# Competitive Processes, Terms, and Conditions for Leasing Public Lands for Solar and Wind Energy Development and Technical Changes and Corrections

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A2014-23089

## Record

- **Collection:** Federal Register
- **Document type:** Proposed Rule
- **Published:** September 30, 2014
- **Citation:** 79 FR 59022

## Text

DEPARTMENT OF THE INTERIOR
Bureau of Land Management
43 CFR Parts 2800 and 2880
[LLWO301000.L13400000]
RIN 1004-AE24
Competitive Processes, Terms, and Conditions for Leasing Public Lands for Solar and Wind Energy Development and Technical Changes and Corrections

AGENCY:

Bureau of Land Management, Interior.

ACTION:

Proposed rule.

SUMMARY:

The Bureau of Land Management (BLM) proposes to amend existing regulations to facilitate responsible solar and wind energy development and to receive fair market value for such development. The proposed rule would promote the use of preferred areas for solar and wind energy development and establish competitive processes, terms, and conditions (including rental and bonding requirements) for solar and wind energy development rights-of-way both inside and outside these preferred areas. In the proposed rule, preferred areas for solar and wind energy development would be called “designated leasing areas.” The proposed rule would also make technical changes, corrections, and clarifications to existing rights-of-way regulations. Some of these changes would affect all rights-of-way and some provisions would affect particular types of actions, such as transmission lines with a capacity of 100 Kilovolts (kV) or more, or pipelines 10 inches or more in diameter.

DATES:

Please submit comments on or before
December 1, 2014.

ADDRESSES:

You may submit comments by any of the following methods:

Mail:
Director (630) Bureau of Land Management, U.S. Department of the Interior, 1849 C St. NW., Room 2134LM, Washington, DC 20240, Attention: 1004-AE24.

Personal or messenger delivery:
U.S. Department of the Interior, Bureau of Land Management, 20 M Street SE., Room 2134LM, Attention: Regulatory Affairs, Washington, DC 20003.

Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions at this Web site.

You may submit comments on the proposed collection of information by fax or electronic mail as follows:

Fax:
Office of Management and Budget, Office of Information and Regulatory Affairs, Desk Officer for the Department of the Interior, 202-395-5806.

Electronic mail: oira_submission@omb.eop.gov.

Please indicate “Attention: OMB Control Number 1004-XXXX,” regardless of the method used. If you submit comments on the proposed collection of information please provide the BLM with a copy of your comments at one of the addresses shown above.

FOR FURTHER INFORMATION CONTACT:

Ray Brady, Bureau of Land Management, at 202-912-7312, for information relating to the BLM's solar and wind renewable energy programs, or the substance of the proposed rule. For information pertaining to the changes made for any transmission line with a capacity of 100 kV or more, or any pipeline 10 inches or more in diameter you may contact Lucas Lucero at 202-912-7342. For information on procedural matters or the rulemaking process you may contact Jean Sonneman at 202-912-7405. Persons who use a telecommunications device for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339, to contact the above individuals.

SUPPLEMENTARY INFORMATION:

Executive Summary

The BLM initiated this rulemaking in 2011 by publishing an Advance Notice of Proposed Rulemaking (ANPR) seeking public comment on a potential regulatory framework for competitive solar and wind energy rights-of-way. The regulations in this proposed rule would provide for such a framework, update rental fees, establish new Megawatt (MW) Capacity fees for wind and solar energy projects, and codify existing solar and wind energy policies in 43 CFR 2800. The proposed regulations also would affect other rights-of-way, including transmission lines with a capacity of 100 kV or more, and pipelines 10 inches or more in diameter.

Statutory and Regulatory Authority

Facilities for the generation, transmission, and distribution of electric energy are authorized under Title V of the Federal Land Policy and Management Act (FLPMA) (43 U.S.C. 1761-1771) and 43 CFR part 2800. Section 501(b)(1) includes provisions authorizing the consideration of competition in the issuance of a right-of-way. Section 504(g) requires annual rental payments of fair market value for a right-of-way, but does not provide for royalty payments on electricity generation.

Rights-of-way for oil and gas pipelines are authorized under Section 28 of the Mineral Leasing Act (30 U.S.C. 185) and 43 CFR Part 2880. The BLM processes applications for these categories of rights-of-way in accordance with 43 CFR 2884.11.

Policies

Title V of FLPMA authorizes the BLM to issue right-of-way grants, leases, and easements. The majority of BLM-issued rights-of-way are grants. The BLM intends to differentiate the solar and wind energy development rights-of-way issued inside a designated leasing area under new subpart 2809 as leases, which would be a type of grant with specific requirements.

The BLM released a Draft Solar Energy Programmatic Environmental Impact Statement (EIS) on December 17, 2010, and released a Supplemental Solar EIS on October 28, 2011. The Supplemental EIS included discussions of a process to identify and offer public lands in Solar Energy Zones (SEZs) through a competitive leasing process. The Supplemental EIS indicated that the BLM would pursue a rulemaking process to implement a competitive leasing program within SEZs. The BLM released the Final Solar EIS on July 27, 2012, and the Secretary signed the Record of Decision on October 12, 2012, which carried forward the proposal to establish a competitive leasing program within the SEZs.

The designation of SEZs, as an outcome of the Solar Energy Programmatic EIS, provides the foundation for initiating a Bureau-motion competitive process for offering lands for solar energy development within the SEZs. Similar efforts could be initiated by the BLM for designated wind development areas that may be identified in the future. The public comment period on the ANPR ended in February 2012 and this proposed rule has been prepared for competitive solar and wind energy leases in designated renewable energy leasing areas.

Competitive Leasing Process

The proposed rule outlines the competitive leasing process for solar and wind energy leases in designated leasing areas, including the definition of designated leasing areas, the nomination process, reviews of nominations, competitive bidding procedures, and the administration of solar or wind energy leases issued through the competitive leasing process. The proposed rule also includes provisions to provide incentives for leases within designated leasing areas. The proposed rule establishes a new $15 per-acre

application filing fee for right-of-way applications outside of designated leasing areas to discourage speculative applications and encourage development in the preferred designated leasing areas.

The proposed rule would provide for variable offsets when the competitive bidding process is used in a designated leasing area. A bidder would have an opportunity to pre-qualify for the offset by meeting the factors set forth in the Notice of Competitive Offer. Pre-qualified bidders would be eligible for offsets limited to no more than 20 percent of the high bid. Factors for a bidder to pre-qualify may vary from one competitive lease offer to another, but could include offsets for bidders with an approved Power Purchase Agreement (PPA) or Interconnect Agreement, among other factors. The proposed rule also includes revised language to facilitate the competitive ROW application process outside of designated leasing areas under the provisions of the existing right-of-way regulations at 43 CFR 2804.23. This provision would allow the use of a competitive process to select a preferred applicant for the processing of a ROW application outside of designated leasing areas.

Incentives

The proposed rule includes some financial incentives for leases within designated leasing areas. Incentives for designated leasing areas would include a limited nomination fee of $5 per acre for wind and solar competitive parcels, variable offsets for pre-qualified bidders, 10-year phase-in of the MW capacity fee as opposed to a 3-year phase-in for authorizations outside of a designated leasing area, issuance of 30-year fixed-term leases, and standard bonding requirements to include $10,000 per acre for solar energy development and $20,000 per wind energy turbine.

Rents and Fees

The proposed rule would update the annual rent schedules for both solar and wind energy authorizations. The acreage rent would be based on the acreage of the authorization, using a 10 percent encumbrance value for wind energy authorizations and a 100 percent encumbrance value for solar energy authorizations. This compares to a 50 percent encumbrance value that is used for determining rent for a linear right-of-way on the public lands. The acreage rent for both linear rights-of-way and solar and wind energy rights-of-way would vary by individual counties and are based on land values determined by data published by the National Agricultural Statistics Service.

A MW capacity fee would be used to capture the increased value of a solar or wind energy project on the public lands above the rural land value captured by the acreage rent. The MW capacity fee captures the value of the electrical generation from a project based on a formula that includes the MW size of the approved project, a capacity factor or efficiency factor based on average potential electric generation that varies by solar and wind technologies, average wholesale prices of electricity, and a Federal rate of return based on a 20-year Treasury bond. The capacity factor used for calculating the MW capacity fee would be 20 percent for solar photovoltaic (PV), 25 percent for concentrated solar power (CSP), 30 percent for CSP with storage, and 35 percent for wind.

The MW capacity fee would increase from the current fee of $4,155 per MW to $6,209 per MW for wind energy authorizations and adjust to $3,548 per MW for PV solar, $4,435 per MW for CSP solar and $5,322 per MW for CSP solar with storage. The MW capacity fee would provide for a 3-year phase-in outside of designated leasing areas (25 percent, 50 percent and 100 percent) and provide for a 10-year phase-in within designated leasing areas (50 percent the first 10 years and 100 percent for subsequent years). The MW capacity fees are based upon and supported by an appraisal consultation report performed by the Department's Office of Valuation Services.

The proposed rule would expand cost recovery, in response to BLM field office recommendations, to the pre-application process that has been implemented for solar and wind energy projects. In addition, the proposed rule would provide for cost reimbursement measures to coincide with a Secretarial Order for delegation of FLPMA cost recovery authority to other agencies and offices of the Department of the Interior.

43 CFR Part 2880

The BLM is proposing revisions to several subparts of part 2880. These revisions are necessary to ensure consistency of policies, processes, and procedures, where possible, between rights-of-way applied for and administered under part 2800 and those applied for and those rights-of-way administered under part 2880. In addition, the BLM is proposing pre-application requirements and fees for any transmission line with a capacity of 100 kV or more, or any pipeline 10 inches or more in diameter (see section 2884.10), similar to those being proposed for all solar energy and wind energy projects. Authorizations for solar or wind energy, for any transmission line with a capacity of 100 kV or more, or any pipeline 10 inches or more in diameter, are all generally large-scale operations that require additional steps to help protect the public land.

I. Public Comment Procedures

II. Background

III. Advance Notice of Proposed Rulemaking for the Competitive Solar and Wind Energy Development Regulations

IV. General Discussion and Section-by-Section Analysis

V. Procedural Matters

I. Public Comment Procedures

You may submit comments on this proposed rule by mail, personal or messenger delivery, or electronic mail.

Mail:
Director (630) Bureau of Land Management, U.S. Department of the Interior, 1849 C St. NW., Room 2134LM, Washington, DC 20240, Attention: Regulatory Affairs, 1004-AE24.

Personal or messenger delivery:
U.S. Department of the Interior, Bureau of Land Management, 20 M Street SE., Room 2134LM, Attention: Regulatory Affairs, Washington, DC 20003.

Electronic mail:
You may access and comment on the proposed rule at the Federal eRulemaking Portal by following the instructions at that site (see
ADDRESSES
).

Written comments on the proposed rule should be specific, should be confined to issues pertinent to the proposed rule, and should explain the reason for any recommended change. When possible, comments should reference the specific section or paragraph of the proposed rule that the comment is addressing.

The BLM need not consider or include in the Administrative Record for the final rule, comments that it receives after the close of the comment period (see
DATES
) or comments delivered to an address other than those listed above (see
ADDRESSES
).

Comments, including names and street addresses, will be available for public review at the U.S. Department of the Interior, Bureau of Land Management, 20 M Street SE., Room 2134LM, Washington, DC 20003 during regular hours (7:45 a.m. to 4:15 p.m.), Monday through Friday, except holidays. They will also be available at the Federal eRulemaking Portal:
http://www.regulations.gov.
Follow the instructions at this Web site.

You may submit comments on the proposed collection of information by fax or electronic mail as follows:

Fax:
Office of Management and Budget, Office of Information and

Regulatory Affairs, Desk Officer for the Department of the Interior, 202-395-5806.

Electronic mail: oira_submission@omb.eop.gov.
Please indicate “Attention: OMB Control Number 1004-XXXX,” regardless of the method used. If you submit comments on the proposed collection of information, please provide the BLM with a copy of your comments at one of the addresses shown above.

Before including your address, telephone number, email address, or other personal identifying information in your comment, be advised that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask in your comment for the BLM to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.

II. Background

Section 310 of the Federal Land Policy and Management Act (FLPMA) (43 U.S.C. 1740) authorizes the Secretary of the Interior (Secretary) to promulgate regulations with respect to public lands. FLPMA also provides comprehensive authority for the administration and protection of the public lands and their resources and directs that the public lands be managed “on the basis of multiple use and sustained yield” (43 U.S.C. 1701(a)(7)).

In this proposed rule, the BLM would amend its regulations to provide for two competitive processes for solar and wind energy rights-of-way on public lands. One of the processes would be for lands inside “designated leasing areas,” that is, areas that have been identified as preferred for solar or wind energy facility development. The other process would be for lands outside of such areas. The proposed rule, in an amendment of 43 CFR 2801.5, would define the term “designated leasing area” as a parcel of land with specific boundaries identified by the BLM land-use planning process as being a preferred location, conducted through a landscape-scale approach, for solar or wind energy where a competitive process must be undertaken.

For lands outside designated leasing areas, the BLM would amend existing section 2804.23 to allow the BLM to provide for a competitive bid process specifically for solar or wind energy development. At present, section 2804.23 authorizes a competitive process only when the BLM is resolving competing applications for the same facility or system. Under amended section 2804.23, the BLM could competitively offer lands by soliciting bids. The highest bidder would become the preferred applicant for a right-of-way if all requirements are met. The competitive process for solar and wind energy development on lands outside of designated leasing areas is outlined in new section 2804.30.

The competitive process for lands inside designated leasing areas is outlined in new 43 CFR subpart 2809, which would provide for a nomination and competitive process, instead of an application process. This nomination and competitive process for lands inside designated leasing areas was the primary focus of the BLM's Advance Notice of Proposed Rulemaking (ANPR) that was published on December 29, 2011 (76 FR 81908).

This proposed rule includes not only the process that was emphasized in the ANPR and a proposed competitive process for lands outside of designated leasing areas, but also a number of amendments to other provisions of the right-of-way regulations found at 43 CFR part 2800 and 43 CFR part 2880. The BLM has determined that it is necessary to first articulate the general requirements for rights-of-way in order to distinguish the specific solar and wind requirements.

For example, the proposed rule has mandatory bonding requirements for solar and wind energy, including a minimum bond amount. The BLM has determined that bonding is necessary for all solar and wind rights-of-way because of the intensity and duration of the impacts of such authorizations. For other right-of-way grant or lease authorizations, the BLM would require bonding at its discretion, under both the existing and proposed regulations. The proposed regulations, however, identify specific bonding requirements, should the BLM require a bond.

Other proposed amendments pertain to right-of-way bonding, rents for rights-of-way, and changes in pre-application requirements for applications for any transmission line with a capacity of 100 kV or more, or any pipeline 10 inches or more in diameter. Based on the BLM's experience, pipelines and transmission lines of these sizes would be large-scale projects and generate more public interest. In addition, this rule proposes several technical corrections.

FLPMA provides comprehensive authority for the administration and protection of the public lands and their resources and directs that the public lands be managed “on the basis of multiple use and sustained yield” (43 U.S.C. 1701(a)(7)). As defined by FLPMA, the term “right-of-way” includes an easement, lease, permit, or license to occupy, use, or traverse public lands (43 U.S.C. 1702(f)). Title V of FLPMA (43 U.S.C. 1761-1771) authorizes the BLM to issue rights-of-way for electric generation systems on the public lands and this authority includes solar and wind energy generation systems. FLPMA also mandates that “the United States receive fair market value of the use of the public lands and their resources unless otherwise provided for by statute” (43 U.S.C. 1701(a)(9)). Section 28 of the Mineral Leasing Act (MLA) (30 U.S.C. 185) provides similar authority for authorizing rights-of-way for oil and gas pipelines. The BLM has authority to issue regulations under both FLPMA (43 U.S.C. 1740) and the MLA (30 U.S.C. 185).

The Energy Policy Act of 2005 (codified at 42 U.S.C. 15801
et seq.
) (EPAct) includes provisions authorizing and encouraging the Federal Government to develop energy producing facilities. Title II of the EPAct includes a provision encouraging the Secretary to approve non-hydropower renewable energy projects (solar, wind, and geothermal) on public lands with a total combined generation capacity of at least 10,000 MW of electricity by 2015. See Section 211, Public Law 109-58, 119 Stat. 660 (2005).

Since passage of the EPAct, the Secretary has issued several orders that emphasize the importance of renewable energy development on public lands and the Department of the Interior's (Department) efforts to achieve the goal that Congress established in Section 211 of the EPAct. Secretarial Order No. 3283, “Enhancing Renewable Energy Development on the Public Lands,” was signed by Secretary Salazar on January 16, 2009, and facilitates the Department's efforts to achieve the goal established by Congress in Section 211 of the EPAct. On March 11, 2009, Secretary Salazar signed Secretarial Order No. 3285, “Renewable Energy Development by the Department of the Interior” that describes the need for strategic planning and a balanced approach to domestic resource development. This order was amended by Secretarial Order 3285A1 (Order) in February 2010. This amended Order establishes the development of renewable energy on public lands as one of the Department's highest priorities.

In 2012, the BLM met the goal established by Congress by approving over 12,000 MWs of renewable energy. However, the development of renewable energy is a continuing Federal priority. On June 25, 2013, to emphasize the importance of the renewable energy

goals of the nation, the President announced the release of a Climate Action Plan to reduce carbon pollution. The Climate Action Plan set a new goal for the Department to approve a renewable energy capacity of at least 20,000 MWs of electricity on the public lands by 2020.

The BLM has, in recent years, issued several instruction memoranda (IM) that identify policies and procedures related to processing solar and wind energy right-of-way applications. Through this rule, the BLM intends to incorporate many of these existing policies and procedures into its right-of-way regulations. The IMs can be found at
http://www.blm.gov/wo/st/en/prog/energy/renewable_energy.html.

Briefly, the IMs are as follows:

1. IM 2009-043, Wind Energy Development Policy: This IM provides guidance on processing right-of-way applications for wind energy projects on public lands;

2. IM 2011-003, Solar Energy Development Policy: This IM provides guidance on the processing of right-of-way applications and the administration of authorized solar energy projects on public lands;

3. IM 2011-059, National Environmental Policy Act (NEPA) Compliance for Utility-Scale Renewable Energy Right-of-Way Authorizations: This IM clarifies NEPA policy for evaluating solar and wind energy project right-of-way applications;

4. IM 2011-060, Solar and Wind Energy Applications—Due Diligence: This IM provides guidance on the due diligence requirements for solar and wind energy development right-of-way applications; and

5. IM 2011-061, Solar and Wind Energy Applications—Pre-Application and Screening: This IM provides guidance on the review of right-of-way applications for solar and wind energy development projects on public lands. More recently, Secretary Jewell signed Secretarial Order No. 3330, “Improving

Mitigation Policies and Practices of the Department of the Interior.” In it, the Secretary established principles for the use of the mitigation strategies when considering the deployment of infrastructure, particularly large-scale applications, that impact natural resources and should incorporate a landscape-scale approach to mitigation compliance. The process proposed within this rule allows for the inclusion of landscape-scale approach and other mitigation actions on the public land.

Further, the President issued Executive Order 13604, “Improving Performance of Federal Permitting and Review of Infrastructure Projects.” The President established executive policy to improve the permitting and review processes across multiple agencies to reduce the aggregate time required to make permitting and review decisions on projects. In the policies, improved outcomes for communities and the environment were addressed. The policies compelled the agencies to improve practices such as “pre-application procedures, early collaboration with other agencies, project sponsors, and affected stakeholders and coordination with State, local and tribal governments.”

In addition, the BLM has completed two programmatic EISs related to wind and solar energy development. These programmatic EISs supported decisions by the BLM to amend a large number of land use plans (LUP), which guide future BLM management actions by identifying and modifying desired outcomes and allowable or potential uses on public lands covered by a particular LUP.

On June 24, 2005, the BLM published the Final Programmatic Environmental Impact Statement on Wind Energy Development on BLM-Administered Lands in the Western United States (70 FR 36651), which analyzed the environmental impact of the development of wind energy projects on public lands in the West and identified approximately 20.6 million acres of public lands with wind energy development potential (
http://windeis.anl.gov
). The Final Programmatic EIS and the Record of Decision (ROD) for Implementation of a Wind Energy Development Program and Associated Land Use Plan Amendments (71 FR 1768) did not identify specific wind energy development leasing areas, but rather identified areas that had potential for the development of wind energy production facilities, along with areas that were excluded from consideration from wind energy facility development because of other resource values that were incompatible with this use. The Programmatic EIS on Wind Energy Development also amended 48 BLM LUPs to incorporate wind energy development.

On July 27, 2012, the BLM and the Department of Energy published the Notice of Availability of the Final Programmatic Environmental Impact Statement for Solar Energy Development in Six Southwestern States (Solar Programmatic EIS) (77 FR 44267), which assessed the environmental, social, and economic impacts associated with utility-scale solar energy development on public lands in Arizona, California, Colorado, Nevada, New Mexico, and Utah (
http://solareis.anl.gov
). On October 12, 2012, the BLM and the Department issued the Solar Programmatic EIS ROD, which identified 17 solar energy zones (SEZs) on BLM managed lands, modified 89 land use plans, and described the BLM's intent to use a competitive offer process to facilitate solar energy development projects in SEZs.

This proposed rule is one of the steps being taken by the Department and the BLM to promote renewable energy development on the public lands consistent with the BLM's multiple use mission. The proposed rule would also implement the suggestions for improving the renewable energy program made by the Office of the Inspector General for the Department, initially in its draft report and carried over to the final report (Report No. CR-EV-BLM-0004-2010) and the Government Accountability Office (Audit No. 361373), both of which address the use of competitive leasing for solar and wind development authorizations. The Inspector General (IG) reviewed the BLM's renewable energy activities to assess the effectiveness of the BLM's development and management of its renewable energy program. The IG also made recommendations on other aspects of the BLM's right-of-way program.

The IG report discusses only wind energy projects, as the solar energy program was not at a stage where projects had been authorized. However, based on experience gained from recent authorizations for solar projects, the BLM believes that these recommendations also should apply to solar energy projects.

Other IG recommendations pertained to the amounts and collection procedures for bonds covering wind energy projects. These recommendations included:

1. Requiring a bond for all wind and solar projects and reassessing the minimum bond requirements;

2. Tracking and managing bond information;

3. Developing and implementing procedures to ensure that when a project is transferred, the BLM would return the first bond to the company that obtained it and request a new bond from the newly assigned company; and

4. Developing and implementing Bureau-wide guidance for using competitive bidding on wind and solar ROWs.

For additional information, you may review the IG report and recommendations at:
http://www.blm.gov/wo/st/en/prog/energy/renewable_energy.html.

The BLM concurred with the recommendations provided by the IG report. The last recommendation is one of the principal reasons for developing this proposed rule. The other recommendations require changes in the BLM's operating procedures that will also be addressed through this rulemaking.

Through this rulemaking, the BLM proposes to amend existing regulations in 43 CFR parts 2800 and 2880, and in particular:

1. § 2804.25, to establish screening criteria to prioritize applications for solar or wind energy development applications;

2. § 2804.30, to establish a competitive process for leasing public lands outside of designated leasing areas for solar and wind energy development;

3. § 2805.11(b), to establish a term for granting rights-of-way for solar or wind energy development;

4. § 2805.12(c), to establish terms and conditions for a solar or wind energy development grant or lease;

5. § 2805.20, to provide more detail on bonding requirements;

6. § 2806.50, to provide information on rents for solar energy development rights-of-way;

7. § 2806.60, to provide information on rents for wind energy development rights-of-way;

8. Subpart 2809, to establish a competitive process for leasing public lands inside designated leasing areas for solar and wind energy development;

9. Provisions in 43 CFR part 2800 pertaining to transmission lines with a capacity of 100 kV or more and any non-oil or gas pipeline 10 inches or more in diameter; and

10. Provisions in 43 CFR part 2880 pertaining to all oil and gas pipelines 10 inches or more in diameter.

In addition to these amendments, the BLM is proposing technical changes, corrections, and clarifications to the regulations at 43 CFR parts 2800 and 2880. For example, the BLM is codifying the cost recovery authority delegated by Secretarial Order 3327. See the explanation of the proposed changes to “Management Overhead Costs” for more discussion on this topic.

III. Advance Notice of Proposed Rulemaking for the Competitive Solar and Wind Energy Development Regulations

To solicit public comments and suggestions to assist the BLM in preparing the proposed regulations for competitive solar and wind energy leasing, the BLM published an ANPR in the
Federal Register
on December 29, 2011, and provided a 60-day comment period ending on February 27, 2012 (76 FR 81906). The BLM asked generally for comments regarding the content and structure of a competitive process for solar and wind energy development and specifically requested comments responding to the following nine questions:

1. How a competitive process should be structured for leasing lands within designated solar or wind energy development leasing areas?

2. Should a competitive leasing process be implemented for public lands outside of designated solar or wind energy development leasing areas? If so, how should such a competitive leasing process be structured?

3. What competitive bidding procedures should the BLM adopt?

4. What is the appropriate term for a competitive solar energy ROW lease?

5. What is the appropriate term for a competitive wind energy ROW lease?

6. Should nomination fees be established for the competitive process? If so, how should the fees be determined?

7. How should the bidding process for competitive solar and wind energy ROW leases be structured to ensure receipt of fair market value?

8. Should a standard performance bond be required for competitive solar and wind energy ROW leases and how should the bond amount be determined?

9. What diligent development requirements should be included in competitive solar and wind energy right-of-way leases?

In response to the above questions, 76 industry representatives, environmental groups, individuals, and local and State governments provided comments and suggestions. The BLM used this information to develop many components of this proposed rule. The substantive comments received are grouped together by the question asked and are addressed below. An introductory “General Comments” section responds to some comments that did not address the above nine questions. Comments received from this ANPR were directed at the 2800 regulations, specifically at solar and wind energy competitive leasing. Other provisions of this proposed rule were not raised in the ANPR.

General Comments

Several comments addressed topics other than those raised by the nine questions in the ANPR. These comments discuss the lease rental rates, valuing project proposals based upon qualitative and quantitative factors, adequate implementation of resource protection measures, and providing incentives for the leasing of low conflict development areas.

Some comments discussed grant and lease rental rates. Rates discussed in this proposed rule would be established pursuant to FLPMA and would be based upon known market data and calculations that are confirmed by a survey of market rental rates and comparable commercial practices. Provisions for updating the rental rates for solar and wind energy rights-of-way are included in this proposed rule and would be incorporated within any BLM grant or lease. Under the proposed rule, the BLM proposes a payment structure that includes both acreage rent and a MW capacity fee for solar and wind energy right-of-way authorizations.

Some comments expressed concern that if the BLM were to adopt a competitive leasing process, the agency might not adequately evaluate the potential impacts to resources on affected public lands. The BLM has structured its proposed competitive processes to obtain fair market value, while also promoting thoughtful and reasonable development of the public lands and protecting important resource and other values. If a competitive lease is issued, the BLM would continue to comply with all NEPA and other statutory requirements when reviewing project-specific plans. The designated leasing areas, which are preferred areas for solar or wind energy development, would be identified through the BLM land use planning process (43 CFR part 1600), supported by a NEPA analysis, and designed to minimize impacts to environmental and cultural resources. In addition to the environmental review associated with the designation of leasing areas, site specific environmental analyses and other appropriate studies would be done for each proposed lease site as stated in the proposed rule at paragraph 2809.12(b)(1).

Likewise, several comments voiced concern that the BLM would be unable to adequately mitigate impacts to resources if it were to adopt a competitive leasing process. All grants and leases for solar and wind energy right-of-way authorizations would be expected to implement best management practices and mitigation as identified within the ROD for the Wind Programmatic EIS (
http://windeis.anl.gov/
) or Solar Programmatic EIS (
http://solareis.anl.gov/
). Furthermore, any additional site-specific NEPA requirements associated with an individual project could result in the identification of further mitigation measures, as applicable. It is intended that this review would provide

the careful balance between the development and protection of the public lands that the BLM is charged with overseeing.

There were multiple comments regarding the BLM's proposed incentives for development in designated leasing areas. The BLM conducts an environmental review when identifying a designated leasing area through the planning process. This environmental review supports the BLM's decision to identify a designated leasing area. Project specific environmental reviews would be tiered from or incorporated by reference from this initial review to the extent practicable. The completion of this environmental review would be an incentive to develop facilities in designated leasing areas by reducing uncertainty regarding expected project schedules, potential resource conflicts, and mitigation measures, all of which could add considerably to a project development timeline and cost if not already captured in BLM's environmental review.

Some commenters suggested development of an internal cash flow model for how the BLM would retain and redistribute collected funds within the agency. Currently, the BLM does not have authority under FLPMA to retain rents or fees collected from right-of-way grantees for the use of public lands. It is required to distribute such funds to the U.S. Treasury. The BLM's collection of money as a bid, fee, or rent does not result in the BLM retaining such funds. The BLM may retain funds when collecting reimbursement for processing or monitoring costs under Sections 304(b) and 504(g) of FLPMA or when the BLM holds funds for a performance and reclamation bond. Funds held for purposes of a performance and reclamation bond are tied to the performance requirements of an authorization, which would include costs such as the reclamation and restoration of the right-of-way.

Question 1. How should a competitive process be structured for leasing lands within designated solar or wind energy development areas?

Comments responding to Question 1 of the ANPR discussed State and local government involvement in the process, multi-factor bidding, and revenue sharing with State and local governments.

One comment recommended that the BLM coordinate with and consider the regulations of State, local, and tribal governments during the application process. The BLM's proposed rule does not affect the authority of State, local, or tribal governments. The BLM's ongoing objective is to coordinate with State, local, or tribal governments to the fullest extent possible when considering the issuance of rights-of-way across Federal public lands. Under the existing regulations, applicants are encouraged to hold a pre-application meeting with the BLM and the BLM may share this information with State, local, and tribal governments (see section 2804.10). The proposed rule would require all applicants for solar and wind energy (and for any transmission line with a capacity of 100 kV or more, or any pipeline 10 inches or more in diameter), as part of the pre-application meetings, to coordinate with appropriate Federal and State agencies and tribal and local governments.

Some comments discussed competitive bidding processes to be applied outside of a designated leasing area and the allocation of revenue generated by an authorization. Of the several bidding processes discussed in the ANPR, the multi-factor bidding proposal received the most discussion. After review of comments and internal discussions, the BLM determined the term “multi-factor bidding” did not appropriately describe the BLM's procedures. It has been modified to align with its intent, which is to provide an offset to the successful bidder after competitive bidding has occurred. The variable offsets are discussed in the section-by-section analysis under section 2809.16. Bidding options are discussed later in the section-by-section analysis part of this proposed rule. Section 2804.30 outlines a competitive leasing process for solar and wind energy development outside of designated leasing areas similar to the process in subpart 2809 for lands inside designated leasing areas. The BLM would use the process in section 2804.30 when there are two or more competing applications, or may start the process on its own initiative. The BLM may receive interest from the public or industry for development in an area. The BLM may also offer a parcel to help a state reach its goals for developing renewable energy.

Under FLPMA, revenues generated from right-of-way rentals are deposited in the U.S. Treasury. Currently, there is no authority to distribute rents, fees, or bid amounts to State or local governments, or to the BLM. However, the proposed rule would not limit the ability of the BLM or other Federal agencies to seek reimbursement from project proponents for the costs associated with processing, inspecting, and monitoring right-of-way authorizations. In fact, the existing regulations already require reimbursement of costs associated with processing, inspecting, and monitoring rights-of-way under section 2804.14.

Question 2. Should a competitive leasing process be implemented for public lands outside of designated solar or wind energy development leasing areas? If so, how should such a competitive leasing process be structured?

Several commenters discussed their interest in the BLM's existing competitive process under section 2804.23 to remain intact and continue forward. They also had concerns about the recent processes established by the BLM under the Solar Programmatic EIS and ROD and about eminent domain actions. Other commenters proposed the use of a sliding scale for a nomination fee based upon the amount of environmental risk associated with a proposal. Comments were also submitted suggesting that the BLM should allow development outside of designated leasing areas based upon a determination of the project's economic viability.

The proposed rule would codify new procedures for the competitive process currently being implemented on public lands outside of designated leasing areas and establish a similar process for lands inside designated leasing areas. The proposed rule would also clarify the circumstances in which a competitive process may be used outside of designated leasing areas.

When developing the proposed rule, the BLM considered the solar variance process that was established by the Solar Programmatic EIS and ROD. The Solar Programmatic EIS and ROD identified variance areas as lands outside of SEZs (a type of designated leasing area) that may be suitable for solar energy development. The Solar Programmatic EIS and ROD accounted for avoidance and exclusion areas when identifying variance lands. The variance process established in the Solar Programmatic EIS ROD is the process by which the BLM evaluates applications for solar energy development in variance areas. The existing solar variance process and proposed rule are intended to be compatible and complement each other when the BLM processes an application for solar energy development.

One commenter expressed concern over potential BLM eminent domain actions on private land in areas where public and private lands are interspersed. The BLM's authority does not extend beyond the boundaries of BLM managed public lands. The

proposed rule is intended to provide further direction on the management of public lands and should not be interpreted as applying to lands managed or owned by others. To the extent private lands are relevant to or necessary for a proposed use of public lands, it would be the responsibility of an applicant who proposes the use of BLM managed public lands to also secure the necessary rights over the adjacent private lands. No authorization from the BLM can confer such rights.

Some comments expressed concern that the BLM was determining whether projects are economically viable if located inside or outside a designated leasing area and questioned the differences in environmental conditions between lands inside and outside a designated leasing area.

The BLM would identify areas that have a high potential for solar or wind energy development, but would not determine the economic viability of developing a project in these areas. Any determination of a project's economic viability would be left to the prospective developers.

The BLM would, however, identify locations that have fewer and less significant adverse resource impacts and are suitable for solar or wind energy development. The BLM would identify these areas through the land use planning process, which includes a supporting environmental review. The BLM and the Department issued the Solar Programmatic EIS ROD, which identified 17 SEZs on BLM managed lands, modified 89 land use plans, and described the BLM's intent to use a competitive process to facilitate solar energy development projects in SEZs.

Lands outside of designated leasing areas are not closed to solar and wind energy development, but would not benefit from the completed environmental review of the land use planning process and may, therefore, have greater resource conflicts. Greater resource conflicts are likely to increase an applicant's costs, as well as the BLM review period.

Outside of designated leasing areas, the BLM would prioritize solar and wind energy applications based upon categories of screening criteria, as discussed in the section-by-section analysis. While this is not a sliding scale as suggested by commenters, an application may be reprioritized based on new information provided or identified in the processing of an application. Prioritizing applications would focus the BLM's efforts on those applications that are likely to have lesser resource conflicts before those with potentially greater impacts.

Question 3. What competitive bidding procedures should the BLM adopt?

In response to the request for comments on competitive bidding procedures, the BLM received several recommendations to model the competitive procedures of solar and wind energy development after the geothermal or oil and gas leasing programs. One commenter discussed the merit in allowing bidding on single or multiple tracts at a time. In addition to the recommendations for methods of competitive procedures, several commenters discussed appropriate methodologies for valuing public lands made available for competitive offering.

When developing the proposed competitive bid procedures, the BLM considered the bidding processes used by programs for offshore renewable energy, onshore oil and gas, and geothermal mineral leasing, and also past competitive actions for rights-of-way. Though these programs are guided by different statutes, regulations, and policies, the BLM's proposed competitive bid processes for rights-of-way have incorporated procedures used by the oil and gas and geothermal leasing programs, some of which were described in the ANPR. For example, similar to the BLM's oil and gas program, a notice placed in both a local newspaper and the
Federal Register
would provide specific instructions to interested parties on the required methodology and procedures to file for a pending competitive offer.

The BLM, through this proposed rule, intends to identify the methods by which it may competitively offer rights-of-way inside designated leasing areas. However, the proposed rule is written so as to not unnecessarily limit the BLM's ability to competitively offer lands for solar and wind energy development. The BLM may tailor the competitive leasing offer to meet the needs of the agency, prospective developers, and the interests of the public. For example, when a notice is provided in a local newspaper and the
Federal Register
, the BLM could announce whether it would accept bids on single or multiple tracts of public land and whether variable offsets would be provided for a preferred technology.

Questions 4 and 5. What is the appropriate term for a competitive solar energy ROW lease? What is the appropriate term for a competitive wind energy ROW lease?

Most of the commenters agreed that the duration of both solar and wind energy development right-of-way lease terms should be no less than 20 years and no more than 30 years. The proposed rule would establish a term of 30 years inside designated leasing areas, and up to 30 years outside of designated leasing areas.

Question 6. Should nomination fees be established for the competitive process? If so, how should the fees be determined?

Most commenters felt that a nomination fee should be established for a competitive process for solar and wind energy development. However, those commenters that agreed with a nomination fee had different suggestions for how the nomination fee should be configured. Most commenters indicated that they would support a nomination fee if the fee was reasonable. The BLM's proposed nomination fees are discussed in the section-by-section analysis under section 2809.11.

Question 7. How should the bidding process for competitive solar and wind ROW leases be structured to ensure receipt of fair market value?

The BLM received a variety of different comments discussing Question 7. Some commenters discussed instituting a bidding process while others opposed it. Some commenters recommended that the agency consider not implementing a bidding process once an application is submitted.

The BLM considered not implementing a competitive process once an application for solar or wind energy development has been submitted. Existing regulations allow the BLM to implement a competitive process when there are two or more competing applications for the same facility or system. The rules would still have this provision, and under the proposal, the BLM would also be able to implement a competitive process on its own initiative. FLPMA directs the BLM to receive fair market value for right-of-way authorizations on the public lands and the recommendation not to offer rights-of-way competitively could prevent the BLM from doing so. The BLM is more likely to receive fair market value through a combination of the competitive process and the rents and MW capacity fees described in this proposed rule. Section 2804.23 describes when the BLM would implement a competitive process outside of designated leasing areas. Section 2809.19 describes how the BLM would process applications on lands that are subsequently identified as designated leasing areas.

Some commenters suggested alternative methodologies for

determining the value of using public lands for solar or wind energy development, including valuing a proposed right-of-way based on adjacent land uses or the appraised value of the past uses of the land.

In this rule, the BLM proposes a structure where the fair market value of a right-of-way authorization would be reflected by all of the components of the competitive offer i.e., the minimum bid, bonus bid, acreage rent, and a MW capacity fee. The combination of these components is intended to result in the Government's receipt of fair market value for the use of the public lands for solar and wind energy development. The BLM has determined competitive offers provide a more accurate assessment of fair market value for solar and wind energy rights-of-way than valuations of adjacent lands.

Other commenters indicated that the BLM should develop an internal cash flow model for specific technology types, on a State-by-State or regional basis to achieve fair market value. Comments also indicated that the BLM should match or stay above other competitively offered lease prices, utilizing a minimum bid rate.

As part of this rule, the BLM has proposed rents and fees specific to the different solar and wind energy technology types. The BLM proposes a MW capacity fee, based on the number of approved MWs of capacity for the energy development, and an acreage rent, based on the number of acres authorized for the right-of-way. The acreage rent would be based on the existing linear rent schedule, which is determined on a regional basis to reflect the value of the land. The MW capacity fees and acreage rents would be different for solar and wind energy based upon technology type and encumbrance factors. See sections 2806.50 and 2806.60 for more information on the solar and wind right-of-way rents and fees. The proposed combination of rent, MW capacity fees, and bids proposed by this rule is not intended to require a value greater than other competitively offered parcels, but rather to represent fair market value.

Question 8. Should a standard performance bond be required for competitive solar and wind energy ROW leases and how should the bond amount be determined?

Most commenters stated that a standard performance bond should be required for competitive solar and wind energy development right-of-way leases. Several comments suggested that a bond should be required for the cost of restoring the land to its original condition. Other comments suggested that bond amounts should be based on project development costs. Several comments also suggested that a bond requirement would encourage viable proposed solar and wind energy development projects by committed applicants. There were a few comments suggesting that bonds should not be required because of uncertainty as to what bonds were to cover, and other comments recommended that the BLM should continue to use its existing bond requirements.

The proposed rule describes bonding requirements and addresses the elements the BLM would consider when establishing a bond amount. The BLM considered the comments submitted under the ANPR and determined that a bond would be required for each solar and wind energy authorization, including a minimum bond amount. A minimum bond amount would be established for grants on lands outside of designated leasing areas. This minimum bond amount would be the same as the standard bond amount for leases on lands inside designated leasing areas. These amounts are discussed in greater detail in the section-by-section analysis under section 2805.20. The bond amount for grants on lands outside designated leasing areas would be based on a reclamation cost estimate (RCE), which estimates the costs for reclaiming and restoring the public lands. This amount would include the administrative costs for the BLM to administer a contract to reclaim and restore the lands in the authorization. The minimum bond amount is based on an average of RCEs for existing projects.

The BLM considered establishing bond amounts based upon other costs, such as costs to develop a project. However, the BLM rejected this idea since these and other suggested costs and methods for establishing bond amounts were based on construction costs and were not specific to the reclamation and restoration requirements of a project or an indication of reasonable costs to do so on BLM-managed public lands. The proposed minimum bond amounts are based on an average of the RCEs for existing projects.

Question 9. What diligent development requirements should be included in competitive solar and wind energy right-of-way leases?

Comments on diligent development requirements for leases focused on the BLM notification to potential bidders before a competitive offer is made. Comments expressed interest in timeframes for the start and completion of development requirements, such as construction deadlines, once a lease is offered to the successful bidder. Some comments indicated that the BLM should enforce benchmarks, deadlines, or other criteria.

The BLM is proposing diligent development requirements for a competitively offered lease for solar or wind energy development. For example, the proposed regulations would require that a plan of development (POD) be submitted to the BLM within 2 years and that the proposed energy development be operational within 10 years of the lease issuance. Other site-specific requirements may be disclosed in the notice offering the lands for a competitive offer.

Existing regulations (section 2807.16) provide the BLM with authority to suspend or terminate a right-of-way authorization if the holder does not comply with the terms and conditions of the grant, such as a POD. A suspension or termination of a solar or wind energy right-of-way would cause a right-of-way holder to lose profits and potentially increase their cost of operations. The BLM does not propose to establish monetary penalties to enforce diligent development or established benchmarks or criteria.

IV. General Discussion and Section-by-Section Analysis

General Discussion

The BLM's existing right-of-way regulations provide only limited authority to use a competitive bidding process when authorizing solar and wind renewable energy facilities. Specifically, the existing regulations (see 43 CFR 2804.23(c)) allow the BLM to use a competitive bidding process only when it has already received two or more competing right-of-way applications for the same facility or system. This proposed rule would expand the BLM's ability to use competitive bidding processes, including competitive bidding for solar and wind energy development grants and leases. While this proposed rule includes provisions that apply to all rights-of-way, the focus of this rule is primarily on solar and wind energy development. It would codify existing BLM policies and provide additional detail pertaining to a competitive process for seeking solar or wind energy development grants outside designated leasing areas. In addition, it would establish a competitive process for seeking solar and wind energy development leases inside designated leasing areas.

The term “designated leasing area” would be defined at section 2801.5(b) as “a parcel of land with specific boundaries identified by the BLM land use planning process as being a preferred location for solar or wind energy development that must be leased competitively.” Similar to right-of-way corridors, designated leasing areas would be identified as appropriate areas for development while minimizing cultural and environmental impacts through avoidance, minimization, and compensatory mitigation. The BLM's preliminary review of these areas, and its determinations that these areas are suitable for renewable energy development, are intended to provide an incentive to renewable energy developers looking for a potential site to develop. Site-specific NEPA analysis would still be required for each right-of-way, but the BLM's preliminary review and land management suitability determinations would streamline subsequent site-specific NEPA analysis and could save the developer time and money.

Solar and wind energy development inside designated leasing areas would be authorized using the competitive offer process that would be established in proposed 43 CFR subpart 2809. Another competitive process for lands outside designated leasing areas would be established in proposed section 2804.30. Both processes would enable the BLM, on its own initiative, to offer lands competitively for solar or wind energy development.

After deciding to offer either type of lands competitively, the BLM would publish a notice of competitive offer in accordance with new section 2804.30(d) that would be used in conducting the auction or competitive bidding. This notice would include the date, time, and location, as well as the process and procedures of the competitive offer. The BLM would accept a bid only if it included payment for the minimum bid and at least 20 percent of the bonus bid.

The minimum bid would consist of: (1) Administrative costs incurred by the BLM and other Federal agencies in preparing for and conducting the competitive offer; and (2) An amount determined by the BLM based on known or potential values of the parcel. The bonus bid would consist of any dollar amount that a bidder decides to bid in addition to the minimum bid.

