# Petition for Writ of Certiorari — FMC Wyoming Corp. v. Hodel > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_2417%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1988 - **Citation:** 484 U.S. 1041 ## Text fo ee eee " YOSEPS, -, — IN THE hevhiiiiineceee ai Suprene Court of the United States OCTOBER TERM, 1987 FMC WYOMING CORPORATION, Petitioner, Vv DONALD P. HODEL, Secretary of Interior, et al., Respondents. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT KENNETH D. HUBBARD (Counsel of Record) MICHAEL J. BRENNAN HOLLAND & HART 1875 Eye Street, N.W. Suite 1200 Washington, D.C. 20006 (202) 872-1101 MARILYN S. KITE PATRICK R. DAY HOLLAND & HART 2020 Carey Avenue Suite 500 Cheyenne, WY 82001 (307) 632-2160 Counsel for Petitioner WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001 j ‘_ Sey Ne: QUESTION PRESENTED Whether or not Congress sub silentio revoked vested federal coal lease rights when it enacted the Federal Coal Leasing Amendments Act of 1975. (i) il LIST OF PARTIES FMC Wyoming Corporation, Petitioner, v. Donald P. Hodel, as Secretary of the United States Department of the Interior; Robert F. Burford, as Director of the Bu- reau of Land Management, United States Department of the Interior; Jim H. Taylor, as Chief, Branch of Solid Minerals, Wyoming State Office, Bureau of Land Man- agement; Marla B. Bohl, as Former Chief, Land and Mining, Wyoming State Office, Bureau of Land Manage- ment; Harold G. Stinchcomb, as Former Chief, Branch of Energy Minerals, Wyoming State BLM Office; J. Stan McKee, as Former Acting Chief, Branch of Solid Min- erals, Wyoming State Bureau of Land Management; and the United States Department of the Interior, Respondents. RULE 28.1 LISTING The parent company is FMC Corporation. Subsidiaries (except wholly-owned subsidiaries) and Affiliates include CBV—Industria Mecanica, S.A.—(Brazil); Centocor, Inc.; FMC Gold Company; and Teknowledge, Inc. TABLE OF CONTENTS Genes Cee tee .................----.-- Em LE eg gy 8) CE EE ES EE STATUTORY PROVISIONS fo ks |) re Dememeeees Ge seem CAGE .........-......<...- REASONS FOR GRANTING THE WRIT ---------- I. The Tenth Circuit’s Decision Squarely Conflicts With Supreme Court Precedent ____._-------- II. The Tenth Circuit’s Decision Creates Taking Issues of First Impression Which Strike at the Heart of All Federal Mineral Leases .________-- III. The Tenth Circuit’s Opinion Ignored Explicit Congressional Efforts to Avoid Taking Issues_-_ TCA Rh se aa mans etre wan areese= APPENDICES Appendix A. Opinion and Judgment of the United States Court of Appeals --__--------- Appendix B. Opinion and Judgment of the United States District Court for the District NS RE a la iv TABLE OF CONTENTS—Continued Page Appendix C. Decision of United States Department of Interior, Interior Board of Land BE ctiadccaaaddnccawekae kas 2la Appendix D. Decision of the Wyoming State Office, Bureau of Land Management _________ 32a Appendix E. Federal Coal Leasing Amendments Act OE STE aida dendlichieaenudacanbwemes 37a Appendix F. FMC Corporation Federal Coal Leases, NUNS Re SN a deeae ee ek 57a Appendix G. FMC Corporation Federal Coal Lease Readjustments, March 1, 1983 ________ 88a Appendix H. Letters to Department of Interior From John Corra, FMC Corporation Resident Manager, February 11, 1983, June 2, FES wdneca wie hained saad kcal aie 120a Vv TABLE OF AUTHORITIES CASES: Page Bennett v. New Jersey, 470 U.S. 632 (1985) ----- 9 Bowen v. Agencies Opposed to Social Security En- trapment, 477 U.S. 41 (1986) ._--- lah dares 12 Farmers and Mechanics Savings Bank of Minne- apolis v. Minnesota, 232 U.S. 516 (1914)-_----- 7 Federal Trade Commission v. American Tobacco Crh Se Se ee CE ic cece manda te nanos 13 First English Evangelical Lutheran Church v. Los Angeles, U.S. , 107 S.Ct. 2378 (1987) _ 11 FMC Wyoming Corp. v. Watt, 587 F. Supp. 1545 ee | 5 Re oe not ee eel 1, 2, 5, 6 FMC Wyoming Corp. v. Hodel, 816 F.2d 496 (10th I ED: att wacechducecee alae eee 1, 6,9 Greene v. United States, 376 U.S. 149 (1964) ___- 9 Keystone Bituminous Coal Association v. De Bene- dictis, 480 U.S. , 107 S.Ct. 12382 (1987) -.--- 10 Lorillard v. Pons, 434 U.S. 575 (1978) .--------- _9 Lynch v. United States, 292 U.S. 571 (1934) .---- 12 Nollan v. California Coastal Commission, USS. | pis Be 8) 3 Bee aR ee 11 Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 CT keke akc eae eeesee aoe 10, 11 Perry v. United States, 294 U.S. 330 (1935) .----- 12 Rosebud Coal Sales Co. v. Andrus, 667 F.2d 949 C20 See. Gee anavccumcnedtndsatkeccust anes 10, 11 Ross v. City of Berkeley, 655 F. Supp. 820 (N.D. SR: RED cain esacahbteredeeees anne ea ane 8 Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984)_ 9,10 Sinking-Fund Cases, 99 U.S. 700 (1879) .-------- ae Sun Oil Co. v. United States, 572 F.2d 786 (Ct. Ci. BREE. ciwissiewadennaeswebee eee 11 Union Oil Co. of California v. Morton, 512 F.2d TaN: CE CO Se ncecac dna Dibweke wees 11 Union Pacific Railroad Co. v. Laramie Stock Yards Ca, Be Geek Be CE dunes, 8,9 United States v. General Motors, 323 U.S. 373 CREE etniietkcirecdibaiccmionuuadn a eee 11 United States v. Security Industrial Bank, 459 U.S. TO CIE? sitidiadaddesnekonuasewdee es 9 vi TABLE OF AUTHORITIES—Continued STATUTES: Page OR PEREEED TIOGED .cciiccedkumnnnnntaane 2 ee BE CPD keke nerd eencadccecéuaae 5 es 6 EE. CERES dwcwencnddncounsncsenn 5 Mineral Lands Leasing Act of 1920, 30 U.S.C. § 181, et seq. (1970) . OCC T, De Cae. BOOE cmenencciiecnnecnes 2, 3, 6 Federal Coal Leasing Amendments Act of 1975, 2 Ue, S181, 006.. (IGRE) nnn nncccscnnns 3 Section 3, 30 U.S.C. § 201 (a) (2) (A) ~------- 13 Section 6, SOU.S.C.62707. .......-.-..c0n0 1,2, 3 section 6, 30 U.S.C. § 207(a) ......-......... 4 LEGISLATIVE MATERIALS: 51 Cong. Rec. 14,945 (1914) (statement of Rep. DE hance ines heweeneuenmiouen 8,12 122 Cong. Rec. 488 (1976) (statement of Rep. SE oe rie dae encar nh melabiners haemo aaa 13, 14 ADMINISTRATIVE AND EXECUTIVE MATERIALS: Decision of the United States Department of the Interior Board of Land Appeals, FMC Corp., 74 IBLA 389 (July 29, 1983) (Appendix B)-_____-_ 3.& Whether Leases Issued Prior to Aug. 4, 1976, Sub- ject To Readjustment After That Date Must Be Readjusted To Conform To The Federal Coal Leasing Amendments of 1976, Opinion By Office of Solicitor +M-36939, 88 Interior Dec. 1003 Ciena 39, Bees) ons dkinens ch accmese n> 4,5,8 United States Congress Office of Technology As- sessmeril Special Report, “Potential Effects of Section 3 of the Federal Coal Leasing Amend- ments Act of 1976” (March 1986)___________~ 5, 6, 10 IN THE Supreme Court of the United States OCTOBER TERM, 1987 No. FMC WYOMING CORPORATION, Petitioner, v. DONALD P. HODEL, Secretary of Interior, et al., Respondents. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT FMC Wyoming Corporation (“FMC”) respectfully prays that a writ of certiorari issue to review the judg- ment and opinion of the United States Court of Appeals for the Tenth Circuit, entered on April 9, 1987, which held that section 6 of the Federal Coal Leasing Amend- ments Act of 1975' automatically applies as a matter of law upon readjustment of federal coal leases issued before the FCLAA was enacted. OPINIONS BELOW The Opinion of the United States Court of Appeals, reproduced as Appendix A, is reported at 816 F.2d 496. The Opinion of the United States District Court for the District of Wyoming, reproduced as Appendix B, is re- 1 Although not_actually passed until 1976, the Act is commonly known as the Federal Coal Leasing Amendments Act of 1975 and will be referred to as such throughout this Petition. 2 poried at 587 F. Supp. 1545. The Decision of the United ‘ States Department of the Interior, Interior Board of Land Appeals, reproduced as Appendix C, is reported at 74 IBLA 389. The Decision of the Wyoming State Office, Bureau of Land Management is reproduced as Appendix D. JURISDICTION The Judgment of the Court of Appeals was entered on April 9, 1987. A Petition for Rehearing was filed on May 22, 1987, and denied on July 8, 1987. Jurisdiction to review the judgment of the Court of Appeals by Writ of Certiorari exists under 28 U.S.C. § 1254(1) (1982). STATUTORY PROVISIONS INVOLVED Section 6 of the Federal Coal Leasing Amendments Act of 1975, 30 U.S.C. § 207 (1982). Because analysis of the issues presented also requires consideration of other portions of the FCLAA, the Act is attached in its entirety as Appendix E. STATEMENT OF THE CASE On March 1, 1963, FMC and the Secretary of Interior (“Secretary” or “Interior”) entered into two federal coal leases covering lands located near Kemmerer, Wyo- ming. The basic contract and property rights conveyed by the leases were established by section 7 of the Mineral Lands Leasing Act of 1920, and the terms of the leases. Section 7 of the 1920 Act provided: [Coal] Leases shall be for indeterminate periods upon condition of diligent development and continued operation of the mine or mines ... and upon the further condition that at the end of each-twenty-year period succeeding the date of the lease such read- . justment of terms and conditions may be made as the Secretary of the Interior may determine, unless otherwise provided by law at the time of the expira- tion of such periods. ee 3 30 U.S.C. § 207 (1970). The 1920 Act also provided for payment of royalties on coal produced in an amount determined by the Secretary. but not less than five cents per ton. ZId. FMC’s leases incorporated this statutory language and granted FMC the right to mine federal coal for an in- determinate term, subject only to ‘‘reasonable’”’ readjust- ment every twenty years: The lessor, in consideration of the rents and royal- ties to be paid and the conditions to be observed as hereinafter set forth does hereby grant and lease to the lessee the exclusive right and privilege to mine and dispose of all the coal in the following-described tracts of land.... [The lessor expressly reserves:] The right reason- ably to readjust and fix royalties payable hereunder and other terms and conditions at the end of 20 years from the date hereof and thereafter at the end of each succeeding 20 year period during the continuance of this lease unless otherwise provided by law at the expiration of any such period... . Appendix F at 57a, 63a, 7la, 77a; Record at 59-61; 174- 176; 62-65; 319-323 (emphasis added). The royalty im- posed by the Secretary in FMC’s leases was seventeen and one-half cents per ton. Jd. Relying on the rights created by these leases, FMC spent millions of dollars developing its Skull Point mine. FMC also spent 70 mil- lion dollars to convert boilers from natural gas to coal power at FMC’s Trona Plant near Green River, Wyo- ming. Appendix H at 128a-129a; Record at 86. Thirteen years after FMC’s leases were issued, Con- gress passed the Federal Coal Leasing Amendments Act of 1975 (“FCLAA’’), 30 U.S.C. § 181, et seg., which substantially revised the coal leasing portions of the original Mineral Lands Leasing Act. Among other things, section 6 of the FCLAA amended section 7 of the Mineral Lands Leasing Act, creating for the first time 4 “primary term” federal coal leases much different than the indeterminate term coal leases Congress originally developed under section 7 of the Mineral Lands Leasing Act. Instead of conveying an indefinite right to mine coal, the new coal leases convey only a twenty year “pri- mary term’ during which coal must be produced within ten years or the lease expires. In addition, the readjust- ment period has been shortened from twenty years to ten and, of fundamental importance here, a new mini- mum royalty rate of 12144% of the value of the coal produced has been created: A coal lease shall be for a term of twenty years and for so long thereafter as coal is produced annually in commercial quantities from that lease.... A lease shall require payment of a royalty in such amount as the Secretary shall d=termine of not less than 12'4% per centum of the value of coal as defined by regulation. . . . Such rentals and royalties and other terms and conditions of the lease will be sub- ject to readjustment at the end of its primary term of twenty years and at the end of each ten-year pe- riod thereafter if the lease is extended. 30 U.S.C. § 207(a) (1982) ; Appendix E at 45a. Congress expressed no intent in section 6 of the FCLAA that the new primary term leases created by that section—and their minimum 1214% royalty rate— had to be applied upon readjustment of the 533 pre- FCLAA indeterminate term leases issued by Interior under section 7 of the Mineral Lands Leasing Act. After several years of indecision, however, Interior decided it was obligated as a matter of law to replace existing indeterminate term coal leases with the new primary term coal leases as those pre-FCLAA indeterminate term leases became subject to readjustment. Whether Leases Issued Prior to Aug. 4, 1976, Subject To Readjustment After That Date Must Be Readjusted To Conform To The Federal Coal Leasing Amendments of 1976, Opinion 5 By Office of Solicitor #M-36939, 88 Interior Dec. 1003 (September 17, 1981). As a result, when FMC’s leases became subject to readjustment in early 1983, Interior sent FMC two new primary term coal leases, each of which incorporated the provisions of section 6 of the FCLAA. Appendix G; Record at 68-74; 121-123; 254- 256. These new leases conveyed a primary term of twenty years, shortened the readjustment period from twenty years to ten, and imposed a 1000% increase in FMC’s royalty rate. Appendix G; Record at 68-74; 121- 123; 254-256; Appendix H at 120a-125a; 126a; Record at 75-78; 113-116; 247-250. Arguing it was legally com- pelled to impose section 6 of the FCLAA at readjustment, Interior made no effort to determine if these new leases were “reasonable” in light of the circumstances of FMC’s existing operations, contrary to the express terms of FMC’s leases. FMC appealed the readjustment to the Interior Board of Land Appeals, arguing it was entitled to the reason- able readjustment called for under the terms of its pre- FCLAA leases. The Interior Board of Land Appeals upheld the readjustment, however, relying upon a Solici- tor’s Opinion which had concluded that section 6 of the FCLAA must be imposed at readjustment as a matter of law. FMC Corp., 74 IBLA 389 (1983) ; see Solicitor’s Opinion +M-36939, supra.” Invoking federal jurisdiction under 28 U.S.C. $§ 1331, 13861, FMC appealed to the United States District Court for the District of Wyo- ming. The district court reversed, holding that Inte- rior could not impose the newly created “primary term” coal leases—and their minimum 12!4% royalty—under the guise of readjusting the existing indeterminate term leases. The court concluded that to do so would inter- fere with vested lease rights. Since section 6 of the FCLAA did not even mention pre-FCLAA leases, much 2 FMC also objected to the timeliness of the readjustment. FMC does not seek review of the Tenth Circuit’s decision on that issue. 