Logical Mining Units in General; LMU Application Procedures; LMU Approval Criteria; LMU Diligence; and Administration of LMU Operations

SUMMARY: The Bureau of Land Management (BLM) is amending the

regulations that pertain to formation and administration of logical

mining units (LMUs) by limiting the inclusion in an LMU of Federal coal

leases that have not produced commercial quantities of coal in the

first 8 years of their 10-year diligent development periods, setting

forth the factors BLM will consider in reviewing an LMU application,

and narrowing the range of possible starting dates for an LMU's 40-year

mine-out period. BLM is also modifying the definition of ``producing''

to limit the circumstances in which it considers a Federal coal lease

``producing'' and the leaseholder thereby qualified to acquire

additional Mineral Leasing Act leases and limit the aggregate duration

of temporary interruptions in coal severance. BLM is taking this action

to ensure that LMUs are approved and administered only for the purpose

of developing Federal coal reserves consistent with the goals of the

Federal Coal Leasing Amendments Act. This action will prevent the use

of LMUs to extend the diligent development period of a Federal coal

lease unless the operator or lessee demonstrates measurable and prudent

progress toward production of the Federal coal reserves. BLM is also

implementing a ruling by the Federal District Court for the District of

Columbia that struck down a provision allowing extension of the 3-year

submission requirement for resource recovery and protection plans.

DATES: This rule is effective September 19, 1997.

FOR FURTHER INFORMATION CONTACT: William Radden-Lesage, Mining

Engineer, Solid Minerals Group (WO-320), Bureau of Land Management,

Mail Stop-501LS, 1849 ``C'' Street N.W., Washington, D.C. 20240; or by

telephone at (202) 452-0350.

SUPPLEMENTARY INFORMATION:

I. Background

II. Discussion of Final Rule and Response to Comments

III. Procedural Matters

I. Background

The Mineral Leasing Act of 1920 (MLA) gives the Secretary of the

Interior authority to offer lands containing deposits of coal owned by

the United States for leasing and award leases (30 U.S.C. 201(a)(1)).

The Secretary is also authorized to prescribe necessary and proper

rules and regulations to carry out the purposes of MLA (30 U.S.C. 189).

Due to concern about the number of Federal coal leases that were being

held and not developed, Congress amended MLA by passing the Federal

Coal Leasing Amendments Act of 1976 (FCLAA), Pub. L. 94-377. To

discourage the speculative holding of Federal coal leases and encourage

the development of leased coal, FCLAA established production

requirements for leases and consequences for lessees when those

requirements are not met. Section 7(a) of MLA, as amended by FCLAA,

requires that a lessee produce coal in ``commercial quantities'' within

10 years of a lease's issuance or, for a lease issued before the August

4, 1976 enactment of FCLAA, within 10 years after the lease becomes

subject to section 7 (30 U.S.C. 207(a)). Section 7(b) of MLA, as

amended by FCLAA, requires each lease to be subject to the conditions

of diligent development and continued operation, except where

operations under the lease are interrupted by strikes, the elements, or

casualties not attributable to the lessee (30 U.S.C. 207(b)). BLM has

interpreted the reference to a condition of diligent development in

section 7(b) to be satisfied by compliance with the obligation to

produce in commercial quantities within 10 years in section 7(a). BLM's

regulations define ``commercial quantities'' as one percent of a

lease's recoverable coal reserves (43 CFR 3480.0-5(a)(6)). If a lease

does not achieve commercial production within the 10 years provided in

section 7(a) of MLA, as amended, the lease terminates.

The BLM regulations implementing the ``continued operation''

requirement of section 7(b) of MLA, as amended by FCLAA, require a

lessee to annually produce an average of one percent of the recoverable

reserve base after the lease has achieved diligent development (43 CFR

3480.0-5(a)(8) and 3483.1(a)). Alternately, the lessee may apply for a

suspension of the continued operation requirement on the basis of

payment of advance royalty (43 CFR 3483.4) or on the basis of strikes,

the elements or casualties not attributable to the lessee (43 CFR

3483.3) See 30 U.S.C. 207(b).

Section 2(a)(2)(A) of MLA, as amended by FCLAA, requires that

holders of coal leases be disqualified from receiving additional

mineral leases under MLA if the lessee has held and continues to hold

coal leases for more than 10 years (not counting years prior to passage

of FCLAA on August 4, 1976) without producing coal in commercial

quantities (30 U.S.C. 201(a)(2)(A)), except as provided in 30 U.S.C.

207(b). Pub. L. 99-190 extended the effective date of section

2(a)(2)(A) of MLA to December 31, 1986. The effect of the reference to

section 207(b) is to create two exceptions to the producing

requirement. One is for strikes, the elements, or casualties not

attributable to the lessee, and the other is when continued operation

is suspended by the payment of advance royalties.

Section 2(d) of MLA, as amended by FCLAA, also authorizes the

formation of LMUs (30 U.S.C. 202a). An LMU is an area of land in which

the coal resources can be developed in an efficient, economical, and

orderly manner with due regard to conservation of the coal reserves and

other resources. An LMU may consist of one or more Federal leaseholds

and may include intervening or adjacent lands in which the United

States does not own the coal resources. All the lands in an LMU must be

contiguous, under the effective control of a single operator, and able

to be developed and operated as a single mining operation.

Consolidation of leases into an LMU will only take place after a public

hearing, if requested by any person who may be adversely affected. The

Secretary of the Interior may approve an LMU if he determines that

formation of the LMU enhances maximum economic recovery of the Federal

coal reserve.

An LMU is commonly used when the geologic characteristics of a coal

deposit cross lease or ownership boundaries. A logical and efficient

mining sequence in such cases would also span the lease or ownership

boundaries. An LMU fosters maximum economic recovery and conservation

of Federal coal reserves by facilitating a logical mining sequence in

terms of the coal deposit or deposits as a whole, rather than within

only a specific lease or property boundary. In areas where the coal

ownership pattern is disjointed, such as the checkerboard land-

ownership patterns in the western United States, an operator may

develop several contiguous coal tracts owned by or leased from

different entities as a single mining operation. Without the LMU, a

mine operator would, in most

[[Page 44355]]

cases, have to develop the oldest Federal coal lease first, regardless

of the geology of the deposit or the most logical development plan,

simply to comply with the diligent development requirements of section

7(b) of MLA. Inefficient mining sequences do not contribute to the

goals of maximum economic recovery of Federal coal reserves and

conservation of the resource. For this reason, section 2(d)(3) of MLA

authorizes the Secretary to construe diligent development, continued

operation and production occurring on one lease in the LMU as occurring

on all of the Federal leases in the LMU (30 U.S.C. 202a(3)).

LMUs are an important part of the Federal Coal Management Program.

As of September 30, 1996, BLM has approved 49 LMUs, which include 180

of the 389 outstanding Federal coal leases. While LMUs are a critical

tool to efficiently manage Federal coal resources, BLM has determined

that, in some circumstances, forming LMUs under the existing

regulations could have the effect of circumventing lease-specific

production requirements mandated by FCLAA. BLM's existing LMU

regulations at 43 CFR 3480.0-5(13)(ii) provide that the 10-year

diligent development requirement for an LMU begins on the effective

date of the Federal coal lease that was most recently issued or

readjusted after passage of FCLAA, but preceding approval of the LMU.

The existing regulations at 43 CFR 3475.6(b) provide that the LMU

diligence requirements supersede lease-specific diligence requirements

for the duration of the LMU. Therefore, an operator holding a lease

that is about to terminate for failure to meet diligent development

could effectively extend the diligent development period for the lease

by forming an LMU that combines the older lease with a newer lease. BLM

believes that forming an LMU for the sole purpose of extending the

diligent development period of a lease, without evidence that the

lessee is prudently pursuing development of a mine, is contrary to the

intent of MLA, as amended by FCLAA.

In addition, BLM's existing regulations at 43 CFR 3472.1-

2(e)(6)(ii)(E) provide that the holder of a lease in an LMU meets the

production requirements of section 2(a)(2)(A) of MLA, as amended,

whenever the LMU is meeting the diligent development or continued

operation requirements specified in the LMU stipulations of approval.

Thus, the holder of a non-producing lease could avoid the section

2(a)(2)(A) prohibition on obtaining additional leases by forming an

LMU, even if the LMU is not actually producing any coal, as long as the

LMU stipulations are being met. Forming an LMU supersedes the lease-

specific diligence requirement and starts a new 10-year diligence

period for the LMU as a whole. A non-producing LMU can be considered to

be in compliance with its diligent development requirement until the

end of its 10-year diligence period. It is only when the diligent

development period ends without the LMU having achieved production of

commercial quantities that it would be considered out of compliance.

Such an outcome frustrates the intent of FCLAA by nullifying the

penalty provided in section 2(a)(2)(A) of MLA for holding a lease

without producing any coal.

Out of concern for abuse of the regulations, BLM published an

advance notice of proposed rulemaking (ANPR) in the Federal Register on

December 10, 1993 (58 FR 64919), notifying the public that BLM was

considering revising the regulations relating to LMUs for coal

operations. The ANPR solicited public comments to assist in the

preparation of proposed regulatory changes that would place greater

emphasis on the stewardship of Federal coal resources and ensure that

they are developed in an efficient, economical, and orderly manner with

due regard to the conservation of coal reserves and other resources.

BLM received 17 comments on the ANPR. Based on its analysis of the

issues and the comments received, BLM determined that:

(1) the existing regulations that allow LMU diligent development

requirements to supersede lease-specific diligence implement the intent

of Congress in enacting the LMU provisions of FCLAA;

(2) tying the beginning of an LMU's diligent development period to

the effective date of the most recent Federal lease remains

appropriate;

(3) the current procedure of allowing an LMU to be effective as

early as the date that a complete LMU application is submitted should

be continued;

(4) the regulations should not be amended to require that at least

one Federal lease in an LMU be producing;

(5) where a proposed LMU would include a lease that has not met

diligent development requirements within 8 years after its issuance, it

is appropriate to require that at least some part of the proposed LMU

be covered by a pending administratively complete application or an

approved application for a Surface Mining Control and Reclamation Act

(SMCRA) permit in order for BLM to approve the LMU; and

(6) the definition of ``producing'' at 43 CFR 3400.0-5(rr)(6) needs

some clarification to minimize the opportunity to circumvent the intent

of section 2(a)(2)(A) of MLA.

A complete summary and analysis of the comments on the ANPR is in

the preamble to the proposed rule published on December 28, 1994 (59 FR

66874).

During 1993 and early 1994, the General Accounting Office (GAO) was

conducting an investigation of BLM's coal leasing program. In September

1994, GAO published a report of their findings entitled, ``Mineral

Resources: Federal Coal-Leasing Program Needs Strengthening'' (GAO/

RCED-94-10). The GAO report focused on two actual cases, one involving

a large non-producing lease that was combined with a much smaller, more

recently issued lease to form an LMU just before the larger lease would

have terminated for lack of diligence. The other case involved a holder

of a non-producing lease included in an LMU that was idle (not

producing coal) and that had not yet produced sufficient quantities of

coal to meet the commercial quantities requirement for the LMU. The

lease holder applied for and obtained a number of other MLA leases

while the LMU was not producing coal. To address these situations, GAO

recommended BLM amend existing regulations to (1) ensure that lessees

holding pre-FCLAA leases will not be issued mineral leases under MLA

unless they have met the coal production requirements that FCLAA added

to MLA and (2) provide criteria that BLM can use to determine whether

the formation of an LMU is consistent with FCLAA's goals of

discouraging speculation and encouraging the development of Federal

coal leases. GAO also recommended that, for each LMU approved, BLM

document how the approved LMU meets these regulatory criteria (GAO/

RCED-94-10, p. 32).

Subsequently, BLM published the LMU proposed rule in the Federal

Register on December 28, 1994 (59 FR 66874). Comments were accepted

through March 29, 1995. BLM received comments from 14 entities as

follows: Coal industry groups submitted 10 comments, 1 comment was from

a State governor, 2 comments were from environmental groups, and 1

comment was from an individual. As discussed in the next part of the

preamble to this final rule, BLM gave full consideration to all

comments received. Any substantive changes in the final rule from what

was proposed are identified in the following detailed discussion of the

final rule.

[[Page 44356]]

II. Discussion of Final Rule and Response to Comments

A. Legal Basis for the Final Rule

Under the MLA, as amended by FCLAA, the Secretary of the Interior

has the authority to ``prescribe necessary and proper rules and

regulations and to do any and all things necessary to carry out and

accomplish the purposes of [the law]'' (30 U.S.C. 189). Under the

Federal Land Policy and Management Act of 1976 (FLPMA), the Secretary,

``with respect to public lands, shall promulgate rules and regulations

to carry out the purposes of this Act and of other laws applicable to

the public lands'' (43 U.S.C. 1740). For the reasons set forth below,

BLM believes that this final rule is consistent with the letter and

intent of sections 2 (a), (b), (d) and 7 of MLA (30 U.S.C. 201, 202a,

and 207), as well as the general purposes of MLA, FCLAA, and FLPMA.

