Comments Received on the Final Environmental Impact Statementfor North Jacobs Ranch Coal Lease Application (WYW146744) with BLM Response

1d-./1l/01

U.S. DEPARTMENT OF THE INTERlOR BUREAU OF LAND MANAGEMENT RECORD OF DECISION NORTH JACOBS RANCH FEDERAL COAL LEASE APPLICATION WYW146744 CAMPBELL COUNTY, WYOMING

INTRODUCTION

Jacobs Ranch Coa] CompanyfiJed coa] ]easeapplication WYW146744 fora maintenance coal tract for the Jacobs Ranch Mine on October 2, 1998. The maintenance tract was named the North Jacobs Ranch Tract The North Jacobs Ranch Tract, as applied for, includes approximately 4,821.19 acres and contains an estimated 533 mil1ion tons ofin-p]ace coa] reserves in Campbell County, Wyoming. The tract was appJied forunderthe ]ease-by-app]ication (LBA) regu]ations [43 Code ofFederal Regulations (CFR) 3425].

The Lease by AppJication eLBA) Process The Jacobs Ranch Mine has a permit (approved by the Wyoming Department ofEnvironmental Quality, Land Quality Division (WDEQIL@) an,d.the Department ofthe Interior) to conduct surface coa] mining operations on their existing ]eases. The mine a]so has an air quality permit approved by the Wyoming Department ofEnvironmental Quality, Air Quality Division (WDEQIAQD) to mine up to 50 million tons ofcoa] per year in 2002 through 2004.

Under the LBA process, maintenance tracts are nominated for ]easing by companies with adjacent existing mines. Jacobs Ranch Coa] Company previously applied for Federal coal using the LBA process. In 1991, they were the successful high bidder on the Jacobs Ranch LBA Tract and a maintenance lease was issued in 1992. To process an LBA, the BLM evaluates the quantity, quality, maximum economic recovery (MER), and fair market va]ue (FMV) ofthe Federal coal and eva]uates the environmental impacts of leasing and mining the Federa] coal. A Federal coal lease does not authorize mining, but the impacts of mining are considered in the environmental ana]ysis because mining is a logical consequence ofissuing a ]ease. The impacts ofleasing and mining the North Jacobs Ranch LBA Tract were analyzed in an environmental impact statement (EIS). The Office ofSunace Mining Reclamation and Enforcement (OSM), which administers programs thal,[~gulate, surface coal mining, was a cooperating agency o~ the EIS.

The LBA process is an open, public, competitive leasing process, by law and regu]ation, and bidding is not restricted to the appJicant. The North Jacobs Ranch LBA Tract is contiguous with both the Jacobs Ranch and Black Thunder Mines. Jacobs Ranch Coal Company applied for the tract as a maintenance tract for the Jacobs Ranch Mine. The Black Thunder Mine could also mine the tract as a maintenance tract. The tract could also be large enough to be considered by an operator interested in opening a new mine in the

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,.J Powder River Basin. The tract is accessible 10 existing railroad lines and highways, which would decrease the cost of developing a new mine.

Recent Coal Leasing Activity in the Wvoming Powder River Basin Since decertification ofthe Powder River Federal Coal Region in 1990, the BLM has issued ten Federal coal leases in Campbell and Converse Counties, Wyoming, using the LBA process. These leases include approximately 22,475 acres and 2.64 billion tons ofcoal. Nine ofthenew leases were issued to existing mines (Jacobs Ranch, Black Thunder(2), North AntelopelRoche]]e(2), Eagle Butte, Antelope(2), and N orth Rochelle) for the purpose ofextending operations at the existing mines. The West Rocky Buttetract, adjacent to the undeveloped Rocky Butte lease, was leased to Northwestern Resources Company, who planned to start a new mine. Both ofthe Rocky Butte leases are now owned by Caballo Coal Company, a subsidiary of Peabody Coal Company and owner of the adjacent Caballo Mine.

The North Jacobs Ranch LBA tract was previously appljed for by Evergreen Enterprises as part ofthe New Keeline LBA. The New KeeHne application was rejected without prejudice by the BLM Wyoming State Director on June 13, 1997. Evergreen Enterprises appealed the rejection to the Interior Board of Land Appeals in 1997 and submitted a new application, which covered the same area, in January 2000, (State Section LBA). Evergreen Enterprises withdrew their appeal ofthe rejection ofthe New Keeline Tract and their application for the State Section LBA Tract in September, 2000.

The BLM prepared three regional EIS's analyzing the impacts ofsurface coal mining in the Wyoming portion ofthe Powder River Basin in 1974, 1979, and 1981. A fourth regional EIS was prepared and issued in draft form in 1984, but it was not finalized and the actions proposed were never taken. The Jacobs Ranch Mine is included in the impact analyses in all four regional BLM EIS's. All ofthe mines that are current1y operating in the Wyoming portion ofthe Powder River Basin, the proposed Rocky Butte Mine, and a mine proposed for the now terminated Kee1ine lease are included in the analyses in the 1981 and 1984 documents. The] 981 regional EIS predicted that 318.4 million tons ofcoal would be mined in Campbell and Converse counties in 1990. According to the annual Wyoming Inspector ofMines reports, the actual 1990 coal production from the mines in those counties was 162.6 million tons, the 1999 coal production from those counties was 319.9 mi1lion tons, and 2000 coal production from those counties was 323.14 mil1ion tons.

Pending Coal Leasing Applications and Other Proposed Projects in the Wyoming Powder River Basin In addition to the North Jacobs Ranch LBA tract, there are nine pending maintenance lease applications in the Wyoming portion ofthe Powder River Basin which potentially include an additional 3.I billion tons ofFederal coa1. A sale was held for the Bel1e Ayr 2000 tract, appJied for by the Belle Ayr Mine, on October 11,2001, but the bid received from the applicant was rejected as not meeting the Fair Market Value ofthe tract as determined by BLM. The other pending applications (and associated mines) in addition to the North Jacobs Ranch LBA Tract are: NARO, which includes a North and a South tract (North AntelopeIRochel1e Mine), Little Thunder (Black Thunder Mine), West Roundup (North Rochelle

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. Mine), Hay Creek (Buckskin Mine), West Antelope (Antelope Mine), Belle Ayr 1997 (Belle Ayr Mine), Little Thunder Expansion (Jacobs Ranch Mine), and Mount Logan (Cordero-Rojo Mine).

The Jacobs Ranch, Black Thunder, North Roche11e, North AntelopelRochelle, and Antelope Mines fonn a contiguous group ofmines located east and southeast ofWright, in Campbel1 and Converse Counties, Wyoming. Including the North Jacobs Ranch LBA Tract, there are six pending maintenance applications associated with this group of mines.

In addition to ongoing coal mining and leasing, coal bed methane (CBM) we]]s have been dri11ed around the mines in this group, and CBM driJ1ing and production is expected to continue in the areas around the coal mines and on the LBA tracts.

Other development proposals in this area include plans by the North American Power Group (NAPG) to build one or two power plants near the Black Thunder Mine, a proposal by the ENCOAL Corporation to build a Liquids from Coal (LFC) coal beneficiation plant and cogeneration powerplant adjacenttothe North Roche11e Mine, and a proposal to construct a new railroad line into the Powder River Basin by Dakota, Minnesota & Eastern Railroad (DM&E). Construction has not yet begun on the NAPG power plants and the ENCOAL project has been indefinitely delayed. The impacts ofconstructing and operating the DM&E railroad and additional development and production ofcoal bed methane are currently being evaluated in several NEPA documents. The proposed power plants, the proposed DM&E railroad line, and the ongoing and proposed CBM operations are being developed independently ofthe issuance ofa maintenance coal lease for the North Jacobs Ranch LBA Tract. There would be some overlap between the impacts ofmining the tract, ifit is leased, and the impacts ofbuilding the needed facilities and operating these projects, ifthey are constructed andlor developed as proposed.

DECISION

My decision, as BLM Wyoming State Director, is to issue a lease for North Jacobs Ranch Federal coal tract WYWI46744, as amended by BLM, to the successful qualified high bidder ifthe highest bid received at a competitive lease sale meets or exceeds the fair market value (FMV) ofthe tract as determined bythe BLM and ifall other leasing requirements are met. The competitive lease sale wilJ be held under the regulations at 43 CFR 3425, Leasing on Application. Under the selected alternative (Alternative 2), Federal coal tract WYWl46744 includes 4,982.24 acres, more or less, and contains approximately 537 miJlioD tons of in-place Federal coal resources in Campbell County, Wyoming.

This decision is consistent with the April 2001 Approved Resource Management Plan for Public Lands Administered by the BLM Buffalo Field Office and the 1985 U.S. Forest Service Medicine Bow National Forest and Thunder Basin National Grassland Land and Resource Management. This decision incorporates by reference the standard coal lease stipulations addressing compliance with basic requirements ofthe environmental statutes and the attached BLM special stipulations.

CS: ... The above decision is conditioned by ongoing consultation between the BLM, OSM, and the U.S. Fish and Wildlife Service. Specific lease stipulations dealing with threatened and endangered species are under discussion, and are not included in this ROD. The sale notice wil1 be issued after all consultation is complete and after the BLM, OSM, and the U.S. Fish and Wildlife Service detennine ifa final lease stipulation addressing Threatened and Endangered Species is needed.

In the event that the bid orbids submitted at a competitive lease sale do not meet or exceed theFMV of the North Jacobs Ranch Tract as detennined bytheBLM, theBLM may schedule a follow-up sale. In the event that the bid or bids received at the follow-up sale do not meet or exceed theFMV ofthe tract as detennined by the BLM, further fonow-up sales may not be scheduled until processingofthe cWTently pending LBAs is completed.

The environmentally preferable alternatives are the No Action A lternative and the Selected A1ternative. Ifthe North Jacobs Ranch app1ication is rejected (No Action alternative), coal removal and the associated disturbance would not occur on the tract at this time. This would not preclude future leasing ofall or part ofthe lands included this tract. In that case, it would be environmentally preferable to Mine and reclaim the North Jacobs Ranch Tract as a maintenance lease in logical sequence with the ongoing mining and reclamation at the adjacent coal Mine (the selected ahernative).

REASONS FOR THE DECISION

As stated above, the decision to offer 4,982.24 acres containing approximately 537 mimon tons ofin-place Federal coal resources, in response to the coal lease app1ication received on October 2, 1998, is in confonnance with the BLM and U.S. Forest Service land use plans covering this area.

The selected alternative, Alternative 2 ofthe Final EIS for the North Jacobs Ranch Coal Lease App1ication, proposes holding a competitive lease sale for the North Jacobs Ranch LBA Tract, as modified by BLM. Ifthe tract is mined as a maintenance lease by the Jacobs Ranch Mine at the rate of21 mi11ion tons per year as proposed by the applicant, the environmental impacts associ ated with mining operations at the existing Jacobs Ranch Mine will be extended for approximately 23 years. Ifthe proposed powerp]ants and the DM&E rail line are constructed south and east of the Jacobs Ranch Mine and coal bed methane development continues north and west ofthe Mine, the impacts ofconstruction, power generation, coal beneficiation, coal bed methane production, and mining at the Jacobs Ranch Mine may overlap. Any overlap would occur with or without the issuance ofa lease for the North Jacobs RanchLBA Tract, but wi]] occur over a larger area for a longer period oftime ifthe North Jacobs Ranch Tract is leased. Issuance ofa lease wi1l result in Federal and State royalty and tax revenues and win help maintain a stable economy in this area.

c' '~' '.' -' ',_ 1*, .. I ; \... __. '" , .) PUBLIC INVOLVEMENT

The BLM published a notice ofreceipt ofthis lease application in the Federal ReQi ster on January 22, 1999. Copies ofthis notice were sent to voting and non-voting members ofthe Powder River Regional Coal Team (PRRCn, including the governors ofWyoming and Montana, the Northern Cheyenne and Crow tribes, the U.S. Forest Service, the OSM, the U.S. Fish and Wildlife Service, the National Park Service, the U.S. Geological Survey, and others.

The PRRCT reyiewed coal lease application WYWI46744, at public meetings held on February 23,1999, in Billings, Montana, on October 27, 1999, in Gillette, Wyoming, and on October 25, 2000, in Cheyenne, Wyoming. The PRRCTrecommended that the BLM process the application. A Notice ofScoping was published in the Federal Register on October 7, 1999. Notices ofscoping were mailed to Federal, state and local government agencies, conservation groups, commodity groups, and individuals who could be impacted by this lease application. The mailing list was jointly developed by BLM and Jacobs Ranch Coal Company. A public scoping meeting was held in Gi11ette, Wyoming on October 19, 1999. A Notice of Intent to prepare an Environmental Impact Statement on the North Jacobs Ranch coal lease application and notice of additional scoping was published in the Federal Register on January 19,2000.

The BLM draft EIS was mailed to the public in December, 2000. On December 15,2000, the Environmental Protection Agency (EPA) published a Notice ofAvailabi1ity for the draft EIS and BLM published a Notice ofAvailability and Notice ofPublic Hearing in the Federal Register. A formal pubJic hearing was held on January 17,2001, at the Clarion Western Plaza in Gmene, Wyoming, to solicit public comment on the draft E1S, the proposed sale, and the FMV and maximum economic recovery (1v.lER) of coal in the proposed tract. The 60-day comment period on the draft EIS started with the EPA Federal Register Notice on December 15, 2000, and ended on February 13, 2001.

