02-4156. Establishment of Category 5 Royalty Rate at 2.4 Percent in Fort Union Federal Coal Production Region

AGENCY:

Bureau of Land Management, Montana State Office, Interior.

ACTION:

Notice.

SUMMARY:

This notice is issued for the purpose of announcing the determination of Category 5 Royalty Rate at 2.4 percent within the Fort Union Federal Coal Production Region in the Counties of McLean, Mercer, and Oliver, North Dakota, and Richland County, Montana.

EFFECTIVE DATE:

February 21, 2002.

FOR FURTHER INFORMATION CONTACT:

Randy D. Heuscher, Chief, Branch of Solid Minerals, telephone [phone], Montana State Office, Bureau of Land Management, P.O. Box 36800, Billings, Montana 59107-6800.

SUPPLEMENTARY INFORMATION:

The “Fort Union Region Category 5 Royalty Reduction Study” requested by the State Director, Montana State Office, Bureau of Land Management, was completed by the Northwest Regional Evaluation Team of the Bureau of Land Management of the Department of the Interior in 1991. The geographic area qualification and establishment of the competitive royalty rate under Category 5 of the “Royalty Rate Reduction Guidelines for the Solid Leasable Minerals” have been reviewed, and are the basis for the following determinations:

A. Geographic Area Qualification—The Counties of McLean, Mercer, and Oliver, North Dakota, and Richland County, Montana, continue to meet the established five criteria to qualify under Category 5 for royalty rate differentials as follows: (1) The Federal Government is not market dominant in this area; (2) Federal royalty rates are above the current market royalty rate for non-Federal rates in the area; (3) Based on a mine-by-mine examination, it is apparent that there are instances where Federal coal can be expected to be bypassed in the near future due to the royalty rate differential between Federal and non-Federal coal; (4) All three previous criteria considerations have been found to exist throughout the region; and (5) A plant-by-plant analysis, based on actual shipments, indicates that Fort Union coal is competitive in the area. However, it has also been shown that a reduction in the Federal royalty rate would not have a significant impact on this competitiveness.

B. Establishment of Competitive Royalty Rates—The competitive royalty rate of 2.4 percent is established to promote development of Federal coal reserves situated in the Counties of McLean, Mercer, and Oliver, North Dakota, and Richland County, Montana, that may otherwise be bypassed in favor of non-Federal coal having a lower royalty rate.

C. Category 5 Reduction in Royalty Applications—Federal lease-specific applications for Category 5 Reduction in Royalty for Coal deposits within the Counties in North Dakota and Montana named above will be accepted by the Montana State Office, Bureau of Land Management, P.O. Box 36800, Billings, Montana 59107-6800 effective upon publication of this Notice. Applications will be processed pursuant to the regulations at 43 CFR part 3485 as established by the “Royalty Rate Reduction Guidelines for the Solid Leasable Minerals”.

The geographic area qualification and the establishment of the competitive royalty rate under Category 5 of the “Royalty Rate Reduction Guidelines for the Solid Leasable Minerals” will be reviewed again and updated 2 years from the effective date hereof.

Dated: January 11, 2002.

Randy D. Heuscher,

Chief, Branch of Solid Minerals.