# Rights-of-Way, Leasing, and Operations for Renewable Energy > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2023-12178 ## Record - **Collection:** Federal Register - **Document type:** Proposed Rule - **Published:** June 16, 2023 - **Citation:** 88 FR 39726 ## Text DEPARTMENT OF THE INTERIOR Bureau of Land Management 43 CFR Part 2800 [BLM_HQ_FRN_MO#4500171739] RIN 1004-AE78 Rights-of-Way, Leasing, and Operations for Renewable Energy AGENCY: Bureau of Land Management, Interior. ACTION: Proposed rule. SUMMARY: The Bureau of Land Management (BLM) is proposing to amend its existing right-of-way (ROW) regulations, issued under authority of the Federal Land Policy and Management Act (FLPMA). The principal purpose of these amendments would be to facilitate responsible solar and wind energy development on public lands managed by the BLM. The rule would adjust acreage rents and capacity fees for solar and wind energy, provide the BLM with more flexibility in how it processes applications for solar and wind energy development inside designated leasing areas, and update agency criteria on prioritizing solar and wind applications. The rule would also make technical changes, corrections, and clarifications to the existing ROW regulations. This rule would implement the authority granted to the Secretary of the Interior (Secretary) in the Energy Act of 2020 to “reduce acreage rental rates and capacity fees” to “promote the greatest use of wind and solar energy resources” and achieve other enumerated policy goals. DATES: Please submit comments on this proposed rule on or before August 15, 2023. The BLM is not obligated to consider any comments received after this date in making its decision on the final rule. This rule includes a proposed new information collection requirement that must be approved by the Office of Management and Budget (OMB). If you wish to comment on the new information collection requirement in this rule, please note that such comments should be sent directly to the OMB, and that the OMB is required to make a decision concerning the collection of information contained in this rule between 30 and 60 days after publication of this document in the Federal Register . Therefore, comments to the OMB on the proposed new information collection are best assured of being given full consideration if the OMB receives them by July 17, 2023. ADDRESSES: Mail, personal, or messenger delivery: U.S. Department of the Interior, Director (630), Bureau of Land Management, 1849 C St. NW, Room 5646, Washington, DC 20240, Attention: 1004-AE78. Federal eRulemaking Portal: https://www.regulations.gov. In the Searchbox, enter “RIN 1004-AE78” and click the “Search” button. Follow the instructions at this website. For Comments on Information-Collection Activities: Written comments and suggestions on the information-collection requirements should be submitted by the date specified above in DATES to www.reginfo.gov/public/do/PRAMain. Find this specific information-collection by selecting “Currently under Review—Open for Public Comments” or by using the search function. If you submit comments on the information-collection burdens, you should provide the BLM with a copy at the addresses shown earlier in this section, so that we can summarize all written comments and address them in the final rulemaking. Please indicate “Attention: OMB Control Number 1004-0206 (RIN 1004-AE78)” regardless of the method used to submit comments on the information-collection burdens. Comments not pertaining to the proposed rule's information-collection burdens should not be submitted to OMB. The BLM is not obligated to consider or include in the Administrative Record for the final rule any comments that are improperly directed to OMB. FOR FURTHER INFORMATION CONTACT: Jayme Lopez, Interagency Coordination Liaison, by phone at (520) 235-4581 and by email at energy@blm.gov, or Jeremy Bluma, Renewable Energy Advisor, by phone at (208) 789-6014 and by email at energy@blm.gov for information relating to the BLM Renewable Energy program and information relating to the substance of the rule with a subject line of “RIN 1004-AE78”. Individuals in the United States who are deaf, deafblind, hard of hearing, or have a speech disability may dial 711 (TTY, TDD, or TeleBraille) to access telecommunications relay services. Individuals outside the United States should use the relay services offered within their country to make international calls to the point-of-contact in the United States. SUPPLEMENTARY INFORMATION: I. Public Comment Procedures II. Background A. Introduction B. Need for the Rule C. Statutory Authority III. Discussion of the Rule IV. Procedural Matters I. Public Comment Procedures If you wish to comment on this rule, you may submit your comments to the BLM by mail, personal or messenger delivery during regular hours (7:45 a.m. to 4:15 p.m.), Monday through Friday, except holidays, or through https://www.regulations.gov (see the ADDRESSES section). Please make your comments on the rule as specific as possible, confine them to issues pertinent to the rule, and explain the reason for any changes you recommend. Where possible, your comments should reference the specific section or paragraph of the proposal that you are addressing. The BLM is not obligated to consider or include in the Administrative Record for the rule comments that we receive after the close of the comment period (see DATES section) or comments delivered to an address other than those listed above (see ADDRESSES section). Comments, including names and street addresses of respondents, will be available for public review at the address listed under ADDRESSES section. Before including your address, telephone number, email address, or other personal identifying information in your comment, be advised that your entire comment, including your personal identifying information, may be made publicly available at any time. While you can ask us in your comment to withhold from public review your personal identifying information, we cannot guarantee that we will be able to do so. As explained later, this proposed rule would include revisions to information collection requirements that must be approved by the Office of Management and Budget (OMB). If you wish to comment on the revised information collection requirements in this proposed rule, please note that such comments must be sent directly to the OMB in the manner described in the DATES and ADDRESSES sections above. Please note that due to COVID-19, electronic submission of comments is recommended. II. Background A. Introduction This proposed rule sets forth changes to the BLM's Renewable Energy and ROW programs related to two main topics. The first topic is solar and wind energy rents and fees, implementing new authority from the Energy Act of 2020 (43 U.S.C. 3003) to “reduce acreage rental rates and capacity fees, or both, for existing and new wind and solar authorizations” if the Secretary makes certain findings. The second topic is making public lands available to solar and wind energy application inside of a designated leasing area without first holding a competitive offer. Solar and Wind Energy Rents and Fees FLPMA generally requires ROW holders to “pay in advance the fair market value” for use of the public lands, subject to certain exceptions. The Energy Act of 2020, 43 U.S.C. 3003, introduced a new exception to FLPMA's fair market value requirement, allowing the BLM, on behalf of the Secretary, to “reduce acreage rental rates and capacity fees, or both, for existing and new wind and solar authorizations” if the agency makes certain findings, which can include that the existing rates “impose economic hardships” or “limit commercial interest in a competitive lease sale or right-of-way grant,” or “that a reduced rental rate or capacity fee is necessary to promote the greatest use of wind and solar energy resources.” Through this proposed rule, the BLM proposes changes to acreage rents and capacity fees for solar and wind energy ROW authorizations in order to “promote the greatest use of wind and solar energy resources,” maximize “commercial interest” in lease sales and ROW grants, and avoid “economic hardship” to ROW holders. By implementing these proposed changes, the BLM would promote solar and wind energy use on public lands and underpin an increase to the share of clean energy that is part of the United States' domestic power infrastructure. For example, the BLM expects that the proposed reductions in solar and wind energy acreage rent and capacity fees will facilitate solar and wind energy development by increasing commercial interest and encouraging additional investment in the use of public lands. These proposed reductions should particularly benefit smaller scale projects or projects that are on the margins of being economically profitable, increasing interest among renewable energy developers. Through the rent and fee adjustments contemplated in this rule, the BLM also expects that lower acreage rental rates and capacity fees for solar and wind energy generating facilities would translate into lower costs for energy deployment, increasing renewable energy market penetration in domestic energy production. By reducing costs to producers, these reduced rates may also reduce electricity costs to rate payers. Additionally, the BLM proposes reductions to capacity fees tied to a holder's use of American made parts and materials consistent with direction in the Energy Act of 2020. The BLM anticipates that the proposed Buy American capacity fee reductions would increase economic certainty for renewable energy projects on BLM-managed public lands. By incentivizing the use of American made parts and materials in exchange for a reduced capacity fee, the BLM expects to reduce costs for developers, which in turn will stimulate increased demand for domestic production of renewable energy parts and materials. These intended outcomes would serve to promote the greatest use of wind and solar energy resources on public lands. Currently, wind and solar energy developers face a choice between relying on foreign-sourced parts and materials or paying higher prices for domestically sourced parts and materials, if available. (See for example the Department of Energy's Solar Photovoltaics—Supply Chain Deep Dive Assessment. 1 ) Uncertainty in global supply chain dynamics, as seen in recent years, has the potential to delay deployment of solar and wind energy development projects on public lands. Using incentives to create demand for American-made renewable energy parts and materials will help develop domestic supply chains and reduce impacts on renewable energy deployment on public lands from potential supply-chain delays. Similar to the proposed rental fee and capacity fee reductions described in the previous paragraphs, the BLM believes that incentivizing the use of parts and materials that qualify for the Buy American reduction will increase the responsible deployment of renewable energy and will increase commercial interest in the use of public lands, promoting the development of solar and wind energy resources on public lands. 1 https://www.energy.gov/sites/default/files/2022-02/Solar%20Energy%20Supply%20Chain%20Report%20-%20Final.pdf . Consistent with the BLM's authority under FLPMA, the BLM would require ROW holders to pay in advance either an acreage rent or a capacity fee for solar and wind energy generation installations. The proposed rule's methodology for calculating a capacity fee is based on actual energy production, which is a change from the BLM's 2016 rule, Competitive Processes, Terms, and Conditions for Leasing Public Lands for Solar and Wind Energy Development and Technical Changes and Corrections (81 FR 92122). The 2016 rule discusses the capacity fee in detail at 81 FR 92122, page 92134. The 2016 rule bases the MW capacity fee on a technology's ( i.e., photovoltaic or concentrating solar-thermal) nameplate capacity as an estimate of the energy that could be generated at each facility. This rule proposes, instead, to base the capacity fee for solar and wind energy generation facilities on actual energy generation at each facility. The BLM believes this change would more accurately reflect the actual capacity for energy production of an individual project based on a developer's selection of technology, project design and the solar or wind resource available at particular sites. This change to the capacity fee indexes the required payment to the developments' energy generation, being greater when the capacity generates more energy and less when generating less. In the context of this rule, the term “capacity fee” is defined as “the fee charged to right-of-way holders once energy production commences that is based on the production of energy on public lands from solar and wind energy generating facilities.” The BLM would also calculate an acreage rent for wind and solar ROWs based on per acre values for pastureland from the National Agricultural Statistics Service (NASS) Cash Rents Survey. The acreage rent would be the minimum rent paid to the BLM for solar and wind energy generating facilities once a grant or lease is issued, whether or not energy is generated on the ROW in a given year. The capacity fee would be collected in place of the acreage rent if the capacity fee exceeds the acreage rent. The capacity fee would reflect the value of solar or wind energy resources used to generate electricity on the public lands. One component of the capacity fee, the MWh rate, which is based on wholesale prices for the major trading hubs serving 11 western States or on prices received by the ROW holder under a power purchase agreement, would be reduced by 80 percent until 2036 under this rule based on authority provided by the Energy Act of 2020 (codified at 43 U.S.C 3003) and would only be adjusted by a fixed annual adjustment factor once set at the beginning of the grant or lease period. If the BLM collects the capacity fee, no acreage rent would be required that year. This fee calculation relies on BLM's direction under sections 504(g) and 102(a)(9) of FLPMA to collect “the fair market value” for the use of the public lands and its resources, which Congress further clarified in the Energy Act of 2020 to confirm that the BLM could “consider acreage rental rates, capacity fees, and other recurring annual fees in total.” Starting in 2036, under § 2806.52(b)(1)(ii), the MWh rate reduction would decrease from 80 percent to 20 percent of the wholesale price per Megawatt hour (MWh). This change in the MWh rate reduction in 2036 would not affect existing ROWs and would only apply to new or renewed ROWs for which the MWh rate is set at the beginning of their authorization using the current rate of the MWh rate schedule applicable in 2036. This rule aims to improve payment predictability for