The BLM final EIS was mai1ed to the public in August, 2001. A Federal Register Notice ofAvaiJabiJity for the final EIS was published by the EPA on August 24, 2001, and byBLM on August 6, 2001. The· availability period for the final EIS ended on September 24, 2001.

BLM received nine wrinen comments and six ora 1comments during the scoping period on the North Jacobs Ranch lease application. The wrinen comments are on file in the Casper and Cheyenne offices of the BLM. BLM received written comments from twelve parties on the draft EIS, and these are included, with written responses, in the fmal E1S. Fourparties commented during the public hearing held on January 17,2001. The transcript ofthe formal hearing is on file in the Casper and Cheyenne offices oftheBLM. Three written comments were received on the final E1S. All comments that were received during the process have been considered in the preparation ofthe draft and fmal EIS's, and in this Record oIDecision (ROD).

5 ALTERNATIVES ANALYZED IN DETAIL

Proposed Action: . Hold a Competitive Sale of Federal Coal Lands as Applied For Under the Proposed Action. The lands that were applied for in the North Jacobs Ranch LBA Tract would have been offered for lease at a competitive sale. The tract as applied for included approximately 4,821.19 acres containing approximately 533 million tons ofin-pI ace Federal coal (see Figure 1). The applicant estimated that they could recover 90 percent (479.7 million tons) ofthe coal in the North Jacobs Ranch LBA tract under the Proposed Action. This alternative assumed the coal would be mined, processed and sold by the successful bidder.

Alternative 1: No Action A1ternative Under this a1ternative, the North Jacobs Ranch lease application would have been rejected, and the tract would not be offered for sale at this time. Ifthe North Jacobs Ranch application had been rejected at this time, permitted mining activity at the adjacent Jacobs Ranch and Black Thunder Mines would continue, and portions ofthe North Jacobs Ranch Tract adjacenttothe Jacobs Ranch Mine and the Black Thunder Mine would have been disturbed to recover a11 ofthe coal in the adjacent existing coal leases at those two mines. The existing Jacobs Ranch Mine leases and permit boundary are shown in Figure I. This alternative is the environmentally preferable alternative ifit is assumed this tract wi11 never be leased because, in that case, coal removal and the associated disturbance would never occur on the tract.

Rejection ofthis lease application at this time would not, however, preclude subsequent lease applications for an or part ofthe lands included this tract. Ifthe North Jacobs Ranch LBA Tract is leased in the future, the environmental impacts ofmining it at that time could be similar to or greater than the impacts ofthe selected alternative, depending on who acquired the tract and whether it was mined as a maintenance lease for an existing Mine or as part of a new Mine.

Alternative 2 (Selected Alternative): Hold a Competitive Sale ofFederal Coal Lands as Amended by BLM to avoid bypass ofunleased Federal coal reserves Under Alternative 2, the Selected Alternative, the North Jacobs Ranch LBA tract with amended boundaries will be offered for lease at a competitive sale. Under this alternative, theBLM added about ] 61.05 acres to the eastern part ofthe North Jacobs Ranch LBA Tract, based on an evaluation ofthe available geologica] information and the potentia] that this adjacent unleased Federal coal could be bypassed ifthe tract is leased as applied for. The resu1ting tract includes approximately 4,982.24 acres (see Figure 1 and Table 1).

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8 10 11 12 R~OW R70W I R69W e LEGEND

Jacobs Ranch MIne PermIt Boundary 0%0J &31!r'1t:.,~~ & 3 NOt1h Jacobs Ranch LBA BLM Tract As Applied For &\'1 &J:1W=\Cll3 GRAPHC SCALE W7h1 ~:ai~:~:chMine M\3 Private Coal ~_.i TJ!1J" Inp

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Table 1: Description oflands to be offered for competitive sale under the Selected Alternative:

T. 44 N.. R. 70 W .. 6th P.M .. Campbell County. Wvoming Section 26: Lots 8 through 12; Section 27: Lots 1 through 16; Section 28: Lots 1 through 16; Section 29: Lots 1 through 16; Section 30: Lots 5 through 20; Section 31 : Lots 5 through 20; Section 32: Lots 1 through 16; Section 33: Lots 4,5, 12, 13 ; Section 35: Lot 1.

T. 44 N .. R. 7] Woo 6th P.M .. Campbell County, Wvoming Section 25: Lots 1 through 16.

The total surface area included in the tract is 4,982.24 acres, more or Jess, with an estimated 537 million tons ofin-place coal.

The selected aJternative assumes the coal wiJ] be mined, processed, and sold by the successful bidder. Both the Jacobs Ranch Mine and the BJack Thunder Mine could effectively mine the tract as a maintenance lease. Ifanother company acquires the tract as a maintenance tract for an existing Mine, the rate ofcoal production and the mining sequence would probably change from what is analyzed in the BLM E18, different equipment and facilities might be used, and haul distances could be different, but the area of disturbance would be the same and the general impacts ofmining the tract woul d be similar to the impacts that are predicted to occur jfthe applicant acquires and mines the tract.

Alternative 3: Hold a Competitive Sale ofFederal Coa1 Lands as Amended by BLMto minimize conflicts with existing and proposed oil and gas wens Under this Alternative, the BLM considered reducing the size ofthe North Jacobs Ranch LBA Tract as applied forto minimize conflicts with existing and proposed oil and gas deve10pment. Under this a1ternative, the BLM considered removing about] ,619.66 acres from the western part ofthe North Jacobs Ranch LBA Tract to allow existing oil and CBM production to continue prior to coal leasing. The resu]tingtract included approximately 3,363.58 acres (see Figure 1).

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ALTERNATIVES CONSIDERED BUT NOT ANALYZED IN DETAIL

Alternative 4 Under Alternative 4, like the proposed action, BLM would hold a competitive coal lease sale for the tract as applied for and issue a lease to the successful bidder. This ahernative assumed the LBA tract would be developed as a new stand-alone Mine. In the past, BLM has estimated that approximately 300 million tons ofcoal is enough to justify a new Mine start. Underthe selected alternative, the North Jacobs Ranch Tract includes approximately 537 million tons ofin-place. This alternative was not considered in detail because the current economics ofmining in the Powder River Federal Coal Region appear to make construction of new mines economically unfeasible.

Ifa qualified bidder interested in opening a new Mine were to acquire the North Jacobs Ranch LBA Tract by submitting the highest bid that meets the FMV ofthe North Jacobs Ranch LBA Tract as determined by the BLM, then that bidder would go through the process ofpermitting and constructing a new Mine. Ifnew mining facilities are constructed, the environmental impacts ofmining the tract underthis alternative would be expected to be greater than for the Proposed Action, the Selected Alternative, or the No Action Alternative because ofthe need for new facilities, new employees, and the creation ofnew sources of emissions. Approval ofa mining aT)d reclamation plan for WYW] 46744 would be necessary before the tract could be mined, and the NEPA compliance documents would be reviewed at that time and supplemented as necessary prior to approval ofthe mining and reclamation plan.

Alternative 5 Under Alternative 5, the BLM would have held a competitive lease sale for the Federal coal lands in an expanded tract configured to include the North Jacobs Ranch Tract and all ofthe State Section LBA. Evergreen Enterprises applied for the State Section LBA tract on January 31,2000. The State Section LBA tract included most ofthe area applied for by JRCC in the North Jacobs Ranch tract, but also included additional Federal coal resources north ofthe North Jacobs Ranch LBA Tract. Evergreen Enterprises withdrew their application for the State Section LBA Tract in September, 2000.

Alternative 6 Under Alternative 6, BLM wou1d have postponed a sa1e ofthe North Jacobs Ranch LBA Tract to allow recovery ofadditional CBM resources in the tract prior to mining, and to increase the benefit to the public ifcoal prices increased in the Powder River Basin. This alternative was not considered in detail because coal prices have been rising and CBM resources are currently being recovered from Federal and private oil and gas leases on the tract. The impacts ofthis alternative could have been similar to any ofthe alternatives analyzed in detail, depending on how long the sale was postponed and which tract configuration was selected at the time ofthe sale.

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IMPACTS OF THE PROPOSED ACT10N, ALTERNATIVE 1, ALTERNATIVE 2, AND ALTERNATIVE 3

The potential impacts ofthe Proposed Action, Alternative 1, and Alternative 2 are summarized in Tables 2 and3. Several issues that were brought up in comments on the EIS are discussed in more detail below.

Coal and OJ] and Gas Development Conflicts The oil and gas development rights on the North Jacobs Ranch LBA Tract are Federally and privately owned, and the Federal oj] and gas rights are leased. There is currently production from both conventional oil and gas wells on the tract and CBM wells on the tract. The applicant and the conventional oil and gas operator have reached an agreement that wilJ anow the coal lessee to remove the production equipment in advance ofmining and Mine through the wens before the coal lessee can Mine the coal in the tract. The applicant and the CBM operator have also reached an agreement to anow coal mining.

The current Federal regulations provide for the issuance ofboth Federal oi1 and gas leases and Federal coal leases on the same lands. The General Coal Management regulations related tomuhip]e mineral development are located in43 CFR3400.1 (a), 43 CFR3400.1(b), and in the General Onshore Oil and Gas Management regulations at 43 CFR 3161.2.

The BLM in Wyoming currently attaches stipulations related to mUltiple mineral development and oil and gas/coal resources to new Federal coal leases when they are issued [see (c) and (d) ofthe attached BLM Special Stipulations] and these stipulations wi]] be attached to a lease for the North Jacobs Ranch LBA Tract ifone is issued. A mUltiple mineral development stipulation is also current1y attached to all newly issued Federal oil and gas leases in Wyoming and a control1ed surface use stipulation is attached to new Federal oil and gas leases in existing coal mining areas in the Wyoming Powder River Basin.

BLM policy on conflicts between CBM and coal development, as outlined in IMNo. 200-081 (February 22,2000) is to optimize the recovery ofboth resources and ensure that the public receives a reasonable return. In accordance with this policy, the BLM has actively encouraged and facilitated the development ofFederal CBM resources on the LBA tract to a110w recovery ofCBM prior to coal mining while also responding to the appJication from Jacobs Ranch Coal Company to lease additional Federal coal reserves to a1Jow continuation ofoperations at the Jacobs Ranch Mine. The ongoing production ofCBM from the tract should a]]ow recovery ofa significant portion ofthe CBM resource from the tract prior to mining, if the Federal coal in the tract is leased under the selected ahernative.

Threatened and Endangered Species The North Jacobs Ranch LBA Tract was surveyed for suitable habitat for Ute Ladies'-tresses(amember ofthe orchid family) by Intermountain Resources in 1999. Typical suitable habitat for Ute Ladies' -tresses is found along perennial or ephemeral streams with subirrigation into late July or August. There are no perennial streams on the LBA tract and no ephemeral streams with subirrigation into late July or August.

• '''''1 Ii ...... ;. ; '...l Table 2. Summary Comparison of Coal Production, Surface Disturbance, and Mine Life for North Jacobs Ranch LBA Tract and Jacobs Ranch Mine Item No Action Alternative Added by Added by Added by (Existing .Jacobs Ranch Prnpnlled Action Alternative 2 Alternath'c 3 Mine) In-Place Coal (as or 111101) 190.8 mmt 533 mmt 537 mmt 326 mmt Recoverable Coal (as of 1/1101)1 172 mmt 479.7 mmt 483.3 mmt 293.4 mmt. Coal Mined Through 2000 381.5 mmt

Lease Acres' 6.955 ftC 4.821.19 ac 4.982.24ac 3,363.58 lIC

Total Area To Be Disturbed' 8.122 ftC 5.364 ftC 5,465 ac 3,689ac 2 Pennit Area 9,283.78 ac 6,110 ac 6,205 ac 4,131 ac e Average Annual Pnst-2000 Cnal 24.5 mmt -J.5 mmt -J.5 mmt -3.5 mill! Production (""') If) ...... Remaining Life Of Mine (post-20on) 7 yrs 23 yrs V.2 yrs 14 yrs ...... c:-) Average No. of Employees 333 0 0 0 <, Total Projected State Revenues (post- $ 189.2 million $ 527.7 million $ 531.6 million $ 322.7 million 2000f Total Piojected Federal Revenues (post- $ 64.0 million :I; 109.2 million r '. $ 178.6 million $ 179.9 million I 2000t L. Footnote.c;: 0 I Assumes 90 percent recovery of leased coal. For the Proposed Action and AItematives 2 and 3, the disturbed acreage exceeds the leased acreage because ofthe need for highwall reduction. topsoil removal and other activities outside the lease boundaries. The permit area is larger than leased or disturbed areas to assure that all disturbcd lands are within the pcnnit boundary And to allow easily defined legal land description. Projected revenue to the State of Wyoming is SI.IO per ton ofcoal sold and includes income from severance tAX, property And production tAxes, sales and use tAxes. and Wyoming's share of federal royalty payments (University of Wyoming 1994). e Federal revenues based on $4.00 per ton price x federal royalty of 12.5 percent x amount of recoverable coal pillS bonus pAyment on LBA coal of$0.22 per ton bllSed on average of last nine LBA's (Table 1.1) x amnunt of leased coal less state's 50 percent share. Table 3. Summary Comparison ofMagnitude1 and Duration ofDirect and Indirect Impacts for the Proposed Action,Alternative 2, Alternative 3 and the No-Action Alternative for the North Jacobs Ranch LBA Trace. DESCRIPTION OF POTENTIAL IMPACT BY MAGNITUDE AND DURA TTON OF IMPACT RESOURCE

