Interior's Flexible Approach to Strip Mining: Energy Self-Sufficiency Through Minimal Environmental Protection

Under heavy administration and industry pressure to end its five-year moratorium on the leasing of federal coal lands, the Interior Department has issued a series of regulations that permit massive strip mining of western coal deposits. In a claim that is disputed by environmentalists, Secretary Kleppe has asserted that the flexible nature of these coal leasing procedures and mining operation standards will ensure achievement of the goal of 300 million tons of annual coal production on federal lands by 1985 through mining procedures consistent with the requirements of environmental protection.¹

Revision of the regulations is a certainty, since the recently enacted Federal Coal Leasing Amendments Act of 1975 requires additional mechanisms to prevent monopoly development of coal resources and mandates stricter supervision of site selection.² And although the reclamation standards set in the rules have yet to be directly challenged, the state of Wyoming is seeking to eliminate provisions which allow the Secretary to preempt more stringent state reclamation standards.³ Moreover, despite enactment of the Coal Leasing Amendments, congressional delay in passing a bill aimed specifically at strip mining increases the likelihood that western coal development will occur under rules so flexible that mine operators may avoid even minimal reclamation efforts and environmental quality safeguards.

[6 ELR 10199]

Coal Leasing Procedures

The coal leasing process established by the Interior Department is designed to assure "the orderly and timely development of federally-owned coal … and a fair market return to the public for the resources sold."⁴ The regulations neglect to fully implement these goals, however, for they failed to devise a mechanism which provides for automatic termination of those leases held by speculators. Further, the regulations require only that land be leased at a "fair market value," not that the coal itself be sold at a price not exceeding the costs of development plus a reasonable profit.⁵

The regulations establish a detailed framework for the selection of sites and the drafting of lease terms. Leasing tracts are to be selected by the Bureau of Land Management and the United States Geological Survey on the basis of the extent of coal deposits, potential impacts on economic structures and aesthetic qualities, and rehabilitation potential.⁶ An environmental analysis must then be made of alternative land uses, need for development, and the effects of production on area resources and environment. The proposed tract recommendations will subsequently be identified in a regional environmental impact statement. Consultation with the governors of affected states is required before a final decision may be made on specific sales.

Applicants for each tract must describe the surface features, existing land use, and quantity and quality of minerals at the prospective lease site. Further, they are required to explain their proposed mining operations, including the methods to prevent air and water pollution and soil erosion, and their reclamation plans. The Department of the Interior will then evaluate the impacts of the proposed operations on other land uses, and recommend lease conditions and the amount of bonds required to cover the estimated reclamation costs. Based on these lease terms and stipulations, the applicant will make a final showing that there is a reasonable expectation that the projected revenues from the sale of coal will exceed his costs of developing, removing, and marketing the material.⁷ Only after such a showing may the Secretary of the Interior make the decision to issue a lease.

Effect of the Federal Coal Leasing Amendments Act

The Act's principal revision of the regulations involves increased restrictions on site selection. Before any acreage may be offered for lease, such use must first be found to be compatible with a land use plan based on information gathered through a comprehensive exploratory program. In requiring a complete survey of all federal coal lands to determine the amount and location of deposits, Congress has forced Interior to gather independently information that can be used to assure that land will be leased at a cost at least equal to the fair market value of the coal. But Congress failed to provide a correlative mechanism to assure that the coal itself will be sold at a reasonable price.⁸

Although Interior's regulations did not attempt to prevent a small group of companies from monopolizing the leasing of western energy resources, the Leasing Amendments Act forces a revision of departmental rules since it mandates a series of procedures designed to prevent monopoly domination of the coal mining process. Acreage limits are established on lands that may be leased within a state and nationwide to a single company or its subsidiaries. As a further check, the Act requires the Secretary to consult the Attorney General on possible antitrust violations before a lease may be issued.⁹ Participation of small companies is assisted through a requirement that 50 percent of the land to be offered for lease must be available on a deferred bonus payment basis.¹⁰

Congress further recognized that most land leased before imposition of the moratorium is now held by speculators. To ensure that operators proceed expeditiously with "orderly development," the Act provides for automatic termination of leases for those lands that do not produce commercial quantities of coal at the end of ten years.¹¹

Performance Standards

The need for tough environmental safeguards concerning strip mining has long been recognized. Without uniform federal regulation, there is an incentive for new mining investment to be located in states having the weakest laws. And even with uniform federal regulation, standards must be devised which achieve the ambitious goals of reclamation: insulation of the environment from toxic materials; stabilization of land by [6 ELR 10200] revegetation of the surface to prevent slides and erosion; and restoration of the approximate original contour to minimize disturbance of wildlife habitats and lessen the danger of contamination of local water supplies.

