response, in July 1983, Congress directed the 
Secretary to appoint members to a commission, known as the Linowes 
Commission, to investigate fair market value policies for Federal coal 
leasing. Congress also, in the 1984 Appropriations Act, directed the 
Office of Technology Assessment (OTA) to study whether the Department's 
coal leasing program was compatible with the nationally mandated 
environmental protection goals.

[[Page 17723]]

    As part of the 1984 Appropriations Bill, Congress imposed a 
moratorium on the sale or lease of coal on public lands, subject to 
certain exceptions, starting in 1983 and ending 90 days after 
publication of the Linowes Commission's report. The Linowes Commission 
published the Report of the Commission on Fair Market Value Policy for 
Federal Coal Leasing in February 1984. The OTA report, Environmental 
Protection in the Federal Coal Leasing Program, was released in May 
1984. The principal thrust of these reports was that the Department 
should: (1) Temper its pace of coal leasing; (2) Improve and better 
document its procedures for receiving fair market value; and (3) Take 
care to balance competing resource uses in making lease decisions.
    Interior Secretary William P. Clark extended the suspension of coal 
leasing (with exceptions for emergency leasing and processing 
preference right lease applications, among other things), while the 
Department completed its comprehensive review of the program. This 
review included proposed modifications to be made by the Department in 
response to the Linowes Commission and OTA reports. Secretary Clark 
announced on August 30, 1984, that the Department would prepare an EIS 
supplement to the 1979 Programmatic EIS for the Federal coal management 
program. The Department issued the Record of Decision for the 
Programmatic EIS supplement in January 1986, in the form of a 
Secretarial Issue Document. That document recommended continuation of 
the leasing program with modifications. In conjunction with those 
modifications, Interior Secretary Donald Hodel lifted the coal leasing 
moratorium in 1987.

B. Need for Comprehensive Review of Federal Coal Program

    On March 17, 2015, Secretary Jewell called for ``an honest and open 
conversation about modernizing the Federal coal program.'' As described 
above, the last time the Federal coal program underwent comprehensive 
review was in the mid-1980s, and market conditions, infrastructure 
development, scientific understanding, and national priorities have 
changed considerably since that time. The Secretary's call also 
responded to continued concerns from numerous stakeholders about the 
Federal coal program, including concerns raised by the GAO,\10\ the 
Department's Office of Inspector General (OIG),\11\ members of 
Congress, interested stakeholders, and the public. The concerns raised 
by the GAO and OIG centered on whether taxpayers are receiving fair 
market value from the sale of coal. Others raised concerns that the 
current Federal leasing structure lacks transparency and competition 
and is therefore not ensuring that the American taxpayer receives a 
fair return from Federal coal resources, while also raising questions 
regarding current market conditions for the coal industry generally and 
related implications for Federal resources. Stakeholders also 
questioned whether the leasing program results in over-supply of a 
commodity that has significant environmental and health impacts, 
including impacts on global climate change.
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    \10\ GAO, Coal Leasing: BLM Could Enhance Appraisal Process, 
More Explicitly Consider Coal Exports, and Provide More Public 
Information, GAO 14-140 (Dec. 2013).
    \11\ OIG, Coal Management Program, U.S. Department of the 
Interior, Report No.: CR-EV-BLM-0001-2012 (June 2013).
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    In response to the Secretary's call for a conversation to address 
these concerns, the BLM held 5 listening sessions regarding the Federal 
coal program in the summer of 2015. Sessions were held in Washington, 
DC; Billings, Montana; Gillette, Wyoming; Denver, Colorado; and 
Farmington, New Mexico. The Department heard from 289 individuals 
during the sessions and received more than 92,000 written comments 
before the comment period closed on September 17, 2015. The oral and 
written comments reflected several recurring themes:

     Concern about global climate change and the impact of 
coal production and use.
     Concern about the loss of jobs and local revenues if 
coal production is reduced.
     Support for increased transparency and public 
participation in leasing and royalty decisions and concern that the 
structure of the leasing program does not provide for adequate 
competition or a fair return to the taxpayer for the use of Federal 
resources.
     Support for increasing coal royalty rates because: (1) 
The royalty rate should account for the environmental costs of coal 
production; (2) The royalty rate should match the rate for offshore 
Federal leases; and (3) Taxpayers are not receiving a fair return.
     Support for maintaining or lowering coal royalty rates 
because: (1) The coal industry already pays more than its fair share 
and existing Federal rates are too high given current market 
conditions; (2) Raising rates will lower production and revenues; 
and (3) Raising rates will cost jobs and harm communities.
     Support for streamlining the current leasing process, 
so that the Federal coal program is administered in a way that 
better promotes economic stability and jobs, especially in coal 
communities which are already suffering from depressed economic 
conditions.