RESOURCE NAME NO ACTION ALTERNATIVE PROPOSED ACTION, ALTERNATIVE 2 & ALTERNATIVE 3 TOPOGRAPHY & PHYSIOGRAPHY PERMANENT TOPOGRAPHIC MODERATION cOllld result in: Microhabitat reduction Moderate, long term on existing mine area Same as No Action on expanded mine area Hahitat diversity reduction Moderate, long term on existing mine area Same 8S No Action on expanded mine area e Reduction in water runoff and peak nows Moderate, long term on existing mine area Same as No Action on expanded mine area M Increased precipitation infiltration Moderate, long term on existing mine area Same as No Action on expanded mine area If) Wildlife carrying capacity redllction Moderate, J'105Sihly short term on existing Same as No Aclion on cxpllndcd mine liTeR .... mine llreR '" Reduction in erosion Moderate, long term on existing mine areR Same as No Action on expanded mine area li'<.. Enhanced vegetative productivity Moderate, beneficial. long term on existing Same as No Action on expanded mine area mine area Potential acceleration of groundwater recharge Moderate. long term on existing mine area Same as No Action on expanded mine area ( {,: GEOLOGY AND MINERALS c ...' SUBSURFACE changes would result In: Removal of coal Moderate, short term on exIsting mine area Same as No Action on expanded mine area CJ Removal and replacement of topsoil and overburden Moderate. long term on existing mIne area Same as No Actron on expanded mine area Physical characteristic alterations In geology Moderate. long term on existing mine area Same as No Actron on expanded mine area Loss of coal bed methane Moderate. permanent on eXI$tlng mine area Same as No Action on expanded mine area

SOILS

CHANGES IN PHYSICAL PROPERTIES would Include: Same as No Action on expanded mine area e Increased near-surface bulk densIty Moderate. long term on exIsting mIne area More unlfonnlty In 8011 type. thickness. and texture Moderate. beneOctal. long term on exIsting Same as No Action on expanded mine area mine area Increased unIformIty In mixed 80IIs (e.g.. texture) Moderate. beneOclal, long term on exIsting Same as No Action on expanded mine area mIne area Decreased 8011 loss due to topographic modtncation Moderate, beneOctal. long term on exIsting Same as No Action on expanded mine area mine area Table 3. Summary Comparison of MagnitudeI and Duration of Direct and Indirect Impacts for the Proposed A~tion, Alternative 2, Alternative 3 and the No Action Alternative for the North Jacobs Ranch LBA Trace (continued).

DESCRIPTION OF POTENTIAl.. IMPACT BY MAGNITUDE AND DURATION OF IMPACT RESOURCE

RESOURCE NAME NO ACTION ALTERNATIVE PROPOSETJ ACTION, ALTERNATIVE 2 & ALTERNATIVE 3 SOILS (Continued) CHANGES IN CHEMICAL PROPERTIES would include: Moderate. beneOclal. long term on existing Same as No Acllon on expanded mIne an~::I Unifonn soil nutrient distribution mIne area e CHANGES IN BIOLOGICAL PROPERTIPS woulcl inclucle: Orgllnic mllller reduction Moderate. long term on existing mine area Same as No Acllon on expanded mine area Microorganism popullllion reduction Moderate, long term on existing mine area Same as No Action on expanded mine area .... Moderate, long term on existing mine area Same as No Action on expanded mIne area w Existing plant habitat reduction in soils stockpiled before placement (""") V-) AIR QUALITV IMPACTS ASSOCIATED WITH MINING OPERATIONS would include: Same as No Acllon on expanded mIne area tf, Elevated concenlrations ofTSP Negligible, short tenn on existing mine area Elevaled concentrations ofgaseous emissions relolecllo hlasling and Negligible, short lenn on existing mine area Same as No Aclton on expanrlec1 mIne ::Irea equipment operation

c '" WATER RESOURCES \ C' SURFACI?WATI?R CHANGES IN RUNOFF CHARACTERISTICS AND SEDIMENT CJ DISCHARGE include the following: Same as No Action on expanded mine Area Disruption of surface drainage SYSlems Moderate, short tenn on existing mine area Same as No Action on expanded mine area Increased runoff and erosion rates Moderate. short tenn on existing mine IIreo Same as No Action 011 expanded mine areA e Increased inftltration Moderate, long tenn on existing mine area Same AS No Aclion {'II expanded mine area Reduction In peak flows Moderate, tong tenn on existing mine area

WATER RESOURCES (contlnlled) GROUNDWATER GROUNDWATER RESOURCE IMPACT wmlld inclUde Ihe following: Removal ofcoal end overburden aquifers Same as No Action on expanded mine area Replacement ofexisting coal and overburden with spoil aquifers Negligible, short lenn on existing mine area Same AS No Action on expanded mine area Depressed water levels in aquifers adjace,nt to mines Negligible, long tenn on existing mine area Change in hydraulic properties Same as No Action on expanded mine area Change In groundwater quality In bllckfiJ1ed areas Moderate, short tenn on existing mine area Negligible. long tenn on existing mine area Same as No Aclion on expanded mine arell Moderate. long tenn on existing mine area Same 8S No Action on expanded mine area Table 3, Summary Comparison ofMagnitudeI and Duration of Direct and Indirect Impacts for the Proposed Action, Alternative 2, Alternative 3 and the No Action Alternative for the North Jacobs Ranch LBA Tract2 (continued),

DESCRIPTION OF POTENTIAL IMPACT BY MAGNITUDE AND DURATION OF IMPACT RESOURCE

RESOURCE NAME NO ACTION ALTERNATIVE PROPOSED ACTION, ALTERNATIVE 2 & ALTERNATIVE 3 ALLUVIAL VALLEV FLOORS While a final determination has not been made by WDEQILQD, it is No impact on existing mine arell Slime a~ No Aclion on expllnclecl mine !!rell believed that there are no AVF's signifICant to agriculture on the proposed lease tract It

("') WETLANDS I..n Removal of all existing wetlands Wellands on existing mine I!rea~ would be mined and Same as No Aclion on expanclecl mine IIfca c·:'.) ..... reclaimed ,-- -.t:- VEGETATION PROGRESSIVE REDUCTION IN NATIVE VEGETATION would result in: Increased erosion Moclerate, short term on existing mine area Same liS No Action on expl'mclecl mine area C l' WildIi fe and livestock habitat loss Moderate, short term on existing mine area Same as No Action on expanded mine area C Wildlife hahitat carrying capacity lOllS Moclerl!le. long term on existing mine area Same liS N" Action on expllnclecl mine IIrca

C_~) AFTER RECLAMATION the following could result: Changes in vegelation patterns Negligible, long term on existing mine area Same as No Action on expanded mine area Reduction in vegetation diversity Negligible. long term on existing mine area Same as No Aclion on expandetl mine area Reduction in shrub density Negligible, long term on exisling mine area Same as No Action on expllnded mine area

WILDLIFE DURING MINING the following could occur: e Wildlife displacement Moderale, short term on existing mine BTeII Slime as No Action on eXI"~nded mine areA Pronghorn passage reduction Moderate, short term on existing mine area SAme as No Aclion on expanded mine ~rea Increased mortality rate to small mammals Moderate, short term on existing mine aTell Same as No Action on expanded mine arell Temporary displacement ohmall mllmmllls Moderate, short term on existing mine area Same as No Action on expanded mine &rell Sage grouse habitat removal Negligible, short term on existing mine area Same as No Action on expanded mine area Abandonment of raptor nests Negligible, short term on existing mine area Same as No Action on expanded mine arell Foraging habitat reduction for raptors Negligible, short term on existing mine aTell Same as No Action on ellipanded mine aTell Loss of nesting and foraging habitat for MBHFr Negligible, short term on existing mine area Same as No Aclion on expanded mine area Reduction in waterfowl resting and feedi,ng habitllt Negligible. short term on existing mine area Same as No Action on expanded mine area Same as No Action on expanded mine area Loss ofsongbird foraging habitat Moderate, short letm on existing mine area Same as No Action on expanded mine aTell Temporary wildlife habitat loss Negligible, short term on existing mine aTell Same as No Action on expanded mine area Continued road kills by mine-related traffic Negligible, short term on existing mine area Table 3. Summary Comparison of Magnitude I and Duration of Direct and Indirect Impacts for the Proposed Action, Alternative 2, Alternative 3 and the No Action Alternative for the North Jacobs Ranch LBA Trace (continued),

DESCRIPTION OF POTENTIAL IMPACT BY MAGNITUDE AND DURATION OF IMPACT RESOURCE

RESOURCE NAME NO ACTION ALTERNATIVE PROPOSED ACTION, ALTERNATIVE 2 & ALTERNATIVE 3 THREATENED, ENDANGERED AND CANDIDATE srECIES MINING IMPACTS could result in the following: Loss of black-tailed prairie dog colonies Loss ofand black-footed fenet colonies No impact on existing mine area e Loss of bald eagle typical nesting hahitat Same as No Action on expandcd mine area No impact on existing mine area Loss of bald eagle foraging habitat Same as No Action on expanded mine area r, • Negligible, short term on existing mine area No impact on expanded mine area (-r~ Loss of Ute Ladie5'-tresses orehid typical hahitat Negligible, short term on existing mine area Same as No Action on expanded mine areA Loss of mountain plover typical hahitat th' .I Negligible on existing mine area No impact on eXflanded mine area Loss ofswift fox hahitat :,. Negligible on existing mine area No impact on expanded mine area Negligible on existing mine area Same as No Action on expanded mine arca r".' LAND USE AND RECREATION ENVIRONMENTAL CONSEQUENCES ON LAND USE would be: Reduction ofHvestock grazing Loss of wildlife habitat Moderate, long term on existing mine area Same as No Action on expanded mine area Curtailment ofconventional oil and gas production Moderate, long term on existing mine area Same as No Action on expanded mine area Removal ofconventional oil and gas well equipment Moderate, long term on existing mine area Same as No Action on expanded mine area J Loss ofcoal bed methane reserves Moderate, short term on existing mine area Same liS No Action on expanded mine area Removal ofcoal bed methane well equipment Moderate, permanent on existing mine area Same as No Action on expanded mine area Loss ofplIhlic hind available for recreation activities No impacts on existing mine area Moderate, permanent on expanded mine areA Moderate, short term on existing mine area No impact on expanded mine area e CULTURAL RESOURCES JJ sites not eligible or recommended not eligible for NRHr Impacts to eligible or unevaluated sifes are not permitted; Same A~ No Action on eXflanded mine area I eligihle forNRHP" any site eligible for the NRHP wOllld he avoided or mitigated through data recovery No impacts on existing mine area Possible increase In vandalism No impacts on existing mine area Negligible on expanded mine area Possible increase in unauthorized collecting Negligible on expanded mine area

NATIVE AMERICAN CONCERNS No impact identified on existing mine area Same as No Action on expanded mine area

PALEONTOLOGICAL RESOURCES Overburden removal could expose fossils for scientific examination No impact identified on existing mine area Same as No Action on expanded mine area Table 3. Summary Comparison ofMagnitude' and Duration of Direct and Indirect Impacts for the Proposed Action, Alternative 2, Alternative 3 and the No Action Alternative for the North Jacobs Ranch LBA Tract2 (continued).

DESCRIPTION OF POTENTIAL IMPACT BY MAGNITUDE AND DURATIONOF IMPACT RESOURCE

RF..80URCE NAME NO ACTION ALTERNATIVE PROPOSED ACTION, ALTERNATIVE 2 & ALTERNATIVE 3 VISUAL RESOURCES EVIDENT IMPACTS DURING MINING include the following: AItemtion of landscape c1assi lied by the USFS as common and t-y BLM as Class IV e Negligible, short term on existing mine atea Same as No Action on expanded mine arc!!

~ : : VISUAL RESOURCES (continued) (""' l;') IMPACTS FOLLOWING RECLAMATION cmlld be: ...... 0:-:' Smoother sloped temlin Negligible, long term on existing mine area Same as No Action on expanded mine Me!! Reduction in sagebmsh density Negligible, short term on existing mine atea Same as No Action on expanded mine area ~ ~:; NOISE INCREASED NOISE LEVELS could arrect: Occupied dwellings within I mile None for existing mine area Same as No Action on expanded mine area ( Negligible, short term on existing mine llrea Same as No Action on expanded mine area I Wildlife in immediate vicinity L TRANSPORTATION FACILITIES c; c> Increase in duration that coal is shipped on railmad!l and employees travel on highways by 7 to 23.2 years No impact on existing mine area Negligible, short term on expanded mine area Relocation of pipelines No impact on existing mine area Negligihle, short term on expanded mine area Removal ofCBM collection and compression facilities No impact on existing mine area Modera!e, permanent on expanded mine area Relocation ofutility lines No impact on existing mine area Same as No Action on expanded mine area SOCIOECONOMICS e EFFECTS DURING MINING would include: Continued moderate, benelicial, short term on expanded Employment Potential (No Increase ofjobs In expanded mine area is Moderate, beneficial short term on existing mine area mine area expected) Moderate, beneficial short term on existing mine area Continued mooemte, heneficlal, short tem1 on expanded Revenues from royalties and tllxes to the state government Moderate, beneficial short term on existing mine area Moderate, beneficial short term on existing mine area mine area ' Continued modemte, henelicil1l, short term on eXJlllnded Revenues from royalties and taxes to the federal government No Impact on existing mine areA mine area Economic development Continued moderate, beneficial, short term on expanded minellrea Populallon in Cllmpbel1and Converse copnties Same as No Action on expanded mine area

IRefer to Sections 4.0 and 4.1 for discussions on magnitude of impacts. 'lmpactll are assumed to be adverse unless otherwise noted. Other wetlands, not considered suitable Ute Ladies' -tresses habitat, were surveyed in late July and August of 1999 but no orchids were found.

