2016-12-12_REVISION - C1996083 (2)

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one or both federal leases. Due to the potential impact to federal resources, we urge the Division consult with the BLM regarding the request before making any decision. 2. Federal royalty implications must be addressed. Bowie is proposing to convert existing coal mine waste into synthetic gas which will then be used to generate electricity or diesel/fuel oil. More specifically, the proposal indicates Bowie intends to pull fuel for the gasification system from two existing waste stockpiles—the “run-of-mine” coal and the “stoker coal”—which will be combined, crushed, and then prepared for use. Given the majority federal coal interest at the mine, there is little doubt that much of the coal that will be used is federal. This raises the question of whether and how royalties need to be assessed on that product. Pursuant to Mineral Leasing Act the royalty rate for federal coal extracted from surface mines is set at no less than 12.5% and at 8% for underground mines1. Additionally, royalties are assessed at the first point of sale of the coal after it is removed from the ground as a percentage of the revenues at the sale price. In this case, and based on the lack of information provided in Bowie’s application, it is impossible to determine where the point of sale lies and therefore, what royalty is appropriate for the coal used. Being a federal, and therefore publicly-owned resource, before moving forward, the BLM and the Bowie need to determine the appropriate royalty to ensure American taxpayers are receiving their fair share for the development of those public resources2. 3. Carbon capture and climate implications have not been addressed. One of the features of the closed-loop DAXIOM gasification system touted by Bowie in its application is the minimal pollution generated as a byproduct of the process. In fact, Bowie notes that the emissions associated with the unit are comprised primarily of CO2. While CO2 emissions, especially in the amounts projected by Bowie are largely unregulated at present, they will nonetheless contribute to atmospheric greenhouses concentrations and climate change. The potential climate impacts must be assessed. While this burden does not fall on the State of Colorado, the BLM has been instructed through Executive Order (E.O. 13524, E.O. 13693), as well as Secretarial Order (S.O. 3289, S.O. 3226) and case law, to assess the potential climate impacts of federal actions. Again, this necessitates the consultation with BLM regarding the application for technical revision. A hasty scan of the U. S. Department of Energy, National Energy Technology Laboratory's Gasification Plant Database reveals that a large number of proposed and currently operating gasification plants throughout the world are equipped with carbon capture technology capable of reducing CO2 emissions by up to 95%. According to DOE, “Another advantage of gasification-based energy systems is that when oxygen is used in the gasifier (rather than air), the carbon dioxide produced by the process is in a concentrated gas stream, making it easier and less expensive to separate and capture. Once the carbon dioxide is captured, it can be sequestered - that is, prevented from escaping to the atmosphere, where it could otherwise potentially contribute to the ‘greenhouse effect.’" Despite the widespread use of such technology, Bowie’s proposal does not appear to include a similar process. We believe both the Division and BLM should assess the potential costs and benefits of requiring carbon capture technology if the proposal is considered in detail. 1 Bowie may have requested a royalty-rate reduction in which case coal sold from the mine is likely subject to the reduced 5.5% royalty rate. 2 Waste piles are still subject to federal royalties pursuant to 30 CFR 1206.253(c)