Legislative And Regulatory Issues Facing Western Coal - Federal Leasing and the Future

Ladies and gentlemen, I appreciate this opportunity to be with you, and to share my outlook on the future of Federal coal leasing. I'm told that you wanted the best speaker on this subject in the world. Perhaps it's a reflection of these trying financial times, but I'm glad you finally agreed to settle for the best speaker your budget would afford. I have been asked to give you some insight on the status of Federal coal leasing, and how the budget problems facing the Department will affect the coal program. So I've polished up my crystal ball, and I'll try to give you a peek at the future. Before I do that, however, let me first go back in time - to when this Administration took office in 1981. We had a coal program then, after a hiatus of ten years. But that program was untested and - for reasons well known to all of you - did not work well in practice once we began operating the program. We went back to the drawing board and redesigned the program so that it can do what it is intended to do. We've made the program more predictable. That means that when future lease sales are scheduled, those sales will be reflective and reactive to the need to lease coal. On February 26, Secretary Hodel unveiled a framework for resumption of Federal leasing program activities, ending a more than two-year suspension of regional coal sales. The new program will provide the opportunity to satisfy market demand for acquiring and developing new leases, assure the government of fair market value for its coal reserves, and provide a stable supply of coal for this country's energy needs. The new program grew out of the Department's response to recommendations of the Linowes Commission and the Office of Technology Assessment, coupled with a supplemental environmental study. The Linowes Report, issued in 1984, contained 36 recommendations and three Judgments on leasing levels, tract selection, sale procedures, appraisal methods, key statutory and related factors, and organization and management of the leasing program. Major changes in the new leasing program reflect these concerns. We have developed a definition for captive tracts and devised procedures to appraise their value to the adjacent coal or mine owner. Other steps include a coal lease appraisal guide which describes our appraisal methodology and is available to the public. Improvements have also been made in the gathering of lease assignment information to help in estimating the value of potential lease tracts. To improve market analysis, a three-tiered system will be used to ensure that steps of the lease sale decision process are undertaken in the context of coal supply and demand. Regional Coal Teams will thus have the advantage of long range, regional and tract specific market studies to help them determine whether sufficient demand is expected first to warrant the initiation of activity planning, then to set regional leasing levels, and finally to actually offer specific tracts for lease sale. Sale procedures will also be improved in many ways to encourage competition, improve the chances for receiving adequate bids, and to evaluate whether bids represent fair market value. We made additional modifications to the program in response to the OTA recommendations. Regional Coal Teams have been given a larger role in recommending key decisions concerning the amounts of coal to be studied and the actual selection and scheduling of tracts for lease sale. These recommendations will be accepted unless the Secretary can cite an overriding national interest factor, or a governor's request to modify the recommendations. Smaller, more frequent sales will be held, to better judge market conditions and prevent over- or under-leasing. Public participation guidelines have been written, to document all opportunities for the public to comment at various stages in the planning process. We also decided that resource management plans prepared after the passage of FLPMA in 1976 must be completed, in order for a new round of lease sale planning to begin. The BLM will also beef up its procedures for consulting with affected Federal agencies during the planning process, to assure that the purposes and values of those agencies are considered and factored into land use decisions. To assure consistent use of an adequate data base in coal lease decision-making, Regional Coal Teams will develop standards and guidelines for data adequacy, and document the use of these standards. These procedures will also be applied to the unsuitability criteria screening process. Thus, the new leasing system announced by Secretary Hodel: is fully responsive to recommendations made by the Linowes Commission and the Office of Technology Assessment for improving environmental planning and fair market value procedures; gives the regional coal teams a major say in determining leasing levels, and on the timing,