GENERAL39413

• Permit No: C1980007
• IBM Index Class Name: General Documents
• Doc Name: Dec Document for Federal Lease COC-56447
• Permit Index Doc Type: Other Permits
• Media Type: D
• Archive: No

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Mountain Coal Company
West Elk FAvie
Pos! Office I~ox 591
Sortxrsd Colorado 81434
Telephone [phone][5
Fax 303 9~-5595
December 15, 1994
Mr. Allan Belt, Area Manager
United States Bureau of Land Management
Uncompahgre Basin Resotuce Area Office
2505 South Townsend
Montrose, Colorado 51402
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RE: Response to EA, Mazimum Economic Recovery, and Fair Market Value of federal
coal offered under lease COC-56447.
Dear Mr. Belt:
Mountain Coal Company (MCC) would like to take this opportunity to offer comments on the
Box Canyon Lease Environmental Analysis (EA) and the impact of the related stipulations on the
economics of reserve recovery and market value.
~.ICC believes t.~e stipulations as currently described in the EA could greatly restrict the surface
access to the lease tract and ~ -. going so, may limit the ability to recover the coal resource safely
and economically and to generate royalty income. Surface access restrictions which exclude areas
from exploration dolling lead to increased uncertainty as to the mineability and marketability of
the coal and reduce the value of the reserve. Access restrictions which inhibit development of an
optimal mining plan, also increase the cost of producing coal from the reserve. The resulting lack
of operationa! flexibility increases risk and further diminishes reserve value.
Those stipulations which could reduce MCC's ability to evaluate and recover the coal resource are
specifically addressed below. MCC believes that most, if not all, of these stipulations were taken
from a 1993 U.S. Forest Service Oil and Gas Leasing Environmental Impact Statement which
states that it is expressly for oil and gas leasing and production. Coal development impacu were
to be "determined on a case by case basis", and not broadly assumed to be applicable.
The stipulation disallowing surface disturbances within the reported riparian zone and related
li3 mile buffer zone would prevent even minor use of the canyon bottom and its adjacent
foot slopes. No explanation has been given for the designation of this buffer zone. This arcs
is centrally located within the lease tray area and is critical to MCC's overall evaluation of
the reserve. Prohibiting surface use of this area impairs MCC's ability to evaluate the
marke:ability and mineability of the coal resource through exploration drilling. Doing so
creates considerable risk to the lease bonus payment and future operations in that area. MCC
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