Rights-of-Way, Principles and Procedures; Rights-of-Way Under the Federal Land Policy and Management Act and the Mineral Leasing Act

Federal RegisterApr 22, 2005

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DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Parts 2800, 2810, 2880, 2920, 9230, and 9260

[WO 350 05 1430 PN]

RIN 1004-AC74

Rights-of-Way, Principles and Procedures; Rights-of-Way Under the Federal Land Policy and Management Act and the Mineral Leasing Act

AGENCY:

Bureau of Land Management, Interior.

ACTION:

Final rule.

The Bureau of Land Management (BLM) is amending its regulations governing rights-of-way issued under both the Federal Land Policy and Management Act (FLPMA) and the Mineral Leasing Act (MLA). This final rule revises BLM cost recovery (processing and monitoring fee) policies and procedures for issuing right-of-way grants and adjusts cost recovery fees to take into account cost increases since the previous regulations became effective in August 1987. The rule also eliminates automatic exemptions from cost recovery fees for Federal agencies, except for those agencies and projects exempted by law. It establishes policies related to paying rent in advance and adds a financial penalty for paying rents late and allows for automatic adjustment to cost recovery fees based on an economic indicator. This final rule also clarifies how BLM applies the rent schedules for communication site rights-of-way and reorganizes the regulations in a manner similar to the sequence in which BLM takes action on applications and monitors issued grants.

DATES:

Effective Date:

This final rule is effective June 21, 2005.

FOR FURTHER INFORMATION CONTACT:

Bil Weigand at (208) 373-3862, or Ian Senio at (202) 452-5049, or write to Director (630), Bureau of Land Management, Eastern States Office, 7450 Boston Boulevard, Springfield, Virginia 22153, Attention: RIN 1004-AC 74.

Persons who use a telecommunications device for the deaf may contact these persons through the Federal Information Relay Service at 1-800-877-8339 24 hours a day, seven days a week.

SUPPLEMENTARY INFORMATION:

I. Background

II. Final Rule as Adopted and Response to Comment

III. Procedural Matters

I. Background

BLM published the proposed rule in the

Federal Register

on June 15, 1999 (see 64 FR 32106) for a 120-day comment period ending on October 13, 1999. As a result of public requests for extensions of the comment period, on October 13, 1999, we extended the public comment period for 30 days ending on November 12, 1999. We received 63 comment letters on the proposed rule. We address public comments in the section-by-section discussion of this preamble.

In these regulations we use the terms “previous regulations” and “final regulations.” “Previous regulations” refers to the regulations in effect prior to June 21, 2005. “Final regulations” means the regulations in this final rule. This final rule will replace the regulations in parts 2800 and 2880 of the October 2004 edition of Title 43 of the Code of Federal Regulations.

General Information About BLM Right-of-Way Grants Basis and Purpose of These Regulations

Each year, thousands of individuals and companies apply to BLM to obtain a right-of-way grant on public lands. A right-of-way grant is an authorization to use a specific piece of public land for a certain project, such as roads, pipelines, transmission lines, and communication sites. The grant authorizes a specific use of the land for a specific period of time. The term “grant” is defined in the definitions sections in both parts of this rule. The definition of “grant” in part 2800 applies to grants authorized by Title V of FLPMA, 43 U.S.C. 1761, and the definition in part 2880 applies to grants authorized by the MLA at 30 U.S.C. 185. Generally, BLM issues a right-of-way grant for a term commensurate with the life of the project. Typically, BLM issues grants with 30-year terms, and most can be renewed. This final rule covers FLPMA grants for rights-of-way that cross public lands and MLA grants for rights-of-way that cross Federal lands. We cover general provisions for right-of-way grants in subparts 2801 and 2881 of this final rule.

BLM places a high priority on working with applicants on proposed rights-of-way to provide for the protection of resource values and to process applications timely. Careful advance planning with BLM personnel is strongly encouraged. If we know about your plans early, we can work with you to tailor your project to avoid many problems and costly delays later in the process.

If you are not familiar with our right-of-way application process or local BLM jurisdictions, the best place to start is by contacting a BLM State Office listed in our regulations at 43 CFR 1821.10. Please note that each state office oversees a number of field offices. Depending on your project, you may be working primarily with personnel at a BLM field office.

As a general rule, you need a right-of-way grant whenever you plan to build a right-of-way facility on public lands. Some examples of land uses which require a right-of-way grant include: transmission lines, communication sites, roads, highways, trails, telephone lines, canals, flumes, pipelines, and reservoirs.

You do not need a right-of-way grant for “casual use” activities. Examples of casual use include driving vehicles over existing roads, sampling, surveying, marking routes, collecting data to prepare an application for a right-of-way, and performing certain activities that ordinarily result in no, or negligible, disturbance of the public lands or resources. “Casual use” is defined in sections 2801.5 and 2881.5 and is addressed in sections 2804.29 and 2884.25 of this final rule. We encourage you to contact BLM and discuss your planned activity before assuming your use is casual. BLM can then make a judgment based on your particular activity.

Steps In Applying for a Right-of-Way

(A) Contact the BLM office having management responsibility for the land where you need the right-of-way.

(B) Arrange a preapplication meeting with the field office manager or appropriate staff. During this meeting, participants will jointly review the application requirements and Standard Form (SF) 299, Application for Transportation and Utility Systems and Facilities on Federal Lands, to determine what information BLM needs. If you contact us ahead of time to set up the meeting, we can often arrange to hold the meeting at the site of your proposed use.

(C) When you have all the information, bring or mail the application, along with the nonrefundable application processing fee, to the appropriate BLM office.

This final rule covers the application process for FLPMA right-of-way grants in subparts 2803 and 2804, and the application process for MLA grants in subparts 2883 and 2884.

Preapplication Meeting

The preapplication meeting is an important part of the process for both

you and BLM. The meeting provides the opportunity for you to fully discuss and describe your proposal in detail and provides an opportunity for BLM to fully explain processing requirements. The preapplication meeting may also cover fees, safety, work schedules, and other items. This meeting has the potential to save both you and BLM time and expense. For example, in FLPMA, Congress directed that “rights-of-way in common” (common use of a right-of-way area by multiple grant holders) be required, to the extent practical, in order to minimize adverse environmental impacts and the proliferation of separate rights-of-way. This is accomplished through a system of designated right-of-way corridors and co-locating communication uses on existing towers and within multi-occupancy buildings when feasible. During the preapplication meeting, BLM staff may examine the proposed right-of-way use to see if it would fit in an existing corridor or in an existing communication facility. Sections 2804.10 and 2884.10 of this final rule address preapplication meetings.

Application forms are available at every BLM office and on the Internet at

www.blm.gov/nhp/what/lands/realty/forms/299/index.html.

BLM wants to make the application process as easy as possible. Accordingly, the application form (SF-299) requests a minimum amount of information. Even so, incomplete information is often the reason BLM cannot process your application quickly.

To avoid problems, you should review the form prior to your preapplication meeting and, if possible, complete it before or during the preapplication meeting with BLM. Be sure to bring any information that you believe BLM would find useful during this session. For example, item 8 requests a map of the project area. You may already have a survey or other adequate map that will satisfy this requirement.

You should arrange for your preapplication meeting well in advance of when you would like to start work on the project. Processing time for an average grant is 60 to 90 days. However, grants for complex projects can take much longer to process. Try to contact BLM as soon as possible. The field office manager and staff are ready to provide information, advice, and assistance to help you prepare your application.

Costs

Both FLPMA (43 U.S.C. 1764(g)) and the Mineral Leasing Act (30 U.S.C. 185(l)) authorize BLM to charge processing fees, monitoring fees, and rent.

Processing Fees.

This cost recovery charge reimburses the United States in advance for the expected administrative and other costs we incur in processing the application. You must pay processing fees when you submit the written application. BLM will use the information presented during the preapplication meeting to estimate the application processing fee. Subparts 2804 and 2884 of this final rule address processing fees.

Monitoring Fees.

This cost recovery charge is a nonrefundable fee to reimburse the United States for the cost of monitoring compliance with the terms and conditions of the right-of-way grant, including your obligation to protect and rehabilitate the lands covered by the right-of-way. BLM will monitor your construction, operation, and maintenance of the right-of-way and, when the time comes, the shutdown of your activities and the termination of the right-of-way grant. Subparts 2805 and 2885 of this final rule address monitoring fees.

Rents.

This is a charge for locating your right-of-way facility on public or Federal lands. It is payable (for a specified term) before we issue the grant and is based on the fair market value of the rights we authorize. We usually establish the rental for linear and communication sites on public lands via two separate administrative schedules. Based roughly on land values in the project area, these schedules are adjusted annually using an economic index. In some cases, the rental is established by an appraisal. Subparts 2806 and 2885 of this final rule address these schedules and other rent issues.

Exemptions, waivers, or reductions in the processing, monitoring, or rental fees may apply to your application and BLM officials can explain these during the preapplication meeting. Subparts 2804, 2806, 2884, and 2885 of this final rule cover these issues.

Temporary Use Permits and Short Term Grants

All activities associated with the construction, operation, maintenance, and termination of your right-of-way grant must be within the specified limits of the authorization. Item 7 on the right-of-way application form is where you would identify your need for the use of additional land during, for example, the construction phase of your project. This additional land may be necessary for construction, stockpiling of excess materials, equipment parking, and the like. If you require additional land for your MLA grant, you will need to apply for a temporary use permit (TUP). The MLA specifically authorizes BLM to issue temporary use permits associated with MLA grants (see 30 U.S.C. 185(e)). BLM can grant TUPs for up to three years. If you require additional land for your FLPMA grant, you will need to apply for a short term grant for the additional lands. FLPMA specifically authorizes temporary use of additional lands for FLPMA grants (see 43 U.S.C. 1764(a)). You should discuss TUP and short term right-of-way grant needs with BLM during the preapplication meeting.

You can apply for a TUP or a short term grant at the same time you apply for a right-of-way by describing the dimension and location of the additional lands, and the term you need in item 7 of the standard right-of-way application (SF-299), or by describing this information in your Plan of Development, as part of your application. You may also apply for a TUP or short term grant after BLM grants your right-of-way. In this case, you must use a separate SF-299 form, and pay additional processing and monitoring fees for BLM to process the TUP or short term grant. This might require a separate environmental clearance and take additional processing time. If there is a possibility that you may need extra width or space, it is best to identify this in your original right-of-way application. Part 2800 of this final rule addresses short term grants and part 2880 of this final rule addresses TUPs.

Processing a Right-of-Way Application

Once you file an application with BLM, we will review it to make sure you have included all necessary information. We will then review and evaluate the application contents and determine the probable impact of the activity on the social, cultural, economic, and physical environment. BLM will also check to see if the proposed right-of-way is consistent with the existing land use plan, and will check to see what valid existing rights currently exist on the lands in question. BLM may deny a right-of-way application for any number of reasons. A preapplication meeting will reduce the possibility of BLM denying your application. Sections 2804.26 and 2804.27 and sections 2884.23 and 2884.24 of this final rule address denials of grant or TUP applications.

Appeals

If BLM denies your application, the official written decision will give the reasons for the denial and information on how to file an appeal. You also have appeal rights at many other decision

points in this final rule. In general, if you are an applicant who is adversely affected by a BLM written decision, you may appeal that decision. Sections 2801.10 and 2881.10 of these regulations address appeals.

Liability

As holder of a right-of-way grant you are responsible for damage or injury to the United States and to third parties in connection with the right-of-way use. You, as the holder, must also indemnify or hold the United States harmless for third party liability, damages, or claims it incurs. Sections 2807.12, 2807.13, 2886.13, and 2886.14 of this final rule address liability issues.

Amendments to Your Grant

If you want to substantially change, improve, or add to a project once you have a right-of-way grant, you must file an application with BLM to amend your right-of-way grant. You must have BLM's prior written approval before you make any substantial change in location or use during construction, operation, or maintenance of the right-of-way. You must contact the field office manager to determine if your proposed changes require you to file an amendment. Sections 2807.20 and 2887.10 of this final rule cover grant amendments.

Monitoring Your Grant

BLM may inspect your project for compliance with the terms and conditions of the grant and these regulations. In addition, under the terms of the grant, BLM reserves the right of access onto the lands covered by the right-of-way grant and, with reasonable notice to the holder, the right of access and entry to any facility constructed in connection with the project (see sections 2805.15 and 2885.13). Subparts 2805 and 2885 of this final rule address grant monitoring.

Grant Suspension and Termination

A right-of-way holder may use the right-of-way for only those purposes permitted in the grant. BLM may suspend or terminate a right-of-way if the holder does not comply with the applicable laws, regulations, terms, or conditions. BLM may require an immediate temporary suspension of activities within a right-of-way to protect the public health or safety or the environment. Sections 2807.16 through 2807.19 and sections 2886.16 through 2886.19 of this final rule address suspensions and terminations.

Assignments

With BLM approval, you may transfer your right-of-way grant to another person. A transfer of your grant is called an assignment. You must submit to BLM, in writing, an application for the proposed assignment, along with a nonrefundable payment. BLM will not recognize an assignment to the new owner until we approve it in writing. BLM will approve the assignment if doing so is in the public interest. Sections 2807.21 and 2887.11 of this final rule address assignments.

Trespass

If you use, occupy, or develop the public lands or their resources without a required authorization or in a way that is beyond the scope and terms and conditions of your authorization, you are considered to be in trespass and you may be penalized. Subparts 2808 and 2888 of this final rule address trespass.

Comparison Between FLPMA and MLA Grants

There are many similarities and differences between FLPMA and MLA grants. The following chart describes FLPMA and MLA right-of-way grants, but is not meant to be a complete description of all of the nuances, similarities, and differences between FLPMA and MLA grants.

Part 2800 Regulations FLPMA Grants

Part 2880 Regulations MLA Grants

Agency Jurisdiction

BLM issues grants on public lands only (43 U.S.C. 1761(a))

BLM issues grants on all Federal lands if the lands are administered by two or more Federal agencies. BLM also issues grants on public lands (30 U.S.C. 185(c)).

Term

A reasonable term. This can range from a term of one day to a term in perpetuity. (43 U.S.C. 1764(b))

A reasonable term not to exceed 30 years (30 U.S.C. 185(n)).

Rental

Fair market rental value required from holders, but exceptions apply. (43 U.S.C. 1764(g))

Fair market rental value required from all holders (30 U.S.C. 185(l)).

Cost Reimbursement

Collect reasonable costs of processing the application and monitoring except from certain government agencies and cooperative cost share program participants (43 U.S.C. 1764(g))

Collect actual costs of processing the application and monitoring except from certain government agencies (43 CFR 2884.13).

Renewal

Renewable if it is provided for in the grant and satisfactory operation and maintenance exists (43 U.S.C. 1764(b))

Renewable if the grant is still being used for commercial operations and satisfactory operation and maintenance exists (30 U.S.C. 185(n).

Citizenship

Individual applicant not required to be U.S. citizen (43 U.S.C. 1761(b))

Individual applicant required to be U.S. citizen (30 U.S.C. 181, 185).

