In a boost to Arch Coal’s (NYSE: ACI) big West Elk longwall mine, the U.S. Department of Agriculture said in a July 3 Federal Register notice that it has approved a state-specific final roadless rule for Colorado that carves out flexibility for using roadless areas along the North Fork of the Gunnison River.
The Clinton Administration in its last days in January 2001 kicked off years of controversy and litigation by declaring huge areas of western U.S. federal lands as roadless areas subject to a ban on development for purposes like coal mining and oil and gas production. Colorado, in an effort to work around some of the issues, came up with its own version of the roadless rule for Colorado specifically, which the Department of Agriculture, the parent of the Forest Service, has now approved.
The Colorado rule is to provide management direction for conserving and managing about 4.2 million acres of Colorado Roadless Areas (CRAs) on National Forest System (NFS) lands. “The State of Colorado and Forest Service, working in partnership, have found a balance between conserving roadless area characteristics for future generations and allowing management activities within CRAs that are important to the citizens and economy of the State of Colorado,” said the July 3 notice.
The Colorado Roadless Rule, besides having in it flexibility for existing development areas, provides for future adjustments to be made to CRA boundaries, subject to a public review and comment period, and applicable National Environmental Policy Act or other requirements. In addition, the rule provides for administrative corrections to upper tier boundaries, subject to a public review and comment period.
“The State has indicated flexibility is needed to accommodate State-specific situations and concerns in Colorado’s roadless areas,” said the notice. “These include: (1) Reducing the risk of wildfire to at-risk communities and municipal water supply systems; (2) facilitating exploration and development of coal resources in the North Fork coal mining area on the Grand Mesa, Uncompahgre, and Gunnison National Forests; (3) permitting the construction and maintenance of water conveyance structures; (4) restricting linear construction zones, while permitting access to current and future electrical power lines and telecommunication lines; and (5) accommodating existing permitted or allocated ski areas.”
Notable is that Arch Coal’s West Elk mine is within the North Fork area and Arch has run into roadless issues in leasing new federal coal reserves for the mine. Also nearby in the North Fork area are the Bowie No. 2 longwall mine of Bowie Resources and the Elk Creek longwall mine of Oxbow Mining.
All existing federal coal leases within CRAs occur in the North Fork Valley near Paonia on the Grand Mesa, Uncompahgre, and Gunnison National Forests. Coal from this area meets the Clean Air Act definition for compliant and super-compliant coal, which means it has high energy value and low sulfur, ash and mercury content, making it desirable for electric generation plants throughout the country, the notice said. Coal from these existing leases is currently being extracted at three underground mines (West Elk, Bowie No. 2 and Elk Creek), which collectively produce 10 million to 15 million tons of coal per year and accounts for about 40% of all the coal production in Colorado. These mines provide about 2,100 jobs (direct, indirect and induced) and $151.1 million annually of direct labor income within Colorado.
“The final rule accommodates the continued operation of these three mines by defining an area called the North Fork coal mining area,” said the notice. “This area is about 19,100 acres which is less than 0.5% of the CRAs. The North Fork coal mining exception allows for the construction of temporary roads for exploration and surface activities related to coal mining for existing and future coal leases. The final rule does not approve any future coal leases, nor does it make a decision about the leasing availability of any coal within the State. Those decisions would need to undergo separate environmental analyses, public input, and decision making.”
The notice added: “Many comments were received [on related environmental impact statements] regarding whether the Currant Creek CRA should be included or excluded from the North Fork coal mining area. About 9,000 acres of the Currant Creek CRA was removed from the North Fork coal mining area in the [revised draft EIS] due to important wildlife habitats and juxtaposition of these habitats to nearby habitats. The Colorado Division of Parks and Wildlife reviewed comments regarding the inclusion of Currant Creek to the North Fork coal mining area, including the independent analysis of wildlife resources submitted by a commenter, and remains convinced of the importance of the wildlife habitat values in Currant Creek. The Department agrees and will not include Currant Creek in the North Fork coal mining area to ensure conservation of these important wildlife habitats. The Department notes that there are no existing coal leases in Currant Creek.”
The department said it reviewed likely scenarios of potential mining within the Currant Creek CRA and determined that the economic effects of including Currant Creek in the North Fork coal mining area would not be realized for more than three decades based on current coal production levels, current mining technologies, the assumption that an adjacent area on non-NFS lands known as Oak Mesa would be mined, and the fact that coal from Currant Creek would not be mined until Oak Mesa was mined out. Oxbow Mining, looking at the end of coal reserves in the next few years at Elk Creek, applied with the U.S. Bureau of Land Management last year for an exploration license on the nearby Oak Mesa coal reserves, which would support a potential new mine.