With the enactment of FCLAA, the regulations governing the Federal

coal program must implement the express intent of Congress to

discourage speculation in Federal coal leases. This intent is embodied

within 30 U.S.C. 201 and 207. Also, see H.R. Rep. No. 94-681, 94th

Cong., 1st Sess., 14-15 (1975). The twin goals of encouraging

development of Federal coal resources and limiting speculation are not

mutually exclusive. When Federal coal leases are obtained and held for

long periods without production, or without legitimate steps toward

production, the efficient, economic and orderly development of the

resource is precluded. When those who are interested in simply holding

leases are discouraged from doing so, or are encouraged to relinquish

their leases, to the extent that others have an opportunity to develop

those properties, the development goal is met. BLM's goal, and

challenge, in this rule is to establish some prudent constraints on

lease holders that will be disincentives to speculation, and at the

same time, to avoid imposing the kind of constraints that will be

disincentives to development and production, taking into account the

dynamic nature of the coal industry.

There is no question that under BLM's current coal management

regulations the proportion of Federal leases actually producing coal

has increased. At the time that FCLAA was passed 20 years ago, only

about 10 percent of Federal coal leases were producing. Currently, the

figure is close to 35 percent. BLM believes, however, that the

aggregate proportion of producing leases is not determinative in

deciding whether changes to the regulations are necessary. Each lease

or LMU represents a specific set of unique facts and circumstances

owing to the geology of the coal deposit, the qualities and

characteristics of the coal, the proximity to the transportation

network, the existence of markets, and many other technical and socio-

economic factors. Decisions of lessees whether to form an LMU and

decisions by BLM approving LMUs are made on a case-by-case basis. BLM

has to look at the outcomes of individual cases to see whether its

regulations are working properly.

Two recent cases shed light on whether our regulations are working

the way they were intended to work. These are the two cases described

in the GAO report, discussed above. In the Rocky Butte case, one month

before a large non-producing lease was scheduled to terminate, it was

combined with a newer small lease into an LMU, extending the diligence

date for 10 more years. In the Clovis Point case, the holder of a non-

producing lease that had been held for more than 10 years was found to

be qualified under section 2(a)(2)(A) to obtain additional leases by

virtue of the fact that the non-producing lease had been included in an

LMU that was in compliance with the LMU stipulations of approval. Thus,

in the first case, application of the statutory penalty for failure to

achieve diligent development (termination of the lease) was stymied by

LMU formation that extended the diligent development period. In the

second case, the statutory penalty for failure to produce coal from

leases (disqualification from obtaining additional leases) was stymied

by LMU formation that applied the LMU diligence requirements as

established by the LMU stipulations of approval to all leases in the

LMU.

BLM believes that the outcomes of these two cases are not

consistent with the spirit and intent of FCLAA. Because its current

regulations do not prevent this type of outcome from occurring again in

the future, BLM believes that its regulations should be changed. The

final rule adopted today is consistent with the view that BLM must

prevent outcomes such as those described above from happening again. As

described in the section-by-section analysis that follows, BLM is

adopting provisions that are focused on preventing specific kinds of

results while avoiding, to the extent possible and foreseeable,

unintended negative impacts on legitimate producers of Federal coal.

Based on BLM's analysis of the issues involved, taking into account the

purposes of the statutes and the administrative record of this

rulemaking, including comments received, this final rule is a proper

and reasonable interpretation of the MLA, as amended.

B. General Comments

Several comments expressed support for the overall thrust of the

rules and BLM's effort to clarify and tighten up the current Federal

coal leasing LMU regulations. One commenter was concerned by BLM's past

practice of issuing new MLA leases to a lessee who is not in compliance

with section 2(a)(2)(A) of MLA and concluded that this practice must

stop. Another comment expressed agreement with the recommendation from

the GAO report that the Secretary of the Interior cease issuing

additional MLA leases to companies that are not qualified under FCLAA.

BLM believes that this rule will significantly reduce the chance that a

lessee could abuse section 2(a)(2)(A) of MLA, as amended by FCLAA, by

obtaining additional MLA leases.

However, most comments, submitted by members of the coal industry,

were not supportive of the proposed rule. Specific concerns or comments

are addressed in the analysis of each respective topic or subsection.

These comments generally requested that the proposed rule be withdrawn.

BLM remains committed to encouraging diligent development of Federal

coal and reducing the potential for speculation. However, after

comprehensive review of all comments, BLM has made some changes to the

proposed rule. Those changes are discussed in detail below.

Several comments expressed concern that BLM had not established a

clear need for the proposed rule change. Several other comments

expressed an opinion that the current regulations were entirely

adequate and there was no need for the proposed regulatory changes.

However, as outlined in the GAO report discussed above, there remains a

potential for abuse of the current regulations that is not consistent

with FCLAA's goal of discouraging speculation and encouraging diligent

development of Federal coal.

Several comments addressed the relationship of the proposed rule to

the intent of FCLAA. One comment said that the proposed rule is not

compatible with FCLAA's intent to reduce the possibility of

speculation. One comment noted the marked increase in the number of

Federal coal leases actually producing coal since enactment of FCLAA as

evidence of the effectiveness of the current regulations and FCLAA to

reduce speculation. Another comment asserted that the intent of FCLAA

was confined to preventing the holding of a

[[Page 44357]]

lease without development, and so long as the lease or LMU had been

developed, the intent of FCLAA was satisfied. Another comment said that

there is no evidence to indicate that the speculative concerns of

Congress have not been adequately resolved by FCLAA. BLM agrees that

FCLAA has reduced the potential for speculation with Federal coal

reserves. However, questions concerning the effectiveness of FCLAA are

beyond the scope of this rulemaking. This rulemaking addresses only the

effectiveness of the regulations to discourage speculation and

encourage production as intended by FCLAA. As mentioned above, the

overall percentage of leases that are producing is not determinative as

to whether the regulations should be changed. BLM disagrees with the

comment that if a lease or LMU had been developed, FCLAA is satisfied.

FCLAA contains specific requirements that must be satisfied before

compliance with FCLAA is achieved. BLM concurs with the GAO findings

that there are weaknesses in the current regulations that need to be

addressed.

One comment discussed the relationship between diligent development

and speculation. The comment said that the apparent extension of the

diligence period when an older lease is combined with a younger lease

in an LMU is not speculation as addressed by FCLAA because formation of

an LMU often involves tradeoffs such as the 40-year mine-out

requirement and inclusion of non-Federal coal reserves in determining

commercial quantities. BLM agrees that for leaseholders who are

producing or plan to produce Federal coal, there are some tradeoffs

associated with LMU formation. However, for those who are apparently

holding leases without any current intention of producing coal,

imposition of the 40-year mine-out period and increasing the commercial

quantities amount are not tradeoffs. Clearly, if you have no current

intention of mining the coal and are holding a lease for the purpose of

selling it at a profit, you are not going to be greatly concerned about

how much time you have to mine the coal or the amount of coal you must

mine each year. You are more concerned, however, about being able to

hold the lease for 10 more years by including it in an LMU. To the

speculator, the advantage of substituting a new diligence period vastly

outweighs any drawbacks associated with the obligation to mine the

larger reserves of the LMU in 40 years.

Several comments expressed concern that the proposed rule would

restrict the flexibility the lessee has under the current regulations.

One comment noted that ``these unyielding requirements call for more

flexibility, not less.'' Another comment said ``the Federal regulations

must provide sufficient flexibility to allow * * * mak[ing] legitimate

business decisions while still protecting the public interest in the

coal resources owned by the United States.'' Another comment noted that

arbitrary limits in the proposed rule ignore the current practical

realities confronted by the lessee/operator. As addressed in analysis

of specific sections, some of the ``unyielding requirements'' of the

proposed rule have been modified to provide some additional

flexibility. However, such flexibility must be within the limits

established by the statute. BLM believes the final regulations achieve

a careful balance between discouraging speculation while at the same

time encouraging diligent development.

Several comments expressed concern that the GAO report is, in part,

a supporting document for this rulemaking. One comment questioned using

the conclusions of the GAO to support the proposed rule because the

Department of the Interior's official response to the GAO is not

consistent with the conclusions of the GAO report. In addition, the

comment was concerned that the GAO report has not been subject to

public review and comment sufficient to warrant its serving as the

primary basis for the proposal. Another comment asserted, ``We have

concluded that this GAO criticism was ill-advised and unfounded, and it

appears to have been designed to fulfill a political agenda adverse to

the interests of * * * federal coal development.'' This comment

continued, ``We urge BLM not to depend upon the GAO Report to justify

these new regulations, because it cannot withstand the light of a full

independent review.''

The GAO report has been included in the Administrative Record as

support for this rule. Commenters were free to dispute the foundations

or conclusions of the report. BLM has considered both the substance of

the report and criticisms by commenters in formulating this rule. Also,

this final rule is consistent with the response to GAO from the

Assistant Secretary, Land and Minerals Management, dated April 12,

1994. In the response to GAO, the Assistant Secretary noted that

``BLM's interpretation (of FCLAA) was a matter of policy formulated by

previous Administrations that met the letter of the law but that

appeared not to be in concert with the major goal of FCLAA, which was

to reduce speculation.'' See GAO/RCED-94-10, p. 77. The response also

stated that ``the policy could be amended prospectively at any time by

following the normal notice and comment rulemaking process.'' Id. BLM

considers the final rule to be within the scope of MLA, as amended by

FCLAA, and BLM's rulemaking authorities.

One comment asserted that ``defin[ing] `producing' in a manner

designed to punish a company which has properly suspended mining

because of poor market conditions'' could have ``takings''

implications. BLM does not agree that the rule ``punishes'' companies,

nor that it has takings implications. Under the commenter's scenario,

if BLM defined ``producing'' in such a way that a particular company

was disqualified from obtaining additional leases, no taking would

occur. BLM's action would preclude the company from obtaining

additional leases but would not deprive the company from the full

enjoyment of any rights it already possesses under existing leases. A

lease holder does not have a contractual or property interest in

acquiring additional leases at some future time. See Natural Resources

Defense Council v. Jamison, 815 F.Supp. 454, 470 (1992). To suggest

that a compensable claim arises from an action that precludes one from

obtaining additional rights extends the concept of takings beyond the

scope of current judicial interpretation.

The same commenter went on to assert that any action ``which could

result in the taking of leases from competent mine operators * * *

could in turn represent a taking of potential royalties and tax

revenues from [State and local governments].'' BLM disagrees. Although

each takings claim has to be decided on its own merits, BLM believes

that the rights attendant to a coal lease are conditioned on compliance

with the law and regulations. When noncompliance occurs, BLM has the

authority to impose the penalties provided for by MLA. In some cases,

BLM has no discretion regarding the nature of the penalty. For example,

MLA provides that ``[a]ny lease which is not producing in commercial

quantities at the end of ten years shall be terminated'' (30 U.S.C.

207). As to the question of whether State or local governments have a

``right'' to the revenue stream associated with a particular lease, the

commenter construes a possible diminishment of future revenues as a

compensable taking. BLM does not agree that States have such a claim.

Under 30 U.S.C. 191, the Secretary has an obligation to pay an

appropriate share of the money received

[[Page 44358]]

as a result of the production of coal. The obligation does not arise

until the Secretary receives the money; no obligation to the States

exists to maintain the revenue stream associated with Federal mineral

leasing. Moreover, any impacts of these rules on revenue streams is

purely speculative.

Finally, the same commenter went on to assert that a regulation

that ``would limit the leasing of new federal coal or limit the number

of potentially qualified bidders for new federal coal represents a

`taking of potential bonus bid revenues' from [the State] which would

otherwise be available.'' BLM disagrees. As discussed in response to

the commenter's first assertion, the courts have interpreted the Fifth

Amendment prohibition on uncompensated takings as being based on a

deprivation or limitation of rights that a person already possesses.

Takings are not based on a potential deprivation or limitation of

rights that a person may or may not possess at some time in the future.

In summary, BLM does not believe that the regulations adopted today

have takings implications.

Several comments expressed concern that the generally negative

response to the ANPR appeared to be ignored by BLM. The volume of

opposing comments does not, in and of itself, overshadow BLM's

responsibility to implement FCLAA. BLM believes the final rule properly

takes into account the views of commenters in implementing the

statutory requirements of FCLAA and MLA.

One comment said BLM failed to describe the need for the changes or

how the rule will reduce speculation. The final rule discourages

speculation in a number of ways. For example, the previous open-ended

definition of the term ``producing'' allowed speculative holding of

coal leases without limit on the nature or duration of mine shutdowns.

BLM believes holding a Federal lease for an extended period while both

the lease and the LMU which contains the lease fail to produce coal in

sufficient quantities to meet diligence requirements is speculation

that Congress intended to reduce by enactment of FCLAA. The promise of

future severance of coal, as evidenced by the presence of mining

equipment with the capability of severing coal, is not an acceptable

substitute for the actual severance of coal without an objective

standard to assure that severance recommences. In addition, this rule

discourages the formation of LMUs created to allow speculative holding

of non-producing coal leases. Regulations that allow formation of an

LMU consisting of an older Federal coal lease that is close to

termination for failure to meet diligence requirements with other coal

reserves which also have not produced coal, without any evidence of

prudent progress of developing a mine on either area, circumvent

sections 7(a) and 2(a)(2)(A) of MLA and allow speculation. Chapter 2 of

the GAO report provides a detailed discussion of the relationship

between speculation and formation of an LMU. The detailed analysis of

each section of the final rule provides additional information

concerning how the final rule will specifically serve to reduce the

potential for speculation.