The following surveys were conducted on the North Jacobs Ranch LBA I ract and required adjacent buffer zones for the Tbreatened and Endangered wildlife species identified as potentially present by the US Fish and Wildlife Service:

• Intermountain Resources surveyed the tract for bald eagle roosting sites during January and February, 2000. No suitable roosting habitat was found. • Intermountain Resources surveyed the tract for prairie-dog towns in 1999 and 2000. The black tailed prairie dog is a candidate species, and prairie dogs are the main prey source for black-footed ferrets, an endangered species. There are no prairie dog colonies on the tract, the nearest town is approximately %mile away. As a result, neither black footed ferrets or black-tailed prairie dogs are expected to occur on the tract. • Intermountain Resources surveyed the tract for habitat typically used by mountain plovers from March through July of1999. Mountain plovers are proposed for Jisting as threatened. No typical mountain plover habitat was found on the tract. Intermountain Resources conducted surveys to determine the presence ofmountain plovers during March, April, May, June, and July of1999 and March, April, May, and June of2000. No mountain plovers have been recorded on or near the LBA tract. • The swift fox is a candidate species. The swift fox has never been recorded in the area. • No habitat for the sturgeon chub (large perennial streams with silty bottoms) is present on the LBA tract.

Based on the currently available information, summarized above, the BLM has concluded that issuing a lease for the North Jacobs Ranch LBA tract will not adversely affect any T &E species.

In order to provide continued protection for Threatened and Endangered species after the tract is leased but before the Jessee has an approved mining plan, the BLM may attach a special stipulation to a lease for the North Jacobs Ranch Iract, ifone is issued.

Air Ouality Impacts reJated to Blasting There is public concern over the releases ofnitrogen oxides (NO,,) from overburden blasting, which can form a Jow-lying, gaseous orange doud that can be transported by wind. Exposure to NO" can cause adverse health effects. Appendix F ofthe Final EIS provides information about nitrogen dioxide and its potential health effects. In the Powder River Basin, individuals have complained ofhealth effectS after exposure to visible clouds. EPA has expressed concerns that NO" levels in some blasting clouds may be sufficiently high at times to cause human health effects.

In the State ofWyoming, the Wyoming Department ofEnvironmental Quality (WDEQ) regulates surface coal mining activities. As a result ofthese incidents, WDEQ has directed some mines to take steps to

17 Ii

mitigate the effects ofnitrogen dioxide (N02) emissions from overburden bl asting. Steps that may be required include: public notifications (in the fonn ofwaming signs along public roadways for example); temporary closure ofpublic roadways near a Mine during and after ablast; establishment ofsafe set-back distances from blasting areas; prohibiting blasting when wind direction is toward a neighbor; prohibiting

blasting during temperature inversions; establishment ofmorutoringplans; estimation ofN02 concentrations; and development ofblasting procedures that will protectpublic safety and health. To date, there have been no complaints, either to the Mine or to the WDEQ, about blasting c10uds at the Jacobs Ranch Mine. Based on the size and nature oftheir blasting, the WDEQhas not directed the Jacobs Ranch Mine to take any ofthese steps to mitigate orprevent blasting douds. Jacobs Ranch Mine has voluntarily placed warning signs along public roadways near the Mine.

M1TIGATION, COl\1PLIANCE AND MONITORING

Any1ease wi11 contain the standard coal lease stipulations ifthe North Jaco bs Ranch LBA Tract is sold. In addition, the attached BLM Special Stipulations regarding cultural resources, paleontological resources, mUltiple mineral development, oil and gas/coal resources, resource recovery and protection, and public land survey protection wi]] be added to the coal lease. The existing mitigation measures specific to the current Mineplan wi11 be amended to include mitigation measures specific to mining WYW146744 when the current mining permit is revised.

The Surface Mining Control and Reclamation Act of1977 gives the OSM authority to administer surface coal mining operations. In Wyoming, the WDEQ regulates surface coal mining activities in the state. The successful qualified high bidder on Federal coal tract WYW146744, must obtain an approved mining and redamation plan orrevision prior to mining coal on the tract. Ifthe successful qualified high bidder does not operate an adjacent Mine and proposes to open anew Mine, a new mining and reclamation plan must be approved before mining the coal in the tract. Mitigation measures and monitoring plans specific to the approved mining and reclamation plan will be attached to any mining and reclamation plan revision ornew mining and rec1amation plan for WYW146744 before the tract is mined.

An practicable means to avoid or minimize environmental hann have been adopted as leasing stipulations or, consistent with normal practices, can be expected to be adopted as conditions ofthe mining permitprior to mining the proposed lease. BLM has aresponsibility to review the mining and reclamation plan revision prior to its approval by WDEQ and the Department ofthe Interior to ensure that the revised plan is in . compliance with the leasing stipulations, and that it meets the requirements ofthe Mineral LeasingA~ The revised mining and reclamation plan must be approved before mining can begin on the North Jacobs Ranch LBA Tract.

18 · RECOMMENDATJON:

1 recommend that Federal coal tract WYW] 46744, affecting 4,982.24 acres, more or less, be issued to the successful qualified high bidder after a competitive lease sale, if it is detennined that the highest bid meets or exceeds the fair market value ofthe tract as determined by the BLM, and ifall other leasing requirements are met. The competitive lease sale win be held in accordance with the requirements of 43 CFR 3425. The lease will be subject to the anached BLM special lease stipu1ations.

Date

Attachments

BLM Special Lease StipUlations Comments received on the "Final Environmemallmpact Szazement for the North Jacobs Ranch Coal Lease Application (WYW146744)", and BLM responses

19 APPROVED:

Based on the recommendations ofthe Casper Field Manager, dated October 24,2001, I hereby approve the decision to offer Federal coal tract WYW146744 for competitive lease sale.

Because the' Asst •..Secretary ofthe Interior has concurred in this decision, it is not subject to appeal to the Interior Board ofLand Appeals and is the final action ofthe Department. Blue Star, Inc., 41 IBLA 333 (1979); Marathon Oil Co., 108 IBLA 177 (1989).

Approved:

W§oming~ State Director, BLM

£:s :01 ~.;J 20 •.; r.· " :... \,.i i_' .. " I,

J CODCur in the ELM Wyoming State Director's decision to offer the North Jacobs Ranch Tract for competitive lease sale and to issue a coal lease to the successful qualified high bidder.

Concurred in by:

DateI

Concurred in by:

I{I;.~/o/ . Assistant Secretary, Department oftbe Interior r r Date Attadunent BLM SPECIAL LEASE STIPULATJONS

In addition to observing the general obligations and standards ofperfonnance set out in th~ current regulations, the lessee shall comply with and be bound by the following special stipulations.

These stipulations are also imposed upon the lessee's agents and employees. The failure or refusal ofany of these persons to comply with these stipulations shall be deemed a failure of the lessee to comply with the tenns ofthe lease. The lessee sha11 require his agents, contractors and subcontractors involved in activities concerning this lease to inc1ude these stipulations in the contracts between and among them. These stipulations may be revised or amended, in writing, by the mutual consent ofthe Jessor and the lessee at any time to adjust to changed conditions or to correct an oversight.

(a) CULTURAL RESOURCES

(1) Before undertaking any activities that may disturb the surface ofthe leased lands, the lessee shan conduct a cultural resource intensive field inventory in a manner specified by the Authorized Officer of the BLM or ofthe surface managing agency, if different, on portions ofthe mine plan area and adjacent areas, or exploration plan area, that may be adversely affected by lease-related activities and which were not previously inventoried at such a level of intensity. The inventory shan be conducted by a qualified professional cultural resource specialist (Le., archeologist, historian, historical architect, as appropriate), approved by the Authorized Officer ofthe surface managing agency (BLM, ifthe surface is privately owned), and a report ofthe inventory and recommendations for protecting any cultural resources identified shal1 be submitted to the Assistant Director of the Western Support Center ofthe Office of Surface Mining, the Authorized Officer of the BLM, jfactivities are associated with coal exploration outside an approved mining pennit area (hereinafter ca]Jed Authorized Officer), and the Authorized Officer ofthe surface managing agency, ifdifferent. The lessee shan undertake measures, in accordance with instructions from the Assistant Director, or Authorized Officer, to protect cultural resources on the leased lands. The lessee shall not commence the surface disturbing activities unti] permission to proceed is given by the Assistant Director or Authorized Officer.

(2) The Jessee shall protect all cultural resource properties within the lease area from lease-related activities until the cu1tural resource mitigation measures can be implemented as part ofan approved mining and reclamation or exploration plan.

(3) The cost of conducting the inventory, preparing reports, and carrying out mitigation measures shaH be borne by the lessee.

Stipu1ations - 1

' .." .." ~:;..... 'If" J I I

(4) If cuJtural resources are discovered during operations under this lease, the lessee shall immediately bring them to the attention ofthe Assistant Director or Authorized Officer, or the Authorized Officer ofthe surface managing agency, ifthe Assistant Director is not available. The lessee shall not disturb such resources except as may be subsequently authorized by the Assistant Director or Authorized Officer.

Within two (2) working days ofnotification, the Assistant Director or Authorized Officer wiJ] evaluate or have evaluated any cultural resources discovered and will determine if any action may be required to protect or preserve such discoveries. The cost ofdata recovery for cultural resources discovered during lease operations shall be borne by the surface managing agency unless otherwise specified by the Authorized Officer ofthe BLM or ofthe surface managing agency, jfdifferent.

(5) All cultural resources shaH remain under the jurisdiction ofthe Uruted States until ownership is determined under applicable law.

(b) PALEONTOLOGICAL RESOURCES - Ifpaleontological resources, either large and conspicuous, and/or ofsignificant scientific value are discovered during mirung operations, the find wiJ] be reported to the Authorized Officer immediately. Mining operations will be suspended within 250 feet ofsaid find;-;~ evaluation ofthe paleontological discovery will be made by a BLM approved professionJr'iialeontologist within five (5) working days, weather permitting, to determine the appropriate actiem(s) to prevent the potential loss ofany significant paleontological value. Operations within 250 feet ofsuch discovery wi1l not be resumed until wrinen authorization to proceed is issued by the Authorized Officer. The lessee will bear the cost ofany required paleontological appraisals, surface collection offossils, or salvage ofany large conspicuous fossils ofsignificant scientific imerest discovered during the operations.

(c) MULTIPLE MINERAL DEVELOPMENT - Operations wi11 not be approved which, in the opinion ofthe Authorized Officer, would unreasonably interfere with the orderly development and/or production from a valid existing mineral lease issued prior to this one for the same lands.

(d) OIL AND GAS/COAL RESOURCES - The BLM reaJizes that coal mining operations conducted on Federal coal leases issued within producing oil and gas fields may interfere with the economic recovery ofoil and gas; just as Federal oil and gas leases issued in a Federal coal lease area may inhibit coal recovery. BLM retains the authority to aJter and/or modifY the resource recovery and protection plans for coal operations and/or oj] and gas operations on those lands covered by Federal mineral leases so as to obtain maximum resource recovery.

(e) RESOURCE RECOVERYAND PROTECTION - Notwithstanding the approval ofa resource recovery and protection plan (R2P2) by the BLM, lessor reserves the right to seek damages against the operator/Jessee in the event (i) the operator/Jessee fails to achieve maximum economic recovery (MER) (as defined at 43 CFR 3480.0-5(21)) ofthe recoverable coal reserves or (ii) the operator/Jessee is determined to have caused a wasting ofrecoverable coal reserves.

Stipulations - 2 . Damages shall be measured on the basis ofthe royalty that would have been payable on the wasted or unrecovered coal.

The parties recognize that under an approved R2P2, conditions may require a modification by the operator/Jessee ofthat plan. In the event a coal bed or portion thereof is not to be mined or is rendered unmineable by the operation, the operator/Jessee shal1 submit appropriate justification to obtain approval by the Authorized Officer to leave such reserves unmined. Upon approval by the Authorized Officer, such coal beds or portions thereofsha11 not be subject to damages as described above. Further, nothing in this section shall prevent the operator/Jessee from exercising its right to re1inquish all or portion of the lease as authorized by statute and regulation.

In the event the Authorized Officer determines that the R2P2, as approved, will not attain MER as the result of changed conditions, the Authorized Officer will give proper notice to the operator/Jessee as required under appJicable regulations. The Authorized Officer will order a modification ifnecessary, identifying additional reserves to be mined in order to attain MER. Upon a final administrative or judicial ruling upholding such an ordered modification, any reserves left unmined (wasted) under that plan wi]] be subject to damages as described in the first paragraph under this section.

Subj~ct to the right to appeal hereinafter set forth, payment ofthe value ofthe :oY~\lm?n such unmmed recoverable coal reserves sha11 become due and payable upon determmatlOlW.fy the Authorized Officer that the coal reserves have been rendered unmineable or at such time that the operator/Jessee has demonstrated an unwi1lingness to extract the coal.

