Case-by-Case Fees for Mineral Materials Program

UNITED STATES DEPARTMENT OF THE INTERIOR
BUREAU OF LAND MANAGEMENT
WASHINGTON, D.C. 20240-0036
http://www.blm.gov
May 19, 2016

In Reply Refer To:
3600 (320) P

EMS TRANSMISSION 06/02/2016

Instruction Memorandum No. 2016-100
Expires: 09/30/2019

To:                   All Field Office Officials

From:               Assistant Director, Energy, Minerals and Realty Management

Subject:           Case-by-Case Fees for Mineral Materials Program

Program Areas: Mineral Materials Program

Purpose: This Instruction Memorandum (IM) provides guidance on the procedure BLM staff should follow to properly charge case-by-case fees to cover the BLM’s costs of processing documents relating to the Mineral Materials Program.

Policy:  The BLM regulations at 43 CFR 3000.10 and .11 provide the basic framework for determining and charging case-by-case processing fees to applicants for mineral materials.  This IM provides additional procedures that state, district, and field office staff should follow to ensure that case-by-case processing fees are properly charged to the mineral materials applicants.

General Procedure for Both Noncompetitive and Competitive Mineral Material Sales:

In all noncompetitive and competitive mineral material sales, the BLM will charge processing fees on a case-by-case basis (see 43 CFR 3602.31 and 43 CFR 3602.43) for the processing of all documents.  Upon receiving a mineral materials document, the BLM should send a letter to the applicant acknowledging receipt, citing the applicable fee regulations, and informing the applicant that the BLM will determine whether the lands are open for the activity requested before it prepares a fee estimate.  The letter should state that if the lands are open to the activity the applicant is pursuing, the BLM will include the cost of the land status determination in its subsequent fee estimate. If the applicant decides not to proceed with the application after receiving BLM’s cost estimate, the BLM will not be able to recover the cost of the land status determination.

Determining Fees and Preparing Cost Estimates

In determining case-by-case fees, the BLM must consider the six reasonableness factors contained in Section 304(b) of FLPMA, 43 U.S.C. 1734.  Attachment 1 explains the FLPMA 304(b) reasonableness factors.  As a guide in preparing a cost estimate, the BLM should begin with the first FLPMA factor identified in Attachment 1, specifically, the BLM’s actual costs [1] to process a document.  Estimates should include all actual costs the BLM expects to incur in processing a document.  Attachment 2 consists of worksheets identifying basic processing steps for each mineral materials document.  The cost estimate worksheets are provided as templates for internal use in preparing estimates for a case-by-case processing fee.  In addition to capturing estimated staff time and hourly wages, the worksheets are set up to capture direct processing costs such as per diem expenses and equipment use or rental in conjunction with required field work, reproduction costs, etc., as well as indirect costs.  Attachment 3 is an example of a completed worksheet.

After estimating the actual processing cost (Attachments 2 and 3), the BLM should consider the remaining FLPMA factors identified in Attachment 1 to determine if any of them might cause a fee to be set at less than the actual cost of processing the application projected for FLPMA factor 1.  If so, then consider whether any of the other FLPMA factors would mitigate against setting the fee at less than the actual cost.  The BLM cannot charge a fee higher than its actual processing costs.

A preliminary written fee estimate (Attachment 4) should either be mailed to an applicant or served personally. It should be accompanied by a notice that the preliminary estimate is not subject to appeal, with a statement that includes a 30-day deadline for the applicant to provide comments on the estimated fee. Only the final decision on the fee estimate is subject to appeal.

After receiving and considering comments from the applicant, or if the deadline passes without any comments being received, the BLM should mail or personally serve, the applicant a written final fee estimate (Attachment 4) accompanied by a courtesy bill, as discussed below. The BLM office that receives and processes the application should request that the applicant sign the final fee estimate and return it with the payment. Additionally, BLM staff should inform the applicant that processing will not begin until payment is received.

The final fee estimate must take into account any pre-approved working agreements for actions the applicant will fund [2] and should be accompanied by information on filing an appeal of the fee determination with the Interior Board of Land Appeals (IBLA), as provided in 43 CFR 3000.11(b)(7).