One comment expressed concern that Executive Order 12988 of

February 11, 1994, entitled ``Federal Actions To Address Environmental

Justice in Minority Populations and Low-Income Populations,'' must be

considered and implemented in any final rule. This Executive Order

requires that each Federal agency make achieving environmental justice

part of its mission by identifying and addressing, as appropriate,

disproportionately high or adverse human health or environmental

effects of its programs, policies, and activities on minority

populations and low income populations in the United States. As

discussed below, BLM believes that this final rule complies with

Executive Order 12988.

A logical mining unit can be formed only after a Federal coal lease

has been issued. BLM must comply with all applicable environmental and

procedural requirements, which include many opportunities for public

comment and collection of environmental data, before the lease is

issued. This final rule does not alter the lease issuance process. The

logical mining unit itself cannot be approved without providing ample

opportunity for public comments and, if requested, a public hearing (43

CFR 3481.2). The mining operation must have a SMCRA mining permit

before mining operations can begin (30 U.S.C. 1256(a)). Exploration

operations, permitted through BLM, must also comply with established

procedures to safeguard the environment. Once mining operations begin,

the lessee/operator is generally required to continuously monitor the

environment in and around the mine for potential adverse effects. These

provisions for public participation and environmental protection

adequately ensure consideration of impacts on minority or low-income

communities. Thus, BLM believes that there are ample requirements and

safeguards already in place to assure compliance with Executive Order

12988.

One commenter said that the proposed regulations were ``at odds

with the President's Regulatory Reinvention Initiative.'' This comment

said that the proposed regulation cut against the initiative's

objectives to eliminate or revise obsolete regulations and seek the

views of the regulated community. BLM does not agree with this comment.

This final rule revises the regulations to comply with the letter and

intent of MLA, as amended by FCLAA, after inviting comment and

informing the regulated community of our intentions. BLM published an

ANPR and a proposed rule providing the regulated community ample

opportunity to provide input into the regulatory process. These

regulations are written to implement the MLA, as amended by FCLAA, and

have been modified in response to comments from the regulated

community. BLM believes that the regulations comply with the

President's regulatory reinvention initiative which requires ``sensible

regulations without sacrificing rational and necessary protection.''

In the proposal, BLM indicated that the changes to the definition

of ``producing'' would take effect 30 days after the final rule is

published. BLM specifically solicited comments on whether a longer

phase-in period, such as 6 months, is necessary (59 FR 66877). One

commenter was concerned that under the proposed rule, BLM would not

consider suspension of operations due to loss of a contract or lack of

a market for coal to be a qualifying temporary suspension. The

commenter proposed that ``the rule take effect a minimum of six months

after the final rule is published to allow [the lessee/operator] to

come into compliance with these proposed changes.''

As discussed in more detail later in this preamble, the final rule

that BLM is adopting today differs from this aspect of the proposal in

important ways. The final rule allows qualifying temporary

interruptions in coal severance up to one year in aggregate length in

the immediately preceding five-consecutive-year period. See final

Sec. 3481.4-4. Under the final rule, an operation could temporarily

interrupt coal severance for the period specified in final Sec. 3481.4-

4 due to loss of contract or lack of market without being disqualified

from obtaining additional leases. See final Sec. 3481.4-2(c). The final

rule provides lessees/operators significantly more flexibility with

regard to temporary interruptions in coal severance than the proposal,

which, as the commenter points out, would have excluded suspensions for

loss of

[[Page 44359]]

contract or lack of market and limited qualifying suspensions to three

months in length. These changes address the commenter's concern, and

BLM does not believe it is also necessary to extend the period of time

between the publication of the final rule and its effective date. Thus,

the regulations BLM is adopting today take effect in 30 days.

One commenter objected to the statement in the proposed rule

preamble that BLM intended to apply the regulations governing approval

of LMUs, under 43 CFR part 3480, subpart 3487, to all LMU applications

that were pending or submitted after the date of the proposed rule. The

commenter argued that implementation of the rules in this manner would

constitute ``an unlawful retroactive application of changes in

regulations.'' BLM does not agree that these rules will have

retroactive effect. Once the rules become effective 30 days after being

published in the Federal Register, they govern all subsequent decisions

by BLM concerning approval of LMU applications regardless of whether

the applications are pending on the effective date of the final rule or

submitted after that date. BLM applies the regulations that are in

effect at the time it makes the decision on the application. See

Bradley v. School Board of City of Richmond, 416 U.S. 696 (1974), cited

with approval in Illinois South Project, Inc. v. Hodel, 844 F.2d 1286,

1289 (7th Cir. 1988). The fact that an LMU application may have been

submitted prior to the change in the regulation does not entitle the

applicant to have BLM act on the application on the basis of rules no

longer in effect. See Hunter v. Morton, 529 F.2d 645, 649 (10th Cir.

1976); Hannifin v. Morton, 444 F.2d 200, 203 (10th Cir. 1971). In

response to the comment, however, BLM has decided not to reconsider

decisions made after the date of the proposed rule, but before the

effective date of these rules.

C. Section-by-Section Analysis of Final Rule and Specific Comments

Part 3400--Coal Management: General

Subpart 3400--Introduction: General. Section 3400.0-5 Definitions.

The prefatory clause previously stated ``As used in this part,'' and

could be interpreted to mean that the definitions listed in

Sec. 3400.0-5 applied only to part 3400, and were not applicable to all

of the regulations in 43 CFR group 3400, which includes parts 3400,

3410, 3420, 3430, 3440, 3450, 3460, 3470, and 3480. BLM proposed to

change the clause to read, ``As used in this group,'' to clarify that

the definitions in section 3400.0-5 apply to all of the regulations in

Group 3400--Coal Management. BLM is adopting the change to the

prefatory clause for the list of definitions at 43 CFR 3400.0-5 as

proposed.

One comment expressed concern that the change in the prefatory

clause from ``part'' to ``group'' could extend the definition of

``producing'' at Sec. 3400.0-5(rr)(6), for section (2)(a)(2)(A) of MLA,

to include ``continued operations'' under section 7 of MLA. However,

the prefatory clause at Sec. 3400.0-5(rr) specifically limits this

paragraph to, ``For the purposes of section 2(a)(2)(A) of the Act.''

Thus, BLM does not intend the change in the prefatory clause at

Sec. 3400.0-5 to extend the definition of ``producing'' under

Sec. 3400.0-5(rr)(6) to considerations of ``continued operations''

under section 7 of the MLA, which is defined at 43 CFR 3480.0-5(a)(8).

Section 3400.0-5(rr)(6) Definition of producing. Under the previous

definition of producing, BLM considered a lease to be producing, for

the purposes of lessee qualification under section 2(a)(2)(A) of MLA,

whenever coal was actually being severed, or the lessee was operating a

mine in accordance with standard industry operating practices. The

previous rule also provided an allowance for ``temporary suspension''

of coal severance for reasons that are beyond the reasonable control of

the mine operator or lessee. The definition contained several examples

of circumstances under which BLM allowed a non-disqualifying

``temporary suspension,'' including, but not limited to, factors such

as dragline or other equipment movement, breakdown, or repair;

overburden removal; sale of coal from stockpiles; vacations and

holidays; orders of governmental authorities; coal buyer's operations

of its power plants that require the coal buyer to stop taking coal

shipments for a limited duration of time; or severed coal being

processed, loaded, or transported from the point of severance to the

point of sale. Although the definition stated that it is limited to

circumstances beyond the reasonable control of the operator/lessee,

several of the examples described circumstances within the operator's

control. Thus the rule contained no effective limit on either the type

or duration of temporary interruptions under which a mine would be

considered ``producing.''

The definition of ``producing'' primarily has relevance for

operations that have not yet achieved diligent development, that is,

have not produced in commercial quantities within ten years. Operations

that have achieved diligence and are subject to continued operation

cannot be disqualified from receiving additional leases under the

definition of ``producing'' while they remain in compliance with the

continued operation requirements. See final Sec. 3472.1-2(e)(6)(D).

BLM proposed that the definition of ``producing'' at section

3400.0-5(rr)(6) be changed to limit the circumstances under which BLM

would consider a Federal coal lessee qualified to obtain additional MLA

leases. BLM proposed to eliminate the provision that allowed the lease

to be considered producing, for the purposes of section 2(a)(2)(A) of

MLA, if a mine were operating on the lease or LMU in accordance with

standard industry operation practices and proposed limiting temporary

suspensions to 3 months. In the proposal, BLM indicated that it

believes that the definition had potential for abuse. A lessee could

claim that it is producing in accordance with standard industry

practices even though, for reasons that are within its control, coal

has not been produced from the lease for many years. This result would

not serve the purpose of FCLAA to prevent speculation. Several comments

expressed support for this aspect of the proposal. Several other

comments indicated that removal of the ``standard industry operating

practices'' clause from the rule would unduly constrain the ability of

BLM to effectively administer the coal program and would not recognize

site-specific needs of smaller mines. One comment said that standard

industry operating practices must continue as the standard by which BLM

makes many of its management decisions.

The final rule eliminates the ``standard industry operating

practices'' clause and provides that producing means actually severing

coal. Under the final rule, BLM also considers a lease producing when

the operator/lessee is processing or loading severed coal or

transporting it from the point of severance to the point of sale, or

coal severance is temporarily interrupted in accordance with 43 CFR

3481.4-1 through 4-4. BLM continues to believe that the open-ended

``standard industry operating practices'' and ``temporary suspension''

clauses of the previous rule could be interpreted to extend the

definition of ``producing'' beyond the scope of FCLAA. ``Standard

industry operating practices'' and unlimited ``temporary'' suspensions

could include things that are clearly outside the range of what is

contemplated under FCLAA, such as an open-ended discretionary mine

closure.

[[Page 44360]]

As discussed later in this preamble in connection with final

Secs. 3481.4-1 through 3481.4-4, BLM is providing the flexibility

requested by commenters by allowing temporary interruptions not

exceeding an aggregate of 1 year in the 5-consecutive-year period

immediately preceding the date of BLM's determination of lessee

qualifications under 43 CFR 3472.1-2. This provision allows operators

more flexibility to temporarily interrupt coal severance without

penalty under section 2(a)(2)(A) than would have been provided under

the proposal, which would have limited the length of a ``temporary

suspension'' to 3 months. The final rule also provides flexibility by

not limiting a temporary interruption in coal severance to

circumstances beyond the control of the lessee/operator.

By its own terms, section 7(b) provides an exception for

interruptions caused by ``strikes, the elements, or casualties not

attributable to the lessee.'' To the extent that a temporary

interruption is caused by a circumstance that meets the standards of

section 7(b), BLM has recognized in the final rule that section 7(b)

does not afford BLM with the authority to limit that type of

interruption to either a 3-month or 1-year period. Therefore, that type

of interruption will not lead to disqualification under section

2(a)(2)(A). See the preamble discussion of Sec. 3481.4 below.

However, certain of the circumstances listed in the proposal or

this final rule as non-disqualifying temporary suspensions do not fall

within the section 7(b) exception because they are not ``casualties not

attributable to the lessee.'' Some are not ``casualties'' and some are

not beyond the lessee's control.

Nevertheless, BLM continues to believe that such temporary

suspensions should not lead to a disqualification under section

2(a)(2)(A). By not defining the term ``producing,'' Congress was silent

as to whether and the degree to which temporary interruptions in coal

severance should disqualify a lessee from receiving additional leases

under section 2(a)(2)(A). BLM has attempted to determine what is

reasonable and has so provided in this final rule. See section 3481.4,

discussed below. This final rule eliminates the confusing and

unnecessary requirement that temporary interruptions be beyond the

control of the operator.

As discussed above, BLM's previous rules allowed a lease that is

not actually severing coal to be considered ``producing'' when severed

coal is being processed, loaded, or transported from the point of

severance to the point of sale. BLM proposed to retain this provision

and received no comments that specifically addressed this issue. BLM is

adopting this provision in the final rule. BLM recognizes that the

mining operation consists of more than just the mechanical severance of

coal. Coal, once severed, requires processing and transportation prior

to it having value to the coal consumer. Severance, processing, and

transportation of coal are equally important to the success of the

lease or LMU in meeting the producing requirements under section

2(a)(2)(A) of the MLA.

Both BLM's previous rule and the proposal contained definitions of

the term ``producing'' that would have delineated the circumstances

under which a lease could be considered ``producing'' for purposes of

section 2(a)(2)(A) even though coal severance was temporarily

suspended. BLM believes that these provisions are regulatory in nature

and do not belong in a definition. Therefore, BLM has moved the

provisions governing what in the previous rule was a temporary

suspension to final Secs. 3481.4-1 through 3481.4-4 and included a

cross-reference to those sections in the definition of ``producing.''