The BLM may enforce this provision either by issuing a wrinen decision requiring payment of the MMS demand for such royalties, or by issuing a notice ofnon-compliance. A decision or notice ofnon-compliance issued by the lessor that payment is due under this stipulation is appealable as allowed by law.

(1) PUBLJCLAND SURVEYPROTECTJON - The lessee will protect all survey monuments, witness corners, reference monuments, and bearing trees against destruction, obliteration, or damage during operations on the lease areas. Ifany monuments, corners or accessories are destroyed, obliterated, or damaged by this operation, the lessee will hire an appropriate county surveyor or registered land surveyor to reestablish or restore the monuments, comers, or accessories at the same location, using surveying procedures in accordance with the "Manual of Surveving lnstructions for the Survey ofthe Public Lands of the United States." The survey will be recorded in the appropriate county records, with a copy sent to the Authorized Officer.

Stipulations - 3

, .:.. '"/:) • j Comments Received on the Final Environmental Impact Statementfor North Jacobs Ranch Coal Lease Application (WYW146744) with BLM Response

t ~ .,.', , 0 £S :ullJ j I' i;

,., ,M. ,.,.' r'"'.. "',r'." • ';-- .'. .:1 i: ....J -'" ..... : -~ .' ,. c , Uruted States Department of the Interior c 0J"' ";I-~~ .~ ... F]SH AND WILDLIFE SERV1CE -. .... , .. , . ', ...... , Ecological Services .,. .' 4000 Airport Parkway Cheyenne, Wyoming 82001

ES-61411 pdIW .02lwy4994.pd September 17,2001

Memorandum

To: Nancy DoeJger, Project Coordinator, Bureau of Land Management, Casper Field Office, Casper Wyoming

From: MikeLong,FieJd Supervisor,~U.J.~~ndWj]dljfeService, WyomingFieldOffic~, Cheyenne,Wyoming ~~

Subject: Final Environmental Impact Statement for the North Jacobs Ranch Coal Lease App1ication (WYW 146744)

Thank you for the Final Environmental Impact Statement (FEIS) for the North Jacobs Ranch Coal Lease Application (project) in Campbell County, Wyoming.

As we stated in our letter of January 16,2001, issuing a new coal Jease is a discretionary Federal action, and therefore, the Bureau of Land Management (Bureau) needs to consult with the U.S. Fish and WiJdJife Service (Service) if Jease issuance may negatively affect a listed species or jeopardize a proposed species. This consultation needs to include a11 future actions which will occur as a result of this Jeasing decision. Ifthere may be adverse affects to species protected by the Endangered Species Act of 1973, as amended (Act), as a resuJt of Jeasing, or' subsequent coal mining and reclamation activities, the Bureau must address those impacts at this time. The ultimate responsibiHty for section 7 compliance for Federal aClions remains with the Federal agency. Therefore, the proposed stipUlation for the lease, which def~rs threatened and endangered species protection to the State mining regulatory agency at the time of mine permitting (Appendix G) does not satisfy the Bureau's obligations under the Act since section 7 responsibiJities cannot be transferred to the State mining regulatory authority. Also, delaying' resolution of threatened and endangered species concerns until the mine permitting stage does not satisfy consultation requirements under section 7 the Act.

The Bureau has indicated they have made a threatened and endangered species determination of uno adverse effect" (Appendix I, page 3), Section 7 of the Act requires that the Federal action agency get concurrence from the Service for all 'determinations other than "no effect." The Service has not been contacted regarding section 7 consultation, and therefore, cannot provide

." ',...1"'" .. I J." \ ... 1 I I

Ms. Nancy DoeJger • • CoO ;~A.:;i'2f;b',¢. ,. 'concurrence with this determination. Additionally, given the mobility of s6'mcc,s~c.ies·ide~tifi'€Gk.~T in our previous comments (i.e. black~tailed prairie dog, mountain plover), data coHecQee>jp ~929 and 2000 may not be current. If the Bureau makes a "no effect" determination, the Service'::· ::53 requests a copy of that determination for our records.

Section 7(d) of the Act requires that the Federal agency and pennit or license applicant shaH not make any irreversible or irretrievable commitment of resources which would prec1ude the formulation of reasonable and prudent alternatives untj] consultation on listed species is completed.

If you have any questions, please contact Pat Deibert of my staff at the letterhead address or phone (307)·772·2374, extension 26.

cc: Statewide Habitat Protection Office, WGFD, Cheyenne, WY Margot Zallen, FWS Solicitors Office, Denver, CO Grady Towns, FWS NEPA Coordinator, Denver, CO Ai Kesterke, BLM. Cheyenne, WY Jeff Carro)), BLM. Cheyenne, WY Susan Baker. Asst. Reg. Director, FWS. Denver, CO

[S ;01 k'ij I I I''0

-, .", , ..... j .-' ... J " . ..-.:, ~~, "i ,.,) .::. ">04: ; .,:.; .". ~._< • II

DUCKER, MONTGOMERY, LEWlS & ARONSTEIN, P.C. AnORNEYS AT LAW ONE CIVIC CENTER PLAZA 1560 BROADWAY, SUITE 1400 DENVER, COLORADO 80202 303-861-2828 TElECOPIER 303-861-'1017 JAMES K. ARONSTEIN E-mail: [email protected]

September 24,2001

Via Facsimile (307) 261-7587 and email: casper [email protected]

Bureau ofLand Management Casper Field Office Attn: Nancy Doelger 2987 Prospector Drive Casper, Wyoming 82604

Re: Final Environmental bnpact Statement for the North Jacobs Ranch LBA, Serial No. WYW146744

Dear Ms. Doelger:

This finn represents RlM-CBM LLC and RIM Operating, Inc. (collectively, "RIM"). RIM hoJds leasehold and operating rights to coaJbed methane ("CBM") in several locations in the Powder River Basin ("PRB"), incJuding over most of the Jand included within the North Jacobs Ranch Coal Lease Application, Serial Number WYW146744 (the "Coal Lease Application"). This letter is written in order to provide you with comments on the Final Environmental bnpact Statement on the Coal Lease Application (the "FEISj.

As you know, we previously provided the Bureau of Land Management ("BLM'') with extensive comments on the Draft Environmental Impact Statement ("DEIS") and during scoping for the Coal Lease Application. We incorporate by reference all comments that we have previously provided to the BLM with respect to the DEIS and the Coal Lease Application. Rather than repeat our prior comments, we will attempt in this Jetter to focus upon new statements and analyses included in the FEIS that were not contained in the DEIS.

ES :01 ;~'~ I I

Nancy Doelger Page 2 October 22, 2001

Protection of Vested Senior rugbts

In our comments to the DEIS, we detailed the numerous authorities, decisions and regulations which establish that the Bureau ofland Management ("BlM") may not take actions, including without limitation the issuance of a new coal lease, that would adversely affect the rights ofsenior oil and gas lessees or interfere with the ful1 development and production. ofCBM pursuant to such leases. The FE IS seeks to assure the senior CBM lessees that their rights and interests will be ful1y protected, notwithstanding the issuance of a new coal lease covering the North Jacobs Ranch Tract (the "lBA Tract"). For example, at pages 13 and 14 of Appendix I, the FEIS states as follows:

RIM's private and federal oil and gas lease rights in the North Jacobs Ranch LBA Tract will not be changed ifa federal coal lease is issued. As RIM points out, the existing oil and gas rights predate any rights that will be conveyed by a federal coal lease. A coal operator who acquires the right to mine the federal coal in the North Jacobs Ranch LBA Tract cannot mine before reaching a settlement with the existing oil and gas lessees and operators, inc1uding RIM.

Any coal lease issued for the North Jacobs Ranch LBA Tract will include stipulations for simultaneous operations. These stipUlations are listed .•• in appendix D ofthe DEIS.

In turn, Appendix D states that the fol1owing stipUlation (the "Multiple Mineral Development StipUlation'') would be inc1uded in a new coal lease:

Operations will not be approved which, in the opinion of the Authorized Officer, would unreasonably interfere with the orderly development and/or production from a valid existing mineral lease issued priQr to this one for the same lands. .

While RIM beHeves that the Multiple Mineral Development Stipulation should operate so as to protect the rights of the senior oil and gas lessees and prohibit the junior coal lessee from. conducting any operations unless and until it enters into a settlement agreement with the senior oil and gas lessees, we are not confident that the coal companies that might bid on the coal lease understand and accept this proposition. In the past, certain coal companies have taken the position that they are entitled to mine through .a senior oil and gas lease, notwithstanding a Multiple Mineral Development Stipulation in their junior coal leases. In the face of Multiple Mineral Development StipUlations, these coal companies have repeatedly argued that the

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seniority of lease rights is lega]]y irrelevant and that, pursuant to the accommodation doctrine, coal mining operations must be approved even if they cause the waste of CBM or interfere with development and production under a senior oil and gas lease. Once they pay a large bonus bid and are issued a coal lease, coal companies will vociferously maintain that they are entitled to conduct mining operations notwithstanding damage that might result to CBM operations or resources.

In order to address this issue, the BLM should strongly consider two alternatives. First, as we have repeatedly urged, the BLM should refrain from issuing a new coal lease until the recovery of CBM from the LBA Tract is completed. While it may be possible in certain situations to develop two different resources under two different leases covering the same land, this cannot legally, practica]]y or equitably be accomplished in the present case.

As we noted in our comments to the DEIS, the vested rights ofa senior oil and gas lessee to fully produce its resource cannot be prejudiced by the subsequent issuance ofanother lease for the same lands. See, Transwestern Pipeline Co. v. Kerr McGee Corp., 492 F.2d 878 (1Oth Cir. 1974), cert. denied, 419 U.S. 1097 (1975); Del Rio Drilling Programs, Incorporated v. United States, 146 F.3d 1358 (Fed. Cir. 1998); GulfOil Corp., 73 IBLA 328 (1983); Kaiser Steel Corp., 87 IBLA 228, 233 (1985); Midcontinent Coal Co., 76 IBLA 312, 313 (1983); Black Hawk Coal Co., 68 IBLA 96, 98 (1982).

Moreover, both RIM's senior oil and gas leases and the regulations of the BLM at 43 C.ER. § 3400.1(b) provide that a junior lease may not be issued if operations thereunder would interfere with the operations or rights of a senior lessee. The regulations of the BLM also expressly provide that a coal lease may not be issued for lands on which there is a pre-existing lease for another mineraJ resource, unless the coal lease includes "stipulations for simultaneous operations." See 43 C.F.R. § 3400.1 (b). In other words, a junior coal lease must contain stipulations ensuring that coal operations wiJ] not damage the previously leased oil and gas estate or operations with respect thereto. However, in the present case, no such stipUlations can be effectively crafted because, as the FEIS itself repeatedly recognizes, surface coal mining will unavoidably result in the venting and waste of the CBM resource. In such a situation, the BLM must defer the issuance of a junior coal lease. As the Department itselfhas concluded:

• .. If "suitable stipulations" cannot be developed, that is, if it is not possible to mine the mineral deposits subsequently leased without unreasonably interfering with the recovery of the mineral deposit first leased, then a subsequent lease should not be issued. Nancy DoeJger Page 4 October 22, 2001

See Opinion dated August 3, 1993 of the Rocky Mountain Regional Office of the Solicitor, United States Department ofthe Interior.

If the BLM does issue a coal lease covering the LBA Tract, it should supplement the Multiple Mineral Development Stipulation by including in the lease itself a statement similar to the statement in Appendix I of the FEIS to the effect that "[a] coal operator who acquires the right to mine the federal coal in the North Jacobs Ranch LBA Tract cannot mine before reaching a settlement with the existing oil and gas lessees and operators." Such a cJarification would help prevent a prospective coal lessee from arguing that it did not clearly understand this requirement and that it is entitled to pursue coal mining operations notwithstanding the Multiple Mineral Development Stipulation in the lease. This approach is consistent with BLM Instruction Memorandum 2000-081 ("Policy on Conflicts between Coal Bed Methane (CBM) and Coal Development"), which provides that new coal leases should contain stipulations which "[c]larify that the Jessee's right to develop its minerals may be junior to existing development rights for other minerals on the same lands."

Tbe Proposed Action Does not Optimize Tbe Recovery of Botb Coal and CBM

The FEIS repeatedly states that it is the policy of the BLM to optimize the production of both coal and CBM. See FEIS at ES-8, 1-12,2-3,4-7 and 4-26. The FEIS then jumps to the ilJogica] and unsupportable concJusion that the leasing of the LBA Tract for coal mining will optimize the recovery of both resources. This is cJearJy not the case. As the FElS itself recognizes, the mining of coal will result in the irretrievable Joss of CBM. On the other hand, the production of CBM will in no way harm or resuJt in the waste of coal. The only way to optimize the recovery of both resources is to a]]ow the CBM to be fully recovered prior to the commencement of coal mining operations. This sequencing of operations will result in the full recovery of both resources. Any other approach, incJuding the proposed action, will not optimize the recovery ofboth resources.

As authority for the proposition that the poHcy ofthe BLM is to optimize the production ofboth resources, the FEIS cites BLM Instruction Memorandum 2000-081. Howevc::r, this 1M. addresses the resolution and management of conflicts between existing and overlapping oil and gas leases and coal leases, not the issuance ofnew leases that would create conflicts that did not previously exist. At the very end of the document, the I.M. briefly addresses "AJternatives for Future Leasing" and states that stipulations should be inserted in any new leases in order to "[c]larify that the Jessee's right to develop its minerals may be junior to existing development rights for other minerals on the same lands." However, for the various reasons discussed above,

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Nancy Doelger Page 5 October 22,2001

inc1uding the optimization of the recovery of both resources and the protection of vested senior property rights, it would be more prudent and appropriate to defer leasing of the LBA Tract for coal until the CBM is ful1y recovered.

