[Federal Register Volume 86, Number 159 (Friday, August 20, 2021)]
[Notices]
[Pages 46873-46877]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-17827]


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DEPARTMENT OF THE INTERIOR

Bureau of Land Management

[21X.LLHQ320000.L13200000.PP0000]


Notice of Intent To Conduct a Review of the Federal Coal Leasing 
Program and To Seek Public Comment

AGENCY: Bureau of Land Management, Interior.

ACTION: Notice of intent.

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SUMMARY: The Bureau of Land Management (BLM), Headquarters Office seeks 
public comment on the Federal coal program in advance of the BLM's 
intended review of that program. The Department of the Interior (DOI) 
also intends to conduct government-to-government consultation with 
affected Indian tribes about the Federal coal leasing program and to 
consider the potential environmental, social, and cultural impacts of 
the coal program on indigenous communities and their lands during this 
review.
    This notice solicits public comments for consideration in 
establishing the scope and content of the BLM's review of the Federal 
coal leasing program.

DATES: The BLM invites 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 that the BLM should consider in its review of the 
Federal coal program.
    The BLM will consider all written comments received or postmarked 
during the public comment period which will close on September 20, 
2021.

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: National Coal 
Program Review, In care of: Thomas Huebner, BLM Wyoming State Office, 
5353 Yellowstone Rd., Cheyenne, WY 82009.

FOR FURTHER INFORMATION CONTACT: Lindsey Curnutt, Chief, Division of 
Solid Minerals, email: [email protected], telephone: 480-708-7339. 
Persons who use a telecommunications device for the deaf (TDD) may call 
the Federal Relay Service at 1-800-877-

[[Page 46874]]

8339 to contact Ms. Curnutt. This service is available 24 hours a day, 
7 days a week, to leave a message or question. You will receive a reply 
during normal business hours.

SUPPLEMENTARY INFORMATION: On January 15, 2016, Secretary of the 
Interior S.M.R. Jewell issued Order No. 3338 (Jewell Order), directing 
the BLM to conduct a broad, programmatic review of its Federal coal 
program through preparation of a Programmatic Environmental Impact 
Statement (PEIS) under the National Environmental Policy Act (NEPA). 42 
U.S.C. 4321 et seq. The Jewell Order was issued in response to a range 
of concerns regarding the Federal coal program, including, in 
particular, concerns as to whether American taxpayers are receiving a 
fair return from the development of these publicly owned resources; 
concerns about fluctuating market conditions and attendant 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. The Jewell Order directed a pause 
on the issuance of new Federal leases for thermal (steam) coal, subject 
to certain enumerated exclusions, until completion of the PEIS.
    On March 29, 2017, former Secretary Zinke issued Secretary's Order 
No. 3348 (Zinke Order) entitled, ``Concerning the Federal Coal 
Moratorium.'' The Zinke Order rescinded the Jewell Order, lifted the 
coal leasing pause, and halted preparation of the PEIS. On April 16, 
2021, Secretary Haaland issued Secretary's Order 3398, which rescinded 
the Zinke Order (Haaland Order). While the Haaland Order did not 
reinstitute the Jewell Order, it directed the Department to ``review 
and revise as necessary all policies and instructions that 
implemented'' the revoked Secretary's Orders. This Federal Register 
Notice is intended to further the goals of the Haaland Order by 
beginning a new review of the Federal coal leasing program. The BLM has 
not approved a new coal lease sale since the Biden Administration took 
office.

