E9-34. Leasing of Solid Minerals Other Than Coal and Oil Shale

AGENCY:

Bureau of Land Management, Interior.

ACTION:

Final rule.

SUMMARY:

The Bureau of Land Management (BLM) is amending its regulations in 43 CFR part 3500 for leasing of solid minerals other than coal and oil shale to distinguish fringe acreage lease requirements from lease modification requirements, and to describe acceptable justifications for a lease modification. The final rule also identifies changes in the associated procedural requirements and updates the filing fees. The final changes are based on statutory authorities, which authorize the BLM to issue regulations for leasing of minerals and to charge for administrative processing costs, and on policy guidance from the Office of Management and Budget (OMB) and the Department of the Interior (DOI) requiring the BLM to charge these fees.

DATES:

Effective date: February 6, 2009.

ADDRESSES:

Inquiries or suggestions should be delivered to Director (320), Bureau of Land Management, Room 501LS, 1849 C Street, NW., Washington, DC 20240, ATTN: 1004-AD91.

FOR FURTHER INFORMATION CONTACT:

George Brown, Geologist, Solid Minerals Division (WO-320), Bureau of Land Management, Mail Stop-501LS, 1849 “C” Street, NW., Washington, DC 20240; or by telephone at [phone]. Persons who use a telecommunications device for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8330, 24 hours a day, seven days a week, to leave a message or question with Mr. Brown. You will receive a reply during normal business hours.

SUPPLEMENTARY INFORMATION:

I. Background

II. Discussion of Final Rule

III. Procedural Matters

I. Background

On June 24, 2008 (73 FR 35609), the BLM published a proposed rule to amend 43 CFR part 3500, Leasing of Solid Minerals other than Coal and Oil Shale. The comment period ended on August 25, 2008. The BLM received one public comment, which whole-heartedly supported the proposed rule. We therefore publish today's final rule with no changes from the proposed rule.

The comment supported the proposed rule as necessary in order to promote maximum recovery of the minerals being leased. Without the revisions proposed in the rule, the comment continued, the BLM would be precluded from granting lease modifications when the acreage proposed to be added does not contain an extension of the mineral deposit. The comment stated that the experience of the members of the National Mining Association confirms that the current regulations can constrain optimal development and recovery.

As explained in the proposed rule, the BLM proposes initial lease boundaries that conform as nearly as possible to the orientation of known mineral deposits. However, progress in development of the deposit may indicate that a lease boundary may need refinement. For example, additional exploration by the lessee may identify extensions of the deposit onto adjoining land. Or new engineering information may determine that lease boundaries are not situated for optimal development and recovery of the mineral deposit within the lease. Thus, the BLM uses lease modifications to adjust lease boundaries and make corrections to accommodate new information. These changes are infrequent and typically involve relatively small areas.

Current regulations treat fringe acreage leases and lease modifications in the same way. In both cases, there must be a mineral deposit under the additional acreage to be added to the primary leasehold. In some cases, this required placing overburden onto lands containing mineral deposits, which interfered with maximum recovery of the minerals and shortened the operating life of some mines. It is appropriate that a fringe acreage lease, as a new lease, should be required to show the presence of a mineral deposit within the final lease boundaries. By contrast, since a modification is an adjustment to an existing lease that already contains a known mineral deposit, the requirement in the existing regulations for the presence of a mineral deposit in the modification area should not be applicable to adjustment of the existing lease boundary. Therefore, the final rule amends this provision with regard to lease modifications.

The final rule also provides more detailed information in the cross-reference in section 3510.12(b) to the cost recovery fees listed in section 3000.12 of title 43 of the CFR.