    Of these concerns, three aspects of the current Federal coal 
program received the most attention. First, numerous stakeholders are 
concerned that American taxpayers are not receiving a fair return on 
public coal resources. Second, many stakeholders are concerned that the 
Federal coal program conflicts with the Administration's climate policy 
and our national climate goals, making it more difficult for us to 
achieve those goals. Third, there are numerous and varying concerns 
about the structure of the Federal coal program in light of current 
market conditions, including how implementation of the Federal leasing 
program affects current and future coal markets, coal-dependent 
communities and companies, and the reclamation of mined lands. These 
three main concerns are addressed in more detail below.
1. Concerns About Fair Return
    In 2013, both GAO and OIG issued reports expressing concerns about 
the Federal coal program, particularly with respect to the leasing 
process and fair market value. In response, in 2014, the BLM developed 
new protocols and issued policy guidance, a manual, and a handbook to 
implement these changes. Nevertheless, stakeholders have expressed 
concerns that the BLM's response, while helpful, was insufficient to 
rectify fundamental weaknesses in the program with respect to fair 
return.\12\
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    \12\ See, e.g., Taxpayers for Common Sense, Federal Coal 
Leasing: Fair Market Value and a Fair Return for the American 
Taxpayer (Sept. 2013). (http://www.taxpayer.net/images/uploads/downloads/TCS_Federal_Coal_Leasing_Report_-_Final_-_Updated_10.4.13.pdf); Center for American Progress, Modernizing the 
Federal Coal Program (Dec. 2014) (https://cdn.americanprogress.org/wp-content/uploads/2014/12/FederalCoal.pdf); Headwaters Economics, 
An Assessment of U.S. Federal Coal Royalties (Jan. 2015) (http://headwaterseconomics.org/wphw/wp-content/uploads/Report-Coal-Royalty-Valuation.pdf); Center for American Progress, Cutting Subsidies and 
Closing Loopholes in the U.S. Department of the Interior's Coal 
Program (Jan. 6, 2015) (https://cdn.americanprogress.org/wp-content/uploads/2015/01/CoalSubs-brief2.pdf); Institute for Policy 
Integrity, Harmonizing Preservation and Production (June 2015) 
(http://policyintegrity.org/publications/detail/harmonizing-preservation-and-production/); Institute for Policy Integrity, 
Illuminating the Hidden Costs of Coal (Dec. 2015) (http://policyintegrity.org/publications/detail/hidden-costs-of-coal).
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    These concerns arise, at least in part, because there is currently 
very little competition for Federal coal leases. About 90 percent of 
lease sales receive bids from only one bidder, typically the operator 
of a mine adjacent to the new lease, given the investment required to

[[Page 17724]]

