# 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%3A2016-27551

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** December 19, 2016
- **Citation:** 81 FR 92122

## 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, Department of the Interior.

ACTION:

Final rule.

SUMMARY:

Through this final rule the Bureau of Land Management (BLM) is amending its regulations governing rights-of-way issued under the Federal Land Policy and Management Act (FLPMA) and the Mineral Leasing Act (MLA). The principal purposes of these amendments are to facilitate responsible solar and wind energy development on BLM-managed public lands and to ensure that the American taxpayer receives fair market value for such development. This final rule includes provisions to promote the use of preferred areas for solar and wind energy development, called “designated leasing areas” (DLAs). It builds upon existing regulations and policies to expand BLM's ability to utilize competitive processes to offer authorizations for development inside or outside of DLAs. It also addresses the appropriate terms and conditions (including payment and bonding requirements) for solar and wind energy development rights-of-way issued under the regulations. Finally, the rule makes technical changes, corrections, and clarifications to the existing rights-of-way regulations. Some of these changes affect all rights-of-way, while some provisions affect only specific rights-of-way, such as those for transmission lines with a capacity of 100 kilovolts (kV) or more.

DATES:

Effective Date:
This final rule is effective January 18, 2017.

FOR FURTHER INFORMATION CONTACT:

John Kalish, 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 final rule. For information pertaining to the changes made for any transmission line with a capacity of 100 kV or more you may contact Stephen Fusilier at 202-912-7426. For information on procedural matters or the rulemaking process you may contact Charles Yudson at 202-912-7437. 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:

I. Executive Summary

II. Background

III. Final Rule as Adopted and Responses to Comments

IV. Section-by-Section Analysis for Part 2800

V. Section-by-Section Analysis for Part 2880

VI. Procedural Matters

I. Executive Summary

The BLM initiated this rulemaking in 2011 through publication of an Advance Notice of Proposed Rulemaking (ANPR) seeking public comment on a potential regulatory framework for competitive solar and wind energy rights-of-way. A proposed rule was published in the
Federal Register
on September 30, 2014, summarizing and discussing the comments that the BLM received on the ANPR. The proposed rule set forth a framework for the competitive leasing of solar and wind energy rights-of-way both inside and outside of designated leasing areas. It also proposed codifying existing solar and wind energy policies in 43 CFR part 2800, establishing a new acreage rent for wind energy projects, and updating the methods used to set acreage rents and megawatt (MW) capacity fees for existing and future solar and wind energy projects. In addition to the changes related to solar and wind energy development, the rule also proposed related updates to other provisions of the rights-of-way regulations, including those applicable to transmission lines with a capacity of 100 kV or more and pipelines 10 inches or more in diameter. Based on comments on the proposed rule and consideration of other factors, the BLM prepared this final rule.

Statutory and Regulatory Authority

Facilities for the generation, transmission, and distribution of electric energy are authorized under Title V of the FLPMA (43 U.S.C. 1761-1771) and its implementing regulations at 43 CFR part 2800. Section 504(g) requires that the BLM generally receive fair market value for a right-of-way. Under Title V, the BLM can issue easements, leases, licenses, and permits to occupy, use or traverse public lands for particular purposes. The BLM generally refers to all such rights-of-way as “grants.” The final rule continues to refer to solar and wind energy development rights-of-way issued noncompetitively or outside a DLA as “grants,” but designates solar and wind energy development rights-of-way issued competitively and within a DLA under revised subpart 2809 as “leases,” to which specific requirements and benefits are attached, as explained below.

Rights-of-way for oil and gas pipelines are authorized under Section 28 of the MLA (30 U.S.C. 185), Sections 302, 303, and 310 of FLPMA (43 U.S.C. 1732, 1733, and 1740), and the applicable implementing regulations at 43 CFR part 2880. The BLM processes applications for these categories of rights-of-way in accordance with section 2884.11.

Policies

The BLM released a Draft Solar Energy Programmatic Environmental Impact Statement (EIS) on December 17, 2010 and released a Supplement to the Draft EIS on October 28, 2011. The Supplement to the Draft EIS contemplated a process to identify and offer public lands in solar energy zones (SEZs) through a competitive leasing process. The Supplement to the Draft EIS described how the BLM intended to 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 of the Interior (Secretary) signed the Record of Decision (ROD) on October 12, 2012. The Solar Programmatic EIS ROD, or Western Solar Plan, likewise described the BLM's intent to establish a competitive leasing program within the SEZs.

The Western Solar Plan provides the foundation for a Bureau-initiated competitive process for offering lands for solar energy development within the SEZs. Similar comprehensive or regional land use planning efforts could be initiated by the BLM in the future to designate additional renewable energy development areas, such as for wind development. For example, the recently completed Desert Renewable Energy Conservation Plan (DRECP) identified Development Focus Areas (DFAs) in Southern California that were designed to support wind, solar, and geothermal development. As explained elsewhere in this preamble, in the Western Solar Plan and in the DRECP Record of Decision (ROD), SEZs and DFAs, like all DLAs, represent areas that have been prescreened by the BLM and identified as having high energy generation potential, access to transmission (either existing or proposed), and low potential for conflicts with other resources. The rule supports the establishment of these areas through procedures to inform their identification and establishment.

Competitive Leasing Process

Existing regulations authorize the BLM to determine whether competition exists among right-of-way applications filed for the same facility or system; however, they do not allow the BLM to offer such lands competitively absent such a finding. The existing regulations allow the BLM to resolve any such competition using competitive bidding procedures. All such grants are issued subject to valid existing rights in accordance with 43 CFR 2805.14.

Building on recommendations and analysis in the Western Solar Plan, this final rule expands the existing regulations to allow the BLM to offer lands competitively on its own initiative, both inside and outside DLAs, even in the absence of identified competition. Within DLAs, the rule will require competitive leasing procedures except in certain circumstances, when applications could be considered outside the competitive process. Outside DLAs, the BLM will have discretion whether to utilize competitive leasing procedures. This rule identifies what constitutes a DLA, and outlines the competitive process for solar and wind energy leasing inside DLAs, including the nomination process for areas inside DLAs, the process for reviewing nominations, the competitive bidding procedures to be deployed, and the rules governing administration of solar or wind energy leases issued through the competitive process.

Incentives

This rule includes various provisions to incentivize development inside rather than outside of DLAs. For example, the rule establishes a new $15 per acre application filing fee for right-of-way applications outside of DLAs to discourage speculative applications and encourage development in DLAs. In addition, a winning bidder outside a DLA will be deemed the “preferred applicant” and eligible to apply for a grant, while a winning bidder within a DLA will be offered a lease. A primary reason for this distinction is that the prescreening done by the BLM as part of the identification of DLAs enables it to issue a lease prior to the conclusion of the project-specific reviews (such project-specific reviews would, however, have to be completed prior to the commencement of construction).

Further, this final rule establishes a mechanism whereby bidders inside DLAs may qualify for variable offsets (a form of bidding credit) that will give them a financial advantage in the competitive bidding process. Specifically, a bidder that meets the qualifications set forth in the Notice of Competitive Offer for a particular offset will have an opportunity to pre-qualify for a reduction to their bid amount, up to 20 percent of the bid. Suppose, for example, a bidder pre-qualified for a 20 percent offset and then won the auction with a high bid of $100. The bidder would only be obligated to pay the BLM $80 for the lease. These reductions would be sale-specific and would be based on factors identified in the initial sale notice. The final rule gives the BLM the flexibility to vary the factors that could enable a bidder to obtain a variable offset from one competitive offer to another, but possible factors include having an approved Power Purchase Agreement (PPA) or Interconnect Agreement, or employing a less water-intensive technology. Each of the factors will be identified in the Notice of Competitive Offer, which will also specify the pre-determined reduction (
e.g.,
5 percent) associated with any individual factor. The total aggregate reduction across all factors cannot exceed 20 percent.

Additional provisions that incentivize development within DLAs include a reduced nomination fee of $5 per acre, which is electively paid by a potential bidder, compared to $15 per acre non-elective application filing fee for competitive parcels outside of DLAs; a 10-year phase-in of the MW capacity fee inside a DLA as opposed to a 3-year phase-in of the fee outside of a DLA; and more favorable bonding requirements inside DLAs. Specifically, outside DLAs, bonding must be determined based on reclamation cost estimates, whereas inside DLAs, the final rule requires a standard bond in the amount of $10,000 per acre for solar energy development and either $10,000 or $20,000 per wind energy turbine for wind energy development, depending on the nameplate capacity of the turbine.

Finally, successful competitive processes within DLAs will result in the issuance of a 30-year fixed-term lease, whereas a successful competitive process outside of a DLA will result in a preferred applicant status for the winner. The 30-year fixed term lease issued to the high bidder for a parcel offered competitively within a DLA will increase the certainty for developers and, in turn, make it easier to secure financing or reach terms on other agreements. Specifically, the lease will provide developers with evidence of site control, and they will obtain it much earlier in the review process than they would under existing regulations (notably, before project-specific NEPA reviews have been concluded).

Rents and Fees

The rule updates the payments currently established by BLM policies to ensure that the BLM obtains fair market value for the use of the public lands. Specifically, it updates and codifies the acreage rent for both solar and wind energy authorizations. The acreage rent will 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 the 50 percent encumbrance value that is used for determining rent for linear rights-of-way on the public lands.

The acreage rent for linear rights-of-way and solar and wind energy rights-of-way will vary by individual counties and is based on agricultural land values determined from data published by the National Agricultural Statistics Service (NASS). The BLM may also determine on a project-specific or regional basis that a different rate should be utilized. The “acreage rent” component captures the value of unimproved rural land encumbered by a project.

In addition to acreage rent, the rule also updates and codifies the MW capacity fee that the BLM already charges under existing policies. As under existing policy, that fee is designed to capture the difference between a particular project area's unimproved land value and the higher value associated with the area's solar or wind energy development potential. The BLM uses a MW capacity fee as a proxy for the area's electrical generation development potential. That fee is calculated using a formula that includes the nameplate capacity of the approved project, a capacity factor or efficiency factor that varies based on the average potential electric generation of different solar and wind technologies, the average wholesale prices of electricity, and a Federal rate of return based on a 20-year Treasury bond. In this final rule, the capacity factors used for calculating the MW capacity fee are 20 percent for solar photovoltaic (PV), 25 percent for concentrated solar power (CSP), 30 percent for CSP with storage capacity of 3 hours or more, and 35 percent for wind. Additionally, the final rule allows the BLM to determine, on a project-specific or regional basis, that a different net capacity factor is more appropriate, such as if a project takes advantage of a new technology (
e.g.,
energy storage) or project design considerations (
e.g.,
solar array layout).