For lands outside designated leasing areas, the bidder who submits the highest total bid would become the preferred applicant. The preferred applicant is the only party who may submit a right-of-way application for the parcel identified in the notice of competitive offer on which it was the highest bidder. A preferred applicant who completes the application process may be offered a grant, at the BLM's discretion.

In contrast, for lands inside designated leasing areas, the bidder who submits the highest total bid would be offered a lease, provided that qualifications and payment terms are met. The BLM would offer a lease in designated leasing areas as an incentive for development in these preferred areas. These lands would have undergone sufficient cultural and environmental review to offer the successful bidder a lease that ordinarily would not require further evaluation. As noted, site-specific NEPA analysis would still be required for each right-of-way and could be tiered from the BLM's preliminary review and land management suitability determinations. This streamlined process would save the applicant time and money. Lands outside of designated leasing areas would not have yet undergone the preliminary environmental and cultural review provided by the planning process.

In addition, new section 2809.16 of this proposed rule would provide that a successful bidder for lands inside a designated leasing area may qualify for variable offsets totaling up to 20 percent of the total bid. These offsets are intended to provide an incentive for development inside designated leasing areas and benefits to the general public. As envisioned, such benefits to the public would include better resource protection, more efficient use of the public lands, and an increased likelihood of project development. Requirements for qualifying for such offsets would be outlined specifically in the notice of competitive offer. Competitive offers for lands outside of designated leasing areas would not include variable offsets. These offsets are discussed in detail in the section-by-section analysis of this preamble.

The rent for solar and wind energy grants and leases would comprise an acreage rent and a MW capacity fee. The methodology used to determine rents and fees for solar and wind energy, inside and outside of designated leasing areas, are generally the same. The main differences between acreage rents for lands outside and inside designated leasing areas are when the acreage rent is adjusted and how it is phased in. For lands outside of designated leasing areas, the acreage rent would be updated every year using the BLM's linear rent schedule. For lands inside designated leasing areas, the acreage rent would be updated in year 11 of the lease, and every 10 years thereafter, using the acreage rent schedule in place at the time of the adjustment.

The MW capacity fees would be phased in over the course of the grant or lease based on changes to the MW rate. There would be a 3-year phase-in period for grants outside of designated leasing areas, and a 10-year phase-in period for leases inside designated leasing areas. The provisions describing how acreage rents and MW capacity fees would be phased in are explained in greater detail in the section-by-section analysis.

Bonding requirements would also differ. Inside designated leasing areas, the standard bond amount for solar energy developments would be $10,000 per acre and wind energy developments would be $20,000 per authorized turbine. These same amounts would be the minimum requirements for bonds outside designated leasing areas, and those minimum bonds could be subject to adjustment by the BLM under proposed section 2805.20(a). These bond amounts are based on an average of the bond requirements of existing solar or wind energy projects. The minimum amount outside of designated leasing areas would help ensure that the BLM receives an adequate bond to protect the public lands. Since the BLM would identify designated leasing areas as areas with lesser and fewer environmental and cultural resource conflicts, the BLM proposes a standard bond amount for solar or wind energy developments inside those areas. The BLM expects that if a RCE were prepared for a project inside a designated leasing area, the amount would not deviate significantly from the standard bond amount.

The BLM intends to provide an additional level of certainty for right-of-way holders inside designated leasing areas and streamline the development process. The potential lessee could save time and money by not preparing a RCE.

Under existing regulations, the BLM may adjust a bond amount to ensure the bond adequately protects the lands in a right-of-way. The BLM does not intend to adjust the standard bond amount for solar and wind energy leases unless there is a change in use. A change in use would be when a grant is amended. The removal of a wind turbine and subsequent reclamation could result in a decreased bond amount. The expansion of a lease area for a solar project could result in an increased bond amount. While the BLM intends to streamline solar and wind energy development on public lands, the BLM would maintain the ability to protect public lands.

Title V of FLPMA authorizes the BLM to issue right-of-way grants, leases, and easements. The majority of BLM-issued rights-of-way are grants. The BLM intends to differentiate the rights-of-way issued under subpart 2809 as leases, which would be a type of grant with specific requirements. Communication site rights-of-way are another example of BLM-issued leases, which have specific regulatory requirements for rent and subletting.

The following table summarizes the differences between grants outside designated leasing areas and leases inside designated leasing areas:

Differences in Processes, Terms, and Conditions Between Right-of-Way Grants and Leases for Solar and Wind Energy Development

Grants (outside designated
leasing areas)

Leases (inside designated
leasing areas)

Applicable regulations

All applications

Pre-application meetings
Mandatory for all applications
Does not apply
43 CFR 2804.10.

Screening Criteria
Applies to all applications
Does not apply
43 CFR 2804.25 and 2804.35.

Competitive Process

BLM would identify parcels for competitive offer
When there are 2 or more competing applications, or on the BLM's initiative
After issuing a call for nominations, or on the BLM's initiative
43 CFR 2804.30 and subpart 2809.

Variable offset
Does not apply
Each offset (and percent) described in Notice of Competitive Offer; total offset cannot exceed 20 percent of total bid
43 CFR 2809.16.

The successful bidder:
Becomes the preferred applicant and may apply for a grant
Would be offered a lease if requirements are met
43 CFR 2804.30(f) and 2809.15.

Terms and Conditions

Assignment rights
Yes
Yes
43 CFR 2807.21 and 2809.18(f).

Due Diligence
2 years to begin construction, 24 months to complete construction
2 years to submit POD, 7 years to complete construction
43 CFR 2805.12(c)(3) and 2809.18(g).

Bonding
Minimum bond of $10,000 per acre for solar/$ 20,000 per authorized turbine for wind
Standard bond of $10,000 per acre for solar/$ 20,000 per authorized turbine for wind
43 CFR 2805.20.

Acreage Rent
Adjusted annually
Adjusted every 10 years.
43 CFR 2806.50 and 2806.60.

MW Fee Phase-ins
3 years at 25%/50%/100%
10 years at 50%, then 100% all subsequent years
43 CFR 2806.50 and 2806.60.

Term Length of Grants and Leases
Up to 30 years
30 years
43 CFR 2805.11 and 2809.18(a).

The above identified differences between outside and inside designated leasing areas are intended to provide incentives for development inside designated leasing areas. The BLM is soliciting comments as to whether these identified differences and incentives are appropriate for the designated leasing areas, if other incentives may exist, and as to whether the identified timeframes, amounts, rationale, and processes are appropriate for such areas.

The BLM believes that the Federal Government will receive fair market value for all of the uses of public lands that could be authorized by the proposed rule (see 43 U.S.C. 1701 (a)(9)). The salient features of fair market value as referenced by the Uniform Appraisal Standards for Federal Land Acquisitions (1992) and the Appraisal of Real Estate (1992) are as follows:

1. Fair market value is characterized as, or is representative of, a transaction between a knowledgeable buyer and a knowledgeable seller;

2. Neither buyer nor seller is obligated or under duress to buy or sell;

3. Fair market value is determined by a competitive market rather than the personal or inherent value of the property;

4. The property is exposed to a competitive market for a reasonable time;

5. Market value is only that value transferable from owner to owner. In most cases this means private market value; and

6. Properties lacking buyer competition, which are likely to become part of a larger competition property, can be given an estimated market value as part of the larger property. In accordance with the market concept, the price paid for a similar property in an arm's-length transaction is accepted as the best evidence of fair market value. Factors to be considered in estimating value include probable demand, property location, and property use.

This proposed rule would establish a framework through which the United States would obtain fair market value for the use of the public lands (See 43 U.S.C. 1701(a)(9) and 43 U.S.C. 1764(g)). The procedures in the proposed rule have been designed to facilitate the BLM's determination of fair market value through a combination of acreage rent (based on the number and value of acres within the authorized area), MW capacity fees (based on approved capacity of the solar or wind energy project), and any minimum and bonus bids offered during the competitive process. Although the BLM would collect administrative costs as a component of the minimum bid, these costs are not part of the fair market value of a parcel and would be reimbursement for reasonable costs for processing the authorization.

Drawing upon its experience with solar and wind energy development on the public lands to date, the BLM has given careful consideration to the procedures to collect fair market value through a combination of rents, MW capacity fees, and bids (not including

Federal administrative costs). While the BLM's current right-of-way regulations provide only limited authority for the agency to use a competitive bidding process, through the proposed rule the BLM intends to develop a more detailed set of competitive procedures that will enhance the agency's ability to identify and receive fair market value by collecting minimum and bonus bids for solar and wind energy authorizations.

Currently, the BLM does not have authority to retain revenues collected from such developments as payment to the government for the use of public lands. Revenue collected for solar or wind energy developments will be sent to the U.S. Treasury and not retained by the BLM. This revenue includes acreage rents, MW capacity fees, minimum bids and bonus bids (not including Federal administrative costs), application filing fees, and nomination filing fees.

However, some funds received by the BLM for solar and wind energy developments would be retained or held by the BLM for its use. Such funds would include those received for cost recovery for the pre-application period and the processing of an application or the monitoring of an authorization, bonds, Federal administrative costs for a competitive offer, and penalty fees for the late payment of rent and MW capacity fees.

Annual rent payments are required for all solar and wind energy grants and leases. Acreage rent would consist of payments based on the value of the underlying public land encumbered by a particular project, which the proposed rule addresses through a set of updated and more detailed methods. Under the proposed rule, the BLM would identify acreage rent as described in the section-by-section discussion at 2806.50 and 2806.60 of this preamble. For lands outside of designated leasing areas, the acreage rent would be updated every year using the BLM's linear rent schedule. For lands inside designated leasing areas, the acreage rent is updated in year 11, and every 10 years thereafter, using the acreage rent schedule in place at the time of the adjustment.

The BLM would also establish a MW capacity fee using payment schedules based on the approved generation capacity of solar and wind energy grants and leases. It has been the BLM's practice under its current regulatory authority and policies to collect acreage and MW capacity payments as rent. Through this proposed rule the BLM is proposing to classify MW capacity payments as fees, since they reflect the incremental value added by the more intensive, industrial use of the land above and beyond the rural or agricultural value of the land in its unimproved state. In addition, in the BLM's experience, the total MW generating capacity of a project is independent of the area of land it occupies since the generation capacity of a project is driven in significant part by the technology used. The acreage payment would remain classified as rent under the proposed rule as it is directly tied to the area of public lands encumbered by the project and its constraints to other uses on the public lands.

Under the competitive process that the proposed rule would establish for lands outside designated leasing areas, the winning bid amount, combined with other potential payments to the BLM over the course of the period of the grant, may better represent the fair market value. If the BLM receives no bids in a competitive offer, the lands could be reoffered competitively or non-competitively, if doing so is in the public interest (see paragraph 2804.34(h)(4)). In the absence of comparable transactions, an appraisal could determine whether a fair market value was achieved.

For lands inside designated leasing areas, the highest bidder at the competitive offer would become the lessee and may qualify for and receive variable offsets for up to 20 percent of the winning bid amount. Since the potential offsets would be known to bidders before a competitive offer, bidders should be willing to bid higher than they would without the offsets.

Assuming a scenario with sufficient competition among bidders who qualify for offsets, the winning bid amount minus any offsets would theoretically be the same as what the winning bid would have been if no offsets were offered. In this case, the bonus bid and the other payments to the BLM over the course of the lease may better represent the fair market value for the lease. If one or few bidders qualify for offsets, then it is likely that the winning bid amount minus any offsets would be less than what the winning bid would have been if no offsets were offered.