open a new mine. While the BLM conducts a peer-reviewed analysis to 
estimate a pre-sale fair market value of the coal and will not sell a 
lease unless the bid meets or exceeds that value, commenters have 
questioned whether an accurate fair market value can be identified in 
the absence of a truly competitive marketplace.
    Commenters also raised concerns about the royalty rates set in 
Federal leases, which are set by regulation at a fixed 8 percent for 
underground mines and not less than 12.5 percent for surface mines. 
Many stakeholders believe that these rates do not adequately compensate 
the public for the removal of the coal and the externalities associated 
with its use. Still others have suggested that the large volumes and 
relatively low costs of Federal coal, which currently represents 
approximately 41 percent of total domestic production, have the effect 
of artificially lowering market prices for coal, further reducing the 
amount of royalties received.
    Stakeholders also criticize the Federal coal program for obtaining 
even lower returns through certain types of leasing actions, such as 
lease modifications, and through royalty rate reductions, which may 
result in royalty rates as low as 2 percent. In addition, stakeholders 
have noted that the $100 acre minimum bid requirement established in 
the regulations is outdated, and although the minimum bid does not 
apply frequently, given fair market value requirements, there are 
situations in which it sets the floor for the bid price.
    Some stakeholders further suggest that a fair return to the 
taxpayer should also include compensation for externalities such as the 
environmental damage (or lost environmental benefits) from the removal 
and combustion of the coal.
2. Concerns About Market Conditions
    Stakeholders raised a variety of concerns about the implications of 
current and future coal market conditions. As reported by EIA, between 
2008 and 2013, U.S. coal production fell by 16 percent in total, as 
declining natural gas prices and other factors made coal less 
competitive as a fuel for generating electricity.\13\ In 2015, U.S. 
coal production was roughly 891 MMst, 11 percent lower than 2014, and 
the lowest level since 1986.\14\ World-wide demand for coal appears to 
be softening as well, with EIA estimating a 23 percent decline in total 
U.S. coal exports in 2015 from the previous year.\15\ As a result of 
these market trends, a number of mines in the U.S. have idled 
production, companies have asked the BLM to hold off on processing 
certain lease tracts for sale, several major coal companies have 
entered Chapter 11 bankruptcy, many coal miners have been laid off, and 
coal-dependent communities have suffered.\16\ The EIA and other 
projections of future coal production anticipate continuing declines.
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    \13\ U.S. EIA, Annual Energy Outlook 2015, 22 (Apr. 14, 2015).
    \14\ U.S. EIA, Short Term Energy Outlook: Coal (Feb. 9, 2016) 
(http://www.eia.gov/forecasts/steo/report/coal.cfm) ; U.S. EIA, Coal 
Production and Prices Decline in 2015 (January 8, 2016) (http://www.eia.gov/todayinenergy/detail.cfm?id=24472).
    \15\ U.S. EIA, Short Term Energy Outlook: Coal (Feb. 9, 2016) 
(http://www.eia.gov/forecasts/steo/report/coal.cfm); see also U.S. 
EIA, Coal Production and Prices Decline in 2015 (Jan. 8, 2016) 
(http://www.eia.gov/todayinenergy/detail.cfm?id=24472).
    \16\ See, e.g., Wall Street Journal, Pressure on Coal Industry 
Intensifies, B1 (Jan. 12, 2016).
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    Stakeholders have urged the BLM to modify the Federal coal program 
to take these significant market changes into account, although the 
recommended changes vary. Some suggest that the program should attempt 
to improve the economic viability of the coal industry by reducing 
royalties and streamlining the leasing and permitting processes. Others 
raise concerns that the program has contributed to low coal prices by 
incentivizing over-production through non-competitive sales that 
oversupply the market.
    Some have focused on how current market conditions threaten 
reclamation of lands disturbed by coal mining and may leave State and 
Federal governments with billions of dollars of unfunded reclamation 
liabilities. Specifically, many coal companies ``self-bond'' to meet 
reclamation bonding requirements, and some stakeholders have asserted 
that these companies may no longer have the funds to support 
reclamation activities, and/or they may attempt to shed reclamation 
obligations in bankruptcy.\17\ OSMRE currently estimates that there is 
over $3.6 billion in outstanding self-bonded reclamation liability in 
the United States.
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    \17\ See, e.g., In re Alpha Natural Resources, Inc., et al., 
Case No. 15-33896 (KRH) United States Bankruptcy Court, Eastern 
District of Virginia, Richmond Division (Alpha Resources bankruptcy 
filing) (Aug. 3, 2015) (http://www.kccllc.net/alpharestructuring); 
In re Arch Coal, Inc., et al, Case No. 16-40120-705, United States 
Bankruptcy Court, Eastern District of Missouri, Eastern Division 
(Arch Coal bankruptcy filing (Jan. 11, 2016) (http://www.archcoal.com/restructuring/).
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    Stakeholders also expressed a number of views regarding export of 
Federal coal. Some see export markets as a possible way to maintain or 
expand Federal coal production, while others view the production of 
coal for export as a less valuable activity than coal production for 
domestic use. A number of stakeholders expressed concern that exports, 
or the potential for exports, were not adequately considered as part of 
the leasing process.
3. Concerns About Climate Change
    The third broad category of concerns about the Federal coal program 
relates to its impacts on climate change. The United States has pledged 
under the United Nations Framework Convention on Climate Change to 
reduce its greenhouse gas (GHG) emissions by 26-28 percent below 2005 
levels by 2025. The Obama Administration has made, and is continuing to 
make, unprecedented efforts to reduce U.S. GHG emissions in line with 
this target through measures such as vehicle efficiency standards, the 
Clean Power Plan, energy efficiency standards, requirements to reduce 
methane reductions from oil and gas production, and many other 
measures. Numerous scientific studies indicate that reducing GHG 
emissions from coal use worldwide is critical to addressing climate 
change.\18\
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    \18\ See, e.g., McGlade and Ekins, The geographical distribution 
of fossil fuels unused when limiting global warming to 2 [deg]C, 
Nature, 517, 187-190 (Jan. 8, 2015) (finding that globally over 80% 
of current coal reserves should remain unused from 2010 to 2050 to 
meet the target of 2 degrees C).
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    As noted above, the Federal coal program is a significant component 
of overall U.S. coal production. In recent years, Federal coal has 
comprised about 41 percent of the coal produced in the U.S.\19\ When 
combusted, this Federal coal contributes roughly 10 percent of total 
U.S. GHG emissions.\20\
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    \19\ U.S. EIA, Sales of Fossil Fuels Produced from Federal and 
Indian Lands, FY 2003 through FY 2014 (July 17, 2015) (https://www.eia.gov/analysis/requests/federallands/) (quantity of Federal 
coal production in 2014 and percent of total U.S. coal production).
    \20\ Id.; U.S. EPA, Inventory of U.S. Greenhouse Gas Emissions 
and Sinks, 3-2 (April 2015) (http://www3.epa.gov/climatechange/Downloads/ghgemissions/US-GHG-Inventory-2015-Chapter-3-Energy.pdf) 
(quantity of U.S. emissions from coal in 2013).
---------------------------------------------------------------------------