Please refer to that portion of this preamble for a complete discussion

of comments received on that subject, which BLM has designated

``temporary interruption in coal severance'' in the final rule. Thus,

the provision that BLM is adopting today simply lists the three

circumstances under which a lease may be considered producing: (1) When

coal is being severed (that is, being physically removed from the

working face to another location); (2) when severed coal is being

processed, loaded, or transported from the point of severance to the

point of sale; and (3) when coal severance is interrupted in accordance

with 43 CFR 3481.4-1 through 3481.4-4.

The proposal would have added a provision that, for the purposes of

the definition of ``producing,'' the term ``operator/lessee'' has the

meaning set forth in 43 CFR 3480.0-5(a)(28). This was an incorrect

cross reference; the term ``operator/lessee'' is actually found at 43

CFR 3480.0-5(a)(27). BLM received no comments concerning this section

of the proposed rule. However, in the interest of simplifying its

regulations, BLM has decided that it is not necessary to incorporate

this cross reference into the final rule. The term ``operator'' is

defined at Sec. 3400.0-5(cc).

Part 3470--Coal Management Provisions and Limitations

Subpart 3472--Lease Qualification Requirements. Section 3472.1-2

Special leasing qualifications. Section 3472.1-2 sets forth special

qualifications that applicants must meet in order to obtain leases.

Subparagraph (e)(1)(i) implements section 2(a)(2)(A) of MLA and

establishes the general prohibition on issuance of new leases to those

who have held a Federal coal lease for 10 years and who are not

producing coal from the lease deposits in commercial quantities. The

previous provision set forth exceptions to the prohibition, including

those in ``paragraph (e) (4) or (5) of this section.'' BLM proposed to

revise subparagraph (e)(1)(i) by making some grammatical corrections

and adding a clarifying reference to paragraph (e)(6) as an exception

to the prohibition. Several comments generally supported the proposed

rule. BLM is adopting this provision in the final rule as proposed.

Final Sec. 3472.1-2(e)(1)(i) contains a reference to the exception

provisions of part 3480. The reference is intended to include

suspensions approved under 43 CFR 3483.3 and final Sec. 3481.4-4. See

the preamble to Sec. 3481.4-4 below.

BLM also proposed changes to paragraph (e)(6), which contains

exceptions to the prohibition on issuing new leases to holders of non-

producing leases. In BLM's previous rules, paragraph (e)(6)(ii)(D)

established an exception from section 2(a)(2)(A) for leases ``producing

in compliance with the diligent development and continued operation

provisions of part 3480.'' Paragraph (e)(6)(ii)(E) established a

corresponding exception for leases contained in an LMU, if the LMU is

producing ``in accordance with the logical mining unit stipulations of

approval.'' As explained in the proposed rule preamble, these two

provisions allowed a lease or LMU to be considered in compliance with

the producing requirement of section 2(a)(2)(A) during the diligent

development period, even though the lessee may have held the lease for

more than 10 years without producing coal (59 FR 66877). This is

exactly the type of abuse identified in the GAO report. See GAO/RCED-

94-10, pp. 24-25. BLM believes that a policy which allows a non-

producing lease in a non-producing LMU to satisfy the ``producing''

requirement of section 2(a)(2)(A) because it complies with the diligent

development requirements undermines the anti-speculation goal of FCLAA

and implementation of section 2(a)(2)(A).

[[Page 44361]]

For these reasons, BLM proposed to change paragraph (e)(6)(ii)(D)

to provide that, in order to protect a lessee from disqualification

under section 2(a)(2)(A), a lease must be producing, or a lease that

has met its diligent development requirements must be in compliance

with its continued operation requirements. Similarly, BLM proposed to

change paragraph (e)(6)(ii)(E) to provide that, in order to protect a

lessee from disqualification, an LMU must be producing, or be in

compliance with its continued operation requirements, in addition to

complying with the LMU approval stipulations. BLM is adopting both

provisions in the final rule as proposed, with the exception of one

editorial change prompted by a comment (discussed below).

One comment suggested that the rule should be written in a more

direct style. The comment suggested replacing the phrase ``has produced

in satisfaction of'' to ``currently in compliance with'' in both

paragraph (D) and (E). BLM agrees that the suggested change improves

the clarity of the rule and recognizes that continued operation is

based on a rolling 3-year period, for which an operator may be in

compliance, but the necessary production may not yet have occurred. An

operator has the flexibility to satisfy continued operation by

producing a total of 3 percent of the recoverable coal reserves within

3 years, regardless of when production occurs during that 3-year

period. Thus, the duration of coal severance is not relevant to meeting

the continued operation requirement as long as the operator meets the

production requirement on average. Such production satisfies both the

continued operation and section 2(a)(2)(A) production requirements. The

final rule does not affect the operator's flexibility in meeting the

continued operation requirement, where a degree of flexibility is

appropriate once diligent development has been achieved. The comment is

adopted, and the final rule requires leases and LMUs to be producing,

or currently in compliance with the lease-specific or LMU continued

operation requirements.

Under final Sec. 3472.1-2(e)(6)(ii)(E), if a Federal lease that is

included in an LMU and has been held for more than 10 years is

producing or is in compliance with its continued operation requirement,

the lessee would remain qualified under section 2(a)(2)(A) of MLA. If a

Federal lease that is included in an LMU and has been held for more

than 10 years is not producing or is not in compliance with continued

operation, but the LMU is producing or is in compliance with its

continued operation requirement, the lessee remains qualified under

section 2(a)(2)(A) of MLA. However, if a Federal lease that is included

in an LMU and has been held for more than 10 years is not producing and

is not in compliance with its continued operation requirement, and the

LMU is not producing and is not in compliance with its continued

operation requirement, the lessee would be disqualified under section

(2)(a)(2)(A) of MLA.

One comment disagreed with ``BLM's assertion that for an LMU with a

pre-FCLAA lease, [LMU] compliance with [diligent development] is

inadequate for lease compliance with the ``producing'' requirement of

Section 2(a)(2)(A).'' BLM did not accept this comment. As discussed

above, if compliance with the diligent development requirement of

section 7 were to be construed as satisfying the requirements of

section 2(a)(2)(A), the holding period for readjusted leases could be

stretched for an additional 10 years before actual production would

have to begin. This is because the diligent development period of the

LMU supersedes the lease-specific diligent development period.

One comment noted the Department had previously considered FCLAA to

be silent concerning the interplay between section 2(a)(2)(A) and 2(d)

of the MLA and concluded that ``the agency's attempt at legislative

revisionism, by inserting FCLAA's anti-speculation purposes, remains

unpersuasive.'' BLM believes that, where a statute does not directly

speak to an issue, the agency that has been delegated rulemaking

authority, BLM in this case, has the discretion to adopt a reasonable

interpretation that is consistent with the purposes of the statute.

Under the discretionary authority granted in section 2(d)(3) of MLA (30

U.S.C. 202a(3)), BLM chose, as a matter of policy, to provide by

regulation that production from anywhere within an LMU should be

construed as occurring on all Federal leases in the LMU for purposes of

diligent development and continuous operation. BLM also chose, as a

matter of policy, to provide by regulation that a lessee producing in

accordance with the LMU stipulations was not disqualified under section

2(a)(2)(A). For the reasons described above, BLM is now changing its

interpretation with regard to section 2(a)(2)(A) to better serve the

anti-speculation goals of FCLAA. BLM believes it has articulated a

reasonable explanation for why it is doing so. This action is within

BLM's discretionary rulemaking authority under MLA as amended and

contains a sufficient basis and purpose as required by the

Administrative Procedure Act (5 U.S.C. 553).

Part 3480--Coal Exploration and Mining Operations Rules

Subpart 3480--Coal Exploration and Mining Operations Rules:

General. Section 3480.0-5 Definitions. The proposed rule would have

added a new term, ``Logical mining unit recoverable coal reserve

exhaustion period,'' which would have been defined as the period of

time beginning upon approval of the LMU resource recovery and

protection plan and ending when all the recoverable coal reserves are

mined out, but not more than 40 years. BLM has decided not to include

the definition in the final rule. Based on comments, BLM is adopting a

final rule that differs from the proposal with regard to the beginning

of the 40-year period for mining out the LMU. The final rule provides

flexibility in beginning the 40-year period, because BLM has concluded

that a definition that specifies a single beginning point for the 40-

year period is not appropriate. See the preamble discussion below

concerning Sec. 3487.1 of the final rule.

Subpart 3481--General Provisions. Section 3481.4 Temporary

interruption in coal severance. As discussed above, BLM also proposed

to change the definition of ``producing'' to allow temporary suspension

of operations for reasons beyond the control of the lessee/operator

without disqualifying the lease holder from receiving new leases. The

proposed rule would have restricted a ``temporary suspension'' to not

more than 3 months in length and provided a list of qualifying

circumstances similar to those included in the previous rule. BLM has

decided that the provisions relating to ``temporary suspension,'' which

has been renamed ``temporary interruption in coal severance'' in the

final rule, are regulatory in nature and should not be included in a

definition. Thus, in the final rule adopted today, these provisions are

located at final Sec. 3481.4, including Secs. 3481.4-1 through 3481.4-

4.

Some commenters confused a ``temporary suspension'' for the

purposes of determining lessee qualifications under section 2(a)(2)(A)

of MLA with lease suspensions authorized under section 7(b) of MLA (30

U.S.C. 207(b)). BLM believes that some of the confusion may have

resulted from the proposed ``temporary suspension'' provision which

combined administrative exceptions to the definition of ``producing''

with elements of the section 7(b) suspension criteria.

[[Page 44362]]

The comments make it evident that using the same or similar terminology

for different circumstances is confusing. Therefore, in the final rule,

BLM uses the term ``temporary interruption in coal severance'' to refer

to periods when a lease or LMU is not severing coal, but the lease

holder is still considered to be producing and thus qualified under

section 2(a)(2)(A) of MLA to receive additional leases.

Section 3481.4-1 Can I temporarily interrupt coal severance and

still be qualified as producing? Final Sec. 3481.4-1 provides that an

interruption in coal severance allows a lessee/operator to temporarily

halt the extraction of coal for a limited period of time without

jeopardizing the lessee/operator's qualifications under section

(2)(a)(2)(A) of MLA to receive additional leases. During the period of

an interruption in coal severance, BLM still considers a lease or LMU

to be producing so as not to preclude the lessee/operator from

receiving a new or transferred lease. This section corresponds to the

first sentence of proposed Sec. 3400.0-5(rr)(6)(ii)(A), but without the

proposed 3-month limit and the restriction to reasons beyond the

reasonable control of the operator/lessee. The time limit for temporary

interruptions in coal severance is prescribed in final Sec. 3481.4-4

(discussed below).

BLM decided not to restrict temporary interruptions in coal

severance to circumstances beyond the reasonable control of the lessee/

operator. BLM believes that proposed Sec. 3400.0-5(rr)(6)(ii)(A) was

confusing in that it included in the examples of circumstances beyond

the lessee/operator's control things that could be within the control

of the lessee/operator. For example, equipment movement, overburden

removal, and vacations would all appear to be, generally, within a

lessee/operator's control.

To remedy the confusion, the final rule allows temporary

interruptions in coal severance for any reason, up to the 1-year limit.

See final Sec. 3481.4-4. As discussed below, BLM believes that limiting

the aggregate duration of interruptions is a much clearer and more

effective way to regulate than limiting the types or causes of

interruptions. If adopted, the proposal might have resulted in

disagreements over whether or not an interruption was caused by a

factor beyond an operator's control. Such disagreements are difficult

to resolve and rarely increase understanding of, or compliance with, a

regulation.

Because the term ``producing'' in section 2(a)(2)(A) of MLA, as

amended, (30 U.S.C. 201(a)(2)(A)) is not defined in the statute, BLM

has the authority under MLA (30 U.S.C. 189), the MLA for Acquired Lands

(30 U.S.C. 359), and FLPMA (43 U.S.C. 1733 and 1740) to adopt a

provision defining the term, provided we establish a reasonable

connection between the provision and the purposes of the statutes. In

this case, the final rule fosters maximum economic recovery of Federal

coal reserves and facilitates development of coal reserves in an

efficient, economical, and orderly manner by giving operators the

flexibility to temporarily interrupt coal severance as necessary due to

the unique and dynamic circumstances of each coal mining operation. In

addition, the final rule limits abuse through the aggregate time limit.

See the preamble discussion of final Sec. 3481.4-4 below. Readers

should note that some of the circumstances beyond a lessee/operator's

control correspond to the ``casualties not attributable to the lessee''

set forth in section 7(b) of MLA (30 U.S.C. 207(b)). As discussed

above, to the extent that an operation is forced to temporarily

interrupt coal severance due to casualties not attributable to the

lessee, BLM has additional authority under section 7(b) of MLA to

consider the interruption a non-disqualifying event under section

2(a)(2)(A)'s producing requirement.