grant and lease holders by fixing the key data used for determining the acreage rent and the capacity fee—the state-wide pastureland rent values and the wholesale price of electricity—at the time the ROW is issued. In doing so, these rates would be set for the term of the ROW and only adjusted by the annual adjustment factor and, in the case of the capacity fee, by the holder's actual annual production. See preamble § 2806.50 for a more detailed discussion of the BLM's proposed methodology for determining the acreage rent and capacity fee. Lands Available for Solar and Wind Energy Applications Under this rule, the BLM would have the option to make public lands inside designated leasing areas available for non-competitive leasing by application, while retaining discretion to conduct competitive offers, either within or outside of designated leasing areas. This is a change from the BLM's 2016 rule, Competitive Processes, Terms, and Conditions for Leasing Public Lands for Solar and Wind Energy Development and Technical Changes and Corrections, which required authorizations within designated leasing areas to be offered competitively before the agency could proceed with a non-competitive application process. The BLM designated solar energy zones through the 2012 Western Solar Plan ( https://blmsolar.anl.gov/documents/solar-peis/ ), which identified approximately 285,000 acres of agency preferred development locations for solar with high potential for solar energy production and low conflicts with other resources and uses. Subsequently, the BLM designated approximately 388,000 acres of preferred development locations for solar in California through the 2016 Desert Renewable Energy Conservation Plan ( https://blmsolar.anl.gov/documents/drecp/ ) and over 192,000 acres of preferred development locations for solar energy in Arizona through the 2017 Restoration Design Energy Project. After the 2016 rule went into effect, the BLM initially observed that solar and wind energy developers generally did not submit nominations or expressions of interest on their own accord for lands within agency preferred locations and instead continued to actively submit non-competitive applications outside of such locations. In the past two years, however, the BLM has offered designated leasing areas competitively and identified greater levels of competitive interest inside and outside of designated leasing areas. Nonetheless, the BLM believes that by revising the regulations to allow the agency greater flexibility to use competitive processes in circumstances where competitive interest exists and to issue leases without a competitive process where no competitive interest exists across all BLM-managed public lands, the BLM can maximize interest in renewable energy leasing and accelerate the deployment of solar and wind energy on the public lands. Therefore, the BLM proposes to revise its rules to allow applications to be filed within designated areas without first holding a competitive offer, while preserving for the BLM the discretion to hold a competitive offer in response to competing applications, nominations, or expressions of interest, or on its own initiative. See § 2804.23 for cost recovery considerations related to competing applications and subpart 2809 for the competitive process for solar and wind energy applications or leases. Need for the Rule FLPMA provides the BLM with 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” unless otherwise provided by law (43 U.S.C. 1732(a)). Further, FLPMA authorizes the BLM to issue rights-of-way on the public lands for electric generation systems, including solar and wind energy generation systems, and 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. 1764(g)). On December 27, 2020, the Energy Act of 2020 was enacted, establishing a minimum goal of “authoriz(ing) production of not less than 25 gigawatts of electricity from wind, solar, and geothermal energy projects by not later than 2025.” To date, the BLM has authorized projects on public land that are estimated to support more than 13 gigawatts of electricity from renewable energy sources. Current information regarding the BLM's approved energy developments and number of gigawatts is available on its website. 2 The Energy Act of 2020 also provided the BLM with new authority to reduce rates below fair market value based on specific findings, including “that a reduced rental rate or capacity fee is necessary to promote the greatest use of wind and solar energy resources” 43 U.S.C. 3003(b)(2). The BLM proposes to implement the direction in the Energy Act of 2020 through this rulemaking process. 2 https://www.blm.gov/programs/energy-and-minerals/renewable-energy/active-renewable-projects . On January 27, 2021, President Biden issued Executive Order (E.O.) 14008, “Tackling the Climate Crisis at Home and Abroad.” Section 207 of E.O. 14008, titled “Renewable Energy on Public Lands and in Offshore Waters,” instructs the Department of the Interior “to increase renewable energy production on (public) lands.” The changes in this rulemaking would provide clearer direction for the BLM in processing proposed renewable energy right-of-way applications on public lands while also supporting the goals of the Energy Act of 2020 and E.O. 14008. Statutory Authority Section 310 of FLPMA (43 U.S.C. 1740) authorizes the Secretary to promulgate regulations to carry out the purposes of FLPMA and other laws applicable to public lands. Section 302 of FLPMA (43 U.S.C. 1732) also provides comprehensive authority for the administration and protection of the public lands and their resources and directs that the public lands be managed “under principles of multiple use and sustained yield,” unless otherwise provided by law (43 U.S.C. 1732(a)). Sections 501, 504, and 505 of FLPMA authorize the Secretary to grant ROWs on public lands; to issue regulations governing such ROWs and charge rent for such ROWs; and to impose terms and conditions on ROW grants, respectively (43 U.S.C. 1761, 1764, and 1765). Sections 304 and 504 of FLPMA (43 U.S.C. 1734(b) and 1764(g)) also authorize the BLM to collect funds from ROW applicants or holders to reimburse the agency for its costs incurred while working on a proposed or authorized ROW. 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)). See Title V of FLPMA (43 U.S.C. 1761-1772). The Energy Act of 2020 authorizes the Secretary to reduce acreage rental rates and capacity fees if the Secretary makes certain findings, which can include that the existing rates “impose economic hardships” or “limit commercial interest in a competitive lease sale or right-of-way grant,” or “that a reduced rental rate or capacity fee is necessary to promote the greatest use of wind and solar energy resources” (43 U.S.C. 3003). III. Discussion of the Rule 43 CFR Part 2800 Rights-of-Way Authorized Under FLPMA Part 2800 of the CFR describes requirements for ROWs issued under FLPMA. This rule would revise the rent and fee schedules for solar and wind energy development ROWs. This rule would also modify the application process for public lands inside of solar and wind designated leasing areas available to allow for either competitive or non-competitive leasing processes. Other changes, including updated solar and wind prioritization provisions and establishing criteria for a “complete application,” would correct or clarify existing regulations. Section 2801.5 What acronyms and terms are used in the regulations in this part? This section contains the acronyms and defines the terms used in this rule. Paragraph (a) provides for the acronyms used in this part. The acronym “FLPMA,” meaning the Federal Land Policy and Management Act of 1976, as amended (43 U.S.C. 1701 et seq. ), would replace the term “Act” from these rules. This change provides clarity to which act the BLM is referencing. Paragraph (b) provides for the terms used in this part. The proposed rule would: Remove the term “Act” which means the Federal Land Policy and Management Act of 1976 (43 U.S.C 1701 et. seq.). This revision is consistent with the addition of the acronym “FLPMA” under paragraph (a) of this section; Remove definitions of “Megawatt (MW) capacity fee,” “Net capacity factor,” “Megawatt hour (MWh) price,” “Rate of return,” and “Hours per year” from this rule. Because under this proposed rule the BLM would no longer charge a megawatt capacity fee based on solar and wind energy generation facility nameplate capacity, definitions related to the nameplate capacity fee are no longer necessary and would be removed from this rule; Revise the definition of the term “Megawatt hour (MWh) rate” to mean the 5 calendar-year average of the annual weighted average wholesale prices per MWh for major trading hubs serving 11 western States of the continental United States. This revision is consistent with the BLM's proposed change to implement a capacity fee; Add the term “Buy American” to mean an item or product that qualifies for the Buy American preference under Section 52.225-1(b) of the Federal Acquisition Regulations (FAR) (48 CFR 52.225-1(b)) or a successor regulation. Section 52.225-1(b) of the FAR identifies certain categories of items or products that qualify for the Buy American preference in federal acquisition. Generally, under section 52.225-1(b), the preference applies to “domestic end products” and “commercially available off-the-shelf” (or “COTS”) items, with an additional provision specifying qualification rules for an “end product that consists wholly or predominantly of iron or steel or a combination of both.” Each of the terms quoted above, in turn, is defined in section 52.225-1(a). The BLM proposes to use the term “Buy American” as a catch-all term to refer to items for which the Buy American preference is available under section 52.225-1(b) of the FAR; Revise the term “Grant” to reflect that solar or wind energy leases are not covered under the definition. The change is consistent throughout the proposed rule and provides reader clarity where the BLM will issue a solar or wind energy grant and where a solar or wind energy lease will be issued; Add the term “Capacity fee” to mean the fee based on the amount of electricity produced from solar or wind energy resources on the public lands. This proposed change is consistent with the BLM's proposed change to implement a capacity fee that is based on production; Revise the term “Reasonable costs” to be consistent with the rule change replacing the words “the Act” with the acronym “FLPMA.” This change is intended to improve readability and consistency with the rules in this part. See changes to acronyms under paragraph (a) of this section for further discussion on the use of acronyms; Add the term “Renewable Energy Coordination Office (RECO)” to mean one of the National, State, district, or field offices established by the Secretary under 43 U.S.C. 3002(a) that is responsible for implementing a program to improve Federal permitting coordination with respect to eligible projects on covered land and such other activities as the Secretary determines necessary; Add the term “Solar and wind energy lease” to mean any right-of-way issued under Title V of FLPMA within an area identified in a BLM land use plan as a designated leasing area. Any right-of-way not issued within an area identified as a designated leasing area would be a grant. This term is introduced for readability; and Add the term “solar or wind energy development” to mean the use of public lands to generate electricity from solar or wind energy resources on public lands. This definition is intended to clarify that the term “energy development” refers specifically to uses of public lands that directly involve the generation of electricity on public lands, and not to other uses of public lands that might indirectly support energy production. The addition of this definition clarifies which ROW grants and leases are subject to the conditions in Section 50265(b)(1) of the Inflation Reduction Act, which apply to “a right-of-way for wind or solar energy development on Federal land.” Section 2801.6 Scope The scope in 43 CFR part 2800 would clarify that the regulations in this part apply to leases as well as grants. Paragraph (a)(1) includes the additional language “or leases” when describing the authorization types, clarifying that the scope includes both instrument types. Section 2801.9 When do I need a grant or lease? Section 2801.9 explains when a grant or lease is required for systems or facilities located on public lands. Section 2801.9(d) would be revised to extend the thirty-year maximum term to 50 years for ROWs for solar or wind energy development and for other uses that support solar or wind energy development, and to make other technical changes. Paragraphs (d)(3) and (4) are consolidated into new paragraph (d)(3), removing differences between grants and leases inside and outside designated leasing areas. New paragraph (d)(4) would add storage facilities that are separate from energy generation facilities to the list of systems, facilities, and related activities for energy generation, storage, or transmission projects for which a grant or lease is required. Similarly, paragraph (d)(6) would add electric transmission lines with a capacity of 100kV or more. The BLM proposes to add these paragraphs to specifically describe the additional types of authorizations required for various components of solar and wind energy developments, or their related infrastructure that may be operated, and thus processed, separately. FLPMA requires the BLM to limit each ROW granted under FLPMA “to a reasonable term in light of all circumstances concerning the project,” including among other factors, “the cost of the facility, its useful life, and any public purpose it serves” (43 U.S.C. 1764(b)). The BLM considered different alternatives for the maximum term of a grant or lease for solar or wind energy development and for other uses that support solar or wind energy development, such as freestanding energy storage and electric transmission. Among other alternatives, the BLM considered providing for 5- or 10-year extensions to the initial term length with continued operations. However, the BLM believes, based on its experience administering such ROWs, that the reasonable term of a grant or lease is best limited to a 50-year term for large infrastructure ROWs, considering the cost of the facility, its useful life, and the public purpose it serves. Considering the cost of the facility may include the financing terms and the payback period a prospective grant or lease holder may enter into under a loan or grant program. When evaluating the useful life of a project, the BLM may consider the time it takes before a facility is no longer economically feasible to operate or the projected time until repowering ( i.e., updating components