    Many stakeholders highlighted the tension between producing very 
large quantities of Federal coal while pursuing policies to reduce U.S. 
GHG emissions substantially, including from coal combustion. They also 
stated that the current leasing system does not provide a way to 
systematically consider the climate impacts and costs to the public of 
Federal coal development, either as a whole, or in the context of 
particular projects. In addition, they raise concerns that exporting 
Federal coal, and the associated GHG emissions, undermines

[[Page 17725]]

our nation's efforts to encourage all countries to contribute to 
climate change mitigation efforts.

C. Secretarial Order

    On January 15, 2016, the Secretary of the Interior issued Order No. 
3338 directing the BLM to conduct a broad, programmatic review of the 
Federal coal program it administers through the preparation of a 
Programmatic EIS under NEPA. The Order stated:
    Given the broad range of issues raised over the course of the past 
year (and beyond) and the lack of any recent analysis of the Federal 
coal program as a whole, a more comprehensive, programmatic review is 
in order, building on the BLM's public listening sessions . . . .
* * * * *
    [T]he purpose of the P[rogrammatic] EIS is to identify, evaluate, 
and potentially recommend reforms to the Federal coal program. This 
review will enable the Department to consider how to modernize the 
program to allow for the continued development of Federal coal 
resources while addressing the substantive issues raised by the public, 
other stakeholders, and the Department's own review of the comments it 
has received.
    The Order does not apply to the coal program on Indian lands, as 
that program is distinct from the BLM's program and is subject to the 
unique trust relationship between the United States and federally 
recognized Indian tribes and government-to-government consultation 
requirements. The Order also does not apply to any action of OSMRE or 
ONRR.