Tbe FEIS Materially Misstates tbe Extent of CBM Reserves, tbe Life of CBM Wells and tbe Amount ofCBM That '''ill be Vented and Lost as a Result ofCoaJ Mining The FEIS materially misstates the extent of CBM reserves within the LBA Tract, the expected producing life ofCBM wells and the amount of CBM that will be vented and lost from the LBA Tract as a result of coal mining. Col1ective]y, these errors result in a gross underestimate of the damages and losses that will result from the leasing of the LBA Tract for coal mining. The inadequate factual analyses and assumptions contained in the FEIS will not allow the BLM to mak,e proper decisions regarding the proposed leasing ofthe LBA Tract.

At pages 4-6 and 4-7, the FEIS sets forth the fol1owing erroneous assumptions and estimates: (i) the recoverable CBM resources in the LBA Tract are equal to or less than 5.1 bi11ion cubic feet; (ii) average CBM well life wil1 be 4.6 years; (iii) two thirds of each CMB well's reserves will be reocvered within the first 2.3 years of operation; and (iv) most of the CMB reserves win be recovered prior to the initiation of coal mining within the LBA Tract. The FEIS explains that these estimates and assumptions were derived from the fol1owing work:

BLM's oj] and gas Reservoir Management Group has evaluated methane adsorptive capacity for coal core samples taken near the North Jacobs Ranch LBA Tract, measured bottom hole pressures from wells dril1ed in the central and eastern part of the LBA Tract, and reviewed production histories from 133 CBM wells that started producing before 1999.

FEIS at 4-6. The methodology and analysis employed by the BLM's oil and gas Reservoir Management Group ("RMGj is explained in greater detail in Attachment A to the FElS's Response to Letters 4 and 5.

The RMG's analysis is deeply flawed in several respects. Errors inc1ude: (i) imp~oper and undue reliance upon methane adsorptive capacity from coal cores, which have historically underestimated actual CBM production by significant margins; (ii) use ofbottom hole pressures solely from wells drilled in the central and eastern part of the LBA Tract, rather than from the western part of the LBA Tract where LBM potentia] is universaUy recognized to be much greater; (iii) a failure to recognize the greater thickness of coals and higher pressures in the LBA Nancy Doelger Page 6 October 22,2001

Tract than in the 133 comparison wells studied by the RMG; and (iv) incomplete and faulty information in well production histories used to estimate average well life.

'Whi]e methane adsorptive capacity from coal cores may provide some useful information concerning gas content in coal, it cannot be used to accurately predict uhimate CBM recovery for low pressure CBM wells. This can be clearly seen from a review of the Grady CBM development.

In 1998, RIM began CBM production from its Grady CBM development located in Township 46 North, Range 71 West. The coal in the Grady development area is generally found at approximately 180 feet in depth, typically is only 35 feet thick and had an average original pressure when driI1ed of about 28 psig. As of July 2001, 25 CBM wells had been drilled and completed in the Grady area. Ofthese, 21 have sufficient production histories to analyze, while the remaining 4 were driI1ed this year. Cumulative CBM production from the 21 well Grady samples is 1,876 MMCFG, for a per welJ average of 90 J\.1MCFG. Individual well cumulative range is from 1.5 MMCFG to 198 J\.1MCFG. The core data that RMG suggests is applicable to this area would predict an adsorbed CBM content of coal at this pressure of 6.5 scflton. RMG also suggests that "free gas" may also be stored in the fractures, but "it is unlikely that the free gas adds more that 3 scflton." Using RMG's adsorbed and free gas content data would suggest that the maximum (100% recoverable) amount of CBM that could be produced from a Grady area well, drilled on 40 acre spacing, would be only 25 MMCFG, or only approximately 20% of that established through actual production.

The LBA Tract contains coals that are almost twice as thick as those at Grady, averaging 65 to 70 feet thick, and that have higher average pressure. RIM's reserve expectations of the LEA are based on the Grady projections, as well as the coal thickness and pressure encountered within the LBA. Based upon this more reliable methodology, RIM has estimated the recoverable CBM resource within the LBA Tract at 15.4 BCF.

RMG has also improperly estimated that the average producing life of a CBM well will be only 4.6 years. Many factors influence the rate of depletion of an individual well, including reservoir productivity, gathering system conditions, equipment availability etc. Certainly low EUR wells are likely to reach economic production limits sooner than high EUR wells. RIM's expectation is that well lives in the LEA Tract will range from 5 to 10 years, with most wells producing for 8 to 9 years. RMG's use ofa well history decline curve for CBM Well A #33·17R to predict expected average we111ife demonstrates the flaw in its methodology. RMG incorrectly forecasts this well to have a 4.5 year life and an EUR of 138 M:MCFG .. RMG incorrectly forecasts the future performance and life of this wel1 because it did not have critical facts

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involving changes to the gathering system pressure, which impacted the well's perfonnance during the latter part of 2000. Problems with the gathering system pressure have since been corrected and the wel1 rate has improved. In July, the we]] produced approximately 3000 MCF and the present cumulative production for the we]] is 148 MMCFG, already 10 MMCFG more than RMG's EUR. RlM's forecast of the EUR for the wen is 249 MMCFG and RIM expects its life to be 9.5 years.

Accordingly, the FEIS's assumptions and estimates regarding CBM reserves within the LBA Tract, average well life and the amount of CBM that will be wasted as a resuJt of coal mining are materiaIJy inaccurate and misleading. CBM reserves within the LBA Tract are properly estimated at 15.4 BCF, not less than 5.1 BCF, and average well life will be approximately 8 to 9 years, not 4.6 years. These two significant errors result in a material underestimate ofthe amount of CBM that would be inevocably wasted ifcoal mining is al10wed to procee4,.in the LBA Tract. - .~ ;;;'~R\ ~~~, The Leasing of the LBA Tract for Coal Mining Is Not Consistent With The Governing Resource Management Plan

In our comments to the DEIS, we noted that the leasing ofthe LBA Tract for coal mining is not consistent with the governing Resource Management Plan ("RMP"). The RMP unequivocally states that the BLM must ""defer coal leasing in producing oil and gas fields unless or until coal development wilJ not interfere with 1he economic recovery of the oil and gas resources." The regulations of the BLM at 43 CFR §§ 3240.1-4(a) and 3425.2 require that the issuance ofany coallease must be consistent with the governing RMP.

It is undeniable that the LBA Tract is part of a producing oil and gas field Accordingly, pursuant to the RMP, the leasing ofthe LBA Tract for coal mining must be deferred The FEIS does not address this issue but attempts instead to side-step it. At page ES-4, the FEIS boldly states that a decision to lease the LBA Tract for coal mining would be in conformance with the RMP. At page 1-11, the FEIS supports this conclusion by explaining that:

The mUltipJe use conflict evaluation in the Buffalo RMP identified approximately 22 I ,000 acres within CampbeJI, Converse and Johnson . counties that were potentiany affected by mUltiple use conflicts in four categories (producing oil and gas field, communities, recreation and public pwpose facilities, and cuJtural resources). None of these mUltiple use conflict areas identified in the BuffaJo RMP are included in the North Jacobs Ranch lBA Tract

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In other words, the FEIS takes the position that coal leasing is prohibited only in producing oil and gas fields for which conflicts were specifically anticipated and specifically identified in the RMP. However, the RMP does not contain qualifying language stating that the leasing of coal will only be prohibited in producing oil and gas fields for which conflicts were specifically anticipated and specifically identified in the RMP and such qualifying language cannot legally or reasonably be read into the document.

The Buffalo RMP was created in 1985 and was intended to govern resource management issues for many years thereafter. The RMP must be regarded as a non~static document whose management goals and proscriptions were intended to apply over time and with ensuing changes. It is not reasonable to argue that the RMP's prohibition on coal-leasing in producing oil and gas fields does not apply in the present case merely because the conflict in the LBA Tract was not specifically anticipated and specifically identified in the RMP when it was prepared more than 15 years ago.

If the prohibitions against coal leasing was intended to apply only to producing oil and gas fields for which conflicts were specifically identified and anticipated in the RMP, coal leasing would be a]]owed in any oil and gas field brought onto production after 1985. However, it would not make any sense to prohibit the leasing of coal in producing oil and gas fields in existence in 1985 but not in oil and gas fields brought onto production thereafter. From an economic and policy perspective, the newer oil and gas fields are equally or more deserving of protection that the older fields. The interpretation of the RMP urged by the FEIS, that it prohibits the leasing of lands for coal only in producing oil and gas fields for which conflicts were specifically identified and anticipated in the RMP, is also manifestly absurd when applied to other circumstances. Would the RMP anow the leasing of lands for coal mining.that contain communities or recreation or public purpose facilities that were constructed after 1985 and for which conflicts were not anticipated or specifically identified in the RMP1 Would the RMP allow the leasing of lands for coal mining that contain cultural resources discovered after 19851 Conversely, would the RMP prohibit the leasing of lands for coal mining that contain an oil and gas field that was identified in the RMP but that ceased production and was abandoned in 19871

The BLM cannot avoid the RMP's prohibition against coal leasing in producing oil and gas fields through such a tortured and self-serving interpretation. Any decision to lease the" LBA Tract based upon such an interpretation would constitute reversible error. The LBA Tract may be leased for coal mining only ifthe RMP is first amended so as to allow such leasing. Any such amendment ofthe RMP must comply fully with the applicabJe regulations ofthe BLM, including without limitation those pertaining to procedures required pursuant to NEPA.

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Nancy Doe1ger Page 9 October 22, 2001

Tbe FEIS Fails To Analyze Tbe Costs or Removing And Relocating OJ) And Gas FaciUties

At pages 3-43 and 3-46, tb~ FEIS briefly identifi~scertain of the .infrastructure required for the gathering, compression and transportation of CBM. However, the FEIS includes no analysis whatsoever of the costs of removing and relocating such infrastructure or of associated disruptions to CBM production throughout the larger area surrounding the LBA Tract.

Tbe FEIS Fails To Adequately Address The Environmental Impacts OrTbe Venting or Metbane

The FEIS makes a cursory attempt to quantify the amount of methane that will be vented into the atmosphere as a resu1t of coal mining withjn the LEA Tract and concludes that it will be a relatively small percentage of overall anthropogenic methane emissions in the United States. At page 4-91, the FEIS concedes that ''the methane on this LBA Tract could be more completely recovered ifJeasing is deJayed." However, the FEIS maintains that overall methane emissions would not be reduced because substitute coal would be mined which would result in the same quantity ofmethane emissions. See FEIS at 4-9] and Comment Responses -9.

There are several flaws in this logic. First, it assumes that a reduction in emissions of methane as a result of delaying the proposed lease of the LBA Tract for coal mining is worthless because that reduction would not effectively be realized for several years. In other words, applying the same analysis as the FEIS, if Jeasing of the LBA Tract is delayed for several years until after CBM recovery has been completed, the Jow emissions coal mining that will ultimately take place on t.l)e LBA Tract could replace high emissions coal mining elsewhere. One of the express pwposes of an EIS is to compel the consideration oflong term issues and impacts.

Second, the FEIS refuses to consider the benefits of a systemic change, in which all coal operations might be encouraged to capture CBM in advance of mining. The FEIS uses the existence of presently inadequate practices as the reason and justification for their own perpetuation. This is akin to arguing that we should not impose emissions standards on new factories because the factories would be built instead in countries where unacceptable emi~sions would continue to be permitted.

It is time to consider what can be done to reduce greenhouse gas emissions in the United States. The possibility of capturing methane emissions in advance of coal mining is an excellent place to begin. We should not refuse to consider such a policy because the emissions from each mine or each new LEA Tract is relatively sma1l; even sman incremental reductions in emissions Nancy DoeIger Page 10 October 22,2001

are meaningful and the small reductions that can be accomplished from each tract add up to significant reductions when considered coJIectively across a region or across an industry. This is the fundamental pmpose of an E1S: to ensure that long range poJicies for the health of our environment are adequately considered.

It should also be noted that if)easing of the LBA Tract is deferred until the completion of CBM production, substitute coal might be mined from areas that do not contain economically recoverable CBM. The mining of certain substitute coal deposits might also result in lower emissions of methane.

The FEIS also fails to consider or analyze the economic and environmental consequences of the loss of CBM reserves as a clean burning fuel and the need to replace such lost energy source with dirtier fuels.

ConcJusiOD

The FEIS contains numerous and material errors and omissions and does not comply with the requirements, goals and policies of NEPA. Many of these errors and omissions were discussed at length in our comment letter on the DEIS. Certain of these errors and omissions are also discussed in this letter.

We appreciate the opportunity to submit these comments on the FEIS. We trust that these comments will be considered and addressed prior to the making of any decision with respect to the proposed leasing ofthe LBA Tract for coal mining.

ATTORNEYS FOR RIM-CBM, LLC AND RIM OPERATING, INC.

DUCKER, MONTGOMERY, LEWIS & ARONSTEIN, P.C.

