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Show Interior reply to criticism of federal coal leasing program By Helene C. Monberg Washington-Interior Department (fficials stoutly defend the Depart-nent's Depart-nent's program to resume federal coal easing on June 4 despite heavy riticism leveled at it recently at parings of the House Mining Sub-ommittee. Sub-ommittee. (See last week's. WRW.) Assistant Interior Secretary Guy R. . dartin told Western Resources Wrap-m Wrap-m (WRW) on July 17 the program has ieen generally favorably received hruout the West, where most of the ederal coal will be mined. And he eiterated a point that he made before he House Mining Subcommittee on Jun. 14- "At least at this point we know of no ihallenge to the program legally." Deputy Under Secretary of Interior Steven P. Quarles, director of the Of-ice Of-ice of Coal Policy at the time the new jrogram was announced, told WRW in 1 lengthy interview on July 13 that industry had leveled one very valid point against the proposed program relative to determining "maximum sconomy recovery" of marginal coal seams. That has been changed in the new federal coal management regulations regula-tions published in the Federal Register jn July 19, Quarles said. "We were naive about that," Quarles admitted. And he admitted that Interior had to igree to more federal leasing than it night have preferred under the Justice Department insistence for more easing to encourage competition in Western coal markets to keep prices vithin reason. "It is true that the Department of Justice will always put jressure on us to increase our leasing igures. That is one of the reasons why He put a fudge factor of 24 percent into ;he target for leasing in the Powder liver Basin" in Montana and Vyoming. "It is one of the reasons why ve plan to double the amount of tracts ivailable for leasing by 1990 in the . Jinta-Southwestern Utah region, which ;xtends into Western Colorado, ' Quarles told WRW. "Justice has one :oncern: competition. We at Interior ave to look at a whole range of factors ncluding other resource values." Juarles stated. in separate interviews with WRW, th Martin and Quarles tended to iismiss most of the criticism levelled at ' he Administration's new- federal. coal leasing program as coming from critics )f legislation which the critics had once )pposed but which is now on the statute oks. This legislation formed the basis :or the new federal coal leasing -Drogram. The critics-and Martin inducted in-ducted Chairman Jim Santini, D-Nev., )f the House Mining Subcommittee in his group-had lost the legislative aattles in Congress which resulted in ;nactment of the 1977 Surface Mining "ontrol and Reclamation Act, the 1976 federal coal leasing amendments, and the Federal Land Policy and Management Act of 1976. they said. So" naturally the industry and members ot -Congress critical of the new laws will complain about the new program based mi them, Martin and Quarles told WRW. MARTIN'S POINT OF VIEW Martin made several points about the new federal coal leasing program and about coal generally. The problem with coal today is a limitation on demand, not on supply, he maintained. He said there are already 17-18 billion tons of federal coal under lease at this time. Much coal is available for mining, mainly in the East, but it is not being mined because it is high-sulfur coal barred from the marketplace because of air pollution control standards. (This situation could change quickly, of course, if air quality standards are lowered in line with President Carter's energy proposals of July 15.) Interior did not take off on bureaucratic adventurism in putting together the new federal coal leasing Program. "Eighty percent of it is built n the statutory requirements" of the laws noted above, he said. This is he first Administration in the past wee able to put a new leasing program into effect, he pointed out. Because of speculation and failure to develop ederal lands under lease , Interior put a "moratorium on federal coal leasing in 137l- Under the new program an-Jjounced an-Jjounced by. Interior Secretary Cecil D. f5 1 n June 4' Intenrr wil1 resume 'leral coal leasing in January 1981. "umber of Western states and areas have expressed concern about coming national sacrifice areas to m(t national energy needs, par-"cuiarly par-"cuiarly strip mining of coal, he P'nted out. The new coal leasing 0gram includes the states directly in wcision-making, Martin underscored. 1 nis new, highly sensitive approach to annlng or Western resources veiopment seems to have won the upport of all Western coal states," trtin testified on June 25. From time withT Western governors in states criti ?rge coal reserves have been r "cal of e federal government's ZZZ licies-But on this new we ha tln told WRW- "l tnink Scotnu6 he suPPrt of (Governors) of Wv n of Utah- Ed Herschler LamLmmg' and even, I think, of Dick Umn of Colorado." Land-use planning is a new concept to many coal companies which have not had the experience that the hard-rock mining industry operating on federal lands in 'the West has had, Martin stated. Once they get the hang of it, they will be able to work satisfactorily with the land management agencies, like other resource users, Martin told WRW. Interior and the American Mining Congress and the