United States: DOI Releases Scoping Report On Coal Leasing Reforms

On January 11, 2017, the Bureau of Land Management (BLM) within the Department of the Interior released a scoping report analyzing a wide range of proposed reforms to the federal coal leasing program, administered by the BLM. The scoping report is an initial step in the National Environmental Policy Act (NEPA) review process for reforming leasing and management of the 475,000 acres of existing coal leases across 10 states, with an estimated 7.4 billion tons of recoverable coal. The last such comprehensive review was in the mid-1980s, and most of the existing regulations were promulgated in the late 1970s, with little change since. The recently released report lays the groundwork for a future programmatic environmental impact statement (PEIS) that will evaluate a variety of potential reforms to the program. It will make recommendations as to which of those reforms would best meet the BLM's stated goal to improve and modernize the program to allow for orderly development of coal resources on federal lands in a way that accounts for the agency's stewardship responsibility and provides the public with a fair return.

The scoping report follows a Notice of Intent, released by the BLM in March 2016, which asked stakeholders to weigh in on several issues related to the federal coal leasing program, including:

  • the process, location, and timing for federal coal leasing;
  • fair return for the public;
  • climate impacts of coal production on federal lands;
  • socioeconomic impacts of federal coal leasing;
  • exports; and
  • energy needs.

Since release of the Notice of Intent 10 months ago, the BLM has conducted six public meetings and received over 200,000 written comments. The BLM summarizes those comments—both oral and written—in the scoping report and uses them to refine the issues for consideration in the Draft PEIS, the preparation of which is the next step in the BLM's process under NEPA.

Key Issues

In describing the need for a PEIS, the BLM identifies four categories of issues and potential reforms that the PEIS will address: "fair return, climate change, resource management and protection, and program administration." Scoping Report, at 6-1. For each of these four policy categories, the BLM identifies several specific policy options, noting that the various options could be combined in various ways to reform the coal leasing program.

Fair Return

The BLM acknowledges concerns regarding whether the public is currently receiving a fair return arise "because there is currently very little competition for Federal coal leases." Id. at 6-3. A central objective of the reform, therefore, is to "ensure that the public owners of [Federal] coal receive a full and fair return for this resource." Scoping Report, at 6-2. To that end, the BLM proposes eight policy options related to the goal of ensuring a fair return. For example, the BLM suggests increasing the royalty rate as a way to better reflect fair market value. The other policy options concerning fair return are:

  • implement fair market value process changes;
  • limit the use and improve the transparency of royalty rate reductions;
  • increase rental rate;
  • raise minimum bid bonus;
  • implement inter-tract or modified inter-tract bidding processes;
  • evaluate current performance bonding amounts and increase as necessary; and
  • convene a royalty policy commission.

Climate Change

The BLM notes that "virtually every community in the US is being impacted by climate change, and Federal programs have an obligation to be administered in a way that will not worsen and [will] help address these impacts." Scoping Report, at 6-3. The scoping report goes on to identify reform opportunities that will "ensure appropriate alignment with US climate goals and adequately reflect the impact of the [coal leasing] program on climate change."

The BLM proposes five policy options related to climate change and focuses on the prospect of using a "royalty adder" or royalty rate increase to capture the externalities associated with carbon emissions related to coal production. The BLM acknowledges the contribution of federal coal to US carbon emissions, both emissions associated with mining directly and emissions from the ultimate combustion of federal coal. At the same time, the BLM notes that "the environmental effectiveness of a royalty rate increase or adder would be largely contingent on the degree to which the substitute fuel sources are less carbon intensive (e.g., natural gas-fired generation, or renewable generation) as opposed to similarly carbon intensive (e.g., non-Federal coal)." Id. at 6-15. The scoping report calls on the PEIS to weigh the impact and effectiveness of accounting for carbon externalities through a rate increase or adder. The other policy options related to climate change are:

  • require compensatory mitigation for greenhouse gas emissions;
  • lease based on a carbon budget;
  • create incentives for methane capture; and
  • no new leasing, with limited modifications for existing leases.

Resource Management and Protection

Beyond climate change, the scoping report identifies a need for program reform "to better protect the nation's other natural resources (e.g., air, water, and wildlife)." Id. at 6-4. The BLM identifies seven policy options related to this objective:

  • improve application of unsuitability criteria and modify criteria;
  • develop strategic leasing plans that address landscape scale issues, multiple use, and mitigation planning;
  • account for additional coal-related externalities;
  • strengthen lease applicant qualification requirements;
  • apply environmental protections to existing leases;
  • develop regional mitigation strategies for existing and new coal development; and
  • develop best management practices.

Program Administration

Finally, the BLM identifies "a need for common-sense reforms to the Federal coal program that provide for the efficient and orderly administration of coal on Federal lands in light of current market conditions." Scoping Report, at 6-5. The BLM identifies six policy options related to this objective:

  • develop strategic leasing plans that allow for tiering of future lease decisions;
  • create a pre-application process;
  • create a standardized lease application form and develop an electronic application platform;
  • establish a single team to develop fair market value;
  • work with other agencies to evaluate means for eliminating overlapping requirements and redundant processes; and
  • improve transparency in the leasing process.

Options Not Carried Forward

The BLM also discusses a number of policy options raised by commenters that the agency decided not to carry forward for the Draft PEIS phase. In some cases, such as a suggestion to change how coal is valued for purposes of royalty payments, the BLM has no authority to act because another entity regulates the matter. In other cases, the BLM considered the suggestion and decided it was not worth further attention. For example, the BLM declined to carry forward a proposal to account for social and environmental costs of coal in the fair market value calculation, calling the accounting required "too remote or speculative" and noting that other proposals attempt to address the social and environmental externalities associated with coal production. Id. at 6-32 to 6-33.

Next Steps

The scoping report does not end the BLM's process. Consistent with NEPA, the next step for the agency is to prepare a Draft PEIS. The Draft PEIS will assess several different alternatives created by making different combinations out of the various policy options articulated in the scoping report. The scoping report suggests three possible policy combinations, but notes that additional analysis of those and other potential combinations is needed. The BLM will also consider a "no leasing alternative" under which the BLM would not issue new coal leases while leaving the regulations governing existing leases unchanged, as well as a "no action alternative." Once the Draft PEIS is published, the public will have an opportunity to review and comment on it before BLM incorporates that feedback into a Final PEIS. The target date for a Final PEIS is early 2019.

Responsibility for this process, which was initiated under the Obama Administration, now passes to the Trump Administration. In his January 17 confirmation hearing, Rep. Ryan Zinke, President Trump's nominee to serve as the Secretary of the Interior, was asked for his views on the ongoing coal leasing reform efforts, to which he responded, "I think the review is good," and added that he believes taxpayers should receive fair value for the resources developed from federal lands, including coal.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions