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1976/07/03 S391 Federal Coal Leasing Act of 1975 (vetoed) (1)
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This file contains material relating to the veto overridden 08/04/1976.
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The original documents are located in Box 48, folder "7/3/76 S391 Federal Coal Leasing
Act of 1975 (vetoed) (1)" of the White House Records Office: Legislation Case Files at the
Gerald R. Ford Presidential Library.
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The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
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Exact duplicates within this folder were not digitized.
Digitized from Box 48 of the White House Records Office Legislation Case Files at the Gerald R. Ford Presidential Library
one
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
STATES
WASHINGTON, D.C. 20503
July 2, 1976
Dec
MEMORANDUM FOR THE PRESIDENT
Subject: Enrolled Bill S. 391 - Federal Coal Leasing
Amendments Act of 1975
Sponsors - Senator Metcalf (D) Montana and
Senator Jackson (D) Washington
Last Day for Action
July 3, 1976 - Saturday
Purpose
Makes numerous basic changes to the Mineral Leasing Act
of 1920 relating to the development of Federal coal.
Agency Recommendations
Office of Management and Budget
Disapproval
Department of the Interior
Disapproval (Informally)
Department of Commerce
Cites concern
Department of Justice
Cites concern
Department of Defense
Cites concern
Federal Energy Administration
Disapproval
Environmental Protection Agency
Defers to Interior
Department of Agriculture
Approval; defers to
Interior on non-
USDA provisions
Council on Environmental Quality
Approval
Many Members of Congress and industry and public interest
representatives have written concerning this bill. Their
views are attached in the Appendix.
FORD LIBRARY & GERALD
2
Discussion
This enrolled bill memorandum sets forth the following
relevant factors concerning the Federal Coal Leasing
Amendments Act of 1975: A. Background; B. S. 391 -
Provisions and Analysis; C. Congressional views; and,
D. Agency views.
A.
Background
1. Existing Law
- Coal leasing is currently authorized under
the Mineral Leasing Act of 1920. Under this
Act, the Secretary of the Interior may lease
coal competitively or by issuing prospecting
permits which ripen into a lease if the
applicant demonstrates he has found a coal
deposit with commercial quantities. The
1920 Mineral Leasing Act provides the
Secretary of the Interior broad discretion
on how he administers the law.
2. Legislative History
- The Nixon Administration submitted to both
the 92nd and 93rd Congresses comprehensive
legislation to modernize the 1890 Mining
Law and the 1920 Mineral Leasing Law. The
legislation dealt with all minerals
including oil and gas, and was intended
to modernize Interior's leasing procedures
by requiring competitive leasing, eliminat-
ing preference right leases, requiring
diligent development, and assuring fair
market prices for Federal coal.
- On May 5, 1975, the Department of the
Interior advised the Senate Interior
Committee that while it favored more
comprehensive legislation it would approve
of enactment of S. 391, if amended. At
that time, S. 391 was patterned after the
coal portions of the amendments to the
Mining and Mineral Leasing Acts proposed
by the Nixon Administration. On the
Senate floor, portions of the vetoed
surface mining bill that would apply to
Federal lands plus a provision increasing
the State share of Federal mineral leasing
receipts to 60% was added to S. 391 and it
passed by 84 to 12. Senators Metcalf,
Jackson and Hansen were the primary
FORD i LIBRARY GERALD
3
advocates in the Senate.
- Last November, the House Interior Committee
reported H.R. 6721, a coal leasing bill
similar to S. 391 as now enrolled. In
January of this year, Interior wrote a
letter to Chairman Haley of the House
Interior Committee saying that unless the
bill was significantly amended, the
Administration would oppose enactment.
- In March 1976, OMB concurred with Secretary
Kleppe's recommendation not to resubmit
comprehensive legislation amending the
mining and mineral leasing laws.
- The House, in a vote of 344 to 51, passed
the reported bill and accepted none of the
Administration proposed changes.
Representatives Melcher, Mink, Seiberling,
and Roncalio were the primary advocates
in the House. On June 21, 1976, the
Senate by unanimous consent, considered
the House bill and enacted it by voice
vote.
3. Interior's recent actions
- On January 26, Secretary Kleppe announced
a new Federal coal leasing policy. After
it becomes fully implemented later this
year, the virtual moratorium on leasing
that has been in effect for several years
would be lifted. To implement this
policy, the Secretary has issued a series
of regulations that cover the following:
-- requiring stringent reclamation standards
on all Federal coal leases;
-- requiring production on all leases
within 10 years, but retaining the
flexibility to extend this by 5 years
when conditions warrant;
-- requiring advance royalties so as to
encourage rapid and diligent development
of Federal leases;
GERALO FORD LIBRARY
4
-- establishing an average royalty of 8% with a
floor of 5% (contrasted with average 4%
royalty in the past). The royalty will vary
up and down depending on conditions;
--- leasing only competitively, i.e., no more
prospecting permits. However, legal commit-
ments to issue pending preference right
applications will be met;
-- issuing testing (drilling) permits to permit
exploration of Federal lands that do not
ripen into leases; and
--- leasing only when the value of the coal
exceeds the total cost of production includ-
ing environmental costs.
Thus by regulation, Interior has put into place most
of what the Nixon Administration and this Administration
had sought in its earlier legislative positions to
modernize coal leasing procedures.
B. S. 391 - Provisions and Analysis
As enrolled, S. 391 contains provisions directed at moderni-
zation of coal leasing procedures substantially in accord
with the Administration's objectives in that the bill (a)
requires competitive leasing, (b) eliminates preference right
leases, (c) requires diligent development, and (d) is intended
to assume fair market prices for Federal coal. However, the
manner in which the bill attempts to achieve diligent develop-
ment and assure fair market prices and certain other pro-
visions in the bill essentially unrelated to such objectives
are inconsistent with Administration positions heretofore
taken. An analysis of the key amendments to the Mineral
Leasing Act of 1920 follows:
1. Increased payments to States
This provision increases the State's share of
revenues from Federal leases from the present
37 1/2% to 50% -- on both coal and other minerals,
including gas and oil. These additional funds
could be earmarked by the States for social and
economic impacts related to mineral development.
Furthermore, the State share of payments made
under the Geothermal Steam Act of 1970 would
increase from 5% to 50%
GERALD FORD LIBRARY
5
Advocates of this position argue that the
States bearing the social and economic
impact which results from mineral develop-
ment within their borders both need and
are entitled to a larger share of the
Federal receipts derived from such operations.
Moreover, with the establishment of a minimum
royalty of 12 1/2% as discussed below, federal
receipts will still increase from present
levels over time even though a greater
proportion is shared with the States, and
the loss to the Federal Government from the
change is not a huge number.
The Administration's position has been that
royalty payments determined by a arbitrary
formula will likely bear no relationship
either in amount or timing to problems of
social and economic impacts -- state-by-state
or project-by-project -- generated by energy
development of Federal lands. Further,
although the federal receipts loss is not
huge viewed in the context of the total federal
budget, the loss is substantial. In FY 1976,
payments to the States would increase from $126
million to $168 million. Such payments can
be expected to increase rapidly in future
years as Federal coal development expands and
coal, oil, and gas prices increase. For
example, under S. 391, the States are estimated
to receive $300 million in FY 1980, or $75 million
more than under existing law. In later years
the loss could be expected to be greater.
The Administration acknowledges that the Federal
Government should give assistance to alleviate
the impact of coal development projects. In
this regard, the Administration has proposed
the Federal Energy Development Assistance Act
which would provide communities impacted by
the development of Federal energy resources
with $1 billion in planning grants and loans
and guarantees for public facilities. Although
the $1 billion applies to off-shore Federal oil
as well as inland Federal minerals, estimates
are that about one-half would go to coal. This
approach would provide ample assistance in a
timely, equitable, and fiscally responsible
manner, principally through the use of loans
FORD is LIBRARY
and loan guarantees, with provision for loan
forgiveness if the project failed to generate
the expected local and state revenues necessary
to pay off the loans.
6
The Administration approach provides assistance
that is both equitable and timely -- equitable in
giving the assistance to those that need it and in the
amount needed, and timely in that it provides
the assistance for the community impacted at the
outset of the particular project. However, it
also contemplates that the economic gains from
the project will enable and justify the collection
of state or local tax revenues (whether by
severance, property or other taxes) to pay off
the loans over time.
Advocates of S. 391 note that the state's royalty
share is in effect a grant that doesn't have to
be repaid and that this eases the state and local
tax burden. The countering argument is that it
is unfair to the taxpayers of all the other non-
coal states to give the coal states more than is
necessary to help them meet the impact and that
as the coal states and communities realize the
economic growth that eventually comes from the
particular projects, the federal assistance
through loans can and should be repaid.
Notwithstanding efforts by coastal states to get
a royalty-sharing approach on development of
off-shore federal oil and gas leases, the coastal
zone bill completed by Congress two days ago
subordinates the royalty concept to the Administration
approach. It is not improbable that even if the
12 1/2% state share add-on in S. 391 becomes law,
the coal states will also later try for, and get,
the coastal zone-type of assistance as well.
2. Minimum 12 1/2% royalty on coal
This provision requires royalties of not less than
12 1/2%, except the Secretary may determine lesser
amounts in the case of underground mining.
Supporters of the bill argue that a 12 1/2%
minimum royalty would: (1) generate a fair
return on a public resource and increase Federal
receipts over the long run; (2) make coal royalty
levels more equivalent to those for oil and gas;
(3) reduce the front end bonus paid on coal leases,
thus minimizing the required initial investment
FORD
and encouraging coal development; and (4) permit
greater sharing of revenues with the States
LIBRARY
without a decrease in Federal revenues.
7
Advocates also point out that the Secretary
has discretion under Section 39 of the Mineral
Leasing Act to reduce the minimum royalty
below 12 1/2% during the course of a lease if
economic conditions so warrant (i.e., the
remaining coal under the lease is marginal).
We think it probable that the cognizant Committee
Chairmen in both the House and Senate would give
Interior assurance in writing that prospective
lessees could be assured before entering into a
lease that such reductions would occur
automatically during the lease life under
prescribed circumstances.
The Administration's position has been that
royalties should not be set legislatively at
or near their historic highs -- the present ceiling
should not become the floor. Depending on the
market prices, such a minimum royalty could
prevent production from vast acreages of Federal
coal. This problem is accentuated in those areas
which have imposed State severance and local
taxes in addition to Federal royalties. Also,
it is unwise to favor underground mining because
of its lower recovery rate and greater safety
hazards. As noted above, in contrast, Interior's
new regulations provide royalty levels fitted
to the relevant factors (location, topography,
royalty rates on private coal within the same
area, size and quality of coal deposit, nature
of payment, etc.) associated with each lease
sale. The industry also points to increased
electricity costs to energy consumers.
3. Deferred bonus payments
S. 391 requires that no less than 50% of the
total acreage offered for lease by the Secretary
in any one year be leased under a system of
deferred bonus payment. A bonus is a lump-sum
amount for the purchase of all or part of the
leasehold. Payment of the amount is usually made
at the outset, but can, of course, be deferred.
Advocates of this position argue that it would
foster competition by reducing the front-end capital
outlay necessary and thus enabling smaller
corporations to compete with the larger firms.
The Administration's position has been that the
GERALD FORD VIBRARY
Secretary presently has authority to lease under
a deferred bonus scheme and this new requirement
would unduly and arbitrarily limit his discretion
as to how Federal coal is to be leased. The
8
Secretary should be free to use the deferred
bonus procedure depending on economic conditions
and the amount of interest in leasing Federal
coal. Further, deferred bonus is an untried procedure.
4. Federal exploration program
This provision by its terms would require a com-
prehensive Federal exploratory program to evaluate
the extent, location, and potential for developing
known recoverable coal resources (stratigraphic
drilling authorized).
Advocates of this position argue that it would:
(1) assist Interior in determining the value of
tracts which are up for lease sale; and, (2) be
useful in estimating reserves for logical mining
units and advance royalty payments.
Although the language of the bill would seem to
call for a very comprehensive program, Senator Metcalf
and Congresswoman Mink have written you stating that
this provision "essentially extends and codifies the
on-going evaluation program (presently) carried out by
the Geological Survey
This program does not
prevent the Secretary from issuing coal leases where
he believes he already has adequate information about
the nature and extent of the coal, nor does it
require that all known coal be evaluated before any
is leased.' Both of these Members appear, on the
basis of conversations yesterday, to be willing to
give the Administration and the Appropriations
Committees written assurances that a modest program --
in the $10 to $30 million range, annually -- would
satisfy the law and that Interior could rely heavily
on data submitted by bidders.
