Coal Exploration and Leasing (43 CFR 3400)
Exploration for coal on Federal mineral estate may occur prior to issuance of a lease through an exploration license (43 CFR 3410) or after a lease is issued. Exploration after leasing, but prior to the issuance of a mining permit, is through the BLM (43 CFR 3480). After a mining permit has been issued, exploration is through the Office of Surface Mining (30 CFR Chapter VII).
Coal leasing is in accordance with 43 CFR 3420 and 3430. Applications are filed with the BLM office in Springfield, Virginia, for adjudication prior to forwarding to the Jackson Field Office. The geologist at the Jackson Field Office develops a mineral assessment from information in BLM files or provided by the applicant. The Environmental Impact Review Team in the Jackson Field Office considers mining method, surface and subsurface resources, and potential impacts to arrive at a decision whether to offer the land for lease. The engineer and geologist arrive at a fair market value for the coal reserves in concert with the BLM economist.
Location of Coal Exploration and Development
Existing leasing activities on Federal land within the Jackson Field Office occur in the Warrior Coal Basin and Cahaba Coal Basin in Alabama and the Central Appalachian Coal deposits in eastern Kentucky. The surface ownership overlying Federal coal in Alabama is private while, in Kentucky, the Federal coal underlies Federal and state surface. The leases in Alabama are located in Walker, Jefferson, Tuscaloosa, Fayette, and Shelby Counties. The Federal leases in Kentucky exist beneath the Daniel Boone National Forest and the Kentucky State Forest. The coal reserves underlying Corps of Engineers land in Kentucky and other states is not available for leasing except in unusual circumstances.
Income Derived from Federal Coal Mining
Income from coal leasing occurs from three primary methods, royalty for produced coal, bonus bids at the time of lease sale, and rental prior to production. Generally, royalty from Federal coal mined underground is 8 percent of the gross sales price and 12½ percent for surface operations. Royalty income to the Federal Government from Federal coal in Alabama and Kentucky is about $765,000 per year, of which approximately 50 percent is distributed to the states.
Economic Stimulus of Leasing, Exploration and Development
More importantly than the income provided directly from leasing is the income provided from goods, services and jobs associated with mining Federal minerals. Mining is an important aspect of maintaining a viable economy in certain areas especially in eastern Kentucky. Intense capital investment is required to open a new mine and to maintain a mine in production. Unless the scattered Federal coal is mined along with surrounding private coal, the Federal coal would become inaccessible.
Office of Surface Mining
The Office of Surface Mining is the agency of the U.S. Department of the Interior with responsibility, in cooperation with the states and Indian Tribes, to protect citizens and the environment during coal mining, reclamation, and to reclaim abandoned mines before 1977.