The final rule increases the MW capacity fee currently established by BLM policy from $4,155 per MW to

$5,010 per MW for wind energy authorizations, and reduces the MW capacity fee from $5,256 to $2,863 per MW for PV solar, from $6,570 to $3,578 per MW for concentrated photovoltaic (CPV) or CSP solar, and from $7,884 to $4,294 per MW for CSP with storage capacity of 3 hours or more. The rule provides for a three-year phase-in of the MW capacity fee for right-of-way grants outside DLAs (25 percent in year one, 50 percent in year two, and 100 percent for subsequent years) and for a longer, ten-year phase-in for right-of-way leases inside DLAs (50 percent for the first 10 years and 100 percent for subsequent years).

As explained elsewhere in this preamble, both the acreage rent and MW capacity fees adjust periodically based on identified factors, including changes in NASS survey values and wholesale power prices. In addition, based on comments received on the proposed rule, this final rule includes provisions that allow grant or lease holders the option to select fixed, scheduled rate adjustments to the applicable per acre zone rate (or rent) and MW rate over the term of the right-of-way grant or lease. This scheduled rate adjustment method would be used in lieu of the rule's standard rate adjustment method, under which those rates could increase or decrease by irregular amounts depending on changes to NASS survey values or wholesale power prices.

The rule includes requirements to hold preliminary application review meetings after the submission of an application for a solar or wind energy project, including authorizing the BLM to collect cost recovery fees for those meetings. Through this final rule the BLM is also extending the preliminary application review meeting requirement to any transmission line having a capacity of 100 kV or more. This change is appropriate because both solar or wind energy projects and transmission lines with a capacity greater than 100 kV are generally large-scale facilities with greater potential for impacts and resource conflicts. Based on experience with existing solar and wind energy projects, the BLM has found that those preliminary application meetings provide both the applicant and the BLM with an opportunity to identify and discuss resource conflicts early on in the process. In addition, the rule provides for additional cost reimbursement measures, consistent with Sections 304(b) and 504(g) of FLPMA.

Changes to 43 CFR Part 2880

In addition to the changes to 43 CFR part 2800, this final rule also revises 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 rights-of-way applied for and administered under part 2880. These changes are discussed in more detail in Section II of this preamble. However, a proposal to require preliminary application review meetings for right-of-way applications for pipelines exceeding 10 inches in diameter was dropped from this final rule in response to comments.

II. Background

A. Rule Overview

The BLM published the proposed rule in the
Federal Register
on September 30, 2014 (79 FR 59022) for a 60-day comment period ending on December 1, 2014. In response to public requests for extensions of the public comment period the BLM extended the period for an additional 15 days on November 29, 2014, through December 16, 2014. We received 36 comment letters on the proposed rule. We also received similar feedback through stakeholder engagement meetings held as part of BLM's regular course of business. This final rule addresses the comments received during the comment period and during stakeholder engagement meetings in the section-by-section discussion in section III. of this preamble.

As explained above, the primary purpose of this rule is to facilitate the responsible development of solar and wind energy development on the public lands, with a specific focus on incentivizing development on lands identified as DLAs. To that end, this rule, in an amendment of section 2801.5, defines 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 for solar or wind energy that can be leased competitively for energy development. In this rule, the BLM amends its regulations implementing FLPMA to provide for two competitive processes for solar and wind energy rights-of-way on public lands. One of the processes is for lands inside DLAs. The other process is for lands outside of DLAs.

For lands outside DLAs, the BLM amends section 2804.23 to provide for a competitive bidding process designed specifically for solar or wind energy development. Prior to this final rule, section 2804.23 authorized a competitive process to resolve competing right-of-way applications for the same facility or system. Under amended section 2804.23, the BLM can now competitively offer lands on its own initiative. The competitive process for solar and wind energy development on lands outside of DLAs is outlined in new section 2804.30.

The competitive process for lands inside DLAs is outlined in revised 43 CFR subpart 2809, which provides for a parcel nomination and competitive offer, instead of an application process.

This rule includes not only these competitive processes, but also a number of amendments to other provisions of the right-of-way regulations found at 43 CFR parts 2800 and 2880. The BLM determined that it is necessary to first articulate the general requirements for rights-of-way in order to set the solar and wind requirements apart.

For example, the final rule has mandatory bonding requirements for solar and wind energy, including a minimum bond amount. The BLM determined that bonding is necessary for all solar and wind energy rights-of-way because of the intensity and duration of the impacts of such authorizations. For other right-of-way authorizations, the BLM will continue to require bonding at its discretion under this final rule.

Other amendments to the regulations include changes in right-of-way application submission and processing requirements, rents and fees, and alternative requirement requests. In addition, this final rule makes several technical corrections as explained in the section-by-section analysis below.

B. Statutory and Regulatory Background

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) and 1732(a)). 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 on the public lands for electric generation systems, including solar and wind energy generation systems. FLPMA also mandates that “the United States receive fair market value for the use of the public lands and their resources unless otherwise provided for by statute” (43 U.S.C. 1701(a)(9) and 1764(g)). Section 28 of the MLA (30 U.S.C. 185) and FLPMA provide 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. 1732, 1733, and 1740) and the MLA (30 U.S.C. 185 and 189).

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 MWs 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's) 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,” signed by Secretary Kempthorne on January 16, 2009, 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,” which describes the need for strategic planning and a balanced approach to domestic resource development. This order was amended by Secretarial Order 3285A1 in February 2010. Amended Order 3285A1 establishes the development of renewable energy on public lands as one of the Department's highest priorities.

While the BLM has already met the goal established by Congress by approving over 12,000 MWs of renewable energy by the end of 2012, the development of renewable energy resources on the public lands remains a national priority. To advance that goal, President Obama included in the administration's Climate Action Plan to reduce carbon pollution, released on June 25, 2013, a new goal for the Department to approve at least 20,000 MWs of new renewable energy capacity on federal lands by 2020. As of the end of fiscal year 2015, the BLM has reviewed and approved 60 projects capable of generating over 15,000 MWs of power.

The BLM has issued several instruction memoranda (IMs) that identify policies and procedures related to processing solar and wind energy right-of-way applications. The BLM is incorporating some 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; and

6.
IM 2016-122, Policy Guidance for Federal Land Policy and Management Act Right-of-Way Rent Exemptions for Electric or Telephone Facilities Financed or Eligible for Financing under the Rural Electrification Act of 1936, as amended (IM 2016-122).
This IM provides guidance for processing requests for FLPMA right-of-way rent exemptions for electric and telephone facilities financed or eligible for financing by the United States Department of Agriculture, Rural Utilities Service (RUS) under the Rural Electrification Act of 1936, as amended (Rural Electrification Act), 7 U.S.C.901
et seq.
In particular, this IM makes clear that wind and solar entities that qualify under the Rural Electrification Act pay the MW capacity fees but not acreage rent.

In addition, in 2005 and 2012 the BLM issued landscape-level land use plan amendment decisions supported by programmatic EISs to facilitate wind and solar energy development. These land use plan amendments guide future BLM management actions by identifying desired outcomes and allowable uses on public lands.

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 (Wind Programmatic EIS) (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
). Following the publication of the Wind Programmatic EIS, the BLM issued the ROD for Implementation of a Wind Energy Development Program and Associated Land Use Plan Amendments (Wind Programmatic EIS ROD) (71 FR 1768), which amended 48 BLM land use plans. The Wind Programmatic EIS ROD did not identify specific wind energy development leasing areas, but rather identified areas that have potential for the development of wind energy production facilities, along with areas excluded from consideration for wind energy facility development because of other resource values that are incompatible with that use.

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). The Solar Programmatic EIS 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 Department and the BLM issued the Western Solar Plan, which amended 89 BLM land use plans to identify 17 solar energy zones (SEZs) and identify mandatory design features applicable to utility-scale solar development on BLM managed lands. The Western Solar Plan also described the BLM's intent to use a competitive offer process to facilitate solar energy development projects in SEZs. SEZs, including those identified in the Western Solar plan, will be considered DLAs under this final rule.

This final rule is one of the steps being taken by the Department and the BLM to promote renewable energy development on the public lands. It implements one of the Western Solar Plan's key recommendations, namely that the BLM institute a process whereby it can competitively offer lands within DLAs. In addition to addressing recommendations in the Western Solar Plan, the final rule also implements suggestions for improving the renewable energy program made by the Department of the Interior's Office of

Inspector General for the Department, initially in a draft report and carried over to the final report (Report No. CR-EV-BLM-0004-2010), and by the Government Accountability Office (GAO) (Audit No. 361373), both of which address the use of competitive leasing for solar and wind development authorizations. The Inspector General (OIG) 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 OIG report discusses only wind energy projects, as the solar energy program was not at a stage where it had been fully implemented. However, based on experience gained from its authorization of solar projects, the BLM believes that recommendations made for the wind energy program would also benefit the solar energy program. Other OIG recommendations pertained to the amounts and collection procedures for bonds for wind energy projects. These recommendations included:

1. Requiring a bond for all wind energy 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 from one entity to another, 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 energy rights-of-way.

The BLM concurred with all of the OIG's recommendations. The last recommendation is one of the principal reasons for developing this rule. The other recommendations form the basis for other changes being made as part of the BLM's operating procedures that are also addressed through this rulemaking.