Width

Variable, depending on purpose of the authorization (43 U.S.C. 1764(a))

Maximum 50-foot permanent width, plus the ground occupied by the pipeline; exceptions are possible (30 U.S.C. 185(d)).

Assignments

Assignable with BLM's approval (43 U.S.C. 1764(c) and (g))

Assignable with BLM's approval (30 U.S.C. 185(r)).

Temporary Use

Authorize temporary work areas as part of a right-of-way grant or with a separate short-term right-of-way grant (43 U.S.C. 1764(a))

Authorize temporary work areas with a Temporary Use Permit (30 U.S.C. 185(e)).

Common Carrier Provision

Does not apply to FLPMA grants

Applies to all pipeline grants (30 U.S.C. 185(r)).

Application form

BLM Standard Form 299 or APD or Sundry Notice for off-lease oil and gas access roads

BLM Standard Form 299 or APD or Sundry Notice for all off-lease portions of oil and gas pipelines.

II. Final Rule as Adopted and Response to Comment

Part 2800—Rights-of-Way Under FLPMA

We received many comments on the proposed rule that addressed issues common to both the part 2800 and part 2880 regulations. So as not to be redundant, we address the comments only in the section they pertain to in the part 2800 regulations. Comments that specifically address the part 2880 regulations are discussed in that section of the preamble.

Subpart 2801—General Information

This subpart contains material that pertains to all of part 2800 and several sections of part 2880. Part 2800 contains policies and procedures related to right-of-way grants BLM issues under the Federal Land Policy and Management Act and part 2880 to right-of-way grants and temporary use permits BLM issues under the Mineral Leasing Act. More specifically, subpart 2801 contains:

(A) An explanation of the objective of BLM's right-of-way program;

(B) Acronyms and definitions used in the regulations; and

General Comments

Several commenters said that there is no up-to-date data to support the need for increases in existing right-of-way fees or the creation of new ones, and that BLM should prepare a baseline report and annual reports thereafter to document the needed increases. They also said that there have been significant technology increases, as well as staff reorganizations, that have improved efficiencies that should reduce costs. For a discussion of the justification for increasing cost recovery fees, please see the proposed rule at 64 FR 32107 through 32111.

In 1995, BLM program experts analyzed a cross section of right-of-way cases. This analysis showed that the cost of processing right-of-way cases, including labor costs, had increased since 1986 at approximately the same rate as the Implicit Price Deflator-Gross Domestic Product (IPD-GDP). Therefore, the final rule adjusts costs upward based on the IPD-GDP and allows for automatic adjustments based on this indicator. Technological improvements and staff reorganizations that have taken place recently may have yielded improved right-of-way processes in many BLM offices. Since the processing categories in this final rule are based on the time (hours) required to process an application, this final rule takes into account increases in efficiencies. We note, however, that the number of processing hours may be increased by the increasingly complex resource issues BLM encounters when processing grant applications which add to the amount of coordination required to process applications. Increased public involvement in the National Environmental Policy Act (NEPA) process adds extra levels of analysis and review. Comments relating to BLM creating new fees are misdirected since BLM is not proposing any new fees in this rule (see previous subparts 2808 and 2883 and previous sections 2803.1-2 and 2883.1-2).

We suggest that commenters who requested reports justifying the fee increases refer to the preamble discussion in the proposed rule (64 FR 32107 and 32108). A 1995 audit of BLM's cost recovery efforts by the Office of Inspector General (OIG) for the Department of the Interior found BLM was not recovering all the costs of processing applications and recommended that BLM revise its regulations to recover all applicable costs. The audit estimated that BLM incurred about $640,000 in additional expense in excess of the fees collected in 1993. (This shortfall comes to $213 per application, or $800,000 and $336 respectively when adjusted for the change in IPD-GDP.) BLM is following the OIG's suggestions by increasing the costs for processing and monitoring right-of-way applications and providing for future adjustments to the costs based on economic indicators to reflect the costs of inflation. BLM also prepares yearly reports, some to meet requirements imposed by Congress in the Mineral Leasing Act, that discuss the relative numbers and types of cases that we process each year. BLM publishes this data annually in a statistical report that you can find on the Internet at

http://www.blm.gov/nhp/browse.htm#annual_reports.

While these reports alone do not justify increasing cost recovery fees, they show that the number of right-of-way authorizations BLM grants and administers continues to increase. As such, the monetary losses projected by the OIG in 1995 continue to increase each year. We did not amend the final rule as a result of these comments.

Several commenters from the oil and gas industry suggested that BLM should not increase processing fees because the bonuses, rents, and royalties industry already pays to the government should cover BLM's right-of-way processing costs. We address this comment here because it could apply to grants issued under either FLPMA or the MLA, as some oil and gas lessees do hold FLPMA rights-of-way to assist in transporting product off-lease.

Congress authorized BLM to recover processing costs, and did so fully aware that BLM was already collecting bonuses, rents, and royalties. Congress is presumed to understand the state of the existing law when it legislates.

Bowen

Massachusetts,

487 U.S. 879, 896 (1988).

In the MLA, Congress specified how mineral royalties and bonuses are distributed to states and to the Treasury (30 U.S.C. 191), and this distribution does not return funds to BLM to cover the costs of processing right-of-way applications. However, as discussed in the preamble to the proposed rule at 64 FR 32107, section 504(g) of FLPMA and section 28(l) of the MLA authorize BLM also to collect the costs to process right-of-way applications. Section 504(g) of FLPMA further provides that the deposit of reimbursements for reasonable costs be placed into a Treasury account to be appropriated to BLM for processing applications.

Also, BLM charges processing fees to everyone who files an application, except those specifically exempted by law or regulation, pursuant to its authorities under the Independent Offices Appropriations Act, as amended, 31 U.S.C. 9701 (IOAA); section 304(a) of FLPMA; Office of Management and Budget Circular A-25; the Department of the Interior Manual 346 DM 1.2 A; and case law (also see the preamble to the proposed rule at 64 FR 32107 and Solicitor's Opinion M-36987 (December 5, 1996)). Congress clearly intended for agencies to recover processing costs in addition to bonuses, rents, and royalties.

The IOAA states that Federal agencies should be “self-sustaining to the extent possible,” and authorizes agency heads to “prescribe regulations establishing the charge for a service or thing of value provided by the agency.” Section 304(a) of FLPMA specifically authorizes the Secretary of the Interior to “establish reasonable filing and service fees and reasonable charges and commissions with respect to applications and other documents relating to the public lands.” IOAA and FLPMA give BLM authority to charge fees for processing applications, which we interpret to include amendments and assignments.

OMB Circular A-25 sets forth a general policy that a user charge will be assessed against each identifiable recipient for special benefits derived from Federal activities beyond those received by the general public. Departmental Manual 346 DM 1.2A

requires (unless otherwise prohibited) that a charge, which recovers the bureau's costs, be imposed for services which provide special benefits or privileges above and beyond those which accrue to the public at large.

A particularly relevant court ruling is

Mississippi Power & Light Co.

United States Nuclear Regulatory Commission,

601 F.2d 223 (5th Cir. 1979),

cert. denied,

444 U.S. 102 (1980). The court upheld a Nuclear Regulatory Commission (NRC) licensing fee schedule. The court rejected the petitioners' argument that the work of the NRC benefitted the general public solely and that the conferral of a license or permit does not bestow upon the petitioners any special benefit whatsoever. The court concluded: “A license from the NRC is an absolute prerequisite to operating a nuclear facility, and as such, is a benefit ‘not shared by other members of society.’ ” Likewise, a right-of-way grant is a benefit not shared by other members of society. Therefore, BLM charges applicants for processing their applications for grants because they are seeking a benefit not shared by other members of society.

The commenters' contention that BLM should not charge right-of-way processing fees to the oil and gas industry because the industry already pays bonuses, rentals, and royalties misses the point about processing fees. Congress intends for agencies to be reimbursed for processing costs when the agency action benefits an identifiable party. BLM's processing of right-of-way applications benefits the applicant, who will use the right-of-way to aid its operation. Bonuses, rentals, and royalties are related to the use of the resource and are unrelated to agency processing costs. Congress has provided for agencies to collect both for the use of the resource and for the processing of applications and other documents.

Some of these commenters further suggested that any regulations pertaining to rights-of-way should be combined with existing oil and gas regulations, onshore orders, and notices to lessees and that a separate rulemaking is duplicative. We have decided not to combine this rule with other oil and gas rules. We believe that since both the FLPMA and MLA right-of-way programs are administered under BLM's lands and realty program and because of the many similarities between the various lands and realty regulations, both as a matter of policy and a matter of process, BLM's right-of-way regulations should not be located in the same part in 43 Code of Federal Regulations as BLM's oil and gas regulations.

One commenter suggested that BLM should consider the benefits the public receives from industry upgrading access roads and performing special studies that benefit the public. Previous regulations allowed BLM to reduce cost recovery fees to reflect both public benefits from studies connected with processing an application and special services to the public or a program of the Secretary provided by a project (see previous sections 2808.5(b)(5) and (6). Like previous regulations, the final rule contains provisions for FLPMA right-of-way applicants to pay cost recovery fees that reflect the public service or public benefit derived from a right-of-way grant or its processing (see final sections 2804.20 and 2804.21).

Several commenters said that the proposed automatic fee adjustments appear to be a disincentive for future BLM process improvements. We disagree with the commenters. The automatic fee adjustment provisions in this final rule will not act as a disincentive to continuing our process improvement efforts. Even after this rule becomes final, BLM will continue to examine ways to improve processes. The automatic fee adjustments are intended to increase fees based on an economic indicator that reflects yearly increases in the cost of doing business. We have included automatic fee adjustments because the cost to BLM of going through rulemaking each time fees needed to be adjusted would be prohibitive and inefficient. If during periodic review of the fee structure we determine that the fees or fee structure need to be revised, apart from applying the IPD-GDP, we will propose new rulemaking.

Some commenters said that the fee increases were not legal since they were really special use taxes that must be “approved by Congress and signed by the President.” BLM does not agree with the commenter. Clearly, both FLPMA and MLA give BLM authority to collect the reasonable or actual costs of processing right-of-way applications (see 43 U.S.C. 1764(g) and 30 U.S.C. 185(l)). Neither statute imposes a limitation on fee increases. Moreover, the Supreme Court has made clear that agencies may charge for special benefits to identifiable recipients, which is what BLM is doing in this rule. See

National Cable Television Association

U.S.,

415 U.S. 336, 341 (1973), and

Federal Power Commission

New England Power,

415 U.S. 345, 349 (1973).

One commenter agreed with the proposal to automatically adjust fees to keep pace with inflation. This provision remains in the final rule.

Some commenters thought that the IPD-GDP was not the appropriate indicator for automatic increases in fees. They thought that the Consumer Price Index would be a better economic indicator to use since, due to streamlining, labor costs have decreased since 1987. We disagree. As we stated in the proposed rule's preamble (see 64 FR 32109), we believe that the IPD-GDP is the correct economic indicator on which to base these fee adjustments since the IPD-GDP more closely reflects the relationship of labor to other costs than do other economic indicators and most of BLM's processing and monitoring costs are related to labor costs.

One commenter stated that BLM was attempting to recover costs in excess of the shortfalls in cost recovery identified by the OIG in 1995, and that the new fees would be indexed annually to guarantee additional income. Further, commenters said that BLM was only allowed to recover reasonable or actual costs. We agree that BLM can only charge reasonable or actual costs for processing right-of-way applications. Final section 2804.14 of the FLPMA regulations requires that you pay the United States the reasonable costs of processing your application, and final section 2884.12 of the MLA regulations requires that you pay the United States the actual costs of processing your application.

We believe the commenter who stated that BLM was attempting to recover more that its shortfall misunderstood the explanation in the proposed rule. In 1995, the OIG sampled 75 of the approximately 3,000 right-of-way cases BLM processed in fiscal year 1993 and determined that there was a shortfall in collected processing fees of $16,000 for those 75 cases. The total estimated shortfall for the 3,000 cases processed was thus at least $640,000 for that one year. The proposed rule stated that the maximum fees that possibly could be generated by the proposed regulations over and above fees already being collected, was approximately $2.7 million annually (see 64 FR 32123). We calculated that figure to show that even under the most extreme circumstances this rule would not be considered economically “significant” under Executive Order 12866 (which defines “significant” as having an annual economic impact of $100 million or more). The $2.7 million figure does not represent anticipated revenue, but indicates the outside limit of the economic impact of the proposed rule, over and above the fees already being

collected, if every right-of-way application, including those that were exempted or reduced under previous regulations, were placed at the highest fee category available. Therefore, the difference between $640,000 and $2.7 million does not represent costs in excess of what BLM needs to process grant applications. BLM anticipates that this rule will, on an annual basis, generate additional revenue from processing fees approximately equivalent to the $640,000 shortfall identified by the OIG, corrected for inflation by application of the IPD-GDP.

One commenter said that BLM and the U.S. Forest Service (FS) should adopt the same rules, procedures, and regulations to reduce application costs and review times. We agree. BLM and the FS are working together on parallel regulations to establish procedures that are consistent to the extent possible for the collection of right-of-way processing and monitoring fees (see 64 FR 66341 for the FS proposed rule).

A few commenters said that the difference between FLPMA and MLA rights-of-way should be pointed out in the final rule since it is confusing to the public and BLM. The basic processing steps, fee determination process, and conditions for approval involved in both types of applications are nearly identical. However, there are some differences between the two types of applications and the two parts of the rule, most of which result from distinctions in the statutory authority for the two types of grants. The major differences between the part 2800 and part 2880 regulations are explained in the table and general discussion above.

A few commenters said that instead of the cost recovery fee in the proposed rule, BLM should use a “minimal impact flat fee” similar to that proposed by the FS for flowlines, roads and electric lines being installed in a developing field. The FS proposed a “minimum impact category” in their rule that would cover one-time authorizations for the use of forest system lands for events such as recreation events, weddings, or bike races or uses where more than 75 people participate (see 64 FR 66341, 66344, and 66350). The BLM requested comments on the need for such a category. Both agencies decided not to establish a “minimal impact category” in their final rules. Instead, in this final rule BLM establishes a new processing and monitoring category for all ROW actions where we spend more than one hour but less than eight hours processing the application or monitoring the grant. The FS also plans to issue a similar final rule.

R.S. 2477

Many commenters were concerned that the regulations would impact rights associated with R.S. 2477 roads. One commenter said that before the rule can be finalized, a Federal court must decide which roads are available for rights-of-way as some may be owned by the county under R.S. 2477. Similarly, another commenter said that BLM needs to make sure we own the road before issuing a right-of-way grant. These final regulations do not change the current policy of the Department of the Interior for handling R.S. 2477 issues and apply only to public lands (Part 2800) and Federal lands (Part 2880). Final section 2801.6 makes clear that these regulations do not apply to valid claims under R.S. 2477.

