Role of Federal Coal Resources in Meeting National Energy Goals Needs To Be Determined and the Leasing Process Improved

RED-76-79: Published: Apr 1, 1976. Publicly Released: Apr 1, 1976.

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Because of its large holdings of low-sulfur coal, the Federal Government is in a key position to shape future patterns of coal development. Most of the coal lands are administered by the Department of the Interior (DOI) and may be leased to mine coal. In 1971 DOI halted the issuance of coal leases and prospecting permits because growing amounts of coal resources were being placed under lease at a time when production was falling off.

DOI has decided to lift the moratorium without having reasonable goals of how much coal to lease or when to lease, based on the best possible estimates of how much coal to expect from the development of the leases. DOI intends to rely on the leasing process itself to indicate the need for new leasing. Under that process, the level of lease offerings would be determined by bidding results in competitive lease sales. However, reliance on this process places DOI in the position of reacting rather than providing leadership needed to develop sound national energy strategy. The new leasing process appears to be much improved over the previous system. The effectiveness of the system will depend on the integration of such information as the potential for reclamation and revegetation of mined areas, coal reserve estimates, and conflicting land uses. There are weaknesses in the system which will undermine seriously the effectiveness of the leasing process. In the past, DOI gave little attention to adequately valuing coal lands and leased coal under conditions of great uncertainty about the quantity and quality of the resources. Several changes are needed in present and proposed coal-leasing regulations for effective administration of the leasing program. Improvements needed concern production standards for leases, adjustment of lease terms, assignment of leases, and coal exploration.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: The Congress should enact legislation that would permit adjusting terms of future leases more frequently than after a 20-year primary term, and amend the law to provide for the award of leases only on a competitive basis and issuance of prospecting permits under which persons could explore for coal for commercial purposes but have no exclusive rights to leases.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Department of Interior should: specify what demands will be placed on Federal coal reserves in meeting the President's goal of doubling coal production by 1985; establish a leasing schedule to indicate the timing and magnitude of lease sales; develop a systematic coal-drilling program to provide data for appraising coal resources and provide planned and coordinated drilling through federally financed activities; require existing and potential lessees and permittees to furnish information on reserve holdings, production plans, reasons and justifications for nonproduction, and the need, if any, for additional Federal coal reserves; and award leases only on a competitive basis.

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