Through this rulemaking, the BLM amends regulations in 43 CFR parts 2800 and 2880, and in particular:

1. Section 2804.12, to establish preliminary application review requirements for solar and wind energy development, and for development of any transmission line with a capacity of 100 kV or more;

2. Section 2804.25, to establish application processing and evaluation requirements for solar and wind energy development;

3. Section 2804.30, to establish a competitive process for public lands outside of DLAs for solar and wind energy development;

4. Section 2804.31, to establish a two-step process for solar or wind energy testing and conversion of testing areas to DLAs;

5. Section 2804.35, to establish screening criteria to prioritize applications for solar or wind energy development;

6. Section 2804.40, to establish a requirement to propose alternative requirements with a showing of good cause;

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

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

9. Section 2805.20, to provide more detail on bonding requirements;

10. Sections 2806.50, 2806.52, 2806.54, 2806.56, and 2806.58, to provide information on rents for solar energy development rights-of-way;

11. Sections 2806.60, 2806.62, 2806.64, 2806.66, and 2806.68, to provide information on rents for wind energy development rights-of-way;

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

13. Provisions in 43 CFR part 2800 pertaining to transmission lines with a capacity of 100 kV or more.

In addition to these amendments, this rule also makes several technical changes, corrections, and clarifications to the regulations at 43 CFR parts 2800 and 2880. The following table provides a summary of the principal changes made in this final rulemaking. The table shows: A description and CFR reference to the existing rule, a description of the changes in the proposed rule, and a description of the changes made in this final rule. The BLM made minor revisions throughout the final rule to improve its readability, which are not noted in this table but are discussed in the section- by- section analysis of this preamble.

Table 1—Abbreviated Descriptions of the Major Changes Made to 43 CFR Parts 2800 and 2880 by This Rule

43 CFR reference and description
Changes between proposed rule and existing regulations

Changes between final rule and
proposed rule

Additional comments

2801.5(b)—Acronyms and terms
Adds definitions for 10 items and revises definitions for 3 items, mostly pertaining to solar and wind energy development

This final rule adopts the definitions in the proposed rule, except that under the final rule the definitions allow the BLM to determine a more appropriate Net Capacity Factor for rights-of-way with storage on a case-by-case basis
No other substantive changes were made from the proposed to the final rule

Changes made in this section were based on comments received from the public to account for the application filing fee, energy storage, and MW rate.

2801.6—Scope
Clarifies that the regulations in this part apply to all systems and facilities identified under section 2801.9(a)
No changes were made from the proposed to the final rule for this section

2801.9—When do I need a grant?
Revises language in paragraph (a)(7) to include solar and wind development facilities. Adds paragraph (d) that references solar and wind energy projects
The testing provisions at new paragraphs (d)(1) and (2) are revised to include both solar and wind facilities, as opposed to just wind
Changes made in this section were based on comments received from the public requesting that the testing provisions account for solar facilities as well as wind facilities.

2802.11—Designation of right-of-way corridors and leasing areas
Adds a process for designating leasing areas for solar and wind energy projects
No changes were made from the proposed to the final rule

2804.10—Actions to be taken before filing a right-of-way application
Discusses pre-application requirements and specifically addresses solar and wind filing requirements
Removes all discussion or requirements for pre-application meetings. Now the only change from the existing regulation is to include designated leasing areas in paragraph (a)(2)
Requirements of this section are also applicable to transmission lines with a capacity of 100 kV or more. Based on comments received, the final rule removes the provision in the proposed rule that would have applied certain application requirements to pipelines greater than 10 inches in diameter.

2804.12—Right-of-way application requirements
Discusses additional filing fees required for solar and wind energy applications
This section has been retitled to improve clarity. This section also removes requirements for pre-application meetings and substitutes preliminary application review meetings that will occur after rather than before an application is filed. This section is also revised to clarify how the BLM will use the IPD-GDP to update fees
Changes made in this section were based on comments received from the public. The paragraphs formerly located in section 2804.10(b) and (c) are now found in section 2804.12(b) and (c).

2804.14—Processing fees for grant applications
Gives the BLM discretion to collect the estimated reasonable costs incurred by other Federal agencies
No changes were made from the proposed to the final rule for this section

2804.18 and 2804.19—Master agreements and major projects
Adds information on cost reimbursement requirements for work performed by other Federal agencies
No changes were made from the proposed to the final rule

2804.20—Determining reasonable costs for work on major (Category 6) rights-of-ways
Section title revised for clarity. Adds discussions on right-of-way work performed by other Federal agencies and pre-application requirements for major rights-of-way
Any reference to “pre-application” requirements was removed to be consistent with other changes made to this final rule to reference preliminary application meetings
Changes made in this section were based on comments received from the public in regards to collecting cost recovery with the submission of an application.

2804.23—Competitive process for applications
Adds provisions for competition for solar and wind energy rights-of-way, both inside and outside of designated leasing areas
Minor changes were made from the proposed to the final rule. The latter clarifies that the BLM will not competitively offer lands where a plan of development (POD) has been accepted and cost recovery established. The requirement to publish in a newspaper is now optional instead of required
Changes made in this section were based on comments received from the public requesting that the BLM provide assurance that it will not competitively offer lands if a developer has committed considerable time and resources to a project, as evidenced by the existence of a complete POD and executed cost recovery agreement.

2804.24—Use of Standard Form 299 for submitting a right-of-way application
Updates the circumstances when an application is not required to account for competitive offers under both section 2804.23(c) and subpart 2809
No changes were made from the proposed to the final rule for this section

2804.25—BLM actions in processing a right-of-way application
Describes POD requirements and adds additional other requirements for solar and wind energy applications. Covers instances where a right-of-way is authorized to resolve a trespass
Changes were made from the proposed to the final rule to reflect the shift from “pre-application meetings” to “preliminary application review meetings” as described in section 2804.12. The requirement to publish in a newspaper is now optional instead of required
Changes were made in the final rule for clarity, especially a description of what constitutes “unpaid debts.” Other changes were made to accommodate new requirements for solar and wind rights-of-way and to clarify when the time clock begins for a due diligence request.

2804.26—Circumstances when the BLM may deny your application
Adds additional situations where the BLM may deny your application, including specific examples for solar and wind energy applications
Adds language to correspond to the due diligence requirements found in sections 2804.12 and 2804.25. Additional language added to provide consideration when the BLM may deny an application when circumstances are outside of an applicant's control
This change was made to be consistent with other changes in this final rule.

2804.27—What fees are owed if an application is not completed?
Revises this section to include any pre-application costs that must be paid if an application is withdrawn or rejected
Removes the term pre-application costs and substitutes preliminary application review costs
This change was made to be consistent with other changes in this final rule with respect to the pre-application meeting identified in the proposed rule.

2804.30—Description of the competitive process for solar or wind energy development
Adds section 2804.30, which describes the competitive process for solar or wind energy development outside of DLAs
Several minor changes were made from the proposed to the final rule, including removing a reference to mitigation costs, a statement that filing fees will be refunded to unsuccessful bidders, and that a successful bidder will have site control over applications from other developers (by virtue of being identified as the preferred applicant following completion of the sale process). Additionally, the requirement to publish in a newspaper is now optional instead of required
The final rule changes were made principally for clarification. The change in notification requirements is consistent with other changes in this final rule.

2804.31—Site testing for solar and wind energy
No section 2804.31 in proposed rule
Adds section 2804.31. This new section describes how the BLM will inform the public that site-testing applications will be accepted for lands within a DLA
This new section is a result of public comments on the proposed rule requesting clarification on site testing procedures. This new section does not make any changes to existing policies or procedures.

2804.35—Prioritizing solar and wind energy applications
Adds section 2804.35 which describes a process for prioritizing solar and wind energy applications
The rule clarifies that the BLM will generally prioritize the processing of solar and wind energy leases issued under subpart 2809 over applications for solar and wind energy grants issued under subpart 2804. Other minor revisions were made in response to comments and discussed further in the section-by-section analysis
The changes were made to clarify how the BLM will prioritize leases and applications.

2804.40—Alternative requirements
No section 2804.40 in proposed rule
Adds a provision that allows an applicant to submit an alternate requirement if it is believed that the original requirements cannot be met
This section was added in response to comments about the BLM need for a process for applicants to demonstrate, based on a showing of good cause, the reasons for its failure to meet the rule requirements and demonstrate why alternative requirements should be put in place in their stead.

2805.10—Approving or denying a grant
Includes right-of-way leases in addition to grants, and adds specific items to be included within a solar or wind energy grant or lease
No changes were made from the proposed to the final rule

2805.11- What does a grant contain?
Adds specific terms for solar and wind energy grants and leases
Removed specific references to “wind” so that section would apply to project testing for either solar or wind
This change was made to be consistent with other changes in this final rule.

2805.12—Terms and conditions in a right-of-way authorization
Revises this section in its entirety and adds specific terms and conditions for solar and wind energy grants and leases
Adds new section 2805.12(e) stating that good cause must be shown for extension of time requests. This section now includes solar in addition to wind energy development processes. Other revisions in this section are discussed in the section-by-section analysis
Changes made in this section were based on comments received from the public, concerning a holder's inability to meet BLM requirements in some circumstances.

2805.14—Rights conveyed by a right-of-way grant
Adds section 2805.14(g) allowing for renewal applications for wind projects and section 2805.14(h) allowing renewal for site testing grants
Removed specific references to “wind” so that section would apply to project testing for either solar or wind
This change was made to be consistent with other changes in this final rule.

2805.15—Rights retained by the United States
Adds a provision requiring common use of your right-of-way for compatible uses
No changes were made from the proposed to the final rule

2805.16—Payment of monitoring fees
Adds a provision to allow the BLM to collect monitoring fees for expenses incurred by other Federal agencies
Adds the word “inspecting” in addition to the existing word “monitoring.”
This change was made to be consistent with other changes in this final rule.

2805.20—Bonding requirements
Adds new section 2805.20 describing bonding requirements
The final rule adds a requirement to have periodic reviews of project bonds for adequacy. Also, the bond amounts for wind turbines are changed to be based on the nameplate capacity. The final rule also explains that the BLM may consider factors in addition to the reclamation cost estimate (RCE), such as the salvage value of project components, when determining bond amounts
Changes made in this section were based on comments received from the public.