If the BLM processes an application and encounters higher or lower costs than anticipated, provide the applicant with a revised fee estimate in writing, considering the six FLPMA Section 304(b) reasonableness factors found in Attachment 1.  Do not stop processing an application unless an applicant fails to pay any additional processing costs within 30 days of receipt of a bill based on the revised estimate.  However, do not complete processing an application and issue a final decision until payment for all processing costs has been received.

Billing

The regulations at 43 CFR 3000.11(b)(5)(i) provide for periodic billing.  If the total estimated processing time exceeds six months, the BLM should bill the applicant on a quarterly basis (or more often as explained below), with the first bill issued when the BLM provides the final fee estimate. An applicant always has the option of paying the entire estimated fee at once.

Most mineral materials sales will involve substantially less than six months processing time.  If the total estimated processing time is six months or less, the BLM should bill for the total amount when providing the final fee estimate.  An applicant’s payment is due to the BLM 30 days after it receives the bill.  After the BLM receives payment of the first bill from the applicant, a project code should be assigned and processing can begin.

It is important to ensure that the BLM processing costs incurred during any billing period do not exceed payments previously submitted by an applicant.  If at any time it is determined that the BLM’s processing costs are likely to exceed funds previously submitted by an applicant, the BLM should bill the applicant before the next regularly scheduled payment is due.

The applicant has 30 days to pay any bill.  Therefore, when sending a bill, the BLM staff must ensure that the available funds are sufficient to cover the next 30 days of operating costs.  If the BLM office determines that payment has exceeded the BLM’s reasonable processing costs for a billing period, the next billing should be adjusted accordingly.  The applicant cannot deduct any amount from its payment unless it has obtained written approval from the BLM.  If the last payment requires adjustment, then the BLM should either issue the applicant a refund for overpayment or bill the applicant for underpayment.  Before issuing the final document to the applicant, the BLM must receive the entire fee as required by 43 CFR 3000.11(b)(6).

Additional Protocol for Competitive Sales:

Competitive mineral material sales follow the same procedure as non-competitive sales, with the additional protocols outlined in 43 CFR 3602.43(a). In all cases in which an applicant requests a mineral materials sale, the applicant must initially pay the cost recovery amount to the BLM before the BLM publishes the sale notice.  Please note that if the applicant request the sale, 43 CFR 3602.42(b)(8) requires the sale notice to state the total cost recovery fee paid to the BLM by the applicant up to 21 days before the sale.  This timing provides 7 days for the BLM to incorporate the fee payment amount into the sale notice and 14 days to advertise the sale.

If the initial applicant is the successful bidder at a competitive sale, then it must pay all processing costs the BLM incurs after the date of the sale notice in addition to the fees it paid before publication of the sale notice.

If the successful bidder is not the initial applicant, the successful bidder is required to pay the BLM the cost recovery amount specified in the sale notice.  The BLM will then refund that amount to the applicant.  The successful bidder will also be required to pay all processing costs the BLM incurs after the date of the sale notice.

If the BLM initiates a competitive sale where there is no initial applicant, the successful bidder is required to pay the cost recovery amount specified in the sale notice, and all processing costs the BLM incurs after the date of the sale notice.

In the event that the BLM determines to reject all bids as provided in 43 CFR 3602.43(c), the applicant is responsible for all processing fees and there will be no refund.  Also, the BLM will not reimburse an applicant for money paid directly to a third party to perform a study or prepare an EIS or other environmental analysis.

Timeframe: The guidance in this IM applies to case-by-case fees for processing documents related to mineral materials documents that the BLM received after November 7, 2005 (43 CFR 3000.10(d)(2)).

Budget Impact:

Subactivity and Project Codes:

The cost recovery rule requires collection of revenues from case-by-case fees for mineral materials document processing. The National Business Center established subactivity 5110 and requires use of project codes to assist in maintaining accountability for cost recovery fees and the BLM’s processing costs.  Requests for project codes should be made to the appropriate State budget office.  Use of subactivity 5110 with an accompanying project code is necessary to track the BLM costs for processing a particular case-by-case document the BLM received on or after November 7, 2005 (the effective date of the final cost recovery rule).  Field Office personnel must keep track of all processing costs when processing a document that is subject to a case-by-case fee, and should maintain working files with this information.  Each office should designate an employee to be responsible for tracking all case-by-case processing costs for a mineral materials document.