If the BLM receives no bids on a competitive offer, the lands could be reoffered competitively or non-competitively, if doing so is in the public interest (see 2809.17(d)). An appraisal could verify whether a fair market value was achieved.

Section-by-Section Analysis for Part 2800

This proposed rule would make the following changes in part 2800. The existing language found at section 2809.10 would be revised and redesignated as paragraph 2807.17(d), while revised subpart 2809 would be devoted to solar and wind energy development in designated leasing areas. This proposed rule would also amend parts 2800 and 2880 to clarify the BLM's administrative procedures used to process right-of-way grants and leases. These clarifications would ensure uniform application of the BLM's procedures and requirements. A more in-depth discussion of the proposed changes is provided below.

The following terms would be added to the definitions in section 2801.5:

“Acreage rent” is a new term that means rent assessed for solar and wind energy development grants and leases that is determined by the number of acres authorized by the grant or lease. The acreage rent is calculated by multiplying the number of acres (rounded up to the nearest tenth of an acre) within the authorized area times the per-acre county rate in effect at the time the authorization is issued. Provisions addressing adjustments in the acreage rent can be found in sections 2806.52, 2806.54, 2806.62, and 2806.64. An example of how to calculate acreage rent is discussed in this preamble in the section-by-section analysis of paragraph 2806.52(a)(1).

“Application filing fee” is a new term that means a nonrefundable filing fee specific to solar and wind energy right-of-way applications. The fee is proposed at $15 per acre for all solar and wind energy development applications and $2 per acre for wind site testing applications. The BLM would adjust the application filing fee once every 10 years to account for inflation. Further discussion of application filing fees can be found in section 2804.12.

“Assignment” means the transfer, in whole or in part, of any right or interest in a right-of-way grant or lease from the holder (assignor) to a subsequent party (assignee) with the BLM's written approval. The proposed rule would add this definition to section 2801.5 to help clarify existing regulations. A more detailed explanation of assignments and the changes made can be found under section 2807.21.

“Designated leasing area” is a new term that means a parcel of land with specific boundaries identified by the BLM's land use plan process as being an area (e.g., SEZ) established, conducted through a landscape-scale approach, for the leasing of public lands for solar or wind energy development via a competitive offer. The competitive offer process may be found in the discussion of subpart 2809 under the section-by-section analysis contained in this

preamble. Further discussion of designated leasing areas can be found under section 2802.11.

“Designated right-of-way corridor” is a term that is defined in existing regulations. The word “linear” has been added to this definition to distinguish between these corridors and designated leasing areas.

“Management overhead costs” is defined in existing regulations as Federal expenditures associated with the BLM. Under Sections 304(b) and 504(g) of FLPMA, the Secretary may require payments intended to reimburse the United States for reasonable costs with respect to applications and other documents relating to public lands. Secretarial Order (see Order 3327) delegated the Secretary's authority under FLPMA to receive reimbursable payments to the bureaus and offices of the Department of the Interior. This definition has been expanded to include other Federal agencies.

“Megawatt capacity fee” is a new term meaning the fee paid in addition to the acreage rent for solar and wind development grants and leases based on the approved MW capacity of the solar or wind authorization. The MW capacity fee is calculated based on the MW capacity for an approved solar or wind energy project authorized by the BLM. Examples of how MW capacity fees are calculated may be found under the discussion of section 2806.56. While the acreage rent reflects the value of the land itself, the MW capacity fee reflects the value of the industrial use of the property to generate electricity.

“Megawatt rate” is a new term that means the price of each MW for various solar and wind energy technologies as determined by the MW rate schedule. The MW rate equals the number of hours per year multiplied by the net capacity factor multiplied by the MW per hour (MWh) price multiplied by the rate of return where: The net capacity factor is the average operational time divided by the average potential operational time of a solar or wind energy development facility multiplied by current technology efficiency rates. The net capacity factor for each technology type is:

a. Photovoltaic (PV) = 20 percent;

b. Concentrated photovoltaic (CVP) and concentrated solar power (CSP) = 25 percent;

c. Concentrated solar power with storage capacity of 3 hours or more = 30 percent; and

d. Wind energy = 35 percent.

1. The MWh price equals the 5-year average of the annual weighted average wholesale price per MWh for the major Intercontinental Exchange (ICE) or its successor in interest at trading hubs serving the 11 Western States of the continental United States (see proposed paragraph 2806.52(b)). The wholesale price of electricity is tracked daily on the ICE and is readily accessible at
https://beta.theice.com/marketdata/reports/ReportCenter.shtml.
Should the ICE or its successor in interest discontinue tracking the wholesale price of electricity, the 5-year average of the annual weighted average wholesale price per MWh would be calculated using comparable market prices.

2. The rate of return is the relationship of income (to the property owner, or in this case the United States) to the revenue generated from authorized solar and wind energy development facilities, based on the 10-year average of the 20-year U.S. Treasury bond yield, rounded to the nearest one-half percent.

3. The number of hours per year is a fixed number (i.e., 8,760 hours, the total number of hours in a 365-day year).

The BLM is considering basing the net capacity factors for these technologies on an average of the annual capacity factors listed by Energy Information Administration (EIA). The EIA posts an average of the capacity factors on its Web site at
http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_6_07_b.

“Performance and reclamation bond” is a new term that means the document provided by the holder of a right-of-way grant or lease that provides the appropriate financial guarantees, including cash, to cover potential liabilities or specific requirements identified by the BLM. This term is defined here to clarify the expectations of what a bond accomplishes.

The definition would also explain which instruments would or would not be acceptable. Acceptable bond instruments include cash, cashiers or certified check, certificate or book entry deposits, negotiable U.S. Treasury securities, surety bonds from the approved list of sureties, and irrevocable letters of credit. The BLM would not accept a corporate guarantee. These provisions would codify the BLM's existing procedures and practices.

“Reclamation cost estimate (RCE)” is a new term that means the report used by the BLM to estimate the costs to restore the intensive land uses on the right-of-way to a condition that would support pre-disturbance land uses.

“Right-of-way” is defined in existing regulations as the public lands the BLM authorizes a holder to use or occupy under a grant. The revised definition would describe the authorization as “a particular grant or lease.”

“Screening criteria for solar and wind energy development” is a term that refers to the policies and procedures that the BLM would use to prioritize how it processes solar and wind energy development right-of-way applications outside of designated leasing areas. Some examples of screening criteria are:

1. Applications filed for areas specifically identified for solar or wind energy development, other than designated leasing areas;

2. Previously disturbed areas or areas located adjacent to previously disturbed areas;

3. Lands currently designated as Visual Resource Management (VRM) Class IV; and

4. Lands identified for disposal in a BLM land use plan.

Screening criteria for solar and wind energy development have been established by policy through IM 2011-61, and are further discussed in paragraph 2804.25(d)(2) and section 2804.35 of this proposed rule. The IM may be found at
http://www.blm.gov/wo/st/en/prog/energy/renewable_energy.html.

“Short term right-of-way grant” is a new term that means any grant issued for a term of 3 years or less for such uses as storage sites, construction sites and short-term site testing and monitoring activities. The holder may find the area unsuitable for development or the BLM may determine that a resource conflict exists in the area.

The scope section of the regulations in part 2800 is clarified in the proposed changes to section 2801.6. The additional language clarifies that the regulations in this part would apply to all systems and facilities identified under paragraph 2801.9(a).

Section 2801.9 explains when a grant or lease is required for systems or facilities on public lands. Paragraph 2801.9(a)(4), systems for generation, transmission and distribution of electricity, would be expanded to include solar and wind energy development facilities and associated short-term actions. Language would also be added to paragraph 2801.9(a)(7) to allow any temporary or short-term surface-disturbing activities associated with any of the systems described in this section. A new paragraph (d) would be added to specifically describe the types of authorizations required for various components of solar and wind energy development projects. These are:

1. Short term authorizations (term to not exceed 3 years),

2. Long term right-of-way grants (up to 30 years); and

3. Solar and wind energy development leases (30 years).

This paragraph also describes the type of authorizations for solar and wind projects located both inside and outside of designated leasing areas. Authorizations for solar or wind energy development located outside of a designated leasing area would be issued as a right-of-way grant for a term of up to 30 years. Authorizations located inside of a designated solar or wind energy development would be issued as a right-of-way lease for a term of 30 years.

Section 2802.11, which explains how the BLM designates right-of-way corridors, would be revised to include “designated leasing areas.” The BLM would identify designated leasing areas as preferred areas for solar or wind energy development, based on a high potential for energy development and lesser resource impacts. This section provides the factors the BLM considers when determining which lands may be suitable for right-of-way corridors or designated leasing areas. These factors are unchanged from the existing regulations.

Paragraphs (a), (b), (b)(3), (b)(4), (b)(6), (b)(7) and (d) of this section would be amended to include references to designated leasing areas. Existing regulations specifically mention right-of-way corridors in these paragraphs. These revisions would clarify that this section would apply to designated leasing areas in addition to linear right-of-way corridors.

Existing section 2804.10 encourages prospective applicants for a right-of-way grant to schedule and hold a pre-application meeting. As revised in this proposed rule, section 2804.10 would continue to encourage pre-application meetings regarding some right-of-way grants, but would require two or more such meetings for:

1. Any solar or wind energy grant outside a designated leasing area;

2. Any transmission line with a capacity of 100 kV or more; or

3. Any pipeline 10 inches or more in diameter.

Under existing paragraph 2804.10(a)(2), the BLM determines if your application is on land within a right-of-way corridor. This paragraph would be revised to include “or a designated leasing area.” The BLM would not accept applications for grants on lands inside designated leasing areas (see the section-by-section analysis of paragraph 2809.19(b) for further discussion).

Proposed paragraph 2804.10(a)(4) would be amended by adding a reference to proposed paragraph 2804.10(b). The existing paragraph states that the BLM may inform you of financial obligations, such as processing and monitoring costs, rent, and mitigation. The reference would reiterate that applicants must pay the reasonable costs associated with proposed paragraph 2804.10(b), or may elect to pay the full actual costs.

Under paragraph 2804.10(b), applicants for right-of-way grants for solar or wind energy development (outside of designated leasing areas), any transmission line with a capacity of 100 kV or more, or any pipeline 10 inches or more in diameter, must hold two or more pre-application meetings. These types of authorizations are generally larger and more complex than the average right-of-way authorization, and this extra step would help protect the public lands and make application processing more efficient.

The BLM would not accept an application until all pre-application meetings are held and the applicant complies with the grazing permittee early notification requirement found at 43 CFR 4110.4-2(b). Applicants must pay reasonable costs associated with the pre-application requirements identified in paragraph (b) of this section, with the option of paying the-actual costs. Payment for reasonable costs associated with pre-application requirements would be paid prior to the first pre-application meeting.

After the enactment of the Energy Policy Act of 2005, the BLM received an influx of solar and wind energy development applications. Many of these applications were unlikely to be approved due to issues such as siting, environmental impacts and lack of involvement with other interested parties. As the BLM gained more experience with these applications it developed policies to process applications more efficiently. These policies required pre-application meetings and application screening criteria (see section 2804.35).

Mandatory pre-application meetings helped the BLM and prospective applicants identify necessary resource studies, and other interests and concerns associated with a project. Further, the pre-application meetings provided an opportunity to direct development away from lands with high conflict or sensitive resource values. As a result of these meetings, the applications submitted were better sited and had fewer resource issues than those submitted where no pre-application meetings were held. Holding these meetings early in the process made the applications more likely to be approved by the BLM. This saved the applicant the time and money spent when doing resource studies and developing projects that may not be accepted or approved by the BLM.