II. Discussion of Final Rule

The BLM is amending the regulation that requires that the acreage proposed to be added to an existing lease in a lease modification application must contain an extension of the mineral deposit. The amendment acknowledges that an existing lease already contains a known deposit, and provides for modification where the configuration of the lease boundary has been found to be inadequate for recovery of the previously leased mineral deposit. Under circumstances where there is no known deposit of the same mineral on the additional acreage, the final rule requires that the acreage to be added is necessary to achieve recovery of the mineral deposit on the pre-existing Federal lease and, had the acreage been included in the Federal lease at the time of the Federal lease's issuance, such inclusion would have produced a reasonably compact lease as required by the Mineral Leasing Act of February 25, 1920, as amended. The final rule recognizes that, since the additional acreage could have been included at the time of lease issuance even though it did not contain a known mineral deposit, it may now be included as a modification of the pre-existing lease. The final rule allows modification of lease boundaries for better accommodation of development based on new information on the location and orientation of deposits and extraction areas, providing potential cost savings to lessees and increased returns to the United States from maximum recovery of leased mineral deposits. This is a minor regulatory change that applies in limited circumstances. The BLM consulted with the Forest Service in the development of the proposed rule.

The principal reason for this amendment is to facilitate the modification of a lease for the following purposes:

(1) To recognize new information about the extent of the deposit to avoid bypassing reserves that could not be independently developed;

(2) To provide space for placement of overburden and other waste rock materials to facilitate maximum recovery of the mineral deposit; and/or

(3) To provide space for other facilities needed to recover the deposit, including ore stockpiles, topsoil stockpiles, haul and/or access roads, and support facilities such as warehouse and storage areas, shops, fuel and lubricant storage, equipment staging areas, electrical substations, repair shops, and restrooms.

All leases necessarily include some nonmineral acreage. Lease boundaries are based on the location of deposits that may not be fully identified at the time of lease issuance. Items (2) and (3) above already take place on existing leases but can be constrained because the lease boundaries may not be optimally situated with respect to the deposits to provide space for these activities. For example, due to the space limitations caused by orientation of the deposit relative to the lease boundary, temporary stockpiling of ore or overburden on the surface over an unmined portion of a deposit may be necessary, interfering with mining efficiency and increasing costs. Such stockpiling blocks access to the deposit, reduces recovery, and requires handling and hauling the stockpile multiple times as the deposit is mined. Readjustment of the lease boundary for better conformity with the deposit orientation will allow better utilization of the lease acreage for the overall mine operation.

Subpart 3516 provides for use permits for ancillary operations for phosphate leases (up to 80 acres) and sodium leases (up to 40 acres). However, use permits are not appropriate to meet the needs addressed by this final rule, for several reasons. Lease boundary readjustment provides for more efficient utilization of leased acreage and more space in the area of the greatest need immediately adjacent to the operations. Readjustment will provide more space for operations in a compact configuration than a use permit by making more effective use of the acres that are leased and minimizing the additional acres needed. Use permits, on the other hand, may not provide enough acreage for all lease operations. Also, BLM use permit provisions do not apply to national forest lands.

III. Procedural Matters

1. Regulatory Planning and Review (E.O. 12866)

This document is not a significant rule and the Office of Management and Budget has not formally reviewed this rule under Executive Order (E.O.) 12866. We have made the assessments required by E.O. 12866 and the results appear below.

• The rule will not have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities. Mining companies rarely seek lease modifications. For the fifteen-year period from FY1992 through FY2007, BLM processed 18 lease modifications for active leases. This regulation change is not expected to result in a substantial increase in the number of modifications. Although the BLM expects few modifications, the likely economic impacts from an individual lease modification can be illustrated in the following example. In one recent lease modification, one company employed about 210 workers with annual wages of about $18.7 million. The modification extended the mine's life by 2 to 3 years, thereby extending the wage earnings for those 210 workers, and producing an additional $4 to 6 million in royalties for the Federal Government.
• The rule will not create a serious inconsistency with an action taken or planned by another agency. It will be consistent with the current practices of the BLM and the Forest Service for operation on a lease, which provide for consultation between the agencies before the BLM authorizes a lease modification, and will extend those practices to the additional lands in modified leases. It will not change the relationships of the BLM to other agencies and their actions. The final rule will allow a lease modification to increase the size, or change the shape and orientation of the lease, or both, providing more acreage for lease operations. Procedures for review and approval of all lease operations, including mining and reclamation plans, development of mitigation measures, and the associated reviews under the National Environmental Policy Act, will remain the same. Potential activities on the leases will remain the same. The effect of this rule is merely to provide more acreage to perform those operations on existing leases.
• The rule will not materially affect entitlements, grants, loan programs, or the rights and obligations of their recipients. The rule does not address any of these programs.
• The rule will not raise novel legal or policy issues.