6 less clearly express an intent that they be altered, the district court held that section 6 of the FCLAA as a matter of law did not apply to pre-FCLAA leases at readjustment. FMC was entitled to a “reasonable” re- adjustment of its lease terms, which necessarily entailed a consideration of the facts and circumstances pertaining to FMC’s leases. FMC Wyoming Corp. v. Watt, 587 F. Supp. 1545, 1548 (D. Wyo. 1984). The Secretary appealed this portion of the district court’s Order and the Tenth Circuit reversed, holding that section 6 of the FCLAA as a matter of law did apply to pre-FCLAA leases. FMC Wyoming Corp. v. Hodel, 816 F.2d 496 (10th Cir. 1987). The Tenth Circuit focused on language in the 1920 Act that the leases were subject to the “condition that at the end of each twenty- year period succeeding the date of the lease such read- justment of terms and conditions may be made as the Secretary of the Interior may determine, unless other- wise provided by law at the time of the expiration of such periods.” 30 U.S.C. § 207 (1970) (emphasis added). Although FMC argued that Interior’s unilateral imposi- tion of the new primary term leases effectively destroyed many of the contract and property rights created by FMC’s indeterminate term leases, the Tenth Circuit held that section 6 of the FCLAA “otherwise provided” and applied to pre-FCLAA leases at readjustment because nothing in the Act indicated it should not. FMC Wyo- ming Corp. v. Hodel, 816 F.2d 496, at 501 (10th Cir. 1987). REASONS FOR GRANTING THE WRIT If the Tenth Circuit decision is allowed to stand, al- most 500 vested contracts, covering more than sixteen billion tons of federal coal,* will have been revoked and 3 At the time the FCLAA was enacted there were 533 existing coal leases. As of March 1986, there were 489 pre-FCLAA leases still in effect covering sixteen billion tons of coal. United States Congress Office of Technology Assessment Special Report, “Po- 7 replaced with new and less substantial contracts based on the language of a statute which does not mention the existing contracts. The effect of this decision will be to sanction unreasonable readjustments, and to replace existing leases with substantially different leases and an increased royalty rate at some ten times the existing rate. As the Tenth Circuit conceded, this result is reached without a shred of evidence that Congress intended to do so in 1976. | Since this Court has repeatedly held that statutes will not be construed to impair existing contract and property rights absent express language compelling that result,* the Tenth Circuit’s decision either squarely conflicts with settled Supreme Court precedent or stands for the in- defensible proposition that federal mineral leases do not convey significant contract or property rights. Either proposition has tremendous ramifications, since the Tenth Cireuit’s decision affects hundreds of vested mineral leases. Until now, federal mineral leases have always been held to convey significant contract and property rights. The Tenth Circuit’s decision calls that principle into question, however, since it permits Interior to re- write existing mineral leases even though Congress has expressed no intent that this should occur. Ultimately at stake, therefore, is the basic integrity of all federal mineral leases. Given the importance of this issue to the entire mineral industry, as well as to the nearly 500 owners of pre-FCLAA coal leases, the Tenth Circuit’s decision warrants review. tential Effects of Section 3 of the Federal Coal Leasing Amend- ments Act of 1976,” at 43 (March 1986). 4 See, e.g., Farmers and Mechanics Savings Bank of Minneapolis, v. Minnesota, 232 U.S. 516, 528 (1914), where this Court declared that an intent to impair the obligation of a contract of the United States “should not be presumed without the clearest legislative language requiring it.” 8 I. The Tenth Circuit’s Decixies Squarely Conflicts With Supreme Court Precedent. Congress deliberately chose indeterminate term coal leases over primary term coal leases when it enacted the Mineral Lands Leasing Act in recognition of the tre- mendous investment in time and money needed to develop coal. Solicitor’s Opinion #M-36939, supra, 88 Interior Dec. 1003, 1005 (1981); 51 Cong. Ree. 14,945 (1914) (statement of Rep. Thompson). The contract and prop- erty rights created by the indeterminate term coal leases issued under that Act are therefore vastly more substan- tial than those created and conveyed by the primary term coal leases created by section 6 of the FCLAA. Indeterminate terms have been reduced to twenty-year primary terms, readjustment now occurs every ten years instead of every twenty, coal leases are no longer sub- ject only to judicial cancellation, and production must occur within ten years or the lease expires. Cf. Ross v. City of Berkeley, 655 F. Supp. 820 (N.D. Cal. 1987) (changing a term lease to an indeterminate term lease constituted a taking of the lessor’s reversionary interest). Moreover, royalties have arbitrarily been increased ten times their previous amount, with absolutely no consid- eration of the facts and circumstances at FMC’s mines or the “reasonableness” of the new rate. Converting the almost 500 indeterminate term pre- FCLAA leases into primary term leases at readjustment, and dramatically increasing the royalty rate, substantially diminishes the contract and property rights represented by the pre-FCLAA leases. For this reason, FMC has consistently maintained that section 6 of the FCLAA applies only to new federal coal leases, because Congress expressed no intent that existing leases be altered: [T]he first rule of construction is that legislation must be considered as addressed to the future, not to the past. The rule is one of obvious justice and prevents the assigning of a quality or effect to acts or conduct which they did not have or did not con- 9 template when they were performed. The rule has been expressed in varying degrees of strength but always of one import, that a retrospective operation will not be given to a statute which interferes with antecedent rights or by which human action is regu- lated, unless such be “the unequivocal and inflexible import of the terms, and the manifest intention of the legislature.” Union Pacific Railroad v. Laramie Stock Yards Co., 281 U.S. 190, 199 (1913) (citations omitted) ; see also Greene v. United States, 376 U.S. 149 (1964). The Tenth Circuit, however, held that section 6 of the FCLAA and the “unless otherwise provided” clause ap- plied to pre-FCLAA leases because nothing in the FCLAA or its legislative history indicated it should not apply. FMC Wyoming Corp. v. Hodel, 816 F.2d_at 501. Surely, such a radical change in the terms of existing contracts must be based on more than mere silence. The “unless other- wise provided” clause cannot cause the FCLAA to apply in the absence of plainly expressed congressional intent to do so. The Tenth Circuit’s reasoning flatly conflicts with Supreme Court precedent, since this Court has re- peatedly held that statutes which would substantially disrupt pre-existing contract and property rights must be presumed to operate only prospectively. Bennett v. New Jersey, 470 U.S. 632, 638 (1985). By taking the opposite approach, the Tenth Circuit ignored the long- followed rule that “retrospective operation will not be given to a statute which interferes with antecedent rights. . . .” Union Pacific Railroad Co. v. Laramie Stock Yards Co., 231 U.S. at 199; United States v. Se- curity Industrial Bank, 459 U.S. 70, 79 (1982). The Tenth Circuit’s decision also conflicts with the settled principle that statutes should be construed to avoid constitutional issues. Lorillard v. Pons, 484 U.S. ~ 575, 577 (1978); United States v. Security Industrial Bank, 459 U.S. 70 (1982). As FMC pointed out in its brief, the application of section 6 to pre-FCLAA leases 10 raises substantial fifth amendment taking issues. See Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984). In addition to reducing the real property estate conveyed by the indeterminate term leases, blanket imposition of section 6 may force some pre-FCLAA lessees to abandon valuable coal deposits. In FMC’s case, for example, the new 1214% minimum royalty will likely require FMC to abandon millions of tons of otherwise mineable coal.® As this Court recently suggested, making it commer- cially impossible to mine coal may constitute a taking, and FMC has consistently pointed out that this is the case here. Keystone Bituminous Coal Association v. De Benedictis, 480 U.S. , 107 S.Ct. 1232, 1247-48 (1987); Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 414 (1922). Given the substantial disruption of existing rights caused by forcing section 6 of the FCLAA onto the pre- FCLAA lessees, it is clear the Tenth Circuit applied the wrong principle of statutory construction. This depar- ture from precedent has tremendous implications, as more than sixteen billion tons of federal coal are dedi- cated to pre-FCLAA leases. In addition, approximately 90% of the nearly 500 pre-FCLAA leases are located within the jurisdiction of the Tenth Circuit.® All of ° FMC’s mines have dipping coal seams, which require ever in- creasing amounts of overburden to be removed. This causes the cost of mining to increase continuously, and any cost of mining which cannot be passed through to customers will cause FMC to stop mining earlier than would otherwise be the case. FMC has calculated that the 1000% royalty increase caused by the section 6 minimum royalty will cost FMC 3% to 41% million tons of coal. Worse yet, FMC will be left with a royalty rate 1000% higher than that imposed on the neighboring coal mine, whose readjustment was waived by Interior. Appendix H, Record at 75-78; 113-116; 247-250; 84-95. This is clearly unreasonable, despite the “reason- able” readjustment language of its leases. That contractual right has been taken, however, by Interior’s mandatory application of the new primary term leases. 6 See n.3, supra, at 42-43. 11 these leases are affected by the Tenth Circuit’s deci- sion. Until now, coal leases were thought to convey substantial property rights. See, e.g., Rosebud Coal Sales Co. v. Andrus, 667 F.2d 949, 951 (10th Cir. 1982). In holding that Congress revoked these fundamental lease rights sub silentio, however, the Tenth Circuit has ignored that well established principle. Sun Oil Co. v. United States, 572 F.2d 786, 818 (Ct. Cl. 1978) ; Union Oil Co. of California v. Morton, 512 F.2d 743, 747, 751 (9th Cir. 1975). Il. The Tenth Circuit’s Decision Creates Taking Issues of First Impression Which Strike at the Heart of All Federal Mineral Leases. Because the application of section 6 of the FCLAA to pre-FCLAA leases represents a substantial diminution in the contract and property rights represented by the pre-FCLAA leases, the Tenth Circuit’s decision if upheld will force pre-FCLAA lessees to litigate the extent to which Congress constitutionally may diminish without compensation the rights conveyed by federal coal leases. Many coal lessees, like FMC, have invested millions of dollars in reliance upon the property and contract rights represented by their leases. Diminishing those rights therefore raises complex fifth amendment issues. Cf. United States v. General Motors Corp., 323 U.S. 373 (1945) (shortening a vested lease can constitute a tak- ing); and see First English Evangelical Lutheran Church v. Los Angeles, U.S. , 107 S.Ct. 2878 (1987) (citing Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922) (if regulation goes too far it will be recognized as a taking) ) ; Nollan v. California Coastal Commission, U.S. , 107 S.Ct. 3141 (1987) (con- ditioning grant of permission to rebuild a house on prop- erty owners’ transfer to public of beachfront property constitutes a taking for which the California Coastal Commission must pay the owners compensation). In fact, the issues raised are of first impression and will affect all federal coal leases, and possibly all mineral 12 leases issued under the Mineral Lands Leasing Act. This Court has never considered the extent to which federal mineral leases create property rights, nor has this Court ever been called upon to define the limits of congressional authority to alter existing mineral leases under its re- served powers. Those issues are squarely framed here, however, if the Tenth Circuit’s decision is allowed to stand. Although Interior argued below that no “taking” can occur with changes in federal coal leases since Con- gress initially reserved the power to “readjust” those leases every twenty years, citing Bowen v. Public Agen- cies Opposed to Social Security Entrapment, 477 U.S. 41, 106 S.Ct. 2390 (1986), it does not follow that Congress constitutionally can rewrite with impunity leases the gov- ernment has already entered into, even under its re- served legislative powers. Congress specifically intended to induce tremendous private investment when it created indeterminate term coal leases. 51 Cong. Ree. 14,945 11914) (statement of Rep. Thompson). Those leases therefore represent substantial property rights and Con- gress may not “readjust” them out of existence without compensation. Congress’ ability to change its mind is necessarily limited by the fifth amendment. Sinking- Fund Cases, 99 U.S. 700, 720-721 (1879); see Perry v. United States, 294 U.S. 330, 351 (1935) (due process clause may limit Congress from annulling contractual obligations) ; Lynch v. United States, 292 U.S. 571, 579 41934). The complex taking issues created by the Tenth Cir- cuit’s decision should not have arisen, as Congress never clearly expressed an intent to revoke existing coal lease rights upon readjustment. By ignoring statutory con- struction rules established by this Court, however, the Tenth Circuit has raised the specter of constitutional liti- gation. Since the Tenth Circuit’s decision affects hun- dreds of leases covering billions of tons of coal, it will not go unchallenged. Before difficult fifth amendment 13 issues are litigated, however, this Court should decide whether or not they need be.’ III. The Tenth Circuit’s Opinion Ignored Explicit Congres- sional Efforts to Avoid Taking Issues. Congress explicitly sought to avoid taking issues when it enacted the FCLAA. Recognizing it could not impose fundamental policy changes on existing leases without running into fifth amendment limitations, Congress care- fully drafted the FCLAA to avoid unnecessary disrup- tion of existing coal lease rights. This was clearly the case, for example, with section 3 of the FCLAA. To spur pre-FCLAA leases into production, Congress enacted a provision denying existing lessees new federal mineral leases if they did not develop their pre-FCLAA coal leases within ten years of enactment of the FCLAA. 