Notwithstanding such assurances, there is an
appreciable risk that courts would construe the
mandatory language of the bill to be much broader.
Current Interior program of drilling is in known
coal areas for the selection of tracts for leasing
and to determine fair market value and is not for
exploration. The Administration's position
has been that comprehensive exploration: (1) is
not an appropriate Federal function; (2) could
entail large costs with little benefit in terms of
Federal revenues -- Interior has not made any cost
estimates, but the Congressional Budget Office
has estimated a 5-year comprehensive program at
FORD
$1.2 billion based on U.S. Geological Survey pro-
cedures and cost data; and (3) could create
significant delays in the discovery and development
of Federal coal. It could be added that such Federal
9
exploration duties on coal would be a bad prece-
dent for oil and gas and that the provision is
unfair in that the Federal Government bears all
the exploration cost but the States get 50% of
the royalties under the bill.
5. Production requirements
The bill requires coal lease terms of 20 years and
so long thereafter as coal is produced in commercial
quantities. Any lease not producing within 10
years shall be terminated. Lease terms would be
subject to readjustment at the end of the primary
20-year term and at the end of each 10-year period
thereafter if the lease is extended.
Advocates of this position argue that it would
assure diligent development of the coal lease, which
coincides with Administration objectives. They
point out that Interior's current requirement that
2 1/2% of the 40-year production be accomplished
over the first 10 years may be more stringent than
requiring coal to be produced "in commercial
quantities" by the 10th year.
They also argue that if the 10 years prove to be
impractical in some cases, Congress will amend it.
The Administration position has been that it is
unrealistic to require production within 10 years.
It is important to have the discretion to extend
a lease for an additional 5 years, as Interior's
regulations allow, under certain conditions.
Specifically, in the case of very large mines,
synthetic fuel plants or other plants built at the
mine site, it is necessary to do several or all of
the following: (1) find a market for coal; (2)
develop mining and reclamation plans; (3) arrange
for financing; (4) procure long-lead time equipment;
(5) build railroad spur lines or arrange for other
modes of transportation; (6) obtain numerous local,
State or Federal permits; and (7) build the mine
site plant. In some cases, 10 years could prove
insufficient and thus very massive, complex projects
will not be initiated for fear of not meeting the
10-year deadline.
10
The 10-year limitation was added by Congressman
Hechler -- the most active opponent of your syn-
thetic fuel proposal. Senator Metcalf has stated
that he, Senator Jackson and Senator Hansen would
sponsor an amendment to the synthetic fuel bill
to exclude projects thereunder from the 10-year
restriction.
6. Tracts reserved to public bodies (rural electric
co-ops, etc.)
This provision of the bill reserves a "reasonable
number" of leasing tracts for public bodies. It
would also authorize the Secretary, with the con-
currence of the Secretary of Defense, to lease coal
or lignite underlying acquired military lands
(such leasing is currently prohibited).
Advocates of this position argue that it would
encourage and promote rural electrification and
help serve areas which private industry has passed
by.
Opponents argue that this provision discriminates
in favor of public bodies which can, under exist-
ing authority, receive a license from the Secretary
to mine coal. Considerable difficulty could be
encountered in defining a "reasonable number." "
7. Acreage limitation for logical mining units (LMU)
The bill prohibits any one entity from controlling
and mining LMUs -- including non-Federal lands --
in excess of 25,000 acres.
Advocates of this provision argue that it would
assist in preventing a concentration of holdings
while nonetheless assuring that large powerplants
have ample coal reserves.
Opponents argue that this is an arbitrary restric-
tion which could result in: (1) multiple discrete
mines where one large mine is most economic; (2)
higher coal production costs; and (3) non-development
of economically valuable coal. This is true because
non-Federal coal is included within the definition
of an LMU and a number of such areas now exist or
GERALD FORD LIBRARY
have been identified by Interior in excess of that
11
size. In such cases, and assuming a 25,000 acre
limit, the issuance of two leases to cover what
would otherwise be one LMU will require
essentially concurrent production from both tracts.
Also, synthetic fuel production operations may
require more than 25,000 acres.
8. Mining and reclamation plan
This provision requires Secretarial approval of an
operation and reclamation plan within three years
of lease issuance.
Proponents argue that this would assure the diligent
development of coal leases, which again coincide
with Administration objectives. However, the three-
year period may be impractical. Since the lessee
must, under existing procedures, have an approved
plan before beginning production, this requirement
serves no useful purpose and adds to paperwork
burden both in and out of Government.
9. Anti-trust review
S. 391 requires the Attorney General to review all
coal leases being issued, renewed, or readjusted
as to their consistency with the anti-trust laws
(30 days allowed). If leases are deemed to be in-
consistent with the anti-trust laws, they may not
be issued, nor renewed or readjusted for more than
one year, unless the Secretary finds that such
action is in the public interest or is not subject
to any reasonable alternative.
Advocates of this provision argue that it is in
response to a Justice Department concern about the
possibility of violations of anti-trust laws by
the coal-energy industry. There is precedent, e.g.,
in the nuclear field.
However, this provision is administratively cumber-
some and Justice is extremely reluctant to offer
conclusions on anti-trust questions in advance of
a particular activity. It would also increase the
paperwork burden and create a troublesome further
precedent for other economic areas.
10. Public hearings
The bill requires public hearings or comment at four
different stages pertaining to any one lease sale:
(1) development of land use plan; (2) before lease
LIBRARY
sale; (3) formulation of logical mining units; and
(4) prior to determining the fair market value of
coal in an area.
12
Advocates of this position argue that multiple
public hearings or opportunities for comment have
been sought by western Governors because of their
and local concerns regarding the adverse impacts
of surface coal mining.
The Administration position has been that four
potential hearings on one coal lease sale are
excessive. Hearings at the point of developing a
land use plan are appropriate and are required under
current regulations, but the additional three hear-
ings will not usually produce benefits commensurate
with the additional burden. The requirement will
slow down, at least to some extent, implementation
of Interior's coal leasing program.
11. State delay of national forest leasing
This provision requires that prior to any coal
leasing on national forest lands the Governor of
such State be notified; within 60 days of such
notification, the Governor may request a 6-month
delay and reconsideration of any coal leasing.
Advocates of this position argue that it would
assure adequate consideration of competing surface
uses within the national forests, and they assert
that such special consideration is warranted because
of the unique nature of forest lands as opposed to
other lands.
The Administration's position has been that the
Governor and local officials have the same or
better opportunity than others do during land use
and environmental impact hearings to register their
views concerning coal leasing within the national
forests.
In addition, the enrolled bill requires the following -- all
of which are less controversial than the provisions set out
above:
- completion of comprehensive land use plans (very similar
to what Interior now requires) before the sale of any
coal leases;
- mining operating plans which assure maximum economic
(underground VS. surface) recovery of the coal (similar
to Administration proposal) ;
- individual licenses issued for each State in which coal
FORD
exploration is to be undertaken;
LIBRARY
elimination of preference right leases (Administration
proposal) ;
13
- diligent development and continuous operation of the mine
or mines with authorization of specific advance royalty
payments in lieu of continuous mine operation (similar to
Administration proposal) ;
- that no one person hold leases in the aggregate that
exceed 46,080 acres per state or 100,000 acres nationally;
- competitive bidding in lease sales and fair market value
payment (Administration proposal) ;
- no coal mining in any area of the National Park System,
the National Wildlife Refuge System, the National
Wilderness Preservation System, the National System of
Trails, and the Wild and Scenic Rivers System, including
study rivers.
C. Congressional views
In reporting on the enrolled bill, a majority of the House
Interior and Insular Affairs Committee expressed the belief
that the Federal coal leasing program under the Mineral
Leasing Act of 1920, as interpreted and enforced by the
Department of the Interior, has the following basic
deficiencies:
- lease terms, preference rights, and royalty requirements
that encourage speculation and do not assure a fair return
to the public;
- bidding procedures that lead to a concentration of lease
holdings;
- inadequate environmental protection, planning and public
participation; and
- a lack of mechanisms to alleviate social and economic
impacts in areas affected by mineral development.
Eight members (Ruppe, Skubitz, Sebelius, Lagomarsino, Smith,
Pettis, Bauman, S. Steiger) of the 43-member Committee
voiced additional views that strongly urged reconsideration
and adoption of essentially the Administration's viewpoint
concerning the following provisions of the bill: (1) anti-
trust review; (2) comprehensive Federal exploratory program;
(3) minimum 12 1/2% royalty; (4) multiple public hearings;
(5) 25,000 acre LMU acreage restriction; and (6) increasing
the States' share of mineral receipts. However, such
reconsideration was not undertaken, and neither the House
nor the Senate appeared to give serious consideration to
Interior's new coal leasing and reclamation programs which
FORD LIBRARY & GERALD
14
were in the final stages of being implemented. (House
passage of the bill occurred shortly before Secretary
Kleppe announced the Department's new coal leasing program.)
D. Agency views
Agriculture and CEQ recommend approval generally on the
grounds that the enrolled bill would provide the necessary
environmental assessment, land use planning, and other pro-
cedural safeguards to assure the resolution of potential
resource value conflicts in advance of development decisions.
Agriculture considers the requirement to notify Governors in
advance of Forest Service leasing as superfluous. While EPA
defers to Interior, on balance it appears to view the bill
more favorably than negatively.
Commerce, Justice and Defense all express serious concerns in
their enrolled bill letters on S. 391. Commerce believes
that the bill will retard the exploration and development of
Federal coal reserves while Justice sees the anti-trust pro-
visions as burdensome and unproductive. Defense is fearful
that the authority to lease coal and lignite underlying
acquired military lands would be "inimical to the operational
integrity of the military installation."
Finally, Interior, EPA and this Office all recommend
veto. Interior has serious concerns with respect to most of
the bill's deficiencies as they have been discussed in this
memorandum. The Department fears that the enrolled bill will
seriously interfere with the present program. FEA believes
that the Federal exploration program is most inappropriate
and unacceptable. FEA agrees with Interior's conclusion that
the bill's provisions will seriously complicate our coal
leasing program. While sharing the agencies' concerns, we
also note that the bill provides absolutely no new authorities
that we really need to manage the Federal coal leasing pro-
gram in an efficient, productive and effective manner. As
pointed out above, it could very likely interfere and hamper
the present program.
Finally, it is possible that your action on this bill will
affect future Congressional consideration of strip mining
legislation. Although approval of the enrolled bill would
probably lessen the risk of a bad strip mining bill coming
to your desk (either separately or as a part of a new effort
on coal leasing legislation), we are not in a position to
judge how important action on S. 391 is in this respect.
GERALD FORD LIBRARY
15
Likewise, we are not in a good position to assess the
chances that a veto would be sustained. The lopsided
votes indicate that an override is a real threat (Interior
believes it will be difficult to sustain a veto). However,
the manner in which the legislation was passed and the
timing thereof vis-a-vis Interior's subsequent new
regulations lessen the utility of such votes as an accurate
barometer on a veto vote.
Jamb
Jane
Director
Enclosure
APPENDIX
1. Letter to you from 74 Senators urging you to sign
S. 391
2. Letter to Secretary Simon from Senator Hansen explain-
ing the return to the U.S. Treasury under S. 391 and
urging Secretary Simon to join in asking the President
to sign S. 391
3. Letter to you from Senator Metcalf and Congresswoman
Mink urging you to sign S. 391
4. Telegram to you from the United Mine Workers urging
you to sign S. 391
5. Letter to you from 11 House members urging you to
veto S. 391
6. Letter to you from the American Mining Congress urging
you to veto S. 391
FORD i LIBRARY 074930
CLIFFORD P. HANSEN
WYOMING
Mnited States Senate
WASHINGTON, D.C. 20510
June 23, 1976
The President
The White House
Washington, D. C. 20500
Dear Mr. President
We urge you to sign into law the Federal Coal
Leasing bill, S. 391, as amended and recently passed
by Congress.
S. 891 is designed to eliminate the speculative
holding of Federal coal leases and to ensure that
they will be developed on a timely basis and in a
manner which is of benefit to the public. These
lands are owned by the people and subject to the
Mineral Leasing Act of 1920. We must have an equi-
table coal leasing policy. We must have increased
coal production from our public lands to help meet
our national energy needs. We must set environmental
parameters for the taking of coal from these lands.
We also must have a fair and decent return from
coal and mineral production to the U. S. Treasury and
to the states which are and will be most affected by
Federal eeal mining
There is no other substantial Federal assistance
available to the coal producing states to deal with
the projected and already occurring population
increases occasioned by mineral extraction. The new
financial assistance provision in this bill could help
with an orderly, stable transition and mitigate the
dramatic and often traumatic social changes.