Both Congress and the Department of the Interior have therefore instituted procedures designed to supervise operations of mining operators. The Coal Leasing Amendments provide that before any activity may be conducted on leased land, and at least within three years of issuance, exploration and mining plans must be submitted.¹² The plan must describe surface reclamation measures, including a reclamation schedule and description of vegetation to be planted. Interior's regulations require, in addition, a description of the proposed land use following reclamation, and estimation of reclamation costs per acre, and the steps to be taken to comply with applicable air and water quality laws.¹³ These plans must be consistent with the applicable performance standards, and they may only be approved after a bond, conditioned on compliance with all the provisions of such plans, has been furnished to and approved by the appropriate mining supervisor.¹⁴

Interior's performance and reclamation standards, not affected by passage of the Act, will apply to existing mining operations after November 6, 1976.¹⁵ In general, mine operators are required to take those actions"needed to minimize, control, or prevent soil erosion; air pollution; surface or ground water pollution; serious diminution of the normal water flow; adverse impacts upon fish and wildlife; permanent damage to vegetative growth; and adverse impacts upon adjacent land uses."¹⁶ Each operator is further required to adopt measures consistent with "feasible known technology" in order to control such detrimental effects of underground mining as subsidence and mine instability.¹⁷

The imprint of Interior's flexible approach to environmental safeguards, evident in provisions which permit variances at the expense of some adverse environmental impact, is not readily apparent on the face of the reclamation standards. Operators must reclaim lands "as contemporaneously as practicable with operations," a condition which requires prompt action to prevent surface deterioration. To prevent soil erosion and slides, operators must establish a "diverse vegetative cover" at least equal in density and permanence to the natural vegetation.¹⁸ The key to prevention of unstable surface areas and resultant air and water pollution lies in the requirement that the area be restored to its "approximate original contour."¹⁹

But an operator need not fully comply with these performance and reclamation standards. Should he demonstrate a need to avoid meeting such standards, and should he show that the variance will not interfere with an acceptable post-mining land use, he may avoid strict compliance with all but the water quality requirements. Since no objective criteria must be presented to establish a "need," the operator's main task is to show that the new land use is both an "equal or better economic or public use than the previous" and is compatible with adjacent land uses.²⁰ If an operator can show a more beneficial economic result, he may obtain permission to restore the land to an extent that some disturbance of wildlife habitat, possibility of erosion, and danger of landslide may exist. Although water quality standards must be maintained, granting of variances may increase the likelihood that the rain cycle will interact with altered land patterns to produce substantial water quality deterioration.

Should such deterioration occur, the mining supervisor may issue a notice of noncompliance. Failure to act in accordance with the notice is grounds for suspension of operations, cancellation of the lease, and forfeiture of the compliance bonds.²¹ This enforcement mechanism should deter operators from acting in a manner detrimental to the environmental at least where substantial portions of a lease remain to be mined. Since these sanctions are discretionary, however, there is no certainty that remedial action would be taken in all circumstances.

In seeking to establish procedures which reconcile the goals of resource development and environmental protection, Interior has created a system which permits environmental deterioration through efforts to minimize rather than prevent environmental damage. Further, the desire for flexibility has produced a situation where numerous variances may allow avoidance of federal standards necessary to prevent surface deterioration so that such damage may become inevitable.

The Legal Challenge: Pre-emption

Enforcement of state strip mining and reclamation laws should ideally provide a final check on the regulations' apparent allowance of operator circumvention of environmental safeguards. Yet the Interior Department rules seek to cut off the exercise of state police power over federal coal lands. If the Secretary finds that the application of state laws would "unreasonably" prevent the mining of federal coal and determines that the national interest in such production requires that restrictions not be applied, state laws would not affect the leased areas.²²

Although the Secretary is required to consult in advance of his decision with the Governor of the state involved, conflicts will inevitably develop where a state decides to proceed more slowly on coal development or [6 ELR 10201] to regulate it more thoroughly than the Department believes is in the national interest. These potential disputes may be avoided, however, should the courts rule that the Secretary exceeded his authority in promulgating regulations which permit discretionary pre-emption of stricter state regulations. There is no doubt that the Secretary can set standards and regulate leases. However, this regulatory authority is limited by the statutory requirement that it cannot be exercised in a manner which "affects the rights of the States or other local authority to exercise any rights which they might have."²³ Quite clearly, this provision seeks to preserve state authority to exercise police power over federal mineral leases.²⁴

Resolution of this issue may occur in Herschler v. Kleppe,²⁵ a suit in which the state of Wyoming seeks to rescind the rule which permits the assertion of federal jurisdiction to preclude the application of state law governing reclamation of mined land within state boundaries. The complaint raises the point that the Secretary of Interior must recognize state authority to regulate reclamation and exercise police power over all lands. The state alleges that the Secretary acted unconstitutionally in seeking to pre-empt state laws absent explicit congressional authorization. Interior is expected to argue in response that, under the implied pre-emption standard, its regulations validly supersede state laws.