National Coal Association are not jointly sponsoring seminars to 'discuss the details of the new program. In response of the complaint of Rep. Morris K. Udall, D-Ariz., that the Administration should back his bill (HR 8) divesting Big Oil from coal leases and prohibiting it from securing new coal leases before the government resumes federal coal leasing in 1981, Martin said a study is now being conducted con-ducted on competition in the coal industry in-dustry which is due for completion in May 1980. That will reveal what the exact situation is, he said. In the interim, in-terim, Martin stated, existing provisions in law and administrative regulations require development of coal leases within 10 years under a diligence requirement in federal lease contracts, there are acreage limitations by state and nationally, there is a legal requirement that new federal leases can only be leased competitively, and Interior must consult with the Justice Department before offering new leases for sale, among other safeguards to insure competition. GRIPES OF INDUSTRY -The hearings of the House Mining Subcommittee indicated that industry critics, in particular, objected to land-use land-use planning and to regional targets for coal production. Because of the wide coal seams close to the surface, most coal companies want to lease in the Powder River Basin of Montana and Wyoming because the resource can be strip-mined. But Interior is deliberately setting production targets for six regions in the West, as well as for federal coal reserves in Oklahoma and Alabama, so that the impacts of coal production are spread out. Quarles said it would be harder for local in-terests in-terests to-'try ,to prevent- coal 'leasing under Interior's new program. "The burden of proof will be on them," Quarles stated. Both industry and other federal agencies questioned Interior's plan to complete land use plans for all areas, then fit coal mining in as one resource use where it is deemed compatible with other resource uses.' The critics feel that the coal lands in which industry has the greatest interest should be given top leasing priority. Land-use planners in the U.S. Forest Service and. in the Bureau of Land Management in the Interior Department regard land-use land-use planning as THE basic tool in public land management. Top officials in both agencies are totally wedded to the land-use planning concept, which is embedded in recent statutes. "The days when (industry) nominations to lease coal lands drove the planning process are over," Quarles told WRW. "We have to look at other resource values including other mineral values-uranium, values-uranium, oil, gas, shale," as well as the non-energy minerals, Quarles stated. Industry criticism in general added up to a stated belief that the new program and the procedures to carry it out are too cumbersome and too costly for effective leasing of federal coal reserves, the House Mining Subcommittee Sub-committee was told on June 25-26. Only time and the effectiveness of the program will tell whether this criticism is justified. Just exactly " how the estimated value of the coal resource would be factored into the land use planning process and against the un-suitability un-suitability criteria of sites that Interior plans to apply against coal-bearing tracts of land proved difficult for Martin and Quarles to explain. Quarles made this explanation to the House Mining Subcommittee on June 25: "We have two different processes going on here. The assessment of coal value comes along as soon as the initial assessment of the application of the unsuitability criteria." After the draft land use proposal for a specific unit of land is made public, "for the first time the public or anyone gets to look at how we think we are applying the unsuitability un-suitability criteria. They also get to look at the assessment of the coal value" of the unit or tract of land, Quarles testified. On preference right leases, the unsuitability criteria will be applied thru terms of the lease, Assistant Interior Solicitor Robert J. Uram stated. Regarding such leases, Quarles stated, "It is our expectation that most of the time unsuitability doesn't mean you cannot mine on that piece of land. It means that you will have to mine under certain stipulations." Maximum economic recovery, the most important element of cost, was defined in the new land management regulations issued on July 19 as "all portions of the coal deposits within the leased tract shall be mined that have the private incremental cost of recovery (including reclamation, safety and opportunity costs) less than or equal to the market value of the i coal." Industry wanted maximum economic recovery (MER) determined on a seam-by-seam marginal cost basis. Charles M. Rech, acting director, of the Office of Coal Policy, told WRW on July 17 the above definition was what industry wanted. Simply put, Rech gave this example: If it cost a company $7 to mine a ton of coal, Interior initially wanted it to mine a ton at $7.50 and another ton at $6.50, with the cost averaging out at $7 a ton. Under the latest definition, the company com-pany would be required to mine the ton costing $6.50 to mine, but not the higher cost $7.50 a ton coal, so that its marginal costs would not exceed its marginal revenue, he said. |