Some prospective applicants chose not to pursue a development after these meetings after they had a better understanding of the potential issues and resource conflicts with the project as proposed. The BLM found that applicants who participated in pre-application meetings saved money that would have been spent planning a development that the BLM would not have approved. This also saved the BLM time by reducing the number of applications they would process and the time spent reviewing resource studies and project plans.

The Government Accountability Office report (GAO-13-189), submitted in January 2013, found that the average BLM permitting timeframes have decreased since implementation of its solar and wind energy policies, which include the pre-application and application requirements in this proposed rule.

In review of the BLM's experiences with renewable energy development, transmission lines larger than 100 kV, and pipelines larger than 10 inches in diameter, holding pre-application meetings save both the BLM and a developer time and money. The GAO concluded that applications submitted in 2006 averaged about 4 years to process. Applications submitted in 2009 and later averaged about 1.5 years to process. Further, the BLM has reviewed its records for cost recovery of these renewable energy, transmission and pipeline projects and identified a range of costs and time associated with each type of application for the public lands. These ranges vary between the solar and wind energy, transmission line, and pipeline projects. For solar and wind energy a range of costs was identified between $40,000 and $4 million including up to approximately 40,000 BLM staff labor hours and other non-labor costs per project. For transmission lines 100 kV or larger and pipelines 10 inches or larger, a range of costs was identified between $260,000 and $3.2 million including up to approximately 32,000 BLM staff labor hours and other non-labor costs per project.

Based on the BLM's experience, two pre-application meetings would usually be sufficient to address all potential concerns with a project. However, the BLM understands that additional pre-application meetings may be beneficial to a project before an application is submitted. The BLM does not want to limit its ability to hold additional meetings should a project be

particularly complex and has allowed for additional pre-application meetings to be held when mutually agreed upon by the BLM. For example, a project that crossed State lines could require additional coordination with local governments and other interested parties.

The burden on prospective applicants would be limited. In advance of the first pre-application meeting, they would need to collect information about the general project proposal (see section 2804.10(b)(1)(i)). The BLM would be in the best position to know, and thus would be primarily responsible for collecting and communicating, the rest of the required information:

• The status of BLM land use planning for the lands involved;

• Potential siting issues or concerns;

• Potential environmental issues or concerns;

• Potential alternative site locations; and

• The right-of-way application process.

One or more additional pre-application meetings would be held with the BLM and other Federal, State, tribal, and local governments to facilitate coordination. This requirement would provide an opportunity for a prospective applicant to describe the general project proposal (i.e., information that has already been collected), and for the BLM and the prospective applicant to learn generally the views of various governmental entities. Again, the burden for prospective applicants would be limited. Paragraph 2804.10(c) would explain requirements for submitting an application for solar or wind energy development projects, for any transmission line with a capacity of 100 kV or more, or for any pipeline 10 inches or more in diameter. This provision would codify the existing policies and provide clear instructions to the public about what they should expect during the application process.

The BLM would accept an application only if the following conditions are met. The written proposal must address known potential resource conflicts with sensitive resources and values that are the basis for special designations or protections, and include applicant-proposed measures to avoid, minimize, and mitigate such resource conflicts. For example, some applicant proposed measures could utilize a landscape level approach as conceptualized by Secretarial Order 3330 and subsequent reports, and consistent with the BLM's IM 2013-142 interim policy guidance. Due to the intense use of the land from the projects covered in this section, the BLM would require applicants to identify potential conflicts and how they may be avoided, minimized, or mitigated. The BLM works with applicants throughout the application process to ensure the most efficient use of public land and to minimize possible resource conflicts. This provision would require applicants to consider these concerns before submitting an application and therefore provide the BLM with potential plans to minimize and mitigate conflicts.

The BLM is soliciting comments on the number of pre-application meetings that would be required for solar or wind energy development projects, for any transmission line with a capacity of 100 kV or more, or for any pipeline 10 inches or more in diameter. The Department of Energy (DOE) is currently developing a draft integrated, interagency pre-application (IIP) process for onshore transmission projects. The BLM intends to create a pre-application process that would be consistent with the IIP when it is proposed for transmission lines. However, the DOE has not yet published the IIP or other such plan for pre-application. The BLM will coordinate with the DOE to ensure that the final BLM rule is consistent with DOE's final IIP process.

The proposal for solar energy or wind energy development must not be sited on lands inside a designated leasing area except as provided for by section 2809.19. Lands inside designated leasing areas would be offered competitively under subpart 2809. See section 2809.19 of this preamble for further discussion.

The applicant must have completed pre-application meetings described in paragraphs 2804.10(b)(1) and 2804.10(b)(2) to the BLM's satisfaction. This paragraph would reinforce the requirements for pre-application meetings.

The proposal must be accompanied by a general description of the proposed project and a schedule for the submittal of a POD conforming to the POD template at
http://www.blm.gov.

The submittal of a POD is often required under the authority of the existing regulations at paragraph 2804.25(b). Under proposed paragraph 2804.10(b) of this rule, PODs would always be required for authorizations for solar or wind energy development, any transmission line with a capacity of 100 kV or more, or any pipeline 10 inches or more in diameter. The new requirement in paragraph 2804.10(c)(4) is for a more general summary of the project, using the information available at the time of submittal. A POD conforming to the BLM's template would be submitted later, in accordance with the approved schedule.

Proposed paragraph 2804.12(a)(8) would require that an applicant submit a non-refundable application filing fee with any solar or wind energy right-of-way application. Section 304 of FLPMA authorizes the BLM to establish filing and service fees. A per-acre application filing fee would discourage applicants from applying for more land than would be necessary for the proposed project. Revenue collected for application filing fees will be sent to the U.S. Treasury and not retained by the BLM as this is not a cost recovery fee. A similarly structured nomination fee inside designated leasing areas is established following the same criteria and is described in paragraph 2809.11(b)(1).

The application filing fee is based on the appraisal consultation report performed by the Department's Office of Valuation Services. The appraisal consultation report compared similar costs on private lands, and provided a range between $10 and $25 per acre per year. The nominal range or median was reported as $15-$17 per acre per year. The appraisal consultation report is available for review by contacting individuals listed regarding the substance of the proposed rule under the
FOR FURTHER INFORMATION CONTACT
heading section of this preamble.

The BLM is proposing to adopt a single filing fee at the time of filing an application, as opposed to a yearly payment. Based on the appraisal consultation report, fees are proposed at $15 per acre for solar and wind energy applications and $2 per acre for wind energy project area and site specific testing applications.

Fees for solar and wind energy development applications would be adjusted for inflation once every 10 years using the Implicit Price Deflator for Gross Domestic Product (IPD-GDP). The average change in the IPD-GPD from 1994-2003 is 1.9 percent which would be applicable through 2015.

Paragraph 2804.12(a)(9) would be added to clarify existing requirements, as well as to complement new provisions. Under existing paragraph 2804.25(b), the BLM may require an applicant to submit a general description of the project POD. This new requirement in paragraph 2804.12(a)(9) states that if the BLM requires you to submit a POD, you must include a schedule for its submittal in your application.

Under the existing regulations at section 2804.14, applicants must pay the BLM for its reasonable costs, as defined by FLPMA, of processing an application. New paragraph 2804.14(a)

gives the BLM discretion to collect the estimated reasonable costs incurred by other Federal agencies. Secretarial Order 3327 delegated the Secretary's FLPMA cost reimbursement authority to Interior agencies, who often work together on projects with joint jurisdiction. Applicants may pay those costs to the other affected agencies directly instead of paying them to the BLM.

Proposed paragraph 2804.14(b) includes a table of the processing categories for applications. The specific costs would be removed from this table, while the explanations of the categories and the methodology of calculating the costs would remain. These numbers are available in writing upon request or on the BLM's Web site. The cost figures that would be removed are outdated, since the BLM updates these costs annually and has done so annually since the original rule was published. The revision would allow the BLM to update these numbers without modifying the CFR and prevent confusion to potential applicants who would see incorrect information. The explanation of how these costs are calculated, currently in paragraph 2804.14(c), would be moved up to paragraph (b) in order to provide better context for the amended table. Redundant language would be removed from the Category 1 processing fee in order to streamline the definition.

As defined in section 2804.18, a Master Agreement is a written agreement covering processing and monitoring fees negotiated between the BLM and a right-of-way applicant that involves multiple BLM rights-of-way for projects within a defined geographic area. New paragraph 2804.18(a)(6) would require that a Master Agreement describe existing agreements between the BLM and other Federal agencies for cost reimbursement with such applications. With the recent authority delegated by Secretarial Order 3327 to collect costs for other Federal agencies, it is important for the applicant, the BLM, and other Federal agencies to coordinate and be consistent for cost reimbursement.

Under paragraph 2804.19(a), an applicant for a Category 6 application must enter into a written agreement with the BLM about how such applications would be processed. A new requirement would be added to this paragraph requiring that the final agreement must include a description of any existing agreements the applicant has with other Federal agencies for cost reimbursement associated with the application. The new authority delegated by Secretarial Order 3327 requires more coordination and promotes consistency between the Federal agencies and this revision would help to implement this coordination.

Under new paragraph 2804.19(e), the BLM may collect reimbursement to the U.S. for reasonable costs for processing applications and preparation of other documents under this part relating to the public lands. Secretarial Order 3327 authorizes the BLM to collect funds for other agencies for their work on applications submitted to the BLM. Adding this language to the CFR would clarify the BLM's authority for the public.

Section 2804.20 would be amended to account for the authority delegated by Secretarial Order 3327, as well as new provisions in the proposed rule, when determining reasonable costs for processing and monitoring Category 6 applications. New language would include existing agreements with other Federal agencies for cost reimbursement associated with an application and costs associated with new pre-application requirements for proposed solar or wind energy development projects, for any transmission line with a capacity of 100 kV or more, or any pipeline 10 inches or more in diameter. Processing costs would include reasonable costs for processing a right-of-way application, while monitoring costs include reasonable costs for those actions the Federal Government performs to ensure compliance with the terms, conditions, and stipulations of a right-of-way grant.

The heading of section 2804.23 would be revised to read “When will the BLM use a competitive process?” to better reflect the subject of the section. Paragraph (a)(1) of this section would now require applicants to reimburse the Federal Government, as opposed to just the BLM, for processing costs. This change reflects the authority delegated by Secretarial Order 3327 for Interior agencies to collect money for processing applications made on the public land, as well as promote cooperation between the different Federal land management agencies.

A new sentence in paragraph 2804.23(c) would give the BLM authority to offer lands through a competitive process. Under the existing regulations, the BLM may only use a competitive process when there are two or more competing applications for a single right-of-way system. This change gives the BLM more flexibility to offer lands competitively for all potential rights-of-way, not just solar and wind energy development projects.

The BLM has already established competitive leasing procedures for the oil and gas and geothermal leasing programs, some of which were described in the ANPR. Though these programs are guided by different statutes, regulations, and policies, the BLM's proposed competitive bid processes for rights-of-way have appropriately incorporated procedures used by these programs. For example, a notice placed in both a local newspaper and the
Federal Register
would provide specific instructions to interested parties on the required methodology and procedures for a competitive offer.