In short, the help offered in S. 391 is badly
needed. Again, we respectfully request that you sign
this bill.
With kind regards,
Sincerely,
FORD i LIBRARY 076839
Gallumege lind P.M.
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Herman E. Talmody
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FORD LIBRARY
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John Charter Pity
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HENRY M. JACKSON, WASH., CHAIRMAN
TRAF- CHURCH, IDAHO
PAUL J. FANNIN, ARIZ.
PRETCALE, MONT.
CLIFFORD P. HANSEN, WYO.
7. BENNETT JOHNSTON, LA.
MARK o. HATFIELD, OREG.
JAMES ABOUREZK, S. DAK.
JAMES A. MC CLURE, IDAHO
FLOYD K. MASKELL COLO.
DEWEY F. BARTLETT, OKLA.
JOHN GLENN, OHIO
RICHARD STONE. FLA.
Amited States Senate
DALE BUMPERS, ARK.
GRENVILLE GARSIDE, SPECIAL COUNSEL AND STAFF DIRECTOR
WILLIAM J. VAN NESS, CHIEF COUNSEL
JUN
26
5
MITTEE ON
ND INSULAR AFFAIRS
WASHINGTON, D.C. 20510
OFFICE OF
MANAGEMEN & BUDGET
June 28, 1976
Honorable William E. Simon
Secretary of the Treasury
Washington, D. C. 20220
Dear Mr. Secretary:
In a letter signed by 74 of my colleagues in the United States
Senate and delivered by me to the President on June 25, urging him
to sign S. 391 into law, the issue of a proper return to the U. S.
Treasury was mentioned but not fully explained.
The question of overall increase to the Treasury, vis a vis
the Reclamation Fund, is in my estimation open to speculation, if
viewed in the long run based on the known reserves of the minerals
involved. We are considering in this letter the return to the
U. S. Treasury as it applies to the leasing and mining of coal.
I wish to assure you that Section 7 of this bill does in fact
provide for a net increased return to the Treasury as illustrated
by the following example:
Interior Regulations
(current)
S. 391
Fair Market Value
of Coal
$1.00
$1.00
*Federal Royalties
(highest possible)
8¢
**Federal Royalties
FORD LIBRARY
(actual to 1975FY)
4¢
Federal Royalties
minimum under S. 391
12.5¢
Return to the Treasury
5¢
2.67¢
6.25¢
Return to the States
3¢
1.33¢
6.25¢
*Increase to the Treasury would be 1.25¢ or 25% assuming the highest
possible return under current regulations.
**Increase to the Treasury would be 3.58¢ or 71% under current, actual
rates of return.
Honorable William E. Simon
June 28, 1976
Page two
I would earnestly ask your support in light of the above
to join with me in asking the President to sign this bill. The
bill was enrolled and delivered to the President on June 22.
I appreciate any assistance given to coal producing states.
With best regards,
Sincerely,
air
ORD
Clifford P. Hansen
U S S
LIBRARY
CPH:tbc
cc: Honorable James T. Lynn
MINRY M. JACKSON, WASH., CHAIRMAN
6-28
CHICK, IDAHO
PAUL J. FANNIN, ARIZ.
LEE METCAL* MONT.
CLIFFORD P. HANSEN, WYO.
J. BENEFIT JOHNSTON, LA.
MARK o. HATFIELD, OREG.
JAMES ABOUREZK, S. OAK.
JAMES A. MC CLURE, IDAHO
FLOYD K. HASKELL. COLO.
DEWEY F. EARTLETT, OKLA.
JOHN GLENN, OHIO
RICHARD STONE FLA.
United States Senate
DALE SUMPERS. ARK.
COMMITTEE ON
BRENVILLE GARSIDE. SPECIAL COUNSEL AND STAFF DIRECTOR
INTERIOR AND INSULAR AFFAIRS
WILLIAM J. VAN NESS, CHIEF COUNSEL
WASHINGTON, D.C. 20510
A391
24 June 1976
The President
The White House
Washington, D. C.
Dear Mr. President:
3
We respectfully urge you to approve S. 391, the Federal
Coal Leasing Amendments Act. S. 391 is designed to eliminate
the speculative holding of Federal coal leases and to insure
me
development of Federal coal on a timely basis and in a manner
beneficial to the public. It would not only increase coal pro-
duction to fulfill national energy needs, but also guarantee
a decent return to the United States Treasury and to States
impacted by Federal coal mining.
While the Administration has supported the concept of
amendments to the Mineral Leasing Act dealing with coal, in
January, Secretary Kleppe expressed some concerns about the
bill. We believe that the major provisions of the bill are
compatible with the new policies and regulations of the Depart-
ment of the Interior.
1. Minimum Royalty. During the past 54 years, the Federal
Government has collected an average of only 12½ cents per ton
of leased coal in royalty payments. This is a ridiculously low
rate of return. Recognizing this fact, the Interior Department
has now raised its royalty rate to 8%. S. 391 would go further
in rectifying this inequity by establishing a minimum royalty
of 12½, a rate generally in line with coal taxes and royalties
of western States and Indian tribes.
The Secretary would be given discretionary authority to set
a lower rate for coal produced by underground mining, which is
a relatively costly method of recovery. In addition, Section
39 of the Mineral Leasing Act would continue to allow the Secre-
tary to reduce the minimum royalty below 12½ "for the purpose
of encouraging the greatest possible recovery of coal". Thus,
FORD
LIBRARY
The President
24 June 1976
Page 2
an operator could pay a lesser royalty on a portion of his
coal lease which might otherwise be uneconomical to mine, while
overall the return to the public treasuries will substantially
increase.
2. Payment to States. S. 391 would increase from 37½ to
50% the portion of revenues going to/the States from mineral
leasing, and reducing from 52½ to 40% the portion deposited in
the reclamation fund. The additional 121/2% returned to the States
would be available for use in planning, construction and mainte-
nance of public facilities, with priority to be given to areas
impacted by coal development. The U. S. Treasury would continue
to receive the remaining 10%, as under existing law. The western
coal-producing States must deal with the problems of population
influx triggered by Federal coal development. For these States,
new financial resources provided by S. 391 could spell the dif-
ference between a chaotic disintegration of traditional rural
lifestyles, and the orderly transition to urban and semi-urban
living patterns.
3. Federal Coal Evaluation Program. The Department has been
seriously handicapped in determining the actual value of coal
tracts which are leased. However, through the Geological Survey
it has begun to correct this deficiency. In Fiscal 1975, $1.9
million was spent for stratigraphic drilling and other evalua-
tions of Federal coal lands. According to the amended budget
request now pending before Congress, Interior's program would in-
crease from a projected $2.5 million to $7.6 million for Fiscal
1977.
The Department has stated that "expansion of this (coal
drilling) program is necessary to supply the Government with ad-
ditional data to facilitate the coal leasing program". Section
7 of the bill essentially extends and codifies the on-going evalua-
tion program carried out by the Geological Survey by directing
the Secretary "to evaluate the known recoverable coal" on Federal
lands. This program does not prevent the Secretary from issuing
coal leases where he believes he already has adequate information
about the nature and extent of the coal, nor does it require that
all known coal be evaluated before any is leased.
GERALD FORD LIBRARY
The President
24 June 1976
Page 3
4. Logical Mining Unit. Considering that the multipli-
city of land holdings and the failure to consolidate varying
types of holdings under a single control can lead to wasted
resources where coal tracts are too small for profitable mining
separately, the Department has produced the so-called "logical
mining unit", an administrative construct now incorporated into
its regulations. The definition of a logical mining unit (LMU)
in S. 391 and the Department's definition are essentially alike,
with the exception of the term "contiguous". The bill would
provide new discretionary authority to the Secretary to require
the formation of LMU's and (as in the Department's regulations)
require mandatorily the mining out of the coal reserves contained
in the LMU within a 40-year period. A 25,000-acre limitation
in the bill would provide ample coal reserves within an LMU to
supply even the largest electric generating plants, calculated
on the basis of tonnage yield averages in the major coal-producing
counties of the western coal States.
5. Competitive Bidding. In suspending the future issuance
of preference right leases, Secretary Kleppe has adopted a cardi-
nal principle of S. 391, namely confining leasing to competitive
bidding only. The Department's regulations now contain require-
ments for competitive bidding on coal leases and for determination
of fair market value which -- although not as detailed --- are
generally comparable to provisions in S. 391. S. 391 would re-
quire that half of all acreage leased in any one year be leased
under a system of deferred bonus bidding. Deferred bonus bidding
would prevent domination of the field by the largest coal
companies and the multinational oil corporations.
6. Diligent Development. Both S. 391 and the Interior Depart-
ment's regulations require actual production from coal leases
within 10 years. The Department's regulations, while containing
a possible 5 year extension of the ten year limit, also require
production of 2 1/2% of the 40 year coal reserves of the LMU
by the end of year 10 of the lease - a requirement which is
arguably more stringent than the provision of S. 391 calling
only for production "in commercial quantities" at the end of the
tenth year.
GERALD FORD VIRYARIA
The President
24 June 1976
Page 4
In both cases, leeway is provided for interruptions by
strikes, the elements or casualties not attributable to the lessee.
Both systems combine flexibility with a mechanism for ending the
wasteful speculative holding of Federal coal leases which has
frustrated the intent of Congress over the past few decades.
7. Other Provisions. In passing, we would mention several
other provisions of S. 391 which are comparable in most respects
to those contained in the Department's regulations. These are
as follows: (1) In Section 3, requirements for a land use plan,
public hearings, consultation with other Federal agencies, mineral
assessment, review of likely community impacts, public notice,
compliance with Federal environmental statutes; (2) In Section 4,
the exploration license and data; and (3) In Section 16, exclusion
of the National Park and similar Federal-protected areas from
coal leasing.
In sum, Mr. President, we are convinced that S. 391 would
strengthen the hand of the Secretary of the Interior in carrying
out his mandate to bring about the orderly and equitable develop-
ment of Federal coal resources upon which this Nation will more
and more come to depend in the foreseeable future.
Respectfully,
Lee Metcalf, Chairman
Patsy T. Mink, Chairwoman
Subcommittee on Minerals,
Subcommittee on Mines and Mining
Materials and Fuels
House Interior Committee
Senate Interior Committee
LIBRARY
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The White House
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Bushington
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MWHD025
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WAF416(1530) 028052C181)PD 06/29/78
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TWX UMWA WASH
1976 JON 29 PM 6 22
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001 WASHINGTON, DC 6-29-76
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PMS THE HONORABLE GERALD FORD
,
PRESIDENT
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UNITED STATES OF AMERICA
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THE WHITE HOUSE
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1600 PENNSYLVANIA AVE.
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WASHINGTON, DC 20004
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DEAR PRESIDENT FORD:
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THE UNITED MINE WORKERS OF AMERICA STRONGLY SUPPORTS S. 391, THE
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FEDERAL COAL LEASING AMENDMENTS ACT, AND RESPECTFULLY REQUESTS THAT
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IT BE SIGNED INTO LAW. THERE IS A GREAT NEED TO REFORM THE ENTIRE
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COAL LEASING PROCESS AND THIS BILL WILL BRING THE LONG OVERDUE
FORD & LIBRARY
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CHANGES.
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IN LIGHT OF OUR NATIONAL ENERGY PROBLEMS AND THE PROPOSED SOLUTIONS,
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THERE IS A NECESSITY FOR THE OPTIMUM UTILIZATION OF OUR DOMESTIC
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ENERGY SOURCES. HOWEVER, THIS UTILIZATION SHOULD BE CONSISTENT
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WITH THE PUBLIC INTEREST. S. 391 NOT ONLY HELPS ASSURE THE DILIGENT
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PRODUCTION OF FEDERAL COAL BUT ALSO ASSIRES THE PUBLIC AN EQUITABLE
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RETURN ON THIS VALUABLE RESOURCE.
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THE UMWA URGES YOU TO SIGN S. 391 SO THAT THE NATION MAY ONCE AGAIN
21
BEGIN TO DEVELOP ITS FEDERAL CCOAL RESERVES, BUT IN A MANNER GIVING
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DUE REGARD TO THE PROBLEMS THIS DEVELOPMENT WILL CAUSE FOR THE
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WESTERN PUBLIC LAND STATES.