30 U.S.C. § 201(a) (2) (A) (1982). Significantly, this pro- vision very carefully avoided interfering with the con- tract rights created by the pre-FCLAA coal leases them- selves, by only denying non-producing pre-FCLAA lessees the opportunity to obtain new leases. Section 6, on the other hand, provides that new leases must produce com- mercial quantities in ten years, or else they will be ter- minated. Applying this provision to pre-FCLAA leases therefore threatens those leases with termination, de- feating the entire purpose behind the carefully thought- out production incentives contained in section 3. By sanctioning Interior’s attempt to impose section 6 of the FCLAA onto pre-FCLAA leases, therefore, the Tenth Circuit’s opinion raises the precise taking issues Conu- gress tried to avoid: [We do not] wish to trigger sticky constitutional questions involving the taking of legislatively con- 7 This Court has frequently stated that it will not attribute to Congress an intent, in the enactment of a statute, to defy a provi- sion of the Constitution, “or even to come so near to doing so as to raise a serious question of constitutional law.” Federal Trade Cmmission v. American Tobacco Co., 264 U.S. 298, 307 (1924). 14 ferred rights to reacting to the deficiencies of cur- rent leasing law with the retroactive application of tough new lease standards and terms to lessees who legally gained their rights relying on the provisions of current law. Rather, Mr. Chairman, it is the pur- pose of the legislation before us today to insure that any future leasing and lease administration is car- ried out under congressionally mandated guidelines that will require a fair return to the public, diligent, efficient, and orderly development and production of the coal resources in a leasing tract, and adequate environmental and social planning. 122 Cong. Rec. 488 (1976) (statement of Rep. Mink, principal author of the FCLAA). The Tenth Circuit’s reliance on the “unless otherwise provided by law” clause of the 1920 Act does not avoid the taking issue. In the absence of clear legislative in- tent to apply FCLAA upon readjustment of pre-FCLAA leases, that provision is not triggered. As the Tenth Cir- cuit admitted, there is not clear legislative intent. The Tenth Circuit's analysis is in error. 15 CONCLUSION The decision by the Tenth Circuit squarely conflicts with United States Supreme Court precedent and calls into question the basic contractual integrity of all fed- eral mineral leases. It permits Interior to revoke funda- mental rights held under hundreds of existing federal coal leases even though the statute relied upon to do so does not mention those leases or otherwise authorize Interior to do so. For these reasons, it is respectfully submitted that this petition for certiorari should be granted. KENNETH D. HUBBARD (Counsel of Record) MICHAEL J. BRENNAN HOLLAND & HART 1875 Eye Street, N.W. _ Suite 1200 Washington, D.C. 20006 (202) 872-1101 MARILYN S. KITE PATRICK R. DAY HOLLAND & HART 2020 Carey Avenue Suite 500 Cheyenne, WY 82001 (307) 632-2160 October 1987 Counsel for Petitioner APPENDICES ~ ee. la APPENDIX A UNITED STATES COURT OF APPEALS TENTH CIRCUIT Nos. 84-2175, 84-2208 FMC WYOMING CORPORATION, Plaintiff-A ppellee/Cross-A ppellant, Ve DONALD P. HODEL, as Secretary of the United States Department of the Interior; ROBERT F. BURFORD, as Director of the Bureau of Land Management, United States Department of the Interior; JIM H. TAYLOR, as Chief, Branch of Solid Minerals, Wyoming State Of- fice, Bureau of Land Management; MARIA B. BOHL, as Former Chief, Land and Mining, Wyoming State Of- fice, Bureau of Land Management; HAROLD G. STIN- CHCOMB, as Former Chief, Branch of Energy Minerals, Wyoming State BLM Office; J. STAN MCKEE, as For- mer Acting Chief, Branch of Solid Minerals, Wyoming State Bureau of Land Management; and the UNITED STATES DEPARTMENT OF THE INTERIOR, Defendants-A ppellants /Cross-A ppellees, COLORADO-UTE ELECTRIC ASSOCIATION, INC.; NORTHERN STATES POWER COMPANY; PEABODY HOLDING Com- PANY, INC.; SYSTEM FUELS, INC. ; WESTERN COAL TRAFFIC LEAGUE; COLOWYO COAL COMPANY, Amicus Curiae. April 9, 1987 Rehearing Denied in No. 84-2175 July 8, 1987 2a Marilyn S. Kite (Patrick R. Day of Holland & Hart, with her, on the briefs), Cheyenne, Wyo., for plaintiff- appellee/cross-appeilant. Jean A. Kingrey, Sp. Litigation Counsel, Dept. of Jus- tice (F. Henry Habicht II, Asst. Atty. Gen., Robert Klarquist, Atty., Dept. of Justice, of counsel, Lyle K. Rising and Stephen Brown, Office of Sol., Dept. of In- terior, with her, on brief), Washington, D.C., for de- fendants-appellants /cross-appellees. L. Christian Hauck and John R. McNeill, Montrose, Colo., for amicus curiae Colorado-Ute Elec. Ass’n. Jack F. Sjoholm, Minneapolis, Minn., for amicus curiae Northern States Power Co. Terry O’Connor, Denver, Colo., for amicus curiae Peabody Holding Co., Inc. and System Fuels, Inc. Jon N. Halverson and Charles L. Kaiser of Davis, Graham & Stubbs, Denver, Colo., for amicus curiae Colowyo Coal Co. William L. Slover, C. Michael Loftus, Donald G. Avery and Pauline E. Waschek of Slover & Loftus, Washing- ton, D.C., for amicus curiae Western Coal Traffic League. Before LOGAN, MOORE, and MCWILLIAMS, Circuit Judges. McWILLIAMS, Circuit Judge. This dispute concerns a readjustment by the Secre- tary of the Interior of the terms and conditions of two coal leases between the United States and FMC Cor- poration, a Delaware corporation with its principal place of business in Chicago, Illinois, and qualified to do busi- ness in Wyoming. On administrative appeal, the Interior Board of Land Appeals (IBLA) held that the royalty readjustment was timely and that the adjusted royalty rate was lawful. FMC Corp., 74 IBLA 389 (1983). Ta eeemeeniaamaeeneaniilll 3a Thereafter, FMC Corporation filed a petition for review in the United States District Court for the District of Wyoming.: On cross-motions for summary judgment the district court affirmed, in part, and reversed, in part, the decision of the IBLA, the district court holding that the royalty readjustment was timely but unlawful. FMC Wyoming Corp. v. Watt, 587 F.Supp. 1545 (D.Wyo. 1984). Both parties appeal. We affirm, in part, and re- verse, in part, the judgment of the district court, holding that the royalty readjustment was both timely and law- ful. This case is a companion case to Coastal States Energy Co. v. Hodel, 816 F.2d 502 (10th Cir. 1987). Our starting point is the Mineral Lands Leasing Act of 1920 (MLLA). 41 Stat. 437 (1920), amended by 30 U.S.C. § 201 et. seq. (1976). That Act provided, inter alia, that the Department of Interior could issue leases on federal lands for an indeterminate term to private parties to mine and remove coal at a royalty rate to be fixed by the Secretary, such rate, however, not to be less than five cents per ton of coal and subject to the right of the Secretary to readjust the terms and condi- tions of the lease, including the royalty rate, at the end of each 20-year period following the issuance of the lease.” On March 1, 1963, the two leases here involved were entered into by the Secretary of the Interior, on behalf 1 After instituting the present proceeding, FMC Corporation assigned its interest in the two leases to FMC Wyoming Corpora- tion, and the latter was substituted as the plaintiff in this proceed- ing. However, FMC Wyoming Corporation will hereinafter be referred to as simply FMC. 2 Specifically, Section 7 of MLLA (1920) provided as follows: {l]eases shall be for an indeterminate period . . . upon the further condition that at the end of each 20-year period suc- ceeding the date of the lease such readjustment of terms and conditions may be made as the Secretary of the Interior may determine, unless otherwise provided by law at the expiration of such periods. 4a of the United States, and FMC. The leases covered land near Kemmerer, Wvoming, now known as the Skull Point Mine. Both leases were made subject to MLLA (1920) and called for a royalty payment of 1714 cents per ton of coal while providing for periodic readjust- ment of the terms and conditions of the leases at 20- year intervals.® On August 4, 1976, the Federal Coal Leasing Amend- ments Act (FCLAA) was enacted by Congress which amended much of the Act of 1920. 30 U.S.C. § 201 et seq. (1982). FCLAA (1976) included a provision that royalty on a coal lease shall be in such amount as the Secretary shal! determine, but not less than 1214% of the value of the coal.t 30 U.S.C. § 207 (1982). The 20-year anniversary date on the two coal leases held by FMC was March 1, 1988. On August 23, 1982, some six months before the March 1, 1983, anniversary date, the Bureau of Land Management (BLM) sent for- mal notice to FMC of its intent to readjust the terms and conditions of these two leases on their anniversary dates.© On December 22, 1982, 68 days prior to the 3 Specifically, both of FMC’s leases reserved the following right to the lessor: [t]he right reasonably to readjust and fix royalties payable thereunder and other terms and conditions at the end of 20 years from the date hereof and thereafter at the end of each succeeding 20-year period during the continuance of this lease unless otherwise provided by law at the time of the expiration of any such period. 4 Exempted from the 1214% royalty rate was coal recovered by underground mining. The rate for this coal was left to the discretion of the Secretary. 30 U.S.C. § 207 (1982). However as the leases held by FMC cover only surface mined coal, the statu- torily set rate of 1214% is the only rate at issue in this case. 5 This notice informed FMC that “the lease terms and conditions will be readjusted under the provisions of 43 C.F.R. § 3451.” The cited regulation provided that the lease royalty shall be readjusted 5a March 1, 1983, anniversary date, the terms of BLM’s readjustments were sent FMC. Included in these read- justments was a readjusted royalty rate of 12!2% of the value of the coal mined. The notice of the adjust- ments provided that the readjustments would become ef- fective on March 1, 1983, the 20-year anniversary date of the two leases, but, at the same time, allowed FMC 60 days to file any objections. FMC filed objections on February 11, 1983. These objections were dismissed by the BLM on April 6, 1983. FMC appealed the BLM de- cision to the IBLA, the latter upholding the BLM’s de- cision on July 29, 1983. 74 IBLA 389 (1983). FMC thereafter sought judicial review of the IBLA’s decision in the United States District Court for the District of Wyoming. No. 84-2208 The district court held that the Secretary’s readjust- ment of the royalty rate in FMC’s leases was timely. FMC appeals from that part of the district court’s final judgment. We are in accord with the district court’s resolution of this matter. Section 7 of MLLA (1920) stated that “readjust- ments’ may be made “at the end of each 20-year period succeeding the date of the lease. .. .”* In line with the provisions in section 7 of MLLA (1920), FMC’s leases also reserve to the Secretary the right to readjust the terms and conditions of the lease “at the end of 20 years from the date hereof [the date of the lease]. ...” As stated, FMC’s two leases were dated March 1, 1963, and, accordingly, the 20-year anniversary date for both leases to conform to the minimum rate proscribed in § 3473.3-2. 43 C.F.R. § 3451.1(a) (2) (1986). Section 3473.3-2(a) (2) required a royalty of not less than 1214% of the value of the surface mined coal. 6 FCLAA’s § 6 which replaced §7 of the MLLA (1920) adopted the same language requiring readjustment to be “at the end of” the applicable term. 30 U.S.C. § 207 (1982). 6a was March 1, 1983. It is uncontested that BLM gave FMC notice on August 23, 1982, over six months before the anniversary date of the two leases, that BLM in- tended to readjust the terms and conditions of the two leases. FMC’s position on the timeliness issue is that under MLLA (1920) and the leases here involved the final decision of the BLM to readjust terms and conditions of an existing coal lease may not occur after the 20- year anniversary date of the lease involved. In this case, the final action of the BLM readjusting the terms and conditions of FMC’s leases occurred on April 6, 1983, 387 days after the anniversary date of the two leases, i.e., March 1, 1983. Thus, argues FMC, the re- adjustments of the existing leases did not occur ‘‘at the end” of 20 years after the date of the lease, as required by MLLA (1920) and the leases themselves. The Secretary’s position is that there is compliance with both the statute and the language of the leases if the notice of intent to readjust is given the lessee prior to the 20-year anniversary date.’ In the instant case, such notice was given more than six months prior to the 20-year anniversary date. Moreover, the Secretary points out that, though under regulation he was not required to advise the lessee before the 20-year anniversary date of the particular readjustments to be made, in the instant case FMC nonetheless advised of the readjustments, in- cluding the increase of the royalty rate to the statutory 7™The Secretary has promulgated regulations covering coal lease readjustments. These regulations require notice of intent to re- adjust prior to the anniversary date but then allow for two years in which to finalize the terms. 43 C.F.R. §3451.1(c) (1986). Prior to being finalized, the Secretary published regulations ca'ling for notice of intent on or before the readjustment date. 44 Fed. Reg. 16832-33 (1979). Although many comments were received, not one suggested that the BLM must complete the readjustment prior to the anniversary date of the lease. Ta minimum set forth in FCLAA (1976), on December 22, 1982, 68 days before the March 1, 1983, anniversary date. In connection with the timeliness issue, both FMC and the Secretary rely on Rosebud Coal Sales Co., Inc. v. Andrus, 667 F.2d 949 (10th Cir. 1982). The coal lease in Rosebud was entered into on April 5, 1935, and, under MLLA (1920) and the terms of the lease, was subject to readjustment by the Secretary at the end of each succeeding 20-year period. Accordingly, the end of the second 20-year period occurred on April 5, 1975. In Rosebud, there was no notice of any sort sent the coal company by any representative of the De- partment of the Interior until October 4, 1977, two and one-half years after the expiration of the second 20-year period. On this latter date a notice was sent the coal company by the Department advising the former that the terms and conditions of the existing lease were going to be readjusted to conform with the requirements of FCLAA {1976). The IBLA held that there could be a readjust- ment of the terms and conditions of Rosebud’s lease at a time over two and one-half years after the anniversary date of the lease. California Portland Cement Co., Rose- bud Coal Sales Co., 40 IBLA 339 (1979). Rosebud sought judicial review of that administrative decision. The United States District Court for the District of Wyoming held that the lease could not be readjusted two and one-half years after the anniversary date of the lease and reversed the IBLA’s decision. On appeal, in Rosebud, we affirmed the district court, stating that the issue was a “narrow one”, i.e., ‘“whether by a notice given about two and one-half years after the anniversary date the Department has authority to exer- vise a right given it under the Mineral Leasing Act to readjust the terms of the coal lease.” 