By: ______James K. Aronstein

IKAlcgtldma

r' II

Nancy DoeJger Page 11 October 22,2001

cc: Mr. AI Pierson, State Director, Wyoming BLM Mr. Larry Kline, OSM, Denver, Colorado

F:wpSJ/jkalcorlrimlblm IIr n: feis.doc

f'Sc.. :u"'j"" h¥' Ifl"~-JO •..l..::lU Unjted States Department of the Interior

BUREAU OF lAND MANAGEMENT Casper Field Office 298i Prospector Drive 3425 (LEA) Casper. Wyoming 82604-2968 WYW146744 N. Jacobs Ranch

OCT 24 2001 Ducker, Montgomery, Lewis & Aronstein, P.C. Attn: James K. Aronstein 1560 Broadway, Suite 1400 Denver, CO 80202

Re: September 24,2001, Comments on Final Environmental lmpact Statement (EIS) for the North Jacobs Ranch Lease by Application (LBA). WYW146744

'-::;1--hi Dear~:

We have reviewed the comments that you submitted on the North Jacobs Ranch LBA Final EIS, as a representative of RIM-CBM lle (hereinafter referred to as RIM). Your comments are being considered in making a decision to lease or not to lease the North Jacobs Ranch LBA tract. This decision wi11 be made in the near future by Alan Pierson, the BlM Wyoming State Director; and a Record ·of Decision wi1l be issued at that time.

We offer the following comments in response to the concerns you outlined in your September 24, 2001, comment letter.

Protection of Senior Vested Rights

Your comment letter urges BLM to consider two alternatives in making a decision to lease or not to lease the North Jacobs Ranch LBA Tract. The first alternative is to refrain from issuing a new coal lease until the recovery of the coal bed methane (CBM) from the LBA tract is completed. The second alternative that you suggest ELM should consider is to supplement the Multiple Mineral Development Stipulation that will be attached to the new Jease, if the decision is to issue a Federal coal lease.

With respect to the first a1ternative suggested in your letter, RIM's comments regarding delaying a coal lease unti] the CBM is compJetely recovered have been taken into consideration by the

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• • •• M.., 1 .;"" \ .. / , .... Powder River Regional Coal Team (PRRCT) at pub]jc meetings that were held in BiJ1ings, Montana, on February 23, 1999, in Gj]]ette, Wyoming, on October 27, 1999, and in Cheyenne, Wyoming, on October 25,2000. The recommendation of the PRRCT has been to continue processing the lease application. BLM has fo11owed the recommendations of the PRRCT. RlM's comments on the Draft £IS related to this topic were considered in preparation of the FinalElS and discussed, as your letter points out, on pages 13 and 14 of the BLM's responses to comments in Appendix I of the Final E1S. RIM's comments on the Final E1S are currently being reviewed in . making the decision on whether or not to proceed with holding a ]ease sale and issuing a Federal coal lease.

With respect to the second alternative suggested in your letter, BLM has been attaching stipulations to new coal leases regarding multiple mineral development and coal and oil and gas conflicts. The Mu1tiple Mineral Development stipulation states that BLM wHl not approve operations which "would unreasonably interfere wHh the orderly development andlor production from a valid existing mineral lease issued prior to this one for the same lands." The Oil and Gas/Coal Resources stipulation states thai" BLM retains the authority to 3Jter andlor modify the resource recovery and protection plans for coal operations andlor oil and gas operations on those lands covered by Federal mineral leases so as to obtain maximum resource recovery." These stipUlations were developed after extensive review by the BLM and the Interior SoEdtor. The current wording is consistent with B4~~~iCY and regulatory authority.

The Proposed Action Does not Optimize the Recovery of Both Coal and CBM

As discussed in Appendix I, on pages 9 and 10 of BLM's responses to comments in the Final £IS, BLM believes that a decision to lease the North Jacobs Ranch LBA Tract, under the Proposed Alternative or any of the action alternatives, does conform with the BlM policy of optimizing recovery of multiple mineral resources, such as coal and CBM, wherever possible. The Final EIS identifies BLM's preferred alternative as Alternative 2.

By processing the North Jacobs Ranch LEA Tract app1ication, BLM is responding to a continuing and legitimate demand for low-sulfur Powder River Basin coal. By approving applications to drill CBM we]]s on Federal oil and gas leases in the North Jacobs Ranch LBA Tract, BLM is facilitating recovery of the CBM resource in the tract prior to mining. CBM recovery can continue as coal mining occurs. Coal mining wi1l not start until several years in the future, if a lease is issued. in response to this application; and coal rrilning wjlJ progress through the lease over 23 years at the mining rates proposed in the Final E15. Based on analysis of CBM wens in this area, a significant portion of the CBM resource can be recovered in the first two or three years that those wells produce, prior to any mining activity on the tract; and CBM recovery can continue after mining starts. Proceeding with both the leasing process for the North Jacobs Ranch LBA Tract and with

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.... • .. 1 # .... :); ..) approval of CBM we]]s on federal oj] and gas leases in the tract allows for continued recovery of both resources from existing operations.

The Final E1S, in section 1.1, estimates that the existing recoverable reserves at the Jacobs Ranch Mine will be depleted within approximately seven years at a planned average production rate of 24.5 million tons of coal per year. According to your September 24, 2001, comment letter, RIM. estimates that average we]] life wilJ be approximately eight to nine years. Delaying the sale of the North Jacobs Ranch LBA Tract for eight to nine years when the existing recoverable coal reserves at the Jacobs Ranch :M.ine wilJ be depleted within approximately seven years would potentially cause the North Jacobs .Ranch Mine to close, if they could not acquire other additional reserves. Since there are nb mineable coal reserves east of the Jacobs Ranch M:.ine and Black Thunder Mine's federal coal leases south of the existing Jacobs Ranch M:.ine leases prevent expansion in that direction, expansion of the Jacobs Ranch Mine is Jimited to the north and west (the location of the North Jacobs Ranch LBA Tract). Without additional coal reserves, the Jacobs Ranch Mine will cease operations when their existing reserves are depleted. A mine closure would immediately affect more than 300 employees of the Jacobs Ranch Mine and would immediately reduce federal, state, and local government taxes and royalties.

H the BLM delays leasing the coal included in the North Jacobs LBA Tract until after the CBM is completely recovered, it mayor may not be leased and mined in the future. The Black Thunder Mine would be in a position to apply for a maintenance lease for aD or part of the coal included in the tract, or the tract is potentia]]y large enough to be leased and mined by a new operation. However, neither of those outcomes is guaranteed.

The Final EJS Materia]]y Misstales the extent of CBM Reserves. the Life of CBM We11s and the Amount of CBM that wm be Vented and Lost as a Result of Coal Mining

We have reviewed our analysis of the extent of the in place and recoverable CBM resource in the North Jacobs Ranch LBA Tract in light of the information you submitted and the additional production data that is now availabJe. Using standard evaluation techniques accepted by industry and the additional production data that is now available for the we]]s on the tract, BLM's estimate of the extent of the recoverable. CBM resource in the North Jacobs LBA Tract remains closer to the 5.1 biJJion cubic feet estimated by Jacobs Ranch Coal Company than the 15.4 billion cubic feet estimated by RIM. See the attached report for a more detailed response to the comments yo~ submitted.

".: ,'-' --' -..," , ... -" I I

The Leasing of the LBA Tract for Coal Mining Is Not Consistent with the Govemin2 Resource Mana2ement Plan

Decision M:M-5 of the 1985 Buffalo Resource Management Plan Record of Decision (p.15) states: "Defer coal leasing in producing oil and gas fields unless or until coal development will not interfere with the econorrric recovery of the oil and gas resource, as detennined case by case by the BLM."

The BLM Buffalo Field Office has completed a review and evaluation of the 1985 Buffalo R.1v.1P and pub1ished the resuhs of this review in a document entitled, "Approved Resource Management Plan for Public Lands Administered by the BLM Buffalo Field Office" (April, 2001). 'This document describes the existing management direction for land and mineral resources administered in Campbell, Johnson, and Sheridan counties. This direction was derived from the 1985 Buffalo RMP, as amended and modified by subsequent changes in BLM policy. In the case of the management decision cited above, the decision was brought forward, and the document states (p. 11): "Coal leasing in producing oil and gas fields would be deferred unless or until coal development would not interfere with the economic recovery of the oj] and gas resources. 'This would be deterrrrined on a case-by-case basis."

The Final E1S does not take the position that "coal leasing is prohibited only in producing oil and gasfie]ds for which conflicts were specifically anticipated and specificaJJy identified in the 1985," as stated in your Jetter. As background, the Fina] EIS reports the findings of the 1985 multiple use analysis which is cited in your comment Jetter. A multiple use analysis was also conducted in 1993 and 1994, and published in draft in 1997. This analysis, which did recognize the potential conflicts with CBM, is incJuded as pan of the Apri] 2001 RMP document discussed above. The Final EIS also reports the finding of this more recent multiple use analysis. Fo]]owing that discussion, the Final ElS summarizes the appHcable RMP decisions, including the decision cited above, and goes on to say (page 1-12) that:

"The North Jacobs Ranch LEA Tract is located in a producing oj] and gas field. As indicated in Section 1.1 of this E1S, the PRRCT has reviewed the JRCCapplication to lease the federal coal in the North Jacobs Ranch LEA Tract at three public meetings (February 23, 1999, in Bmings, Montana; October 23, 1999, in Gmene, Wyoming; and October 25,2000, in Cheyenne, Wyoming). The PRRCT heard presentations from the oil and gas lessees and JRCC at each of these meetings regarding deferring leasing the federal coal in this tract until the. CBM is recovered. At the most recent meeting, just prior tQ issuance of the DEIS, the coal team recommended that the BLM continue processing the application. BLM has fo11owed the recommendations of the regional coal team regarding processing of the application for the North Jacobs Ranch LEA Tract."

Accordingly, the Final ElS indicates that, after mUltiple reviews of the issues related to processing a coal lease app1ication (the North Jacobs Ranch LEA tract) which is located in a producing oU and

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.) ,.: ;,... ,- " '"., .~: ~~ \:: J ! I' ., ., ; .~ (J:~:\-j gas field: the BLM made a determination to continue processing the coal lease application. This is consistent with the RMP decision, which a]]ows the decision to defer coal leasing in an existing ojl and gas field to be evaluated on a case by case basis.

The Final ElS Fails to Analyze the Costs of Removing and Relocating Oil and Gas Facilities

The Final E1S describes the extent of the existing oj] and gas facilities and discusses the necessity ofremoving them and the potential economic consequences to the State and Federal government.

As indicated in your comment Jetter, Section 3.1] ofthe final E1S includes a discussion ofthe types of facilities associated with oil and gas production that are present on the North Jacobs Ranch LBA Tract on pages 3-43 and 3-46. Section 3.11 also incJudes maps which show the location and extent of the existing oil and gas faciJities on the tract. Figure 3-11 (page 3-41) shows oil and gas ovvnership on the North Jacobs Ranch LBA Tract and the locations ofexisting and proposed conventional and CBM we1Js on the tract, Figure 3-12 (page 3-44) shows conventional oil and gas pipelines, as we]] as roads and raHroad Jines, and Figure 3-13 (page 3 45) shows existing and proposed CBM we]]s, pipelines and compression stations on the tract. , -t" ion 4.1.]2 of the Final EJS identifies that an impact ofissuing a coal lease for the North Jacobs Ranch LBA tract would be the need to remove a]J ofthe facilities discussed and shown in Section 3.1] prior to coal mining. Payment of the cost of the removal ofthat equipment would be part ofthe agreement which must be negotiated between the oil and gas operator and coal operator prior to coal mining. However, as pointed out in Section 4.1.12, the estimated costs of the such agreements between the coal and oj] and gas operators are factored into the coal fair market value determinations and can result in a loss ofbonus money to the State and Federal governments.

The Final EIS Fails 10 Adeguately Address the Environmental Jmpacts ofthe Venting ofMethane

In considering the North Jacobs Ranch LBA app1ication to lease Federal coal, BLM is considering leasing some ofthe "lowest emission" coal currently available for mining. The CBM emissions from this coal, ifit is leased as proposed, would be expected to be relatively Jow compared to CBM emissions from most of the coal that is being mined elsewhere in the country. First ofa11, CBM emissions from Powder JUver Basin coal would be expected to be low because ofits relatively low rank and correspondingly relatively low CBM content per ton, compared with coal that is being mined elsewhere. Secondly, the coal that BLM is considering leasing in the North Jacobs Ranch LBA Tract is next to the outcrop, has an average overburden thickness of 215 feet, and is some ofthe Jowest overburden llnmined coa1 remaining in the Powder JUver Basin. According to the article entitled "Estimates ofCoal Volumes and Coalbed Methane in Place, Powder River Basin, Wyoming," by Andrew K. Fin]ey and Jimmy E. Goolsby, .... .it is

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generally accepted that coal beds Jess than 200 feet deep have already been de-pressured and much of the gas ,has escaped to the atmosphere." This article is referenced in the Final EIS and in the BLM Response's to Comments in Appendix J of the Final EJS (page 12). And finally, CBM is being actively produced on the Jacobs Ranch LEA Tract and the areas surrounding the LBA to the north, west, and south, which will further reduce the amount of methane that would be lost if the tract is leased and mined as proposed.