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GERALD FORD LIBRARY
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RESPECTFULLY YOURS,
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ARNOLD MILLER, PRESIDENT
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UNITED MINE WORKERS
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FORD & LIBRARY GERALD
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PHILIP E. RUPPE
31TH DISTRICT, MICHIGAN
203 CANNON OFFICE BUILDING
WASHINGTON, D.C. 20515
CODE 202: 225-4735
COMMITTEES:
MERCHANT MARINE AND FISHERIES
INTERIOR AND INSULAR AFFAIRS
Congress of the United States
FEDERAL BUILDING. Room 102
ALPENA MI 49707
CODE 517: 356-2028
House of Representatives
FEDERAL BUILDING, ROOM 32
Mashington, D.C. 20515
MARQUETTE, MI 49855
Code 906: 228-8250
June 29, 1976
The Honorable Gerald R. Ford
The White House
Washington, D.C. 20500
FORD LIBRART
Dear Mr. President:
The undersigned strongly urge you to veto S. 391, the
federal coal leasing bill, as we believe it is not in the
best interest of the nation and will severely hinder the
achievement of your administration's objective of energy
independence.
S. 391 will have a devastating impact on the development
of our critically needed low-sulphur western coal reserves be-
cause it is not likely that any new leases can be issued for
up to eight or ten years after enactment. A major cause of
the delay will be numerous public hearings required specifi-
cally by the bill and by the application of NEPA to this
proposed legislation. It specifically calls for four hearings,
namely, upon completion of the land use plan; prior to the
issuance or approval of a lease by the Secretary; upon the
creation of logical mining units; and upon the advice of the
Attorney General that an antitrust problem may exist. The
National Environmental Policy Act will require additional
hearings: a hearing on the promulgation of the regulations
under the act; a hearing on the exploration drilling program;
a hearing on the land use decision; a hearing on the issuance
of a lease; and possibly a hearing on the mining and reclama-
tion plan. Clearly this enormous and repetitive hearing
process, assuming there is no litigation to cause further
delay, will consume several years.
of greater significance, however, are the delays inherent
in the federal exploration program. Sec. 7 of the bill directs
the Secretary to conduct a comprehensive exploratory program
The Honorable Gerald R. Ford
June 29, 1976
Page two
to obtain the resource information necessary for determining
whether commercial quantities of coal are present, and the
geographical extent of the coal fields, in order to estimate
the amount of such coal that is recoverable by underground
mining as well as surface mining. In order for the Secretary
to carry out this program he must submit a plan to the
Congress within 6 months, request appropriations, and let
drilling and other exploration contracts.
The cost of the comprehensive exploratory program has
been estimated to be $1.2 billion over the next five years
by the Congressional Budget Office. The time required to
complete the program in order to permit the commencement of
leasing cannot be easily estimated because there are too many
variables such as the appropriation of funds, the design and
approval of the exploration program, and the availability of
drilling rigs and laboratories. However, if there are around
90 million acres of federal coal lands, the process could take
decades, during which time coal leasing would be halted.
Exploration has been traditionally carried on by the industry
with data being made available to the government at no cost
to the taxpayer.
S. 391 establishes a minimum royalty on federal coal of
12½ percent. We do not believe that royalties should be set
by legislation which are at or near the historic high. The
current ceiling should not become the floor. The 12½ percent
royalty could have the effect of making large acreages of
federal coal lands uneconomical to mine. Your administration
recommended a 5 percent minimum royalty. This increase in
FORD
royalty will be reflected in higher fuel costs for electric
utilities and in turn, higher costs to energy consumers.
LIBRARY
Under the logical mining unit section, no logical mining
unit may exceed 25,000 acres, including both federal and non-
federal lands. This is an arbitrary restriction and flies
in the face of testimony from Department of Interior witnesses
outlining logical mining units in excess of 25,000 acres.
The facts support logical mining units of a larger size in
order to economically and efficiently recover the coal resources.
This requirement may force inefficient operations, thereby
unnecessarily increasing the cost of coal, and may very well
preclude the mining of significant amounts of federal coal.
The Honorable Gerald R. Ford
June 29, 1976
Page three
S. 391 requires that all leases issued pursuant to it
must be producing in commercial quantities by the end of the
tenth year or be subject to cancellation. There are many
reasons why a lease may not be in production by the end of
ten years; for example, delays in equipment deliveries,
permit approvals, railroad spur construction to name just
a few. With respect to gasification or liquifaction plants,
the coal reserve for the entire life of such plants must be
secured prior to construction. Because of the very long lead
times in construction of such plants, including financing,
technological developments, obtaining of FPC permits, and the
actual construction time, and the fact that commercial pro-
duction of coal cannot commence until the plant is complete,
such a ten-year production requirement could well lead to
the exclusion of federal coal for such plants. Experience
indicates that well over 10 years will be required to put
GERALD FORD LIBRARY
in operation a gasification plant.
Section 9 (a) amends Sec. 35 of the Mineral Leasing Act
and increases the state's share of total federal revenues from
the leasing of federal coal, oil, gas, phosphate, sodium,
potassium, oil shale, native asphalt, sulphur, etc. from the
present 37½ percent to 50 percent. Admittedly, social impacts
will be felt in states in which coal development is substantial.
However, no evidence has been presented to demonstrate that
the current level of revenue sharing is insufficient to meet
these adverse impacts. Additionally, increased revenue sharing
from resources other than coal is unrelated to the adverse
impacts caused by coal development.
S. 391 contains cumbersome antitrust review procedures
which require the Secretary to submit all decisions on the
issuance, renewal or readjustment of every coal lease to the
Attorney General for his assessment of possible violation of
the antitrust laws. These provisions only serve as another
mechanism to delay the leasing of federal coal.
The Department of the Interior has recently finalized
its new coal leasing and reclamation regulations after working
on them for well over three years. The enactment of this bill
The Honorable Gerald R. Ford
June 29, 1976
Page four
would require significant changes that would necessitate a
major revamping of Interior's program with NEPA and public
hearing requirements, promulgation of a leasing program could
be delayed three years or more.
For all of the above reasons we respectfully urge you
to return S. 391 to the Congress without your approval.
Sincerely,
Gluing Puppe
Philip E. Ruppe, M.C.
Sam Sam Steiger, Sterger M.C.
Oshn Browx
John Breaux, M.C.
Br Barm Biu Petal
Robert E. Bauman, M.C.
William M. Ketchum, M.C.
MingHams Any M.C. Joe An D. Waggonner N. 1 Jr. M.C.
Alave Freen
Used Rischooaed
David €. Treen, M.C.
Theodore M. Risenhoover, M.C.
Don Dongan Young, M.C.
James M. Collins, m. Callins M.C.
MERICAN MINING CONGRESS
1100 Ring Bldg., Washington, D.C. 20036
Telephone: 202/331-8900
1897
TWX 710-822-0126
OF
MANA
JUDGET Lune 28, 1976
COPY The President
The White House
Washington, D. C. 20500
Dear Mr. President:
On June 21, the Senate agreed to the House amendments to the Coal
Leasing bill, S. 391. The American Mining Congress respectfully urges you
to veto the legislation.
In Secretary Kleppe's letter of January 19, 1976, to Chairman Haley
of the House Committee on Interior and Insular Affairs, he raised thirteen
important objections to H. R. 6721 (the House bill which ultimately became
S. 391) as reported by the Committee, and urged the adoption of amendments
on the House floor to correct those identified deficiencies. We note that none
of your Administration's proposed amendments was adopted on the House floor.
Because of the following requirements contained in the bill, the
American Mining Congress opposes S. 391:
(1) The bill will cause inordinate delays in the leasing of coal;
(2) The bill requires repetitive and costly hearings -- four
separate hearings are specifically required by S. 391 and
an additional four or five would be required by the National
Environmental Policy Act;
FORD
(3) The bill requires a costly and time-consuming Federal
GERALD
exploration program;
(4) The bill requires production in ten years, which is far too
short;
(5) The bill increases royalties to a minimum of 12.5 percent;
Continued
IAN MacGREGOR
DIRECTORS
Chairman
CHARLES J. POTTER, Indiana, Pa.
ANK R. MILLIKEN
PLATO MALOZEMOFF, New York
WILLIAM H. LOVE, Wallace, Id.
RALPH E. BAILEY, Pittsburgh
*CHRISTIAN F. BEUKEMA, Pittsburgh
N. T. CAMICIA
*CHARLES F. BARBER, New York
D. A. McGEE, Oklahoma City
PAUL W. DOUGLAS, New York
*FRANK R. MILLIKEN, New York
\ HARRISON
E. R. PHELPS, St. Louis
JOHN A. LOVE, Denver
F. C. KROFT, JR., New York
*W. A. MARTING, Cleveland
*ROBERT W. FORT, Cleveland
: BARBER
*THOMAS L DINEEN, Milwaukee
K. E. McELHATTAN, Pittsburgh
*IAN MacGREGOR, Greenwich, Ct.
JOHN B. M. PLACE, New York
W. FORT
PAUL C. HENSHAW, San Francisco
SHELDON J. SHALE, Bethiehem, Pa.
*N. T. CAMICIA, New York
EMA
ELTON HOYT III, Cleveland
ROBERT W. HUTTON, Greenwich, Ct.
+HERBERT C. JACKSON, Cleveland
GEORGE B. MUNROE, New York
OTES BENNETT, JR., Cleveland
en
RICHARD A. LENON, Libertyville, III.
ANDREW FLETCHER, New York
*E W. LITTLEFIELD, San Francisco
JOHN C. DUNCAN, New York
A.
J. E. YATES, Pittsburgh
+RAYMOND E. SALVATI, Ft. Lauderdale
ROBERT H. ALLEN, Houston
C.F. FOGARTY, New York
D. W. BUCHANAN, JR., Chicago
CRIS DOBBINS, Denver
STONIE BARKER IR. Lexington Kv
IA
HOL
MES.
Woodcliff
The President
-2-
June 28, 1976
(6) The bill places an unrealistic 100,000 acre nationwide
limitation on the holdings of any one lessee;
(7) The bill places an artificial restriction on logical mining
units of 25,000 acres; and
(8) The bill contains a cumbersome and unnecessary anti-
trust review requirement.
In summary, S. 391 appears to be designed to make the burdens of
Federal coal leasing so onerous that little or no new leasing will occur, at
least for many, many years. For these reaons, which are set forth with
greater particularity in the attached, the American Mining Congress believes
that S. 391 is not in the national interest and will endanger the achievement
of significantly reducing this nation's dependence upon foreign energy sources.
Therefore, Mr. President, the American Mining Congress respectfully urges
that S. 391 be vetoed.
Sincerely,
J. President Allen Overton, Jr.
FORD
LIBRARY
AM
AMERICAN MINING CONGRESS
1100 RING BUILDING
WASHINGTON, D. C. 20036
TELEPHONE 202/331-8900
TWX 710-822-0126
ESTABLISHED 1897
J. ALLEN OVERTON, JR., President
June 28, 1976
Attachment to
FORD
Letter to
President Ford
Re:
LIBRARY
S. 391, Coal Leasing Act
No Administration Amendments Adopted:
Secretary of the Interior Thomas Kleppe set forth thirteen important
objections in his January 19, 1976, letter to Chairman Haley with respect to
H. R. 6721 (the House bill which ultimately became S. 391), and urged the
adoption of corrective amendments on the House floor. None of the amend-
ments offered to correct the identified deficiencies was adopted.
Inordinate Delays in Coal Leasing:
The most damaging aspect of S. 391 to the achievement of energy
independence is the inordinate delays it will cause in the leasing of Federal
coal. The source of these delays is two-fold: first, the fact that at least four
public hearings are provided for by the terms of the bill, and another four hearings
will likely be required by the National Environmental Policy Act, for a total of
eight or nine public hearings; and second, the requirement for a comprehensive
exploratory program under section 7 of S. 391.
The bulk of the Federal coal lands are located west of the Mississippi
River. The government owns about 60 percent of the western coal lands, but
because of the existing checkerboard land ownership patterns, the leasing of
Federal lands can influence the development of another 20 percent bordering on
Federal lands. The effect of inordinate delays in leasing Federal coal lands
can preclude the development of non-Federal adjoining coal lands by preventing
the creation of an efficient, logical mining unit.
Attachment
-2-
June 28, 1976
Public Hearings:
The bill requires a hearing upon completion of a land-use plan (sec-
tion 3), a hearing prior to the issuance of a lease (section 3), a hearing upon
the creation of a logical mining unit (section 5), a hearing upon the advice of
the Attorney General that an antitrust problem may exist with respect to the
issuance, renewal, or readjustment of a lease (section 15), and the require-
ment that the Secretary "
give opportunity for and consideration to public
comments on the fair market value
" of the coal may lead to or result in
the requirement for another public hearing. All of the above hearings are
specified in the bill, and in no way obviate the public hearing requirements of
the National Environmental Policy Act.