D. Scoping Discussion

    The Programmatic EIS will identify and review potential 
modifications to the Federal coal program to address the concerns 
discussed above and others that may be identified during the scoping 
process, and potentially, identify a preferred set of actions. Such 
modifications could include changes to guidance, regulations, and/or 
land use plans. The process of developing the Programmatic EIS will be 
used to identify and develop potential changes to the program and 
evaluate their projected effects on the quality of the human 
environment. In addition, the Programmatic EIS will consider, as an 
alternative, a continuation of the current Federal coal program without 
any modifications, as required by NEPA. The scoping process will refine 
the specific issues to be addressed in the Programmatic EIS and the 
potential modifications to be evaluated. Cooperating agencies may 
include any Federal, State, or local agency or tribal government with 
jurisdiction or special expertise in matters within the scope of the 
Programmatic EIS.
1. Issues To Be Addressed
    The full set of issues to be assessed in the Programmatic EIS will 
be determined through the public scoping process, but it is expected to 
include the following topics. The Order identified most of these, but 
the following list has been expanded to include additional topics and 
details raised through the listening sessions.
    a. How, When, and Where to Lease. The regional leasing program 
authorized in the 1979 regulations has not worked as envisioned and, 
instead, the BLM has conducted leasing only in response to industry 
applications. Given concerns about the lack of competition in the 
lease-by-application system, as well as consideration of environmental 
goals, the Programmatic EIS will examine whether the current regulatory 
framework should be changed to provide a better mechanism or mechanisms 
to decide which coal resources should be made available and how the 
leasing process should work.
    As part of this evaluation, the Programmatic EIS will examine the 
issue of when to lease. Some leasing programs for other Federal 
resources operate with an established schedule for leasing or 
consideration of leasing (e.g., BLM holds onshore oil and gas lease 
sales on a quarterly basis if parcels are available; offshore oil and 
gas leasing occurs using a schedule established in a five-year plan). 
The Programmatic EIS will examine whether scheduled sales should be 
used for Federal coal. In addition, the Programmatic EIS will look at 
the factors that should be considered in decisions about the timing of 
leasing. For example, it will evaluate whether market conditions should 
affect the timing of lease sales, such that sales would occur when coal 
values are higher rather than during periods of market downturns, when 
revenues from lease sales would be lower.
    The Programmatic EIS will also examine where to lease and where not 
to lease, consistent with taking a landscape level view of this 
question. The Federal Land Policy and Management Act requires the BLM 
to develop land use plans, also known as Resource Management Plans to 
guide the BLM's management of public lands. The BLM uses this planning 
process to identify and address, at a broad scale, potential conflicts 
over and impacts of possible resource uses. The Programmatic EIS will 
consider whether the BLM's unsuitability screening criteria adequately 
address the questions of where and/or where not to lease for coal 
production, as well as other potential factors that could be applied 
during the planning process to provide guidance on the most appropriate 
locations for coal leasing. This question is particularly timely in 
light of the BLM's recent proposal to update the current planning 
regulations (``Planning 2.0'').\21\ The proposed regulatory changes 
highlight, in particular, opportunities for early public involvement in 
the planning process and landscape level planning efforts that may 
cross traditional administrative boundaries, both of which are relevant 
for planning related to the coal program.
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    \21\ Dept. of Interior, Bureau of Land Management, Resource 
Management Planning, Proposed Rule, 81FR 9674 (Feb. 25, 2016).
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    b. Fair Return. The Programmatic EIS will address whether the bonus 
bids, rents, and royalties received under the Federal coal program are 
successfully securing a fair return to the American public for Federal 
coal, and, if not, what adjustments could be made to provide such 
compensation. As part of this analysis, the Programmatic EIS will 
examine how each of these components of fair return should be 
calculated, including whether (and if so, what) externalities should be 
considered as part of the fair return calculation.
    c. Climate Impacts. With respect to the climate impacts of the 
Federal coal program, the Programmatic EIS will examine how best to 
measure and assess the climate impacts of continued Federal coal 
production, transportation, and combustion. This will include 
evaluation of potential substitution effects from any changes in 
Federal coal production, and consideration of how best to ensure no 
unnecessary and undue degradation of public lands from climate change 
impacts. It will also consider whether and how to mitigate, account 
for, or otherwise address those impacts through the structure and 
management of the coal program, including, as appropriate, land use 
planning, adjustments to the scale and pace of leasing, adjustments to 
royalties or other means of internalizing externalities, mitigation 
through greenhouse gas reductions elsewhere, information disclosure, 
and other approaches. The Programmatic EIS will examine the climate 
impacts of the coal program in the context of the Nation's climate 
objectives, as well as the Nation's energy and security needs.
    d. Other Impacts. The Federal coal program has other potential 
impacts on public health and the environment,

[[Page 17726]]