Section 3481.4-2 What are some examples of circumstances that

qualify for a temporary interruption of coal severance? Final

Sec. 3481.4-2 provides some examples of circumstances that qualify for

an interruption in coal severance, including movement, failure, or

repair of major equipment, such as draglines or longwalls; overburden

removal; adverse weather; employee absences; inability to sever coal

due to orders issued by governmental authorities for cessation or

relocation of the coal severance operations; and inability to sell or

distribute coal severed from the lease or LMU out of or away from the

lease or LMU. This section corresponds to proposed Secs. 3400.0-

5(rr)(6) (ii) and (iii). The final rule differs from the proposal in

that we added ``adverse weather'' to the list of qualifying

circumstances based on the fact that coal operations sometimes have to

temporarily interrupt operations in the winter. We also substituted the

term ``employee absences'' in the final rule for ``vacations and

holidays'' in the proposal in the belief that a more inclusive term is

preferable. For example, ``employee absences'' takes into account

situations where employee illness is a factor.

In response to BLM's request in the proposed rule, several

commenters suggested additional circumstances in which an interruption

in coal severance could be allowed. These additional circumstances

included fires, explosions, storms, floods, boycotts, court orders,

damage to support facilities or systems, interruptions in coal

transportation, strikes, material shortages, and interruptions in

delivery of coal initiated by the coal customer. Several comments

stated that any attempt to exhaustively list all potential exceptions

to ``producing'' is misplaced. One comment suggested that the rule

appeared to rely on ``events'' while there might be ``conditions'' that

could be the basis of an interruption to operations.

BLM agrees that a list of potential exceptions to ``producing'' can

never capture all possible qualifying circumstances. Rather than

attempting to establish an exhaustive list of events or conditions that

justify a temporary interruption, BLM has decided to adopt in principle

the proposed approach by limiting the duration of interruptions.

Limiting the duration of interruptions in coal severance is a reliable

means that eliminates the complexities of interpretation, is not

excessively burdensome, and captures all possible circumstances.

Administratively, BLM believes it to be more efficient to regulate the

duration of the interruption in coal severance rather than listing all

the possible combinations of qualifying criteria. Thus, the final rule

simply lists several examples of qualifying circumstances, all of which

are subject to the limit established by final Sec. 3481.4-4, discussed

below, except for temporary interruptions of less than 14-day duration

and section 7(b) suspensions.

Several comments on proposed Sec. 3400.0-5(rr)(6)(ii)(A), which

would have included ``dragline or other equipment movement,'' requested

that BLM also include examples of underground mining equipment and

methods. BLM believes that it would be cumbersome to provide examples

applicable to every mining method and all varieties of mining

equipment. However, BLM has modified the list of example methods and

equipment in corresponding final Sec. 3481.4-2(a) to include examples

of both surface (draglines) and underground (longwall) mining

equipment. Thus, the item in the proposed rule that read ``dragline or

other equipment movement, breakdown, or repair'' is changed to

``movement, failure, or repair of major equipment, such as draglines or

longwalls * * *.'' The term ``major equipment'' includes draglines,

longwalls, haulage trucks, and conveyor belts, the failure of which

[[Page 44363]]

would directly impede coal severance. Dozers, graders, and utility

trucks are not examples of major equipment.

Many comments expressed opposition to proposed Sec. 3400.0-

5(rr)(6)(ii)(B), which would have added a provision to exclude a lack

or loss of market and a lack or loss of a contract as qualifying

circumstances for an interruption of coal severance. BLM included this

provision in the proposal to address abuses such as maintaining a lease

in non-producing status while waiting for a market to develop or for a

contract to be negotiated. The comments asserted that the proposed rule

would force a lessee/operator to capitulate to a buyer's demands, which

could result in the potential bypass of Federal coal reserves. For

simplicity and streamlining and based on the commenter's concerns, BLM

has decided not to include the proposed provision in this final rule.

BLM believes the limit on the duration of interruptions will curb any

abuse. BLM continues to believe, however, that loss of a coal contract

or market does not constitute a ``casualty'' that would qualify for a

suspension under section 7(b) of MLA, as amended. Thus, an operator who

stops severing coal because of the loss of a contract or market can

qualify as ``producing'' subject to the 1 year in 5 aggregate maximum

for temporary interruptions, but would not be entitled to a section

7(b) suspension for loss of a coal contract or market.

Section 3400.0-5(rr)(6)(iii) of the proposal would have included

orders by governmental agencies for suspension of coal severance for

reasons that are beyond the control and not the fault of the lessee/

operator as an example of a qualifying circumstance for an interruption

in coal severance. One comment indicated that the proposed rule had a

narrow definition and could tend to defeat the purpose for which it was

intended. For example, orders of government authorities to relocate

coal severance can have as much impact on a lease or LMU as orders for

suspension of coal severance. In response to this comment, BLM has

added to final Sec. 3481.4-2(b) a provision for cessation or relocation

of coal severance operations due to governmental order. We substitute

the term ``cessation'' in the final rule for the proposed

``suspension'' to avoid any possible confusion with suspensions

authorized under 43 CFR 3483.3.

One commenter objected to language in proposed Sec. 3400.0-

5(rr)(6)(iii) that would have allowed a non-disqualifying suspension

ordered by governmental authorities for reasons beyond the control of

the lessee/operator and not the fault of the [lessee /operator]

(Emphasis added). The commenter asserted that the proposal would invite

needless disputes over what was, or was not, the fault of the lessee/

operator. BLM agrees and has deleted the reference to reasons beyond

the reasonable control and not the fault of the operator/lessee from

final Sec. 3481.4-2(b).

Section 3481.4-3 Does a temporary interruption in coal severance

affect the diligence requirements applicable to my lease or LMU? Final

Sec. 3481.4-3 specifies that an interruption in coal severance does not

change the diligence requirements of 43 CFR subpart 3483 applicable to

a lease or LMU. There was confusion among the commenters concerning the

distinction between an interruption in coal severance under the

proposed definition of ``producing'' and the lease suspension

provisions located at 43 CFR 3483.3. BLM is including this section in

the final rule to clarify that a qualifying interruption in coal

severance, which maintains eligibility to receive future leases, does

not affect the diligence requirements of a lease or LMU. Such

interruptions do not constitute suspensions under 43 CFR 3483.3, which

implements sections 7(b) and 39 of MLA (30 U.S.C. 207(b) and 209). A

lessee who seeks such a suspension or extension of lease terms must

apply to BLM for approval.

Section 3481.4-4 What is the aggregate amount of time I can

temporarily interrupt coal severance and have BLM consider my lease or

LMU producing? Based on commenter opposition to the proposed 3-month

limit on temporary interruptions, BLM has modified the final rule to

provide substantially more flexibility to operators, but without being

completely open-ended, as was the previous rule. BLM believes that the

approach selected in the final rule appropriately balances the

legitimate operational needs of lessees with the goal of curbing abuse

of the exception from the requirement to sever coal. Thus, final

Sec. 3481.4-4 adopts a provision that limits the aggregate of all

interruptions in coal severance to 1 year in the 5-consecutive-year

period immediately preceding the date of BLM's determination of lessee

qualifications under 43 CFR 3472.1-2, except that BLM will not count

any interruption that is 14 days or less in duration or any suspension

approved by BLM pursuant to section 7(b) of MLA (30 U.S.C. 207(b)). In

other words, if BLM were looking, on June 30, 1997, at the eligibility

of a particular lease holder who is reliant upon the temporary

interruption provision, we would look at the aggregate of interruptions

between July 1, 1992, and June 30, 1997. If the aggregate of

interruptions during that period exceeded 365 days, not counting

interruptions of 14 days or less or approved section 7(b) suspensions,

the lease holder would not be qualified to obtain additional leases.

With each passing day, the 5-year period that BLM looks at rolls

forward.

In the proposed rule, BLM stated that section 7(b) provides an

exception from the diligent development requirements (59 FR 66876).

However, the last sentence of section 7(b) makes it clear that the

section 7(b) exceptions do not apply to the requirement to produce

commercial quantities at the end of ten years in section 7(a). Thus the

rule implementing the section 7(b) exceptions provides an opportunity

to seek a suspension of the continuous operation requirement, but does

not mention a suspension of the diligent development requirements. See

43 CFR Sec. 3483.3(a). Therefore when the proposed rule preamble

suggested that an operator/lessee could seek a force majeure exception

under section 7(b) for temporary suspensions of greater than three

months in accordance with 43 CFR Sec. 3483.3, that statement was

accurate under the previous regulations only for operations which have

achieved diligent development and are in a continuous operation mode,

and for circumstances which would qualify under section 7(b).

Although the section 7(b) exception from producing requirement in

section 2(a)(2)(A) applies to leases which have not achieved diligent

development, no existing regulatory provision implements the statutory

provision. Thus, we are adopting in the final rule a conforming

provision at Sec. 3481.4-4(b)(3) to recognize that MLA, as amended,

provides a force majeure exception to the section 2(a)(2)(A) producing

requirement (30 U.S.C. 201(a)(2)(A)) for operations that are subject to

diligent development. In circumstances that meet the force majeure

exceptions described in section 7(b) of MLA, BLM will approve

suspensions for operations subject to diligent development for the

purpose of compliance with section 2(a)(2)(A).

Most of the commenters were concerned about the proposed 3-month

limitation for temporary suspensions and the circumstances under which

a temporary suspension could be authorized. To adequately address the

volume and detail of the comments received, the comments applicable to

these topics are discussed individually below.

[[Page 44364]]

Many comments took issue with the 3-month limit on the duration of

a temporary suspension in proposed Sec. 3400.0-5(rr)(6)(ii)(A). Most of

these comments considered a 3-month period to be too brief. Several

comments noted that the duration of most qualifying conditions could be

longer than 3 months, for example, the time to repair a damaged steam

turbine or the time needed to negotiate alternative sales agreements.

Several comments said they thought the 3-month duration was arbitrary

and would serve little useful purpose, suggesting instead to retain the

former provision which did not limit the duration. Another comment

stated that the word ``temporary'' speaks for itself, thereby

eliminating the need for a specified duration. One comment was

concerned about how frequently 3-month temporary suspensions could be

granted and if such suspensions could be granted for consecutive 3-

month periods. One comment suggested as an alternative that a temporary

suspension could continue until the end of the next continued operation

year.

BLM believes the duration of an interruption in coal severance must

be explicitly limited to preclude abuse. BLM recognizes that in the

normal course of business, a lessee/operator may be confronted with

circumstances in which prudent business practice demands a cessation of

coal production for an abbreviated period. It is in the best interest

of both the lessee/operator and BLM to work together to ensure prudent

resource management is maintained through periods when coal is not

produced. However, BLM's experience has shown, as documented by the GAO

report discussed above, that allowance of an interruption in coal

severance for an unspecified duration will not necessarily achieve the

intent of FCLAA. BLM believes that the duration of any interruption in

coal severance must be limited to reduce opportunities for abuse and

speculation.

The comment that suggested allowing extension of an interruption in

coal severance until the end of the next continued operation year

assumes that the lease or LMU is subject to continued operation. As

discussed earlier in this preamble in connection with Sec. 3472.1-2,

the holder of a lease subject to continued operation will not be

disqualified from obtaining additional leases if the lease is producing

or in compliance with the continued operation requirements. Thus, a

standard for temporary interruptions based on continued operation year

would not be applicable to the type of situation identified in the GAO

report, that is, where the holder of a non-producing lease subject to

diligent development obtains additional leases. Extending the duration

of an interruption in coal severance must also be considered in light

of the explicit production requirements of section 2(a)(2)(A) of MLA

and the goals of FCLAA to deter speculation. However, in response to

the comments, BLM considers it reasonable to allow the aggregate length

of temporary interruptions in coal severance to exceed 3 months. Thus,

final Sec. 3481.4-4 adopts a maximum aggregate for temporary

interruptions in coal severance of not more than 1 year in the 5-

consecutive-year period immediately preceding the date of BLM's

determination of lessee qualifications under 43 CFR 3472.1-2.

One comment on the proposed rule expressed concern that the

proposed rule did not explicitly establish if the proposed 3-month

limit would be applied for each qualified event, or only once within

the lease term, or if a lessee/operator could receive consecutive 3-

month interruptions for an indefinite period. BLM agrees that the

proposed rule inadequately defined when and how the 3-month limit would

be applied. This concern is addressed in the final rule at Sec. 3481.4-

4(a) which provides that the lessee/operator may interrupt coal

severance for up to 1 year, in aggregate, during the immediately

preceding 5-consecutive-year period. BLM believes that allowing an

aggregate of 1 year of interrupted coal severance in the immediately

preceding 5-consecutive-year period will provide a needed balance

between operating flexibility for the lessee/operator as well as

enforcement of FCLAA's anti-speculative intent. A quantifiable standard

for temporary interruptions in coal severance eliminates the need for

an exhaustive listing of qualified events. BLM believes that simple and

predictable criteria are the only way to provide consistent and uniform

outcomes. The workload associated with tracking the aggregate days of

interrupted coal severance is negligible when compared to the workload

that would be associated with determining if each temporary

interruption in coal severance is a qualified event or not. Additional

discussion of qualified events is located under the portion of the

preamble associated with final Sec. 3481.4-2.