of a facility to increase useful life or energy production). The economic life of technology has been increasing and is expected to continue doing so with the advent of new materials in solar or wind energy facilities. The method for financing or repowering may also change over time with further advances with the maturation and advancement of the renewable energy market. Additionally, a facility may also be part of a Federal, Tribal, state or local government energy plan or infrastructure project which may also indicate the need for a longer ROW term. In providing for ROW terms that may be up to 50 years, the BLM would be able to take into consideration the cost of the facility, its useful life and public purposes it serves up to a 50-year term as these considerations may change over time or with specific projects. The BLM is interested to hear from commenters whether other alternatives for maximum terms of grants and leases would be more appropriate, including, potentially, the existing 30-year maximum term; a maximum term longer than 50 years; no regulatory limitation to a ROW term; extending the initial term by 10-year intervals with updated power purchase agreements; or reducing the initial term based on the factors listed in 43 U.S.C. 1764(b). Subpart 2802—Lands Available for FLPMA Grants or Leases Subpart 2802 would be revised to add “or leases” to the title to clarify for readers that public lands are available for both grants and leases, consistent with other revisions in this rule regarding leases. Section 2802.11 How does the BLM designate right-of-way corridors and designated leasing areas? Section 2802.11 explains how the BLM designates ROW corridors and designated leasing areas. Section 2802.11 would be revised to explain how the BLM designates areas through its land use planning process, including the non-exhaustive list of factors it considers. The rule would add a new factor for access to electric transmission. § 2802.11(b) would be revised to improve readability and consistency between the BLM's regulatory authority under part 2800 and its statutory authority under the FLPMA. Paragraph (b)(1) is revised to be consistent with section 202(c)(9) of FLPMA (43 U.S.C. 1712(c)(9)), to include Tribal land use plans. Paragraphs (b)(10) and (b)(11) would be added to provide more detail for what the BLM considers when designating new leasing areas for solar and wind energy. In the BLM's experience with its energy programs, it has considered multiple criteria that are either specific to a particular region or State, as well as many common considerations all such types of development must consider. The proposed rule would identify two such factors that the BLM typically considers. The BLM proposes to add “access to electric transmission” in (b)(10) as a factor to be considered. This factor is intended to ensure that planning efforts for prioritizing solar and wind energy development take into consideration access to electric transmission. In the BLM's experience, accessibility to transmission is a key component for successful developments on public lands. The BLM also proposes to add a factor in (b)(11) derived from its 2012 Western Solar Plan. 3 Section A.2.6 of Appendix A of the Plan explained that areas designated for solar development (termed solar energy zones in the Plan) would be relatively large areas where energy development is feasible and there is a low potential for conflict due to environmental, cultural, and other relevant criteria. The Western Solar Plan sets forth a four-step process for identifying new or expanded solar energy zones. The four steps are as follows: 3 https://eplanning.blm.gov/eplanning-ui/project/2017069/510 . (1) Assess the demand for new or expanded areas; (2) Establish technical and economic suitability criteria; (3) Apply environmental, cultural, and other screening criteria; and (4) Analyze proposed areas through the land use planning process described in part 1600 of this chapter. In the rule, the BLM proposes to carry forward three of these four steps, excluding the establishment of technical and economic suitability criteria because technical and economic criteria have and will change rapidly for utility-scale solar energy development and in the BLM's experience it has not been feasible or appropriate to utilize those criteria for the establishment of designated leasing areas. The BLM proposes to include steps (1), (3), and (4) above to the factors listed in § 2802.11(b)(11). Section 2803.10 Who may hold a grant or lease? Section 2803.10 provides the criteria for who may hold a grant or lease. Some BLM ROWs may cross more than one State. Therefore, the BLM proposes to revise existing provisions to clarify that a holder who is of legal age and authorized to do business in one State must also meet this requirement in each other State in which the ROW grant they seek is located. Section 2803.12 What happens to my application or grant if I die? Section 2803.12 explains how the BLM administers a ROW or an application for a ROW in the event of the holder's or applicant's death. Paragraph (a) would be added to this section to address a situation in which an applicant dies before the ROW is granted and clarifies that an application does not hold any transferable rights. If an applicant dies before the grant or lease is issued as described in 43 CFR 2805.10, the application cannot be transferred to another person and is deemed denied. Existing paragraphs (a) and (b) would be renumbered as (b) and (c) and revised. Paragraph (b) would be revised to include leases, clarifying that any inheritable interest in the grant or lease would be distributed under state law. Paragraph (c) would be revised to include the additional provision that if the BLM distributes a grant to an unqualified holder, the receiver must comply with all the terms, conditions, and stipulations of the grant. The BLM also replaces the word “distributee” to “receiver” to improve clarity to readers that when the BLM distributes a grant or lease, the instrument would be received by the holder. Section 2804.12 What must I do when submitting my application? Section 2804.12 explains what an applicant must do when submitting a ROW application. Section 2804.12 would be revised to remove a provision that limits solar and wind energy development applications to public lands outside of designated leasing areas, revise the application fee requirements for solar and wind rights-of-way, and specify when an application becomes “complete.” The BLM proposes to remove existing paragraph (c)(1), which limits solar and wind energy development applications to public lands outside of designated leasing areas, to allow applications to be submitted on public lands inside or outside of designated leasing areas without the BLM first holding a competitive offer under subpart 2809. As discussed previously in the summary and background sections of this notice, this change will make designated leasing areas available to noncompetitive applications. Paragraph (c) would be revised to update the requirements for payment of an application filing fee for solar or wind energy development ROWs and for short-term ROWs, which include project-area testing applications. The paragraph would also address the relationship between application filing fees and reasonable costs. Application filing fees are an existing per-acre fee collected by the BLM as a cost recovery payment and are intended to discourage applicants from applying for more land than is necessary for a proposed project and also to provide an early cost recovery payment. This rule would clarify that application filing fees are applied towards payment of reasonable costs to the government for processing applications as required under FLPMA. New provisions would be added to clarify that a cost recovery agreement may be required under §§ 2804.14 through 2804.22 of this part for processing an application if the application filing fees are insufficient to cover the government's costs in processing such an application. Any cost recovery overpayment under an agreement, including application filing fees, may either be refunded to the applicant or applied to the monitoring costs of the ROW grant or lease consistent with this part if the project is approved. This rule would remove periodic (at least once every 10-year) updates to the application filing fee amounts using the IPD-GDP. The BLM is proposing to remove these periodic updates because they are not necessary in light of the BLM's ability to establish a cost recovery agreement with an applicant. Alternatively, the BLM considered but did not propose in this rule that it may continue updating the rate every 5 years through policy. Cost recovery agreements may include consideration for changes from inflation or government indirect costs that are not captured by the application filing fee. The BLM is interested in comments regarding its proposed removal of the periodic update to the application filing fee. Section 2804.12(f) would be revised to clarify that the BLM will use a deficiency notice pursuant to existing § 2804.25(c) to inform applicants of additional information that the BLM requires in order to process their application. This could include, for example, an updated plan of development (POD). Paragraph (f) would also be revised to remove a reference to part 2880, which applies to oil and gas pipeline ROWs under the Mineral Leasing Act (MLA) rather than to FLPMA ROWs, to avoid confusion to readers. The BLM proposes to add paragraph (j), describing what constitutes a complete application. Under this rule, a complete application would be one that meets or addresses the requirements of § 2804.12, as appropriate for the application submitted. Identifying when an application is complete will support consistency in agency actions that require completed applications, such as when the BLM would prioritize solar and wind energy development applications under § 2804.35. The proposed revision would clarify that the BLM will notify an applicant in writing when their application is complete. Additional information may be necessary for the BLM to continue processing a complete application if necessary, resource data is not submitted earlier. If the BLM determines that additional information is necessary after an application becomes complete, it may issue a deficiency notice under § 2804.25(c). Additional sections in this rule that refer to complete applications are § 2804.25, How will the BLM process my application?, and § 2804.35, Application prioritization principles for solar and wind energy facilities. In addition, complete applications are discussed in this preamble in the context of § 2084.30, which this rulemaking proposes to remove and reserve. Section 2804.14 What is the processing fee for a grant application? This section provides for collection of a fee to reimburse the Federal Government for its costs in processing an application for use of public lands. Paragraph (c) would be revised to update the BLM's address to read as U.S. Department of the Interior, Bureau of Land Management, 1849 C Street NW, Room 5645, Attention: Lands, Realty, and Cadastral Survey, Washington, DC 20240. This revision would be made so that the public is aware of where to obtain a copy of the current cost recovery schedule. The BLM also posts the cost recovery schedule online at http://www.blm.gov. Section 2804.22 How will the availability of funds affect the timing of the BLM's processing? Section 2804.22 provides that if the BLM has insufficient funds to process your application, the bureau will not process your application until funds become available or you elect to pay full actual costs under § 2804.14(f). Current text of § 2804.22 would become paragraph (a). The BLM proposes to add “continue to” to this provision to clarify that if the BLM is processing an application, the BLM will not continue to process the application until funds become available or the applicant elects to pay full actual costs under § 2804.14(f). Section 2804.22 would be revised to improve readability and add new provisions under paragraphs (b) and (c). New paragraph (b) would allow the BLM to deny an application after 90 days if requested reasonable costs for processing an application have not been received. Cost recovery agreements can provide for a portion of the funds to be used for the BLM to hire additional staff or contractors. New paragraph (c) would provide that the BLM may enter into a cost recovery agreement with an applicant in which a portion of the funds may be used to hire additional staff or contractors to aid in application processing. If such cost recovery payments are provided to the BLM, the funds paid must be non-severable (non-refundable) once committed to the hiring of an employee. Payment of such funds would allow the BLM to increase its application-processing capacity. Section 2804.23 What costs am I responsible for when the BLM decides to use a competitive process for my application? Existing § 2804.23 describes when the BLM will use a competitive process and how such a process is initiated. Portions of the existing section that address when the BLM would use a competitive process have been relocated to subpart 2809, along with portions of the existing § 2804.30, or have been removed for reasons explained below. Therefore, revised § 2804.23 is limited to addressing issues related to cost recovery in competitive processes. The section title would be revised, changing “if” to “when.” In this paragraph, the applicant would be required to pay the application costs when the BLM decides to use a competitive process. Existing paragraph (a) would become introductory text, and existing paragraphs (a)(1) and (2) would be renumbered as paragraphs (a) and (b). The introductory text has been revised to remove the term “competing applications for the same facility or system,” which is a term that is not used elsewhere in the regulations and is not clearly defined, and instead refer to situations in which “the BLM decides to use a competitive process,” which matches the title of this section as well as the language used in subpart 2809. Apart from this change, the substance of the retained text has not changed. Provisions found under existing paragraph (b) would be removed, but the substance of these provisions—that the discretion to decide whether to conduct a competitive process resides with the BLM—is addressed in proposed §§ 2809.10(a) and 2809.12. The provisions of existing paragraph (c) can be found in existing § 2809.13(b) (which addresses the notice requirements for notices of competitive offerings), and in proposed §§ 2809.10(a) and (e) (which address the BLM's discretion and the circumstances under which the BLM will not conduct a competitive offer). Changes to the substance of these provisions are addressed