Program Elements (PEs):

To assist in tracking the BLM processing costs, program elements (PEs) were created for mineral materials case-by-case documents the BLM received on or after November 7, 2005.  Attachments 5 and 6 include descriptions of the PEs.  

Background:

On October 7, 2005, a final rule was published in the Federal Register (70 FR 58854) to amend the BLM’s mineral resources regulations to increase certain fees and to impose new fees to cover the BLM’s costs of processing documents relating to its minerals programs. The final rule provides for case-by-case fees for mineral materials sales (see Table 1 at 70 FR 58856-57).

The fee changes in the final rule are based on statutory authorities that authorize the BLM to charge for its processing costs, policy guidance from the OMB (OMB Circular A-25 – Revised, “User Charges”), and Solicitor’s M-Opinion 36987 (December 5, 1996).  The general Federal policy as stated in OMB Circular A-25 is that a charge will be assessed against an identifiable recipient for special benefits derived from Federal activities beyond those received by the public (see 70 FR 58854).

The preamble to the final rule states at 70 FR 58861: “BLM intends to structure its budget processes to return fees collected to the BLM office which processes the actions.”  State offices, district offices and field offices should coordinate with one another for the distribution of funds received from mineral materials cost recovery fees.

Initial guidance to implement the rule was issued in IM No. 2006-106.  The Office of Inspector General Final Audit Report- Bureau of Land Management's Mineral Materials Program Report No. C-IN-BLM-0002-2012,Recommendation #10 advised the BLM to reissue guidance explaining which costs are recoverable for exclusive sale contracts and ensure that field offices seek reimbursement for costs incurred.

The Washington Office Solid Minerals Group (WO-320) internal homepage includes relevant information on energy and mineral resources cost recovery, such as links to pdf files for the final and proposed rules, Office of Management and Budget (OMB) Circular A-25, Part 346 of the Departmental Manual, the Solicitor’s Opinion on cost recovery, and other pertinent reference materials.  The internal homepage includes a “Questions and Answers” section that addresses questions submitted to WO-320 concerning case-by-case fee determinations and Instruction Memorandum (IM) No. 2006-106.

Manual/ Handbook Sections Affected: Policy guidance included in this IM will be incorporated into the H-3600-1 handbook and 3600 manual for the mineral materials program. Attachment 7 contains procedures relating to collections and billing of case-by-case fees for processing mineral materials documents.

Coordination: Guidance contained in this IM has been reviewed by staff from the Office of the Solicitor and the WO budget office as well as by certain staff from various BLM state offices and field offices.

Contact:  If you have any questions concerning the content of this IM, please contact me at 202‑208-4201, or you or your staff may contact Mitchell Leverette, Division Chief, Solid Minerals, at 202-912-7113, or George Brown, Geologist, Solid Minerals, WO-320, at 202-912-7118 or g1brown@blm.gov.

Signed by:                                                                   Authenticated by:

Michael D. Nedd                                                        Robert M. Williams
Assistant Director                                                       Division of IT Policy and Planning,WO-870
Energy, Minerals, and Realty Management

7 Attachments

     1 – List of FLPMA section 304(b) Factors (1 p)

     2 - Cost Estimate Worksheets for Solid Mineral Case-by-Case Document/Actions (6 pp)

     3 - Completed Cost Estimate Worksheet (8 pp)

     4 - Template for Fee Estimate (to be provided to applicant) (1 p)

     5 - Program Element Descriptions – Mineral Materials Cost Recovery (for Cost Recovery     Case-by-Case documents/actions filed on/after November 7, 2005) (2 pp)

     6 - Revised Program Element Descriptions for Community Pits, Common Use Areas, and Free Use Permits (documents/actions that are not subject to cost recovery) (4 pp)

     7 - Procedures for Collections and Billings for Solid Mineral Case-by-Case Documents/Actions (8 pp)