Under proposed paragraph 2804.23(d), lands outside of designated leasing areas may be made available for solar or wind energy applications through the competitive process outlined in section 2804.30. This new provision would direct the reader to new section 2804.30, which explains the competitive process for solar and wind energy development outside of designated leasing areas. This paragraph is necessary to differentiate between development inside and outside of a designated leasing area.

Under new paragraph 2804.23(e), lands inside a designated leasing area would be offered competitively through the process described in subpart 2809. This new paragraph would direct the reader to new subpart 2809, which would explain the competitive process for solar and wind energy development inside of designated leasing areas. This paragraph is necessary to differentiate between development inside and outside of a designated leasing area.

Existing section 2804.24 explains when you do not have to use Standard Form 299 (SF-299) to apply for a right-of-way. Under the existing rule, you do not have to use SF-299 if the BLM determines competition exists under paragraph 2804.23(a). This only occurs when there are two or more competing applications for the same right-of-way facility or system.

Due to the proposed changes to section 2804.23, section 2804.24 must specify when an SF-299 is required. Under both the existing regulations and the proposed rule, the BLM would implement a competitive process if there are two or more competing applications. Under paragraph 2804.24(a), you would not have to submit a SF-299 if the BLM is offering lands competitively and you have already submitted an application for that facility or system.

Under paragraph (a), if you have not submitted an application for that facility or system, you must submit an SF-299 as specified by the BLM. Under the competitive process for solar or wind energy in section 2804.30, for example, the successful bidder becomes the

preferred applicant, and may apply for a grant. The preferred applicant would be required to submit an SF-299, but unsuccessful bidders would not.

New paragraph (b) would explain that an applicant would not have to use an SF-299 when the BLM is offering lands competitively under subpart 2809. The BLM may offer lands competitively for solar and wind energy development inside designated leasing areas under subpart 2809. Under subpart 2809, the successful bidder would be offered a lease if the requirements described in paragraph 2809.15(d) are met. The successful bidder inside designated leasing areas would not have to submit an application using SF-299. The following chart illustrates under what circumstances the filing of an SF-299 would or would not be required:

When a SF-299 Is Required

Type of solar or wind right-of-way

Would have to
submit a SF 299

Comments

Have two or more competing applications for the same area
Yes
Outside of designated leasing areas.

Lands are offered competitively outside of a designated leasing area and you have already submitted an application for the parcel before the Notice of Competitive Offer
No.

Lands are being offered competitively outside of a designated leasing area and you have not submitted an application
Yes.

You are the successful bidder and have been declared the preferred applicant and may apply for a grant
Yes
Outside of designated leasing areas.

Lands being offered competitively within a designated leasing area under subpart 2809
No.

Under the amendments to paragraph 2804.25(b), the BLM would not process your application if you have any trespass action pending for any activity on BLM-administered lands or have any unpaid debts owed to the Federal Government. The only applications the BLM would process to resolve the trespass would be for a right-of-way as authorized in this part, or a lease or permit under the regulations found at 43 CFR 2920, but only after outstanding debts are paid. This provision would apply to rights-of-way, and would clarify existing regulations. Under existing regulations at section 2808.12, the BLM will not process any application for any activity on BLM-administered lands until you have satisfied your liability for a trespass. The requirement in section 2808.12 is often overlooked by potential right-of-way applicants and this change would insert this existing requirement into the application process described in subpart 2804.

Paragraph 2804.25(d) would be revised by replacing the words “before issuing a grant” with “in processing an application.” This change would be made to account for the situation where the BLM would issue a grant without accepting applications. Lands leased inside designated leasing areas would be offered through a competitive bidding process under subpart 2809 in situations where no applications for those lands are received. The provisions in section 2804.25 would not apply to the leases issued under subpart 2809. They would apply to all other rights-of-way, including solar and wind energy development grants outside of designated leasing areas. The issuance of leases inside designated leasing areas will be discussed in subpart 2809.

Paragraph 2804.25(d) also would be revised to incorporate new provisions for all rights-of-way as well as specific provisions for solar and wind energy development. Existing paragraph 2804.25(d)(5), which provides the requirement to hold a public meeting if there is sufficient public interest, would be moved to new paragraph 2804.25(d)(1). Language would be added to specify that the public notice would be published in a newspaper in the area affected by the potential right-of-way and that the BLM may use other notification methods as well, such as the Internet. The former revision would clarify existing regulations, while the latter would expand the BLM's methods for notification.

New paragraph 2804.25(d)(2) would consist of three separate requirements for solar and wind energy development applications. Under paragraph 2804.25(d)(2)(i), the BLM would hold a public meeting in the area affected by the potential right-of-way for all solar or wind energy applications. Based on the BLM's experience, most solar and wind energy development projects are large-scale projects that draw a high level of public interest. This requirement would be added to provide an opportunity for public involvement early in the process. Under paragraph (d)(2)(ii), the BLM would apply screening criteria when processing an application outside of designated leasing areas. These screening criteria are explained further in section 2804.35.

Under new paragraph 2804.25(d)(2)(iii), the BLM would either deny or continue processing an application, after reviewing the input of other government and tribal entities, as well as information received in the application, public meetings, and pre-application meetings. The denial of an application would be in writing and would be an appealable decision under section 2801.10. The approval of all grant applications is at the BLM's discretion and the BLM would likely deny an application that has high potential for resource conflicts. While the BLM already has the authority to deny applications that have high potential for resource conflicts, the proposed rule would clarify to potential applicants how they may submit an application that is more likely to be approved.

Under new paragraph 2804.25(d)(3), if an application is for solar or wind energy development, for any transmission line with a capacity of 100 kV or more, or any pipeline 10 inches or more in diameter, then the BLM would determine whether the POD submitted with the application meets the applicable development schedule and other requirements or whether the applicant must provide additional information. This is a necessary step that would be added to allow the BLM to evaluate the new application requirements under paragraphs 2804.10(c)(4) and 2804.12(a)(9). The BLM would determine if the development schedule and other requirements of the POD templates were followed as required under paragraphs 2804.10(c)(4) and 2804.12(a)(9). The POD template can be found at
http://www.blm.gov.

Proposed paragraphs (d)(4), (d)(5), (d)(6), (d)(7), and (d)(8) of this section are existing provisions that would be moved to fit in with the other paragraphs of this section.

The BLM is considering and seeks public comment on establishing in the final rule a provision that would limit

the time for applicants to begin conducting necessary resource studies. The deadline could be specific, for example 1 year after the BLM accepts an application. Alternatively, a time limitation could be stated in more general terms that would provide for greater flexibility on a case-by-case basis. Under this proposal, the failure to begin conducting such studies in the specified time frame could result in the BLM's denial of an application unless the BLM had previously agreed to a longer period of time at the request of the applicant. We are considering adding this time limitation to section 2804.25. We seek public comment on any other provisions that might be pertinent.

Section 2804.26 explains the circumstances under which the BLM may deny an application. Existing paragraph 2804.26(a)(5) explains one such circumstance, when an applicant does “not have or cannot demonstrate the technical or financial capability to construct the project or operate facilities in the proposed right-of-way.” The proposed rule would add text to clarify this requirement, which applies to all rights-of-way. The new paragraphs would explain how an applicant could provide evidence of the financial and technical capability to be able to construct, operate, maintain, and decommission a solar or wind energy development project. The applicant may provide documented evidence showing prior successful experience in developing similar projects, provide information of sufficient capitalization to carry out development, or provide documentation of loan guarantees, confirmed power purchase agreements, and contracts for the manufacture and/or supply of key components for solar or wind energy project facilities. A specific period of time for requiring compliance with this provision has not been established. The BLM is soliciting comments as to what an appropriate time would be in such situations.

Under new paragraph 2804.26(a)(6), the BLM may deny your application if you do not meet the POD submittal requirements under paragraphs 2804.10(c)(4) and 2804.12(a)(9). New paragraph 2804.26(a)(7) would reference the possible denial based on the screening criteria established in new paragraph 2804.25(d)(2)(iii). Paragraphs (a)(6) and (a)(7) would be added to this section to reiterate these new requirements and explain that the BLM may deny an application should an applicant not comply with these provisions.

The heading of section 2804.27, “What fees do I owe if BLM denies my application or if I withdraw my application?” would be revised to read “What fees must I pay if BLM denies my application or if I withdraw my application?” A new provision in this paragraph would provide that if the BLM denies your application, or if you withdraw it, you must still pay any pre-application costs required under paragraph 2804.10(a)(4), any application filing fees submitted or due under paragraph 2804.12(a)(8), and the processing fee set forth at section 2804.14. Currently, the BLM is reimbursed for its costs only after a right-of-way application has been filed. Under the proposed rule, the BLM could recover the considerable expense devoted to pre-application work. Reimbursement for pre-application costs would ensure that the BLM has funds for, and could help reduce delays in performing pre-application work. Section 304(b) of FLPMA provides for the deposit of payments to reimburse the BLM for reasonable costs with respect to applications and other documents relating to the public lands.

New section 2804.30 would explain the process by which the BLM would competitively offer lands outside of designated leasing areas. The bidding process here is similar to the one established in subpart 2809, except for the end result of the bidding. Under paragraph (f) of this section, the successful bidder would become the preferred right-of-way applicant. Under this section, the high bidder is not guaranteed a grant; however, the preferred applicant is the only party that may submit an application for the parcel identified by the BLM under paragraph (g). This is different from subpart 2809, where the successful bidder would be offered a lease.

Paragraph (a) of this section would identify which lands are available for competitive lease; paragraph (b) of this section would explain the variety of competitive procedure options available; and paragraph (c) would explain how the BLM would identify parcels for competitive offer. The BLM may identify a parcel for competitive offer if competition exists or the BLM may include lands in a competitive offer on its own initiative. The existing regulations only allow the BLM to use a competitive process when there are two competing applications and the changes to paragraph 2804.23(c) would give the BLM more flexibility. The BLM could include lands in a competitive offer in response to interest from the public, industry, or to facilitate State renewable energy goals.

Paragraph 2804.30(d), “Notice of competitive offer,” establishes the content of the materials of a notice of competitive offer that include the date, time, and location (if any) of the competitive offer, bidding procedures, qualifications of potential bidders, and the minimum bid required. The notice would also explain that the successful bidder would become the preferred applicant and must apply for a grant under this subpart. This is different from the competitive offers held under subpart 2809 where the successful bidder is offered a lease.

Paragraph 2804.30(d)(4) requires that the notice to provide the amount of the minimum bid, which would include a description of the administrative costs to the Federal agencies involved and what was provided by those administrative costs, as well as the minimum bid determined by the authorized officer and the rationale for how this minimum bid was derived. As discussed in the general discussion section of this preamble, the administrative costs are not a component of fair market value, but are cost reimbursement to the Federal Government. The BLM would publish a notice containing all of the identified elements in a newspaper of general circulation in the area affected by the potential right-of-way, in the
Federal Register
, and other notification methods, including use of the Internet.

Under paragraph 2804.30(e), “Bidding,” the BLM would require that bid submissions include both the minimum bid amount and at least 20 percent of the bonus bid. The minimum bid would consist of administrative costs and an amount determined by the authorized officer. Included in the administrative costs are those expenses pertaining to the development of environmental analyses and those costs to the Federal Government associated with holding the competitive offer.

The authorized officer may specifically identify a second component for the minimum bid(s) submitted for each competitive offer.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2014-23089. Public record. Not legal advice.