667 F.2d at 950. Our answer in Rosebud to that narrow issue was that such notice did not give the Department authority to 8a readjust. In so holding, we stated that MLLA (1920) and the lease provisions “provide a right to the govern- ment in the nature of an option to make adjustments it considers necessary or to let the opportunity pass.” Id. at 951. Further, we indicated quite clearly that this option must be exercised in timely fashion, or it is waived by inaction, and that an attempt two and one- half years after the anniversary date to serve notice on the Coal Company of an intent to readjust is not timely. In our view, Rosebud strongly suggests that a notice of an intent to readjust terms and conditions of a coal lease given a coal company on or shortly before the 20-year anniversary date preserves the Department’s right under MLLA and the lease provisions to readjust the terms within a reasonable time thereafter, and we now so hold.® No. 84-2175 The district court, after holding that the Secretary’s readjustment of the royalty rate in FMC’s two leases 8In Rosebud, notice that there would be readjustments in the terms and conditions of the lease was given the company on Oc- tober 4 1977, two and one-half years after the 20-year anniversary date. On November 28, 1977, Rosebud was given the readjusted terms. Rosebud filed objections which were subsequently overruled by the BLM. The decision of the IBLA upholding the ruling of BLM occurred on May 10, 1979 (40 IBLA 339). On judicial review, the focus of the district court, and of this court on appeal, was exclusively on the date of notice, and the date of final action by BLM was not mentioned, iet alone relied on, by either the district court or this court. Rather, as stated, both the district court and this court were concerned only with the date of the notice of intent to readjust. Option contracts are usually exercised by giving notice of ac- ceptance. Restatement (Second) of Contracts, §63, comment f (1979); A. Corbin, 1A Corbin on Contracts, § 264 (1963). Al- though time is of the essence in accepting the option; once a timely acceptance is made, additional time may be allowed to perform the terms of the option. Jd., § 273 at 600. Hence once the Depart- ment has exercised its option to readjust in a timely fashion, it has a reasonable time thereafter in which to set the terms of the lease. 9a to 1214% of the value of the coal was timely, thereafter held that the readjustment was improper. The Secretary appeals from that part of the district court’s judgment. In essence, the district court held that section 6 of FCLAA (1976) did not apply to leases pre-existing FCLAA (1976) even where the anniversary date of the lease was subsequent to FCLAA (1976) and that, such being the case, by the terms of FMC’s leases any readjustment must be “reasonable” and “should only be altered upon a complete evaluation of all the factors involved in an individual case.” We are not in accord with this rea- soning or the result reached by the district court. Section 7 of MILLA (1920), set forth above in foot- note 2, provides, in effect, that a lease shall be for an indeterminate period at a specified royalty rate, fixed by the Secretary, of not less than five cents per ton, subject to the further condition that at the end of each 20-year period “such readjustment of terms and conditions may be made as the Secretary of the Interior may determine, unless otherwise provided by law at the expiration of such periods.’ The leases at issue incorporated this lan- guage reserving in the lessor the right to readjust terms and conditions “unless otherwise provided by law.” The quoted language in MLLA (1920) incorporated into the leases is of particular importance. To us it quite clearly means that at the end of a 20-year period the Secretary may fix, inter alia, such a new royalty rate as he, or she, may determine is proper, unless law in effect at the expiration of such 20-year period provides differently.° ® We do not interpret the language in MLLA (1920), which was incorporated verbatim in the two leases here involved, as only meaning that the Secretary on an anniversary date may readjust unless the law in effect at the time of readjustment has taken that right away. It no doubt covers that possibility. But in our view it also permits Congress to allow the Secretary to continue to have the right to readjust, but at the same time circumscribe that right by enacting, for example, a revised minimum royalty rate. The power to do the greater includes the power to do the lesser. 10a Applied to the present case, such means that the Secre- tary on the anniversary date of FMC’s leases could in- crease the royalty rate as he deemed proper, subject, however, to any statutory law in effect on such anni- versary date. And statutory law in effect on FMC’s an- niversary date provided, in essence, that though the Sec- retary could, as before, change the previously existing royalty rate to one he determined to be proper, the ad- justed new rate could not be less than 1214% of the value of the coal. 30 U.S.C. § 207 (1982). Stated differently, MLLA (1920) had a minimum royalty rate of five cents per ton of coal, and FCLAA (1976) raised the minimum royalty rate to 12'4% of the value of the coal.’® Ad- mittedly, this is a drastic increase in royalty rate, but such is a matter for Congress. Further, and impor- tantly, we find nothing in our reading of FCLAA (1976), or in its legislative history, to indicate that FCLAA (1976) was not to be applied to pre-FCLAA coal leases on their post-FCLAA anniversary date.” 10FMC contends applying FCLAA’s terms at readjustment of a pre-FCLAA leases constitutes a retroactive application of the statute. In Rosebud we noted that FCLAA was not intended to be retroactive. 667 F.2d at 952. While we continue to adhere to that belief, we are not persuaded that the statute was applied retroactively in this case. In Rosebud the lease at issue came due for readjustment over a year before FCLAA was passed by Con- gress. In contrast FMC’s leases could only be readjusted as of March 1, 1983, over six years after FCLAA amended the MLLA (1920). The Secretary clearly had the right to set new terms on the readjustment date and it is not a retroactive application of FCLAA to set the new terms in accordance with existing law. 11To the contrary, there is evidence that FCLAA terms were meant to apply on post-FCLAA readjustments. Specifically when Congress amended portions of FCLAA in 1978 it was aware of Interior’s interpretation that FCLAA terms were to be applied at the time of readjustment. See S.Rep. No. 1169, 95th Cong., 2d Sess. 7 (1978) (In discussing the 1978 modification of FCLAA‘s § 3, the report noted that “all leases of course would be subject to the provisions of the 1976 amendments at the expiration of their original lease terms.”) ; see also Coal Leasing Amendments, Hear- a | lla As stated, FMC’s leases generally tracked the lan- guage of MLLA (1920) with the addition, however, of the word “reasonably”, i.e., the lessors’ “right reasonably to_readjust.” However, we do not regard the use of the word “reasonably” to alter the present situation, since the leases themselves used the additional statutory lan- guage “unless otherwise provided by law at the expira- tion of any such period.” And, as indicated, the law as of March 1, 1983, did “otherwise provide.” ?” In sum, on the readjusted royalty rate issue, we be- lieve the result reached gives effect to the plain meaning of the applicable statutes, which is of course controlling, and at the same time squares with the language used in the leases themselves. Judgment affirmed in part and reversed in part, and case remanded for further proceedings consonant with this opinion. ings on $3189, Before the Subcommittee on Energy Production and Supply, 95th Cong., 2d Sess. 15 (1978) (statement of Guy Martin, Assistant Secretary of Interior) ; Letter from Department of Interior, Solieitor’s Office, to Senator Jackson (Sept. 12, 1978). Congress’ failure to alter this interpretation while amending the statute in other respects indicates that legislative intent has been correctly discerned. Commodity Futures Trading C’mmn v. Schor, U.S. , 106 S.Ct. 3245, 3255, 92 L.Ed.2d 675 (1986) ; North Haven Board of Education v. Bell, 456 U.S. 512, 535, 102 S.Ct. 1912, 1925, 72 L.Ed.2d 299 (1982). 12 FMC argues it is at least entitled to an individualized evalua- tion of its lease at readjustment. However, as the Secretary was directed by law to raise the royalty rate to at least 1212% of the value of the coal mined, and individualized evaluation could not have produced any result more favorable to FMC. Further Interior does allow objections to be filed and also provides a process by which they may be considered. See 43 C.F.R. § 3452.1-1(d). In addition Congress has provided for individualized rate relief in § 39 when necessary to promote development or to allow the leases to be successfully operated. 30 U.S.C. § 209 (1982). FMC has not yet applied for this relief. 12a APPENDIX B UNITED STATES DISTRICT COURT D. WYOMING No. C83-347-K FMC WYOMING CORPORATION, Plaintiff, v. JAMES G. WATT, as Secretary of the United States De- partment of the Interior; ROBERT F. BURFORD, as Di- rector of the Bureau of Land Management, United States Department of the Interior; JIM H. TAYLOR, as Chief, Branch of Solid Minerals, Wyoming State Office Bureau of Land Management; MARLA B. BOHL, as former Chief, Land and Mining, Wyoming State Of- fice, Bureau of Land Management; HAROLD G. STIN- CHCOMB, as former Chief, Branch of Energy Minerals, Wyoming State BLM Office; J. STAN MCKEE, as for- mer Acting Chief, Branch of Solid Minerals, Wyoming State BLM Office; and the UNITED STATES DEPART- MENT OF THE INTERIOR, Defendants. June 29, 1984 Marilyn S. Kite, Holland & Hart, Cheyenne, Wyo., for plaintiff. Richard A. Stacy, U.S. Atty., for the District of Wyoming, Cheyenne, Wyo., and Lyle K. Rising, Dept. of the Interior, Denver, Colo., for defendants. 13a ORDER REVERSING DECISION OF INTERIOR BOARD OF LAND APPEALS WITH FINDINGS KERR, District Judge. The above-entitled matter having come on regularly for hearing before the Court upon cross motions for summary judgment and upon request for judicial review of the decision of the Interior Board of Land Appeals (IBLA), plaintiff appearing by and through its attorney, Marilyn S. Kite, and the federal defendants appearing by and through their attorneys, Richard A. Stacy and Lyle K. Rising, and the Court naving heard the argu- ments of counsel in support of and in opposition to said motions and having carefully considered the memoranda on file herein and being fully advised in the premises, FINDS as follows: This matter was originally brought before this Court as an appeal from the FBLA affirmance of a BLM deci- sion which held (1) that notice of readjustment given on or before the 20 year anniversary of the lease was suffi- cient for timely readjustment under the statute, and (2) that the 1214% royalty rate named in the Federal Coal Leasing Amendments Act of 1976 (FCLAA) was man- datory upon readjustment of pre-existing leases. The relevant facts are as follows: The United States, through defendant Secretary, issued two federal coal Jeases to plaintiff on March 1, 1963. The royalty rate fixed in the leases was 1714 cents per ton for strip mined coal. The United States expressly re- served the “right reasonably to readjust and fix royalties payable hereunder and other terms and conditions at the end of 20 years from the date hereof.” The leases were also subject to the Mineral Lands Leasing Act of 1920 (MLLA) and all reasonable regulations of the Secretary then in force. iiss, | l4a Plaintiff opened the Skull Point Mine near Kemmerer, Wyoming, making substantial investment in the develop- ment and production of the coal therein. The mine has been classified as a special bituminous coal mine wherein the cost of extracting the coal increases over the life of the mine due to dipping coal seams. Under that classifi- cation the mine is exempt from certain reclamation standards under the Surface Mining Control and Recla- mation Act. Only one other mine is so classified in the entire United States—the Pittsburgh and Midway Mine neighboring plaintiff’s Skull Point Mine. Plaintiff’s roy- alty was readjusted in April 1983. The anniversary date allowing readjustment of the Pittsburgh and Midway lease does not occur until 1998. In 1976, Section 7 of the MLLA of 1920 which was applicable to plaintiff, was amended to read as follows: Sec. 7 (a) A coal lease shall be for a term of twenty years and for so long thereafter as coal is produced annually in commercial quantities from that lease. Any lease which is not producing in com- mercial quantities at the end of ten years shall be terminated. The Secretary shall by regulation pre- scribe annual rentals on leases. A lease shall require payment of a royalty in such amount as the Secre- tary shall determine of not less than 1214, per cen- tum of the value of coal as defined by regulation, except the Secretary may determine a Jesser amount in the case of coal recovered by underground mining operations. The lease shall inelude such other terms and conditions as the Secretary shall determine. Such rentals and royalties and other terms and con- ditions of the lease will be subject to readjustment at the end of its primary term of twenty years and at the end of each ten-year period thereafter if the lease is extended. March 1, 1983 was the 20 year anniversary date of plaintiff’s lease whereupon the leases could be readjusted. 