Temporary Use Permits

Several commenters supported the continued use of temporary use permits (TUPs). Some commenters from the oil and gas industry said that we should not eliminate TUPs for FLPMA rights-of-way since the industry needs them for testing and emergency situations. Other commenters said that BLM only needs to be able to authorize the additional use of public land outside a permanent right-of-way, no matter what you call the authorization. We agree with the basic point of the last comment and have so provided in this rule. Moreover, BLM believes there is little difference between approving the use of public land using short term right-of-way grants and approving the use of Federal land with TUPs. Both authorizations require:

(A) The same application procedure;

(B) Compliance with NEPA and land use plans;

(D) Execution of an authorizing document.

BLM can authorize all associated uses with a FLPMA grant, whether they are short or long term, and therefore TUPs are not needed. This is consistent with the proposed rule (see 64 FR 32118).

One commenter said that BLM should authorize in a right-of-way grant access roads, temporary landing sites, and lay down areas rather than in a special use permit since these activities are an integral part of the construction operations. We agree and the final rule is consistent with this comment. The same commenter said that short-term incidental activities, such as those short term construction activities that would temporarily require additional width for a right-of-way, or a temporary access road should be permitted for a term and with stipulations, as a right-of-way, not as a special use, because they are tied to a longer term use. We agree with the commenter. Under this final rule, we will issue right-of-way grants under FLPMA with an appropriate term and stipulations for all authorized uses associated with a right-of-way, including short term construction and access needs.

Section 2801.2

What Is the Objective of BLM's Right-of-Way Program?

This section is new to the final rule and explains it is BLM's objective to grant rights-of-way to qualified individuals and business or government entities, and to direct and control the use of rights-of-way on public lands in a manner that:

(A) Protects the natural resources;

(B) Prevents unnecessary or undue degradation to public lands;

(D) Coordinates, to the fullest extent possible, all BLM actions under the regulations with state and local governments, interested individuals, and appropriate quasi-public entities.

We inadvertently left the objectives section out of the proposed rule, but this final section is consistent with previous section 2800.0-2. We added a similar provision to the part 2880 regulations discussed later in this preamble.

Section 2801.5

What Acronyms and Terms Are Used in These Regulations?

This section contains the acronyms and defines the terms that are used in these regulations. Paragraph (a) is new to the final rule and contains acronyms that are frequently used in the final rule. We also amended the definitions section in the final rule by adding several terms, by deleting unnecessary terms, and by amending the definitions of the terms we proposed.

Two terms not defined in the proposed or final regulations are “suspension” and “termination.” We discuss those terms here because the public and BLM staff often inappropriately use the terms interchangeably. The two terms have very different meanings. Suspensions involve immediately curtailing activities and privileges authorized under a grant for a specified period of time. Suspensions may be ordered to protect public health, safety, or the environment. Terminations, on the other hand, involve ending the term of a grant because the grant has expired or is required by law to terminate, the holder requests and BLM consents to the termination, or the holder has not complied with laws, regulations, or any

terms and conditions of the grant, including abandonment.

Many comments related to redefining terms used in the proposed rule or adding new terms to make the rule easier to understand.

In the final rule we added a definition of “actual costs” to mean the financial measure of resources BLM expends in processing and monitoring right-of-way grants including direct and indirect costs, exclusive of management overhead. We added this definition because “actual costs” is one of the criteria spelled out in FLPMA that BLM uses to assess whether costs are reasonable. The term is defined similarly to previous section 2800.0-5(o).

One commenter asked that the final regulation define “administrative costs of processing,” as the phrase was vague and subject to interpretation. In the final rule we do not use the phrase “administrative cost of processing” and therefore there is no need to define the term.

The Forest Service recommended revising the definition of “base rent” to read, in part, as follows:

Base rent means the initial dollar amount required of a facility owner or a facility manager based on the highest value use in their facility, as determined by the communications rent schedule and the population of the community served. If the facility manager rental rate or the facility owner's type of use rental rate is equal to or greater than other assigned rental rates in that facility, then * * *.

In the final rule we moved the definition of “base rent” from proposed section 2806.5 to this section. We also modified the final definition to make it easier to understand that when a communication site facility manager's or facility owner's scheduled rent is equal to the rent for the highest use from the communication use rent schedule, the facility manager or facility owner's use determines the base rent. When the value of any other use in the communication site facility exceeds that of the facility manager or facility owner's use, that other use determines the base rent. Although we did not copy the FS proposed language exactly, we followed the suggested meaning of the FS comment in the final definition.

In the final rule we amended the definition of “casual use” to mean “activities ordinarily resulting in no or negligible disturbance of the public lands, resources, or improvements.” We also replaced the example proposed with “Surveying, marking routes, and collecting data to use to prepare grant applications.” We believe the final rule's definition of “casual use” is a more accurate and useful description because it recognizes that casual use may cause no disturbance and because it gives examples that are more useful than that provided in the proposed rule.

In the final rule we moved the definition of “commercial purpose or activity” from proposed section 2806.5 to this section and modified it to make it easier to understand. In the final rule, we use the term to describe the situation where a holder attempts to produce a profit by allowing the use of its facilities by an additional user. Under these circumstances BLM may assess an appropriate rent for such commercial activities. The holder's use may not otherwise be subject to rent charges under BLM's rental provisions.

In the final rule we moved the definition of “communication use rent schedule” from proposed section 2806.5 to this section and modified it to make it easier to determine where a use will fit into the schedule. The final rule also clearly states that the type of use identified on an FCC license does not supersede either the definition found in this subpart or the procedures for calculating rent in subpart 2806. The definitions in this rule are different from those in FCC's rules because our reason for defining them is so we can determine the correct rent for the use of a right-of-way, whereas the FCC regulations define them for entirely different reasons, such as licensing requirements. Therefore, our definitions continue to focus on determining the type of use. However, there may be circumstances where BLM cannot accurately determine the type of communication use and therefore cannot determine the proper category in the rent schedule for the use. Should this occur, BLM may consult with the FCC to help us determine the use, based on our definitions, and therefore determine where the use would fit into the communication use rent schedule.

Several commenters said BLM should change its definition of “commercial mobile radio service” (CMRS) (contained in “communication use rent schedule) because it differs significantly from the regulatory classifications established by Congress and the FCC. They said BLM's definition of CMRS did not identify cellular, personal communication service, or enhanced specialized mobile radio services as specific types of commercial mobile radio services, but instead focused on communication services to individual customers and ancillary communication equipment for operating, maintaining, or monitoring use. One of the commenters suggested that we use the FCC's definition of CMRS. Another commenter said that the definition contravened section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, which mandated that similar mobile services be subject to consistent regulatory definition and urged BLM to adopt FCC definitions in its final rule. We disagree with the commenters. BLM and the FCC have different definitions for the terms because we use the terms for different purposes. The FCC issues licenses for different classifications of primary uses. BLM defines different types of communication uses for rental calculation purposes only.

In the final rule we moved all communication site related definitions from proposed section 2806.5 to this section. For example, we moved the definition of “customer” from proposed section 2806.5 to this section. We also modified the definition to make it clear that:

(A) BLM includes private or internal communication uses located in a holder's facility as customer uses; and

(B) Customer uses are not included in the amount of rent owed by a facility owner, facility manager, or tenant unless the facility owner or facility manager is operating the facility for a commercial purpose. This more accurately describes how we charge for customer uses than the proposal and is consistent with existing policy and practice.

Several commenters thought the definition of “designated right-of-way corridor” should be deleted because it is not compatible with oil and gas field operational practices. We address this comment here because right-of-way corridors, even those for oil and gas operations, are designated under FLPMA. The commenters said that the spider web of flowlines, gathering lines and roads on specific leases cannot be predicted and would not be conducive to corridors. We retained the definition in the final rule because of the advantages to locating major utility rights-of-way in corridors on public land and because section 503 of FLPMA requires that we use rights-of-way in common to the extent practical. Further, the final rule does not require that rights-of-way for all oil and gas field operations be located in a designated right-of-way corridor. Designation of a right-of-way corridor is a land use planning decision that BLM makes only after fully considering the impacts on other existing and planned land uses, including oil and gas development.

We made minor wording changes to the definition of “facility” in the final rule to make it easier to understand. The definition makes it clear that “facility” includes the improvements or structures on a right-of-way owned or controlled by the grant or lease holder.

In the final rule we moved the definition of “facility manager” from proposed section 2806.5 to this section. The final definition makes clear that a communication site facility manager does not own or operate its own equipment, but leases space to tenants and customers in a communication facility. We also moved the “facility owner” definition from proposed section 2806.5 to this section and reworded it to be clear that a “facility owner” owns and operates its own communication equipment in a facility and may or may not lease space to other users in the communication facility. Both definitions are consistent with current policy and practice.

Several commenters said that the definition of “field examination” should make it clear that the BLM staff person making a field trip should look at as many rights-of-way and Applications for Permits to Drill as possible in one trip to make the trip as efficient as possible. We agree. Combining several field examinations or other inspections into one field trip is BLM's routine practice. However, we deleted the proposed definition of “field examination” from the final rule because we no longer use the term and it is not part of the criteria for determining a cost recovery category in this final rule. For further information, please see the preamble discussion of final section 2804.14.

Several commenters asked what “reasonable costs” are and said that BLM should be responsible for paying for NEPA and other studies since it is our responsibility under the law. We use the phrase “reasonable costs” in sections 2804.14, 2804.20, and 2805.16. The final rule defines this phrase in section 2801.5, and final section 2804.20 lists the factors from FLPMA that BLM will use in its determination of the reasonable costs for Processing Category 6 or Monitoring Category 6.

We reworded the definition of “grant” to state that a grant is any authorization or instrument (

e.g.

, easements, leases, licenses, or permits) issued under Title V of FLPMA, and that “grant” includes those authorizations and instruments BLM and its predecessors issued for like purposes prior to the passage of FLPMA under now expired authorities. Therefore, the term “grant” includes communications use leases. We use the term “lease” for communication site purposes because of the nature of the rights we authorize to the holder of the authorization. Communication use leases allow holders to sublease space to tenants and customers without first obtaining BLM approval. A typical BLM right-of-way grant does not allow holders to sublease.

We received many comments related to the definition of “hazardous material.” Many commenters said that the Environmental Protection Agency (EPA) has an established definition of “hazardous substance” and that EPA regulates hazardous substances and BLM therefore need not. Some commenters said the definition was overly broad, inconsistent with other regulatory authorities and should be deleted. Several commenters said that the definitions “hazardous material,” “discharge,” and “release” should all be deleted from the rule and that the rule is expanding BLM's jurisdiction beyond what is required by law. Some commenters said the rule changes statutory requirements and regulations on hazardous materials. The commenters said the rule should not weaken or dilute the Resource Conservation and Recovery Act (RCRA) or the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) or eliminate the exemptions provided the oil and gas industry in those statutes. We have not changed these definitions as a result of these comments. The final rule includes these definitions to make clear the regulations addressing use and management of hazardous materials on Federal and public lands. As noted in the proposed rule's preamble (see 64 FR 32118), right-of-way holders use, store, and transport various hazardous materials on and across public lands. BLM seeks to ensure that those using BLM lands are responsible for damage to health, property, and the environment incurred while using and occupying a right-of-way and that they understand which materials we consider to be hazardous.

The terms “discharge” and “release” take their meanings from the Clean Water Act (33 U.S.C. 1321(a)(2)) and CERCLA (42 U.S.C. 9601(22)), respectively. The terms broadly address the range of circumstances under which, during the use of a right-of-way, a chemical substance may enter the environment.

The term “hazardous material” is also intentionally broad and includes, among others:

(A) Hazardous substances as defined by CERCLA (see 42 U.S.C. 9601(14);

(B) Regulated substances managed in tanks as defined by the Resource Conservation and Recovery Act (RCRA) (see 42 U.S.C. 6991

et seq.

);

(C) Oil, as defined by the Oil Pollution Act (see 33 U.S.C. 2701(23)), and the Clean Water Act (see 33 U.S.C. 1321(a)); and

(D) Other substances defined and regulated as “hazardous” under applicable Federal, state, tribal, or local law.

We defined “hazardous material” by cross-referencing other laws to ensure that all pollutants, contaminants, and hazardous substances, including oil and petroleum products, fall within the definition. Although some commenters stated that BLM should specify hazardous substances of concern, and should not incorporate into its rule definitions taken from other laws, such an approach would be impracticable in light of the large number and types of hazardous substances that can cause harm to health, property, or the environment. In addition, numerous laws, including CERCLA, define “hazardous substance” by incorporating definitions found in other laws. (See section 101(14) of CERCLA, 42 U.S.C. 9601(14), and section 1001(23) of the Oil Pollution Act, 33 U.S.C. 2701(23).) Because numerous jurisdictions have adopted definitions of hazardous substances that, in many respects, differ from those in CERCLA, RCRA, the Oil Pollution Act, and the Clean Water Act, BLM included within its definition a catch-all for substances defined as hazardous under Federal, state, tribal, or local law. Rather than cause confusion and inconsistency, as claimed by some commenters, BLM believes the definition fosters consistency in the meaning and application of key terms and provides clear guidance to users of their obligations and liability under these regulations.

BLM disagrees that, by incorporating definitions of environmental terms taken from other laws, we are attempting to expand our authority into areas administered by EPA and state regulatory authorities under environmental laws. BLM is not seeking to supplant EPA and state authorities to regulate environmental laws on Federal and public lands. To the extent that EPA and the state have such authority, nothing in this rule affects it. These definitions apply only to BLM's right-of-way regulations, which seek to ensure that if someone using and occupying a right-of-way issued under these regulations causes harm to health, property, or the environment, the cost of remedying such harm falls on the grant holder, rather than on the public.

Several commenters stated that BLM should delete the term “hazardous material” and replace it with “hazardous substance” as defined in CERCLA, because using the term “hazardous material” could weaken or dilute the exemption granted to the oil and gas industry in CERCLA and RCRA. The commenters misunderstand the purpose of the rule. Nothing in the rule

affects the exclusion of petroleum from the definition of “hazardous substance” under section 101(14) of CERCLA (42 U.S.C. 9601(14)). BLM is not seeking through this rule to enforce CERCLA on Federal or public lands or to regulate users' management of waste under RCRA. Rather, BLM is issuing these regulations to ensure that, as a manager of public lands, it places the risk of harm on the grant holder and not on the public. In this context, the definitions are used in these regulations only as a way to identify which materials we consider to be hazardous and which, therefore, may impact Federal or public lands.

One commenter said that the final rule should define “holder” as it is defined in the law, to exclude Federal agencies. The commenter is correct that FLPMA does not include Federal agencies in its definition of holders. However, section 507 of FLPMA clearly provides for rights-of-way for the use of any department or agency of the United States. Title V of FLPMA also applies to any Federal agency that would apply to construct an oil or gas pipeline on public lands. Therefore, we believe it necessary to include Federal agencies in the definition of holders.

In the final rule we added a definition of “management overhead costs” to mean the costs associated with the BLM directorate, including all BLM State Directors and the entire Washington Office staff, except where a State Director or Washington Office staff member is required to perform work on a specific right-of-way case. We added the definition because we use the phrase in the definition of actual costs and in final section 2804.20.