Final Sec. 3481.4-4(b)(1) provides that BLM will not count any

interruption in coal severance that is 14 days or less in duration. BLM

added this provision to the final rule for the convenience of the

regulated community and ease of administration. BLM is primarily

concerned with interruptions that evince speculative intent, not in

short-term stoppages of a few days duration. Also, it would be onerous

for BLM and lessee/operators to track each time production ceased for a

day or two. It would be difficult for BLM to maintain records of this

information and to enforce this requirement. BLM believes not

regulating interruptions of 14 days or less achieves a reasonable

balance between discouraging speculation and avoiding an administrative

burden. Also, BLM expects that this provision will allow lessee/

operators to take into account vacations and holidays. The previous

rule and the proposed rule both addressed vacations and holidays by

including them in the list of circumstances allowing temporary

suspension of production.

Final Sec. 3481.4-4(b)(2) provides that BLM will not count any

suspension granted under 43 CFR 3483.3 toward the aggregate of

temporary interruptions in coal severance. The referenced provision is

the one that implements the section 7(b) of MLA exception from

continued operation for strikes, the elements, and casualties not

attributable to the lessee. Final Sec. 3481.4-4(b)(3) provides that BLM

will not count toward the aggregate of temporary interruptions any BLM-

approved suspension of the 43 CFR 3472.1-2(e)(1) requirement for

reasons of strikes, the elements, or casualties not attributable to the

lessee before diligent development is achieved. This provision

implements the section 7(b) of MLA exception from diligent development.

A suspension granted under this provision is for the limited purpose of

implementing section 2(a)(2)(A) and does not affect the section 7(a)

requirement to produce commercial quantities in 10 years. BLM added

these provisions to the final rule in recognition of the fact that the

so-called force majeure exceptions contained in section 7(b) are open

ended and cannot be limited by BLM's regulatory provisions applicable

to temporary interruptions in coal severance.

Subpart 3483--Diligence Requirements. Section 3483.3 Suspension of

continued operation or operations and production. BLM's previous rules

allowed extension of the deadline for submission of a resource recovery

and protection plan (R2P2) beyond 3 years. In Natural Resources

Defense Council v. Jamison, 815 F. Supp. 454 (D.D.C. 1992), the court

held that the requirement to submit an R2P2 within 3 years is an

unambiguous deadline that cannot be extended. Consequently, BLM

proposed to eliminate this provision. BLM also

[[Page 44365]]

proposed some minor edits for clarity of expression. BLM is adopting

the provisions as proposed.

Several comments supported removal of the provision for extending

the time for submitting an R2P2 beyond 3 years. One comment suggested

an editorial change in the last sentence of proposed Sec. 3483.3(a).

The comment suggested changing the word ``and'' to ``or'' so that the

last sentence would read, ``The authorized officer, if he or she

determines an application to be in the public interest, may approve the

application or terminate suspensions that have been or may be

granted.'' (Emphasis added.) This comment is adopted in the final rule.

Subpart 3487--Logical Mining Unit. Section 3487.1 Logical mining

units. Paragraph (e) of this section contains the stipulations required

for the approval of a proposed LMU. Paragraph (e)(6) is the stipulation

that sets the beginning of the 40-year period in which the coal

reserves of the LMU must be mined. This provision is derived from

section 2(d)(2) of MLA, which provides in pertinent part 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'' (30 U.S.C.

202a(2)). (Emphasis added.) Because MLA does not specify when the 40-

year period starts, BLM has the discretion to establish a reasonable

starting date(s). BLM's previous regulations provided that the 40-year

period begins on the date that coal is first produced from the LMU,

after LMU approval, as determined during the first royalty reporting

period after such date. See 43 CFR 3487.1(e)(6) (1995). The proposed

rule would have begun the 40-year period when the R2P2 for the LMU is

approved. BLM explained that this change would encourage diligent

development of Federal coal reserves because the lessee/operator is

``free to start'' mining operations after LMU approval (59 FR 66878,

Dec. 28, 1994).

As discussed in the preamble of the proposed rule, the MLA states

that the mine-out period that the Secretary establishes must be part of

the approved ``mining plan'' and cannot exceed 40 years. See 30 U.S.C.

202a(2). BLM interprets ``mining plan'' to mean the ``operation and

reclamation plan'' required under 30 U.S.C. 207(c), which the

implementing regulations at 43 CFR Part 3482 call the resource recovery

and protection plan, or ``R2P2.'' This plan, which the lessee must

submit within 3 years after a lease or LMU is approved, provides a

detailed description of how the lessee/operator will mine the coal and

reclaim the land. Because this plan is customarily approved

concurrently with, or subsequent to, the mining permit issued under the

Surface Mining Control and Reclamation Act (SMCRA), the lessee/operator

can proceed with development operations after the date of R2P2 and

permit approval. See 30 CFR 746.13. Although MLA does not state

expressly when the mine-out period should start, BLM believes that in

situations where R2P2 approval for the LMU precedes coal production on

the LMU, it best serves the purposes of MLA to begin the 40-year LMU

mine-out period on the date of R2P2 approval to encourage diligent

development of Federal coal reserves. Otherwise, in the absence of such

a provision, the lessee/operator could delay the beginning of the 40-

year LMU mine-out period.

BLM is adopting in the final rule a provision that sets the

beginning of the 40-year period at the effective date of the LMU, if

any portion of the LMU is then producing. If not, then the beginning

date is either the date of approval of the R2P2 for the LMU or, if coal

production begins before R2P2 approval, the date coal production begins

after LMU approval. This approach takes into account the three coal-

production scenarios that are possible at the time of LMU formation and

effectively continues the previous rule in situations where coal

production precedes approval of the R2P2. First, if coal production is

occurring within the area covered by the LMU when the LMU is formed, it

is reasonable to begin the 40-year mine-out period on the date of LMU

approval. Second, if coal is not being produced anywhere within the LMU

at the time it is approved, the 40-year mine-out period begins when the

R2P2 for the LMU is approved. In the third scenario, it is possible

that the LMU could begin to produce coal before the R2P2 for the LMU is

approved. For example, production could occur from a lease in the LMU

that has an approved lease-specific R2P2 or from non-Federal resources

within the LMU under a separate SMCRA permit. The final rule takes into

account this scenario by providing that the 40-year mine-out period

begins on the date coal production begins after LMU approval. Final

Sec. 3487.1(e)(6) does not affect the beginning date of the 40-year

mine-out period for LMUs approved before the effective date of this

final rule.

Several comments said the 40-year mine-out provision for an LMU

should be flexible to allow, upon reasonable justification, mine-out

periods longer than 40 years. BLM does not agree. Amended section

2(d)(2) of MLA explicitly limits the period for mining all recoverable

coal reserves in an LMU to not more than 40 years. See 30 U.S.C.

202a(2). BLM does not have the authority to change statutory provisions

through notice and comment rulemaking.

Many comments opposed beginning the 40-year mine-out period for an

LMU upon the approval date of the R2P2 for the LMU. Several comments

asserted it is not correct to assume that a lessee is ``free to start''

mining operation after the R2P2 is approved just because the R2P2 is

approved in connection with the SMCRA permit. Other commenters opposed

the proposal because the R2P2 is a proposed action for the leasehold

rather than being explicitly tied to the actual commencement of mining

operations which could be several years later.

BLM does not agree with these comments. Under existing rules, which

define the mining plan as the R2P2, approval of the mining plan by the

Assistant Secretary constitutes approval under section 7(c) of MLA for

a lessee to enter and disturb the leasehold (30 U.S.C. 207(c)). The

SMCRA permit is an authorization to enter the permit area and commence

mining operations (30 U.S.C. 1256). BLM recognizes that pre-production

activities consume a certain amount of time. However, given the amount

of time and effort needed to obtain a permit, its limited term, and the

fact that it will self-terminate if no activity occurs within 3 years

of issuance (30 CFR 773.19(e)), there are a number of incentives to

expedite pre-production activities and begin production once a permit

is issued. From BLM's perspective, the portion of the 40-year mine-out

period that will elapse during the pre-production phase is small in

relation to the total length of the 40-year period. BLM believes that

this provision is fully in accord with the statutory requirement to

encourage diligent development (30 U.S.C. 202a(2)).

Several other comments said that absent explicit evidence to the

contrary, beginning the LMU recovery period based on the R2P2 approval

date is contrary to the statutory requirement of FCLAA that an LMU must

promote the efficient, economical, and orderly development of the

resource. BLM does not agree. The law provides that, ``[an LMU] 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 regard to

conservation of coal reserves and other resources.'' (Emphasis added.)

See 30 U.S.C. 202(a)(1). The 1976 amendments to MLA (FCLAA) were

intended to address the problem of Federal leases being held for

speculative purposes

[[Page 44366]]

without any production occurring. BLM believes that starting the 40-

year mine-out period upon R2P2 approval, which can occur several years

after LMU approval, will spur efficient, economical, and orderly

development without allowing undesirable speculation. Without such a

provision, lessee/operators can continue to delay the beginning of

production without penalty as long as the diligent development and

section 2(a)(2)(A) requirements are satisfied. Beginning the 40-year

period upon R2P2 approval will provide an appropriate incentive to

commence production.

One comment expressed concern about a situation where an existing

mining operation that has an approved lease-specific R2P2 is included

in an LMU. The commenter inquired whether the 40-year mine-out period

would begin when the lease-specific R2P2 was approved or when the LMU

R2P2 was approved, even though the LMU R2P2 is not required to be

submitted until up to 3 years after the LMU approval. Under the

proposed rule, the 40-year mine-out period would have begun upon

approval of the LMU R2P2. The R2P2 does not have to be submitted for 3

years and may not be approved for an additional time period. To extend

the mine-out period by that amount of time for an LMU that is already

producing would not contribute to the goal of encouraging diligent

development. For the above reason and to ensure compliance with 30

U.S.C. 202a(2), the final rule provides that if any portion of the LMU

is producing when the LMU is approved, the 40-year mine-out period

begins on the effective date of the LMU.

The final rule also addresses the situation where a lease that is

included in an LMU and has an approved lease-specific R2P2 begins

production after LMU approval, but prior to LMU R2P2 approval. In this

case, the final rule provides that the 40-year mine-out period begins

on the date coal is first produced from an approved LMU in advance of

LMU R2P2 approval.

Several comments expressed concern that the proposed rule did not

address whether the change in the beginning date for the LMU 40-year

mine-out period would be applied to LMUs that have already been

approved. In the December 28, 1994, proposed rule (59 FR 66878), BLM

indicated that the proposed rule would apply to all LMU applications

that were under review on December 28, 1994, and all LMU applications

received after December 28, 1994. However, since the final rule BLM is

adopting today differs from the proposal, BLM has decided that the

rules adopted today should apply prospectively. That is, any decisions

on pending LMU applications that BLM makes after the effective date of

these rules will be based on the rules adopted today regardless of when

the LMU application was submitted. Any decisions BLM has made or makes

prior to the effective date of the rules adopted today will be based on

the rules in effect on the date the decision is made. Thus, this final

rule does not affect the beginning date of the 40-year mine-out period

for LMUs approved before the effective date of this rule.

Several comments asserted that changing the beginning date of the

LMU 40-year mine-out period unduly constrains and restricts the

flexibility of the LMU lessee/operator. BLM does not agree with this

characterization of the rule. Section 2(d)(2) of MLA, as amended,

requires the Secretary to establish the 40-year mine-out period (30

U.S.C. 202a(2)). This final rule establishes the beginning of the 40-

year period and provides a degree of flexibility by accounting for the

various scenarios under which coal production may occur in an LMU. This

provision is in contrast to the former regulation which tied the

beginning to initiation of coal production, essentially allowing the

lessee/operator total control over setting the beginning point.

Section 3487.1(f) Criteria for approving the establishment of an

LMU. BLM's previous regulations provided that, ``The authorized officer

shall, except for good cause stated in a decision disapproving the

application, approve an LMU if it meets the following criteria * * *.''

See 43 CFR 3487.1(f) (1995). The proposed rule would have changed the

obligatory ``shall'' to the permissive ``may'' while retaining the

requirement for putting the decision on the LMU application in writing.

See proposed Sec. 3487.1 (f) and (g). As discussed below, BLM is

adopting the word ``may'' and the requirement for a written decision in

final Secs. 3487.1 (f) and (g) respectively.

There were many comments that opposed changing the criteria for

approving an LMU from ``The authorized officer shall, except for good

cause stated in a decision disapproving the application, approve * *

*'' in the previous rule to ``The authorized officer may approve * *

*.'' The comments generally perceived the change as allowing the

authorized officer (BLM) or special interest groups the opportunity to

delay approval of an LMU for any reason. One comment said that an

entity that is willing and able to absorb the significant expense

necessary to initiate a coal mining operation to develop Federal coal

resources should be granted the presumption that BLM would approve an

LMU application unless good cause is documented for not approving the

application. Several commenters were concerned that the rule would be

prone to abuse in that an LMU could be denied for any arbitrary reason

however unjustified. One comment concluded that the MLA does not

support this rule, and the applicant should not bear the burden of

showing that a proposed LMU complies with the statutory requirements.

One comment said, ``the focus of approval determinations has always

been upon the ability of the applicant to meet the criteria specified

within the regulations, and this has constituted demonstration of the

lack of a good cause to disapprove the application.''