At least four more hearings would be required by NEPA: an environ-
mental impact statement and a hearing on the promulgation of regulations, a
hearing on the proposed exploratory drilling program required under section 7,
a hearing on the land-use environmental impact statement, and a hearing on
the environmental impact statement for the lease sale. Very probably, a fifth
hearing will be required on a mining and reclamation plan. While it is possible
that some of these hearings could be held concurrently, nevertheless, the public
hearing requirements are repetitious, unnecessary, costly, and seemingly
designed to delay coal leasing.
FORD
Federal Exploration Program:
LIBRARY
The Federal "comprehensive exploratory program" required by section 7
is the second source of major delay. It should be noted that the exploratory
program is a prerequisite for the land-use plan required under section3, which,
in turn, is a prerequisite for the holding of a lease sale. As a consequence,
the bill is subject to the interpretation that no lease sale can be held until all
the Federal coal lands have been drilled and evaluated, and a "comprehensive
land-use plan" has been prepared.
The language of the bill requires that the comprehensive exploratory
"
program
be designed to obtain sufficient data and information, to
evaluate the extent, location and potential for developing the known recover-
able coal resources within the coal lands subject to this Act. This program
shall be designed to obtain the resource information necessary for determining
whether commercial quantities of coal are present and the geographical extent
of the coal fields and for estimating the amount of such coal which is recover-
able by deep mining operations and the amount of such coal which is
recoverable by surface mining operations
"
Attachment
-3-
June 28, 1976
The following paragraph quoted from page 25 of House Report No.
94-681 (H. R. 6721) on this legislation relative to section 7 is of
significant interest:
Stratigraphic drilling must be carried out so or
in such a manner that information pertaining to all
recoverable reserves is obtained. All information
regarding results of test borings is to be supplied
to the Secretary. The purpose of this requirement
FORD
is to assure that lands are not leased for surface
mining development when greater amounts of coal
could be recovered through deep mining operations.
According to the final environmental impact statement prepared by
the Department of the Interior for its proposed Federal coal leasing program,
92.1 million acres of land overlie Federal coal reserves in eight western
states (Table 1-31, "States With Major Federal Coal Acreages", page I-85).
If drill holes are spaced every 160 acres, roughly 575,000 holes will
have to be drilled, probably to a depth of 1,000 feet in order to obtain the
information needed to determine the amount of coal which "is recoverable by
deep mining operations and the amount of such coal which is recoverable by
surface mining operations." The cost of the drill holes will obviously depend
upon the depth to which they are drilled, the terrain, drilling conditions
encountered, and whether blowout protectors are required, but the total cost
of the drilling program would be measured in billions of dollars.
Experience indicates that for drilling to depths of 1,000 feet (a depth
usually used for calculating underground coal reserves), a cost of $10 per
foot would be very conservative. However, applying $10 per foot to the
drilling program outlined above would result in total drilling costs of $5.75
billion. The costs of laboratory work would, of course, be in addition to the
drilling costs.
Regardless of the cost per hole, considering the number of holes that
will have to be drilled, the amount of time required to complete the program
could be very long, thereby contributing to what the Department of the Interior
terms the "probability of significant delays in discovering coal and in developing
coal."
Production in Ten Years:
An amendment was adopted on the House floor which had the effect of
reversing a previous decision in the House Interior Committee to extend to
Attachment
-4-
June 28, 1976
fifteen years the time period for commercial production from a lease. The
fifteen-year time period was adopted by the Committee because the Department
of the Interior made a persuasive argument therefor. The ten-year time period
for commercial production from a lease was a floor amendment offered by
Congressman Kenneth Hechler, who does not serve on the House Interior
Committee.
Because of this provision, it is highly unlikely that Federal coal
leased in the future would be used for gasification or liquefaction plants,
because the coal resource for such plants must be secured prior to planning,
construction or even the obtaining of financing. Ten years is simply not
enough time, and the prospect of cancellation of the lease and forfeiture of
all bonus, rental and advance royalty payments will deter the acquisition and
committal of Federal coal for such plants, should the bill become law.
Royalty:
S. 391 sets the minimum royalty at 12.5 percent. Your Administration
recommended a 5 percent royalty to permit flexibility where needed, and has
recently adopted a policy of setting royalties at 8 percent, except where circum-
stances indicate that a higher or lower royalty is appropriate. S. 391 sets the
current highs in royalties as the floor. The increased royalty will be evident
in increased fuel costs for electric utilities, and ultimately in increased costs
for electricity to the energy consumer.
Acreage Limitation:
The bill, S. 391, imposes a new nationwide acreage limitation of
100,000 acres on any one lessee. Current law has an acreage limitation of
46,080 acres in any one state. This existing limitation has worked well in the
past and will continue to do so. The 536 existing Federal coal leases are held
by 167 lessees. Of the top twenty Federal coal lessees, only one holds more
than 6 percent of the leased acreage, with the median of 2.4 percent of the
leased Federal coal acreage. It is difficult to discover any valid reason for any
concern over concentration in the coal industry from these figures. The 100,000
acre nationwide limitation is unnecessary and will likely result in hardships and
the cancellation of development plans of companies having the expertise and the
capital to achieve early production of the needed low-sulphur western coal
deposits.
FORD
LIBRARY
Attachment
-5-
June 28, 1976
Logical Mining Unit:
Section 5, relating to logical mining units, places a limit of 25,000
acres, including both Federal and non-Federal lands, upon any logical mining
unit. This restriction is arbitrary and flies in the face of examples of larger
logical mining units outlined by the Department of the Interior. This
restriction may force operations to operate in a less efficient manner, thereby
unnecessarily increasing the cost of coal, and could preclude the mining of
substantial amounts of Federal coal.
Effect on Coal Leasing Program of the USDI:
The Department of the Interior, after three years of intensive work,
has recently issued regulations revising and revamping its coal leasing program.
While the American Mining Congress has expressed some concerns and reser-
vations with regard thereto, if this bill should become law, it would appear that
most of that work would have been fruitless, and the Department would be
required to start all over on the laborious process of drafting regulations and
e nvironmental impact statements, holding hearings, analyzing comments,
designing and conducting the comprehensive Federal exploratory program, etc.
before a new leasing program can be developed. S. 391 appears to be designed
to make the burdens of Federal coal leasing so onerous that little or no new
leasing will occur, at least for many, many years.
FORD
LIBRARY
STATES DEPARTMENTOR THE )
DEPARTMENT OF AGRICULTURE
OFFICE OF THE SECRETARY
WASHINGTON, D.C. 20250
June 2 5, 1976
Honorable James T. Lynn
Director, Office of Management
and Budget
Dear Mr. Lynn:
In reply to the request of your office, the following report is submitted
on the enrolled enactment S. 391, "To amend the Mineral Leasing Act of
1920, and for other purposes. II
Taking into consideration only the provisions of S. 391 which specifically
refer to this Department and the National Forest System lands which it
administers, we recommend that the President approve the enactment. We
defer to the Department of the Interior for a recommendation as to whether
the other provisions of the bill embody suitable procedures and policies
for administration of the Nation's Federally-owned coal resources.
S. 391 would significantly and comprehensively revise existing law
governing the leasing of Federally-owned coal.
Our specific interest in this bill relates to the fact that the Department
of Agriculture through the Forest Service is responsible for the adminis-
tration of 187 million acres of Federal land within the National Forest
System. Approximately 6 1/2 million acres of land within the National
Forest System are known to be underlain with coal.
Provisions of S. 391 which specifically refer to this Department and National
Forest System lands include the following:
1. Section 3 provides that prior to the issuance of a coal lease
within the boundaries of a National Forest the Governor of the State
shall be notifed and given an opportunity to object.
2. Section 3 also provides that no coal lease sales shall be held
on National Forest System lands unless such sales are compatible with land
use plans prepared by the Secretary of Agriculture.
3. Section 3 also provides that coal leases covering lands under
the jurisdiciton of this Department may be issued only upon our consent
and upon such conditions as we may prescribe with respect to the use
and protection of the nonmineral interests in those lands.
GERALD FORD LIBRARY
Honorable James T. Lynn
2.
4. Section 4 provides that exploration licenses covering lands
under the jurisdiction of this Department may be issued only upon such
conditions as we may prescribe with respect to the use and protection
of the nonmineral interest in those lands.
5. Section 6 provides that this Department must consent to the terms
of operation and reclamation plans where the surface of the land involved
is under our jurisdiction.
6. Section 16 would have the effect of withdrawing units of the
National Wilderness System, National System of Trails, and the Wild and
Scenic Rivers System (including study rivers), from the application of the
Mineral Lands Leasing Act and the Mineral Leasing Act for Acquired Lands.
Many such units are located within the National Forest System.
With the exception of item 1. above, we believe these are good provisions.
We believe the decision as to whether a particular coal development lease
should be issued on National Forest System lands should rest with this
Department on a consent basis. We have the responsibility to administer
the various surface resources and uses to which the lands are dedicated.
We are therefore in the best position to evaluate the merits of a mineral
development proposal in relationship to its impacts on other resources and
uses, and also to evaluate how such development might be accommodated
in conjunction with those uses.
In regard to item 1., we consider the requirement of notifying the State
Governors as superfluous.
Sincerely,
John John A. Knebel
Acting Secretary
GERALD R. LISAARY FORD
EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL ON ENVIRONMENTAL QUALITY
722 JACKSON PLACE, N. W.
WASHINGTON, D. C. 20006
JUN 26 1978
MEMORANDUM FOR JAMES M. FREY
OFFICE OF MANAGEMENT AND BUDGET
ATTN:
Ms. Ramsey
SUBJECT: Enrolled Bill S391, "To amend the Mineral
Leasing Act of 1920, and for other purposes." "
This is in response to your June 22 request for our
views on the subject enrolled bill.
This bill would make several basic changes in the
Mineral Leasing Act of 1920 as it applies to the leasing
of coal. Among these changes are requiring competitive
leasing except for a provision to add contiguous acreage
to existing leases, non-preference right exploration licenses,
compatibility of coal development with land use plans, and
provisions for surface management agency concurrence.
The Administration has recognized that essential changes
are necessary in the coal leasing system to assure environ-
mental protection and other public interest considerations.
These were reflected in Administration bills submitted to
Congress in 1971 and 1973, and most recently, in extensive
changes made by the Interior Department in its coal leasing
regulations.
While much has been accomplished through regulatory
change, we believe it is important to have a solid statutory
basis to assure these reforms are carried out as long-term
policy without the prospect of future reversal. S.391 will
accomplish this and facilitate development and implementation
of a high standard of environmental protection.
At the same time it should facilitate the Administration
objective of improved energy self-sufficiency and expanded
production of coal.
A system of competitive leasing only as provided in
S.391 will assure that full environmental assessment takes
place prior to leasing activities. By providing that leasing
is compatible with land use plans, and requiring surface
QS7A10 FORD
management agency concurrence the bill involves the surface
management agency in the leasing decisions and provides
the mechanism for resolving potential resource value conflicts
in advance of development decisions.
For these reasons, the Council strongly recommends that
the President sign this enrolled bill.
Lang Widman
Gary Widman
General Counsel
1060 in LIBRARY GERALD
DEPARTMENT OF COMMERCE
GENERAL COUNSEL OF THE
UNITED STATES DEPARTMENT OF COMMERCE
UNITED STATES OF AMERICA
Washington, D.C. 20230
JUN 28 1976
Honorable James T. Lynn
Director, Office of Management
and Budget
Washington, D.C. 20503
Attention: Assistant Director for Legislative Reference
Dear Mr. Lynn:
This is in reply to your request for the views of this Department
concerning S.391, an enrolled enactment
"To amend the Mineral Leasing Act of 1920,
and for other purposes."
S.391, the "Federal Coal Leasing Amendments Act of 1975", would amend
existing Federal law relating to Federal coal resources and establish
new procedures and requirements concerning exploration for and
development of these resources.
While this legislation's basic objective is stated to be
modernization of the management of Federal coal resources, its
provisions are such that it will in fact probably retard the
exploration for and development of these resources. More specifically,
the royalty provisions, the lease size provisions, and the planning
and development requirements are such as to act as a disincentive to
prompt development of Federal coal resources. These provisions are
also likely to increase to some extent the price of Federal coal.
Further, the bill would restrict the discretion of the Secretary of
the Interior to such an extent that it may be difficult in future years
to adjust Federal coal leasing policy in response to national energy
needs.
We are particularly concerned by the new minimum 12½ royalty
provision. While this provision permits the Secretary to determine
lower royalties in the case of underground mining, it in effect sets
a minimum royalty at a point close to the maximum which has up until
now been exacted. This kind of minimum royalty could significantly
reduce development of Federal coal resources.