In the final rule we also added a definition of “monetary value of the rights and privileges you seek” to mean the objective value of what the right-of-way grant is worth in financial terms to the applicant. We added this definition because “monetary value” is one of the criteria spelled out in FLPMA that BLM uses to assess whether costs are reasonable and we use the term in final section 2804.20. The meaning of the term is the same as the definition in previous section 2800.0-5(p).

Several commenters said the final rule should define “monitoring” in terms of requirements and time frames and that monitoring should not be considered an annual or recurring cost. Another commenter asked if the determination of compliance was part of the “administrative costs of (renewal) compliance,” or part of day-to-day monitoring activities. The second comment appears to be asking if compliance inspections prior to renewal of a grant are part of day-to-day monitoring or part of the cost of processing a renewal. In the final rule we added a definition of monitoring, which includes those actions BLM performs to ensure compliance with the terms, conditions, and stipulations of the grant.

Monitoring occurs primarily during the construction and rehabilitation phases of a project. During grant application processing, BLM will estimate the hours we will need to monitor the construction and rehabilitation of a Monitoring Category 1 through 4 application, and we will collect the applicable fees when the applicant accepts the terms, conditions, and stipulations of a grant. For a Category 1 through 4 application, compliance inspections for a renewal are part of the cost of processing the renewal. Monitoring Category 1 through 4 fees are one-time fees. Monitoring for Category 5 Master Agreements and Category 6 projects are in accordance with the terms of the agreement and may include monitoring during the life of the grant through the termination phase of the project.

In the final rule we deleted the definition of “project” because there is a common understanding of the term as it is used in this rule.

We also replaced the proposed rule's definition of “public land” with a definition more closely following section 103(e) of FLPMA.

In the proposed rule we omitted the definition of “reasonable costs.” In the final rule we added the definition of the term, citing the definition in section 304(b) of FLPMA, which is consistent with existing policy and practice.

In the final rule we moved the definition of “site” from proposed section 2806.5 to this section.

One commenter supported using the term “site,” but recommended a broader definition that would include a geographic area that can accommodate multiple communication facilities under the control of one or more facility managers supporting a combination of recognized communications uses. BLM did not change the definition in response to this comment because we believe the commenter's suggestion is actually more restrictive than the proposed definition. A site is not limited to communication facilities and may contain several other types of right-of-way facilities and uses besides communications facilities.

One commenter said that the definition of “substantial deviation” absorbs rights that a Federal agency may already have in an existing grant. As an example, the commenter said that in utility rights-of-way it is common practice for the grant to include terms that allow the holder to construct, modify, and maintain the facilities. The commenter said that if Federal agencies want to do something that is beyond the scope of the grant, they should contact BLM. In the proposed rule BLM provided an explanation of “substantial deviation” that was not spelled out in previous regulations (see proposed section 2807.11). We moved the description of substantial deviation from proposed section 2807.11 to final section 2801.5. BLM agrees with the commenter that when an activity is beyond the scope of what is authorized in a grant, the holder should contact BLM before engaging in the activity. We reworded the definition of “substantial deviation” to make clear that the notification requirement of proposed section 2807.11(b) applies only in circumstances where the use is outside the scope of an existing grant or outside the boundaries of an existing authorized right-of-way. The requirement does not apply to uses that are in an existing grant. BLM considers adding facilities that are not specifically authorized in the original grant to be a substantial deviation that requires supplemental authorization in the form of a grant amendment.

Several commenters said that as it pertains to the definition of “temporary use permit,” public safety is an “OSHA function,” not a BLM function. They also said that there should be a definition of “natural environment” in the final rule and that under a temporary use permit, there may not be any “natural environment” to protect.

In the final rule we deleted the definition of “temporary use” from part 2800. Under the final rule, for any use or activity requiring a FLPMA grant for a short duration, BLM will issue a short term right-of-way grant instead of a temporary use permit. When an applicant identifies a short term use during application processing, such as the need for additional work space outside the right-of-way boundary, BLM will approve that use, as appropriate, within the right-of-way grant. When the short term use is identified after a right-of-way grant for a project has been executed, BLM will approve the additional short term use, as appropriate, in a separate short term grant or an amendment to the grant. There is no specified term or duration for a short term grant and BLM will determine the term on a case by case basis.

Under the final rule for part 2880, we will continue to issue TUPs for uses associated with MLA right-of-way

grants. We disagree with commenters' suggestion that the definition of TUPs should not address public safety. The MLA specifically states that BLM may issue TUPS to “protect the natural environment or public safety” (see 30 U.S.C. 185(e)). We also disagree with the commenters that said under a TUP there may not be any natural environment to protect. The “natural environment” is the land for which BLM issues the original grant and any attendant TUP, which holders must protect.

In the final rule we moved the definition of “tenant” from proposed section 2806.5 to this section. The final rule's definition is similar, but more specific, than the previous rule's definition (see previous section 2800.0-5(bb)), and is also consistent with the proposed rule.

We use the term “third party” in the proposed and final rules. We did not define it in the proposal, but do define it in the final rule to make clear that BLM considers a third party to be any party aside from the applicant, holder, or BLM.

In the final rule we added a definition of “tramway” to eliminate confusion over the meaning of the term. One of the right-of-way uses FLPMA specifically mentions is tramways (see 43 U.S.C. 1761(a)(6)). BLM administers a large amount of timber property in western Oregon and on other public lands where the term is commonly used to describe systems for transporting and hauling timber from the forest. Previous regulations did not define the term and there has been ongoing confusion over what type of transportation system qualifies as a tramway. Therefore, in the final rule we added a definition of tramway that is consistent with common usage of the word and existing policy.

One commenter said that we should add a definition of “trespass” to the final rule, while other commenters said that the proposed definition of “trespass” was too open ended and gave BLM too much discretion. In the proposed rule we defined the term “trespass” in the body of the regulatory text in section 2808.10, as we do in the final rule. We disagree with the commenter that the definition of the term is too open ended and gives BLM too much discretion. The final definition is consistent with previous regulations (see previous sections 2800.0-5(u), (v), and (w)) and does not give BLM any more discretion than do previous rules.

Several commenters said that the definition of “unnecessary and undue degradation” should be changed to “unnecessary and undue damage” and should not include “non-willful” acts. Other commenters said that “degradation” can mean almost anything and does not provide guidance to industry on what to avoid. The term “unnecessary or undue degradation” is statutory in origin and for that reason we decline to change “degradation” to “damage.” The term appears in section 302(b) of FLPMA (43 U.S.C. 1732(b) which states that “In managing the public lands the Secretary shall, by regulation or otherwise, take any action necessary to prevent unnecessary or undue degradation of the lands.”

In our 1999 proposed rule, we defined the term “unnecessary and undue degradation” to mean “surface disturbance that is greater than that which would occur when the same or a similar activity is being done by a prudent person in a usual, customary, and proficient manner that considers the effects of the activity on other resources and land uses outside the area of the activity. The disturbance may be either willful or nonwillful.” We have decided to delete this proposed definition (and the existing definition at 43 CFR 2800.0-5(x)) because we find it to be unnecessary. Issuing a right-of-way grant is a highly discretionary act on BLM's part. In final section 2804.26(a), BLM has established standards for exercising this discretion. For instance, as final section 2804.26 makes clear, an application may be denied if the proposed use is not in the public interest or is inconsistent with the purpose for which we manage the public lands.

“Unnecessary or undue degradation” sets a standard far less stringent that those in section 2804.26. The Secretary, through BLM, will continue to observe the “unnecessary or undue degradation” standard in addressing a right-of-way application and in assessing and administering the terms and conditions and conditions of a grant, but will allow the facts posed by a particular situation give meaning to this phrase.

In the final rule we moved the definition of “zone” from proposed section 2806.5 to this section. We amended the definition in the final rule to more accurately describe a zone as “one of eight geographic groupings necessary for linear right-of-way rent assessment purposes, covering all lands in the contiguous United States.”

Section 2801.6 Scope

This section explains what these final regulations apply to and what the final regulations do not apply to. In this final rule we combined proposed sections 2801.7 and 2801.8 into this section. We also amended this section by adding new paragraphs (b)(5), (6), and (7).

We added new paragraph (b)(5) to alleviate the concerns of some commenters that this rule would have a negative effect on rights under R.S. 2477.

We added new paragraph (b)(6) to clarify that the right-of-way regulations do not apply to existing rights for private reservoirs, ditches, and canals established prior to FLPMA under the Mining Act of July 26, 1866. We think this clarification will be helpful in eliminating any confusion associated with the previous regulatory language found in former section 2801.4.

In the 1866 Act, Congress granted Federal protection for vested state law-based water rights and rights-of-way for ditches, canals and other structures necessary for the use of water. Under the Act, a private party could acquire a right-of-way across Federal lands without any action by the government—no application or filing with the government was necessary, and no governmental approval was required. The right-of-way vested once a ditch or canal was constructed and a water right acquired. Once the right-of-way was created, it existed in perpetuity and included the right to operate and maintain the ditch, canal or conduit within the right-of-way.

See, e.g., Utah Power & Light

United States,

243 U.S. 389, 405 (1917);

Gorrie

Weiser Irr. Dist.,

153 P. 561, 562 (Id. 1915);

Perry

Reynolds,

122 P.2d 508, 511 (Id. 1942);

United States

Big Horn Land & Cattle Co.,

17 F.2d 357, 366 (8th Cir. 1927).

Other statutes enacted after the 1866 Act also allowed private parties to acquire rights-of-way across Federal lands. Unlike 1866 Act rights-of-way, however, these other statutes required government action before rights-of-way vested. For example, the Act of March 3, 1891 required an applicant to file and get government approval of a map before the right-of-way vested. The 1891 Act differed from the 1866 Act in several other ways, too. Unlike the 1866 Act, the 1891 Act defined the physical extent of the right-of-way. In addition, the 1891 Act allowed for establishment of rights-of-way for irrigation purposes on reserved lands; the 1866 Act did not apply to reserved lands.

When FLPMA was enacted in 1976, it repealed the existing laws governing rights-of-way and replaced them with a single mechanism for establishing a right-of-way over the public lands. Section 501(a) of FLPMA provides the Secretary of the Interior with authority to “grant, issue, or renew rights-of-way over, upon, under, or through” the

public lands. 43 U.S.C. 1761. In addition, FLPMA provides the Secretary with authority to impose terms and conditions on these rights-of-way that, among other things, “minimize damage to scenic and esthetic values and fish and wildlife habitat and otherwise protect the environment.” Section 505(a); 43 U.S.C. 1765.

But FLPMA did not terminate rights-of-way established under the prior statutes. Instead, FLPMA expressly preserved and protected such pre-existing private rights-of-way. Section 701(a) of FLPMA provides that FLPMA does not terminate “any valid lease, permit, patent, right-of-way, or other land use right or authorization” existing at the time of FLPMA's enactment. 43 U.S.C. 1701, note 1. In addition, section 701(h) of FLPMA provides that all actions taken by the Secretary in the exercise of her authority under FLPMA are “subject to valid existing rights.” 43 U.S.C. 1701, note 1. Together, these provisions of FLPMA ensure that pre-FLPMA rights-of-way are protected and preserved.

This final rule therefore reflects long-standing law and BLM's historical practice by clarifying that 1866 Act rights-of-way are not subject to regulation so long as a right-of-way is being operated and maintained in accordance with the scope of the original rights granted. Because rights-of-way under the 1866 Act are perpetual and do not require renewal, no authorization under FLPMA exists or is required in the future. Therefore, unless a right-of-way holder undertakes activities that will result in a substantial deviation in the location of the ditch or canal, or a substantial deviation in the authorized use, no opportunity exists for BLM to step in and regulate a right-of-way by imposing terms and conditions on the right-of-way's operation and maintenance. Simply stated, there is no current BLM authorization to which such terms and conditions could be attached. Therefore, Title V of FLPMA and BLM's right-of-way regulations do not apply to these rights-of-way.

This does not mean, however, that BLM cannot take action to protect the public lands when a holder of an 1866 Act right-of-way undertakes activities that are inconsistent with the original right-of-way. In such a situation, if the right-of-way holder does not approach BLM for a FLPMA permit authorizing such activities, FLPMA and BLM's trespass regulations provide BLM with the discretion to take an enforcement action against the right-of-way holder.

Title III of FLPMA provides the Secretary of the Interior with broad law enforcement authority. Section 302(b) provides that the Secretary “shall * * * take any action necessary to prevent unnecessary or undue degradation of the lands.” 43 U.S.C. 1732(b). In addition, section 303(g) provides: “The use, occupancy, or development of any portion of the public lands contrary to any regulation of the Secretary or other responsible authority, or contrary to any order issued pursuant to any such regulation, is unlawful and prohibited.” 43 U.S.C. 1733(g). BLM's trespass regulations, at 43 CFR part 9230, specify that, among other things, the “extraction, severance, injury, or removal of timber or other vegetative resources or mineral materials from public lands under the jurisdiction of the Department of the Interior, except when authorized by law and the regulations of the Department, is an act of trespass.” 43 CFR 9239.0-7. Trespassers are liable to the United States in a civil action for damages and may be prosecuted under criminal law. Therefore, with respect to 1866 Act rights-of-way, Section 302(b) of FLPMA and the trespass regulations provide BLM with the authority to take an enforcement action against a right-of-way holder undertaking activities inconsistent with the original grant.

We added new paragraph (b)(7) to address statutory changes to the Federal Power Act (FPA) and FLPMA. These changes incorporate existing policy and implement FPA and FLPMA amendments.

One commenter stated that the final rule should state if there are any rights-of-way outside the scope of the rule and should address rights-of-way in wilderness areas or “short term rights-of-way on wilderness lands.” We did not amend the final rule as a result of these comments. However, the final rule explains what the final regulations do not apply to and includes language in paragraph (b)(3) that states that the regulations do not apply to “Lands within designated wilderness areas, although BLM may authorize some uses under parts 2920 and 6300 of this chapter.”

Section 2801.7 Information Collection Matters

We deleted this section from the final rule because it is not necessary to publish this information in the text of the regulations.

These regulations contain information collection requirements. As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3501

et seq.

), we submitted a copy of the proposed information collection requirements to the Office of Management and Budget (OMB) for review. OMB approved the information collection requirements under Control Number 1004-0189, which expires October 31, 2005.

Section 2801.8 Severability

This section explains that if any court holds provisions of these regulations invalid, the remainder of the rules are not affected. This principle has always applied to BLM regulations, but it is stated here for clarity. This section was proposed as section 2801.10. We made editorial changes to the section, but its effect is the same as the proposed rule.

Section 2801.9 When Do I Need a Grant?

This section is a combination of proposed sections 2801.7 and 2801.8. It explains that you must have a grant when you plan to use public lands for certain systems or facilities, whether over, under, on, or through public lands. The section lists examples of the types of systems or facilities that require grants. The section also explains additional requirements for rights-of-way for generating, transmitting, or distributing energy. Finally, the section provides a cross-reference to BLM regulations for rights-of-way for transporting oil and gas resources.

Section 2801.10 How Do I Appeal a BLM Decision Issued Under These Regulations?

This is a new section to these regulations. The proposed rule listed the basic contents of this section for each action which allows a right to appeal. This final rule replaces the appeals language in each of those sections with a cross-reference to this section. This eliminates redundancy and brings this rule in line with other BLM regulations that handle appeals sections in a similar manner.