2. Regulatory Flexibility Act

We certify that this rule will not have a significant economic effect on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) Although a substantial number of lessees meet the criteria for small entities, as defined by the Small Business Administration (SBA), the final rule will only affect a small number of entities and the annual effect on the economy of the regulatory changes will be less than $100 million. When it is applied, the final rule will have a beneficial impact because it allows the lessee to develop the lease more fully, and do so with greater efficiency and potentially at lower cost. A threshold analysis was performed, which determined that a Regulatory Flexibility Analysis is not required. The threshold analysis is available at the address specified under ADDRESSES. A Small Entity Compliance Guide is not required.

For the purposes of this section a “small entity” is an individual, limited partnership, or small company, at “arm's length” from the control of any parent companies, with fewer than 500 employees. This definition accords with Small Business Administration regulations at 13 CFR 121.201.

3. Small Business Regulatory Enforcement Fairness Act

This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act.

• This rule will not have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities. As explained above, lease modifications constitute a small part of solid non-energy mineral leasing activity and most of those are accomplished under existing regulations. The final rule is only expected to involve boundary adjustments for a few leases, and the associated economic effects:
• Will be less than $100 million annually;
• Will not cause a major increase in costs or prices for consumers, individual industries, Federal, state, or local government agencies, or geographic regions; and
• Will not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises.
• The rule will not materially affect entitlements, grants, loan programs, or the rights and obligations of their recipients. The rule does not address any of these programs.

4. Unfunded Mandates Reform Act

This rule will not impose an unfunded mandate on state, local, or tribal governments or the private sector of more than $100 million per year. The rule will not have a significant or unique effect on state, local, or tribal governments or the private sector. The provisions of this rule do not require anything of any non-federal governmental entity. The rule is not a “significant regulatory action” under the Unfunded Mandates Reform Act (2 U.S.C. 1501 et seq.).

5. Governmental Actions and Interference With Constitutionally Protected Property Rights (Takings) (E.O. 12630)

Under the criteria in E.O. 12630, this rule does not have takings implications. This rule does not substantially change BLM policy. Nothing in this rule has any effect on private property interests, and therefore nothing in the rule constitutes a taking. A takings implication assessment is not required.

6. Federalism (E.O. 13132)

Under the criteria in Executive Order 13132, this rule does not have significant Federalism effects to warrant the preparation of a Federalism assessment. This rule does not change the role of or responsibilities among Federal, state, and local governmental entities, nor does it relate to the structure and role of states or have direct, substantive, or significant effects on states.

7. Civil Justice Reform (E.O. 12988)

This rule complies with the requirements of E.O. 12988. Specifically, this rule:

(1) Does not unduly burden the judicial system;

(2) Meets the criteria of sections 3(a) requiring that all regulations be reviewed to eliminate errors and ambiguity and be written to minimize litigation; and

(3) Meets the criteria of section 3(b)(2) requiring that all regulations be written in clear language and contain clear legal standards.

8. Consultation With Indian Tribes (E.O. 13175)

Under the criteria in E.O. 13175, we have evaluated this rule and determined that it has no potential effects on federally recognized Indian tribes. Because this rule does not make significant substantive changes in the regulations and does not specifically involve Indian reservation lands, we believe that relations with Indians, Indian tribes, and tribal governments will be unaffected and no consultation is needed for this rule. Consultation will take place, as necessary before making any lease modifications to individual leases. Lands within Indian Reservations, except the Uintah and Ouray Indian Reservation, Hillcreek Extension, State of Utah, are closed to the operation of the Mineral Leasing Act. Under Public Law 440 (Hill Creek Extension), the boundaries of the Uintah-Ouray Reservation were extended to include the surface of some public domain lands, but those lands do not contain any known mineral resources or leasing operations that are subject to these regulations and are unaffected by this change.

9. Paperwork Reduction Act

The BLM has determined that this final rule does not contain any new information collection requirements that the Office of Management and Budget (OMB) must approve under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). The OMB has approved the information collection requirements in the regulations under OMB control number 1004-0073, which expires March 31, 2010.