Of perhaps greatest concern to the Department is the provision
which provides for a 12½ increase in the state share of mineral
leasing revenues for social and economic impacts related to mineral
development. After lengthy negotiations, the Administration was able
to obtain agreement by the Conferees on the Coastal Zone Management
GERALD FORD LIBRARY
REVOLUTION
AMERICAN
BICENTENNIAL
1776-1976
2
Act amendments to limit similar automatic payments to the case
where facilities provided under the Act were unavailable. Presidential
approval of S.391 will in effect provide the inland states with an
additional source of revenues essentially unrelated to economic and
social needs. The lion's share of this increase would go to Wyoming
in which most Federal coal is currently being produced. Since the
increased share is based on production, the revenues would be
available only after impacts have occurred. Since most mineral
leasing revenues are derived from onshore oil and gas production,
it is unlikely that these additional revenues will do much to
stimulate coal production. In sum, providing an increased share
would not be equitable in terms of needs, and Presidential approval
could be interpreted by coastal states as a preference for the inland
states, thus, giving credence to Louisiana's argument of discrimination.
For these reasons, then, we believe that S.391, as passed by
the Congress, would have a negative affect on Federal coal development
and would constitute an undesirable precedent, politically and fiscally,
in connection with the provision of Federal assistance to states and
localities impacted by Federal energy development. S.391 also constitutes
an undesirable precedent regarding possible Federal involvement in OCS
exploration. In this context, we would be inclined to recommend that
the President veto the legislation.
On the other hand, there are substantial state and privately
owned coal resources which will be developed in response to increased
demands for coal. And, as demand for coal rises and prices increase,
even Federal resources will become more attractive, notwithstanding
the requiremements of S.391. Thus, while the bill will retard the
development of Federal coal resources to a degree we believe undesirable,
it may not substantially affect the price of coal or restrict the
nation's coal supply.
Further, one has to consider the legislative history of S.391.
It was passed by the Senate last year 84-12, and by the House this
year 344-51. On June 21, 1976, the Senate by unamious consent
enacted the House bill by voice vote. Given these facts, and Senator
Hansen's strong support of the bill in its present form, it is
highly questionable whether the Administration could in fact sustain
a veto. Further, there is other less desirable legislation pending
with respect to which it will be more imperative to assure that the
Administration's views prevail.
FORD
LIBRARY
3
For these reasons, the Department of Commerce will not
object to Presidential approval of S.391. The Secretary, as
Chairman of the ERC, would, however, wish to consider Interior's
position paper prior to making a final recommendation to the President.
Enactment of this legislation would not involve any additional
expenditure of funds by the Department of Commerce.
Sincerely,
FORD LIBRARY is 079838
ASSISTANT ATTORNEY GENERAL
LEGISLATIVE AFFAIRS
Department of Justice
Washington, D.C. 20530
June 28, 1976
Honorable James T. Lynn
Director
Office of Management and Budget
Washington, D.C. 20503
Dear Mr. Lynn:
In compliance with your request, I have examined a copy
of the enrolled bill S. 391, "To amend the Mineral Leasing
Act of 1920, and for other purposes. "
This bill, revising existing law controlling the devel-
opment of coal resources owned by the United States, is
designed to provide a more orderly, expeditious and environ-
mentally sound development of Federal coal leases. The
Department of Justice takes no position on the effectiveness
of this legislation in meeting that goal.
Of particular interest and concern to the Department of
Justice are sections 15 and 8 of the bill. Section 15 first
requires the Secretary of the Interior to consult with and
give due consideration to the views and advice of the Attorney
General at each stage in the formulation of rules and regu-
lations concerning coal leasing. This is a generally useful
and probably one-time-only requirement which may help ensure
a procompetitive orientation in the federal coal leasing
program.
The second part of section 15, however, in effect requires
the Attorney General to conduct a case-by-case antitrust review
of every proposed coal lease issuance, renewal or readjust-
ment to determine whether it would create or maintain a sit-
uation inconsistent with the antitrust laws. While no formal
report from the Attorney General is required in each case,
he is given 30 days notice by the Secretary of the Interior
of each proposed lease. If adverse advice is transmitted by
the Attorney General, it is tantamount to a veto of the lease
unless the Secretary of the Interior, after a public hearing,
concluded that its issuance, renewal or readjustment was nec-
essary in the public interest and that there were no reason-
able alternatives thereto. Finally, the bill conveys no immu-
nity from civil or criminal liability under the antitrust laws,
nor does it create any defenses to actions under those laws.
GERALD FORD LIBRARY
-2-
The Department questioned during the pendency of this
legislation, and we continue to question, whether a
seriatim antitrust review of every proposed coal lease is
necessary or appropriate. Our view is that preclearance
antitrust reviews of this type should be confined princi-
pally to significant licensing events or major transactions
and that a requirement to review numerous small-scale
applications with de minimis competitive effects could be
both burdensome and unproductive.
Presented, notwithstanding our reservations, with an
antitrust review requirement covering every proposed coal
lease, we have no particular objection to the procedures
spelled out in section 15. We believe it may yet be
possible, in our required consultations with the Department
of the Interior, to develop implementing regulations which
promote an orderly, efficient and productive antitrust
review.
Section 8 requires a comprehensive annual report to
Congress by the Secretary of the Interior on the federal
coal lands leasing program. Each such report is required
to contain a report by the Attorney General:
on competition in the coal and energy industries,
including an analysis of whether the antitrust
provisions of this Act and the antitrust laws are
effective in preserving or promoting competition
in the coal or energy industry.
The Department has previously expressed reservations about
this type of provision, and we continue to view elaborate
and extensive reporting responsibilities as an unwise,
inefficient expenditure of resources which would otherwise
be committed to our primary role of law enforcement.
Although we necessarily observe economic trends in
American industry in the context of carrying out our
responsibility to detect violations of law, we seriously
doubt whether a survey of competition on such a broad scale
as the "coal and energy industries" (which goes far beyond
the basic subject matter of this legislation) would be
useful or even feasible.
GE3RLD FORD LIBRARY
-3-
Despite these reservations, however, we do not believe
sections 15 and 8 of the bill are of such critical concern
to this Department as to warrant a recommendation of dis-
approval. Accordingly, the Department of Justice does not
object to Executive approval of this bill.
Sincerely,
Michael M, Uhlmann
Assistant Attorney General
FORD & LIBRARY GERALD
UNITED PROTECTION STATES. AGENCY
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
JUN 29 1976
OFFICE OF THE
ADMINISTRATOR
Dear Mr. Lynn:
This is in response to your June 22, 1976 request for a
report on S. 391, an enrolled bill "To amend the Mineral Leasing
Act of 1920, and for other purposes".
The bill amends provisions of the Act dealing principally
with leasing of Federal coal. Provisions governing the division,
apportionment, and price of leasable lands are provided, including
the ineligibility of existing lessees who have failed to produce
coal on the lease. Only land covered by a land-use plan could
be leased, with the Departments of the Interior and Agriculture
responsible for such plans for lands under their control. Plans
are required to include an assessment of minable coal in the area
covered.
The bill would authorize licenses for coal exploration but
a license would not carry a preferential right to lease land on
which coal is found. Consolidation of leases into a "logical
mining unit" would be authorized, no unit to exceed 25 thousand
acres and all coal in the unit to be mined within 40 years of
lease issuance. Provisions governing diligent development and
royalties are contained in the bill.
The Secretary of the Interior would be directed to determine
all recoverable coal under lands subject to the Act for stated
purposes, and the results would be available to the public.
The bill provides that 50 percent of the money from lease
sales shall be returned to the States, to be used for specified
purposes. A ceiling would be placed on the amounts of State
land and National land any one coal company may have under lease
at the same time. Other administrative provisions are also
contained in the bill.
FORD
2
The Environmental Protection Agency finds that the bill is
directed almost entirely to administration of Federal coal leasing
and has little direct impact on the environment. The bill does
have certain economic implications discussed below. For these
reasons, we defer to the Departments of the Interior and Treasury,
but will comment on several provisions of the bill, including
those having an indirect environmental impact.
The bill raises certain economic questions. For example,
preference right leasing often enabled small coal companies to
participate in the Federal leasing program from which they other-
wise would have been precluded, given the risk of entirely losing
exploration costs. Thus, erasing that right could tend to keep
small companies out of Federal land coal leasing. However,
the bill's provision requiring that 50 percent of the leases
shall be issued on a deferred bonus bid basis tends to balance
the adverse impact on small companies.
Another concern is the provision protecting geological,
geophysical, and core drilling analyses as confidential until
involved areas are leased or the Secretary determines a company's
competitive position would not be damaged. Such information
should be available to other governmental agencies and to public
interest groups to help them participate in the leasing process.
For example, the determination of priority for surface mining,
and the nomination of an area as surface-mining exclusive by an
interested party, depend on the availability of adequate infor-
mation.
The bill in fact responds to the problem by mandating a
comprehensive Federal exploration and analysis program, resulting
information to be made public. While the advisability of Federal
minerals exploration programs is generally open to question, such
a program would ensure that at least some information is available
for any one site, which is one stated purpose of the program.
Further, while the cost of such a comprehensive program is
troubling, especially where it duplicates privately-generated
information, we note that decisions as to which areas are to
be mined in what order or not mined at all given various
economic, social, and environmental considerations, are best
made with the complete coal reserves picture in hand. That
picture will not be produced by the companies; and in fact,
absent that picture the companies' exploration policies will
tend to determine Federal leasing policy, which is converse
to Congressional intent. To illustrate, the bill directs that
Federal exploration be done as a basis for land use planning,
and Interior's EMARS program is aimed at imposing Federal goals
on leasing.
GERALD FORD LIBRARY
3
The bill has features which bring new advantages to Federal
coal leasing. Certain provisions assure a more fair and realistic
return to the public treasury for the value given up, and will
provide much needed funds for dealing with the economic and
social impacts of large-scale mining on rural States with limited
resources. These include the competitive bidding requirement,
exclusion of bids for less than fair market value, higher royal-
ties, and provisions which discourage speculation. These latter
include, in addition to the foregoing, diligent development
provisions, such as the exclusion from leasing of lessees who
have failed to produce coal on a lease in commercial quantities
within 10 years, requiring an operation and reclamation plan
within 3 years of lease issuance, and the diligent development,
operation, and production requirements of mining plans.
Finally, the bill's land-use planning requirements improve
the leasing process in that leasing must be in accord with
planning, which will have incorporated the views of all levels
of government, as well as those of the general public.
Sincerely Russell E. yours, Train E. Train
Administrator
Honorable James T. Lynn
Director
Office of Management and Budget
Washington, D.C. 20503
FORD & LIBRARY GERALD
OF DEFENSE DE FENSE
GENERAL COUNSEL OF THE DEPARTMENT OF DEFENSE
WASHINGTON, D. C. 20301
OILIN)
AMERICA
June 30, 1976
Honorable James T. Lynn
Director, Office of Management
and Budget
Washington, D.C. 20503
Dear Mr. Lynn:
This is in response to your request for the views of the Department of
Defense on an enrolled bill, S. 391, an Act "To amend the Mineral
Leasing Act of 1920, and for other purposes".
This legislation, among other things, would make substantial changes in
the Mineral Leasing Act of 1920 as it pertains to the exploration and
exploitation of coal deposits. These would include: (1) the require-
ment for a Federal comprehensive land use plan, (2) consideration of
the effects of leasing on communities and on the environment, (3) the
submission by the lessee of an operation and reclamation plan and (4)
authority and direction to the Secretary of the Interior to conduct a
comprehensive exploration program designed to obtain sufficient data to
evaluate the extent, location and potential for developing the known
recoverable coal resources within the coal lands subject to the legis-
lation. Of specific interest to the Department of Defense is Section 12
which would provide that "Coal or lignite under acquired lands set
apart for military or naval purposes may be leased by the Secretary (of
the Interior), with the concurrence of the Secretary of Defense, to a
governmental entity (including any corporation primarily acting as an
agency or instrumentality of a State) which produces electrical energy
for sale to the public if such governmental entity is located in the
State in which such lands are located."
The Acquired Lands Act of 1947 (30 USC 352) which would be amended by
Section 12 of the enrolled bill now provides that "Except where lands
have been acquired by the United States for the development of the
mineral deposits, by foreclosure or otherwise for resale, or reported as
surplus pursuant to the provisions of the Surplus Property Act of 1944,
all deposits of coal, phosphate, oil, oil shale, gas, sodium, potassium,
and sulfur which are owned or may hereafter be acquired by the United
States (exclusive of such deposits in such acquired lands which are (a)
situated within incorporated cities, towns and villages, national parks
or monuments, (b) set aside for military or naval purposes or (c) tide-
lands or submerged lands) may be leased by the Secretary under the same
conditions as contained in the leasing provisions of the mineral leasing
laws, subject to the provisions hereof. " This provision, which exempts
GERALD FORD LIBRARY
2
military and naval installations, was included in the 1947 Act to protect
the operational integrity of military installations since exploitation
of minerals also requires use of the surface for extraction of the
underlying minerals, and the two requirements are usually incompatible.