We received several comments on the subject of appeals. One commenter wanted the regulations to state whether or not applicants had the right of appeal if BLM rejected their applications. As a result of this comment, we amended final section 2804.26 and it now states that applicants have the right of appeal to the Interior Board of Land Appeals (IBLA) if BLM denies their applications.

Several commenters wanted the opportunity for State Director review for initial disagreements with BLM before BLM referred the matter to the IBLA. One commenter suggested language to accomplish this administrative review. Although other BLM programs have adopted these reviews, BLM did not add State Director review provisions to this final rule. When you appeal a decision to IBLA, BLM is not prohibited from

reconsidering or discussing the appealed decision with you or other interested parties. If BLM decides to rescind or amend the appealed decision as a result of additional review or discussion with you or other interested parties, we may rescind or amend only after asking IBLA to remand the matter for BLM's further consideration and IBLA's consent to this request. We encourage BLM personnel, grant holders, and applicants to work toward informal resolution of disputes over BLM decisions proposed or made by BLM both before and after appeals are filed. In BLM's right-of-way program these informal reviews and discussions have been and are a useful way to resolve disputes without unnecessarily formal mid-level reviews, such as State Director reviews.

Several commenters said that there is no part 4 in this title. The commenters are mistaken. Part 4 of 43 CFR is in a volume separate from the volume where BLM's regulations are located. Parts 1 through 999, including part 4, are in the first volume of 43 CFR and parts 1000 through 10010, including BLM's regulations, are in the second volume.

Subpart 2802—Lands Available for FLPMA Grants

This subpart describes the lands that are available for rights-of-way and how BLM designates corridors. Generally, BLM designates lands as suitable for right-of-way uses through its land use planning process, as described in FLPMA and existing regulations at 43 CFR 1610. During this process BLM prepares land-use plans, called either “resource management plans” or “plan amendments.” After going through a process in which the public helps BLM identify issues the plan should address, BLM then:

(A) Identifies resource and information needs;

(B) Formulates alternatives;

(D) Prepares a draft plan and environmental document for public review and comment; and

(E) Determines what resource and land-use decisions to make in the approved plan. Among these decisions are what land uses are available for right-of-way grants. Land use plans designate lands as:

(1) Open to right-of-way grants;

(2) Right-of-way avoidance areas (where right-of-way grants would not be issued unless there were no other available alternatives); or

(3) Right-of-way exclusion areas where right-of-way grants would not be approved for any reason. Land use plans also designate right-of-way corridors.

Section 2802.10 What Lands Are Available for Grants?

This section explains that BLM grants rights-of-way for lands under its jurisdiction and lists exceptions when we would not issue a right-of-way grant. These exceptions include instances when a statute, regulation, or public land order excluded right-of-way uses, the lands are segregated or withdrawn from right-of-way uses, or when BLM identifies areas as inappropriate in a land use plan or in an analysis of an application. The section explains that BLM may also require common use of rights-of-way and may require location of a right-of-way within an existing corridor. This section states that BLM will designate right-of-way corridors through land use plan decisions. This section also suggests that you contact BLM to determine if the lands you are considering for a right-of-way are available for right-of-way use.

We added new paragraphs (a)(1), (a)(2), and (a)(3) to the final rule to more completely explain the reasons why certain lands under our jurisdiction would not be available for a right-of-way use. These new provisions to the rule are consistent with the proposed rule, our existing regulations at part 2300 (land withdrawals), subpart 2091 (segregation and opening of lands), and part 1600 (planning, programming, and budgeting). We also eliminated the discussion in proposed section 2802.10(b) of notifying the public “by appropriate means” of designated corridors because it was vague and because we already require public notification as part of the land use planning process.

Several commenters said that BLM should replace “may” with “will” where it appears in proposed paragraphs (a) and (b) of this section. We did not make the change to the final rule in either proposed paragraph (a) or (b). Issuing a right-of-way grant remains a highly discretionary act on our part. Section 501(a) of FLPMA authorizes, but does not compel, the Secretary to issue rights-of-way over, upon, under, or through the public lands (see 43 U.S.C. 1761(a)). Section 503 of FLPMA requires common use of a right-of-way but only “to the extent practical” (see 43 U.S.C. 1763). There may be circumstances where BLM determines that it is not in the public interest to issue a right-of-way grant or to require common use of a right-of-way area even when the lands are open to the development of right-of-way grants. Therefore, the final rule continues to leave the discretion to issue a grant or require common right-of-way use in BLM's hands.

One commenter said that in paragraph (b) of this section, we should replace “require” with “propose.” We did not change the final rule as suggested by the commenter. As noted above, Section 503 of FLPMA provides that BLM, to the extent practical, require, not simply propose, common use of a right-of-way. BLM is therefore required to issue rights-of-way in common where it is practical and replacing “require” with “propose” would be inconsistent with the statute.

One commenter said that BLM must consider the location of existing assets and facilities when determining whether land is available. Another commenter said that BLM should not require common use of a corridor if location in the corridor would render use of existing facilities infeasible or burdensome. We agree with the commenters. When issuing rights-of-way in common, or requiring that a right-of-way be issued in or adjacent to an existing corridor, BLM will consider whether or not the uses are compatible. BLM will also consider the possible impacts a proposed use may place on the future usability of a corridor. In other words, if a proposed right-of-way use would render a corridor unavailable for any future right-of-way uses, BLM could decide that the proposed use should be located in some alternate location.

Several commenters suggested inserting “or” between “regulation” and “planning” in proposed paragraph (a), and deleting the rest of the sentence after “planning.” Commenters made this suggestion because they said environmental and other resource conditions should already be addressed in the land management planning process. When BLM completes, updates, or amends a land use plan we undertake an environmental analysis. However, when a project is proposed, BLM will complete a site-specific NEPA analysis. NEPA requires the site-specific environmental analysis and it is designed to identify how the project-specific activities may impact the environment. The planning documents, on the other hand, are more general in nature and generally do not and cannot address site-specific impacts of a given project. Therefore, we made no changes to the final rule as a result of this comment.

The same commenters recommended that we replace “require” with “encourage” in proposed paragraph (b) since access roads, gathering lines, and flowlines do not always fit neatly into existing corridors. The commenter said

that such a requirement could render an oil and gas project uneconomic. We did not amend this section as suggested by the commenter. As stated above, section 503 of FLPMA says that BLM must require common use of rights-of-way to the extent it is practical. When determining whether it is practical to require a right-of-way to be located in a corridor, BLM will consider whether or not the new use will be compatible with the existing use. If it is not, BLM will informally work with you to determine a right-of-way location that will both protect the public interest and meet your needs. These types of issues are best resolved during the preapplication meeting.

One commenter said that the regulations should make clear that communication site facility managers and facility owners need to allow shared use of a right-of-way for pipelines and communications cables. The commenter said that there should be a minimal process for using existing pipeline rights-of-way for fiber optic cables and the like. The commenter said that this will serve the public and facilitate the installation of facilities with minimal damage to BLM lands. We agree with the commenter and encourage co-location of fiber optic facilities with power line structures and within pipeline rights-of-way. One of the advantages of co-locating uses in one right-of-way is that NEPA work has already been done for the existing use and therefore the amount of additional environmental analysis necessary for any additional use would normally be minimal unless the new use is significantly different or other reasons apply. BLM currently has a categorical exclusion for the granting of rights-of-way wholly within the boundary of compatibly developed rights-of-way. Because exceptions to this categorical exclusion may apply, BLM will determine the amount of analysis and additional work for additional uses on a case-by-case basis. The amount of analysis necessary cannot be determined by a rule of general applicability, and as a result we did not amend the rule to address the comment.

Several commenters said that once BLM designates corridors in land-use plans, it should require common use of the corridor and location of new rights-of-way within the corridor to the extent possible. The commenters said that the proposed regulations give too much discretion. As is stated in the proposed rule's preamble (see 64 FR 32118), BLM designates right-of-way corridors and issues grants within these corridors to the maximum extent possible, but due to resource concerns and conflicts between uses, it is not always possible to restrict uses to designated corridors. We disagree with the commenters that the proposed regulations give BLM too much discretion in issuing grants in right-of-way corridors. BLM must have the flexibility to choose whether or not a use should be located in a right-of-way corridor to make sure uses are compatible and to ensure that the public interest is protected.

Several commenters said that forcing the use of corridors will make lease operations uneconomical and result in a waste of minerals and associated royalties from the public good. BLM agrees that the designation of a corridor in a land use plan can impact, in some cases, the development of mineral resources. The land use planning process described above assures that our analysis considers effects on other resource uses such as impacts to mineral extraction. It is frequently these same mineral extraction interests that need right-of-way corridors to support the transportation of materials to and from their operations. We made no changes to the final rule as a result of this comment.

One commenter said that requiring common use of a right-of-way may be unpractical, for safety considerations, in designing power lines. BLM considers issues of safety when requiring common use of a right-of-way. If BLM determines that common use of a right-of-way is unsafe, BLM will not require it.

Section 2802.11 How Does BLM Designate Corridors?

This section explains that BLM may designate corridors during the land use planning process described in 43 CFR 1610. During this process BLM coordinates with other Federal agencies, state, local, and tribal governments, and the public to identify resource-related issues, concerns, and needs. The process results in a resource management plan or plan amendment, which addresses to what extent you may use public lands and resources for specific purposes. It also explains the factors that BLM considers when determining the locations and boundaries of right-of-way corridors.

Paragraph (a) is new to the final rule and generally explains how we designate corridors in our land use planning process, which is discussed in greater detail in subpart 1610 of existing regulations. This provision provides helpful background to an understanding of paragraph (b). Final paragraph (b) lists the factors BLM considers when designating corridors. Final paragraphs (c) and (d) are new to this final rule and are consistent with section 503 of FLPMA and existing policy.

Several commenters said that this section should identify how corridors are designated. The commenters also said that the process of designation through the land planning process or as provided by section 503 of FLPMA also needs to be briefly described. Proposed and final section 2802.11 identify the factors BLM considers when designating corridors. Therefore, the regulations already address the first part of the comment. As for the second part of the comment, we do not believe these rules should address the land use planning process since BLM's existing regulations at subpart 1610 already address the process and it is not necessary to repeat those regulations here. Final paragraph (a) of this section explains that as part of the planning process under subpart 1610, BLM designates corridors. You can find additional information about the land use planning process in section 202 of FLPMA (see 43 U.S.C. 1712).

Several commenters said that the regulations should emphasize the advantages of reduced NEPA requirements, processing time, and costs that could occur through requiring common use of existing or designated corridors. We agree with the commenters that common use of rights-of-way and proper corridor planning and use can lead to reduced processing times and decreased costs. However, we do not believe it appropriate to discuss motivating factors for using corridors in our implementing regulations. Discussions about cost savings and processing time can occur during the preapplication meetings discussed elsewhere in this final rule.

Subpart 2803—Qualifications for Holding Grants

This subpart describes the qualifications necessary for applicants to receive right-of-way grants. It discusses:

(A) Who may hold a FLPMA grant;

(B) Whether another entity can act on a grant holder's behalf; and

Section 2803.10 Who Can Hold a Grant?

This section explains the qualifications for holding a grant and requires that you are:

(A) An individual, association, corporation, partnership, or similar business entity, or a Federal, state, tribal, or local government;

(B) Technically and financially able to construct, operate, maintain, and terminate the grant; and

This section is essentially the same as that proposed, except that we added a new paragraph (c) stating that you must be of legal age and authorized to do business in the state where the right-of-way is located. Although this provision was not in the proposed rule, it is consistent with previous section 2802.3(a)(5).

One commenter asked if BLM is authorized to issue grants to foreign entities and if so, what the qualifications are. FLPMA is silent on the subject of whether BLM may issue a FLPMA grant to foreign entities. The part 2800 regulations are similarly silent. Regarding MLA requirements, however, 30 U.S.C. 185(a) makes the qualifications provisions of 30 U.S.C. 181 applicable to section 185. The part 2880 regulations reflect these considerations. For example, final section 2883.10 states in part:

To hold a grant or TUP [temporary use permit] under these regulations, you must be a United States citizen, an association of such citizens, or a corporation * * * organized under the laws of the United States, or of any state therein.

As in previous section 2802.3(a)(5), final section 2803.10 requires all entities seeking a right-of-way grant under FLPMA to be qualified to do business in the state where the right-of-way is located. Thus state law must be examined to determine the eligibility of a right-of-way applicant. Final section 2803.10 is substantially the same as previous regulations.

Section 2803.11 (Proposed) Must I Submit Proof of My Qualifications With My Application?

Due to reorganization, we moved the substance of this proposed section to paragraph (b) of final section 2804.12. Please see that section for a discussion of this matter.

Section 2803.11 (Final) Can Another Person Act on My Behalf?

This section allows another person to act on your behalf if you have authorized the person to do so under the laws of the state where the right-of-way would be or is located. This section is slightly different from what we proposed in that the final rule requires that you follow the laws of the state where the right-of-way would be or is located. We believe this is reasonable, consistent with the intent of the proposed rule, but most importantly, it sets the appropriate legal standard.

Section 2803.12 What Happens to My Grant If I Die?

This section explains that if an applicant or grant holder dies, any inheritable interest in an application or grant will be distributed under state law. In this rule, the term “inheritable” is not used in its technical sense. Here, it refers to property passing by will or intestate succession.

If the distributee of a grant is not qualified to hold a grant under section 2803.10, BLM will recognize the distributee as grant holder and allow the distributee to hold its interest in the grant for up to two years. During that period, the distributee must either become qualified or divest itself of the interest. We added this provision to the final rule to make sure we have consistent processes in place for cases where an applicant or a grant holder dies.

Subpart 2804—Applying for FLPMA Grants

This subpart contains information and policies concerning how to apply for right-of-way grants under FLPMA. It discusses:

(A) Where applicants should file their applications;

(B) What information BLM needs to process their applications;

(D) Exemptions from paying filing fees and criteria for establishing reasonable costs; and

(E) How BLM processes applications, including a customer service standard.

Section 2804.10

What Should I Do Before I File My Application?

This section encourages you to schedule a preapplication meeting with BLM to discuss your right-of-way grant application. This section also explains that we may share any information you provide to us at this initial meeting with other agencies to help us to better coordinate the application process. Final section 2804.13 provides that we will keep confidential any information you submit that you identify as such, to the extent allowed by law.

We received no substantive comments on this section and except for editorial changes, it remains as proposed.

Section 2804.11

Where Do I File My Grant Application?

This section explains where you must file your right-of-way grant application.

We received no substantive comments on this section and except for editorial changes, this section remains as proposed.

Section 2804.12

What Information Must I Submit in My Application?

