Cooperative leasing offers increased competition, revenues, and production from federal coal leases in western checkerboard lands

Technical Report · Wed Apr 28 04:00:00 EDT 1982

OSTI ID:5318404

Peach, J D

Beginning in 1850, Congress granted land to many railroads generally consisting of 200- to 400-foot rights-of-way for trackage, and alternating (square mile) sections of land on either side of the right-of-way ranging from 6 to 20 miles. Over time, the railroads and the federal government sold some of the surface rights in the checkerboard areas. As a result, checkerboard coal development is complicated not only because of multiple coal owners, but also by the existence of split estates, where one party owns the coal while another owns the surface rights. Because individually owned checkerboard tracts are generally too small to mine efficiently as a single unit, mining companies must obtain two or more adjacent tracts, as well as consent from the surface owner(s), in order to form a logical mining unit. The additional cost of forming a logical mining unit creates market imperfections which drive down the value of individual tracts - both federal and private. If these tracts were combined, however, the Department believes the value of the combined tract would exceed considerably the sum of the values of the individual tracts. Within listed criteria, the task force proposed a presale cooperative leasing agreement providing an opportunity for interested private parties to obtain separate leases for both federal and private coal necessary for an efficient mining operation. The federal coal lease sale would be conducted under normal procedures - sealed bids followed by an oral auction. But under the conditions set forth in the pre-sale cooperative agreement the winning bidder for the federal coal would be given the opportunity to buy the private coal and have 45 days to conclude a sale agreement and satisfy other federal requirements. The price of the private coal would be a function of the cost of the federal lease and determined by applying a federal/private bid ratio announced before the federal lease sale.

• Research Organization: General Accounting Office, Washington, DC (USA). Energy and Minerals Div.
• OSTI ID: 5318404
• Report Number(s): EMD-82-72; ON: DE82904995
• Country of Publication: United States
• Language: English

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