Lease By Application (LBA) Process  

File an application with the appropriate BLM State Office indicating your interest in a specific coal tract, as outlined in 43 CFR subpart 3425.    There is no standard application form, so you are encouraged to work closely with the BLM State Office to determine what information they will require in your application.  The BLM will review your application to assure that it conforms to pertinent land-use plans and determine if the coal tract you propose to lease is appropriate for coal leasing.  The BLM also will review geologic information for the area to ensure the tract is reasonably configured such that federal coal will not be bypassed.

In the Powder River Basin of Wyoming and Montana, your application is then reviewed by the Regional Coal Team (RCT) in a public meeting.  Based upon all available information and public comment, the RCT recommends to the BLM whether to accept, reject or modify your application.  The RCT is unique to coal leasing in the Powder River Basin.  Coal tracts proposed for lease elsewhere will not have this requirement.

The BLM is required to recover its costs associated with processing coal lease applications.  A cost recovery agreement must be signed prior to the BLM beginning any work on the application.  Once a signed agreement is in place, an Environment Assessment (EA) or an Environmental Impact Statement (EIS) for the tract is started.  The EA or EIS requires publication of a draft document, receipt and analysis of public comments, and publication of a final document. During this period the BLM will consult with other government agencies.  Depending on the specific requirements and conditions of the coal tract, this could include a surface management agency, the state, Indian tribes or bands, the Department of Justice, or other agencies as needed. 

The BLM will publish a public notice of the lease sale in the local press and in the Federal Register. This notice includes detailed sale and bidding instructions to anyone who may desire to bid on the tract.

An estimate of fair market value is prepared at this time. The lease sale begins with receipt of sealed bids prior to the sale.  The sealed bids are opened at a public lease sale. The apparent high bid is accepted contingent upon it meeting or exceeding BLM's estimate of fair market value and meets other requirements. 
Several requirements are attached to every federal coal lease that is issued.  For instance, a royalty rate of 12.5 percent for coal to be mined by surface mining methods and 8 percent for coal to be mined by underground mining methods is required.  There is a diligent development requirement that means commercial quantities of coal must be produced from the lease within 10 years of lease issuance.  The term “commercial quantities of coal” has been defined by regulation to be 1% of the coal that potentially could be mined, including any coal that has already been mined.   Failure to meet this requirement will result in termination of the lease.  A lease can only be issued if the competitive bid for the lease meets or exceeds the BLM's estimate of fair market value.