This section explains the information you must include in your application. It requires you to file your application on Standard Form 299 and fill in the required information. This includes a description of the project, a project schedule, the estimated life of the project, and construction and reclamation techniques. You must also include a map of the project, a statement of your financial and technical ability to run the project, and any plans, contracts, and agreements concerning the proposed use(s) on the right-of-way and its effect on competition. We require a complete proposed project description to process the application, to complete an accurate NEPA analysis, and to make a determination whether the proposed use(s) indicate existing or potential competitive interest. BLM requires materials such as plans, contracts, agreements, etc., only if they have a direct bearing on the proposed right-of-way uses. Section 501(b)(1) of FLPMA (and this final rule at section 2804.12(a)(6)) requires a right-of-way applicant to submit and disclose plans, contracts, agreements, or other information reasonably related to the use, or intended use, of a proposed right-of-way, “including its effect on competition,” which the Secretary deems necessary. BLM typically relies on application filing activity as the indicator of competitive interest, but may also examine the plans, contracts, and other information supplied by an applicant to make a determination on competitive interest. We usually process applications on a first come-first serve basis, unless:

(A) Application activity indicates there is a competitive interest; or

(B) Planning decisions, applicant plans, contracts, agreements, or other information indicate there is a competitive interest.

This section also requires business entities to submit additional information about their business. Paragraph (b) of this section was proposed as section 2803.11. BLM requires the information in paragraph (b) to verify the legal status of applicants, including verification that the persons representing the applicant are authorized to do so. Under this paragraph a business entity must submit copies of the formal documents creating the entity and evidence that the party signing the grant application has authority to act on the business entity's behalf. To make it clearer, this final rule uses different terminology than the

proposed rule, but the effect of this final rule is the same as that proposed.

This section also informs you that if you are an oil and gas lessee or operator, and you need a right-of-way for access to your production facilities or oil and gas lease, you may include your right-of-way requirements in your Application for Permit to Drill or Sundry Notice. This improves processing and is consistent with existing policy.

One change from proposed section 2804.12 is our deletion of “On the form, give your name and address and the name and address of any authorized agent * * *” from the second sentence of proposed paragraph (a). We did this because the form itself requires you to submit this information and therefore these words are redundant. In final paragraph (a)(2), we added “operating” and “terminating” the project to the list of things you need to address in your application to ensure that you describe a proposed project completely. As a result of these changes, final paragraph (a)(2) now includes all phases of a proposed project.

In final paragraph (a)(4), the term “facilities'' replaces the term “improvements.” We made this change to make this section consistent with the rest of the rule and because the definition of “facility” includes structures and improvements.

In final paragraph (b)(4), we added text concerning identification of the number and percentage of any class of voting shares of the entity which certain shareholder(s) are authorized to vote. This makes final paragraph (b)(4) consistent with business entity qualification requirements in section 501(b)(2)(B) of FLPMA and previous section 2882.2-1(b)(2). We made the same type of change in final paragraphs (b)(6) and (b)(7) by adding “directly or indirectly,” to be consistent with business entity requirements in section 501(b)(2)(C) of FLPMA and previous section 2882.2-1(b)(3) and final section 2883.12 of this rule. Also, in final paragraph (d) of this section we corrected the citation to BLM's oil and gas operating regulations.

One commenter said that proposed section 2804.12(a)(6) is vague. The commenter also said that we should define “competition” in the final rule. Section 501(b)(1) of FLPMA requires a right-of-way applicant to submit and disclose those plans, contracts, agreements, and other information reasonably related to the use, or intended use, of the right-of-way, “including its effect on competition.” As discussed above, BLM typically relies on application filing activity to determine whether competition exits, but we may also ask an applicant for additional information concerning the proposed right-of-way to verify whether competitive conditions exist. We believe that adding a definition of competition to this regulation would not add any new or useful information to the common understanding of the word, and therefore did not add a definition of the term.

Several commenters said the final rule should provide for applicant-prepared Environmental Assessments and third-party prepared Environmental Impact Statements. The commenters said this practice is authorized by Council on Environmental Quality (CEQ) regulations at 40 CFR 1506.5. Environmental documentation (resource surveys and reports, environmental assessments, and environmental impact statements) prepared by third parties or provided by right-of-way applicants is a well-established and common practice under existing BLM NEPA guidance in H-1790-1. Chapter V-B.1.h, states contracting may be used for preparation of an environmental impact statement (EIS) or for certain analyses to support preparation of an EIS and that either standard Federal contracting procedures or third-party contracting approaches may be followed. H-1790-1, Appendix 7.B. further clarifies that a third-party contract is an option when BLM cannot prepare a required NEPA analysis due to time, budget, or other limitations or when either the BLM or the applicant requests that a contractor be hired to prepare the EA or EIS. Therefore, adding this guidance to the final rule would be repetitive and unnecessary.

We also agree with the commenters that under CEQ rules the practice is acceptable. Although this practice is not specifically restated in the final rule under section 2804.12, this option remains available to applicants. BLM will consider environmental documentation offered by or agreed to by an applicant in determining the appropriate cost recovery category under section 2804.14. The environmental documentation, however, must meet BLM standards, and any conclusions drawn from the documentation remain BLM's jurisdiction. This final rule contains no provision to either discourage or prohibit applicants from providing environmental documentation for BLM to use to determine appropriate cost recovery categories and process applications more efficiently and timely.

Several commenters said that the final rule should make clear that the additional information allowed under paragraph (c) of this section should be limited to requests for “relevant” information or all “pertinent” information, and any requirements in the regulations to ask for more information is “too broad and open-ended,” and could result in limitless requests for additional information. Final section 2804.12(c) states that BLM can require an applicant to provide additional information at any time while processing an application. The comment implies that BLM could require information not relevant to evaluating an application. We disagree. BLM will implement this provision in a common sense manner, limiting requests to only that additional information that is both relevant and necessary for BLM to properly evaluate a right-of-way proposal and to process an application in an efficient and timely manner.

Examples of the type of information we may require are provided by a reference to final section 2884.11(c).

Several commenters objected to the requirement to give BLM a plan of development and stated that it is overly burdensome, expensive, and unnecessary. Final section 2804.25(b) does not require submission of a plan of development as a universal requirement for all applicants. BLM would require a plan of development only where detailed information about a proposed right-of-way development and use is both relevant and necessary for BLM to properly analyze a proposal and render a decision. This is consistent with proposed sections 2804.20(b).

A few commenters said that BLM should require an applicant to provide an “initial environmental assessment” as part of the application since that would enable BLM, other Federal agencies, and state governments to better assess impacts on endangered species, cultural resources, and the like. BLM disagrees with the commenter and we did not amend the final rule as a result of this comment. Because we receive a wide range of applications in terms of scope and impact, we believe that a universal requirement that all applicants be required to submit environmental studies would be inappropriate. However, under this final rule, applicants may continue to volunteer such information to facilitate the processing of an application. Under final sections 2804.12(c) and 2804.25(b), BLM may require an applicant to provide this type of information if we determine it is necessary to process an application.

Section 2804.13

Will BLM Keep My Information Confidential?

This section makes it clear that BLM will keep confidential any information in your application that you mark as “confidential” or “proprietary” to the extent allowed by law.

We amended this section slightly by replacing “to the extent allowed under the Freedom of Information Act (5 U.S.C. 552)” with “to the extent allowed by law” to be consistent with other BLM regulations. We received no substantive comments on this section.

Section 2804.14

What Is the Processing Fee for a Grant Application?

This section requires you to submit a processing fee for a right-of-way grant application before BLM incurs the costs to process your application.

This final rule changes the terminology describing this fee. In the proposed rule we used the phrase “filing fee” to describe the fee. The final rule uses the phrase “processing fee” because that term more accurately describes the fee.

We added a new provision to paragraph (b) of this section which explains that there is no fee if BLM takes one hour or less to process your application. We believe that the minimal costs involved to process an application requiring one hour or less of work does not justify charging a fee.

We added a provision at final section 2804.14(f) that we inadvertently omitted from the proposed rule. This provision allows applicants to pay full actual costs for processing applications and monitoring grants. Although FLPMA requires the Secretary to consider the factors at section 304(b) of FLPMA in determining reasonable fees, and these regulations provide for that, BLM has found that some applicants prefer to pay actual processing and monitoring costs to assist us in processing their applications in a more timely manner. This rule is consistent with previous section 2808.3-1(f) and section 307(c) of FLPMA (43 U.S.C. 1737(c)). Section 307(c) allows the Secretary of the Interior to “accept contributions or donations of money, services, and property, real, personal, or mixed, for the management, protection, development, acquisition and conveying of the public lands * * *.”

BLM has not increased processing fees since publication of its final rule in July 1987. Since January 1986, the Consumer Price Index for All Urban Consumers (CPI-U) has risen by an average annual rate of about 3.83 percent or a total of about 73 percent. The Implicit Price Deflator, Gross Domestic Product (IPD-GDP), has risen by an average annual rate of about 2.88 percent or a total of about 55 percent.

A 1995 audit of BLM's cost recovery efforts by the OIG found BLM was not recovering all the costs of processing applications and recommended that BLM revise its regulations to recover all applicable costs and to provide for adjusting processing costs on an annual basis to reflect changes in economic conditions. The audit estimated that BLM incurred about $640,000 in additional expense in excess of the fees collected in 1993. (This shortfall comes to $213 per application, or $800,000 and $336 respectively when adjusted for changes in the IPD-GDP.) Since section 504(g) of FLPMA requires that BLM set these costs by regulation and the current regulations contain fixed charges, BLM must revise the regulations to revise the processing fees. The final rule will establish a mechanism to adjust the processing fees on an annual basis to reflect changes in economic conditions.

The preamble to the proposed rule at 64 FR 32107 states that BLM conducted field studies in 1982 and 1983 which measured the costs of processing right-of-way applications and monitoring grants. Between November 12, 1982, and July 25, 1986, BLM field offices kept and reported actual time and cost on some 500 right-of-way projects in non-major categories (see 51 FR 26840 (July 25, 1986)). In 1986, the agency conducted an extensive field study of processing and monitoring costs, which generally verified the processing costs developed from the earlier studies (see 64 FR 32108).

When we set the MLA processing fees in 1985 (50 FR 1308, Jan. 10, 1985) and in the proposed rule, we set fixed MLA processing and monitoring fees at our estimated actual cost, as required by section 28 of the MLA. The preamble to the rule proposing MLA cost recovery fees in 1983 makes plain that the fees were developed by a BLM task force consisting of employees with expertise in the processing and monitoring of right-of-way cases, budgeting, and cost accounting. The task force analyzed data from a representative sample of actual right-of-way cases and examined several demographic variables which might influence cost, including location and area of the right-of-way or temporary use area. Fees were based on the estimated work effort required to accomplish the processing actions, including personnel costs, fringe benefits, vehicle usage, and indirect costs (see 48 FR 48478, 48479 (Oct. 19, 1983) and 64 FR 32108 (June 15, 1999)).

In 1995, BLM program experts analyzed a cross section of our right-of-way cases. This analysis showed that the cost of processing right-of-way cases, including labor costs, had increased since 1986 at approximately the same rate as the IPD-GDP. Therefore, the final rule adjusts costs upward based on the IPD-GDP and allows for automatic adjustments based on this indicator. However, in the final rule we also made several other adjustments in the proposed rule fee schedule, in response to comments, which affect the final amounts and number of categories for both the processing and monitoring schedules.

The proposed rule requested public comment (see 64 FR 32108) on whether BLM should adopt a “Minimum Impact” category similar to the one proposed by the U.S. Forest Service. We received several comments suggesting BLM establish a minimum impact processing fee category or a category for any action which might take from 1 to 8 hours to process, such as most assignments and many renewals. We agree that some right-of-way actions can be accomplished in less than eight hours, but saw no benefit in referring to the category as the “minimal impact category,” or restricting the category to only work on assignment and/or renewal applications. Therefore, in the final rule, BLM establishes a new processing and monitoring category (Category 1) for all right-of-way actions where we spend more than one hour, but less than or equal to eight hours, processing the application or monitoring the grant, but we did not use the “minimal impact category” title.

In the final rule we increased the number of processing categories to six from four, adding a Category 1 for processing routine applications that require greater than one hour and less than or equal to 8 hours to process, as just discussed, and another category for processing Master Agreements. Under the final rule no fee is assessed for any action that takes 1 hour or less to process. We then adjusted new Category 2 to include actions that are estimated to take a maximum of 24 hours but greater than eight hours. New Categories 3 (>24 hours ≤ 36 hours) and 4 (>36 hours ≤ 50 hours) are the same as proposed Categories II and III. Category 5 in the final rule is for Master Agreements only. The proposed regulations did not contain a specifically numbered category for Master Agreements, and in this final rule BLM gave these agreements their own category number. Category 6 in the final rule (Category IV in the proposed rule) is for processing applications where the estimated work hours are greater than 50.

For Processing Categories 1 through 4, labor costs are by far the largest percentage of processing costs. Costs associated with environmental analysis and other application processing steps for these categories are predominantly labor costs. The costs of supplies, printing, fuel, and lodging are relatively small. For Processing Category 5 and 6 applications, the extent of the required environmental analysis is usually an important factor in determining processing costs, particularly if the application requires an EIS. Processing costs for Category 5 and 6 applications are, however, worked out in advance between BLM and the applicant either through a Master Agreement or a detailed accounting of work hours spent on processing an application.

In the proposed rule we used the term “field examination” in the category definitions and defined it in section 2801.5 of this part. In the final rule we eliminated this term and instead based the categories on the number of Federal work hours needed to process the document or request. We made this change for Categories 1 through 4 because the non-labor costs are relatively insignificant compared to labor costs, and for Categories 5 and 6 because the non-labor costs are considered as part of a Master Agreement or are otherwise negotiated. As used in the proposed rule, field examinations conducted during the processing of applications included the time and travel costs for BLM personnel. Because, as explained, labor costs constitute nearly all costs associated with field examinations, we decided to measure costs by work hours.

For processing and monitoring fees that we collect under FLPMA, we are required to consider the “reasonableness” factors at section 304(b) of FLPMA. These factors are:

(1) BLM's actual costs to process an application, including monitoring construction, operation, maintenance, and termination of a facility authorized by a right-of-way grant. Actual costs do not include management overhead, which means costs of BLM State Directors and Washington office staff, except when a member of this group works on a specific right-of-way application or grant. Actual cost includes both direct and indirect costs and other costs such as money spent on special studies, environmental impact statements and other analysis, and monitoring activities. We estimated actual cost figures for each category using data from the studies described previously. Where an appraisal is necessary to calculate rent for a right-of-way, such costs may be included in actual costs;

(2) The monetary value, or objective worth, of the right-of-way or what the right-of-way grant is worth in financial terms to the applicant. The preamble to the proposed rule at 51 FR 26837 (July 25, 1986) sets forth a number of ways to estimate monetary value, such as computing residual return or the residual profit of the project. Monetary value can be an enhancing factor when that value is greater than BLM's processing costs. This enhancing factor may offset a diminution caused by another of the “reasonableness” factors, such as public service provided. In considering and applying this factor since 1987, we have noted that the monetary value of the right or privilege sought has been much greater than the processing cost;

(3) The efficiency with which BLM processes an application. This factor refers to BLM's ability to process an application with a minimum of waste by carefully managing agency expenses and time. An explanation of this factor is set forth at 51 FR 26838 (July 25, 1986). Among the considerations there is the establishment of a cost recovery process that does not cost more to operate than would be collected under the process. Charging fixed fees based on the number of Federal work hours necessary to process an application benefits applicants by informing them in advance what the fee will be, and eliminates the enormous time and expense that would be required to track the processing of each document on a case-by-case basis. The use of current average costs to set a fee schedule is a commonly accepted practice in both the private and public sectors (see 50 FR 1309 (Jan. 10, 1985) (preamble to the final rule setting fees for MLA rights-of-way). Our application processing and grant administration procedures, which are based on standard steps in internal BLM Manuals and Handbooks, are reasonably efficient;

(4) Costs incurred for the benefit of the general public interest rather than for the exclusive benefit of the applicant. Under this factor, we examine whether any of the costs for such things as studies and data collection have value to the Federal Government or the general public apart from processing the application. Courts have held that processing which an agency is required to perform in connection with a specific request (for example, before approving a permit or grant) provides a special benefit to an applicant, even if it also provides some benefit to the public. (See, e.g.,

Mississippi Power & Light Co.