2806.12—Payment of rents
Adds provisions for the payment of rents for non-linear rights-of-way, including solar and wind grants and leases
No changes were made from the proposed to the final rule for this section

2806.13—Late payment of rents
Adds penalties for non-payment of rents and removes the $500 limit for late payment fees
No changes were made from the proposed to the final rule

2806.20—Rents for linear right-of-way grants
Describes where you may obtain a copy of the current rent schedule
No changes were made from the proposed to the final rule

2806.22—Changes in the Per Acre Rent Schedule
Corrects a reference to the IPD-GDP
No changes were made from the proposed to the final rule

2806.24—Making payment for a linear grant
Requires making a payment for the initial partial year, along with the first year's rent. Also, provides for multiple year payments
No changes were made from the proposed to the final rule

2806.30—Communication site rents
The communication site rent schedule is removed. Several other minor changes made for clarification
No changes were made from the proposed to the final rule

2806.34—Calculation of rent for a multiple-use communication facility
Corrects an existing citation to read section 2806.14(a)(4)
No changes were made from the proposed to the final rule

2806.43—Calculation of rents for passive reflectors and local exchange networks
Changes a former reference to new section 2806.70
No changes were made from the proposed to the final rule

2806.44—Calculation of rents for a facility owners that authorizes communication uses
Changes a former reference to new section 2806.70
No changes were made from the proposed to the final rule

2806.50—Rents and fees for solar energy rights-of-way
Existing section 2806.50 (provisions for determining rents where the linear right-of-way schedule or the communication rent schedule do not apply) is redesignated as section 2806.70. New section 2806.50 introduces rents and fees for solar energy rights-of-way
No substantive changes were made to the final rule

2806.51—Scheduled Rate Adjustment
Not in the proposed rule; added to the final rule in response to comments received

This section gives solar project proponents the option of selecting scheduled rate adjustments to the per acre zone rate and MW rate for an individual grant or lease, instead of following the process in the rule for periodic adjustments in response to changes in NASS values and wholesale market prices
Parallel revisions were made to section 2806.52 for grants and section 2806.54 for leases

These changes were made in response to comments received from the public and were designed to provide project proponents with the option to choose greater payment certainty over the life of a right-of-way grant or lease.

2806.52 through 2806.58 Provide data for rents and fees for solar energy projects
Sections 2806.50, 2806.52, 2806.54, 2806.56, and 2806.58 describe rents and fees for solar energy authorizations
The rule now allows for solar energy site testing. The calculation of the acreage rent has been expanded to explain the process more thoroughly. Acreage rent reductions are now adjusted to show greater rent reductions in certain States for solar energy rights-of-way

The methodology of determining rents and fees for wind is the same as solar, except where noted in the preamble.
Changes made in this section were based on comments received from the public and to be consistent with other changes in this final rule.

2806.60 through 2806.68 Provide data for rents and fees for wind energy projects
Sections 2806.60, 2806.62, 2806.64, 2806.66 and 2806.68 describe rents and fees for wind energy authorizations
The changes to these sections parallel the changes in sections 2806.50 through 2806.58
Changes made in this section were made to be consistent with other changes in this final rule.

2806.61—Scheduled Rate Adjustment
Not in the proposed rule; added to the final rule in response to comments received

Similar to the provisions of section 2806.51. This section gives wind project proponents the option of selecting scheduled rate adjustments to the per acre zone rate and MW rate for an individual grant or lease, instead of following the process in the rule for periodic adjustments in response to changes in NASS values and wholesale market prices
Parallel revisions were made to section 2806.62 for grants and section 2806.64 for leases

These changes were made in response to comments received from the public and were designed to provide project proponents with an option to choose greater payment certainty over the life of a right-of-way grant or lease.

2806.70—Rent determinations for other rights-of-way
Adds redesignated section 2806.70, which contains the text formerly found at section 2806.50, with minor modifications
No changes were made from the proposed to the final rule
This section is applicable to all rights-of-way that are not subject to rent schedules.

2807.11—Contacting the BLM during operations
Specifies requirements when a change in a right-of-way grant is warranted
No changes were made from the proposed to the final rule

2807.17—Grant suspensions or terminations
This provision contains the regulation formerly located at section 2809.10
No changes were made from the proposed to the final rule

2807.21—Assigning a grant or lease
Revises the title to include leases and clarifies when an assignment is or is not required
Adds two events that may require an assignment. Clarifies that changing only a holder's name does not constitute an assignment and explains how the BLM will process a change only to a holder's name for a grant or lease. It also clarifies that ownership changes within the same corporate family do not constitute an assignment
Changes made in this section were based on comments received from the public requesting clarity on assignments and name changes

2807.22—Renewing a grant
Revises the title to include leases and clarifies that if you apply for a renewal before it expires, your grant will not expire until a decision has been made on your renewal request
No changes were made from the proposed to the final rule

Subpart 2809—Grants for Federal agencies
Existing language in this subpart redesignated as new paragraph (d) of section 2807.17. The title is changed to reflect that it now pertains to competitive leasing for solar or wind energy rights-of-way. This subpart is divided into several added sections as described below
No changes were made from the proposed to the final rule

2809.10—Competitive process for leasing public lands for solar and wind energy projects
Section 2809.10 provides for solar and wind energy leasing inside designated leasing areas
Clarifies that leases under this section generally have processing priority over grant applications to the extent they require the same BLM resources. No other changes were made from the proposed to the final rule
Changes made in this section were made to be consistent with other changes in this final rule.

2809.11—Solicitation of nominations
Section 2809.11 describes how the BLM will solicit nominations for solar or wind energy development
The requirement to publish in a newspaper is now optional instead of required
This change is consistent with other notification requirements in the final rule.

2809.12—Parcel selection
Section 2809.12 describes how the BLM will select and prepare parcels
No changes were made from the proposed to the final rule

2809.13—Competitive offers for solar and wind energy development
Section 2809.13 describes how the BLM will conduct a competitive offer for solar or wind energy development
A reference to lease mitigation requirements is added. The requirement to publish in a newspaper is now optional instead of required
The reference to mitigation was added in response to comments received from the public. The notification change is consistent with other notification requirements in the final rule

2809.14—Acceptable bids
Section 2809.14 describes the types of bids that the BLM will accept
The words “and mitigation costs” were removed to be consistent with section 2804.30
Changes made in this section were made to be consistent with other changes in this final rule.

2809.15—How will BLM select the successful bidder?
Section 2809.15 describes how the BLM will select a successful bidder
No changes were made from the proposed to the final rule

2809.16—Variable offsets
Section 2809.16 identifies when variable offsets will be applied
Added a new offset factor for preparing draft biological strategies and plans
Changes made in this section were based on comments received from the public on variable offset factors.

2809.17—Rejection of bids
Section 2809.17 describes conditions when the BLM may reject bids or re-conduct a competitive offer
No changes were made from the proposed to the final rule

2809.18—Lease terms and conditions
Section 2809.18 identifies terms and conditions that will apply to leases
Paragraph (e)(2) of this section is changed so bond amounts for wind turbines reflect their nameplate capacity. Paragraph (e)(3) is added to this section to account for testing
These changes are consistent with changes to section 2805.20.

2809.19—Applications made inside designated leasing areas
Section 2809.19 describes situations when an application may be accepted inside a DLA
This section is revised to clarify how the BLM will handle applications submitted inside DLAs
The changes made in the final rule were made in response to comments and are intended to clarify the final rule.

2884.10—What needs to be done before filing an application for an oil or gas pipeline right-of-way?
Adds a provision to this section that describes several additional steps, including pre-application meetings, to be taken if an application is for a pipeline 10 inches or more in diameter
The reference to pre-application meetings and additional requirements for pipelines greater than 10 inches were removed, resulting in no changes being made from the existing regulation
See the discussion in section 2804.10 of this preamble for additional information on changes made in response to comment.

2884.11—Information submitted with application
Adds provision to be consistent with POD template development schedule and other requirements
No changes were made from the proposed to the final rule

2884.12—Processing fees for an application or permit
Adds information on cost reimbursement requirements for work performed by other Federal agencies
No changes were made from the proposed to the final rule

2884.16—Master Agreements
Adds information on cost reimbursement requirements for work performed by other Federal agencies
No changes were made from the proposed to the final rule

2884.17—Processing Category 6 right-of-way applications
Adds discussions on right-of-way costs for work performed by other Federal agencies to this section
No changes were made from the proposed to the final rule

2884.18—Competing applications for the same pipeline
Adds discussions on right-of-way costs for work performed by other Federal agencies to this section
The requirement to publish in a newspaper is now optional instead of required
This change is consistent with other notification requirements of this final rule.

2884.20—Public notification requirements for an application
Adds a provision to this section that we may put a notice on the Internet or use other forms of notification as deemed appropriate
The requirements to publish in a newspaper are now optional instead of required
This change is consistent with other notification requirements of this final rule.

2884.21—Application processing by the BLM
The BLM will not process your application if you are in trespass. Several other minor changes were made to be consistent with other changes made in these regulations
Changes are made to section 2884.21 consistent with those made to section 2807.21
Changes made in this section were made to be consistent with other changes in this final rule.

2884.22—Additional information requirements
No change was proposed for this section
This section was revised by changing the reference found in paragraph (a) from section 2804.25(b) to section 2804.25(c)
This change was not proposed, but is made to be consistent with other changes in this final rule. No other changes were made to this section.

2884.23—When can my application be denied?
To be consistent with section 2804.27, section 2884.23 was changed to state that the BLM may deny an application if the required POD fails to meet the development schedule and other requirements for oil and gas pipelines
No changes were made from the proposed to the final rule

2884.24—Fees owed if application is withdrawn or denied
Changes made to be consistent with section 2804.27, would require an applicant to pay any pre-application costs submitted under section 2884.10(b)(4)
Since pre-application meetings are no longer required in this final rule and additional requirements for pipelines greater than 10 inches were removed, the final rule does not make any changes to this existing provision
The revisions to this section suggested by the proposed rule are not included in the final rule based on comments received from the public on BLM's criteria for large-scale pipeline projects.

2884.30—Showing of good cause
There was no section 2884.30 in proposed rule
This section was added to be consistent with section 2804.40
This section was added to be consistent with other changes in this final rule.

2885.11—Terms and conditions
This section makes reference to section 2805.12(b) (bond requirements for FLPMA authorizations) and makes those bonding requirements applicable to MLA rights-of-way. Also, the regulation will be clarified by providing guidance on terms of MLA grants
No changes were made from the proposed to the final rule

2885.15—Rental charges
Clarifies that there is no reduction in rents for grants or TUPs, except as provided in section 2885.20(b)
No changes were made from the proposed to the final rule

2885.16—When is rent paid?
Requires making a payment for the initial partial year, along with the first years rent. Also, provides for multiple year payments
No changes were made from the proposed to the final rule

2885.17—Consequences for not paying or paying rent late
New paragraph (e) explains the circumstances under which the BLM would retroactively collect rents or fees
No changes were made from the proposed to the final rule

2885.19—Rents for linear right-of-way grants
Provides information about where you may obtain a copy of the current rental schedule
No changes were made from the proposed to the final rule

2885.20—Per Acre Rent Schedule calculations
Would remove an obsolete provision (existing paragraph (b)(1)) that provided for a 25 percent reduction in rent for calendar year 2009
No changes were made from the proposed to the final rule

2885.24—Monitoring fees
Provides an updated table describing monitoring categories, but without the cost schedule. Paragraph (b) provides information about where to obtain a copy of the current monitoring cost schedule
Minor revisions were made consistent with changes to section 2805.16
Changes made in this section were made to be consistent with other changes in this final rule.