beyond climate impacts, that will also be assessed in the Programmatic 
EIS. These include the effects of coal production on: The quantity and 
quality of water resources, including aquifer drawdown and impacts on 
streams and alluvial valley floors; air quality and the associated 
effects on health and visibility; wildlife, including endangered 
species; and other land uses such as grazing and recreation. These 
impacts are commonly addressed through mitigation requirements. Recent 
mitigation directives focus on developing a comprehensive, clear, and 
consistent approach for avoidance and minimization of, and compensatory 
mitigation for, the impacts of agency activities and the projects 
agencies approve.\22\ The Programmatic EIS will evaluate the BLM's 
general approach to mitigation for these impacts from coal production, 
and specifically, whether impacts from mining and combusting Federal 
coal are adequately mitigated across the Federal coal program, 
including the timing and certainty of mitigation, and whether standard 
mitigation at the programmatic level should be required, in addition to 
on a project-by-project basis.
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    \22\ Secretary of the Interior, Secretarial Order 3330 (Oct. 31, 
2013) (establishing a Department-wide mitigation strategy) (https://www.doi.gov/sites/doi.gov/files/migrated/news/upload/Secretarial-Order-Mitigation.pdf); President Obama, Presidential Memorandum: 
Mitigating Impacts on Natural Resources from Development and 
Encouraging Related Private Investment (Nov. 3, 2015) (https://www.whitehouse.gov/the-press-office/2015/11/03/mitigating-impacts-natural-resources-development-and-encouraging-related). Consistent 
with these directives, the BLM is currently working on a mitigation 
policy that will bring consistency to the consideration and 
application of avoidance, minimization, and compensatory actions or 
development activities and projects impacting public lands and 
resources.
---------------------------------------------------------------------------

    e. Socio-Economic Considerations. Beyond the issue of fair market 
value, the Programmatic EIS will assess whether the current Federal 
coal leasing program adequately accounts for externalities related to 
Federal coal production, including environmental and social impacts. It 
will more broadly examine how the administration, availability, and 
pricing of Federal coal affect State, regional, and national economies 
(including job impacts), and energy markets in general, including the 
pricing and viability of other coal resources (both domestic and 
foreign) and other energy sources. The impact of possible program 
alternatives on the projected fuel mix and cost of electricity in the 
United States will also be examined.
    f. Exports. The Programmatic EIS will address whether and, if so, 
how leasing decisions should consider actual and/or projected exports 
of domestic coal from any given tract and potential mechanisms that 
could be used to appropriately evaluate export potential.
    g. Energy Needs. Finally, the Programmatic EIS will examine how 
Federal coal supports fulfilling the energy needs of the United States. 
The evaluation will include an assessment of how the administration, 
availability, and pricing of Federal coal impacts electricity 
generation in the United States, particularly in light of other 
regulatory influences, and what other sources of energy supply 
(including efficiency) are projected to be available.
2. Potential Modifications to the Federal Coal Program To Be Considered
    The BLM is considering various approaches for reforming the Federal 
coal program to address some or all of the identified issues above, 
including providing a fair return to taxpayers and providing 
appropriate consideration of the impacts the program has on the 
environment. These approaches may be considered separately or in any 
combination.
    To date, stakeholders have made suggestions that range from 
maintaining the status quo to undertaking sweeping changes. During the 
listening sessions, commenters suggested a variety of modifications 
that could be made to the Federal coal program to better address 
concerns about fair return to taxpayers, market conditions, and effects 
on climate change, among others. Some of these suggestions were 
sufficiently specific to constitute potential approaches that could be 
evaluated in the Programmatic EIS. These proposals are summarized 
below.
    The BLM requests comment on whether the Programmatic EIS should 
further evaluate some or all of these specific approaches, or some 
variation on them. The BLM also welcomes suggestions for other 
potential approaches that should be evaluated in the Programmatic EIS, 
including approaches that may be contrary to those articulated below, 
such as reforming the leasing process to promote coal development 
through steps that might accelerate leasing and reduce delays and 
costs. As previously noted, the Programmatic EIS will also consider a 
``no action alternative''--the continuation of the program without any 
modifications--as required by NEPA. We encourage commenters to be as 
specific as possible in identifying the types of changes to the program 
that the Programmatic EIS should evaluate, including changes to 
regulations, guidance, and management practices.
    To address concerns about fair returns to taxpayers, the BLM is 
considering evaluating the following approaches:
     Raise the royalty rate or adjust the royalty terms of new 
leases, such as:
    [cir] Raise the royalty rate to 18.75 percent, consistent with the 
royalty rate for Federal offshore oil and gas;
    [cir] Raise the royalty rate to a level that would provide parity 
on an energy content (Btu) basis with the royalties currently collected 
for Federal onshore natural gas, a common substitute fuel;
    [cir] Raise the royalty rate to the point that would maximize 
revenues to the taxpayer, taking into consideration any decrease in 
demand that may result from the higher royalty rate; or
    [cir] Identify and require an ``adder'' to be paid to reflect the 
cost of the harm to the public from negative externalities from coal 
development;
     Limit the use of royalty rate reductions;
     Change the methodology for determining fair market value 
when establishing the minimum bid or valuing lease modifications, such 
as:
    [cir] Use the market price of non-Federal coal in the region or 
nation-wide;
    [cir] Include the option value of leasing the coal resource at a 
given point in time;
    [cir] Include the social cost of mining (i.e., the cost to 
taxpayers of mining imposed by fixed cost non-internalized 
externalities, such as loss of recreational or other values, which do 
not vary by quantity produced);
    [cir] Explicitly include export value in establishing fair market 
value;
    [cir] Replace the lease by application approach with an open 
process of setting (after public comment and expert advice) minimal 
acceptable bid levels for tracts; or
    [cir] Update the minimum bid established by regulation to account 
for inflation, and/or establish state-specific minimum bids;
     Raise rental rates to adjust for inflation and/or 
incorporate lost value of other uses of the land and anticipated 
externalities of exploratory activities;
     Do not lease to companies that have more than 10 years of 
recoverable reserves coal at the time of lease application; and
     Evaluate whether there is an over-supply of Federal coal 
that is undercutting market prices for coal in the United States and 
thereby leading to lower royalty revenue.
    The BLM received the following industry proposals concerned with 
promoting coal production that are also under consideration:
     Lower royalty rates, including as a means of increasing 
overall government take;