below in the context of those sections. Existing paragraphs (d) and (e) would be removed from the regulations to be consistent with this rule which would allow for applications to be submitted inside designated leasing areas without first holding a competitive offer. Section 2804.25 How will the BLM process my application? Section 2804.25 explains how the BLM would process your application. Revisions in this section would eliminate the provision for a mandatory pre-processing public meeting under existing paragraph (e)(2)(i); clarify that Tribal governments are accorded equal treatment with state and local governments during application reviews; and make technical changes. Existing provisions in paragraph (e) describe how the BLM processes solar and wind ROW applications. This paragraph is not intended to enumerate all the steps that the BLM may be required to take under other authorities, including its obligations under NEPA (which are incorporated in paragraph (e)(4)) or its obligations to engage in Tribal consultation (which are similarly referenced in paragraph (e)(7)), and any changes to this paragraph would not affect those obligations or the steps that the BLM takes to comply with them. Rather, the purpose of this paragraph is to describe how the BLM carries out certain steps that are distinctive to the ROW application review process, such as prioritizing applications (existing paragraph (e)(2)(ii)) and reviewing a proposed POD (paragraph (e)(3)). The proposed rule would remove a provision in this paragraph requiring a pre-processing public meeting in the affected area of a potential ROW (existing paragraph (e)(2)(i)), while leaving in place a provision that allows for such a meeting to occur at the BLM's discretion (paragraph (e)(1)). Such pre-processing public meetings are in addition to the opportunities for public participation that exist during the environmental review process, and from coordination and consultation sessions that the BLM holds with state, Tribal, and local governments, and are a unique feature of the solar and wind ROW application process. The BLM's experience, since its last rulemaking for solar and wind energy in 2016, demonstrates that this unique procedural step is redundant and not necessary to ensure adequate public participation and coordination with Tribal, and local governments. Participation and interest in these pre-processing meetings are not as strong as it was when solar and wind energy development was a relatively unfamiliar use of public lands, and these meetings are often confused with public meetings that are held later during the environmental review process. Removing this provision would reduce costs, shorten processing times, and remove redundant or unnecessary process requirements for these proposals. However, should the BLM decide that a public meeting is advisable (for example, in response to a request for such a meeting), it will give notice, under existing provisions in paragraph (e)(1) of this section, in the Federal Register , or may use other notification methods such as a local newspaper or the internet to announce a public meeting. Other changes within this section would clarify that Tribal governments are accorded equal treatment with state and local governments under paragraph (e)(2)(ii) (formerly paragraph (e)(2)(iii)); remove references to the prohibition on filing non-competitive applications within designated leasing areas, which would no longer exist under the proposed regulations; and simplify language related to application prioritization under § 2804.35 in paragraph (e)(2)(i) (formerly paragraph (e)(2)(ii)). Additionally, the BLM would revise paragraph (e)(5), which currently reads, “The BLM will determine whether your proposed use complies with Federal and State laws,” by removing “and State.” This revision provides clarity on the BLM's role regarding State laws. The BLM is not responsible for enforcing State law or ensuring that an applicant complies with State law, and removing this provision from the regulations would remove potential reader confusion as to the Federal Government's responsibility under State law. To the extent that State law is applicable to development on Federal lands, consistency with State law may be relevant to an application's prioritization under § 2804.35(a)(4). Paragraph (f) addresses the segregation of lands within a ROW application. Segregation removes the lands covered by a ROW application from appropriation under the public land and mining laws. The BLM would revise this paragraph to clarify that a segregation would not be extended unless the application is complete (as defined in § 2804.12(j)) and a cost recovery payment has been received that includes the application filing fee. For further information on these segregations, please see the BLM's Segregation of Lands-Renewable Energy final rule published on April 30, 2013 (78 FR 25204). Section 2804.26 Under what circumstances may the BLM deny my application? Section 2804.26 explains the circumstances under which the BLM may deny an application. Paragraph (a)(4) would be revised to be consistent with the proposed revisions for acronyms and terms found in § 2801.5, where the BLM replaces the term “the Act” with “FLPMA.” For further discussion on this proposed revision, see this preamble for a discussion of revisions under § 2801.5. New paragraphs (a)(9) and (10) would incorporate into this section requirements that are discussed elsewhere in the rule. Paragraph (a)(9) provides for denying an application if the applicant fails to comply with a deficiency notice within the time specified by the BLM under § 2804.25(c). Paragraph (a)(10) provides that an application may be denied for failing to pay costs, as noted in proposed § 2804.22(b). Paragraph (c) would be removed, since the placement of this provision (which references requests for alternative requirements under § 2804.40) in section 2804.26 may be read incorrectly to suggest that an applicant may request alternative means of complying after the BLM denies the application. Section 2804.40 provides that applicants must request alternative requirements in a timely manner (see § 2804.40(c)). A request that is received after an application has been denied is not timely. Removing this provision in this section improves clarity regarding when such requests may be made. Section 2804.30 What is the competitive process for solar or wind energy development for lands outside of designated leasing areas? Section 2804.30 would be removed and reserved. Some portions of the existing section are duplicative of provisions in existing §§ 2809.13, 2809.14, and 2809.17, which address competitive leasing inside of designated leasing areas; because the BLM proposes to use the same process for competitive leasing inside and outside of designated leasing areas, there is no need to describe this process twice. Other portions of the existing section are proposed for inclusion in revised sections of subpart 2809, while others would be removed for the reasons explained below. Existing paragraph (a) would be removed, because the BLM would no longer distinguish between lands inside or outside of designated leasing areas for purposes of competitive leasing. Criteria and procedures for selecting parcels for competitive leasing are discussed in revised § 2809.12. Existing paragraph (b) is duplicative of existing § 2809.13(a), which the BLM does not propose to revise. Existing paragraph (c) is substantially similar to proposed § 2809.10(a). Existing paragraph (d) is duplicative of existing § 2809.13(b), which the BLM does not propose to revise, except that the sentence in existing section (d) that reads, “The notice would explain that the successful bidder would become the preferred applicant (see paragraph (g) of this section) and may then apply for a grant,” corresponds to proposed new section 2809.13(b)(7), as discussed below. Existing paragraph (e) is duplicative of existing § 2809.14, which the BLM does not propose to revise. Existing paragraphs s (f) and (g) correspond to § 2809.15, which the BLM proposes to revise as discussed below. Existing paragraphs (h)(1) through (3) correspond to § 2809.17(a) through (c), which the BLM proposes to revise as discussed below. Existing paragraph (h)(4) is duplicative of existing § 2809.17(d) and would be removed for the reasons discussed below in connection with that section. Section 2804.31 Reserved Section 2804.31, title, “How will the BLM call for site testing for solar and wind energy?” would be removed and reserved. The BLM has not had competitive interest in a site testing right-of-way since the regulations were finalized in 2016, and thus has not held a competitive process to authorize a site testing ROW during that period. The BLM has received input that the use of a competitive process for a site testing ROW prohibitively increases the time and cost for processing an application. This change does not eliminate rights-of-way for site testing, which may still be issued upon BLM approval of an application for site testing under § 2801.9(d)(1) and (d)(2); nor does it eliminate the use of competitive processes for solar and wind energy development rights-of-way, which can be found in §§ 2809.11 and 2809.13. The BLM is interested in comments on the BLM proposing to remove the rules for a call for a competitive process for site testing ROWs for solar and wind energy and whether there is any value in keeping this rule for the future. Section 2804.35 Application Prioritization Principles for Solar and Wind Energy Development Rights-of-Way Section 2804.35 would be retitled from “How will the BLM prioritize my solar or wind energy application?” to “Application prioritization principles for solar and wind energy development rights-of-way” to more clearly identify the content of this section. Revisions to this section are based on the BLM's experience with the existing prioritization criteria and their potential for causing confusion and misunderstanding of the criteria's use. The existing § 2804.35 prescribes screening criteria under which an application is evaluated and then assigned high, medium, or low priority. However, in practice, a single application may meet criteria that are associated with more than one priority level. Furthermore, the relative importance of different criteria may vary from location to location due to resource considerations. Likewise, not all prioritization criteria are equally relevant for every application. These practical concerns create confusion within the existing regulations. Additionally, evaluation using the existing criteria removes some discretion from the BLM to best determine an application's priority because use of the criteria to prescribe the priority level fails to recognize and give weight to local resource issues and circumstances. Revisions in this section therefore would not assign specific criteria to specific priority levels. Instead, the revised section would clarify that relevant factors including those set forth in the regulation are to be used holistically to prioritize applications in a manner that would facilitate environmentally responsible developments and ensure that agency workloads are directed appropriately. The revised section would also explicitly recognize that the BLM may identify additional criteria in step-down guidance, which may be national in scope or specific to an area. Paragraph (a) clarifies that the purpose of prioritizing applications is to allocate agency resources to processing applications that have the greatest potential for approval and implementation. Paragraph (b) identifies factors that the BLM may consider when prioritizing applications. The proposed factors are similar to the existing criteria inasmuch as they focus on the extent to which an application avoids known resource, use, or policy conflicts and complies with relevant plans and policies, but they are less prescriptive than the existing criteria. This rule proposes factors that are inclusive of the existing rule's criteria found in this section. The rule would provide discretion to the BLM as to how best to apply the factors to prioritizing processing of solar or wind energy generation applications, taking into account the multiple considerations that are relevant to each area and office managing public lands. The first factor would consider whether the proposed project is located within an area preferred for such development, such as a designated leasing area. These areas have previously been identified as posing less severe resource conflicts through the land use planning process, and the BLM may reasonably presume that developments proposed within these areas are more likely to proceed to approval. The second factor would consider whether the proposed development avoids adverse impacts to or conflicts with known resources or uses on or adjacent to public lands, and includes specific measures designed to further mitigate impacts or conflicts. When submitting an application to the BLM, the applicant must address known potential adverse resource conflicts, including those for sensitive resources and values that are the basis for special designations and protections, as well as potential conflicts with existing uses on or adjacent to the proposed energy generation facility. The applicant must also include specific measures to mitigate impacts or conflicts with resources and uses. While subsequent consultation, public comment, and environmental review processes may reveal unknown resource or use conflicts, the BLM may reasonably presume that projects with fewer known conflicts are more likely to proceed to approval and successful implementation. The third factor would consider whether the proposed project is in conformance with the governing BLM land use plans. Applications should identify whether the proposed project is in conformance with the governing land use plan or would require an amendment or revision to the plan. The BLM may, in its discretion, consider applications for solar or wind energy generation facilities that would require an amendment or a revision to the governing land use plan under part 1600 of these regulations. However, such application could require greater resources to process and could present resource conflicts, which would result in a lower priority. The fourth factor would consider whether the proposed project is consistent with relevant State, local, and Tribal government laws, plans, or priorities. The purpose of this determination is not to enforce these State, local, or Tribal but rather to ensure comity and identify projects that are more likely to be successfully approved. In addition, applying this principle helps to ensure that the BLM takes into account the existing resource knowledge and expertise that may be available through State, local, and Tribal