15a Plaintiff was notified on August 23, 1982 that BLM in- tended to readjust the leases and then was notified by BLM on December 22, 1982 of the proposed terms and conditions of the readjustment. Plaintiff objected to the proposed terms of the readjustment on February 11, 1983. The BLM’s response to objections and finalization of the readjustment terms (which still included the 121% royalty rate) were contained in a decision dated April 6, 1983. Plaintiff claims that readjustment was untimely and is, therefore, barred. Prior to the FCLAA, the terms of leases subject to readjustment were readjusted on an individual basis. An evaluation was made on the specific facts of each mining operation. Plaintiff presented a factual statement to the BLM and to the IBLA outlining their situation which they contended made the 1214% royalty unreasonable. No hearing was held on the matter. BLM, affirmed by the IBLA, determined that the 1214% royalty rate was absolute and mandatory upon readjustment of pre- FCLAA leases. Plaintiff contends that such a readjust- ment is arbitrary, capricious and an abuse of discretion. Both parties rely on the case of Rosebud Coal Sales Co. v. Andrus, No. C79-160B (D.Wyo. June 10, 1980), which case was appealed and affirmed in the Tenth Circuit, Rosebud Coal Sales Co. v. Andrus, 667 F.2d 949 (10th Cir. 1982). This Court has made a careful reading of the case, on both levels. As for the untimely readjust- ment, this Court finds the Rosebud case dispositive and concludes that readjustment was not untimely in the present case. In the Rosebud case the anniversary date of readjustment was April 5, 1975. Notice of Intent to Readjust was not given until October 4, 1977. Both the district court and the Tenth Circuit Court of Appeals found that such readjustment was untimely and thereby barred. However, both courts also indicate that it is notice of intent to readjust that must be given prior to the anniversary date. The district court stated: 16a Rosebud did nothing here that would have prevented the United States from giving it notice prior to the twenty year anniversary date that the United States intended to readjust the terms of the lease. (cita- tions omitted) Rosebud, C79-160B supra at 10. On October 4, 1977 the plaintiff was sent a notice that the Department intended to readjust the lease terms. No excuse was offered to show why that simple notice couldn’t have been given as easily on April 4, 1975, prior to the end of the term. 7d. The failure to provide the plaintiff any type of notice prior to the twenty year anniversary date does not evidence good faith performance of the ex- press terms of its contract by the government... . Id. at 10, 11. The government could easily have notified Rosebud on April 5, 1975 at least that it intended to re- adjust the terms of its lease. Id. at 14. The Tenth Circuit Court of Appeals agreed with the district court, affirmed its decision, and stated: The Government made no showing that the giving of notice at or before the anniversary date was not ‘feasible.’ 667 F.2d at 953. The failure to give notice in 1975 without a reason to demonstrate it was not ‘feasible’ must constitute a failure by the Department to follow its own regu- lations had an adjustment been contemplated. 7d. It is clear from the ruling in Rosebud and the explana- tions set forth by the courts therein, that notice prior to the anniversary date made readjustment in the pres- ent case timely. 17a However, the second issue for consideration is whether BLM and IBLA were arbitrary and capricious in man- datorily applying the 1214% royalty rate to the leases in question, without consideration of plaintiff’s specific fact situation. This Court finds that such application of the 1214% royalty rate is arbitrary, capricious, and an abuse of discretion. Defendants contend that the amendment to Section 7 (cited above) which provides: “A lease shall require pay- ment of a royalty in such amount as the Secretary shall determine of not less than 1214 per centum of the value of coal is defined by regulation” requires that the 1214% royalty rate be applied, not only to new leases as of the amendment date, but also mandatorily to pre-existing leases upon readjustment. This is a change from the method of readjustment applied to leases prior to the 1976 amendment, which method provided for an eviden- tiary basis, an individual analysis of the lease subject to readjustment. There is no indication in any part of the amendment that the method of readjustment is to be altered. Presumably, new leases, subject to the 1214% royalty will be reviewed on their factual bases when the readjustment period comes due. To impose a new royalty rate at a 1000% increase without any type of factual analysis or consideration is not only arbitrary, it also defies the notion of equity. The leases in this ease, and all leases issued prior to the 1976 amendment had a minimum royalty rate set. At the time of readjustment, that rate can be altered, but it can and should only be altered upon a complete evaluation of all the factors in- volved in an individual case. For example, one factor which should be considered in the present matter is the existence of a competitive bituminous coal mine which is not subject to readjustment and, therefore, the allegedly mandatory 1214% royalty rate could not be applied until 1998. A second factor is the very nature of plaintiff’s mine, which presumably will be forced to produce less 18a coal as a 1214% royalty rate contributes to making the costs of mining prohibitive. It should not be overlooked that the leases provided for “reasonable” readjustment. It appears to this Court that a readjustment increasing the royalty rate over 1000%, which is based only upon mandatory application of a stat- utory minimum to pre-existing leases, without any con- sideration of facts involved in the individual leases is far from reasonable. The Rosebud case, discussed earlier and cited by both parties, makes some reference to this issue, supportive of this Court’s position. From the district court opinion: The record fails to support the imposition of a roy- alty of 12!1,%. No individual economic analysis of this lease was made. C79-160B, slip op. at 15. No evidentiary basis was provided for the royalty rate established by the regulation. Jd. at 16. Some mention is made by the parties concerning retro- activity. Plaintiff contends that the 1976 1214% royalty rate cannot be retroactively applied to old leases upon re- adjustment. Defendants contend that applying the new royalty rate to readjustments which occur after the 1976 amendment is not retroactive application. The Tenth Circuit Court of Appeals in the Rosebud case stated: The Section 7 amendment provided for a primary term and also for the royalty to be not less than 12.5%. There is no suggestion whatever that the amendment was to be retroactive and the contrary is indicated. 667 F.2d at 952. This Court is of the opinion that mandatory applica- tion of the 1214% royalty rate to pre-existing leases, without a factual evaluation, is retroactive application of the provision, which everyone concedes was not intended and is not proper. The readjustment of existing leases a ee | 19a is not a new event, rather it is an ongoing part of the original lease. To mandatorily apply a minimum royalty rate of 1214% is in essence to alter the original lease issued on March 1, 1963 with a 1714 cent royalty rate imposed under a statutorily minimum royalty rate of 5 cents per ton. That 5 cents royalty rate was, of course, only a statutory minimum, subject to the terms of the lease itself as well as the readjustment process, normally occurring after a case-by-case factual evaluation. Now defendants attempt to change the method of readjustment and the minimum royalty rate is a change of the original lease and thereby a retroactive application of the 1976 amendment. Finally, the Court notes that defendants argue that plaintiff has not exhausted its administrative remedies in that it has not applied for a royalty reduction under 30 U.S.C. § 209. That provision provides: The Secretary of the Interior, for the purpose of encouraging the greatest ultimate recovery of coal, oil, gas, oil shale * * * and in the interest of con- servation of natural resources, is authorized to waive, suspend, or reduce the rental, or minimum royalty, or reduce the royalty on an entire leasehold, or on any tract or portion thereof segregated for royalty purposes, whenever in his judgment it is necessary to do so in order to promote development, or whenever in his judgment the leases cannot be successfully operated under the terms provided therein. * * *, However, the Department of Interior in its interpretation of this provision shows an intent for sparing use (if at all), only upon a showing of hardship and for a tem- porary period of time (there is some indication no re- duction could exceed three years). 44 Fed.Reg. 42607 (1969) ; 87 I.D. 69 (Dec. 11, 1979). Even were the roy- alty reduced in plaintiff’s case under this provision, it i 20a would not be a solution to plaintiff’s problems with the lease readjustment. Furthermore, a temporary reduction of the royalty rate is no substitute for a reasonable re- adjustment. Were the readjustment properly based on the individual factors in plaintiff’s case, it is likely that a request for reduction under 30 U.S.C. § 209 would be unnecessary. In summary, while the readjustment process was timely in the present case, the 1214% royalty rate was imposed arbitrarily and capriciously. Before readjustment can be completed, the BLM must make careful consideration of the facts and circumstances involved in, and especially those specific to plaintiff’s leases. The royalty rate re- adjustment must be reasonable in light of those facts and circumstances. The 1214% royalty rate, though now a statutory minimum, cannot be flatly and mandatorily imposed on pre-existing leases at the time of readjust- ment. For the above-stated reasons, NOW, THEREFORE, IT IS ORDERED that the decision of the IBLA be, and the same is, hereby reversed and the matter is remanded for proceedings consistent with this opinion. 2la APPENDIX C [LOGO] UNITED STATES DEPARTMENT OF THE INTERIOR OFFICE OF HEARINGS AND APPEALS INTERIOR BOARD OF LAND APPEALS 4015 Wilson Boulevard Arlington, Virginia 22203 FMC CORP. {BLA 83-594 Dated July 29, 1983 Appeal from a decision of the Wyoming State Office, Bureau of Land—~Management, dismissing a protest re- garding readjustment of coal leases, W-061421 and W- 061422. Affirmed. APPEARANCES: Marilyn S. Kite, Esq., Carol A. Statkus, Esq., Cheyenne, Wyoming, and John F. Shep- herd, Esq., Washington, D.C., for appellant. OPINION BY ADMINISTRATIVE JUDGE STUEBING FMC Corporation (FMC) appeals an April 6, 1983, decision of the Wyoming State Office, Bureau of Land Management (BLM), dismissing FMC’s objections to BLM’s proposed readjustment of coal leases W-061421 and W-061422. The two leases were issued to FMC on March 1, 1963, pursuant to the Mineral Leasing Act of 1920. Under section 3(d) of both leases, the United States reserved the right to readjust royalties and other terms and con- ditions at the end of 20 years from the date of the lease. BLM informed FMC of its proposed readjustment of the two leases in a notice dated August 23, 1982. In a no- tice dated December 22, 1982, BLM presented the pro- 22a posed terms and conditions to FMC and informed it that the readjustment would be effective March 1, 1983, the anniversary date of the lease. On February 11, 1983, appellant filed a protest with BLM objecting to the pro- posed increase of the production royalty and the advance royalty requirement. BLM dismissed the protest in a de- cision dated April 6, 1983, addressing each objection pre- sented by appellant.’ 1 The following are FMC’s points of objections and BLM’s re- sponses to those points as contained in the Apr. 6, 1983, decision. “Objection 1: ‘Nonapplicability of FCLAA to existing leases.’ “Response: Leases issued prior to August 4, 1976, subject to readjustment after August 4, 1976, must be readjusted to include mandatory terms and conditions of the FCLAA. See Solicitor’s Opinion M-36939, 88 I.D. 1003 (1981) and Coastal States Energy Co., 70 IBLA 386 (1983). “Objection 2: ‘FMC is only subject to regulations in force at the time of execution of the lease.’ “Response: Current regulations promulgated to implement the FCLAA must be imposed on pre-FCLAA leases readjusted after August 4, 1976. “Objection 3: ‘Readjustment must be reasonable.’ “Response: The new royalty rates imposed in the readjusted leases conform to the mandatory royalty rates as set out in FCLAA. “Objection 4: ‘The proposed production royalty increase is an unconstitutional taking of property without compensation.’ “Response: The question of constitutionality is not properly one the Bureau or the Department may rule on. (Madison D. Locke, 65 IBLA 122 (1982) ). “Objection 5: ‘The 12% percent production royalty fails to consider the unique nature of FMC’s special bituminous coal mine. “Response: The 121% percent royalty is mandatory and pre- scribed by the FCLAA. Relief from the mandatory royalty rate is provided a lessee through a separate petition process pursuant to 30 U.S.C. 209 and regulations in 43 CFR 3473.3-2(d) and 30 CFR Part 211. “Objection 6: “The proposed readjustment of the royalty rate will place the FMC Skull Point operation at a competitive dis- advantage.’ [Continued ] 23a FMC filed its appeal of BLM’s decision to dismiss its protest on May 4, 1983, and asserts in its statement of reasons the following reasons for its appeal of the BLM decision: 1. The proposed 12.5% production royalty vio- lates the terms of the leases, which bind-the United States as lessor to reasonable royalty rates. 2. The automatic imposition of a 12.5% royalty rate upon readjustment without any factual evalua- tion to determine an appropriate and reasonable royalty for FMC’s mining operations, is arbitrary, capricious, and an abuse of discretion. 8. The 12.5% statutory minimum royalty, estab- lished by the FCLAA [Federal Coal Leasing Amend- ments Act of 1976, 30 U.S.C. § 207 (1976)] for new leases issued on and after August 4, 1976, is not mandatory upon readjustment of pre-FCLAA leases. 1 [Continued ] “Response: The royalty rates imposed in readjustment of your leases are mandatory. Our failure to timely readjust adjacent leases in no way affects the readjustment of your leases. To not readjust your leases would be a dereliction of our duty in adminis- tering Federal Coal leases and in assuring a fair return to the United States. “Objection 7: ‘Extreme increases in production royalty are inflationary.’ “Response: The response to objection 3 above applies to this objection. “Objection 8: ‘FMC objections to the payment of advance royalties on the Federal coal leases which are part of this ongoing operation. If an advance royalty is in fact imposed, it should be clarified that the intent of Section 7 is to credit all advance royalties paid, with no maximum limit, against production royalties incurred.’ “Response: Advance royalty provisions are mandatory terms prescribed by FCLAA. Section 7 states that payment of advance royalties in lieu of continued operations will be consistent with regulations in 43 CFR 3478 and 30 CFR 211. We feel that Section 7 with references to applicable regulations is sufficient.” 24a 4. FMC’s leases are subject only to regulations in force at the time they were executed; therefore, post-FCLAA regulations setting a 12.5% minimum royalty are inapplicable. 