Despite the exemption of 30 USC 352 the Department of Defense has
assigned the rights in the subsurface migratory minerals such as oil and
gas to the Department of the Interior under an Attorney General opinion
which recites the implied authority in the Executive to take protective
measures when lands acquired by the United States are found to contain
oil which is being drained by adjoining owners.
The Department of Defense, which was not afforded an opportunity to
testify on S. 391 or H.R. 9725 or to comment on Section 12 which was
added as an amendment to the House bill, prefers to defer to the position
of other agencies on the general merits of the enrolled legislation.
However, we believe it essential that we record our objection to the
language of Section 12. This objection is based on the rationale for
the 1947 exemption that extraction of the subsurface minerals is in-
compatible in most cases with the use of the surface. In this instance,
exploitation of coal or lignite would be inimical to the operational
integrity of the military installation. Despite the language of Section
12 which is permissive, we are realistic enough to know that pressures
can be brought to bear to influence a decision to lease at the expense
of the military mission. We also believe that the legislation is
discriminatory in that it is preferential to the State in which the
deposits are located at the expense of the other states whose tax
dollars contributed to its original acquisition. Rather we believe that
coal or lignite deposits are "non-wasting assets" whose time will
eventually come when the land is no longer needed for military purposes.
We realize that while the objection to Section 12 is of importance to
this Department it goes only to a small segment of the overall legis-
lation and is not of sufficient import for us to recommend a veto
message. Since the President must also consider all national benefits
of the legislation we reiterate our deferral to more directly affected
Departments and agencies.
Sincerely,
A.
Richard A. Wiley
FORD LIBRARY
STATE OF THE
United States Department of the Interior
ERIOR
OFFICE OF THE SECRETARY
March
3,
1849
WASHINGTON, D.C. 20240
JUL 2 - 1976
Dear Mr. Lynn:
This responds to your request for our views on the enrolled bill
S. 391, "To amend the Mineral Leasing Act of 1920, and for other
purposes. "
We recommend that the President veto the enrolled bill S. 391
because the bill has major deficiencies and the authority for
accomplishing an effective program of coal leasing is presently
available. Indeed, the Department has announced the development
of a comprehensive new coal program designed to: create a careful
balance between the need for coal and the need to protect the
environment; assure a fair market return to the public for the
sale of this public resource; assure that we lease only that
coal which is needed by the Nation and only when it is needed;
assure the leasing of that coal whose value exceeds the total
cost of production, including environmental costs; eliminate
excessive lease holdings; and assure participation in the Federal
coal leasing process by the respective State Governors and the
public. We believe that the program we have announced will
accomplish all these goals and provide a rational and sound
basis on which leasing decisions can be made. We do not believe
that the enrolled bill offers any new authority, and it appears
to seriously interfere with the present program.
Enrolled bill S. 391 is identical to H.R. 6721, as amended and
sent to the Senate by the House of Representatives on January 21,
1976. H.R. 6721 was previously H.R. 3265, as amended and sent to
the House Interior and Insular Affairs Committee by the Subcommittee
on Mines and Mining. H.R. 3265 was similar to the Committee Print
of S. 3528 in the 93d Congress as issued by the House Committee on
Interior and Insular Affairs, Subcommittee on Mines and Mining.
Secretary Kleppe sent Congress a message on January 19, 1976,
before floor action on H.R. 6721, stating that:
"
we believe the Department presently has adequate
authority to fully implement our coal development
program, however, we are in general agreement with
the basic thrust of H.R. 6721 to provide policy
REVOLUTION
GERALD FORD
AMERICAN
BICENTENNIAL
1776-1976
direction in coal leasing. In assessing the impact
of the bill as reported, we are concerned that there
are a number of provisions in H.R. 6721, as amended,
which we feel would have a seriously adverse effect
on our coal program. We urge that appropriate
amendments be accepted during consideration of
H.R. 6721 on the House floor so that we might fully
support enactment of this legislation. Without
these amendments, however, the Administration
opposes enactment of the bill."
None of these amendments were adopted, and H.R. 6721 passed substantially
unchanged. Similar recommendations were made in the Departmental
reports to the Interior Committee on H.R. 6721 (July 22, 1975) and
to the Mines and Mining Subcommittee on H.R. 3265 (March 13, 1975).
The Bill
S. 391 would amend the Mineral Leasing Act of 1920 (30 U.S.C.
SS 181-287) to require that coal leases be issued by competitive
bidding; eliminate the authority to lease coal by deposit rather
than by tract (both types of leasing are now authorized; require
that 50 percentum of the total acreage offered for lease be issued
under a system of deferred bonus payment; require a reasonable
number of leasing tracts be reserved and offered to various public
bodies, including Federal agencies and rural electric cooperatives;
require opportunity for public comment on fair market value of
coal subject to lease; prohibit the issuance of a lease to any
person holding a Federal lease not producing coal in commercial
quantity within 10 years of issuance of a lease; repeal authority
to issue prospecting permits and provide for issuance of exploration
licenses after approval of an exploration plan; prohibit leasing
of lands unless they are included in a land use plan; require a
6-month period for reconsideration of leasing if a Governor objects
to a lease proposal which permits surface coal mining within boundaries
of a National Forest in his State; require the maximum economic
recovery of the coal within the tract; direct a written evaluation
and comparison by the Secretary of the effects of recovery of coal
by deep mining, surface mining or by any other method; require
public hearing prior to lease sale; provide for consolidation of
coal leases into logical mining units of up to 25,000 total acres
(Federal and non-Federal), after a public hearing, if requested;
require termination at the end of 10 years of any lease which is
not producing in commercial quantities; require 12 1/2 percentum
royalty on the value of the coal, except in case of underground
mining; require diligent development and continuous operation of
the mine or mines, and also provide for the payment of advance
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royalties in lieu of continuous operation on the condition that
advance royalties shall not be paid for more than an aggregate of
ten years and no credit for royalties paid during the initial twenty
years shall be allowed for the twentieth year; require submission
and approval of an operation and reclamation plan prior to any
significant disturbance of the environment and not later than 3 years
after a lease is issued; direct a comprehensive Federal exploration
program including stratigraphic drilling; require an annual report
to the Congress containing a report by the Attorney General on
the coal and energy industries; provide an additional 12 1/2 percentum
of the revenues from mineral leasing receipts and the Geothermal
Steam Act of 1970 be paid to States; require the Director of
the Office of Technology Assessment to conduct a complete study
of coal leases; limit holding leases to 46,080 acres per State and
100,000 total acres in the United States; provide for modification
of coal leases up to 160 acres; provide for an anti-trust review
by the Attorney General at each stage in the formation and promulga-
tion of rules and regulations, and at each stage in the issuance,
renewal, and readjustment of coal leases; and provide that nothing
in the bill, Mineral Leasing Act or the Mineral Leasing Act for
Acquired Lands be construed as authorizing coal mining on any areas
of the National Park System, the National Wilderness Preservation
System, the National System of Trails, and the Wild and Scenic
Rivers System.
Discussion:
The vast Federal coal resources of the American west constitute a
vital source of energy for a Nation too heavily dependent on foreign
sources of petroleum. Coal is our most abundant fossil fuel, yet
it provides only 17 percent of the energy Americans consume each
year. It is obvious that these Federal coal deposits must be
developed so that coal can take its rightful place in the Nation's
energy matrix.
After years of intensive work and research, the Department has
implemented a comprehensive new coal program designed to achieve
maximum environmental protection and to provide access to the Nation's
most abundant fossil fuel energy resource. We believe the Department
has adequate authority to fully implement our coal development
program. Enrolled bill S. 391 would not add to that authority.
Indeed, we are concerned that there are a number of provisions in
S. 391 which would seriously interfere with the present program.
The following features are the most undesirable:
1. Ten-Year Production Requirement.
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The House Interior Committee, after extensive debate, decided to
require production in commercial quantities from the lease in 15
years or the lease would be automatically terminated. A floor amendment
further restricted the time period to 10 years with no provision for
an extension in special circumstances. The Department believes that
the period of time is too short and too inflexible. We must
remember that after a coal lease is granted on Federal lands,
there are still a number of problems to be resolved. The operator
must define his reserves. He must develop a mining and reclamation
plan. He must arrange financing. He must order equipment the
nature of which has lead time of up to 5 years. Transportation
must be taken into consideration. A railroad spur line may have
to be built. The operator must find a market for the coal. In
the case of fossil fuel utility plants or synthetic fuel plants, there
will be a myriad of Federal, State, and local permits to be obtained.
The plant itself must be financed and built before there is any need
for the coal. The Department understands that it may not be possible
to accomplish all these things in a period of 10 years.
Under the new diligence regulations the Department will require 1/40th
of the reserves to be produced within 10 years, unless the period is
extended for specified circumstances. These circumstances would take
into account those special cases where an operator is close to pro-
duction but for justifiable operating reason cannot make it within
10 years. In no case would the new regulations allow an extension
for longer than 5 years.
2. Payment to States.
S. 391 increases the States' share of the total Federal revenues
derived from mineral leasing from 37 1/2 to 50 percent. Current
law restricts the use of the 37 1/2 percent share to construction and
maintenance of public roads or for support of public schools. S. 391
leaves these restrictions unchanged. The Department is sympathetic
with the problems faced by the State and local governments in meeting
increased demands for public services because of expansion of the
Federal mineral leasing program. The Department has helped develop
and on behalf of the Administration has transmitted to the Congress,
on February 4, 1976, the Federal Energy Development Impact Assistance
Act of 1976, a bill designed to help solve the front end money
problems of States having to deal with the socio-economic impacts
of development of Federal energy resources. The bill would give to
the States and communities impacted by the development of Federal
energy resources maximum flexibility in using the loans, guarantees,
and grant funds provided by the bill to plan, build, and equip needed
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public facilities. However, as we earlier recommended to
you, the increase in the States' share of revenues from
37 1/2 percent to 50 percent can have two very significant
and beneficial effects. First, it would better equip State
and local governments to adequately deal with increased
growth and the resultant impact on public facilities and
services arising from new coal development. Second, it
would tend to lessen State and local opposition to much
needed increased coal development. We therefore favor this
provision of the bill.
3. 12 1/2 Percent Royalty.
S. 391 requires that a royalty of not less than 12 1/2 percent
be charged on Federal coal leases. Ten percent is the current
ceiling on highest rate now charged in Federal coal leases.
It is not realistic to set as a minimum a rate so much higher
than that presently charged by the Department. Such a rate
could very well have the effect of making large acreages of
Federal coal lands uneconomical to mine. This will especially
be true in those areas which have imposed State severance and
local taxes in addition to Federal royalties. Such a policy
would also reduce the amount of the bonus bids for Federal
leases.
Most of the western coal is going to go to utilities or the
private consumer, directly or indirectly. A 12 1/2 percent
minimum royalty will mean that the American consumer will have to
pay an even higher price for energy.
4. Acreage Limitations for Logical Mining Units (LMU).
Under the logical mining unit section adopted by S. 391, no LMU
may exceed 25,000 acres (including both Federal and non-Federal
lands). The Department believes that the restriction is arbitrary
and unnecessary in the face of the limitation of 46,080 Federal
acres that any one company can hold in a State and the total limita-
tion of 100,000 Federal acresnationwide provided in the bill. The
House Subcommittee on Mines and Mining has heard testimony from
officials of the Geological Survey who indicated that coal mines
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in excess of 25,000 acres are already being planned. Restricting
the size of logical mining units to 25,000 acres will limit the
efficiency of the mine and will result in leaving behind much of
the coal in the peripheral areas that otherwise would be mined.
The 25,000 acres is an artificial restriction which will require
in some cases, multiple discrete mines where one large mine is most
economic. Surface mining is highly capital intensive and subject to
major economies of scale. Restricting mines to 25,000 acres will
prevent the full economies of scale from being realized, and in
some instances, prevent realization of the full value of equipment
utilized. It will thus lead to unnecessarily high costs of production
for coal. The higher costs of production will mean that coal,
which would without the restriction be economic to mine, will not
be economic to mine. This will lead to nondevelopment of some
socially valuable deposits and early abandonment of others.
5. Federal Exploration Program.
S. 391 contains a section that directs the Secretary of the Interior
to conduct a comprehensive exploration program within the Federal
coal resource lands.