Background

A. Overview of Federal Coal Program

    Under the Mineral Leasing Act of 1920 (MLA), as amended, 30 U.S.C. 
181 et seq., and the Mineral Leasing Act for Acquired Lands of 1947 
(MLAAL), 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 the approximately 700 million acres of mineral estate that is 
owned by the Federal Government. This responsibility includes Federal 
mineral rights on Federal lands and Federal mineral rights located 
under surface lands with non-Federal ownership. Other Departmental 
bureaus, particularly 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 States that have obtained 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 a Federal lease, including bonus bids, royalties, and rental 
payments, and distributes those funds, pursuant to statute, between the 
U.S. Treasury and the States where the coal resources are located, 30 
U.S.C. 191(a).
1. Federal Coal Leasing and Production
    In recent years and on average, approximately 42 percent of the 
Nation's annual coal production came from Federal lands. Federal coal 
produced from the Powder River Basin in Montana and Wyoming accounts 
for over 85 percent of all Federal coal production.
    As of Fiscal Year 2020, the BLM administered 287 coal leases, 
covering 437,039 acres in 11 States, with an estimated 7 billion tons 
of recoverable Federal coal. Over the last decade (2011-2020), the BLM 
sold 17 coal leases and managed leases that produced approximately 3.7 
billion tons of coal and resulted in $9.2 billion in revenue 
collections by the United States.
    The U.S. Energy Information Administration (EIA) estimates total 
U.S. coal production in 2020 was about 534 million short tons (MMst), 
24 percent lower than in 2019.\1\ EIA estimates that U.S. total annual 
coal imports reached a record high of about 36 million short tons in 
2007. In 2020, the United States imported about 5 MMst of coal, which 
was equal to about 1 percent of U.S. coal consumption in 2020.\2\
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    \1\ U.S. EIA, Coal Data (August 4, 2021) (https://www.eia.gov/coal/data/browser/).
    \2\ U.S. EIA, Coal Data (July 20, 2021) (https://www.eia.gov/energyexplained/coal/imports-and-exports.php).
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2. Federal Coal Program
    The current BLM coal leasing program includes land use planning, 
the processing of applications (e.g., applications for exploration 
licenses and lease sales), estimation of the value of proposed leases, 
lease 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 the 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. For coal leases outside of Alaska, 
Treasury pays approximately 50 percent of receipts to the State where 
the leased lands are located, 30 U.S.C. 191(a). For leases and mineral 
deposits in Alaska, Treasury pays 90 percent of the receipts to the 
State, 30 U.S.C. 191(a).\3\ Federal coal development provides coal 
producing states like Wyoming, Montana, Utah, and Colorado with 
significant income and other economic benefits.
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    \3\ Payments to the States are ``reduced by 2 percent for any 
administrative or other costs incurred by the United States,'' and 
``the amount of such reduction shall be deposited to miscellaneous 
receipts of the Treasury.'' 30 U.S.C. 191(b).
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    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 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

[[Page 46875]]

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.\4\ This process includes 
use of a Federal/State advisory board known as a Regional Coal Team \5\ 
to provide input on leasing decisions. The regional leasing system has 
not been used since 1990, and currently all BLM coal leasing relies on 
applications.\6\ Leasing by application begins with an application to 
lease a tract of coal identified by the applicant.\7\ 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 and State 
agencies and Tribal governments, and the BLM determines whether the 
surface manager consents to leasing in situations where the surface is 
not administered by the BLM.
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    \4\ 43 CFR part 3420.
    \5\ 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.
    \6\ 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.
    \7\ See 43 CFR subpart 3425.
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    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 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 from an applicant that meets all eligibility requirements and has 
paid the appropriate fees and payments.
    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 that 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 PEIS for the entire Federal coal leasing program. 
Beginning in February 1973, the Department instituted 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, 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 PEIS 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, the Government Accountability 
Office (GAO) issued a report in May 1983 concluding that the Department 
had received roughly $100 million less than it should have for the 
sale. 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.
    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 message 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.
    Secretary of the Interior William P. Clark extended the suspension 
of coal leasing (with exceptions for emergency leasing and processing 
preference right lease applications, among others) 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, Secretary 
of the Interior Donald Hodel lifted the coal leasing moratorium in 
1987.
    On March 17, 2015, Secretary S.M.R. Jewell called for ``an honest 
and open conversation about modernizing the Federal coal program.'' As 
described

[[Page 46876]]

