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Generally, utilization and/or sales of CMM requires a valid gas lease, regardless <br />of end use. If the leased gas is used by the mine or mine company, used for <br />power production, or sold to another party, gas royalties must be paid to the BLM. <br />If no lease is held for the gas, it may only be vented to the atmosphere for safety <br />purposes as set out by the Mine Safety and Health Administration (MSHA). The <br />federal government has waived the gas lease and royalty requirements in the past <br />if it deems the use of CMM as beneficial to the government. For example, <br />utilization of CMM to fuel a coal drying system will increase the value of the coal, <br />thus increasing the royalty the government may obtain from coal sales. This use <br />would be considered a benefit to the government and could be negotiated without <br />a gas lease in place. Any uses not considered a benefit to the government are <br />prohibited in the absence of a gas lease supplementary to the coal lease. <br />See U.S. EPA, "Coalbed Methane Extra" (Fall 2007) at 2-3 (emphasis added), attached as <br />Exh. 26. <br />EPA's longer statement is consistent with the Supreme Court's ruling in Amoco <br />Production Company v. Southern Ute Indian Tribe et al, 526 U.S. 865 (1999). In its ruling, the <br />Court allowed that "[i]t may be true, nonetheless, that the right to mine the coal implies the right <br />to release gas incident to coal mining where it is necessary and reasonable to do so." Id. at 879. <br />Although mine operators do not have ownership over the gas, they do have a right to remove it <br />from the mine environment to facilitate mining. Clearly, gob gas -- gas that is released and <br />available for transport to the surface only after the coal has been mined and is only released to <br />facilitate miner safety -- is "gas incident to coal mining." 16 <br />Thus, the question here is not if a lease is in place but rather if a lease needs to be in <br />p Lace. If the Federal government found that "use" of the methane in some capacity were <br />beneficial to the government, the lease requirement could be waived. As the vented methane <br />16 See also L. Lyman, "Coalbed Methane: Crafting a Right to Sell Form an Obligation to <br />Vent," 78 U. of Colorado L. Rev. 613-46 (2007) (describing law that permits coal mine operators <br />to dispose of methane produced incidental to mining without leasing the methane, and arguing <br />that the Colorado Oil and Gas Conservation Commission has the authority to regulate coalbed <br />methane produced incidental to coal mining); EEI Geophysical Report at 1-2 (noting legal <br />regime in many states grants rights to coal mine operators who capture methane incidental to <br />their coal mining activities). <br />APPEAL OF E SEAM METHANE DRAINAGE WELLS PROJECT, APRIL 28, 2008 PAGE 26