We do not believe the Federal Government should play a major role
in the exploratory phase of coal development. The Department has
carefully considered this issue, and we have concluded that the
claimed benefits either are small, as in the case of better informa-
tion, or may be obtained without resorting to major Government
exploration, as in the case of increased public control over develop-
ment. We believe a major role for the Government in exploration
would entail large costs with little benefit in terms of federal
revenues and the probability of significant delays in discovering
coal and in developing coal.
The Congressional Budget Office estimates that the program would
cost at least $1.2 billion over the next 5 years. It does not seem
to be worth that dollar amount when most of the information that
would be garnered is otherwise now being made available to the
Government by the companies themselves.
6. Anti-Trust Provisions.
S. 391 contains an antitrust section that requires the Secretary
of the Interior to consult with and obtain the advice of the Attorney
General at each stage in the issuance, renewal, and readjustment of
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every coal lease to determine whether such lease would create
or maintain a situation inconsistent with the antiturst laws. This
is administratively cumbersome and the Department of Justice is
extremely reluctant to offer conclusions on antitrust questions in
advance of a particular activity. This would only serve as an
additional impediment to coal leasing.
The Secretary presently and continuously examines antitrust
questions in coordination with the Federal Trade Commission.
These added requirements amount to regulatory overkill.
7. Public Participation.
S. 391 provides for a public hearing or gives opportunity for public
comment at four different stages in the leasing process: one on
a land use plan; another before a lease sale; another on the
formation of a logical mining unit; and, finally, one prior to
determining the fair market value of coal. A lease sale hearing
would have considered the environmental and social impacts of mining
in the area, the maximum economic recovery of the coal, the effects
of different recovery methods on the area, the effects of consolida-
tion of leases to form logical mining units, and the fair market
value of the coal to be leased.
The Department manuals and the new EMAR's program program require a series
of public meetings during various stages of the land use planning
process. Before a land use plan is adopted public hearings would
have been held.
Also, in preparing an Environmental Analysis Report, BLM instructions
(Manual 1791) call for consultation with the public and public
hearings may be held.
Moreover, an environmental analysis is done on all leases. If the
conclusion of that analysis is that major Federal action is involved
an Environmental Impact Statement (EIS) pursuant to subsection
102(2) (c) of the National Environmental Policy Act of 1969 is pre-
pared. Interior's present EIS process requires public hearings.
We believe that one formal public hearing before a lease sale
would be appropriate. Such a hearing would not lead to unwarranted
delays and would provide a thorough public review of the most
important issues.
8. Tracts Reserved to Public Bodies.
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We object to the provisions in S. 391 which would reserve a
"reasonable number" of leases for public bodies, and thus
discriminate in favor of entities which can now receive a license
to mine coal (30 U.S.C. 208). Considerable difficulty would be
encountered in defining "a reasonable number," and we see no
reason for issuing leases to other Federal agencies. We also feel
that coal on acquired lands set aside for military purposes should
be available for leasing with the concurrence of the Secretary of
Defense. As an alternative to this provision in S. 391, we would
recommend that the Secretary of Defense consider offering inactive
installations to qualified recipients such as States, so that leasing
could occur.
9. Deferred Bonus Payments.
S. 391 would require that no less than 50 per centum of the total
acreage offered for lease by the Secretary in any one year shall
be leased under a system of deferred bonus payment. The Secretary
presently has the authority to lease under a deferred bonus scheme.
We object to legislative specification of how he should exercise that
discretion and we find no basis for concluding that it is in the public
interest to offer 50 percent of the total acreage under a deferred
bonus payment.
10. Mining and Reclamation Plans.
The requirement in S. 391 that a lessee submit an "operation and
reclamation" plan by the third lease year is impractical. This
schedule will not allow a lessee, in many cases, sufficient time
to market the coal. We believe that there is no need for this
provision since the lessee must begin producing coal under the
Department's new diligence regulations by, at the latest, the 15th
lease year and such production cannot begin until a mining plan is
approved.
11. Study of Recovery Methods.
We believe the study of recovery methods directed by S. 391 is
unnecessary. There are only two methods currently used to mine
coal: surface and underground mining. Since the method used
is largely a function of economic decisionmaking on the part
of the developer and since there is already authority to evaluate
the operation and reclamation plans to insure environmental and
personal safety, we believe such studies would be unnecessary.
New Departmental Coal Program:
Early in 1971, coal leasing on the Federal lands was halted because
large amounts of coal were already under lease, little coal was
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being produced, and there was widespread concern that the Department's
leasing processes were not environmentally adequate. In February
1973, this moratorium was modified to permit leasing when coal
was needed to maintain existing mining operations, or as a reserve
against production in the near future. This limited leasing was
allowed only when the environment could be protected and when the
provisions of the National Environmental Policy Act had been complied
with. Only ten leases have been issued under these criteria.
For the past 4 years, the Department has been working to devise a new
policy and new procedures, utilizing existing authority, that would
permit resumption of Federal coal leasing, as the need arises, and
in a way that would be responsible to the taxpayers who own the
resource, to the energy consumers who will benefit by its use, to the
environment, and to the public at large.
A part of the process of developing a new coal policy was the creation
in June of 1972 of the Northern Great Plains Resource Program, a
cooperative effort of the Departments of Interior and Agriculture,
the Environmental Protection Agency, and the States of Montana,
Wyoming, Nebraska, North Dakota and South Dakota. Seven interagency
working groups spent 2 years gathering data on resource and environmental
values in the five-State area, using these data to project the
implications of various assumed rates of development of the coal
resource. Their report was issued in August of 1975.
Also during this time, the Department prepared the Coal Programmatic
Environmental Impact Statement, which was released in September of
1975. This statement is intended to be a general analysis of the
environmental impacts of major leasing alternatives. It will not,
however, satisfy the requirement for future, site-specific or
regional environmental analyses as individual coal-related actions are
proposed.
Another element in the development of this program has been the
process for consultation with the governors of the western States
and their staffs. Several meetings have been held with the
governors or their representatives and continuing close consultation
with the Western Governors Regional Energy Policy Office on all
aspects of Federal coal development in the west is contemplated.
On January 29, 1976, the Department announced its intention to take
steps to implement a new policy for Federal coal leasing and to
adopt a process based primarily on the proposal contained in the
Coal Programmatic Environmental Impact Statement. In this regard
the Department has taken the following steps:
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1. The adoption of EMARS, the Energy Minerals Activity
Recommendation System, a procedure by which the various offices of
the several Federal agencies involved in coal leasing, in cooperation
with State agencies, will gather and combine resource and environmental
information, regional and national policy considerations, and input
from the general public to provide recommendations to the Secretary
on where, when, and how much coal should be offered for lease.
2. The adoption of a totally competitive leasing system,
under which no new coal prospecting permits will be granted.
3. The development of final regulations, effective May 14,
1976. governing conditions under which mining operations and
postmining reclamation must take place. These regulations
propose standards governing mining and reclamation practices
on the Federal lands, designed to meet the highest justifiable
environmental criteria. They apply to all future leases, permits
and licenses. Reclamation standards will apply to existing
operations 180 days after publication of the regulations in the
Federal Register publication date.
More than 100 organizations and individuals submitted written
comments and 35 persons spoke at the public meetings. Comments
received included those from 10 Federal agencies and 23 States. As
a result of the comments and other Departmental review, changes were
incorporated into the regulations or final EIS as appropriate. The
final EIS was filed with the President's Council on Environmental
Quality (CEQ) on March 5, 1976.
The Environmental Protection Agency Administrator, Russell E. Train,
has said his agency "welcomes this opportunity to endorse the
Department of the Interior's coal leasing regulations governing
mining and reclamation activities. These regulations are extremely
important as they establish the environmental ground rules for
Western coal development, as well as serve as a model for national
policy for all coal mining operations.'
The Council on Environmental Quality Chairman Russell Peterson, in
a letter to Secretary Kleppe, has said "the Council is pleased
that working with other Federal agencies, States, and the public,
the Department has adopted final regulations that are environmentally
acceptable, compatible with sound energy development, and worthy of
broad support."
4. The preparation of regional environmental impact statements
where groups of coal and coal-related actions are proposed in a
defined geographical area.
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5. The continuation of the short-term criteria, under
which leases can be granted for continuation of existing mining
operations or where needed to fulfill short-term production needs
until the new leasing is fully implemented. Such leases will be
granted only when NEPA provisions have been met and where
environmental conditions warrant.
6. The promulgation on May 29, 1976, of diligent development
regulations to assure development or relinquishment of Federal
coal resources in a timely manner.
7. The establishment in final regulations published on May 7,
1976, of firm "commercial quantities" criteria pursuant to which
existing preference right lease applications can be granted or denied.
8. The lifting of the moratorium on Federal coal leasing so
that, as the need arises, we will be able to offer leases for sale.
We are very proud of the Department's new coal program and have
the utmost confidence that it will provide an efficient and an
effective mechanism for future leasing. We believe it should be
given every opportunity to work. The enactment of S. 391 would
deny this opportunity.
Our assessment of the support for this legislation in the House
and Senate indicates that a veto may be very difficult to sustain,
particularly in the Senate. However, we believe the potential
adverse impact on our coal program is so serious as to warrant a
veto of enrolled bill S. 391.
Sincerely yours, Colem
Assistant Secretary of the Interior
Honorable James T. Lynn
Director, Office of
Management and Budget
Washington, D. C.
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FEDERAL
BREROY
FEDERAL ENERGY ADMINISTRATION
ADMINISTRA ATION
WASHINGTON, D.C. 20461
July 2, 1976
OFFICE OF THE DEPUTY ADMINISTRATOR
MEMORANDUM FOR JAMES M. FREY
ASSISTANT DIRECTOR FOR
LEGISLATIVE REFERENCE
OFFICE OF MANAGEMENT AND BUDGET
FROM:
DEPUTY JOHN A. ADMINISTRATOR HILL PAID
SUBJECT:
ENROLLED BILL S.391, THE FEDERAL COAL
LEASING AMENDMENTS ACT OF 1975
This is in response to your memorandum of June 22, 1976,
in which you requested the views of the Federal Energy
Administration (FEA) on the subject enrolled bill. This
legislation would: modify procedures related to coal
leasing, as now conducted by the Secretary of the Interior,
and the terms of such leases (including acreage limitation);
give governors an opportunity to comment on leasing within
their states; require prior comprehensive land use planning;
establish procedures for exploration licenses; authorize
consolidation into "logical mining units"; require an
exploratory program by the Secretary of the Interior;
require periodic reports to Congress; and redirect 12-1/2%
of lease generated Federal revenues from the reclamation
fund to the states (increasing their percentage thereof
from 37-1/2% to 50%).
The Federal Energy Administration does not believe that this
bill should be approved by the President. After the recent
prolonged delay in coal leasing and the acceptance of the
EMARS leasing program within the Administration, the possibility
of new delays is unfortunate. The Department of the Interior
is in the best position to evaluate the precise effect of
the legislation on the coal leasing program. Although the
precise effects on coal production are difficult to quantify,
we believe that the enrolled bill could impair the expeditious
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utilization of our domestic coal reserves, which is a
critical component in our national energy policy.
Specifically, the bill creates problems in several areas:
(1) the 12-1/2% minimum royalty on surface mining (although
this provision should not have a major impact) ; (2) the
requirements for public hearings at several points in
the leasing process; (3) the required submission of an
operation and reclamation plan within three years of
leasing; and (4) restrictions placed on the Secretary of the
Interior affecting the manner and terms of leasing (including
acreage limitation). These provisions create a substantial
possibility of delay and inefficient exploitation of our
coal resources without corresponding public benefits.
The specification of royalties should probably be done
administratively, rather than by statute. Further, it would
appear that most of the desirable features of the legis-
lation, e.g., the requirement for exercise of due diligence
by the lessee and comprehensive planning by Interior, can be
or have been accomplished under existing authority.
The bill also not only authorizes but directs the Secretary
of the Interior to conduct a comprehensive exploratory
program to evaluate recoverable coal resources. This
requirement represents a substantial new governmental role
which does not, in our opinion, promote expeditious
development of our coal resources.
Finally, the bill contains an impact assistance provision.
The Federal Energy Administration favors appropriate impact
assistance to communities adversely affected by the develop-
ment of Federal energy resources. However, we cannot concur
in the approach adopted in this enrolled bill. The Adminis-
tration has proposed comprehensive and rational impact
assistance criteria and mechanisms in H.R. 11792. We con-
tinue to believe that the approach advocated in that legis-
lation is superior to an increase in the state share of
royalties and fees received in connection with Federal coal
leases and production.
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