Diligence requirements for federal coal

Book · Tue Jan 01 04:00:00 EST 1985

OSTI ID:6272596

Anderson, R C

Coal on federal lands is developed under conditions established by the Mineral Leasing Act of 1920, as amended by the Federal Coal Leasing Act Amendments of 1976 (FCLAA). Coal leases after 1976 are subject to a diligence rule that production in commercial quantities begin within ten years or the lease will be cancelled. A similar ten-year diligence period for pre-1976 leases begins with the first lease readjustment after 1976. However, pre-1976 leases also are subject to a separate requirement contained in Section 3 of the FCLAA. Section 3 has been interpreted by the Department of the Interior as prohibiting the issuance of new federal mineral leases, including oil and gas, to holders of non-producing coal leases that have been held for ten years, beginning on August 4, 1986 (ten years after the enactment of the FCLAA). Section 3 does not provide a simple, assured alternative to commercial production for coming into compliance with this provision. This paper provides an overall review of the issue and then examines some economic aspects which suggest that the ten-year diligence requirement is too short and too inflexible and that market conditions affect the efficient rate of development. Several proposals extend the term for meeting the commercial quantities production test to 20 years, a period that equals the shortest primary lease term found in private leases. While there may be no single best answer, this paper suggests that a properly structured reform of coal development diligence rules could enhance economic efficiency. 33 references, 6 tables.

• OSTI ID: 6272596
• Country of Publication: United States
• Language: English

Related Subjects

01 COAL, LIGNITE, AND PEAT
017000* -- Coal
Lignite
& Peat-- Legislation & Regulations
29 ENERGY PLANNING, POLICY, AND ECONOMY
293000 -- Energy Planning & Policy-- Policy
Legislation
& Regulation
294001 -- Energy Planning & Policy-- Coal
AMENDMENTS
COAL DEPOSITS
COMMERCIALIZATION
ECONOMICS
GEOLOGIC DEPOSITS
GOVERNMENT POLICIES
LEASES
LEGAL ASPECTS
MINERAL RESOURCES
RESOURCE DEVELOPMENT
RESOURCES
TIME DEPENDENCE