30 U.S.C. § 207 — Conditions of lease

(a) Term of lease; annual rentals; royalties; readjustment of conditions. A coal lease lasts 20 years, and keeps going after that as long as coal is produced every year in commercial amounts. If a lease hasn't produced commercial quantities within 10 years, it ends. The Secretary sets the annual rent by regulation. The lease must charge a royalty of at least 12.5% of the coal's value, except that between July 4, 2025, and September 30, 2034, the royalty can be set as low as 7%; the Secretary can also allow a lower royalty for coal mined underground. The Secretary decides all other lease terms. Every 20 years (and every 10 years after that if the lease continues), the rent, royalty, and other terms can be readjusted. (b) Diligent development and continued operation; suspension of condition on payment of advance royalties. (1) Every lease requires the lessee to keep developing and operating the mine steadily, unless a strike, natural event, or other cause outside the lessee's control interrupts things. (2) If it serves the public interest, the Secretary of the Interior can pause this "keep operating" requirement in exchange for the lessee paying advance royalties. (3) These advance royalties can't be less than the normal production royalty would be, and are calculated using a fixed ratio of coal reserves to expected production, set by the Secretary. (4) The advance royalty amount is based on either the average spot-market price for similar coal from the same region during the last month of the lease year, or, if there's no such spot market, a comparable method the Secretary sets up to capture the coal's commercial value — applied to commercial-quantity amounts defined by regulation. (5) A lease can use advance royalties in place of continuous operation for no more than 20 years total, across the life of the lease. (6) Any production royalty owed for a year is reduced (but never below zero) by advance royalties already paid that haven't yet been credited against an earlier year. Separately, the Secretary can stop accepting advance royalties in place of continuous operation, after giving the lessee six months' notice. (7) None of this changes the separate rule in subsection (a): production must still start within 10 years. (c) Operation and reclamation plan. Before doing anything on the leased land that could significantly disturb the environment, the lessee must submit an operation and reclamation plan for the Secretary to approve. The Secretary can approve it, reject it, or require changes. If a different federal agency oversees the surface of that land, that agency must also agree to the plan's approval.