2886.12—When you must contact the BLM during operations
Adds to this section, contact requirements for when there is a need for changes to a right-of-way grant and to correct discrepancies
No changes were made from the proposed to the final rule

2887.11—Assigning a right-of-way grant or TUP
Clarifies this section to show when an assignment is or is not required
Adds two events that may require an assignment. Clarifies that a change in a holder's name only does not constitute an assignment
These changes are made to be consistent with section 2807.21.

2887.12—Renewing a grant
Clarifies that if you apply for a renewal before it expires, your grant will not expire until a decision has been made on your renewal request
No changes were made from the proposed to the final rule

III. Final Rule as Adopted and Responses to Comments

General Comments by Topic

Competitive Process Comments

A number of comments agreed with the BLM's proposals to create a competitive process for solar and wind development.

One comment stated that the proposed rule, if made final, would be a positive first step in improving the existing processes for solar and wind energy development by incentivizing development in appropriate areas, helping developers estimate costs, and providing a fair return to the taxpayer for the use of public lands. The BLM did not make any changes in response to this comment.

Another comment, on the other hand, recommended that the BLM maintain its current pre-application and application processes rather than adding untested or unproven administrative processes to promote competition inside and outside of DLAs. The BLM notes that it has already successfully used competitive processes when authorizing renewable energy development and it continues to gain experience with competitive auctions. The BLM also intends to continue improving its solar and wind energy policies, including by building upon the provisions codified in this final rule, to reduce administrative timeframes and costs in order to support reasonable and responsible project development, such as those policies designed to further streamline application review and processing.

Several comments provided statements on the use of a competitive process for issuing grants.

One comment stated that we should clarify that the competitive bid process applies only to renewable energy authorizations. The BLM only agrees with this comment in part. In this final rule, the BLM has codified competitive processes inside of DLAs that relate only to solar and wind energy rights-of-way. However, the final rule modifies existing regulations so that those same competitive processes may also be used outside of DLAs and for other types of rights-of-way in the future, such as when they are necessary to resolve other situations where there are competing right-of-way and other land use authorization requests or when the BLM otherwise determines it is appropriate to initiate a competitive process for a particular use in a given area. Specifically, the final rule expands the BLM's ability to initiate a competitive process for other rights-of-way relative to existing regulations. Should the BLM hold a competitive offer for another type of right-of-way, it would be appropriate for the BLM to use processes similar to those developed for this rule because those policies were developed based on sound competitive principles. Therefore, utilizing them as a model in other areas would promote consistency across the agency.

One comment stated that competitive leasing would both lengthen and complicate project siting, using the recent Dry Lake competitive offering in Nevada as an example, noting that the preparations for competition took years. The BLM believes that much of the work required for competitive leasing has already been completed for solar energy in the SEZs identified in the Western Solar Plan and other DLAs established by other planning efforts. The upfront work done when identifying these areas provides a basis for them to be offered under the most favorable competitive process provisions of this rule. That analysis also increases the certainty that the BLM will approve a project in those areas, which ultimately reduces the overall project review timeframes. The work done in establishing a DLA through the land use planning process, including completion of a NEPA analysis, provides a framework from which future project-specific analyses can tier, which should save time and money for both the BLM and project developers. Additionally, by expanding the circumstances under which the BLM can utilize competitive procedures the final rules provides a more direct path than was available to the BLM when setting up the Dry Lake SEZ sale in Nevada.

To further support development in these areas, the BLM is also developing regional mitigation strategies for many of the identified SEZs. While the existence of a regional mitigation strategy is not a prerequisite for holding a competitive sale, the BLM believes that such strategies further clarify development requirements in a given area allowing auction participants to more carefully evaluate potential costs and requirements when formulating a project or a bid in advance of competitive sale.

Collectively, these efforts and the provisions of this rule are consistent with existing policies to encourage the timely and responsible development of renewable energy while protecting the public land and its resources.

One comment suggested that competition should be used only where there are multiple applications for use of the same land. While the BLM intends to use competition in those circumstances, it does not believe that is the only circumstances where such processes are appropriate. The existence of competition is not only indicated by competing application; in some situations competition would be determined where other evidence of competitive interests becomes known through emails, letters, and other contact with the public. As a result, the BLM does not believe it is appropriate to limit the use of competitive leasing regulations to just instances of competing applications. Instead, the provisions of this rule have been designed to provide more flexibility. The BLM is able to hold competitive offers inside DLAs, outside DLA, in response to competing applications, and on its own initiative, in order to encourage development in areas where it determines those processes to be appropriate, such as when it determines that fewer resource conflicts are present. In total, the BLM believes that the competitive processes established by this final rule will enable the BLM to encourage solar and wind energy development on public lands, while also protecting the sensitive resources found on those lands.

Summary of Key Changes Between the Proposed and Final Rule

One comment suggested that we use a table to identify technical changes, corrections, and clarifications being made to the right-of-way regulations by this rule, similar to the table we included in the preamble of the proposed rule. We agree and have included a similar table in this preamble.

Pipeline and Transmission Line Comments

Some comments questioned the BLM's description of pipelines 10 inches or greater in diameter as a measure for large-scale pipeline projects and recommended the removal of additional processes such as mandatory pre-application meetings to facilitate Federal and State reviews of the project. Alternatives for the description of a large-scale project were suggested, such as using a total acreage of disturbance.

In light of these comments, the BLM has decided to remove the description of large-scale pipelines and additional processes required for such projects from the final rule. While some comments included recommendations for alternative ways of determining a threshold for large-scale pipelines, the BLM decided that it must further analyze how it will identify large-scale pipelines before including requirements for such projects in its regulations. If the

BLM were to take such action in the future it would coordinate with other Federal agencies, as appropriate, to identify an appropriate threshold for large-scale pipeline projects and establish consistent, non-duplicative requirements. The removal of the pipeline threshold from the final rule requires deletion of the requirements in the proposed rule that were specifically applicable to large-scale pipeline projects. A more detailed discussion of these revisions can be found in the relevant portions of the section-by-section analysis in this preamble (see sections 2804.10, 2884.10, and 2885.11 of this preamble).

Some comments also questioned the BLM's description of transmission lines with capacities of 100 kV or more as constituting large-scale transmission projects. Those commenters recommended the removal of that threshold and the associated requirements. Some comments suggested that there are no readily identifiable 100 kV transmission projects by which to determine if the proposed threshold is a fair representation of a large-scale project. The BLM does not agree with these comments and believes that the description is appropriate since there is a clear separation between lower voltage transmission lines, generally 69 kV or less, and high voltage transmission lines, beginning at 115 kV of capacity or more. For example, the North American Electric Reliability Corporation established the 100 kV threshold as a bright line criterion to determine which transmission lines are included in the Bulk Electric System, a system that is used by the Regional Reliability Organization for electric system reliability. The BLM is maintaining the description of transmission lines with capacity of 100 kV or the rule as a suitable description to determine large-scale transmission projects.

Megawatt Capacity Fee Comments

Some comments argued that the BLM lacks authority to collect a MW capacity fee because the Federal Government does not own the sunlight or the wind, which are inexhaustible resources. While the BLM agrees that sunlight and wind are renewable resources present on the public lands, it does not agree that it lacks the authority to collect a fee for the use of such resources.

Under FLPMA, the BLM is generally required to obtain fair market value for the use of the public lands and its resources, including for rights-of-way. In accordance with the BLM's FLPMA authority and existing policies, the BLM has determined that the most appropriate way to obtain fair market value is through the collection of multi-component fee that comprises an acreage rent, a MW capacity fee, and, where applicable, a minimum and a bonus bid for lands offered competitively. The BLM determined that the collection of this multi-component fee will ensure that the BLM obtains fair market value for the BLM-authorized uses of the public lands, including for solar and wind energy generation.

The BLM notes that the MW capacity payments are best characterized as “fees” rather than “rent” because they reflect the commercial utilization value of the public's resource, above and beyond the rural or agricultural value of the land in its unimproved state. In the BLM's experience, and in accordance with generally accepted appraisal and valuation standards, the value of the public lands for solar or wind energy generation use depends on factors other than the acreage of the occupied land and that land's unimproved value. Other key elements that add value include the solar insolation level, wind speed and density, proximity to demand for electricity, proximity to transmission lines, and the relative degree of resource conflicts that could inhibit solar or wind energy development. To account for these elements of land use value that are not intrinsic to the rural value of the lands in their unimproved state, the solar and wind right-of-way payments in this final rule incorporate “MW capacity fees” in addition to “acreage rent.”

The use of a multi-component fee that comprises both an acreage rent and a MW capacity fee, and in some cases also a minimum and a bonus bid, achieves four important BLM objectives. First, the approach allows BLM to ensure that it is capturing the full fair market value of the land being encumbered by these projects. Second, the approach is consistent with the approach employed by the BLM for other uses of the public land (
i.e.,
it ensures that our approach to acreage rent is consistent across various categories of public land uses, while mirroring the multi-component payments received from activities like oil and gas development where both rent and royalties are charged), ensuring consistency across users. Third, the approach encourages the efficient use of the public lands by reducing relative costs for comparable projects that take up less acreage. That is, for a project with a given MW capacity, the overall payments to the BLM will be lower if the project employs a more efficient technology that produces more MW per acre and thus encumbers fewer acres. Fourth, the approach is consistent with existing policies governing the BLM's renewable energy program, which have been in place since 2008. As explained in the section-by-section analysis in Section IV of this preamble, this final rule refines the calculation of the fee components (
e.g.,
the MW capacity fee for solar is reduced relative to existing policies) but does not alter the basic multi-component fee structure for solar and wind projects on the public lands.