Ifthe BlJ\1 leases the North Jacobs Ranch LBA Tract in response to the current application from Jacobs Ranch Coal Company, mining the relatively low emissions coal present on the LBA Tract could replace mining of higher emissions coal elsewhere. During the time that the coal in the North Jacobs Ranch LBA Tract would be mined, CBM recovery could continue on the tract and in the surrounding areas; and there would be more time to recover additional CBM from deeper, higher . emissions coals, which would reduce CBM emissions if those deeper coal deposits are mined in the future.

Final1y, while the United States currentJy does not have an approved Energy Policy, BLM believes that a decision to lease would be consistent with the currently proposed Energy Policy for the , United States, which recognizes a continuing need to generate electricity using coal as well as natural gas.

In conclusion, thank you for your participation in the leasing process. As a result of the previous comments provided by RIM, infonnation was added to both the Draft and Final EIS's. The comments submitted on the Final ES are being considered as BlJ\1 prepares to make a decision whether or not to hold a sale and issue a Federal coal lease for the North Jacobs Ranch LBA Tract.

Field Manager, Casper

Attachment cc Mel Schlagel, WSO 922 Mavis Love, WSp 922

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Attachment Response to RIM·CBM llC and RIM Operating, Inc. Comments dated September 24, 2001. Wyoming State Office - Reservoir Management Group October 23, 2001

Rim alleges that CBM reserves are grossly underestimated, CBM well life will be about twice that estimated by BlM. -Rim alleges several errors in the BlM's analysis. These allegations are addressed in consecutive order below.

1. The BlM has used ..... improper and undue reliance on methane adsorptive capacity from coal cores, which have historically underestimated actual CBM

production by significant margins ... It.

a. Background information. Methane adsorption analyses are a standard method of measuring the adsorptive capacity. The method is accepted by industry and widely used. It indicates the maximum amount of methane that can be adsorbed onto coal at given pressures which indicates the maximum adsorbed gas content of the coal and gives a good indication of the gas in place for a particular area, in this case the North Jacobs Ranch lBA area which is 4,821 acres. To estimate recoverable CBM a recovery factor must be selected. This is a volumetric approach to estimating in place and recoverable CBM reserves, and is commonly used in the oil and gas industry. However, if wells drain gas from outside the area then the gas actually recovered from wells may be greater than the estimated reserves.

Spacing is a concept almost universally used in the oil and gas industry in the United States. Wells are drilled on a regular spacing pattem. In the Powder River Basin, CBM wells are drilled on 40 acre or 80 acre pattems. Undrllled 40 or 80 acre areas adjacent to producing CBM wells are often drained by producing wells.

b. Rims allegations. Rim seems to disregard this industry accepted practice and alleges that wells in the North Jacobs Ranch lBA area will recover much more than the 5.1 billion cubic feet (BCF) suggested as the maximum, using a volumetric approach with very optimistic assumptions. If Rim's wells drain gas from outside the lBA then those wells m~y recover more than estimated, however it is unlikely this will increase recovery to anything close to the 15.4 BCF estimated by Rim; actual ultimate recovery will probably be substantially less than 5.1 BCF. Rim states that methane adsorptive capacities have ..... historically

underestimated actual CBM production by significant margins ... It. No data were given to support this allegation, therefore it is difficult to respond to this criticism. We are not aware of any instance where a properly applied

volumetric approach has underestimated recoverable reserves by II

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significant margins ... ". CBM wells may recover more gas than the estimated gas in place under the spacing area (40 or 80 acres). This is not unusual and is caused by drainage of other undrilled spacing areas, or possibly by abrupt changes in coal thickness. Rim does not seem to be arguing that wells in the North Jacobs Ranch LBA are draining CBM from outside the LBA however.

In the Grady area wells are almost certainly draining CBM from outside the well spacing area. There are many undrilled locations and gas from these locations is being produced by Rim's wells. If the Grady area is as productive as Rim alleges, it is puzzling why these offset locations to producing wells have not been drilled.

It is also necessary to respond to some of the numbers used in Mr. Aronstein's letter. Rim states that ..... coal in the Grady development area is generally found at approximately 180 feet in depth, typically is only 35 feet thick ....". No source was given for these numbers. Data from the PIIDwights production database (a commercially available, commonly used oil and gas database) indicates the average depth to the top of the producing coal in the Grady area is 242 feet and the average coal thickness is 42 feet. Rim's thickness number together with the 40 acre drainage area used by Rim would result in a gross underestimation of estimated recoverable reserves. Why Rim would use only 40 acres is puzzling, when it is obvious that wells in the Grady development area are draining much more than 40 acres. Rim also states that "The LBA Tract contains coals that are almost twice as thick as those at Grady, averaging 65 to 70 feet thick ...". The Pl/Dwights database indicates the average thickness of the producing interval for Rim's wells in the North Jacobs Ranch LBA area is 54.2 feet, much less than what is alleged by Rim. This lower thickness would result in a lower estimated recovery based on a volumetric analysis.

2. Rim alleges ..... use of bottom hole pressures solely form wells drilled in the central and eastern part of the LBA Tract, rather than from the western part of the LBA Tract were LBM potential is universally recognized to be much greater ... " caused an error in the estimate of-recoverable reserves for the North Jacobs Ranch tract.

a. We agree that .use of pressures from wells ..... in the central and eastern part of the NJR Tract ... " wOLild cause large errors and underestimate CBM reserves. The word "eastern" in the Final EIS is erroneous and should be "western". We appreciate Rim pointing out this error in the Final EIS. The pressures used were actually from wells in the central and western part of the LBA not from wells in the central and eastern part as misstated in the Final EIS. We also agree that CBM £: S :01 H'~ I I :J:;O 10

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potential is much less in the eastern part of the LBA than in the western part. Because the pressures used were actually form the central and western part of the LBA tract the pressures did not cause an error in the estimates.

3. Rim alleges "... a failure to recognize the greater thickness of coals and higher pressures in the LBA Tract than in the 133 comparison wells studied by the RMG ... " as a cause for the RMG's estimates of recoverable resources and well life to be in error.

a. We are not aware of any pressure measurements in the 133 wells referred to by Rim, therefore we cannot respond to the allegation that wells in the North Jacobs Ranch LBA have higher pressures. The 133 wells extend over several townships both north and south of Gillette, Wyoming and we are not aware of any publicly available pressure data on these wells. The average thickness of producing coals in the same 133 wells was not given in the Final EIS, however thickness data are available for 120 of these wells from the PIIDwights production database. The average thickness of the producing coal in those wells is 61.9 feet. This is 7.7 feet thicker than in the North Jacobs Ranch LBA area, not thinner as alleged by Rim.

4. Rim alleges ..... incomplete and faulty information in well production histories used to estimate average well life." was used by the BLM therefore the estimates of average well life are inaccurate.

a. It certainly appears our information was incomplete in the Grady area. The well in Figure 3 of the Final EIS has had a sharp increase in production, apparently due to a decrease in gathering line pressure as mentioned in Mr. Aronstein's letter. We appreciate Rim sharing this information with us and we agree the EUR for the CBM Well A #33 17R needs to be revised upward. The EURs for others wells in .the Grady area may also need to be revised upward. Only five of the 133 wells analyzed by the RMG are in the Grady area. Unless the same gathering line pressure problems mentioned in Mr. Aronstein's letter are nearly ubiquitous throughout the eastern Powder River Basin it is unlikely the average well life and average EUR from the 133 wells will be significantly changed based on the wells in the Grady area.

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b. CBM production from Rim's wells in the North ':10,000 36 Jacobs Ranch LBA area is now

sufficient to make 1l0,OOO some preliminary conclusions about 60,000

ultimate gas 40,000 recovery. Figure 1 shows the CBM :10,000 production history o o for the North Jan-88 Jacobs Ranch LBA. It appears Figure 1 Gas, water, and producing wells for the North Jacobs Ranch LBA area, Campbell County. Wyoming. that production Data are from the Wyoming on and Gas Conservation has reached its Commission. maximum. If it is , assumed that production will remain steady for an additional year then decline, ultimate recovery from Rim's wells in the North Jacobs Ranch LBA will be about 2.7 BCFG, far below Rim's estimate of 15.4 BCFG ..' If ultimate recovery is to reach 15.4 BCFG as claimed by Rim, it would)!.,.,", " take an additional 20 years producing at the current rate of 62 MMCFG/month without any decline. This se~ms highly unlikely since CBM production appears to be near or at a maximum for the LBA area.

References:

Aronstein, James K., 2001, Letter dated September 24, 2001 in reference to Final Environmental Impact Statement for the North Jacobs Ranch Coal LBA, Serial No. WYW146744, representing interests of RIM-CBM LLC and RIM Operating, Inc.

Final Environmental Impact Statement for the North Jacobs Ranch Coal Lease Application (WYW146744), August 2001, Casper Field Office, U.S. Department of the Interior, Bureau of Land Management.

PIIDwights oil and gas production database, 2001, Oil and gas production data on CD ROM, Petroleum Information/Dwights d/b/a IHS Energy.

Wyoming Oil and Gas Conservation Commission, 2001, oil and gas well data from website.

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RE: EPA comments on the Final EIS for the North Jacobs Ranch Coal Lease Application CEQ No. 010307

Dear Ms. Doe1ger:

In accordance with our responsibilities under the Nationa1 Environmental Policy Act (NEPA) and Section 309 ofthe Clean Air Act (CM), Region 8 ofthe U. S. Environmental Protection Agency (EPA) has reviewed the Fimil Environmentcinmpact Statement (EIS) for the North Jacobs Ranch Coal Lease by Applkation (LBA) in Campbell County, Wyoming. EPA remains concerned with the analysis and information regarding the public health impacts from

N02 releases due to blasting. We are pleased to learn that BLM will consider processing the next four (4) pending LBAs in the area as a group to avoid redundancy and repetition ofseparate NEPA analyses. We offer the fonowing comments for your consideration in preparing the next round ofLBA actions in the Powder River Basin.

Processing LBAs in groups into one EIS

We understand that it is BLM's intent to ana1yze the impacts of1easing the proposed Little Thunder, West Roundup, NARO, and West Antlelope LBA Tracts in one NEPA document due to their proximity to one another. We appreciate this direction as it offers an opportunity to evaluate these related actions at the same time and in the same document. We request that EPA staffbe invited as early as practical into the scoping process. We wish to offer staff involvement

on the issues ofN02 emissions and regional air quality in a time1y manner that will allow our agencies to cooperate on thls upcoming NEPA document.

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Potential Public Health Impacts from NO) Releases due to Blasting

The Final EIS acknowledges that the public concern over the releases ofNO;.} from coal overburden blasting in the area. EPA appreciates the data provided from past blasting events near the North Jacobs Ranch operation as well as the inclusion in Appendix F the infonnation supplied

by EPA on the general health effects ofN02 exposure. The final EIS incJudes a s':lmmary of information on the work by the Air Quality Subcommittee on the Wyoming :Mining Association

(\VMA) in relation to reported N02 concentrations near this mine. According to the Final EIS, as a result ofthe \VJ\.1.A's monitoring effort, the c10sest station to Jacobs Ranch :Mine reported a

maximum one-minute average reading of 1.7 ppm N02 • Further, according to this source, the maximum IS-minute average valid values observed for each ofthe six monitors ranged from 0 to

1.65 ppm N02 • This information is then compared to the OSHA Immediately Dangerous to Life and Health (IDLH) threshold of20 ppm and to EPA's Significant Harm Level threshold of2 ppm which is based upon a one-hour averaging time. This seems to indicate these reported concentrations, if accurate, indicate levels below these health-based criteria. However, there may be some confusion with respect to the appropriate averaging time to be used to detennine whether any adverse hea1th effects wou1d occur to the general population from these exposure events. Consider that the basis for establishing the IDLH is based upon "an atmospheric concentration ofany toxic, corrosive or asphyxiant substance that poses an immediate threat to life or would cause irreversib1e adverse health effects or would interfere with an individual's ability to escape atmosphere." (Emphasis added.) Note that an averaging time for an IDLH is not specified by OSHA. Rather, the risks to public health should

be based on the instantaneous or peak concentration ofN02 to which the public is exposed.. AJso note that the 20 ppm IDLH is based on risk ofdeath or irreversible health effect to a healthy adult worker. Lower concentrations than an peak concentration of20 ppm may result in adverse health affect to the more susceptible persons ofthe popu1ation including the young or asthmatic.

We understand that the JRCe's parent company, Kennecott Energy Company, is involved. in the development ofthe effort by the \VMA to conduct emissions monitoring and develop predictive concentrations on these emissions. And we agree with the statement in the Final EIS that this effort by \\r:MA may pro\~de regulatory agencies, including EPA, with a better tool to evaluate and regulate blasting procedures. However, we are concerned with the statement in the Final EIS that it is reasonable to assume that a decision to lease the North Jacobs Ranch LBA Tract will not result in the exposure ofpersons outside this mine to hannful or toxic effects solely because the proposed action continues existing practices. The reason we are concerned is the lack ofsite-specific data from this mine. Given the complexity on undertaking a more thorough analysis ofpotential risks to the general popUlation from blasting events, we offer to meet with BLM and their consultants for this next round ofElSs on new leases to develop an acceptable

approach to this information inc1uding the appropriate N02 concentrations that would indicate acceptable levels from these blasting events.

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We would appreciate yOUT office involving EPA in the upcoming consolidated environmen1al imp

Sincerely, 9tmAtd~ Cynthia Cody Director, NEPA Program Office ofEcosyslems Protection and Remediation

cc: Floyd McMuHen, OSM, Denver :Mike \Varren, Wyoming DEQ, Cheyenne

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