United States Nuclear Regulatory Comm'n,

601 F.2d 223 (5th Cir. 1979),

cert. denied,

444 U.S. 1102 (1980)). In our preamble to proposed rules at 51 FR 26840 (July 25, 1986), we stated that for non-major projects, there is little opportunity for public benefits or public services because of the local nature of such projects. We find, in practice, that any small benefit to the public provided by the processing of fixed-fee right-of-way applications is speculative and outweighed by the monetary value to the applicant of the right or privilege sought. Major categories 5 and 6 present more opportunities for public benefits;

(5) Any tangible improvements, such as roads, trails, recreation facilities, or other direct services to the public, which provide significant public service and are expected in connection with constructing and operating the project. This is referred to in section 304(b) of FLPMA as “public service.” A negative factor, such as an adverse impact on wildlife or surface drainage, may prevent an improvement from being a public service. Data collection that we need to monitor an activity is not a public service. As mentioned above, for non-major projects such as those falling in categories 1 through 4, there is little opportunity for public service in such projects. If a project provides a small public service, it will usually be outweighed by the monetary value to the applicant of the right or privilege; and

(6) Other relevant factors (see section 2804.21 of the final rule). This factor allows BLM State Directors to reduce actual processing costs based on a wide range of special circumstances, including unique instances of public benefits or services. These reductions generally fall under the broad category of “hardship,” that is, paying full actual costs would create an undue hardship on the applicant. There are an insignificant number of applications (less than 1 percent of the total processed) where “other relevant factors” can be applied.

In our proposed rule at 64 FR 32110, we acknowledged that “[f]or all but complex projects * * * the reasonability factors have little or no effect on actual costs.” The final rule reflects this conclusion. Thus, for categories 1 through 4, processing and monitoring fees under FLPMA are identical to the analogous category under the MLA. (As noted above, MLA fees are based on actual costs.) For example, a category 2 processing fee under FLPMA is identical to a category 2 processing fee under the MLA. A category 3 monitoring fee under FLPMA

is identical to a category 3 monitoring fee under the MLA.

We were aided in this analysis by a 1996 Solicitor's Opinion on cost recovery (M-36987), entitled “BLM's Authority to Recover Costs of Minerals Document Processing.” That opinion clarified that “[a] factor such as ‘the monetary value of the rights or privileges sought by the applicant’ could, when that value is greater than BLM's processing costs, be weighed as an enhancing factor, offsetting a diminution due to another factor such as ‘the public service provided’ ” (see M-36987 at 36). Major categories 5 and 6 are more likely to reflect differences in FLPMA and MLA fees.

In the final rule, we define each processing and monitoring category by the estimated number of Federal work hours necessary to process or monitor the application/grant rather than a combination of criteria (number of hours, availability of data, number of field examinations, and need for land use plan amendment) which in the proposed rule were used to define all the categories (except the Master Agreement category). In doing so, it was necessary to determine a “mean hour” or average number of hours for processing or monitoring for each category, and then apply the appropriate cost figure to the mean hour in each FLPMA or MLA category. This ensures that each category is cost-weighted the same. For example, the mean hour for Category 1 is 4.5; for Category 2 the mean hour is 16; for Category 3 the mean hour is 30; and for Category 4 the mean hour is 43.

The next step in arriving at the cost recovery fees in the final rule was to determine the “mean per hour rate or cost figure” for FLPMA and MLA processing and monitoring categories. In this final rule Category 4 (which in the proposed rule was Processing Category III) was used as the basis for determining the mean per hour rate for all categories. We determined that a mean per hour rate of $21.46 was appropriate. Multiplying the mean hour for each category by the mean per hour rate gives the fee for each category.

The following brief analysis verifies the appropriateness of the above fees:

The $21.46 mean per hour rate for processing and monitoring fees would approximately equal the hourly wage in 2005 for an employee at the GS 9, Step 3 level.

These rates compare favorably with the 1987 processing fees which, if adjusted to a mean per hour rate, would average $11 per mean hour or an hourly wage earned by an employee in 1987 (when the existing rule was published) at the GS 9, Step 2 level (according to the 1987 General Schedule).

Most right-of-way actions are processed and monitored by employees who are at the GS 9 to GS 11 levels and who will earn between $20.02 (GS 9/1) and $31.48 (GS 11/10) per hour in 2005.

Several commenters pointed out that reasonable costs criteria only apply to FLPMA rights-of-way and that the MLA requires BLM to collect actual costs. A few commenters said that we should amend the final regulations to make it clear that the applicant and BLM must agree on what are reasonable costs and that the applicant must have the ability to monitor BLM to make sure it is following the agreement. We received similar comments on the MLA right-of-way regulations.

Sections 304(b) and 504(g) of FLPMA require that right-of-way cost recovery fees represent reasonable costs. BLM's process to identify reasonable cost recovery fees has been in place since 1987 (see previous subpart 2808). This final rule continues to identify reasonable costs using cost recovery categories for a right-of-way grant under FLPMA. BLM must apply the factors at section 304(b) of FLPMA unless the applicant chooses to pay the actual costs. Likewise, the MLA requires that we collect “administrative and other costs” incurred for processing applications under that statute (30 U.S.C. 185(l)). Under the previous rule, and this final rule, BLM determines in a processing fee schedule the cost recovery fees for Categories 1 through 4. We will determine cost recovery fees in the new Category 5 (Master Agreement) through a negotiated agreement between the applicant and BLM, as the comment suggests. All parties have generally accepted the process of identifying set fees in Categories 1 through 4 (and their corresponding categories in the previous regulation) as reflecting average reasonable costs for processing applications in those categories. The same applies for the MLA right-of-way regulations at section 2884.12 of this final rule. Although BLM determines whether an application falls into Category 6, the decision typically reflects an agreement between an applicant and BLM based on communication and cooperation. We also added a definition of “actual costs” to section 2801.5 to help explain the difference between actual and reasonable costs.

The previous regulations contained no provision for applicants to monitor BLM in its determination of cost recovery fees, whether by decision or agreement, and such a provision is unnecessary in this final rule. BLM's internal management reviews and periodic Inspector General and Government Accounting Office audits ensure that BLM is following proper procedures based on law, our regulations, and internal guidance. The final rule contains provisions for appeals in the case of disagreement with a BLM cost recovery decision (section 2804.14(d)), and for consideration of hardship and other factors under section 2804.21(a).

Several commenters said that BLM should make cost adjustments based on the reasonable or actual processing costs from the previous year rather than basing it on the IPD-GDP or any other economic index. Previous section 2808.3-1, which established cost recovery fees in 1987, had no provision to make annual adjustments in its Categories I through IV. The preamble to the proposed rule explained BLM's determination that periodic adjustment of the fees was reasonable, and included consideration of various ways to accomplish it. This final rule uses the IPD-GDP as the basis for making annual adjustments in the new Categories 1 through 4.

We evaluated the question of annual indexing while preparing the 1987 final rule and have used the IDP-GDP since August 1987 to make annual adjustment to right-of-way rent schedules under previous section 2803.1-2(c)(1)(ii). Following consideration of various alternatives, and consultation with the Department of Commerce, BLM determined that applying this known and generally accepted economic indicator is the most efficient method of ensuring that processing category fees adjust with changes in economic conditions. Conducting annual reviews and analyses of the prior year processing costs would be a time and labor intensive effort, which, considering the widely accepted use of economic indicators to make these kind of adjustments, we have determined is unnecessary. BLM continues to believe that the IPD-GDP is the appropriate method for annual indexing of processing fees because it reflects a heavily labor-based activity (see 64 FR 32109 and 32110) and we retained it in the final rule.

One commenter said that BLM should make it clear that we may enter into a Master Agreement at the applicant's option, but that BLM has approval authority over the final agreement. The commenter said the proposed rule suggests that entering into a Master Agreement could be done entirely at the option of the applicant. We made the rule clearer by defining a Master Agreement as a written agreement

negotiated between BLM and an applicant to document cost recovery and other aspects of how application(s) are to be processed. Master Agreements are, under the right conditions, available to applicants, but it requires agreement between BLM and the applicant, and is not at the sole option of either party. Final section 2804.18(b) makes it clear that BLM will not enter into a Master Agreement if it is not in the public interest.

Several commenters said that in determining the processing costs, BLM should consider reducing fees in cases where the applicant does a considerable amount of work that benefits the public, such as archaeological collection and mitigation. We agree with the commenter that BLM may consider beneficial work performed by an applicant, such as archaeological collection above and beyond what is required, in determining whether fees might be reduced. BLM can consider such factors under final section 2804.21(a)(7), which allows consideration of appropriate management of public lands and the applicant's equitable interest. We do not agree that BLM should consider reducing fees due to mitigation the applicant undertakes. Mitigation addresses the consequences of the project; it is not equivalent to, for example, a public service provided by a project.

Several commenters suggested that the final rule should require automatic yearly processing fee adjustments for inflation and that BLM should review the categories every ten years. We agree with the commenters. Final section 2804.14(c) uses the IPD-GDP to make annual adjustments and a new section 2804.15 provides that BLM will reevaluate the processing fees for each category, and the categories themselves, five years after the effective date of this final rule, and then every 10 years after that.

Many commenters supported adding a minimal impact cost recovery category. As discussed above, this rule does not add a category specifically called a “minimal impact cost recovery” category. However, this final rule establishes a new cost recovery Category 1 for any right-of-way action requiring more than one hour, but less than or equal to eight hours to process. The Forest Service plans to adopt a similar category to replace the “minimal impact category” found in its proposed rule.

One industry group thought we should include a minimum impact category in the processing fee regulations to take into consideration activities such as emergency access for repair of facilities damaged by a storm or other disaster. We did not revise the rule in response to this comment, because activities necessary to ensure safe and reliable right-of-way use are normally provided for by the grant, and would be considered within the scope of the authorized use. If maintenance or emergency activities are not within the scope of an existing grant, the proposed use would require a separate application. Under section 2804.21(a)(4) of this final rule, if you include relevant information in your application, the BLM State Director will consider, in determining your processing fee, whether you need a right-of-way grant to mitigate certain damages or hazards. We encourage applicants to include provisions for emergency use or maintenance in the original grant so as to avoid having to apply for the use separately.

One commenter said that there is no reason to charge a fee for less than eight hours of work. We disagree. Section 504(g) of FLPMA requires that the United States be reimbursed for reasonable costs associated with processing right-of-way applications. FLPMA does not provide for fee reduction or elimination based on the number of hours an application takes to process. As explained earlier, we determined that for actions taking less than one hour to process, the minimal costs involved to process an application does not justify charging a fee. For all other actions, unless you are exempt, as provided in final section 2804.16, you must reimburse BLM for the reasonable cost of processing a right-of-way application. We did not amend the rule as a result of this comment. A similar rationale applies to actual costs under the Mineral Leasing Act.

Several commenters said that there should be criteria for measuring “full reasonable costs.” We believe that the final rule provides these. Section 304(b) of FLPMA identifies criteria for determining reasonable costs, as did proposed section 2804.18. These “FLPMA factors” appear in this final rule at sections 2804.20 and 2804.21. BLM considered these factors when developing the schedules for this rule and previous rules.

The fixed fees in FLPMA Categories 1 through 4 all reflect consideration of the FLPMA factors and represent reasonable costs, as FLPMA requires. As explained earlier, the fixed category fees originate from field studies conducted in 1982 and 1983, and supplemented with additional studies in 1986 and 1995. These studies gathered detailed information on processing nearly 3,000 FLPMA and MLA right-of-way applications.

We also apply the FLPMA factors to fees that are determined on a case-by-case basis (Category 6) or by agreement (Category 5). For those fees, BLM would give the applicant an estimate of the proposed fee after estimating the actual cost of processing the application and considering the other FLPMA factors. If the fee is set at less than our actual costs because of one of the FLPMA factors, processing could not proceed until funding for the shortfall became available through the BLM budget, contributions by the applicant, or other means.

For additional information on how BLM applies the FLPMA factors in determining processing fees, and other elements affecting processing costs, please refer to 64 FR 32107 to 32111 (June 15, 1999) and 51 FR 26836 to 26841 (July 25, 1986).

One commenter said that the premise that BLM should determine category fees by the number of hours spent in processing the application is false, but that there is not enough data to evaluate alternatives. Another commenter said that the bulk of an agency's processing and monitoring costs is most accurately measured by the total number of person hours devoted to processing and monitoring activity, not whether the activity involves one or more “field examinations” and one or more vehicles. BLM has determined that using the number of hours spent in processing an application is an appropriate measure to identify cost recovery categories. We base this determination on previous studies and sampling efforts completed in 1982-83, 1986, and 1995, and a review of known economic indicators. BLM also believes that it is reasonable to equate application processing costs to hours of staff time required. We agree with the commenter that the number of field examinations should not be the determining factor for processing categories and have deleted that requirement from the final rule. In the final rule, field examinations are considered only to the extent that they add to the number of hours necessary to process and monitor a right-of-way use or grant.

Several commenters asked that we provide a schedule of costs in the regulations so that the public will know what the costs are before starting a project. We agree with the commenter. Final section 2804.14(b) identifies the set processing fees for Categories 1 through 4.

Several commenters were concerned that BLM will use proposed Category IV

(final Category 6) costs to pay for new NEPA and field studies. There is no provision in section 504(g) of FLPMA or in this or previous regulations that permits BLM to collect fees from a right-of-way applicant for purposes of conducting any work beyond that necessary to process an application. Moreover, section 304(b) of FLPMA expressly identifies “environmental impact statements” and “special studies” as among the reasonable costs for which an agency may be reimbursed. In

Nevada Power Co.

Watt,

711 F. 2d. 913, 933 (10th Cir. 1983), the Court of Appeals held that “[r]easonable costs of processing include the reasonable costs of EIS preparation, as determined using the section 304(b) factors.”

Several commenters asked if BLM does routine Category I (in the proposed rule, Category 2 in the final rule) applications in blocks and stages in which BLM handles several applications at a time, will companies be charged the full amount for each right-of-way. Where efficiencies can be gained by handling the processing of similar or related applications in combination, BLM will do so. If we process several applications in a combined effort, BLM will identify that portion of the effort, in hours, attributable to each application and determine the appropriate cost recovery categories based on those hours. Such efficiencies will most likely occur in Categories 1 through 4, and in the context of a Master Agreement (Category 5).