The BLM's multi-component fee structure also bears similarities to one of the more common structures for solar and wind energy development on private lands, where projects pay a rent for the use of an area of land at the outset and, and then a royalty on the power produced once generation commences. (The BLM recognizes that private-land projects use a variety of fee structures. For example, some projects rely solely on an acreage rent—but in those cases, the BLM believes that the increased value of the land due to project development is captured in other ways, such as by charging a higher base rent that reflects more than the land's unimproved value.)

The acreage rent charged by the BLM is analogous to the rent charged in most private land leases. With respect to the MW capacity fee, the BLM uses the approved electrical generation capacity as a component of the value of the use of the public lands for renewable energy development instead of relying on a royalty like private landowners do. On private lands, such royalties are typically assessed after-the-fact, as a percentage of the value of power actually produced, and the rate can range from 2 to 12 percent. The BLM has determined instead to charge a fee based on the installed nameplate MW capacity of an authorized wind or solar project. This approach is consistent with the BLM's legal authority, including the direction in FLPMA that right-of-way holders “pay in advance” the fair market value for the use of the lands. The BLM considered charging a royalty, assessed as a percentage of power generated, but the FLPMA directive that right-of-way holders must “pay in advance” would require the BLM to collect any such royalty payments in advance of the corresponding power generation and then “true up” at the end of each calendar year. The BLM determined that the MW capacity fee approach in the final rule presents fewer administrative burdens and costs for both the BLM and right-of-way holders than an approach based on in-advance royalty payments followed by annual “true-ups.” The BLM worked with the Office of

Valuation Services to compare its combined acreage rent and MW capacity fee against the total stream of payments from a similarly situated private land project to ensure the total payments collected by the BLM are comparable to those collected on private land. Finally, the BLM notes that in retaining the multi-component payment structure for solar or wind developments as separate “rent” and “fee” components as established under existing policy, the BLM is retaining its existing interpretation of how that multi-component structure interfaces with the Rural Electrification Act (IM 2016-122). Under the final rule, consistent with existing policy, the acreage payment remains classified as “rent,” as it is directly tied to the area of public lands encumbered by the project and the constraints that the project imposes on other uses of the public lands. As noted, however, the MW capacity fee is more properly characterized as a “fee” because it reflects the commercial utilization value of the public's resource, independent of the acreage encumbered. As specified under FLPMA, facilities that qualify for financing under the Rural Electrification Act may be exempt from paying “rental fees.” As explained in IM 2016-122, however, the BLM has determined that such facilities are
not
exempt from paying other components of the fair market value of the land, such as the MW capacity fee, minimum bid, bonus bid, or other administrative costs, as none of those costs are related to the rental value of the unimproved land.

Designated Leasing Areas Comments

Several comments requested clarification about the differences between the competitive processes for lands inside and outside of a DLA. Other comments expressed confusion over whether certain requirements of the proposed rule would apply to both “grants” (authorizations issued under subpart 2804 for solar and wind energy development) and “leases” (authorizations issued under subpart 2809). The BLM has expanded multiple provisions in the final rule to clarify the requirements for solar and wind energy development grants and leases, including those relating to competitive processes, rents and fees, bonding, and due diligence.

Comments Beyond the Scope of the Proposed Rule

In addition to the general comments discussed above and the more specific ones discussed in the section-by-section portion of this preamble below, the BLM received many other comments that suggested revisions to the BLMs right-of-way regulations that were beyond the scope of the proposed rule and/or that are better suited for supplemental policy guidance of the type found in BLM manuals, handbooks, or IMs. The BLM did not make any changes to the proposed rule in light of these comments. However, they are discussed in the relevant portions of the section-by-section analysis of this preamble.

Additional Comments on the Rule

During the preparation of this final rule, the BLM received additional comments from various stakeholders and other interested parties following the close of the comment period and participated in additional stakeholder engagement meetings as part of the BLM's regular course of business. During those meetings and in those comments, stakeholders provided additional information clarifying the concerns, comments, and questions they had previously raised through written comments on the proposed rule. The BLM considered this additional information during the drafting of this final rule. This additional information is addressed in the relevant section-by-section discussion of this preamble.

For example, industry stakeholders provided additional information that was previously unavailable regarding their uncertainty, under the proposed rule, about how both acreage rent and MW capacity fee payments would increase over the life of a lease or grant, and particularly their concern that such rents and fees could increase in an unpredictable manner. These comments and the BLM's responses are discussed further in sections 2806.51 and 2806.61 of this preamble.

Industry stakeholders also raised concern over the factors that the BLM considers when determining a bond amount. This comment and the BLM's response are discussed further under sections 2805.12(e)(1) and 2805.20(a)(3).

Environmental stakeholders also provided additional substantive discussion of their comments. Specifically, they requested additional detail in the final rule explaining the evaluation criteria that the BLM uses when establishing DLAs going forward. The environmental stakeholders' comment and the BLM's response are discussed further in section 2802.11 of this preamble.

IV. Section-by-Section Analysis for Part 2800

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

Subpart 2801—General Information

Section 2801.5 What acronyms and terms are used in these regulations?

This section contains the acronyms and defines the terms that are used in these regulations. Several comments suggested changes to the proposed rule. These suggestions and comments are analyzed under the applicable definition contained in the final rule.

The following terms are 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 zone rate in effect at the time the authorization is issued. Provisions addressing adjustments in the acreage rent are 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 section 2806.52(a). No comments pertaining to this definition were received and no changes are made from the proposed to the final rule.

“Application filing fee” is a new term that means a filing fee specific to solar and wind energy right-of-way applications for the initial reasonable costs for processing, inspecting, and monitoring a right-of-way. The fee is $15 per acre for solar and wind energy development applications and $2 per acre for energy project-area testing applications. The BLM will 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. This definition is revised for consistency with comments received on sections 2804.12 and 2804.30 on application filing fees. See those respective sections of this preamble for further discussion. No other comments were received and no other change is made from the proposed rule to the final rule concerning this definition.

“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 rule adds this definition to section 2801.5 to help clarify regulations. A more detailed explanation of assignments and the changes made is found under section 2807.21. Although some comments were received pertaining to assignments, as discussed later in this preamble, none of them pertain to the definition. No change is made from the proposed to the final rule concerning this definition.

“Designated leasing area” (DLA) is a new term that means a parcel of land with specific boundaries identified by the BLM's land use planning process as being a preferred location for the leasing of public lands for solar or wind energy development via a competitive offer. Examples of DLAs for solar energy include SEZs designated through the Western Solar Plan; Renewable Energy Development Areas (REDAs) designated through the BLM Arizona Restoration Design Energy Project (REDP) planning process; and Development Focus Areas (DFAs) designated through BLM's California's Desert Renewable Energy Conservation Plan (DRECP) planning process. The competitive offer process is discussed in subpart 2809 of this preamble. Further discussion of DLAs can be found under section 2802.11 of this preamble.

Comments:
Some comments recommended that the definition of DLA should indicate criteria that must be met to designate a DLA, in particular, wind energy-specific DLAs. The comment also suggested the final rule include criteria to identify right-of-way exclusion and avoidance areas. Other comments stated a similar concern, and indicated that land use planning varies by BLM State or field office, so DLA standards should be developed.

Response:
The BLM considered establishing standard criteria for DLAs as well as for exclusion and avoidance areas, but this approach is not carried forward in the final rule. Doing so could unintentionally limit the BLM's management of such lands when considering the varied landscapes and resources that the BLM manages. However, the BLM intends to establish guidance, as part of the implementation of this rule, to assist the BLM in establishing DLAs, such as wind energy sites, through its land use planning processes. Further discussion on this issue is found under section 2804.31 of this preamble.

Comments:
Some comments stated that identifying new DLAs through land use planning was too time consuming, and therefore DLA designation should be a separate process.

Response:
Many land use planning efforts take several years to complete and consider many resources and uses in addition to solar or wind energy development. These types of land use planning efforts would not consider a specific project, but instead the effect of such developments in the planning area, and inform the BLM if the lands should be an exclusion or avoidance area, or identified as a DLA for solar or wind energy development. Although the BLM's land use planning process may be time consuming, it is necessary for the BLM in its orderly administration of the public lands to use this process to properly protect and manage the public lands. When amending a resource management plan, the BLM must be consistent with its planning regulations (see 43 CFR part 1600). Absent a larger planning effort underway for the same planning area, the BLM could use a targeted land use plan amendment to identify a designated leasing area. In such cases, the land use planning process may be less time consuming than suggested by commenters. For further discussion, please see section 2804.31 of this preamble. No specific changes were made in response to this comment.

In addition to the amendments to section 2804.31, the BLM has begun its Planning 2.0 initiative, which is aimed at improving the BLM's planning process. This initiative includes targeted revisions to the planning regulations (see 43 CFR part 1600) and land use planning handbook, in order to improve the BLM's use of Resource Management Plans, which guide the BLM's administration of the public lands. The Planning 2.0 initiative will help the BLM to conduct effective planning across landscapes at multiple scales, create more dynamic and efficient planning processes that are responsive to change, and provide new and enhanced opportunities for collaboration with the public and partners. You can find further information on the BLM's Planning 2.0 initiative at the following Web site
http://www.blm.gov/wo/st/en/prog/planning/planning_overview/planning_2_0.html
.

Comment:
A comment recommended that the BLM use one consistent definition to ensure that DLAs represent areas of fewer resource conflicts for solar and wind energy development.

Response:
Because of the many variables that the BLM must consider when designating a DLA, the definition provided is intentionally broad and identifies a DLA as a preferred location for development that may be offered competitively. This definition allows the BLM to identify such areas in land use planning processes using plan-specific criteria to best identify the area. However, we are modifying the definition by removing the example of solar energy zones that was cited in the proposed rule in order to eliminate potential confusion about the future identification of additional DLAs, which may not be identified in the same manner as the solar energy zones. No other comments were received concerning this definition.

“Designated right-of-way corridor” is a term that is defined in existing regulations. The word “linear” has been added to this definition in the final rule to distinguish between these corridors and DLAs. No comments were received concerning this definition change and no changes are made from the proposed rule to the final rule.