BLM believes that the final rule is fully consistent with the

statute. Section 2(d) of FCLAA (30 U.S.C. 202a(1)) states that, ``The

Secretary, upon determining that maximum economic recovery of the coal

deposit or deposits is served thereby, may approve the consolidation of

coal leases into a logical mining unit.'' (Emphasis added.) Use of the

word ``may'' gives the Secretary broad discretion to determine whether

the public interest would be served by approval of an LMU. The

legislative history of FCLAA shows no Congressional intent to create a

presumption in favor of approving an LMU. See 122 Cong. Rec. 507-8

(Jan. 21, 1976). Thus, MLA does not require that the Secretary approve

an LMU.

BLM believes that the concern about abuse of the rule is misplaced.

Final Sec. 3487.1(f)(2) sets forth factors that BLM will consider in

determining whether a proposed LMU meets the statutory requirements.

Any potential for abuse is checked by the requirement in final

Sec. 3487.1(g) for BLM to make a written statement of the reasons for

its decision concerning an LMU application. As with any BLM decision,

it cannot be arbitrary. In addition, aggrieved persons may seek

administrative review from the Interior Board of Land Appeals. Thus,

the rule provides an appropriate balancing of BLM's and an applicant's

interests. The applicant's responsibility to provide sufficient

justification that the LMU application conforms to the requirements of

MLA and applicable regulation is balanced by BLM's obligation to state

and explain, in writing, the reasons for the decision on the LMU

application.

Section 3487.1(f)(2). BLM's previous rules provided that an LMU

would be approved if mining operations on the LMU will achieve maximum

economic recovery of Federal recoverable coal reserves within the LMU.

See 43 CFR

[[Page 44367]]

3487.1(f)(2) (1995). Paragraph (f)(2) also provided that a single

operation may include a series of excavations. Proposed

Sec. 3487.1(f)(2) (i)-(vii) would have listed seven specific factors

BLM would consider in determining if an LMU application meets the

statutory requirements: (1) the amount of coal reserves recoverable

from the LMU, compared with the amount recoverable if each lease were

developed individually; (2) the mining sequence; (3) the potential for

independent development of each lease proposed to be included in the

LMU; (4) the advantages of developing and operating the LMU as a unit;

(5) the potential for inclusion of the leases in question into another

LMU; (6) the availability of transportation and access facilities; and

(7) other factors that the authorized officer finds relevant to

achievement of maximum economic recovery in an efficient, economical,

and orderly manner.

In the final rule, we are adopting the seven criteria, with minor

editorial changes, in a slightly revised form that indicates the

relationship of the criteria to the statutory requirements. Thus, the

final rule provides that in determining whether the proposed LMU will

meet the requirement to achieve maximum economic recovery of Federal

coal reserves, BLM, as appropriate, will consider the amount of coal

reserves recoverable from the proposed LMU compared to the amount

recoverable if each lease were developed individually and any other

factors BLM finds relevant to this requirement.

In determining whether the proposed LMU meets the requirement to

facilitate development of coal reserves in an efficient, economical,

and orderly manner, BLM, as appropriate, will consider the potential

for independent development of each lease proposed to be included in

the LMU, the potential for inclusion of the leases in question in

another LMU, the availability and utilization of transportation and

access facilities for development of the LMU as a whole compared to

development of each lease separately, the mining sequence for the LMU

as a whole compared to development of each lease separately, and any

other factors BLM finds relevant to this requirement.

Finally, in determining whether the proposed LMU meets the

requirement to provide due regard to conservation of coal reserves and

other resources, BLM, as appropriate, will consider the effects of

developing and operating the LMU as a unit and any other factors BLM

finds relevant to this requirement. BLM believes that by explicitly

linking the factors we will consider with the statutory requirements

each LMU must meet, the regulated community will have a better

understanding of what an LMU application must demonstrate.

One of the factors that BLM will consider in determining whether a

proposed LMU meets the requirement to provide due regard to

conservation of coal reserves and other resources is the effects of

developing and operating the LMU as a unit. See final

Sec. 3487.1(f)(2)(iii)(A). This language is a change from proposed

Sec. 3487.1(f)(2)(iv), which would have given consideration to the

advantages of developing and operating the LMU as a unit. (Emphasis

added.) BLM made this change due to a concern that considering only the

advantages of developing and operating the LMU as a unit would unduly,

and perhaps unwisely, narrow the scope of review of the LMU

application. BLM believes that it is appropriate to consider both the

advantages and disadvantages of developing and operating the LMU as a

unit, as well as any associated impacts.

One commenter supported establishment of specific criteria for

approval of an LMU application, but was concerned that the proposed LMU

application approval criteria were confined to geologic and engineering

considerations. The commenter favored criteria that would relate to the

statutory requirement that the LMU should provide ``due regard to the

conservation of coal reserves and other resources,'' particularly water

resources. BLM does not necessarily agree that the proposed criteria

were confined to geologic and engineering considerations. However,

final Sec. 3487.1(f)(2)(iii) clarifies BLM's position that we will

consider the conservation of coal reserves and other resources. In

addition, the substitution of ``effects'' for ``advantages'' in final

Sec. 3487.1(f)(2)(iii)(A), as discussed above, addresses the

commenter's concern. Further, in response to this comment, the final

rule organizes the factors BLM will consider before approving a

proposed LMU according to the statutory criteria the LMU must meet.

Some comments asserted that the LMU approval criteria should be

confined to the statutory criteria. Several comments were concerned

that the proposed criteria do not appear to be related to, nor serve

implementation of, the statutory criteria. One comment said BLM failed

to adequately explain how the proposed approval criteria related to the

statutory criteria. In response to these comments, BLM changed the

organization of the final rule to indicate the relationship between the

statutory criteria and the factors used in determining that proposed

LMUs will meet them. The final rule groups the factors according to the

applicable statutory criteria. BLM has not changed the statutory

criteria that each LMU must meet. We have merely identified factors

that we will use in determining whether LMU applications meet the

criteria. For example, in determining whether a proposed LMU will

facilitate efficient, economical, and orderly development of the coal

reserves, it is entirely appropriate to consider the potential for

independent development of each lease proposed for inclusion in the

LMU. If a lease is not likely to be mined unless included in the

proposed LMU, that is, the lease will be bypassed, then it would make

sense in this case to include it in the proposed LMU.

Several commenters took issue with the proposed additional criteria

for approval of an LMU application. One commenter said BLM lacked good

cause to change the LMU application criteria. Other comments said the

proposed criteria were unwarranted and of little use for approval of an

LMU application. As discussed earlier in this preamble, BLM believes

that there is a need to establish guidance for approving the

establishment of LMUs. This is one of the specific recommendations of

the GAO report. The seven factors provide guidance to the regulated

community for preparing LMU applications and to BLM officials for

analyzing them. This guidance will help to ensure that LMUs are only

approved after demonstrating they will meet the statutory criteria and

will help to ensure that LMUs are not formed merely for the purpose of

allowing the leaseholder to continue to hold the lease without any coal

production, an outcome that conflicts with the anti-speculative intent

of FCLAA.

Section 3487.1(f)(6). Under the proposed rule, BLM would have added

a new provision to limit the circumstances under which a lease that is

nearing the end of its diligent development period may be included in

an LMU. Proposed Sec. 3487.1(f)(7) would have required that a Federal

coal lease that has not met its diligent development requirement prior

to the end of the eighth lease year can only be included in an LMU if

either a portion of the LMU is included in a SMCRA permit or a portion

of the LMU is included in an administratively complete SMCRA

application. This provision corresponds to final Sec. 3487.1(f)(6),

which differs from the proposal only by clarifying that a portion of

the LMU must be included in a SMCRA permit or administratively complete

permit application at the time the LMU application is submitted.

[[Page 44368]]

Although several comments indicated support for the 8-year

requirement as proposed, BLM received many comments opposed to the

proposed rule. Most of the comments said the rule effectively reduced

the diligence period for a lease from 10 years to 8 years. Several

comments said the proposed rule would reduce the incentive to develop

new mines on Federal lands. Some comments said BLM had not offered

sufficient justification for this rule.

BLM does not agree with these opposing comments. The final rule

does not set an absolute barrier to inclusion in an LMU for leases

where 8 years of the diligent development period have elapsed. Leases

in the ninth and tenth years of their diligent development periods are

still eligible for inclusion in an LMU if a portion of the area to be

covered by the LMU is included in a SMCRA permit or administratively

complete permit application. As explained in the proposed rule

preamble, under the current regulations, an LMU's 10-year diligent

development period starts on the effective date of either the LMU or

the most recent Federal lease, depending on the age and status of the

leases to be included in the LMU. This provision gives a lessee/

operator holding an older lease that is about to be terminated for

failure to produce in commercial quantities an opportunity to postpone

the lease termination date by applying for an LMU that combines the

older lease with a more recently issued one. This situation occurred in

the Rocky Butte case described in the GAO report. In this way, FCLAA's

goal of preventing speculation in Federal coal reserves can be

frustrated. A lease proposed to be included in an LMU that is nearing

the end of its diligent development period without having produced in

commercial quantities is likely to have been included in an LMU

application merely for the purpose of delaying the leases's

termination, and not for achieving efficient, economical, and orderly

development of coal, and thus does not satisfy one of the statutory

criteria for approval of an LMU.

To address this opportunity for frustration and circumvention of

FCLAA's goals, BLM is adopting at final Sec. 3487.1(f)(6) the provision

limiting eligibility for inclusion in an LMU as proposed, with minor

editorial changes, including a change that clarifies that the SMCRA

permit must be in place or SMCRA permit application must have been

submitted at the time the lessee submits the LMU application. BLM

believes that the requirement to have a SMCRA permit or have applied

for one is a significant indication that the LMU applicant is pursuing

coal development in good faith.

One comment said this rule would impose an additional restriction

on leases that are proposed to be included in a LMU in that the lease

must demonstrate production in commercial quantities by the eighth

diligent development year to qualify for inclusion in an LMU. BLM does

not agree. The final rule does not affect the diligent development

period of a Federal coal lease, which remains 10 years. The rule

requires a lessee to demonstrate minimal progress toward development of

the lease within the statutorily required diligence period as a

condition for inclusion in an LMU after the eighth year of the lease.

Significant flexibility remains for the lessee/operator in that only a

portion of the LMU needs to be covered by an administratively complete

SMCRA permit application or approved SMCRA permit. All leases proposed

to be included in an LMU need not meet this requirement, but at least a

portion of the area proposed to be included in the LMU must meet the

requirement to obtain BLM's approval for the LMU. BLM believes this

rule implements the anti-speculative intent of FCLAA and comports with

the language of section 2(d) of MLA, as amended (30 U.S.C. 202a),

which, as discussed above, affords BLM discretion in deciding whether

to approve an LMU. This exercise of discretion is being codified in

regulations to ensure consistent application and to inform the public

of BLM policy. BLM has exercised its discretion and chosen to exclude

from LMU those leases where there has not been sufficient progress to

suggest a good-faith intention to timely achieve diligence. The

benefits provided by formation of an LMU (for example, sheltering a

lease from lease-specific diligence requirements) should only be

approved upon demonstrating that the lessee is prudently working toward

developing commercial quantities of coal. The rule only limits a

lease's eligibility to be included in an LMU based on activity within

the LMU boundary and does not affect lease-specific requirements.

One comment suggested an alternative to the proposed requirement

that a portion of the LMU be covered by an approved SMCRA permit or an

administratively complete SMCRA permit application. The commenter

suggested that some portion of the LMU be covered by a SMCRA permit

application submitted prior to expiration of the diligent development

period. BLM did not accept this comment because we believe that

adoption of this suggestion could create an unmanageable situation. An

LMU must be approved prior to the expiration of the diligent

development period because a lease will be terminated at the end of the

period if it has not produced commercial quantities. Thus, a situation

could be created where BLM would be faced with a decision to approve an

LMU based on the expectation that a SMCRA permit application will be

submitted, determined administratively complete, and approved by the

regulatory authority some time in the future, but before the expiration

of the diligent development period. If all these things did not occur,

BLM might be faced with retroactively invalidating the LMU.

We also note that submittal of an administratively complete permit

application for a portion of the LMU under consideration is not

excessively burdensome. The SMCRA regulations at 30 CFR 701.5 limit the

amount of information for an administratively complete application to

that information necessary to initiate processing and public review.

This standard is distinct from the higher standard for permit approval,

which must be based on a ``complete and accurate'' application. See 30

CFR 773.15(c)(1).

Section 3487.1(g). As discussed above in the preamble to

Sec. 3487.1(f), BLM is adopting a provision that the authorized officer

will state in writing the reasons for the decision on an LMU

application.

One commenter suggested adding at the end of the sentence after the

word ``application,'' the following clause: ``including how the

decision meets regulatory criteria.'' BLM did not accept this comment

and is adopting the provision as proposed. Stating the reasons for a

decision is contingent upon establishing the relationship between the

facts of an LMU application and the statutory and regulatory criteria.

BLM believes such a requirement is implicit in the rule as written.