5. Lease provisions governing royalties for under- ground and strip mines do not apply to special bi- tuminous coal mines. 6. Failure to complete readjustment of the leases at the end of the initial 20-year-period is contrary to statutory authority and the terms of the leases. 7. The proposed edvance royalty requirement is ambiguous and should be clarified.'*! At the time each lease was issued, section 7 of the Mineral Leasing Act of 1920, 30 U.S.C. §207 (1970) provided: Leases shall be for indeterminate periods upon con- dition * * * that at the end of each twenty-year "period succeeding the date of the lease such readjust- ment of terms and conditions may be made as the Secretary of the Interior may determine, unless otherwise provided by law at the time of the ex- piration of such periods. Section 7 was amended by section 6 of FCLAA to read in pertinent part as follows: “Such rentals and royalties and other terms and conditions of the lease will be sub- ject to readjustment at the end of its primary term of twenty years and at the end of such ten-year period thereafter if the lease is extended.” 30 U.S.C. § 207(a) (1976). 2 BLM has not declared what royalty rate FMC’s operation will be assessed under the readjusted lease. Despite its arguments that its operation is neither an underground nor strip mine, FMC assumes and therefore argues that the 1242 percent minimum royalty pertinent to strip mine operations will be assessed. 25a FCM asserts that FCLAA and its pertinent regula- tions are not applicable to pre-FCLAA leases and that imposition of the 1244 percent production royalty vio- lates the terms of the lease. In support of its asser- tions, FMC argues that FCLAA is silent on readjust- ment of existing leases and that the express terms of the lease limit the right of readjustment to the imposition of reasonable terms and conditions. It charges that it has been deprived of the benefits of the bargain it has made. Where readjusted lease terms or conditions are ad- dressed by statute or regulation, BLM is required to im- pose those terms and conditions. Likewise, this Board must apply those provisions imposed by law, and we are without authority to waive or disregard legal obliga- tions merely because a lessee challenges their imposition in the administrative appeals process. Coastal States E'nergy Ce., 70 IBLA 386, 391 (1983)*; Lone Star Steel Co., 65 IBLA 147, 150 (1982). FCLAA amended the Mineral Leasing Act to require new mandatory lease terms, most notably the minimum 121% percent production royalty for surface mined coal and a 10-year production requirement. 30 U.S.C. § 207 (1976). The 12% percent minimum royalty rate is by its terms absolute. FCM contends that, based on legisla- tive history and statutory interpretation, FCLAA does not apply to coal leases issued prior to enactment (Au- gust 4, 1976) of that Act. That issue was addressed in Solicitor’s Opinion, M-36939, 88 I.D. 1003 (1981). Therein, the Solicitor concluded that “when the Secre- % Appeal pending, Coastal States Energy Co. vy. Watt, No. Cg3- 0730J (D. Utah filed June 1, 1983). es in oe 26a (1983), Coastal States Energy Co., supra, Blackhawk Coal Co., 68 IBLA 96 (1982), and Lone Star Steel Co., supra. FCLAA certainly cannot alter leases issued prior to its enactment before those leases become subject to re- adjustment. But FCLAA does affect conduct, events, and circumstances which occur after its enactment. The lessee of a pre-FCLAA lease has no vested rights to the indefinite continuation of existing lease terms, since all the terms and conditions were prescribed subject to periodic readjustment. Solicitor’s Opinion, supra at 1008. We also reject FCM’s assertion that it is somehow insulated from regulations promulgated pursuant to FCLAA and in effect at the time of readjustment (43 CFR 3541.1 (1982) )* because of general provisions of its leases relating to regulations “‘in force at date hereof.” That general lease language cannot serve to negate the statutory authority of the Secretary to readjust lease terms and conditions. Regulations in effect at the time of readjustment are applicable to leases subject to read- justment. Just as the statute authorizes readjustment of terms and conditions, so too may the procedures for implementation be adjusted. Coastal States Energy Co., supra. Those procedures were revised pursuant to FCLAA. We find no ban to applying those regulations to readjustment of these leases. Thus, the readjustment of the leases to include an increase in production royalty to 1214, percent is re- quired by both statute and regulation. Because the Board must adhere to statutory and regulatory authority, de- 443 CFR 3451.1(a) (2) reads: “Any lease subject to readjust- ment which contains a royalty rate less than the minimum royalty prescribed in § 3473.3-2 of this title shall be readjusted to conform to the minimum prescribed in that section.” 43 CFR 3473.3-2(a) (2) establishes that ‘“[a] lease shali require payment of royalty of not less than 121% percent of the value of the coal removed from a surface mine.” , | 27a cisions by BLM properly applying statutory or regula- tory requirements will be affirmed on appeal. FMC asserts that BLM failed to recognize the unique nature of its special bituminous coal mine and that the lease provisions governing royalties is inapplicable to such a mine. FCM refers to special relief afforded special bituminous coal mines under section 527 of the Surface Mining Control and Reclamation Act, 30 U.S.C. § 1277 (Supp. V 1981). However, that statutory provision is directed towards providing authority in the Department to adjust several environmental standards. 1977 US. Code Cong. & Ad. News 593, 659. Such authority does not address royalty payments. As pointed out to FMC in BLM’s decision, if special circumstances warrant relief from imposition of the royalty rate established by BLM, such relief is to be sought pursuant to 43 CFR 3473.3-2 (d) and 30 CFR 211.63(c). FCM questions the timeliness in readjusting these leases, stating that readjustment was not completed until “weeks after the March 1, 1983 deadline,” and argues 530 CFR 211.63(c)(1) (47 FR 33179, 33191 (July 30, 1982) ) provides: “The District Mining Supervisor may waive, suspend, or reduce the rental on a Federal lease, or reduce the Federal royalty, but not advance royalty, on a Federal lease or portion thereof. The District Mining Supervisor shall take such action for the purpose of en- couraging the greatest ultimate recovery of Federal coal, and in the interest of conservation of Federal coal and other resources, whenever in his judgment it is necessary to promote development, or if he finds that the Federal lease cannot be successfully operated under its terms. In no case shall the District Mining Supervisor reduce to zero any royalty on a producing Federal lease.” See also 43 CFR 3473.3-2(d). The record indicates that FMC filed a detailed letter with BLM on June 2, 1983, discussing the uniqueness of its situation. Al- though this letter is not framed as an application under 30 CFR 211.63(c) (1), FMC’s circumstances as presented therein may he sufficient to merit the requested relief if an application is filed. 28a that such readjustment was outside statutory authority and contrary to the terms of the lease. However, FMC incorrecly interprets the readjustment process and im- properly compares BLM’s actions with those require- ments. BLM’s initial notice to FMC that the leases were to be readjusted was dated August 3, 1982. The proposed terms and conditions were received by FMC on Decem- ber 27, 1982, with the announcement that those terms and conditions were to be effective March 1, 1983. In its notice, BLM also informed FMC of an opportunity to file within 60 days objections to the proposed terms and conditions. FMC filed its objections. However, such fil- ing of objections did not alter the effective date of the readjustment. 43 CFR 3451.2(b). BLM informed FMC of that fact in the notice. We find that where administration of new terms and conditions is postponed pending review of a lessee’s ob- jections concerning the imposition of such new terms and conditions, such practice is not inconsistent with statu- tory requirements for readjustment. This Board has held that notice of intent to readjust is all that is necessary on or prior to the anniversary of the lease and that such policy is consistent with Rosebud Coal Sales Co. V. Andrus, 667 F.2d 949 (10th Cir. 1982), which FMC significantly relies upon. See Coastal States Energy Co., supra. In this case not only was the required notice given, but the specific terms and conditions for readjust- ment were also provided and scheduled to become effec- tive prior to the end of the 20-year period. -BLM’s re- adjustment of the terms and conditions was timely and in accordance with the statutory and regulatory require- ments. Finally, FMC alleges that section 7 of the readjusted lease, governing advance royalty payment, is ambiguous because it does not specify within the clause either the = 29a minimum tcnnage or the percent of value on which the advance royalty is to be based. FMC argues that im- position of an ambiguous requirement is arbitrary and capricious and requests that section 7 be reworded to eliminate such ambiguity. Section 7 of the readjusted lease reads: Upon request by the lessee the District Mining Su- pervisor may accept, for a total of not more than 10 years, the payment of advance royalties in lieu of continued operation consistent _with the regulations in 43 CFR 3473 and 30 CFR 211. The advance royalty shall be based on a percent of the value of a minimum number of tons which shall be deter- mined in the manner established by the regulations in 30 CFR 211. FMC charges that such reference to regulations does not express the conditions of the clause with clarity since the regulations are subject to change. The opportunity afforded FMC to submit advance royalty in lieu of continued operation arises under statu- tory authority. “The Secretary of the Interior, upon determining that the public interest shall be served thereby, may suspend the condition of continued opera- tion upon the payment of advance royalties.” 30 U.S.C. §207(b) (1976). Thus, the privilege to seek suspension of a lease obligation is not a right peculiar to the con- tract and subject to bargaining, but it is an opportunity made available by Congress and appears in the lease to implement the statute and regulations. See 30 CFR 211.62(c) (1) (47 FR 33179, 33191 (July 30, 1976) ); 43 CFR 3473.3-2(b). The applicable statute, 30 U.S.C. § 207 (b) (1976), also provides that such advance royalty “shall be no less than the production royalty which would otherwise be paid and shall be computed on a fixed reserve to production ratio (determined by the Secretary).” That fixed ratio and i iii i 30a the advance royalty determination process are elaborated with clear meaning in 30 CFR 211.23 (47 FR 33179, 33188 (July 30, 1982)). Such duly promulgated regu- lations have the force and effect of law and are binding on the Department. See Sam P. Jones, 71 IBLA 42 (1983); Altex Oil Corp., 61 IBLA 270 (1982).° It is also generally accepted in contract law that independent elements of an agreement may be determined by a process set forth separate from the agreement and that where a writing refers to another document, that other docu- ment, or so much of it as is referred to, is to be inter- preted as part of the writing. See 1 Corbin on Contracts § 95, 393 (1963); 4 Williston on Contracts § 628, 901-04 (3d. ed. 1961). This is particularly applicable in this r situation, for BLM is governed by the statute and regu- lations in the manner in which it may grant the de- scribed relief. Accordingly, section 7 of the readjusted lease reflects BLM’s balance between notification of the availability of a statutory opportunity and its duty to administer the public land in accordance with applicable statutes and regulations. FMC requests the Board to address circumstances that may not occur during the term that the lease is effective. It is the usual policy of the Board to forego adjudication where no actual controversy exists and no cognizable in- terest has been adversely affected, avoiding advisory opinions based on hypothetical circumstances. See 43 CFR 4.410; Hal V. Carlson, Jr., 62 IBLA 305 (1982). FMC may choose not to avail itself of the opportunity to petition for suspension of the continued operation re- quirement, the operating circumstances may never war- rant application of the denoted relief, or t! e regulations may not be altered or amended prior to a petition under the lease clause. If new regulations are promulgated, the Department must adhere to proper administrative pro- 6 Appeal dismissed, Altex Oil Corp. Vv. Watt, No. 82-0424A (D. Utah Oct. 19, 1982) (dismissed without prejudice). 3la cedures found in 5 U.S.C. § 553 (1976), which afford interested parties the Opportunity to become involved in the rulemaking process. Such guidelines and publie in- BLM’s reply to FMC’s protest was cogent and well presented. FMC has not shown that any part thereof was erroneous. Accordingly, pursuant to the authority delegated to the Board of Land Appeals by the Secretary of the In- terior, 43 CFR 4.1, the decision is affirmed. /8/ Edward W. Stuebing EDWARD W. STUEBING Administrative J udge ~ We concur: /8/ Will A. Irwin WILL A. IRwIn Administrative J udge /8/ James L. Burski JAMES L, BURSKI Administrative J udge 32a APPENDIX D EXHIBIT F State Office P.O. Box 1828 Cheyenne, Wyoming 32001 W-061421 April 6, 1983 W-061422 3400 (922-4) CERTIFIED-RETURN RECEIPT REQUESTED DECISION FMC Corporation Natural Resources Operation Box 750 Kemmerer, Wyoming 83101 OBJECTIONS TO READJUSTED TERMS AND CONDITIONS DISMISSED Coal leases W-061421 and W-061422 were issued effec- tive March 1, 1963, and were subject to readjustment on February 23, 1983. FMC Corporation was notified by decision of this office dated August 23, 1982, of our in- tention of readjusting the lease terms, a right expressly reserved by the lessor in Section 3(d) of the leases. Re- adjusted lease terms and conditions were forwarded to the lessee on December 22, 1982, to become effective March 1, 1983. On February 11, 1983, FMC Corporation filed objections to the readjusted lease terms and conditions. The follow- ing are the points of objection and our response to those points: 33a Objection 1: “Nonapplicability of FCLAA to existing leases.” Response: Leases issued prior to August 4, 1976, subject to re- adjustment after August 4, 1976, must be readjusted to include mandatory terms and conditions of the FCLAA. See Solicitor’s Opinion M-36939, 88 I.D. 1003 (1981) and Coastal States Energy Co., 70 IBLA 386 (1983). Objection 2: “FMC is only subject to regulations in force at the time of execution of the lease.” Response: Current regulations promulgated to implement the FCLAA must be imposed on pre-FCLAA leases re- adjusted after August 4, 1976. Objection 3: “Readjustment must be reasonable.” Response: The new royalty rates imposed in the readjusted leases conform to the mandatory royalty rates as set out in FCLAA. Objection 4: “The proposed production royalty increase is an un- constitutional taking of property without compen- sation.” Response: The question of constitutionality is not properly one the Bureau or the Department may rule on. (Madi- son D. Locke, 65 IBLA 122 (1982) ) 34a Objection 5: “The 1214 percent production royalty fails to con- sider the unique nature of FMC’s special bituminous coal mine. Response: The 1214 percent royalty is mandatory and pre- scribed by the FCLAA. Relief from the mandatory royalty rate is provided a lessee through a separate petition process pursuant to 30 U.S.C. 209 and reg- ulations in 43 CFR 3473.3-2(d) and 30 CFR Part 211. Objection 6: “The proposed readjustment of the royalty rate will place the FMC Skull Point operation at a competi- tive disadvantage.” Response: The royalty rates imposed in readjustment of your leases are mandatory. Our failure to timely re- adjust adjacent leases in no way affects the read- justment of your leases. To not readjust your leases would be a dereliction of our duty in administering Federal coal leases and in assuring a fair return to the United States. Objection 7: “Extreme increases in production royalty are in- flationary.” Response: The response to objection 3 above applies to this objection. Objection 8: - “FMC objects to the payment of advance royalties on the Federal coal leases which are part of this 35a ongoing operation.