Mineral Resources:

Federal Coal-Leasing Program Needs Strengthening

RCED-94-10: Published: Sep 16, 1994. Publicly Released: Sep 26, 1994.

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Pursuant to a congressional request, GAO provided information on the Bureau of Land Management's (BLM) federal coal-leasing program, focusing on: (1) BLM efforts to increase federal coal leases; (2) BLM efforts to address the environmental impacts of additional coal leasing; and (3) whether the projected demand for coal should continue to be used as a basis for BLM coal-leasing decisions.

GAO found that: (1) recent BLM actions have not discouraged speculation or promoted the development of federal coal leases; (2) BLM has issued 36 federal oil, gas, and coal leases to an unqualified lessee and has disqualified other companies with nonproducing federal coal leases; (3) some companies have surrendered nonproducing coal leases to remain qualified to obtain additional federal mineral leases; (4) BLM has allowed the use of logical mining unit (LMU) provisions to extend the life of a federal coal lease that is close to termination for lack of production; (5) BLM actions may encourage other coal lessees to use LMU to extend the development periods of their nonproducing federal coal leases; (6) although BLM offices in Wyoming and the eastern states have addressed cumulative environmental impacts on most resources, the Forest Service and BLM in Utah have addressed only about 22 percent of the potentially affected resources; (7) BLM can meet its coal-leasing objectives without using projected demand to set leasing levels; (8) BLM can discourage speculation, encourage coal lease development, and ensure that it obtains a fair-market value for its leases by enforcing the Federal Coal Leasing Act Amendment's (FCLAA) coal-leasing diligence requirements; and (9) BLM may need to revert to a regional leasing process, using projected demand as a basis for setting leasing levels, if the demand for coal increases significantly.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: On August 20, 1997, the Department of the Interior published a final rule to amend existing regulations to ensure that lessees will not be issued new mineral leases under the Mineral Leasing Act unless they have met statutory coal production requirements. This rule is effective September 19, 1997.

    Recommendation: The Secretary of the Interior should cease issuing any additional Mineral Leasing Act (MLA) leases to unqualified companies and amend existing regulations to ensure that lessees holding pre-FCLAA leases will not be issued new mineral leases under MLA unless they have met the coal production requirements that FCLAA added to MLA.

    Agency Affected: Department of the Interior

  2. Status: Closed - Implemented

    Comments: The Bureau of Land Management has issued an instruction memorandum to state directors, which is updated annually, that provides an updated noncompliance lessee list to be used to ensure that none of the entities listed is issued a lease in violation of statutory requirements.

    Recommendation: With respect to the MLA leases already improperly issued to Kerr-McGee or other companies that were not qualified, the Secretary of the Interior should review these leases for action in accordance with all applicable statutory and regulatory provisions.

    Agency Affected: Department of the Interior

  3. Status: Closed - Implemented

    Comments: On August 20, 1997, the Department of the Interior published a final rule to amend existing regulations to set forth the factors that BLM will consider in reviewing applications for logical mining units, to ensure that logical mining units are approved and administered consistently with statutory goals. This rule is effective September 19, 1997.

    Recommendation: The Department of the Interior should continue its efforts to revise its regulations to provide criteria that BLM can use to determine whether the formation of LMU is consistent with FCLAA goals of discouraging speculation and encouraging the development of federal coal leases.

    Agency Affected: Department of the Interior

  4. Status: Closed - Implemented

    Comments: On August 20, 1997, the Department of the Interior published a final rule to amend existing regulations to set forth the factors that BLM will consider in reviewing applications for logical mining units, to ensure that logical mining units are approved and administered consistently with statutory goals. This rule is effective September 19, 1997.

    Recommendation: For each LMU approved, BLM should document how the approved LMU meets these regulatory criteria.

    Agency Affected: Department of the Interior: Bureau of Land Management

 

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