plans and priorities. To carry out this prioritization, the BLM may enter into agreements with State, local, or Tribal governments or rely on existing agreements. The fifth factor would consider whether the proposed project incorporates the best management practices set forth in the applicable BLM land use plans and other BLM plans and policies. Like the first four principles, this principle ensures that the BLM takes into account the knowledge and expertise that has gone into formulating these existing policies and also recognizes that an application that would require an amendment to existing plans or policies is likely to require more time and effort to process. Under the sixth factor, the BLM would consider any other circumstances or prioritization criteria identified by the BLM in subsequent policy guidance or land use planning. Such guidance or planning could describe new criteria in addition to the proposed principles or may describe regional or local criteria that may be used when prioritizing solar and wind energy applications. Under paragraph (c), once applications are complete (as defined in § 2804.12(j) of this part), the BLM would go through a process to prioritize those complete applications (as defined in § 2804.12(j) of this part), based on all available information. Available information may include information provided in the application or its plan of development, applicant responses to deficiency notices, and information provided to the BLM in public meetings or consultations, including consultations with other Federal agencies and with State, local, or Tribal governments. Paragraph (d) would allow the BLM to re-prioritize an application based on new information that the BLM has received or on changes the applicant has made to the application. Changes to an application may include changes that clarify an applicant's proposal or the related plans, studies, and inventories. Once the BLM begins processing an application, the BLM will generally continue processing that application to completion and decision, to the extent possible. Nonetheless, the BLM reserves the right to re-prioritize an application, and adjust its workload accordingly, if circumstances warrant such re-prioritization. The BLM is interested in comments regarding its proposed prioritization principles for solar or wind energy developments. Are the factors appropriate? Should the BLM consider additional factors, such as co-location with energy storage, or other proposed or existing energy facilities, or proximity to transmission infrastructure facilities as a consideration? Section 2804.40 Alternative Requirements Section 2804.40 provides for situations when a requestor is not able to meet the requirements of this subpart and wants to request alternative requirements from the BLM. The introductory paragraph would be revised to clarify that requests for alternative requirements apply only to the application requirements set forth in this subpart, and not to other requirements related to ROWs, such as the requirement to pay rent as set forth in subpart 2806. This revision would improve clarity and avoid potential misunderstandings. Section 2805.10 How will I know whether the BLM has approved or denied my application or if my bid for a solar or wind energy development grant or lease is successful or unsuccessful? Section 2805.10 provides for how the BLM communicates to an applicant that their application or bid is successful. This section would be revised to improve consistency and clarity within the BLM's regulations and to avoid confusion over the timing of appeals. Existing paragraphs (a) and (d), which the BLM does not propose to revise, specify that the agency decision occurs when the BLM transmits an unsigned grant or lease to the successful applicant or when the BLM notifies an unsuccessful bidder or applicant that their bid or application has not been successful (see also the discussion below of § 2809.15, which clarifies the process through which a successful bidder may proceed to become a presumptive lease holder, and eventually a lease holder). Existing paragraph (b), which the BLM similarly does not propose to revise, clarifies that the unsigned grant or lease document will specify the terms and conditions of the grant or lease. These paragraphs identify the point at which the BLM has made its decision to approve, approve with modifications, or deny the application, which typically marks the endpoint of the BLM's decision-making process. This decision marks the appropriate time for appeal of the BLM's decision. Existing paragraph (c) injects potential confusion into this scheme by stating that after the applicant signs and returns the grant, “BLM will sign the grant and return it to you with a final decision issuing the grant,” and that the applicant “may appeal this decision under § 2801.10 of this part.” This language suggests that an appealable decision occurs any time the BLM issues a grant or lease by returning a signed ROW instrument to the applicant, even though the step of issuing the ROW often does not require the BLM to exercise discretion. Under the proposed rulemaking, paragraph (c) would be revised to replace the text “BLM will sign the grant and return it to you with a final decision” with the text “The BLM will issue the right-of-way by signing the grant or lease and transmitting it to you,” and by removing the sentence “You may appeal this decision under § 2801.10 of this part.” The purpose of this revision is to remove the confusing reference to a “decision” in paragraph (c), to recognize that the act of issuing the grant is not an appealable decision. The BLM also proposes the technical change of replacing “grant” with “grant or lease.” While the proposed revision would clarify that the act of issuing a grant or lease by returning a signed ROW instrument to the applicant is not typically an appealable decision, the revised text retains the critical language clarifying that it is the BLM's act of returning the signed instrument to the holder that constitutes the “issuance” of the ROW. Identifying the point in time at which the ROW is “issued” is important for calculating when the term of a ROW begins to run (see § 2805.11) and when the holder's obligation to pay rent begins (see § 2806.12). Identifying the point at which the ROW is “issued” is also important for clarifying which actions are subject to the conditions in Section 50265(b)(1) of the Inflation Reduction Act, which imposes conditions on when the Secretary may “issue a right-of-way for wind or solar energy development on Federal land.” Under both the current and the proposed text of § 2805.10(c), the ROW is issued when the BLM transmits the signed instrument to the holder. Section 2805.11 What does a grant or lease contain? Section 2805.11(b) addresses the duration of ROWs. Section 2805.11(b)(2) provides specific terms for solar and wind energy grants and leases. Paragraphs (b)(2)(iv), (b)(2)(v), and (b)(4) would be revised to update the maximum terms for solar and wind energy generation facilities, energy storage facilities that are separate from energy generation facilities, and electric transmission lines with a capacity of 100 kV or more. The term for a grant or lease for these types of authorizations may be up to 50 years. Revisions under this section are consistent with those made under § 2801.9(d). Paragraph (b)(2)(iv) would be revised to include updating the maximum term for both grants and leases, consistent with changes under this rule that allow for applications to be filed within designated leasing areas without first holding a competitive offer. Paragraph (b)(2)(v) would be revised to set the maximum term for ROWs for energy storage facilities that are separate from energy generation facilities. Although these ROWs are generally treated as linear ROWs, rather than solar or wind energy development ROWs, for purposes such as rent calculation, the BLM believes that allowing a longer maximum term, commensurate with the maximum term for solar or wind energy development ROWs, will facilitate the transition to cleaner sources of energy in the United States. Paragraph (b)(4) would be added to update the term for electric transmission lines with a capacity of 100 kV or more. Section 2805.12 What terms and conditions must I comply with? Section 2805.12 provides terms and conditions that apply to ROWs. The BLM proposes to revise paragraph (e)(2) to clarify that the option of requesting alternative stipulations, terms, or conditions does not apply to terms or conditions related to rents or fees. As with requests for alternative application requirements under § 2804.40, requests for alternative stipulations, terms, or conditions under § 2805.12 are limited to technical obligations of the applicant or holder and not to the holder's obligation to compensate the United States for the use of the public lands and their resources. Requests for exemptions or deviations from the general rent provisions of subpart 2806 should be made under provisions of that subpart that specifically address such exemptions or deviations, such as existing § 2806.15(c) (which the BLM does not propose to revise), which sets forth a procedure for asking the BLM State Director to waive or reduce a holder's rent payment, or proposed § 2806.52(b)(1)(i), which describes certain circumstances under which the BLM may calculate rent based on an alternative MWh rate. The applicability of those provisions would not be affected by this proposed revision to § 2805.12. Section 2805.13 When is a grant or lease effective? Section 2805.13 title and section is revised to add “or lease” to clarify that this section applies to both grants and leases. Section 2805.14 What rights does a right-of-way grant or lease convey? The title would be revised from “What rights does a grant convey?” to “What rights does a right-of-way grant or lease convey?” The title would be revised to clarify that this section applies to both grants and leases. Paragraph (g) would be revised to remove the text “solar or wind energy development” and add “right-of-way” to read as “right-of-way grant or lease” to capture every instrument or type of ROW authorization that the BLM may issue. This revision would clarify for readers that an applicant may apply to renew any ROW grant or lease, including those for solar or wind. This revision would clarify that holders of all ROW grants and leases may apply for a renewal under § 2807.22. ROW grants or leases would include those issued for solar or wind energy developments, communication sites, or other types of uses authorized by a ROW grant or lease. Section 2805.16 If I hold a grant or lease, what monitoring fees must I pay? This section provides for a monitoring fee to reimburse the Federal Government for its costs in inspecting and monitoring the public lands subject to a ROW and for its ongoing costs administering the ROW. Proposed paragraph (b) would update the BLM's headquarters address to read as U.S. Department of the Interior, Bureau of Land Management, 1849 C Street NW, Room 5645, Attention: Lands, Realty, and Cadastral Survey, Washington, DC 20240. This revision is made so that the public is aware of where to obtain a copy of the current cost recovery schedule. The BLM also posts the cost recovery schedule online at http://www.blm.gov. Subpart 2806—Annual Rents and Payments In subpart 2806, the BLM sets forth the rent calculation methodologies for solar and wind energy development ROWs. Section 504(g) of FLPMA, 43 U.S.C. 1764(g), requires ROW holders, subject to several narrow exceptions, “to pay in advance the fair market value” for the use of the public lands. Section 102(a) of FLPMA, 43 U.S.C. 1701(a), clarifies that “it is the policy of the United States that . . . the United States receive fair market value of the use of the public lands and their resources unless otherwise provided for by statute.” The BLM has consistently taken the position that this statutory mandate includes the authority to charge acreage rent and capacity fees that reflect the fair market value of the public lands and their resources. For example, the preamble to the 2016 rule explained that “(t)he BLM has determined that the most appropriate way to obtain fair market value is through the collection of multicomponent fee (sic) that comprises an acreage rent, a MW capacity fee, and, where applicable, a minimum and a bonus bid for lands offered competitively . . . (T)he collection of this multicomponent 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” (81 FR 92122, page 92134). As the BLM explained in 2016, the use of a multicomponent rent and fee structure that comprises an acreage rent, a MW capacity fee, and in some cases also a minimum and a bonus bid, assists the BLM in achieving important objectives, including identifying the fair market value for the use of public land. The multicomponent fee proposed in this proposed rule would continue to achieve important BLM objectives, including allowing the BLM to capture fair market value for use of the land (subject to reductions pursuant to Energy Act of 2020 authority). For solar and wind energy development ROWs, the fair market value requirement of Section 504(g) of FLPMA has been supplemented since the 2016 rulemaking by the Energy Act of 2020, 43 U.S.C. 3003, which reaffirms that the “Secretary may consider acreage rental rates, capacity fees, and other recurring annual fees in total when evaluating existing rates paid for the use of Federal land by eligible projects,” and confers on the Secretary new authority to reduce acreage rental rates and capacity fees if the Secretary makes certain findings. Consistent with FLPMA and the Energy Act of 2020, the BLM proposes to continue to determine rent for solar and wind energy ROWs based on acreage rent rates and capacity fees, although under a revised methodology that provides the BLM with more flexibility to ensure rental fees and rates are adjusted to appropriately respond to changes in the renewable energy market. The revised methodology would also reflect the direction in the Energy Act of 2020, including to propose rules for certain rate reductions and to meet the Congressional goal of permitting 25 GW by 2025. The BLM also proposes to introduce through this rulemaking certain rate reductions, implementing the authority of the Energy Act of 2020. Acreage rent rates for solar and wind energy ROWs would be determined under the proposed rule using the NASS Cash Rents Survey, which reflects the value of the land at the time the ROW is issued. This per-acre land rental value would be multiplied by an encumbrance factor (which differentiates between solar and wind energy facilities) and an annual adjustment factor that accounts for changes in the value of the land over the lifetime of the ROW due to inflation and similar