Coal Producers may hold BLM leases longer

Coal Producers may hold BLM leases longer

Washington (Platts)--4Aug2005

A handful of coal operators in the Powder River Basin will be able to prolong
the life of leases that haven't produced any coal for years, thanks to a new
policy by the Bureau of Land Management. 

The policy, embodied in an instruction memorandum posted on BLM's Web site
Wednesday, allows operators approaching the 20th year of their leases to
continue to make "advanced royalty payments" in lieu of production. 

Under regulations put forth by the agency in 1985, a coal operator is allowed
to make these payments instead of producing 1% of the resource on its lease
during any 10 years of a 20-year lease. The regulations did not permit the
payments to extend beyond the initial 20-year term of a lease, however. But,
BLM said in the IM, the agency determined the limitation "is not required by
the [Federal Coal Leasing Amendments Act of 1976], regulations, or lease
terms." 

A BLM official who did not wish to be identified told Platts the rule change
would apply only to a "handful" of operators in the West that have been making
the advanced payments for eight or more consecutive years. He could not say
why the leases have not produced any coal for so long, only saying it could be
related to market conditions, weather or other factors. 

Matt Grant, assistant director of the Wyoming Mining Association, said that
the coal market in the state has "fluctuated" over that period, and that it is
an operator's "individual choice" to make the payments.

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