Several commenters asked that BLM provide clear-cut examples of specific types of activities that fall into each category. Because hours are the measure BLM uses to determine the processing costs category, and since there may be several proposed right-of-way uses in a given category, there is no such thing as a typical application. Therefore, we have not provided specific examples for each category in the final rule. However, we expect that most assignment and renewal applications will require fewer than eight hours to process and will, therefore, fall into Category 1. Beyond that, the hours BLM requires to process the application, including those for assignments and renewals, and not the type of proposed use itself, determines the cost recovery category.

Many commenters said that fees for processing assignments are too high. They also said that if the amount of time necessary to process the application is less than the category designation, the fee should be lower. We changed the final rule to lower processing fees for any right-of-way action requiring eight hours or less to process, as suggested in these comments. The new Processing Category 1 will apply to all applications requiring eight or fewer hours to process. The processing fee for Category 1 applications is now $97, a significant reduction from the proposed rule's Category I fee of $230. If you believe that BLM has incorrectly designated an application's fee category, you may appeal our determination to the IBLA.

Several commenters stated that the oil and gas industry pays its own way through bonuses and royalties and therefore should not pay any fees for rights-of-way to develop and produce mineral resources. They stated that BLM should reduce or eliminate fees for the oil and gas industry since:

(A) The revenue stream to the public good resulting from mineral extraction is significant and roadways constructed for oil and gas operations are used by the public and other governmental agencies;

(B) BLM's operating budget is less than the revenues received from the oil and gas industry;

(C) Oil and gas rights-of-way are the infrastructure (roads and pipelines) that allows the treasury to realize the revenues being developed;

(D) BLM should recognize the tangible and valuable benefits that right-of-way grants provide, such as archaeological and threatened and endangered species surveys, road upgrades, and maintenance that benefits recreational users; and

(E) There must be a distinction between those entities that simply use the land and those that pay bonuses and develop minerals and pay royalties.

Please see the discussion in the General Comments section at the beginning of this preamble for a discussion of why we disagree with the commenters. We note that any benefits to the public provided by BLM's processing or any public service provided by the applicant through tangible improvements are factored into the fees BLM charges. See final section 2804.20 and the discussions in the preamble to the proposed rule at 64 FR 32110-32111.

Many commenters said that BLM should not increase fees. They said that if we do so, fees should only be adjusted to the 1986/1987 levels, based on the study. Commenters said that the public should not suffer a 30-percent increase because BLM did not make proper administrative decisions in the past. BLM does not agree with these comments. First, we note that the fees are charged to right-of-way applicants, not the public. Second, any increase reflects an adjustment in the proposed rule, based on the increase in the IPD-GDP since the 1986 studies and comments. BLM has not increased these fees since 1987. As stated in the proposed rule, the IPD-GDP is a reasonable measure to adjust fees that are heavily dependent on labor costs. This final rule contains a periodic review requirement to reevaluate these fees. The adjusted fee categories in this final rule represent BLM's determination of current, reasonable costs as required by section 504(g) of FLPMA.

A few commenters said the rule should make clear that fee increases will not be applied retroactively. The processing fees in section 2804.14(b) for new Category 1 through 4 applications and the Monitoring Categories in section 2805.16(a) Category 1 through 4 grants apply only on and after the effective date of this final rule. Applications pending on the effective date of this final rule will be charged processing fees under subpart 2808 of the previous rule. However, the holder of a new grant authorized after the effective date of these regulations will be subject to the new monitoring fees.

One commenter said that BLM must continue to be responsible for NEPA costs and that if industry chooses to pay NEPA costs because of BLM delays from staffing issues, industry should be able to offset the costs against processing and monitoring fees. We do not agree with the comment. FLPMA is clear that the agency may charge fees for NEPA work, and any application-related NEPA costs will be charged to the applicant in Category 5 or 6. If BLM agrees to allow an applicant to supply NEPA or other documentation, that may reduce the time BLM requires to process the application (depending on factors such as completeness and technical adequacy), which may reduce the fee BLM charges. This could also hold true for set fees (Categories 1 through 4) if the number of BLM processing hours is reduced enough that the application falls into a lower processing fee category. We note, however, that regardless of whether BLM or the applicant supplies the documentation, the applicant is responsible for the costs.

A few commenters said BLM needed to make clear what the fees are targeted toward recovering. We believe the rule does that. Section 504(g) of FLPMA and these regulations provide for the reimbursement of all reasonable administrative and other costs BLM incurs to process a right-of-way application and to inspect and monitor the construction, operation, and termination of a facility authorized by a grant. A variety of tasks are involved as

BLM processes an application, including an analysis of environmental impacts, as set forth at section 304(b) of FLPMA. In this final rule, the range of tasks that BLM performs during application processing is measured by the hours necessary to perform them.

Another comment stated that BLM should recognize that fees could be reduced if economic indices go down. We agree with the commenter. As provided in final section 2804.14(c), BLM will use the IPD-GDP as the basis to make an annual adjustment in fees. The annual adjustment in fees will follow any annual second quarter to second quarter change of this index, either up or down. Under final section 2804.15, fee adjustments, either up or down, may also occur after BLM completes a periodic review of the fees and categories.

Two non-profit cooperatives opposed the fee increases because they stated that they would have to pass the costs along to their customers and that, instead of increasing the fees, BLM should streamline its operations to become more efficient and cost effective. Although non-profit applicants are not exempt from paying processing fees, final section 2804.21 provides a mechanism for BLM to consider the non-profit's status in determining reasonable processing fees. One of the factors BLM may consider is whether the studies undertaken in connection with processing the application of a non-profit have a public benefit. If during the periodic review of processing fees and categories BLM determines that revising the fees and fee structure is warranted, we will make an adjustment as set forth in section 2804.15. If you believe that BLM's category determination for your application is incorrect, you may appeal the decision to IBLA.

Section 2804.15 When Does BLM Reevaluate the Processing and Monitoring Fees?

This is a new section to the final rule that explains that BLM reevaluates processing and monitoring fees for each category, and the categories themselves, within five years after they go into effect and at 10-year intervals after that. This section also lists some examples of the types of factors BLM considers when reevaluating these fees.

Several comments suggested a periodic review and evaluation of the processing and monitoring fees and categories, and this section is in response to those concerns. Previous rules established fixed processing and monitoring fees with no provision for reviewing them. BLM added this provision in this final rule to ensure that the fees and categories are systematically reviewed. Any adjustment that BLM makes to the fees or fee structure as a result of a review under this section, apart from applying the IPD-GDP, would require a separate rulemaking.

Section 2804.16 Who Is Exempt From Paying Processing and Monitoring Fees?

This section explains that under certain conditions, state and local governments or their agencies are exempt from paying processing and monitoring fees. It also explains that if a grant application is associated with a cost-share road or a reciprocal right-of-way agreement, the applicant is exempt from processing and monitoring fees. Section 502 of FLPMA and existing regulations at 43 CFR subpart 2812 provide for the issuance of cost share and reciprocal rights-of-way. A reciprocal right-of-way is the grant to the United States of an access right or easement across private lands as a condition of receiving a right-of-way authorization from the United States. A cost share road authorization is created where the United States and a private party participate, through agreement, to share costs of road construction and maintenance.

This section was proposed as section 2804.15 and except for minor editorial changes, it remains as proposed.

Several commenters said that BLM should not exempt Federal Power Marketing Agencies and other non-profit energy providers from processing fees and rent payments because that would give them an unfair competitive advantage in an open power market. Other commenters said that Federal Power Marketing Agencies and other non-profit energy providers should be exempt from processing fees. Under section 504(g) of FLPMA, BLM may, by regulation, require an applicant to reimburse the United States for all reasonable costs incurred in processing a right-of-way application. The previous rule at section 2808.1(b) identified “automatic” exemptions from payment of processing costs only for Federal agencies; for state and local governments and their instrumentalities where the right-of-way use is for governmental purposes benefitting the general public; and for cost share roads or reciprocal right-of-way agreements. The only substantive change we made from previous regulations is that Federal agency applicants are no longer automatically exempt. Any applicant, including a Federal Power Marketing Agency, that does not meet the new exemption requirements must pay reasonable processing costs. Final sections 2804.20 and 2804.21 identify factors that BLM will take into account for purposes of determining these costs.

Several commenters said that the rule should not eliminate the Federal agency exemption for processing fees. Other commenters said we should establish a threshold over which we would begin charging an agency processing fees. Another commenter said that the rules should exempt Federal agencies from having to pay rent, but not from paying processing fees. Although previous section 2808.1(b) provided for a Federal agency exemption, common practice has been that many Federal agency right-of-way applicants do provide funds, usually through a negotiated agreement, to reimburse BLM for processing costs. To recognize this common practice, and to provide consistency and efficiency in fund transactions, we eliminated the automatic Federal agency processing costs exemption in this final rule.

Several commenters said that BLM does not have the authority to remove the exemption for Federal agencies or those agencies whose facilities are eligible for financing under the Rural Electrification Act (REA). The commenters said that this regulatory change would require an amendment to FLPMA section 504(g) (43 U.S.C. 1764(g)). We disagree. Section 504(g) of FLPMA does not require BLM to exempt Federal agencies. It does allow us to require a right-of-way applicant to reimburse the United States for reasonable processing costs. Although the previous rule provided for an automatic exemption to Federal agencies, that rule may be changed by subsequent rulemaking. Section 504(g) gives BLM discretion to require, by promulgation of regulations, right-of-way applicants, including Federal agencies, to pay reasonable processing costs. Regarding facilities eligible for REA financing, section 504(g) of FLPMA exempts from rent rights-of-way for electric or telephone facilities eligible for financing under the REA, but specifically reinforces the authority for requiring reimbursement of reasonable processing costs from such applicants. The final proviso of section 504(g) addresses this point.

One commenter said that BLM needs to have the flexibility to determine when to waive processing and monitoring payments for Federal agencies. Under final sections 2804.20 and 2804.21, BLM will examine a number of factors, e.g., public benefits or public services, in determining the reasonable costs to be charged an applicant, including Federal agencies.

One commenter said that a weak argument could be made that the Western Power Administration is exempt from paying processing fees because it is in the business of supplying electrical power to rural electric associations. As explained earlier, section 504(g) of FLPMA addresses facilities eligible for REA financing and exempts from rent rights-of-way containing these facilities. It does not exempt such holders from reimbursement of reasonable application processing costs. Therefore, the Western Power Administration is not exempt from payment of reasonable processing costs.

One commenter was concerned that under these regulations, a non-commercial private individual would pay agency costs for processing a grant, but a commercial user may not. The commenter may be referring to the fact that an applicant for a right-of-way involving a cost-share road or reciprocal right-of-way agreement is exempt from paying processing and monitoring fees under section 2804.16. Section 504(g) of FLPMA provides that BLM may require reimbursement of the reasonable costs associated with processing right-of-way applications. This section further provides that BLM need not secure reimbursement in any situation where there is in existence a cooperative cost-share right-of-way program.

Section 2804.17 What Is a Master Agreement (Processing Category 5) and What Information Must I Provide to BLM When I Request One?

This section explains that a Master Agreement is a negotiated agreement between you and BLM covering processing and monitoring fees for multiple applications and grants within a defined geographic area. This section also explains how to apply for a Master Agreement.

In the final rule we split proposed section 2804.17 into this section and the following section, which covers the provisions and limitations of a Master Agreement. This revised section provides a clearer description of what a Master Agreement is. The proposed rule identified it as a “cost recovery” Master Agreement, whereas this final rule identifies it simply as a Master Agreement. We made this change to make clear that a Master Agreement is not strictly limited to negotiation of processing and monitoring fees. A Master Agreement may contain negotiated agreements between BLM and an applicant concerning other aspects of application processing and monitoring as indicated in final section 2804.18. Revised section 2804.17 and new section 2804.18 also provide a clearer distinction between the information BLM requires when you request a Master Agreement, and the required content of a final negotiated agreement.

We amended paragraph (a) in the final section 2804.17 to be more descriptive of what Master Agreements are and amended paragraph (b)(2) of this section by making clear what a preliminary work plan is. Final paragraph (b)(3) is also different from the proposal in that the final rule requires you to submit a timetable along with the preliminary cost estimate. We added this requirement so BLM knows when you expect BLM to complete processing your application. The customer service standard in final section 2804.25(c) for Processing Category 5 applications is “As specified in the Master Agreement.” Your expectation of processing times is critical information for BLM to know in order to proceed and reach a final agreement.

We also made other changes to this section. We simplified proposed paragraph (b)(4) and moved it to final section 2804.18(a)(1). Proposed paragraph (b)(5) now appears as section 2804.18(a)(3).

One commenter said that the rule should require BLM and the applicant to meet to determine the scope of the data needed to process the application to limit the amount of additional information that BLM may request under this section. The same commenter asked who in BLM has the authority to sign the agreement. Since this final rule defines a Master Agreement as an agreement negotiated between BLM and an applicant, communications are by implication necessary to reach such agreement. Therefore, a regulatory requirement to compel a meeting is unnecessary. Signature levels for right-of-way grants are identified in the BLM delegation of authority Manual at section 1203. For most rights-of-way, the delegated authority is at the field manager level, and therefore, we will usually authorize Master Agreements at that level. Master Agreements would not apply to those major rights-of-way not delegated below the BLM State Director signature level, as these are usually single or related one-time actions which are handled in Processing Category 6.

Two commenters said that BLM must commit to making the private party an integral party in agreeing on the level of work necessary to adequately monitor and administer plans for lands affected by Master Agreements. Several commenters asked that the final rule provide for an appeals process for Master Agreements to resolve disagreements over Master Agreements. Inherent in the concept of a Master Agreement is a cooperative relationship between BLM and an applicant. BLM is committed to working with any applicant wishing to pursue a Master Agreement. Under the proposed rule and final section 2804.14(d), an applicant's signature on a Master Agreement constitutes an agreement with the processing category decision. More specifically, an applicant's signature on a Master Agreement constitutes agreement with all of its provisions, including the negotiated application processing costs. A signed Master Agreement documents BLM's decision on the processing category and the applicant's agreement with it. Therefore, we believe that an appeal of a negotiated agreement would be rare. If there are disagreements during the Master Agreement negotiation process that cannot be resolved, negotiations would not culminate in an approved Master Agreement. At that point, if the applicant still wished to pursue applying for a right-of-way grant, BLM would make a processing category decision outside the context of the Master Agreement process, and that decision would be subject to administrative appeal.

Section 2804.18 What Provisions Do Master Agreements Contain and What Are Their Limitations?

This is a new section that incorporates some new provisions and some from proposed section 2804.17. This section describes the provisions in a Master Agreement and explains that BLM will not enter into any agreement that is not in the public interest. It also explains that if you enter into a Master Agreement, you waive your right to request a reduction of processing and monitoring fees. We added paragraphs (a)(1), (a)(2), (a)(4), and (b) to more clearly descri

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