factors. Because the NASS Cash Rents Survey used for solar and wind acreage rents reflects a valuation of annual rent, no rate of return is applied when determining solar and wind energy acreage rents. Once a solar or wind energy generation facility is producing electricity, the BLM would charge the higher of the acreage rent, described in the previous paragraph, or the capacity fee for the ROW. The capacity fee is determined using the annual production multiplied by either wholesale power pricing information or pricing figures specific to a project's power purchase agreement, to determine the market value of the energy generated from the project. The wholesale power pricing information or other pricing figures, like the pastureland rental value used for calculating acreage rents, would be fixed at the time the ROW is issued and would be updated using a fixed annual adjustment factor. This market value of the energy generated would then be multiplied by a rate of return based on a percentage of wholesale pricing, and by certain policy-based fee reduction factors tied to the Energy Act of 2020, to arrive at a capacity fee. Section 2806.10 What rent must I pay for my grant or lease? Section 2806.10 provides rent requirements that apply to all grants and leases, requiring payment in advance, consistent with Section 504(g) of FLPMA, as amended. New § 2806.10(c) would clarify to a reader that the per acre rent schedule for linear ROW grants must be used unless a separate rent schedule is established for your use, such as with communication sites under § 2806.30 or solar and wind energy development facilities per § 2806.50, or the BLM determines that none of these schedules applies pursuant to § 2806.70. Section 2806.12 When and where do I pay rent? Paragraphs 2806.12(a) and (b) describe the proration of rent for the first year of a grant and the schedule for payment of rents. Paragraphs 2806.12(a) and (b) would be revised by deleting the term “non-linear,” which is not defined in the regulations, to clarify that these provisions apply to all ROW grants or leases. Section 2806.20 What is the rent for a linear right-of-way grant? Section 2806.20(c) addresses how to obtain a current rent schedule for linear ROWs. This paragraph would be revised to update the BLM's mailing address of record by reference to § 2804.14(c) that would also be updated. Solar and Wind Energy Development Rights-of-Way The existing regulations contain two undesignated center headings to organize and differentiate sections pertaining to solar (see existing 2806.50 through 58) and wind (see existing §§ 2806.60-68) energy rights-of-way. This proposed rule would revise those sections and undesignated headings to provide a single set of provisions for all solar and wind energy development ROWs. Existing regulations have solar and wind rights-of-way separated into different sections, even though rents, fees, and the required payments for solar and wind rights-of-way are similar. The rent, fee, and payment requirements under the proposed rule are discussed in the following sections and would be the same for both solar and wind except for the difference in the encumbrance factor used in calculating the acreage rent that is discussed under § 2806.52(a). Sections 2806.60 through 2806.68, which address wind energy rents and fees, would be removed and consolidated with solar energy rents and fees under 2806.50 through 2806.58. The BLM has considered several alternative methods for valuing solar and wind energy facilities on public lands. In May 2022, the BLM issued its interim solar and wind energy rent policy in an update to the BLM Right-of-Way Manual (Manual), Section 2806.60— Rent: Solar and Wind Rights-of-Way Rents, Fees, and Reductions, which incorporated the Secretary's authority under the Energy Act of 2020 to implement changes to the solar and wind energy rents and fees, including reductions. The Manual provides for updates to the rent adjustment methodology under regulation or law. The BLM issued this interim policy after first releasing a draft update to Section 2800.60 of the Manual for public review and comment, see https://www.blm.gov/press-release/blm-seeks-public-input-proposed-guidance-renewable-energy-blm-public-lands (December 3, 2021). In the BLM's release of the draft update to the manual, it solicited comments on alternatives for reduced rent payments and offered two rent adjustment options that would rely on the Secretary's authority under the Energy Act of 2020, 43 U.S.C. 3003, to reduce acreage rental rates and capacity fees if, among other things, the Secretary determines “that a reduced rental rate or capacity fee is necessary to promote the greatest use of wind and solar energy resources.” The two primary options would have generally sought to either adjust the baseline acreage and capacity fees or provide for a nominal acreage rent and a capacity fee. After reviewing the comments received on the draft update, the BLM amended Section 2806.60 4 of the Manual with its update to renewable energy rent that provides for adjustments to baseline acreage rents and capacity fees that result in a reduction in total payments for solar and wind energy facilities. Manual 2806.60 does not provide for a nominal acreage rent and a capacity fee. 4 https://www.blm.gov/sites/default/files/docs/2022-05/MS-2806%20rel%202-307%20Chapter%206.pdf . The BLM determined that the most expeditious way to implement rent changes was by an interim adjustment to the 2016 methodology as reflected in the Manual and subsequently to use this rulemaking to further address its proposed rate setting methodology based on an acreage rent and a capacity fee. In this rulemaking, the BLM considered as an alternative the rates released in Manual Section 2806.60— Rent: Solar and Wind Rights-of-Way Rents, Fees, and Reductions, which implements a state-wide per acre value based on non-irrigated land values and a reduced capacity fee that is the same for both solar and wind energy. Please see the BLM's release of its updated Right-of-Way Manual Section 2806.60 for further information. Under this proposed rule, the rates would generally be lower for solar and wind energy ROWs and allow existing holders to choose to keep the updated rate methodology set by the Manual. The BLM understands, based on comments received for the draft Manual and other engagement with industry representatives and grant and lease holders, that predictability of project costs is critical to the success of an energy generation facility. This includes the costs of energy development through its life, including those for construction, operations, and maintenance. Although land use expenses, such as annual payments for rents and fees, are a small portion of an energy generating facility's operating expenses (generally 1-3 percent of costs), these amounts are important to a developer as they contribute to determining if a certain facility may be successful or not. Under existing regulations the BLM adjusts the rates based on changes in land values and power pricing, among other considerations. More recently, the rates for solar and wind energy development acreage rents have increased by more than 300 percent in some locations while capacity fees have decreased by about 50 percent. These unanticipated rate changes affect existing holder payments, raising concerns over project viability in future years for projects that are typically associated with 30-year ROWs. Under the current regulatory method, established in 2016, the rates for acreage rent and wholesale power pricing would likely increase again when the next adjustments are made starting in 2026. These increases to the BLM's rates would be based primarily on recent NASS per-acre land survey data and western power trading pricing in wholesale markets which are both trending upwards in recent years. Changes or variability in rates present an uncertainty to potential ROW holders. The BLM aims through this rulemaking to improve the predictability of public land rental rates for solar and wind energy development, while continuing to adhere to FLPMA's fair market value requirement, except where rates would be reduced to promote the greatest use of the public lands consistent with the Energy Act of 2020. The 2016 rule did not require the BLM to use a particular source for electricity market wholesale trading data when determining the value for wholesale market pricing, in order to provide the agency with flexibility to use the best available data. Such flexibility is maintained in this proposed rule. Currently, the BLM uses the SNL Energy dataset from S&P Global. Under the proposed rule, however, the BLM would elect to use the wholesale market pricing data from the Energy Information Administration at this time because it is free and open to the public, which would provide additional transparency into the BLM's rate schedule. The BLM would still retain flexibility to utilize different data sources in the future. Wholesale market pricing data from the Energy Information Administration may be found on the Administration's website: https://www.eia.gov/electricity/wholesale/. The BLM is interested in receiving comments and information discussing the BLM's proposed changes to the solar and wind energy acreage rent and capacity fees and whether the rule reasonably implements changes to BLM regulations under Title V of FLPMA and the Energy Act of 2020. Is the BLM proposing a reasonable methodology for valuing solar and wind energy development ROWs, including any preference for alternatives to the BLM's proposal in this rule. Is the BLM's proposal to use free and publicly available wholesale market pricing information appropriate when setting its rates? Are there other options that are more appropriate for use in the BLM's rate setting methodology? Under this rule, the BLM proposes changes to the acreage rent and capacity fees that would greatly improve payment certainty. Payment certainty would be improved through the BLM establishing an acreage rate and capacity fee rate at the beginning of a grant or lease term and then adjusting it annually by a fixed percentage of the rate established in the first year of the grant or lease term, and by the annual energy production. This is different than current methodology which updates rates periodically based on changes in land values derived from the NASS Census of Agriculture, conducted every five years, and estimated energy generation capacity of solar and wind facilities. The BLM's proposed acreage rent would use an average of the state-wide pastureland rent from the NASS Cash Rent Survey instead of adjusted non-irrigated land values to determine the acreage rent. The acreage rent would be the minimum payment made to the BLM each year, regardless of energy generation on public lands, and would compensate the United States for the privilege obtained by the developer in securing the right to use and build improvements on the public lands. See § 2806.52(a) for further information on the acreage rent. The BLM also proposes a capacity fee based on wholesale power prices to compensate the United States for the value of the solar and wind energy resources used by the developer on public lands. The capacity fee would be collected annually, but only when the fee exceeds the acreage rent for the year. See § 2806.52(b) for further information on the capacity fee. This rule also proposes certain reductions to the capacity fee under the authority granted to the Secretary in the Energy Act of 2020, which provides that annual acreage rent and capacity fees may be reduced if the Secretary determines that a reduced rental rate or capacity fee is necessary to promote the greatest use of wind and solar energy resources, among other reasons. Reductions to the capacity fee are discussed in greater detail under § 2806.52(b)(1)(ii) and (iii) for the MWh rate reduction and Buy American reduction. The BLM considered but did not pursue several reductions for siting developments in designated areas, use of energy storage, efficiency of technology used, payment of compensatory mitigation fees, and project sizing. These reductions would be applied to solar or wind energy developments depending on the specifics of the project and whether it would qualify for one or multiple reductions. The BLM did not propose multiple reductions because it made for a more complex rate structure that may help individual projects that qualify for the reduction(s) but did not seem to promote the deployment of solar or wind energy on public lands collectively. This rule proposes a single reduction, to apply to all developments, to the annual weighted average wholesale power price, referred to as the MWh rate reduction, as well as a Buy American reduction that is project-specific. For the reasons explained below and in the introduction to this notice, the BLM believes that these proposed rate reductions would reduce economic hardships on developers, maximize commercial interest in lease sales, and promote the greatest use of wind and solar energy resources. The BLM is interested to hear comments from readers on its proposed capacity fee rate reductions and use of the Energy Act to promote the greatest use of solar and wind energy resources on public lands. How might the BLM utilize its authority under the Energy Act of 2020 differently to provide a reduction to the capacity fee? How might the BLM utilize this authority differently to promote the greatest use? Additionally, the BLM would like to receive comments on whether the BLM should use multiple project specific reductions or whether other reductions may be more appropriate toward meeting the goals of the Energy Act of 2020. Section 2806.50 Rents and Fees for Solar and Wind Energy Development Existing § 2806.50 requires a holder of a solar ROW to pay both an annual rent and a phased-in capacity fee in advance each year. Under the proposed rule, this section would be modified to require the holder of a solar or wind energy development ROW to pay the greater of either an annual rent or a capacity fee in advance each year, consistent with Section 504(g) of FLPMA (43 U.S.C. 1764(g)). Because this proposed rule uses a fee based on production, it would remove the phased-in MW capacity fee. The phased-in MW capacity fee in the current regulations is based on the nameplate capacity, an estimation of energy generation potential of a technology, and apart from the phase-in factor, is paid regardless of the amount of energy that is actually produced. The acreage rent or capacity fee, as applicable, calculated consistently with the requirements found in §§ 2806.11 and 2806.12. The acreage rent would be calculated according to the formula set forth in § 2806.52(a), while the capacity fee would be calculated according to the formula set forth in § 2806.52(b). Section 2806.50 would be retitled adding “and wind” consistent with changes under this rule to consolidate both solar and wind energy rent, fee, and payment provisions. Revisions also include the addition of “wind” and “grant or lease,” clarifying that this section applies both to grants and leases issued under this part. The BLM is also interested in public comments regarding its proposal to move from a fee based on the nameplate capacity of a project to a fee based on the energy produced at a solar or wind energy generation facility sited on public lands. Additionally, the BLM would like input on whether it should implement minimum efficiency criteria for developments to support the greatest use of solar and wind energy resources on public land. If so, what criteria should the BLM follow and what penalties, if any should the BLM include for facilities that would not meet these criteria? As proposed, and as noted in the draft economic and threshold analysis, the BLM believes that this rule would not have a significant economic impact on a substantial number of small entities, and further, that any potential impacts on small entities are unlikely, and would only occur in a limited set of circumstances. The BLM is not aware of developers and operators of solar or wind energy facilities on public lands 5 that would typically qualify as a small business under the Small Business Administration regulations at 13 CFR part 121, which define what constitutes a small business for the relevant industries. Additionally, entities that develop solar or wind projects on public land are often an affiliate of a larger company or a financial investment company that does not qualify as a small business, and therefore the affiliate company would also not qualify as a small business. The BLM provides further information on small business and the number of potentially affected establishments in its draft economic and threshold analysis (Table 8). 