Mineral Resources:

Proposed Revision to Coal Regulations

RCED-92-189: Published: Aug 4, 1992. Publicly Released: Aug 17, 1992.

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Pursuant to a congressional request, GAO reviewed the Bureau of Land Management's (BLM) justification for its proposal to decrease the commercial quantities of coal that federal lessees must produce.

GAO found that: (1) BLM proposed reducing the minimum production requirement to 0.3 percent of recoverable coal reserves because of the findings of a task force, a 1985 study that recommended payment of fees for lessees not producing coal, and the number of lessees that had difficulties meeting the 1-percent production requirement; (2) BLM did not provide a basis for reducing the minimum production level because the 1985 study did not discuss revisions to the definition of commercial quantities, BLM could not name companies that were unable to meet the 1-percent requirement, and the task force could not provide documentation to support its proposal; (3) to remain financially viable, operators will have to produce coal in excess of the current or the proposed minimum; (4) a reduction in the minimum level would make it easier for an operator to spread out or put off production until later in the lease period; and (5) a lower minimum would make it easier for an operator to retain a lease when depressed market conditions made it uneconomical to produce or sell coal.

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