10. National Environmental Policy Act

This rule does not constitute a major Federal action significantly affecting the quality of the human environment. A detailed statement under Section 102(2)(C) of the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4332(2)(C), is not required.

The BLM has determined that any environmental effects that this final rule may have are too broad, speculative, or conjectural to lend themselves to meaningful analysis and any actions authorized by the rule will be subject to the NEPA process on a case-by-case basis. See 516 DM2, Appendix I, Item 1.10. In limited circumstances, this regulation will provide a limited amount of acreage within the lease boundary for operations to take place. The factual situation at each lease area is different. Specific proposals for modifications will be reviewed under NEPA and evaluated to identify the potential impacts associated with the final modifications and any appropriate mitigation, and the decisions about what operations will be allowed will be made on the basis of those analyses.

Therefore, the final rule is categorically excluded from environmental review under Section 102(2)(C) of the National Environmental Policy Act, pursuant to 516 Departmental Manual (DM) 2.3A and 516 DM 2, Appendix I, Item 1.10, and does not meet any of the 10 criteria for exceptions to categorical exclusion listed in 516 DM 2, Appendix 2. Pursuant to Council on Environmental Quality regulations (40 CFR 1508.4) and the environmental policies and procedures of the Department of the Interior, the term “categorical exclusion” means a category of actions that do not individually or cumulatively have a significant effect on the human environment and that have been found to have no such effect in procedures adopted by a Federal agency and for which neither an environmental assessment (EA) nor an environmental impact statement (EIS) is required.

Because the final promulgation of this rule will not itself approve any lease modifications, it will have no significant impacts on the environment and will not have a significant impact on any of the following critical elements of the human environment as defined in Appendix 5 of the BLM National Environmental Policy Act Handbook (H-1790-1): Air quality, areas of critical environmental concern, cultural resources, Native American religious concerns, threatened or endangered species, hazardous or solid waste, water quality, prime and unique farmlands, wetlands, riparian zones, wild and scenic rivers, environmental justice, and wilderness. The lease modifications that are authorized will be analyzed in EAs or EISs, and, if approved, they will incorporate site specific mitigation measures in both the modification approval and the mining/reclamation plan. This final rule does not change this, but makes it clear that, in certain circumstances, proponents of lease modifications do not bear the burden of showing that the land contains deposits of the minerals subject to the lease.

11. Information Quality Act

In developing this rule, we did not conduct or use a study, experiment, or survey requiring peer review under the Information Quality Act (Section 515 of Pub. L. 106-554).

12. Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (E.O. 13211)

This rule is not a significant energy action under the definition in E.O. 13211. A Statement of Energy Effects is not required. It will not have an adverse effect on energy supplies. The final rule will reduce energy requirements somewhat by facilitating efforts by lessees to keep operations compact. Thus, transportation required for materials within the mining operation may be reduced, given that operations will be conducted on adjacently located properties. Accordingly, we anticipate that this may reduce fuel consumption from haulage during operations. By facilitating maximum recovery of mineral deposits from leases, the final rule will extend mine life, allowing the existing infrastructure to be used for a longer time. Postponing development of the new infrastructure required for new mines will also reduce overall energy requirements.

13. Facilitation of Cooperative Conservation (E.O. 13352)

In accordance with Executive Order 13352, the BLM has determined that this final rule:

• Does not impede facilitating cooperative conservation;
• Takes appropriate account of and considers the interests of persons with ownership or other legally recognized interests in land or other natural resources;
• Properly accommodates local participation in the Federal decision-making process; and
• Provides that the programs, projects, and activities are consistent with protecting public health and safety.

Author

The principal author of this rule is George Brown, Geologist, Division of Solid Minerals, assisted by Ted Hudson, Acting Chief, Division of Regulatory Affairs, Washington Office, BLM.

List of Subjects in 43 CFR Part 3500

• Government contracts
• Intergovernmental relations
• Mineral royalties
• Mines
• Public lands-mineral resources
• Reporting and recordkeeping requirements
• Surety bonds

Dated: December 24, 2008.

C. Stephen Allred,

Assistant Secretary, Land and Minerals Management.