—If an advance royalty is in fact imposed, it should be clarified that the intent of Section 7 is to credit all advance royalties paid, with no maximum limit, against production royalties in- curred.” Response: Advance royalty provisions are mandatory terms prescribed by FCLAA. Section 7 states that pay- ment of advance royalties in lieu of continued oper- ations will be consistent with regulations in 43 CFR 3473 and 30 CFR 211. We feel that Section 7 with references to applicable regulations is sufficient. All objections filed by FMC Corporation are hereby dis- missed for the reasons set out in the above responses. The right of appeal to the Board of Land Appeals, Office of the Secretary, is allowed in accordance with the regu- lations in 48 CFR Part 4, Subpart E. However, if an appeal is to be taken, the Notice of Appeal must be filed in this office (not with the Board) so that the case file can be transmitted to the Board. To avoid summary dismissal of the appeal, there must be strict compliance with the regulations (see enclosed information sheet out- lining procedures to be followed when filing an appeal). Please note that the Rules of Practice now require that you serve a copy of the Notice of Appeal, any Statement of Reasons, written arguments or briefs on the Regional Solicitor, Rocky Mountain Region, U.S. Department of the Interior, P. O. Box 25007, Denver Federal Center, Denver, Colorado 80225 within 15 days of filing any doc- ument in connection with an appeal. /s/ J. Stan McKee J. STAN MCKEE Acting Chief, Branch of Solid Minerals 36a Enclosure Appeal Information ce: Marilyn Kite, Holland & Hart, Suite 500, 2020 Carey Ave. Cheyenne, WY 82001 Royalty Management Pro- gram, P. O. Box 5760, Denver, Colorado 50217-5760 DMS, P. O. Box 1170, Rock Springs, Wyoming 82901 DM, Rock Springs CM, Casper J Moffitt :ag] 4-6-83 37a APPENDIX E PuBLIC LAw 94-377 [S. 391]; Aug. 4, 1976 FEDERAL COAL LEASING AMENDMENTS ACT OF 1975 For Legislative History of Act, see p. 1948 An Act to amend the Mineral Leasing Act of 1920, and for other purposes. Be it enacted by the Senate and House of Representa- tives of the United States of America in Congress as- sembled, That (a) this Act may be cited as the “Federal Coal Leasing Amendments Act of 1975”. (b) Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other pro- vision of the Mineral Lands Leasing Act, the reference shall be considered to be made to a section or other pro- vision of the Act of February 25, 1920, entitled “An Act to promote the mining of coal, phosphate, oil, oil shale, gas, and sodium on the public domain” (41 Stat. 437). Sec. 2. The first sentence of section 2(a) of the Mineral Lands Leasing Act (30 U.S.C. 201(a)) is amended to read as follows: “(1) The Secretary of the Interior is authorized to divide any lands subject to this Act which have been classified for coal leasing into leasing tracts of such size as he finds appropriate and in the public interest and which will permit the mining of all coal which can be economically extracted in such tract and thereafter he shall, in his discretion, upon the request of any qualified applicant or on his own motion, from time to time, offer such lands for leasing and shall award leases thereon by competitive bidding. No less than 50 per centum of the 38a total acreage offered for lease by the Secretary in any “one year shall be leased under a system of deferred bonus payment. Upon default or cancellation of any coal lease for which bonus payments are due, any unpaid remainder © of the bid shall be immediately payable to the United States. A reasonable number of leasing tracts shall be reserved and offered for lease in accordance with this section to public bodies, including Federal agencies, rural electric cooperatives, or nonprofit corporations controlled by any of such entities: Provided, That the coal so of- fered for lease shall be for use by such entity or entities in implementing a definite plan to produce energy for their own use or for sale to their members or customers (except for short-term sales to others). No bid shall be accepted which is less than the fair market value, as de- termined by the Secretary, of the coal subject to the lease. Prior to his determination of the fair market value of the coal subject to the lease, the Secretary shall give oppor- tunity for and consideration to public comments on the fair market value. Nothing in this section shall be con- strued to require the Secretary to make public his judg- ment as to the fair market value of the coal to be leased, or the comments he receives thereon prior to the issuance of the lease.”’. Src. 3. The last sentence of section 2(a) of the Mineral Lands Leasing Act (30 U.S.C. 201(a)) is amended to read as follows: ““(2) (A) The Secretary shall not issue a lease or leases under the terms of this Act to any person, association, corporation, or any subsidiary, affiliate, or persons con- trolled by or under common control with such persons, association, or corporation, where any such entity holds a lease or leases issued by the United States to coal de- posits and has held such lease or leases for a period of ten years when such entity is not, except as provided for in section 7(b) of this Act, producing coal from the lease deposits in commercial quantities. In computing the ten- 39a year period referred to in the preceding sentence, periods of time prior to the date of enactment of the Federal Coal Leasing Amendments Act of 1975 shall not be counted. “(B) Any lease proposel which permits surface coal mining within the boundaries of a National Forest which the Secretary proposes to issue under this Act shall be submitted to the Governor of each State within which the coal deposits subject to such lease are located. No such lease may be issued under this Act before the expiration of the sixty-day period beginning on the date of such submission. If any Governor to whom a proposed lease was submitted under this subparagraph objects to the issuance of such lease, such lease shall not be issued be- fore the expiration of the six-month period beginning on the date the Secretary is notified by the Governor of such objection. During such six-month period, the Governor may submit to the Secretary a statement of reasons why such lease should not be issued and the Secretary shall, on the basis of such statement, reconsider the issuance of such lease. (3) (A) (i) No lease sale shall be held unless the lands containing the coal deposits have been included in a com- prehensive land-use plan and such sale is compatible with such plan. The Secretary of the Interior shall prepare such land-use plans on lands under his responsibility where such plans have not been previously prepared. The Secretary of the Interior shall inform the Secretary of Agriculture of substantial development interest in coal leasing on lands within the National Forest System. Upon receipt of such notification from the Secretary of the Interior, the Secretary of Agriculture shall prepare a comprehensive land-use plan for such areas where such plans have not heen previously prepared. The plan of the Secretary of Agriculture shall take into consideration the proposed coal development in these lands: Provided, That where the Secretary of the Interior finds that because of 40a non-Federal interest in the surface or because the coal resources are insufficient to justify the preparation costs of a Federal comprehensive land-use plan, the lease sale can be held if the lands containing the coal deposits have been included in either the comprehensive land-use plan prepared by the State within which the lands are located or a land use analysis prepared by the Secretary of the Interior. “(ii) In preparing such land-use plans, the Secretary of the Interior or, in the case of lands within the Na- tional Forest System, the Secretary of Agriculture, or in the case of a finding by the Secretary of the Interior that because of non-Federal interests in the surface or insufficient Federal coal, no Federal comprehensive land- use plans can be appropriately prepared, the responsible State entity shall consult with appropriate State agencies and local governments and the general public and shall provide an opportunity for public hearing on proposed plans prior to their adoption, if requested by any person having an interest which is, or may be, adversely affected by the adoption of such plans. “(iii) Leases covering lands the surface of which is under the jurisdiction of any Federal agency other than the Department of the Interior may be issued only upon consent of the other Federal agency and upon such condi- tions as it may prescribe with respect to the use and pro- tection of the nonmineral interests in those lands. “(B) Each land-use plan prepared by the Secretary (or in the case of lands within the National Forest Sys- tem, the Secretary of Agriculture pursuant to subpara- graph (A) (i)) shall include an assessment of the amount of coal deposits in such land, identifying the amount of such coal which is recoverable by deep mining operations and the amount of such coal which is recoverable by sur- face mining operations. “(C) Prior to issuance of any coal lease, the Secretary shall consider effects which mining of the proposed lease 4la might have on an impacted community or area, including, but not limited to, impacts on the environment, on agri- cultural and other economic activities, and on public serv- ices. Prior to issuance of a lease, the Secretary shall evaluate and compare the effects of recovering coal by deep mining, by surface mining, and by any other method to determine which method or methods or Sequence of methods achieves the maximum economic recovery of the coal within the proposed leasing tract. This evaluation and comparison by the Secretary shall be in writing but shall not prohibit the issuance of a lease; however, no mining operating plan shall be approved which is not found to achieve the maximum economic recovery of the coal within the tract. Public hearings in the area shall be held by the Secretary prior to the lease sale. “(D) No lease sale shall be held until after the notice of the proposed offering for lease has been given once a week for three consecutive weeks in a newspaper of gen- eral circulation in the county in which the lands are situated in accordance with regulations prescribed by the Secretary. “(E) Each coal lease shall contain provisions requiring compliance with the Federal Water Pollution Control Act (33 U.S.C. 1151-1175) and the Clean Air Act (42 U.S.C. 1857 and following).”. SEC. 4. Subject to valid existing rights, section 2(b) of the Mineral Lands Leasing Act (30 U.S.C. 201(b)) is amended to read as follows: “(b) (1) The Secretary may, under such regulations as he may prescribe, issue to any person an exploration license. No person may conduct coal exploration for com- mercial purposes for any coal on lands subject to this Act without such an exploration license. Each explora- tion license shall be for a term of not more than two years and shall be subject to a reasonable fee. An ex- ploration license shall confer no right to a lease under 42a this Act. The issuance of exploration licenses shall not preclude the Secretary from issuing coal leases at such times and locations and to such persons as he deems appropriate. No exploration license will be issued for any land on which a coal lease has been issued. A separate exploration license will be required for exploration in each State. An application for an exploration license shall identify general areas and probable methods of ex- ploration. Each exploration license shall contain such reasonable conditions as the Secretary may require, in- cluding conditions to insure the protection of the environ- ment, and shall be subject to all applicable Federal, State, and local laws and regulations. Upon violation of any such conditions or laws the Secretary may revoke the exploration license. “(2) A licensee may not cause substantial disturbance to the natural land surface. He may not remove any coal for sale but may remove a reasonable amount of coal from the lands subject to this Act included under his license for analysis and study. A licensee must comply with all applicable rules and regulations of the Federal agency having jurisdiction over the surface of the lands subject to this Act. Exploration licenses covering lands the surface of which is under the jurisdiction of any Federal agency other than the Department of the Interior may be issued only upon such conditions as it may pre- scribe with respect to the use and protection of the non- mineral interests in those lands. “(3) The licensee shall furnish to the Secretary copies of all data (including, but not limited to, geological, geo- physical, and core drilling analyses) obtained during such exploration. The Secretary shall maintain the con- fidentiality of all data so obtained until after the areas involved have been leased or until such time as he de- termines that making the data available to the public would not damage the competitive position of the licensee, whichever comes first. 