[[Page 17727]]

     Broaden the applicability of royalty rate reductions;
     Reform the leasing process to accelerate leasing and 
reduce delays and costs;
     Base bonus bids on the amount of recoverable coal, not 
coal reserves;
     Convert revenue streams to pay-as-you go, instead of an 
upfront payment of bonus bids over five years; and
     Reestablish the Royalty Policy Committee to guide changes 
to royalties.
    To address concerns about climate impacts and/or other public 
health and environmental harms, the BLM is considering evaluating the 
following approaches:
     Change the methodology for determining which, or how much, 
Federal coal and/or acreage is made available for leasing, such as:
    [cir] Establish a ``budget,'' or other quantity-based schedule, for 
the amount of Federal coal and/or acreage to be leased over a given 
period, with the budget set on a declining schedule consistent with the 
United States' climate goals and commitments and market demand;
    [cir] Re-establish an updated version of the regional planning and 
leasing process, using land use planning and environmental evaluation 
to decide whether an area should be leased; or
    [cir] Develop a landscape-level approach to identify geographic 
areas for potential leasing to identify and address potential conflicts
     Raise royalty rates or require an ``adder'' to be paid to 
reflect the cost of the harm to the public from negative externalities 
from coal development (could include production-related externalities, 
transportation-related externalities, externalities from use of coal, 
and/or costs of infrastructure demand, such as water and power), such 
as:
    [cir] Incorporating the social cost of carbon;
    [cir] Incorporating the social cost of methane; or
    [cir] Reflecting other externalities;
     Require climate and/or other public health and 
environmental harms to be mitigated; and
     Prohibit or otherwise limit leasing to entities that are 
not meeting their environmental responsibilities, such as:
    [cir] Entities listed in the Office of Surface Mining Reclamation 
and Enforcement Applicator Violator System; or
    [cir] Entities that have not met their reclamation or bonding 
(including bond release) requirements.

E. Scoping Process

    The Federal coal program Programmatic EIS process will provide 
opportunities for formal public participation through commenting during 
public scoping and on the draft Programmatic EIS, when that is 
published. The BLM aims to complete the Coal Programmatic EIS over 
roughly 3 years. The process will include public and agency scoping, 
including public scoping meetings, collection of public comments during 
the scoping period, issuance of a summary of substantive comments 
received during the scoping period, as well as issuance of a scoping 
report at the end of the scoping process; coordination and consultation 
with Federal, State, tribal and local governments; publication of a 
draft Programmatic EIS; public review of and comments on the draft 
Programmatic EIS; and publication of a final Programmatic EIS, which 
will include the BLM's responses to substantive comments received on 
the draft Programmatic EIS. The Programmatic EIS process is intended to 
involve all interested agencies (Federal, State, county, and local), 
Native American tribes, public interest groups, businesses, and members 
of the public.
    At this time, interested parties are invited to participate in the 
scoping process to assist the BLM in identifying and refining the 
issues and policy proposals to be analyzed in depth and in eliminating 
from detailed study those policy proposals and issues that are not 
feasible or pertinent. Participation in the scoping process may take 
the form of attendance at public scoping meetings, speaking at public 
scoping meetings, and/or submitting written comments.
    In addition to taking comment on the specific approaches discussed 
above, as well as welcoming suggestions for other potential approaches 
that should be evaluated in the Programmatic EIS, BLM is soliciting 
input on the following:

1. Potential new leasing models, or potential reforms to the 
previous or existing leasing models of regional leasing and lease by 
application;
2. Other approaches to increase competition in the leasing process;
3. Data or analyses that justify a specific change to the royalty 
rate;
4. Potential approaches to improve the pre-sale estimate of fair 
market value;
5. Whether, and how, to account in the leasing process for the 
extent to which reclamation responsibilities have been met;
6. Potential approaches to design a `budget' for the amount of 
Federal coal and/or acreage to be leased over a given period; and
7. How to account for export potential in the leasing process.

    Public scoping meetings will be held as indicated above under the 
DATES section. These scoping meetings will be informal. The presiding 
officer will establish only those procedures needed to ensure that 
everyone who wishes to speak has a chance to do so, to the extent 
practicable, and that the agency representatives understand all issues 
and comments. Persons wishing to speak on behalf of an organization 
should identify that organization in their request to speak. Should any 
speaker wish to provide for the record further information that cannot 
be presented within the designated time, such information may be 
submitted in writing or electronically by the date listed in the DATES 
section to the addresses listed in the ADDRESSES section.
    In submitting written comments, individuals should be aware that 
the entire comment--including personal identifying information 
(including address, phone number, and email address)--may be made 
publicly available at any time. While the commenter can request in the 
comment that the commenter's personal identifying information be 
withheld from public review, this cannot be guaranteed. All comments 
from organizations or businesses, and from individuals identifying 
themselves as representatives or officials of organizations or 
businesses, will be available for public inspection in their entirety. 
If you would like to receive a copy of the draft Programmatic EIS and 
other project materials, you are encouraged to make this request 
through the project Web site (http://www.blm.gov/wo/st/en/prog/energy/coal_and_non-energy/details_on_coal_peis.html), or you may contact 
Mitchell Leverette as provided in the ADDRESSES section of this notice.
    Pursuant to 36 CFR 800.2(d)(3), the BLM will use the NEPA public 
participation requirements to satisfy the public involvement 
requirements under Section 106 of the National Historic Preservation 
Act (NHPA), 16 U.S.C. 470(f). The BLM will consult with Indian tribes 
on a government-to-government basis in accordance with Executive Order 
13175 and other policies. Tribal concerns, including impacts on Indian 
trust assets and potential impacts to cultural resources, will be given 
due consideration. Federal, State, and local agencies, along with 
tribes and other stakeholders that may be interested in or affected by 
the Federal coal program, are invited to participate in the scoping 
process and, if eligible, may request or be requested by the BLM to 
participate in the development of the environmental analysis as a 
cooperating agency.

[[Page 17728]]

    After gathering public comments on issues and policy proposals that 
should be addressed in the Programmatic EIS, the BLM will identify the 
issues and policy proposals to be addressed in the Programmatic EIS and 
the issues and proposals determined to be beyond the scope of the 
Programmatic EIS. Following closure of the scoping period, the BLM will 
prepare a scoping summary report and will make the report available to 
the public. The report will be posted on the project Web site (http://www.blm.gov/wo/st/en/prog/energy/coal_and_non-energy/details_on_coal_peis.html), or may be requested from Mitchell 
Leverette, as provided in the ADDRESSES section of this notice.

    Authority: The BLM will prepare the Programmatic EIS in 
accordance with, but not limited to, the National Environmental 
Policy Act, 42 U.S.C. 4321 et seq.; the Council on Environmental 
Quality regulations (CEQ), 40 CFR parts 1500-1508; the U.S. 
Department of the Interior regulations implementing NEPA, 43 CFR 
part 46; and the Federal Land Policy and Management Act of 1976 
(FLPMA), 43 U.S.C. 1701 et seq.

    This notice is published in accordance with section 40 CFR 1501.7 
of the CEQ regulations and 43 CFR 46.235 of the DOI regulations 
implementing the NEPA.

Neil Kornze,
Director, Bureau of Land Management, Department of the Interior.
[FR Doc. 2016-07138 Filed 3-29-16; 8:45 am]
 BILLING CODE 4310-84-P