“Management overhead costs” is defined in existing regulations as Federal expenditures associated with the BLM. This definition has been expanded in the final rule to include other Federal agencies. This revision is consistent with Secretarial Order 3327 and will help to promote effective cost reimbursement. Under Sections 304(b) and 504(g) of FLPMA, the Secretary may require payments intended to reimburse the United States for its reasonable costs with respect to applications and other documents relating to public lands. Secretarial Order 3327 delegated the Secretary's authority under FLPMA to receive reimbursable payments to the bureaus and offices of the Department. No comments were received pertaining to this definition change, and no revisions were made from the proposed rule to the final rule.

“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 after the discussion of section 2806.56. While the acreage rent reflects the value of the land itself in its unimproved state, the MW capacity fee reflects the value of the industrial use of the property to generate electricity. Specifically, it captures the additional value of public land used for solar and wind energy generation that are not reflected in the NASS land values.

The BLM revised the definition of MW capacity fee from the proposed to final rule to clarify that the MW capacity fee is calculated for staged developments by multiplying the MW rate by the approved MW capacity for each stage of development. The proposed rule stated that the MW rate would be multiplied to the approved stage of development, but did not specify that it was the approved MW capacity for the stage of development. The BLM made this revision to help improve the public's understanding of the MW capacity fee calculation for staged developments.

Comment:
One comment acknowledged that fair market value can be determined by using a competitive process and agreed with the proposed rule's approach of using a competitive process to authorize solar and wind energy development on public lands. The comment went on to express a preference for a system that includes the payment of a royalty fee for the use of commercial power facilities on public lands.

Response:
As explained above, the BLM has established through existing policy, and now by this rule, a multi-component structure for obtaining fair market value from renewable energy development. Since FLPMA directs right-of-way holders “to pay
in advance
the fair market value” for the use of the public lands, subject to certain exceptions (43 U.S.C. 1764(g)), the BLM's existing regulations governing the use of public lands, under Title V of FLPMA, generally require the prepayment of annual rent and fees in amounts determined by the BLM. This requirement is carried forward in existing guidance governing acreage rent and MW capacity fees for wind and solar energy projects and was selected in lieu of other means of obtaining fair market value. Consistent with the BLM's authority under FLPMA, its existing policies, and the proposed rule, the BLM has determined that it will continue to charge in advance both an acreage rent and a MW capacity fee for solar and wind energy projects, as a means of obtaining fair market value for those projects. Given that FLPMA requires payment in advance, the BLM has determined it is appropriate to base that the MW capacity fee on rated MW capacity as opposed to actual generation. In instances where competitive processes are utilized, any minimum and bonus bids represent an additional component of fair market value on top of the annual acreage rent and MW capacity. No other comments were received on the proposed definition of MW capacity fee, and no changes to the definition were made in this final rule.

“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 (1) the net capacity factor multiplied by (2) the MW per hour (MWh) price multiplied by (3) the rate of return multiplied by (4) the total number of hours per year where:

1. The “net capacity factor” means the average operational time divided by the average potential operational time of a solar or wind energy development, multiplied by the current technology efficiency rates. This rule establishes net capacity factors for different technology types, but the BLM may determine a different net capacity factor to be more appropriate, on a case-by-case or regional basis, to reflect changes in technology, such as a solar or wind project that employs energy storage technologies, or if a grant or lease holder or applicant is able to demonstrate that a different net capacity factor is more appropriate for a particular project design, layout, or location.

The default 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. CSP with storage capacity of 3 hours or more = 30 percent; and

d. Wind energy = 35 percent.

Comments:
Several comments were received concerning the definition and description of net capacity factor. One comment stated that the net capacity factors should not be specified in the proposed rule for CSP projects, as they will undoubtedly increase over time with technology improvements and be updated on a regular basis, in a similar manner as rents. CSP can be designed to operate from a range of 10 to 50 percent efficiency depending on the intended use of the facility (
e.g.,
base load or peaker plant). Another comment recommended using an estimate of the capacity factor identified in the POD and the plant's design as the basis for this calculation.

Response:
The BLM recognizes that there may be technology improvements over time, and that there are variables which may affect a specific project's net capacity factor. For example, a CSP project may be designed to operate at lower or higher efficiency rate depending on its intended use. The BLM took this into account in determining the net capacity factor of the technologies for the final rule. Future rulemaking would be required to change the established net capacity factors for each technology. The BLM will not incorporate the recommendation to use the project owner's estimate of the capacity factor in the POD to calculate its MW capacity fee. The estimated net capacity factor in a POD would be specific to a particular project, but would be a subjective value that could be inaccurate or misleading. Incorporating the methodology suggested by the comment could raise questions as to whether the BLM was truly collecting a reasonable return for use of the public lands.

However, the BLM has revised the final rule, consistent with this comment and those comments submitted regarding storage technologies, to allow the BLM to determine another net capacity factor to be more appropriate on a case-by-case basis. The BLM could determine another net capacity factor to be more appropriate when there is a change in technology, such as when a project employs energy storage technologies. Determining another net capacity factor may also be appropriate if a project uses a more current version of a technology.

Comment:
Another comment agreed with the BLM's proposal to use an average net capacity factor for wind energy projects. However, the comment recommended using a net capacity factor of 26 percent as identified in the wind capacity factor for Western States (see the Department of Energy's 2013 Wind Technologies Report) instead of the national average wind capacity factor of 35 percent.

Response:
While the BLM acknowledges that most solar and wind projects on public lands will be located in the western United States, it nevertheless elected to use the national averages in calculating the net capacity factors for both solar and wind projects, because the BLM believes those values are more representative of the technology that will be deployed on projects developed in the future. The net capacity factor for a given project is greatly influenced by project design, layout, and location. The national average reflects a larger set of projects than the regional average, and is therefore more representative of the full range of older and newer technologies currently sited on public lands.

With respect to the wind capacity factor in particular, the BLM reviewed data from the Department of Energy's 2014 and 2015 Wind Technology Reports (
https://emp.lbl.gov/sites/all/files/lbnl-188167.pdf
and
https://emp.lbl.gov/sites/all/files/2015-windtechreport.final.pdf,
respectively). Based on its review of that data, the

BLM determined that its selection of a 35 percent capacity factor for wind was appropriate for several reasons.

First, the geographic scope of the lands included in the “West Region” of the Department of Energy's reports does not adequately capture the full extent of BLM lands. Using the geographic distribution classifications set by the Department of Energy, BLM lands are located in both the “West” and “Interior” regions, with 7 states in the West and 4 states in the Interior (Colorado, Montana, New Mexico, and Wyoming). It should also be noted that the four BLM states in the Interior region possess significant wind energy development potential. Accordingly, the BLM believes it is reasonable to select a wind capacity factor between the values for the West and Interior. In the Interior Region the Department of Energy reported capacity factors of 41.2 percent and 42.7 percent in 2014 and 2015, respectively. Data from the 2014 report shows that while the average capacity factor in the West was 27 percent, there was considerable spread in the factors by project, from just below 20 percent to over 37 percent. In the Interior, the spread in capacity factors was from 26 percent to 52 percent. Thirty-five percent represents a reasonable average of these very disparate, project-specific capacity factors.

In addition to looking at capacity factors regionally, the Department of Energy's analysis also controlled for wind quality. Notably, the Department of Energy determined that even in low wind quality areas, which predominate in the West, new projects achieve 35 percent capacity factors. As explained in the reports, this analysis was based on wind turbine specific power, which is the ratio of a turbine's nameplate capacity rating to its rotor-swept area. All else being equal, a decline in specific power leads to an increase in capacity factor according to the analysis presented in the report. In general, since the wind industry is shifting towards deploying lower specific power wind turbines at new wind energy projects across the United States, the BLM believes it is reasonable to select 35 percent as the default capacity factor for a wind project in the final rule.

It should also be noted that the BLM considered basing the net capacity factors for these technologies on an average of the annual capacity factors posted by the Energy Information Administration (EIA) on its Web site at:
http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_6_07_b.
However, the BLM is not carrying this approach forward in the final rule because, as discussed earlier in the preamble regarding net capacity factors, we believe that the 35 percent capacity factor better represents the technologies that will be deployed on projects developed in the future. For this reason, the BLM determined that the EIA annual capacity factors are not appropriate for use in this rule.

Finally, the BLM notes that if an applicant or a grant or lease holder believes that the BLM's net capacity factor is set too high for a particular project, the project proponent can request that the BLM use an alternative net capacity factor when setting the MW capacity rate for the project. Such a request would be made as described under section 2804.40 for applicants or section 2805.12(e) for grant or lease holders. See the section-by-section portion of this preamble for further discussion of requests for alternative requirements.

No other comments were received, and the definition of “net capacity factor” was not changed from the proposed to the final rule as result of this comment.

2. The “MWh price” equals the 5 calendar-year average of the annual weighted average wholesale price per MWh for the major trading hubs serving the 11 Western States of the continental United States (see sections 2806.52(b) and 2806.62(b)).

Comment:
One comment believed that rent and fee calculations may be inaccurate based on inaccurate determinations of the capacity factor and the wholesale price of electricity used in the formula. In the proposed rule, the BLM specified the Intercontinental Exchange (ICE) as the source of data for the wholesale price data.

Response:
As discussed under section 2806.52 for MW capacity fee, ICE was removed as the only vendor for the wholesale data. We revised this definition to account for appropriate wholesale data without limiting it by source. This will allow the BLM to use the best information available, should a company that tracks trading hubs fail to maintain accurate or reliable trade information. No other comments were received concerning this definition.

3. 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-tenth percent.

Comment:
One comment believed that the BLM should use a 5-year average, not a 10-year average, eliminate the 4 percent minimum, and consider rounding down or not at all.

Response:
The BLM disagrees with the suggestion to use a 5-year average. A 10-year average of the 20-year Treasury bond rate provides a more stable rate of return and will benefit the holder when interest rates rise. Under the same concept, this would benefit the BLM when interest rates decline, as is the case in the current cycle.

The BLM also disagrees that it should eliminate a 4 percent minimum rate of return, considering the risk of energy development projects and the fluctuation of energy commodity prices. It is not uncommon for private parties to insist on a minimum return. The 4 percent minimum rate of return recognizes a grant or lease holder's risk of projects that have other financial safeguards in place, such as performance bonds. The minimum is at the lower end of similar rates in the private sector.