Section 3487.1(h)(4). Proposed Sec. 3480.0-5(a)(21) would have

included a definition for ``logical mining unit recoverable coal

reserves exhaustion period.'' In the proposed rule preamble, BLM stated

that the term would better reflect the requirement in MLA that the

maximum mine-out period allowed for each LMU is 40 years (59 FR 66878).

However, BLM is not adopting this definition in the final rule. We

believe that the phrase ``40-year period in which the reserves of the

entire LMU must be mined'' is clearer and more descriptive. It is self-

explanatory and eliminates the need for a separate definition.

Moreover, it is the same

[[Page 44369]]

phrase used in FCLAA. See 30 U.S.C. 202a(2). Therefore, the final rule

for this section has been modified to substitute the term ``40-year

period in which the reserves of the entire LMU must be mined'' for the

term ``logical mining unit recoverable coal reserves exhaustion

period.'' The cross reference to Sec. 3487.1(e)(6), which was proposed

to be eliminated, is retained in the final rule.

III. Procedural Matters

National Environmental Policy Act

BLM has prepared an environmental assessment (EA) and has found

that the final rule does not constitute a major Federal action

significantly affecting the quality of the human environment under

section 102(2)(C) of the National Environmental Policy Act of 1969, 42

U.S.C. 4332(2)(C). BLM has placed the EA and the Finding of No

Significant Impact (FONSI) on file in the BLM Administrative Record.

BLM invites the public to review these documents by contacting the

individual identified under FOR FURTHER INFORMATION CONTACT.

Paperwork Reduction Act

This rule does not contain information collection requirements that

the Office of Management and Budget must approve under the Paperwork

Reduction Act, 44 U.S.C. 3501 et seq.

Regulatory Flexibility Act

Congress enacted the Regulatory Flexibility Act (RFA) of 1980, 5

U.S.C. 601 et seq., to ensure that Government regulations do not

unnecessarily or disproportionately burden small entities. The RFA

requires a regulatory flexibility analysis if a rule would have a

significant economic impact, either detrimental or beneficial, on a

substantial number of small entities. BLM anticipates that this final

rule will have no significant impact on small entities. Historically,

due to the substantial capital investment requirements for lease

acquisition and mine development, LMUs have not been within the purview

of small entities. The size standard established by the Small Business

Administration for small entities engaged in coal mining, including

surface, underground, and anthracite operations, is 500 employees (61

FR 3280, Jan. 31, 1996). However, BLM currently has one pending LMU

application from a small entity. Analysis of this LMU application

indicates that the final rule will have no effect on the outcome of the

review process for this proposed LMU. Therefore, BLM has determined

under the RFA that this final rule would not have a significant

economic impact on a substantial number of small entities.

Unfunded Mandates Reform Act

BLM has determined that this final rule will not result in any

unfunded mandate to State, local, or tribal governments in the

aggregate, or to the private sector, of $100 million or more in any one

year.

Executive Order 12612

The final rule will not have a substantial direct effect on the

States, on the relationship between the national government and the

States, or on the distribution of power and responsibilities among the

various levels of government. Therefore, in accordance with Executive

Order 12612, BLM has determined that this final rule does not have

sufficient federalism implications to warrant preparation of a

Federalism Assessment.

Executive Order 12630 (Takings)

As discussed in the foregoing preamble, the final rule does not

represent a government action that is likely to interfere significantly

with constitutionally protected property rights. Therefore, the

Department of the Interior has determined that the rule would not cause

a taking of private property or require further discussion of takings

implications under this Executive Order.

Executive Order 12866 (Regulatory Planning and Review)

According to the criteria listed in section 3(f) of Executive Order

12866, BLM has determined that the final rule is not a significant

regulatory action. As such, the final rule is not subject to Office of

Management and Budget review under section 6(a)(3) of the order.

Executive Order 12988 (Civil Justice Reform)

The Department of the Interior has determined that this rule meets

the applicable standards provided in sections 3(a) and 3(b)(2) of

Executive Order 12988.

Authors

The authors of this rule are William Radden-Lesage and Patrick W.

Boyd, Bureau of Land Management, 1849 C Street, NW., Washington, DC

20240; Telephone: 202-452-0350 or 5030, respectively (Commercial or

FTS).

List of Subjects

43 CFR Part 3400

Administrative practice and procedure, Coal, Government contracts,

Intergovernmental relations, Mines, Public land-mineral resources.

43 CFR Part 3470

Coal, Government contracts, Mineral royalties, Mines, Public lands-

mineral resources, Reporting and recordkeeping requirements, Surety

bonds.

43 CFR Part 3480

Government contracts, Intergovernmental relations, Mineral

royalties, Mines, Public lands-mineral resources, Reporting and

recordkeeping requirements.

Dated: August 12, 1997.

Bob Armstrong,

Assistant Secretary--Land and Minerals Management.

For the reasons set forth in the preamble, BLM is amending 43 CFR

parts 3400, 3470, and 3480 as set forth below:

PART 3400--COAL MANAGEMENT: GENERAL

1. Revise the authority citation for part 3400 to read as follows:

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

43 U.S.C. 1461, 1733, and 1740.

2. Amend Sec. 3400.0-5 by revising the introductory text and

paragraph (rr)(6) to read as follows:

Sec. 3400.0-5 Definitions.

As used in this group:

* * * * *

(rr) * * *

(6) Producing means actually severing coal. A lease is also

considered producing when:

(i) The operator/lessee is processing or loading severed coal, or

transporting it from the point of severance to the point of sale; or

(ii) Coal severance is temporarily interrupted in accordance with

Secs. 3481.4-1 through 4-4 of this chapter.

PART 3470--COAL MANAGEMENT PROVISIONS AND LIMITATIONS

3. Revise the authority citation for part 3470 to read as follows:

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

Subpart 3472--Lease Qualification Requirements

4. Amend Sec. 3472.1-2(e) by revising paragraphs (e)(1)(i),

(e)(6)(ii)(D), and (e)(6)(ii)(E) to read as follows:

[[Page 44370]]

Sec. 3472.1-2 Special leasing qualifications.

* * * * *

(e)(1)(i) On or after December 31, 1986, no lease shall be issued

and no existing lease shall be transferred to any entity that holds and

has held for 10 years any lease from which the entity is not producing

coal in commercial quantities, except as authorized under the advance

royalty or suspension provisions of part 3480 of this chapter, or

paragraph (e) (4), (5), or (6) of this section.

* * * * *

(6)(i) * * *

(ii) * * *

(D) Producing, or currently in compliance with the continued

operation requirements of part 3480 of this chapter, for leases that

began their first production of coal--

(1) On or after August 4, 1976; and

(2) After becoming subject to the diligence provisions of part 3480

of this chapter;

(E) Contained in an approved logical mining unit that is:

(1) Producing or currently in compliance with the LMU continued

operation requirements of part 3480 of this chapter; and

(2) In compliance with the logical mining unit stipulations of

approval under Sec. 3487.1(e) and (f) of this chapter; or

* * * * *

PART 3480--COAL EXPLORATION AND MINING OPERATIONS RULES

5. Revise the authority citation for part 3480 to read as follows:

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

43 U.S.C. 1461, 1733, and 1740.

Subpart 3481--General Provisions

6. Amend subpart 3481 by adding new Secs. 3481.4 through 3481.4-4

to read as follows:

Sec. 3481.4 Temporary interruption in coal severance.

Sec. 3481.4-1 Can I temporarily interrupt coal severance and still be

qualified as producing?

Yes, a temporary interruption in coal severance allows you (the

lessee/operator) to halt the extraction of coal for a limited period of

time without jeopardizing your qualifications under section

(2)(a)(2)(A) of MLA to receive additional leases. During the period of

a temporary interruption in coal severance, BLM still considers your

lease or LMU to be producing so as not to preclude you from receiving a

new or transferred lease.

Sec. 3481.4-2 What are some examples of circumstances that qualify for

a temporary interruption of coal severance?

(a) Movement, failure, or repair of major equipment, such as

draglines or longwalls; overburden removal; adverse weather; employee

absences;

(b) Inability to sever coal due to orders issued by governmental

authorities for cessation or relocation of the coal severance

operations; and

(c) Inability to sell or distribute coal severed from the lease or

LMU out of or away from the lease or LMU.

Sec. 3481.4-3 Does a temporary interruption in coal severance affect

the diligence requirements applicable to my lease or LMU?

No, a temporary interruption in coal severance covered by

Secs. 3481.4-1 to 3481.4-4 does not change the diligence requirements

of subpart 3483 applicable to your lease or LMU.

Sec. 3481.4-4 What is the aggregate amount of time I can temporarily

interrupt coal severance and have BLM consider my lease or LMU

producing?

(a) If you (the lessee/operator) want BLM to consider your lease or

LMU to be producing, the aggregate of all temporary interruptions in

coal severance from your lease or LMU must not exceed 1 year in the 5-

consecutive-year period immediately preceding the date of BLM's

determination of lessee qualifications under Sec. 3472.1-2 of this

chapter.

(b) BLM will not count toward the aggregate interruption limit

described in paragraph (a) of this section:

(1) Any interruption in coal severance that is 14 days or less in

duration;

(2) Any suspension granted under Sec. 3483.3 of this part; and

(3) Any BLM-approved suspension of the requirements of Sec. 3472.1-

2(e)(1) of this part for reasons of strikes, the elements, or

casualties not attributable to the operator/lessee before diligent

development is achieved.

Subpart 3483--Diligence Requirements

7. Amend Sec. 3483.3 by revising the heading and paragraphs (a)

introductory text and (a)(1) to read as follows:

Sec. 3483.3 Suspension of continued operation or operations and

production.

(a) Applications for suspensions of continued operation must be

filed in triplicate in the office of the authorized officer. The

authorized officer, if he or she determines an application to be in the

public interest, may approve the application or terminate suspensions

that have been or may be granted.

(1) The authorized officer must suspend the requirement for

continued operation by the period of time he or she determines that

strikes, the elements, or casualties not attributable to the operator/

lessee have interrupted operations under the Federal coal lease or LMU.

* * * * *

Subpart 3487--Logical Mining Unit

8. Amend Sec. 3487.1 by revising paragraphs (e)(6), (f)

introductory text, and (f)(2); redesignating existing paragraphs (g)

and (h) as (h) and (i), respectively; adding new paragraphs (f)(6) and

(g); and revising newly redesignated paragraph (h)(4) to read as

follows:

Sec. 3487.1 Logical mining units.

* * * * *

(e) * * *

(6) Beginning the 40-year period in which the reserves of the

entire LMU must be mined, on one of the following dates--

(i) The effective date of the LMU, if any portion of the LMU is

producing on that date;

(ii) The date of approval of the resource recovery and protection

plan for the LMU if no portion of the LMU is producing on the effective

date of the LMU; or

(iii) The date coal is first produced from any portion of the LMU,

if the LMU begins production after the effective date of the LMU but

prior to approval of the resource recovery and protection plan for the

LMU.

* * * * *

(f) The authorized officer may approve an LMU if it meets the

following criteria:

(1) * * *

(2) The LMU application demonstrates that mining operations on the

LMU, which may consist of a series of excavations, will:

(i) Achieve maximum economic recovery of Federal recoverable coal

reserves within the LMU. In determining whether the proposed LMU meets

this requirement, BLM, as appropriate, will consider:

(A) The amount of coal reserves recoverable from the proposed LMU

compared to the amount recoverable if each lease were developed

individually; and

(B) Any other factors BLM finds relevant to this requirement;

(ii) Facilitate development of the coal reserves in an efficient,

economical, and orderly manner. In determining whether the proposed LMU

meets this requirement, BLM, as appropriate, will consider:

[[Page 44371]]

(A) The potential for independent development of each lease

proposed to be included in the LMU;

(B) The potential for inclusion of the leases in question in

another LMU;

(C) The availability and utilization of transportation and access

facilities for development of the LMU as a whole compared to

development of each lease separately;

(D) The mining sequence for the LMU as a whole compared to

development of each lease separately; and

(E) Any other factors BLM finds relevant to this requirement; and

(iii) Provide due regard to conservation of coal reserves and other

resources. In determining whether the proposed LMU meets this

requirement, BLM, as appropriate, will consider:

(A) The effects of developing and operating the LMU as a unit; and

(B) Any other factors BLM finds relevant to this requirement.

* * * * *

(6) A lease that has not produced commercial quantities of coal

during the first 8 years of its diligent development period can be

included in an LMU only if at the time the LMU application is

submitted:

(i) A portion of the LMU under consideration is included in a SMCRA

permit approved under 30 U.S.C. 1256; or,

(ii) A portion of the LMU under consideration is included in an

administratively complete application for a SMCRA permit.

(g) The authorized officer will state in writing the reasons for

the decision on an LMU application.

(h) * * *

(4) The authorized officer will not extend the 40-year period in

which the reserves of the entire LMU must be mined, as specified at

paragraph (e)(6) of this section, because of the enlargement of an LMU

or because of the modification of a resource recovery and protection

plan.

* * * * *

[FR Doc. 97-21880 Filed 8-19-97; 8:45 am]

BILLING CODE 4310-84-P