5 Wind: https://www.blm.gov/sites/default/files/docs/2021-11/PROJECT%20LIST%20WIND_October%202021.pdf. Solar: https://www.blm.gov/sites/default/files/docs/2023-03/PROJECT_LIST_SOLAR_FY2022.pdf . The BLM is interested on comments whether small business may be impacted and whether that impact would be negative or positive. How is this rule negatively or positively affecting small business, and how might the BLM more fairly include small business if it is negatively impacted? Section 2806.51 New and Existing Grant and Lease Rate Adjustments Section 2806.51 would be retitled from “Schedule Rate Adjustment” to “New and Existing Grant and Lease Rate Adjustments,” clarifying to readers that this section applies to both new and existing grants and leases. Paragraph (a) directs readers to the appropriate section setting forth the different rental schedules for different types of ROWs. Paragraph (b) explains the process for selecting a rate adjustment method for a new grant or lease. Paragraph (c) informs holders of existing solar or wind energy development ROWs that they may request that the new rate methodology set forth in this proposed rule be applied to their existing grant or lease. Existing holders would have 2 years from the date this rule becomes effective to request a change to the new rate adjustment method. The BLM would continue to apply the grant or lease holder's current rate methodology if a timely request is not received. A request to change the rate adjustment method would require the holder's agreement to the BLM re-issuing the grant or lease with updated Terms and Conditions found under this part, pursuant to § 2806.70. Section 2806.52 Annual Rents and Fees for Solar and Wind Energy Development Section 2806.52 currently provides the methodology that the BLM uses to determine the acreage rent and the MW capacity fee for solar and wind energy development ROWs. The current regulation provides for payment of both the acreage rent and the MW capacity fee (based on the MW capacity of the solar or wind energy generation facility). The BLM proposes to require payment of the greater of either an acreage rent, which is calculated in advance of authorization, or a capacity fee, which is calculated once energy generation begins (§ 2806.50). Section 2806.52 would be revised to provide the methodology for the BLM to determine the acreage rent (§ 2806.52(a)) and capacity fee (§ 2806.52(b)). Paragraph (a) would provide that acreage rent would be determined by multiplying the authorized number of acres (rounded up to the nearest tenth) by the state-specific per-acre rate from the solar and wind energy acreage rent schedule in effect at the time a grant or lease is issued. The acreage rent would be the minimum yearly payment for a grant or lease and would not be required if the capacity fee under paragraph (b) of this section exceeds the acreage rent. Paragraph (a)(1) explains that the per acre rate is calculated by multiplying the state-specific per-acre value by the encumbrance factor and a factor that reflects the compound annual adjustment since the start of the grant or lease term, according to the formula A × B × ((1 + C) ^D)). Paragraph (a)(1)(i) would clarify that “A” would be the per-acre rate, using the state-specific per-acre value from the solar or wind energy acreage rent schedule for the states where a project is located for the year when the grant or lease is issued. The per-acre rate for a grant or lease would not change once issued, even with updates to the acreage rent schedule; instead, the acreage rent would be adjusted by the annual adjustment factor, “C” in the formula above, under 2806.52(a)(1)(iii). To calculate the current acreage rent schedule for a state, the BLM would use the most recent 5-year period average of NASS pastureland rent values. The average per acre value would be determined by using only the years with reported NASS pastureland rents within the 5-year period. Updates to the per acre rate would occur every 5 years in the acreage rent schedule consistent with the timing of rent adjustments under § 2806.22 for the linear rents schedule. The current 5-year average ranges from $2.10 per acre in Arizona to $12.60 per acre in California with a median value of $6.62 per acre in the Western States, based upon the pastureland rent value in the NASS Cash Rents Survey through 2021. Using Nevada as an example for how the BLM would average NASS pastureland rents, assume that values of $10.00, $13.00, and $10.00 per acre were reported respectively for 2019, 2020, and 2021. NASS reported values during the 5-year period only for those 3 years and did not report values for 2017 and 2018. Therefore, the BLM would average the reported values using three years for that 5-year period. Thus, the 5-year average would be $11.00 per acre. Paragraph (a)(1)(ii) would clarify that “B” in the formula above, would be the encumbrance factor. For solar energy development facilities, a 100 percent encumbrance factor would be set in this rule, and for wind energy a 5 percent encumbrance factor would be set. A 100 percent encumbrance factor reflects a virtual exclusion of all other uses on the ROW. A lesser encumbrance factor recognizes that an authorized use or development only partially encumbers the land, allowing other uses to co-exist. This proposed rule would maintain the existing 100 percent encumbrance factor for solar energy developments. This rule proposes to reduce the encumbrance factor for wind energy from 10 percent to 5 percent to account for changes in technology over the years and the comparative reduction in land occupied by wind energy generation facilities which use fewer wind turbines and generally meet or exceed older wind energy facility nameplate capacities. For wind, this rule proposes a 5 percent encumbrance factor, reflecting that relatively little exclusion of other uses would occur. This is also consistent with changes in lands where the National Renewable Energy Laboratory (NREL) has noted that wind projects now typically occupy one to four percent of the land within the project area. You may read further in NREL's news release and analysis, NREL Explores the Dynamic Nature of Wind Deployment and Land Use. 6 6 https://www.nrel.gov/news/program/2022/nrel-explores-the-dynamic-nature-of-wind-deployment-and-land-use.html#:~:text=Through%20comprehensive%20spatial%20analysis%20of%20U.S.%20wind%20power,and%20plant%20design%20are%20changing%20land%20use%20requirements. Paragraph (a)(1)(iii) clarifies that “C,” in the formula above, would be the annual adjustment factor, which is 3 percent, and Paragraph (a)(1)(iv) clarifies that “D” would be the year of the grant or lease term, where the first year (whether partial or a full year) would be 1 and the final year for a grant or lease authorized for a 50-year term would be 51 (assuming a partial first year). Currently, the BLM sets and adjusts the annual adjustment factor based on the average annual change to the Implicit Price Deflator—Gross Domestic Product (IPD-GDP) for the ten-year period immediately preceding the year that the NASS Census data become available, to reflect the loss in value due to inflation. Under the proposed rule, the annual adjustment factor would be fixed at 3 percent. In reviewing the IPD-GDP, average annual change for the last five-year period (2017-2022) was 3.27 percent, while for the ten-year period before that the average annual change was 2.39 percent. This difference highlights the fact that inflation in 2017-22 has been significantly greater than for years in the preceding 10-year period. Under the proposed rule, the annual adjustment factor would be fixed at 3 percent, derived by rounding the average annual change from the past 15 years to the nearest full percent. Setting this factor would improve future rate predictability. Paragraph (a)(2) would describe where you may obtain a copy of the current per acre rates for solar and wind energy rent schedule. Paragraph (b) would provide that the capacity fee is calculated by multiplying the MWh rate or the alternative MWh rate (which is described below), the MWh rate reduction, the Buy American reduction, the rate of return, and the annual power generated on public lands for the grant or lease in question (measured in MWh) by a factor that reflects the compound annual adjustment. The capacity fee is paid annually beginning in the first year that generation begins for the energy generation facility. There would be no capacity fee levied for the first year or any other year if the acreage rent exceeds the capacity fee. The proposed formula for calculating the annual capacity fee is A × F × G × B × C × (1 + D) ^E. Paragraph (b)(1)(i) would clarify that “A” is either the MWh rate, an amount determined based on the 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, or the alternative MWh rate. The MWh rate is calculated based on the wholesale prices from the full five calendar-year period preceding the most recent MWh rate adjustment before the ROW was issued, rounded to the nearest dollar increment. There is no MWh rate phase-in for energy generation facilities except for existing holders that elect to continue paying under their current rate adjustment method per § 2806.51(c). The BLM may use an alternative MWh rate when a grant or lease holder enters into a power purchase agreement with a utility for a price per MWh that is lower than the average of the annual weighted average wholesale price. In those instances, the BLM would determine if the rate in the power purchase agreement is appropriate to use instead of the MWh rate. For example, an alternative MWh rate may not be appropriate if the utility issues itself a power purchase agreement for its solar or wind energy development. If the rate in the agreement is appropriate, then the BLM would set an alternative MWh rate for the grant or lease at the rate shown in the agreement. In paragraph (b)(1)(ii), “B” is the MWh rate reduction. The BLM proposes to set the capacity fee based on 20 percent of the wholesale price per MWh or alternative MWh rate until 2036. This reduction is consistent with the authority provided in the Energy Act of 2020 allowing the Secretary to reduce acreage rental rates and capacity fees if, among other things, the Secretary determines “that a reduced rental rate or capacity fee is necessary to promote the greatest use of wind and solar energy resources.” Further, this reduction would help BLM meet the minimum goal under the Energy Act of 2020 for “authoriz(ing) production of not less than 25 gigawatts of electricity from wind, solar, and geothermal projects by not later than 2025.” Implementing this reduction is necessary to promote the greatest use of wind and solar energy resources and maximize commercial interest in lease sales by lowering the entry cost of prospective energy generating facilities and further supporting existing facilities that may have capacity fee rates that exceed market value, impose economic hardship, or limit future commercial interests. Starting in 2036, the MWh rate reduction factor would increase to 80 percent of the wholesale price per MWh—that is, the capacity fee would now be based on 80 percent of the wholesale price per MWh or alternative MWh rate. This continuing 20 percent reduction would be consistent with the Energy Act of 2020 authority to reduce acreage rental rates and megawatt capacity fees when the Secretary determines that reducing the rate would ensure that the BLM's rates are “competitively priced compared to other available land.” The BLM is interested to hear from commenters whether the reduction to the wholesale price per MWh should be limited to a specific period of time or conditioned on national or regional ( i.e., renewable portfolio standard) priorities. The BLM has also considered whether a shorter period of time to set its rates would be appropriate instead of using a 5-year average of wholesale market pricing. Should a different period of time be provided in the final rule, or should the BLM allow for the reduction to continue until further rulemaking or a change in the statutory framework? Additionally, the BLM considered conditioning this reduction on renewable portfolio standards, in which a State may set a specific objective for additional energy from renewable energy resources. If such a provision were added to the final rule, the BLM would lower its MWh rate for projects that help a State to meet its renewable portfolio standard. Finally, the BLM has considered, but not proposed in this rule, tiering the wholesale power pricing to the potential energy of the solar or wind energy resource in a given location based on solar energy insolation values or wind energy by meter per second, in which case, the BLM would lower the power pricing for locations that are of lower energy resource potential to promote renewable energy development that may have a lower