The Price of Energy Independence

After a temporary respite, federal coal leasing will soon resume. At a time when consideration should have been given to instituting maximum environmental safeguards, the desire for development has produced standards riddled with loopholes. The political attractiveness of "energy independence," coupled with industry pressures, has produced a climate in which the semblance of environmental protection is apparently more important than the substance of environmental controls. It thus has become easier to mandate selection and supervision of areas to be mined than to demand that ensuing operations be subject to strict reclamation and performance procedures.

Should Congress fail to enact a strip mining law more stringent than current federal regulations, it would be left to the states to assert their varied reclamation policies. And unless the courts enjoin Interior from seeking to circumvent stricter state regulations, it is not even certain that this alternative check on administration policy will be available.

1. Wall Street Journal, May 12, 1976, at 4, col. 3.

2. Public Law 94-377, enacted over veto, August 4, 1976, 122 Cong. Rec. H8311-20 (daily ed., Aug. 4, 1976), ELR 41443.

3. Herschler v. Kleppe, No. 76-108, summarized at ELR 65359 (D. Wyo., filed June 9, 1976).

4. 43 C.F.R. § 3520.04, 41 Fed. Reg. 22053 (June 1, 1976).

5. During the drafting of the regulations, extensive commentaries were submitted by the cities of Anaheim and Riverside, California, alleging that the rules failed to comply with the antimonopoly and reasonable price provisions of the Mineral Leasing Act of 1920, 30 U.S.C. § 187. Noting that the Secretary has authority to require continued information concerning sales under the lease, Wilbur v. Texas Co., 40 F.2d 787 (D.C. Cir. 1930), they suggested that the regulations be revised to require prospective lessees to provide information sufficient to permit determination of the extent to which a lease will be operated and revenues established in compliance with the "reasonable price" provision. In response, the Department stated that "it is not proper to incorporate in these regulations a procedure to review whether prices are reasonable." 41 Fed. Reg. 18846 (May 7, 1976).

6. 43 C.F.R. § 3520.1-3, 41 Fed. Reg. 22054 (June 1, 1976).

7. 43 C.F.R. § 3520.1-1, 41 Fed. Reg. 18847 (May 7, 1976).

8. The importance of congressional and departmental failure to mandate procedures to control production prices is further apparent when the cost differential between surface mining and deep mining is considered. As the Brookings Institute has noted, W. Nordhaus, The Allocation of Energy Resources, 3 Brookings Papers on Economic Activity 529 (1973), the savings from increased use of strip mining ranges from $2 to $4 per ton. Yet, no attempt has been made to guarantee that consumers will benefit from potential economic savings through lower prices. Although most of the savings from strip mining could be in the form of lower coal prices, there is no restriction on profit increases. Though Congress has sought to control some of the savings through a requirement that operators pay at least 12 percent of the value of the coal recovered as a royalty, this recovery may be negated should companies choose to pass on this higher cost to consumers through a price increase.

9. P.L. 94-377, supra note 2, § 15(2).

10. Id. § 2(1).

11. Id. § 6.

12. Id.

13. 30 C.F.R. § 211.10, 41 Fed. Reg. 20265-66 (May 17, 1976), |X{ELR 46914-16|||}.

14. Id. at 20267, ELR at 46916.

15. New York Times, May 12, 1976, at 68, col. 1.

16. 30 C.F.R. § 211.4, 41 Fed. Reg. 20264 (May 17, 1976), ELR 46913.

17. 43 C.F.R. § 3041.2-2, 41 Fed. Reg. 20257 (May 17, 1976), ELR 46906.

18. Id.

19. Id.

20. 43 C.F.R. § 3041.8, 41 Fed. Reg. 20260 (May 17, 1976), ELR 46909.

21. 30 C.F.R. § 211.72, 41 Fed. Reg. 20272 (May 17, 1976), ELR 46921.

22. 30 C.F.R. § 211.75, 41 Fed. Reg. 20273 (May 17, 1976), ELR 46922.

23. Mineral Leasing Act of 1920, 30 U.S.C. § 189 (1970).

24. Texas Oil and Gas Corp. v. Philips Petroleum Co., 277 F. Supp. 366 (D. Okla. 1967).

25. Supra note 3.