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,\8\ the 
Department's Office of Inspector General (OIG),\9\ members of Congress, 
interested stakeholders, and the public. The concerns raised by the GAO 
and OIG were centered on whether taxpayers receive a fair return from 
the sale of federal 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 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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    \8\ GAO, Coal Leasing: BLM Could Enhance Appraisal Process, More 
Explicitly Consider Coal Exports, and Provide More Public 
Information, GAO 14-140 (Dec. 2013).
    \9\ 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 five 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) 
Taxpayers are not receiving a fair return, in part because the royalty 
rate should match that for offshore oil and gas leases; and (2) the 
royalty rate should account for the environmental costs of coal 
production.
     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.
    After conducting these listening sessions, Secretary Jewell 
determined that three areas of the program received the most attention 
from the public: Concerns that American taxpayers were not receiving a 
fair return on public coal resources, that the program conflicted with 
national climate policy and goals, and that the structure of the 
program needed review considering current market conditions. To address 
the issues raised during these sessions, on January 15, 2016, Secretary 
Jewell issued Secretary's Order 3338, directing the BLM to conduct a 
broad, programmatic review of the Federal coal program through the 
preparation of a discretionary Programmatic EIS under NEPA, 42 U.S.C. 
4321 et seq. A Notice of Intent for the Programmatic EIS was published 
in March 2016, and a scoping report was published on January 11, 2017.
    On March 29, 2017, former Secretary Zinke issued Secretary's Order 
No. 3348 (Zinke Order) entitled, ``Concerning the Federal Coal 
Moratorium.'' The Zinke Order rescinded the Jewell Order, lifted the 
coal leasing pause, and halted the preparation of the Programmatic EIS.
    On January 20, 2021, President Biden issued Executive Order 13990, 
``Executive Order on Protecting Public Health and the Environment and 
Restoring Science to Tackle the Climate Crisis.'' On April 16, 2021, 
Secretary Deb Haaland issued Secretary's Order 3398, which rescinded 
the Zinke Order. The Department's programmatic review of the Federal 
coal program furthers the goals of the Haaland Order.
    In announcing this review and soliciting comments, the Department 
notes that 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 
previous concerns about the lack of competition in the lease-by-
application system, as well as consideration of the Biden 
Administration's environmental goals, the BLM is beginning a new review 
of the Federal coal leasing program and seeks comments on whether the 
current regulatory framework should be changed to provide better 
mechanisms to decide which coal resources should be made available and 
how the leasing process should work, including when and where to lease. 
The BLM is also seeking comments on the following topics:
a. Fair Return
    The BLM is seeking comments on 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.
b. Climate Impacts
    The BLM seeks comments on how best to measure and assess the 
climate impacts of continued Federal coal production, transportation, 
and combustion.
c. Other Impacts
    The BLM seeks comments on other potential impacts on public health 
and the environment, such as 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.
d. Socio-Economic Considerations
    The BLM seeks comments on whether the current Federal coal leasing 
program adequately accounts for externalities related to Federal coal 
production, including environmental and social impacts.
e. Exports
    The BLM seeks comments addressing whether and, if so, how leasing 
decisions should consider actual and/or projected exports of domestic 
coal collectively or from any given tract and potential mechanisms that 
could be used to appropriately evaluate export potential.
f. Energy Needs
    Finally, the BLM seeks comments on how Federal coal supports 
fulfilling the energy needs of the United States.

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    The BLM also welcomes suggestions for other potential approaches to 
the Federal coal program including approaches that may differ from 
those articulated below. We encourage commenters to be as specific as 
possible in identifying the types of changes to the program that the 
BLM should consider, including changes to regulations, guidance, and 
management practices.
    BLM also solicits 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.
    In submitting written comments, individuals should be aware that 
their 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.
    The DOI 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 review.
    Following closure of the comment period, the BLM will prepare a 
comment summary report, make the report available to the public, and 
will detail the scope and form of its programmatic review. The BLM's 
goal is to announce additional steps for the programmatic review by 
November 2021.

(Authority: 43 U.S.C. 1701 et seq., 30 U.S.C. 181 et seq., 30 U.S.C. 
351 et. seq.)

Nada Wolff Culver,
Deputy Director, Programs and Policy, Bureau of Land Management.
[FR Doc. 2021-17827 Filed 8-19-21; 8:45 am]
BILLING CODE 4310-84-P