overall production capacity. In addition to the proposed expiration of an 80 percent reduction to the price per MWh rate used in determining a capacity fee, the BLM is interested to hear from commenters whether a different reduction may be more appropriate, if at all. In paragraph (b)(1)(iii), “C” is the Buy American reduction. As explained above, the BLM proposes to promote the development of wind and solar energy resources on public lands by helping to offset some of the costs of using American-made items in solar and wind energy development facilities. The Federal Acquisition Regulations (FAR), 48 CFR 52.225-1(b), describe certain categories of items or products that are eligible for the Buy American preference in Federal acquisition. As noted above, in the discussion of proposed Section 2801.5, the BLM proposes to adopt the term “Buy American” to refer to any item that is eligible for the Buy American preference in Federal acquisition under section 52.225-1(b) of the FAR. Paragraph (b)(1)(iii) of Section 2806.52 of the BLM's proposed regulation would reduce the capacity fee for solar or wind energy generation facilities according to the percentage of the total cost of the facilities on the ROW attributable to Treasury items. The reduction to the capacity fee would be as follows: (A) 25 percent or more of the total facility cost attributable to items qualifying for Buy American preference = 5 percent reduction (B) 35 percent or more qualifying for Buy American preference = 10 percent reduction (C) 45 percent or more qualifying for Buy American preference = 15 percent reduction (D) 55 percent or more qualifying for Buy American preference = 20 percent reduction To qualify for this capacity fee reduction, the percent of the energy generation facility's total cost that consists of items qualifying for the Buy American preference would have to meet or exceed the percentages set forth in this section. The holder would have to identify the items qualifying for the Buy American preference in the energy generation facility and provide sufficient documentation ( e.g., purchase orders for end products, materials and supplies of the facility; as-built or construction plans) to demonstrate that these items, in the aggregate, represent the specified percentage of the facility's total cost. Once an energy generation facility qualifies for a Buy American reduction, the facility would have that same reduction for the term of the grant or lease. The BLM would only revisit the reduction at the time of an assignment, amendment or renewal of an energy generation facility grant or lease to determine what reduction, if any, it may qualify for. The BLM would apply the version of the FAR in effect at the time the ROW is issued If the FAR is amended in the future in such a way that section 52-225-1(b) of the FAR no longer provides a clear meaning for the term “Buy American,” as defined in these proposed regulations, the BLM would continue to apply the most recent version of the FAR that provides such a workable definition until such time as the BLM is able to amend these regulations. Also, the proposed Buy American reduction increases incrementally based on the percentage of the total facility cost attributable to items qualifying for Buy American preference. The BLM recognizes that, in other contexts, such as direct federal procurement, qualification for a domestic content preference is based on reaching a set percentage and is not altered by reaching a higher percentage. The BLM seeks comment on whether it should establish a fixed reduction based upon a set percentage rather than the escalating approach proposed in this rule. The Buy American reduction to the capacity fee is proposed in this rule under the authority of the Energy Act of 2020, 43 U.S.C. 3003, to “promote the greatest use of wind and solar energy resources,” avoid “economic hardships” to ROW holders, and maximize “commercial interest” in lease sales and ROW grants. Providing this reduction would defray some costs in sourcing from domestic supply chains, which would support continued deployment of solar and wind projects on public lands if foreign supply chains are disrupted. Deployment of renewable energy technology on public lands has been impeded, particularly in recent years, by unreliable foreign supply chains as a result of international developments, a worldwide pandemic, and manufacturing limitations. There have been several instances of international developments, such as the Russia-Ukraine war, that resulted in disruptions to supplies and limited investment in solar and wind energy resources on public lands, created economic hardships for ROW holders, or limited commercial interest in lease sales and ROW grants. Such recent developments include the enactment of the Uyghur Forced Labor Prevention Act, Public Law 117-78 (“UFLPA”), which aims to prevent the importation of goods produced using forced labor in China. The UFLPA imposes a rebuttable presumption that “any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region of the People's Republic of China” are made with forced labor, and are therefore prohibited from importation into the United States. A significant portion of the global supply chain for photovoltaic panels and their components involves the Xinjiang region, and although panels imported into the United States no longer incorporate components from Xinjiang, the United States' efforts to combat the use of forced labor has impacted the import of solar energy components and precursor materials. At the same time, the United States has reduced importation of Russian mineral resources and imposed sanctions against the Russian Federation as the Russia-Ukraine war has progressed, resulting in increased demand for domestic minerals ( e.g., steel, aluminum, iron, copper, and silicon). As of November 2022, the United States had reduced US goods trade with Russia to about $500 million worth of goods from its peak of about $2.65 billion in March 2022 (the month after the Russian-Ukraine war started) per the U.S. Census Bureau. 7 Trade in goods between the United States and the Russian Federation continues to decline with the implementation of US tariffs against Russian imports. These imports of necessary minerals have nearly stopped in the past year, having a significant effect on the available resources used in manufacture and development of solar and battery storage facilities. 7 https://www.census.gov/foreign-trade/balance/c4621.html . In addition, the worldwide COVID-19 pandemic that started in 2020 revealed vulnerabilities in the United States' supply chains for materials, supplies, and other goods used in its carbon-free clean energy markets, such as in solar and wind energy developments, among other things. Vulnerabilities in supply chains include international shipping, where shipping vessels and containers waited for months during labor shortages and quarantine periods before becoming available to the American public. Uncertainty in global supply chain dynamics have significant potential to cause delays and higher prices for solar and wind energy development projects on public lands. Potential tariffs to foreign-sourced items and components result in dramatic decline in project deployment. According to the Solar Energy Industries Association's U.S. Solar Market Insight Q2 2021 report, supply chain constraints for critical solar components, such as polysilicon, steel, aluminum, and semiconductor chips, lead to higher prices. In response to the U.S. Department of Commerce's anti-circumvention tariffs on solar products from Southeast Asia countries, the President made an emergency declaration on a temporary duty-free importation of solar cells and modules to curb disruption to solar projects. These developments highlight the importance of secure, reliable domestic supply chains to the development of solar and wind energy resources on public lands and demonstrate how the proposed Buy American reduction, by supporting those domestic supply chains, would promote the greatest use of those resources, while also reducing economic hardships for developers. By offsetting some of the costs of domestically sourced parts and materials, the Buy American reduction would reduce the economic dependence of developers on unreliable global supply chains and support the efforts of domestic suppliers. In this way, the proposed Buy American reduction supports the transition to more-reliable domestic supply chains which would, in turn, increase commercial interest in the use of public lands and promote the development of solar and wind energy resources on public lands. Recent Presidential determinations and legislation are similarly intended to strengthen domestic supply chains for renewable energy components, highlighting the importance of such domestic supply chains to the development of domestic energy generation. On March 31, 2022, and most recently on June 6, 2022, the President signed determinations permitting use of the Defense Production Act Title III authorities for domestic clean energy technologies (including solar photovoltaic components; transformers and electric grid components; heat pumps; insulation; and electrolyzers, fuel cells, and platinum group metals), reiterating the Administration's commitment to a carbon pollution-free electricity sector. In addition, the Creating Helpful Incentives to Produce Semiconductors for America Act, aka, the “CHIPS Act,” was signed on August 9, 2022, providing for improvements to manufacturing of important components for clean energy, among other things, furthering the objective to improve domestic supply chains. The Infrastructure Investment and Jobs Act, Public Law 117-58, signed on Nov. 15, 2021, also provides funding for electric vehicles and clean energy technologies, including manufacturing of energy storage and its components, increasing domestic supply chains. We anticipate that there will be significant increases in domestic manufacturing over the next five years that will benefit the solar and wind energy generation industries. The BLM would encourage a more rapid deployment of domestically made items by providing a reduction to solar and wind energy development facilities using qualifying items for the Buy American preference, thereby increasing further commercial interest in public lands and expediting deployment of solar and wind energy developments and maximizing the greatest use of solar and wind energy resources on public lands. The BLM is aware that other Federal agencies ( e.g., Office of Management and Budget) may currently be developing policy relevant to domestic content requirements, including those authorized by the Inflation Reduction Act. The BLM may consider using a definition from one of those policies as an alternative to the domestic content definition under Buy American and would welcome comments to that effect. The BLM is interested in receiving comments regarding the addition of the domestic content reduction to the capacity fee and to other parts of this rule where domestic content provisions are proposed. Is there a more appropriate way than determining percentage of total cost of qualifying items for the domestic content preference? Are there other methods to promote the greatest use of solar and wind energy generation on the public lands while strengthening the resiliency of domestic energy supply chains that may be more appropriate or preferred? Do the proposed reductions up to 20 percent fairly encourage developers to qualify for using American-made products in their solar or wind energy generation facilities, and support increasing demand for clean energy technologies on public lands? What forms of documentation would be appropriate to provide to the BLM in order to qualify for this reduction when applying for a grant or lease, and when demonstrating at time of renewal or reauthorization? The BLM also is interested in receiving comments on the possibility of adding a reduction to the capacity fee of up to 20 percent based on the use of union labor in project construction. Like the Buy American preference, such a provision would offset some developer costs, thus promoting the use of solar and wind energy resources on public lands, while reducing economic hardships for developers who may also qualify for certain tax incentives. Should the BLM incorporate a capacity fee reduction in this rule for the use of union labor? Should the reduction be contingent on a developer's commitment to enter into a project labor agreement? What documentation should be required to qualify for this reduction? What percentage reduction would be appropriate? Paragraph (b)(1)(iv) explains how the BLM would apply the alternative MWh rate and the Buy American reduction from paragraphs (b)(1)(ii) and (iii) of this section. By default, the BLM would apply the ordinary MWh rate under paragraph (b)(1)(i) and the MWh rate reduction under paragraph (b)(1)(ii). A developer who wished to benefit from the alternative MWh rate and the Buy American reduction would need to submit a request for conditional approval prior to the issuance of a grant or lease, along with sufficient documentation to demonstrate that the development qualifies or may later qualify for these rate reductions. In some cases, the BLM would not be able to determine definitively in advance whether the proponent qualifies for these reductions. The BLM could then conditionally approve the requested reductions, but the reductions would not go into effect until the proponent qualifies for the reduction. If energy generation begins before the holder has demonstrated that the facility qualifies, the BLM would charge the holder the full capacity fee. The capacity fee could be updated for subsequent calendar years after the holder demonstrates that the facility qualifies, but the BLM would not refund past payments made before the rate reductions went into effect. For example, an applicant or presumptive lease holder (see §§ 2809.13 and 2809.15, below) might request conditional approval of an alternative MWh rate. In that situation, a request for conditional approval for an energy generation facility may be granted if the presumptive lease holder has entered into or intends to enter into a power purchase agreement (see (b)(1)(i) of this section) that has a lower rate than the MWh rate. Documentation submitted to the BLM when requesting conditional approval may include draft or interim power purchase agreements or confirmation in writing from the purchasing party that negotiations have been entered into. While the BLM may then conditionally approve the request for an alternative MWh rate, the alternative rate would not go into effect and be used to calculate the rental obligations until the power purch [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2023-12178. Public record. Not legal advice.