43a “(4) Any person who willfully conducts coal explora- tion for commercial purposes on lands subject to this Act without an exploration license issued hereunder shall be subject to a fine of not more than $1,000 for each day of violation. All data collected by said person on any Federal lands as a result of such violation shal] be made immediately available to the Secretary, who shall make the data available to the public as soon as it is practicable. No peralty under this subsection shall be assessed unless such person is given notice and oppor- tunity for a hearing with respect to such violation.”. SEC. 5.:(a) Subject to valid existing rights, subsections 2(c) and 2(d) of the Act of August 31, 1964 (78 Stat. 710; 30 U.S.C. 201-1) are hereby repealed. (b) Section 2 of the Mineral Lands Leasing Act is amended by the addition to the following new subsection at the end thereof: “(d) (1) The Secretary, upon determining that maxi- mum economic recovery of the coal deposit or deposits is served thereby, may approve the consolidation of coal leases into a logical mining unit. Such consolidation may only take place after a public hearing, if requested by any person whose interest is or may be adversely af- fected. A _ logical mining unit is an area of land in which-the coal resources can be developed in an efficient, economical, and orderly manner as a unit with due re- gard to conservation of coal reserves and other resources. A logical mining unit may consist of one or more Fed- eral leaseholds, and may include intervening or adjacent lands in which the United States does not own the coal resources, but all the lands in a logical mining unit must be under the effective control of a single operator, be able to be developed and operated as a single operation and be contiguous. “(2) After the Secretary has approved the establish- ment of a logical mining unit, any mining plan approved 44a for that unit must require such diligent development, op- eration, and production that the reserves of the entire unit will be mined within a period established by the Secretary which shall not be more than forty years. “(3) In approving a logical mining unit, the Secre- tary may provide, among other things, that (i) diligent development, continuous operation, and production on any Federal lease or non-Federal land in the logical mining unit shall be construed as occurring on all Fed- eral leases in that logical mining unit, and (ii) the rentals and royalties for all Federal leases in a logical mining unit may be combined, and advanced royalties paid for any lease within a logical mining unit may be credited against such combined royalties. ““(4) The Secretary may amend the provisions of any lease included in a logical mining unit so that mining under that lease will be consistent with the require- ments imposed on that logical mining unit. “(5) Leases issued before the date of enactment of this Act may be included with the consent of all lessees in such logical mining unit, and, if so included, shall be subject to the provisions of this section. “(6) By regulation the Secretary may require a lessee under this Act to form a logical mining unit, and may provide for determination of participating acreage within a unit. “(7) No logical mining unit shall be approved by the Secretary if the total acreage (both Federal and non- Federal) of the unit would exceed twenty-five thousand acres. “(8) Nothing in this section shall be construed to waive the acreage limitations for coal leases contained in section 27(a) of the Mineral Lands Leasing Act (30 U.S.C. 184(a)).”. 45a SEC. 6. Section 7 of the Mineral Lands Leasing Act (30 U.S.C. 207) is amended to read as follows: “SEC. 7. (a) A coal lease shall be for a term of twenty years and for so long thereafter as coal is produced an- nually in commercial quantities from that lease. Any lease which is not producing in commercial quantities at the end of ten years shall be terminated. The Secretary shall by regulation prescribe annual rentals on leases. A lease shall require payment of a royalty in such amount as the Secretary shall determine of not less than 121% per centum of the value of coal as defined by regulation, except the Secretary may determine a lesser amount in the case of coal recovered by underground mining operations. The lease shall include such other terms and conditions as the Secretary shall determine. Such rentals and royalties and other terms and condi- tions of the lease will be subject to readjustment at the end of its primary term of twenty years and at the end of each ten-year period thereafter if the lease is extended. “(b) Each lease shall be subject to the conditions of diligent development and continued operation of the mine or mines, except where operations under the lease are interrupted by strikes, the elements, or casualties not attributable to the lessee. ‘The Secretary of the Interior, upon determining that the public interest will be served thereby, may suspend the condition of continued opera- tion upon the payment of advance royalties. Such ad- vance royalties shall be no less than the production roy- alty which would otherwise be paid and shall be com- puted on a fixed reserve to production ratio (determined by the Secretary). The aggregate number of years dur- ing the period of any lease for which advance royalties may be accepted in lieu of the condition of continued operation shall not exceed ten. The amount of any pro- duction royalty paid for any year shall be reduced (but not below 0) by the amount of any advance royalties paid under such lease to the extent that such advance 46a royalties have not been used to reduce production royal- ties for a prior year. No advance royalty paid during the initial twenty-year term of a lease shall be used to reduce a production royalty after the twentieth year of a lease. The Secretary may, upon six months’ notifica- tion to the lessee cease to accept advance royalties in lieu of the requirement of continued operation. Nothing in this subsection shall be construed to affect che require- ment contained in the second sentence of subsection (a) relating to commencement of production at the end of ten years. “(e) Prior to taking any action on a leasehold which might cause a significant disturbance of the environ- ment, and not later than three years after a lease is issued, the lessee shall submit for the Secretary’s ap- proval an operation and reclamation plan. The Secre- tary shall approve or disapvrove the plan or require that it be modified. Where the land involved is under the surface jurisdiction of another Federal agency, that other agency must consent to the terms of such ap- proval.”. Sec. 7. The Mineral Lands Leasing Act is amended by inserting after section 8 the following new section 8A: “Sec. 8A. (a) The Secretary is authorized and di- rected to conduct a comprehensive exploratory program designed to obtain sufficient data and information to eval- uate the extent, location, and potential for developing the known recoverable coal resources within the coal lands subject to this Act. This program shall be designed to ob- tain the resource information necessary for determining whether commercial quantities of coal are present and the geographical extent of the coal fields and for esti- mating the amount of such coal which is recoverable by deep mining operations and the amount of such coal which is recoverable by surface mining operations in or- der to provide a basis for— 47a “(1) developing a comprehensive land use plan pursuant to section 2; “(2) improving the information regarding the value of public resources and revenues which should be expected from leasing; “(3) increasing competition among producers of coal, or products derived from the conversion of coal, by providing data and information to all potential bidders equally and equitably ; “(4) providing the public with information on the nature of the coal deposits and the associated stratum and the value of the public resources being offered for sale; and “(5) providing the basis for the assessment of the amount of coal deposits in those lands subject to this Act under subparagraph (B) of section 2(a) (3). “(b) The Secretary, through the United States Geo- logical Survey, is authorized to conduct seismic, geo- physical, geochemical, or stratigraphic drilling, or to contract for or purchase the results of such exploratory activities from commercial or other sources which may be needed to implement the provisions of this section. “(e) Nothing in this section shall limit any person from conducting exploratory geophysical surveys includ- ing seismic, geophysical, chemical surveys to the extent permitted by section 2(b). The information obtained from the exploratory drilling carried out by a person not under contract with the United States Government for such drilling prior to award of a lease shall be provided the confidentiality pursuant to subsection (d). “(d) The Secretary shall make available to the public by appropriate means all data, information, maps, in- terpretations, and surveys which are obtained directly by the Department of the Interior or under a service con- 48a tract pursuant to subsection (b). The Secretary shall maintain a confidentiality of all proprietary data or in- formation purchased from commerciai sources while not under contract with the United States Government until after the areas involved have been leased. “(e) All Federal departments or agencies are au- thorized and directed to provide the Secretary with any information or data that may be deemed necessary to assist the Secretary in implementing the exploratory pro- gram pursuant to this_section. Proprietary information or data provided to the Secretary under the provisions of this subsection shall remain confidential for such period of time as agreed to by the head of the depart- ment or agency from whom the information is requested. In addition, the Secretary is authoribed and directed to utilize the existing capabilities and resources of other Federal departments and agencies by appropriate agree- ment. “(f) The Secretary is directed to prepare, publish, and keep current a series of detailed geological, and geophysical maps of, and reports concerning, all coal lands to be offered for leasing under this Act, based on data and information compiled pursuant to this section. Such maps and reports shall be prepared and revised at reasonable intervals beginning eighteen months after the date of enactment of this Act. Such maps and reports shall be made available on a continuing basis to any person on request. “(g) Within six months after the date of enactment of this Act, the Secretary shall develop and transmit to Congress an implementation plan for the coal lands exploration program authorized by this section, includ- ing procedures for making the data and information available to the public pursuant to subsection (d), and maps and reports pursuant to subsection (f). The im- plementation plan shall include a projected schedule of exploratory activities and identification of the regions 49a and areas which will be explored under the coal lands exploration program during the first five years follow- ing the enactment of this section. In addition, the im- plementation plan shall include estimates of the ap- propriations and staffing required to implement the coal lands exploration program. “(h) The stratigraphic drilling authorized in subsec- tion (b) shall be carried out in such a manner as to obtain information pertaining to all recoverable reserves. For the purpose of complying with subsection (a), the Secretary shall require all those authorized to conduct stratigraphic drilling pursuant to subsection (b) to sup- ply a statement of the results of test boring of core sampling including logs of the drill holes; the thickness of the coal seams found; an analysis of the chemical properties of such coal; and an analysis of the strata layers lying above all the seams of coal. All drilling ac- tivities shall be conducted using the best current tech- nology and practices.”’. Sec. 8. The Mineral Lands Leasing Act is further amended by adding after section 8A the following new section 8B: “Sec. 8B. Within six months after the end of each fiscal year, the Secretary shall submit to the Congress a report on the leasing and production of coal lands subject to this Act during such fiscal year; a summary of man- agement, supervision, aft enforcement activities; and recommendations to the Congress for improvements in management, environmental safeguards, and amount of production in leasing and mining operations on coal lands subject to this Act. Each submission shall also contain a report by the Attorney General of the United States on competition in the coal and energy industries, including an analysis of whether the antitrust provisions of this Act and the antitrust laws are effective in preserving or promoting competition in the coal or energy industry.”. 50a Sec. 9. (a) Section 35 of the Mineral Lands Leasing Act, as amended (30 U.S.C. 191) is further amended by deleting “521% per centum thereof shall be paid into, reserved” and inserting in lieu thereof: “40 per centum thereof shall be paid into, reserved”, and is further amended by striking the period at the end of the proviso and inserting in lieu thereof the following language: “: Provided further, That an additional 12% per centum of all moneys received from sales, bonuses, royalties, and rentals of public lands under the provisions of this Act and the Geothermal Steam Act of 1970 shall be paid by the Secretary of the Treasury as soon as practicable af- ter December 31 and June 30 of each year to the State within the boundaries of which the leased lands or de- posits are or were located; said additional 12'4% per cen- tum of all moneys paid to any State on or after January 1, 1976, shall be used by such State and its subdivisions as the legislature of the State may direct giving pri- ority to those subdivisions of the State socially or eco- nomically impacted by development of minerals leased under this Act for (1) planning, (2) construction and maintenance of public facilities, and (3) provision of public services: Provided further, That such funds now held or to be received, by the States of Colorado and Utah separately from the Department of the Interior oil shale test leases known as ‘C-A’; ‘C-B’; ‘U-A’ and ‘U-B’ shall be used by such States and subdivisions as the legis- lature of each State may direet giving priority to those subdivisions socially or economically impacted by the de- velopment of minerals leased under this Act for (1) planning, (2) construction and maintenance of public facilities, and (3) provision of public services.”’. (b) In the first sentence of sectio [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_2417%3A1. Public record. Not legal advice.