Accordingly, for the reasons stated in the preamble and under the authorities stated below, the BLM amends 43 CFR part 3500 as set forth below.

PART 3500—LEASING OF SOLID MINERALS OTHER THAN COAL AND OIL SHALE

1. The authority citation for part 3500 continues to read as follows:

Authority: 5 U.S.C. 552; 30 U.S.C. 189 and 192c; 43 U.S.C. 1733 and 1740; and sec. 402, Reorganization Plan No. 3 of 1946 (5 U.S.C. Appendix).

Subpart 3501—Leasing of Solid Minerals Other Than Coal and Oil Shale—General

2. Amend § 3501.10 by revising paragraph (f) to read as follows:

§ 3501.10

What types of mineral use authorizations can I get under these rules?

* * * * *

(f) “Lease modifications” add adjacent acreage to a Federal lease. The acreage to be added:

(1) Contains known deposits of the same mineral that can be mined only as part of the mining operation on the original Federal lease; or

(2) Has the following characteristics—

(i) Does not contain known deposits of the same mineral;

(ii) Will be used for surface activities that are necessary in furtherance of recovery of the mineral deposit on the original Federal lease; and

(iii) Had the acreage been included in the original Federal lease at the time of the Federal lease's issuance, the original Federal lease would have been reasonably compact.

* * * * *

3. Amend § 3510.12 by revising paragraphs (b) and (c), and by adding paragraph (d), to read as follows:

§ 3510.12

What must I do to obtain a lease modification or fringe acreage lease?

* * * * *

(b) Include a non-refundable filing fee as provided in § 3000.12, Table 1, of this chapter (the fee may be found under “Leasing of Solid Minerals Other Than Coal and Oil Shale (Part 3500)”). You must also make an advance rental payment in accordance with the rental rate for the mineral commodity you are seeking. If you want to modify an existing lease, the BLM will base the rental payment on the rate in effect for the lease being modified in accordance with § 3504.15.

(c) Your fringe acreage lease application must:

(1) Show the serial number of the lease if the lands specified in your application adjoin an existing Federal lease;

(2) Contain a complete and accurate description of the lands desired;

(3) Show that the mineral deposit specified in your application extends from your adjoining lease or from adjoining private lands you own or control; and

(4) Include proof that you own or control the mineral deposit in the adjoining lands if they are not under a Federal lease.

(d) Your lease modification application must:

(1) Show the serial number of your Federal lease that you seek to modify;

(2) Contain a complete and accurate description of the lands desired that adjoin the Federal lease you seek to modify; and

(3) Show that—

(i) The adjoining acreage to be added contains known deposits of the same mineral deposit that can be mined only as part of the mining operations on the original Federal lease; or

(ii) As an alternative, show that—

(A) The acreage to be added does not contain known deposits of the same mineral deposit; and

(B) The adjoining acreage will be used for surface activities that are necessary for the recovery of the mineral deposit on the original Federal lease, and

(C) Had the acreage been included in the original Federal lease at the time of that lease's issuance, the original Federal lease would have been reasonably compact.

4. Amend § 3510.15 by revising paragraph (e), redesignating paragraphs (f) and (g) as paragraphs (g) and (h), respectively, by adding new paragraph (f), and by revising redesignated paragraph (h), to read as follows:

§ 3510.15

What will the BLM do with my application?

* * * * *

(e) The lands for which you applied for a fringe acreage lease lack sufficient reserves of the mineral resource to warrant independent development;

(f)(1) The lands for which you applied for a lease modification contain known deposits of the same mineral deposit that can be mined only as part of the mining operations on the original Federal lease; or

(2)(i) The acreage to be added does not contain known deposits of the same mineral; and

(ii) The acreage to be added will be used for surface activities that are necessary for the recovery of the mineral deposit on the original Federal lease; and

(iii) Had the acreage added by the modification been included in the original Federal lease at the time of that lease's issuance, the original Federal lease would have been reasonably compact.

* * * * *

(h) You meet the qualification requirements for holding a lease described in subpart 3502 of this chapter and the new or modified lease will not cause you to exceed the acreage limitations described in § 3503.37.