2008-07-16_REVISION - C1980007 (3)

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IBLA 2007-213 benefit of the coal lessee's work- The coal lessee would expend its resources to perform functions the oil and gas lessee ordinarily must perform under its lease. Indeed, this is precisely the situation Vessels would formulate here. Vessels has no precise information about the costs UAE has incurred to ensure inine safety for activities that would effectively perform the reining function of an oil and gas lessee. Nonetheless, it believes that UAE should be forced to disclose private contract information so that Vessels can obtain the right to treat and sell the methane without shouldering the costs of exploration and production, subject only to a 12.5% royalty in the UJAited States, That statutory royalty rate: presumes the lessee has explored and produced. pursuant to statutory lease rights, and may thus be inappropriately low if the lessee of the gas does not incur the associated costs. Second, we are concerned about the potential dilemma facing UAE in this situation if we were to determine that the released gas is a "deposit" that remains intnct throughout the process. In such a case, despite its mandatory obligation under MSHA's rules or requirements to protect coal miners by removing dangerous, explosive methane in the coal mine, UAE arguably risks being held accountable for acting with respect to a deposit in a manner appropriate only for an oil and gas lessee, contrary to the limited rights it is given under its coal lease.. See Amoco v. Southern Ute Indian Tribe, 526 U.S. at 874-80. Thir:4 on the unique facts of this case, we find no basis for adding. an MLA oil and gas lessee to the mix of participants. It would appear that UAE and Oso have collaborated in creating a new coal mine degasification operation that has the benefit of protecting miners as required by MSHA, minimizing pollution to the environment as sought by the EPA, and permitting use of additional energy resources as promoted by national policy, We see nothing in the, MLA that would compel us to add an uninvited third party that would perform no role envisioned by the MLA except to profit from th. a business investment and industry innovation performed by others, [1) Based on the unusual facts.of this. case, we agree with the State Director that this situation is not covered by the MLA, and therefore no MLA competitive lease sate is regal ed.or proper uz der.that. statute. We do not agree. that this conclusion sterns from the definition of "gas" in BLM's rules. Rather; ie comes from the MI A itself, which authorizes leasing of. oil and gas. `-deposits:' The methane-mixture captured, From vents.driMed by the coal mine operator, at the direction of MSHA for protection of coal miners, is not. the oil and gas deposit addressed by leasing under the I U. 13 13 Our holding,(and..BLM's position). that. the. leases were. not properly issued under the MLA necessarily meanhs d at t6 .appvrdonsnent of funds to the State of Utah, (continued...) 1751BLA 26 lZ/6l 'd EM 'ON VIRI IM WAAi.:71 Qnn7 '07 'Aln^ 'VVJ 7b:R7 Qnnzi»iun