The 4 percent minimum rate of return is established for solar energy in section 2806.52(b)(3)(ii) and for wind energy in section 2806.62(b)(3)(ii). The minimum is not included in the definitions section of this final rule because setting the minimum is a substantive regulatory provision. This is not a change from the proposed rule. No changes are made in this final rule from the proposed rule regarding the rate of return in the definitions section (section 2801.5) or in the specific solar (section 2806.52(b)(3)(ii)) or wind (section 2806.62(b)(3)(ii)) provisions.

With respect to rounding, the BLM did agree that it should revisit the proposed rule's approach. While it does not agree with the commenter's suggestion that it should always round down, the BLM did determine upon further review that it should round bond yields to the nearest tenth of a percent to avoid a rounding-based surcharge.

4. 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). No comments were received on the definition of this term and no changes are made to this definition from the proposed rule to the final rule.

“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 also explains which instruments are or are not acceptable.

Acceptable bond instruments include cash, cashiers or certified checks, 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 will not accept a corporate guarantee. These provisions codify the BLM's existing procedures and practices.

Comment:
A comment suggested adding the words “certificate of insurance or other acceptable security” to each of these paragraphs in appropriate places.

Response:
The BLM believes that adding the comment's suggestion to the text of the rule is unnecessary, as the definition of acceptable bond instruments includes insurance policies and does not need to be expanded to include a specific form of insurance. Furthermore, the list of bond instruments that are acceptable is not an all-inclusive list. There may be other forms of bond instruments, but they are not specified in the rule as they are not as common a form of bond as those identified. If we had intended the bond list to be an all-inclusive list we may have unintentionally excluded an acceptable bond instrument. No other comments were received and no changes to this definition were made from the proposed rule to the final rule.

“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.

The BLM revised this definition from the proposed to final rule to clarify that the reclamation work described must meet the BLM's requirements. This change is important because the BLM is required to protect the public lands and must determine if the reclamation work done by the holder is acceptable.

No comments were received on the definition of this term and no other changes are made from the proposed to the final rule.

“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 describes the authorizing instrument for use of the public lands as “a particular grant or lease.” No comments were received on the definition of this term and no changes are made from the proposed to the final rule.

“Screening criteria for solar and wind energy development” is a term referring to the policies and procedures that the BLM uses to prioritize how it processes solar and wind energy development right-of-way applications outside of DLAs. Some examples of screening criteria are:

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

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 were previously established by policy through IM 2011-61, and are further discussed in section 2804.25(d)(2) and section 2804.35 of this rule. The IM may be found at:
http://www.blm.gov/wo/st/en/prog/energy/renewable_energy.html.
No changes were made from the proposed rule to the final rule, nor were any comments received pertaining to this definition. However, there are several comments made on the specific screening criteria proposed that are addressed later in the section-by-section analysis of these criteria.

“Short term right-of-way grant” is a new term meaning 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. No comments were received and no changes are made from the proposed rule to the final rule.

Section 2801.6 Scope

The scope in 43 CFR part 2800 clarifies that the regulations in this part apply to all systems and facilities identified under section 2801.9(a). No comments were received and no changes are made from the proposed rule to the final rule on this provision.

Section 2801.9 When do I need a grant?

Section 2801.9 explains when a grant or lease is required for systems or facilities located on public lands. In section 2801.9(a)(4), the term “systems for generation, transmission, and distribution of electricity” is expanded to include solar and wind energy development facilities and associated short-term authorizations. Language is also added to section 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) is 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 identifies the type of authorizations issued for solar and wind projects depending on whether they are located inside or outside of DLAs. Authorizations for solar or wind energy development outside a DLA, or authorizations issued non-competitively within a DLA, will be issued under subpart 2804 as right-of-way grants for a term of up to 30 years. Authorizations within a DLA will be issued under subpart 2809 as right-of-way leases for a term of 30 years.

Comments:
Some comments were received requesting that the site-specific and project-area testing authorizations be made available for solar energy. A comment further suggested that section 2801.9 be revised so that the authorization types would be listed in the order in which actions are taken to develop a project.

Response:
The BLM revised this section, in response to the comment, by removing the specific references to “wind.” As a result, the testing provisions apply to both solar and wind energy. The BLM also revised this section to reflect the order in which actions are taken to develop a project. The “other appropriate actions” listed under paragraph (d)(3) of this section in the proposed rule are moved to paragraph (d)(5) of this section in the final rule. Paragraphs (d)(4) and (5) of this section in the proposed rule are now paragraphs (d)(3) and (4) of this section, respectively.

Subpart 2802—Lands Available for FLPMA Grants

Section 2802.11 How does the BLM designate right-of-way corridors and designated leasing areas?

Section 2802.11, which explains how the BLM designates right-of-way corridors, is revised to include DLAs. Under this rule, the BLM will identify DLAs 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 DLAs. These factors are unchanged from the existing regulations. This final rule amends paragraphs (a), (b) introductory text,

(b)(3), (4), (6), and (7) and (d) of section 2802.11 to include references to DLAs.

Comment:
One recommendation was made suggesting that the BLM make it clear that we will not accept applications in areas that are closed to development by means of land use plans or other mechanisms.

Response:
The comment's recommendation is addressed in the existing rule at section 2802.10(a). This section clarifies that some lands are not available for a right-of-way grant, which includes those lands that the BLM identifies through the land use planning process as inappropriate for rights-of-way, as well as public land orders, statutes, and regulations that exclude rights-of-way, and lands segregated from application.

Comment:
One comment stated that DLAs are created through the BLM's resource management planning process, but that such plans are changed only every 15 to 20 years. Also, many plans are undergoing or have recently undergone such changes, especially in areas having sage-grouse habitat, but those plans do not designate any DLAs.

Response:
Due to the timing of the comment submission and the BLM's response, the plans noted in this comment have been finalized and the BLM decisions are issued. The Greater Sage-Grouse Plan Amendments and Revisions did not designate any DLAs. These plans are focused on conservation of the Greater Sage-Grouse and its habitat. The decisions issued in these plans safeguard primary and general habitat from the impacts of development, including solar and wind energy.

However, the BLM may have an opportunity to designate some areas for wind energy development using recent analyses or information that identifies areas suitable for energy development on public lands. Examples of such areas may be those identified as not having significant resource and use siting concerns, as identified in the BLM's wind mapper. The wind mapper is a BLM web-based geographic data viewer, found at
http://wwmp.anl.gov,
that has up-to-date geographic information representing the BLM's land use planning decisions for administering public lands and other pertinent regulatory information, specific to wind energy resources. Using information on the wind mapper, a targeted land use plan amendment may be completed more expeditiously than the 15 to 20 years discussed in this comment.

Comment:
Another comment suggested that we consider developing a generic EIS process suitable to all prospective solar and wind leases, coupled with a specific discussion of variations between areas. Also, the comment suggested that we should automate the EIS process to leverage existing GIS and satellite data whenever possible.

Response:
Although worth considering, this concept is outside the scope of this rule, which is focused on the administrative process of solar and wind energy rights-of-way and competitive processes. However, the BLM plans to evaluate its NEPA process and promote automation of the process where possible. Until that time, the BLM will designate such areas through its existing land use planning process.

Comment:
Another comment states that the designation of DLAs will waste taxpayers' money and impede development. The cost to the public for the BLM to designate a DLA will not be fully recaptured and the DLA will not provide any additional value to the public through the competitive process.

Response:
Costs for the preparation of DLAs will be recaptured at the competitive bidding stage as the administrative costs will be paid by the successful bidder. As demonstrated by the BLM's recent competitive actions for solar energy, there is a monetary return to the public for auctions of parcels within renewable energy development areas.

Comment:
During stakeholder engagement meetings, environmental stakeholders expanded on their comment on the definition of “designated leasing area.” The stakeholders suggested that the BLM should not only revise the definition of DLA to include additional specific criteria, but also make changes to section 2802.11 to specify that the BLM consider those criteria when designating DLAs. The stakeholders also recommended that the BLM consider sensitive environmental resources when evaluating potential DLAs.

Response:
The BLM considered adding additional criteria to section 2802.11 that would be considered when the BLM evaluates an area for inclusion in a DLA, but it ultimately made no changes in the final rule. The existing regulations in section 2802.11(b) already explain in great detail what the BLM considers when making a DLA designation. Adding an undefined term, “sensitive environmental resources,” could unintentionally limit the BLM's management of public lands when considering the varied landscapes and resources that are found there. Furthermore, consideration of sensitive resources is already addressed in section 2802.11(b)(2), which requires the BLM to consider “environmental impacts on cultural resources and natural resources, including air, water, soil, fish, wildlife, and vegetation.”

While the BLM did not make any changes to the final rule in response to this comment, it should be noted that the BLM intends to establish guidance, as part of the implementation of this rule, to assist the BLM in establishing DLAs through its land use planning processes. The implementing guidance will allow the BLM to be more specific for these areas without unintentionally limiting itself, and maintain the BLM's flexibility to make any necessary adjustments to the process for evaluating potential DLAs across the varied landscapes that it manages.

Subpart 2804—Applying for FLPMA Grants

Section 2804.10 What should I do before I file my application?

Existing section 2804.10 encourages prospective applicants for a right-of-way grant to schedule and hold a pre-application meeting. Under this final rule, section 2804.10 continues to encourage such meetings regarding some right-of-way grants, and under paragraph (a)(2), would now identify DLAs along with right-of-way corridors as a point of discussion for these meetings if held.

Under existing section 2804.10(a)(2), the BLM determines if your application is on BLM land within a right-of-way corridor. This revised paragraph now includes “or a designated leasing area.” The BLM generally will not accept applications for grants on lands inside DLAs. The BLM will offer lands inside DLAs competitively through the process described in subpart 2809, which does not involve submitting an application. The BLM will only accept applications on lands inside DLAs in limited circumstances (see section 2809.19(c) and (d)).

The BLM proposed amending paragraphs (a) introductory text and (a)(2) and (4), and also adding two new paragraphs that would apply to any solar or wind energy project, transmission line with a capacity of 100 kV or more, or pipeline 10 inches or more in diameter. For these types of projects, the BLM proposed mandatory pre-application meetings. Proposed amendments for paragraphs (a) introductory text and (a)(4) are not included in the final rule, since pre-application meetings will not be required and specific requirements associated with them are no longer necessary. Paragraph (b) of the existing regulations will not be

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2016-27551. Public record. Not legal advice.