Acreage Rent and Megawatt Capacity Fees (Years 2016-2021) for Solar and Wind Energy ROW Grants and Leases

United States Department of the Interior
BUREAU OF LAND MANAGEMENT
Washington, DC  20240
http://www.blm.gov
 
September 14, 2017

In Reply Refer To:
(2800) WO-301 P
 
Instruction Memorandum No. 2017-096       
Expires:  09/30/2019                                                                                        
 
To:                   All Field Office Officials
 
From:               Assistant Director, Energy, Minerals, and Realty Management

Subject:           Acreage Rent and Megawatt Capacity Fees (Years 2016-2021) for Solar and Wind Energy ROW Grants and Leases                                                                                                      
Program Area:  Right-of-Way Management, Solar and Wind Energy
 
Purpose:  This Instruction Memorandum (IM) rescinds IM 2010-141 and IM 2009-043 and provides guidance on the implementation of the solar and wind energy right-of-way (ROW) acreage rent schedule and megawatt (MW) capacity fees from the rule Competitive Processes, Terms, and Conditions for Leasing Public Lands for Solar and Wind Energy Development and Technical Changes and Corrections, 81 Fed. Reg. 92,122 (Dec. 16, 2016).  
 
Policy/Action:  The BLM authorizes ROW grants and leases for solar and wind energy projects under Title V of the Federal Land Policy and Management Act (FLPMA) and its implementing regulations at 43 CFR Part 2800. Outside Designated Leasing Areas (DLA), the BLM issues ROW grants to authorize solar and wind energy development on BLM-administered lands. Inside DLAs, the BLM issues ROW leases to authorize solar and wind energy development on BLM-administered lands. This policy applies to both ROW grants and ROW leases.
 
ROW grant and lease holders must make payments, including acreage rent and a MW capacity fee, in consideration for their authorized use of the public lands.  This IM transmits the current MW capacity fee and acreage rent schedule for years 2016-2021 for solar and wind energy projects, and provides further guidance for implementing related requirements under 43 CFR Part 2800.
 
Acreage Rent
In accordance with 43 CFR 2806.52 and 43 CFR 2806.62, the BLM has developed a solar and wind energy acreage rent schedule (see Attachments 1 and 2). This schedule displays the annual acreage rent by zone for the years 2016-2021.  The acreage rent zone to which a county is assigned may be found in Attachment 5.
 
The BLM will charge acreage rent on an annual basis for all solar and wind energy ROW grants and leases. The BLM will calculate the annual acreage rent by multiplying the entire number of acres authorized in the ROW grant or lease by the appropriate zone’s per acre rate.
 
The BLM will calculate acreage rent on or before the date of issuance of the ROW grant or lease, consistent with the provisions of 43 CFR 2806.12(a)(1). The ROW grant or lease holder must pay the acreage rent at the time the ROW grant or lease is authorized. After the BLM issues a ROW authorization and collects the first partial-year acreage rent payment, the ROW grant or lease holder must pay acreage rent annually on or before January 1 of each succeeding year (43 CFR 2806.12(c)).
 
The BLM will update the solar and wind acreage rent schedules every five years to reflect market conditions. The BLM will release the next solar and wind acreage rent schedules in 2021.
 
MW Capacity Fee
In accordance with 43 CFR 2806.52 and 43 CFR 2806.62, the BLM has developed solar and wind energy MW capacity fees (see Attachments 1 and 2). The MW capacity fee reflects the industrial use value of the land to generate electricity. For wind energy projects, there is a standard MW capacity fee of $5,010. For solar energy projects, the MW capacity fee varies according to technology. The MW capacity fee is $2,863 for photovoltaic solar facilities, $3,578 for concentrated photovoltaic solar facilities and concentrated solar power facilities, and $4,294 for concentrated solar power facilities with storage capacity of 3 hours or more.  
 
The BLM will charge the MW capacity fee on an annual basis for all solar and wind energy ROW grants and leases. The BLM will calculate the MW capacity fee by multiplying the approved MW capacity (sometimes called “nameplate capacity”) of the facility (as described in the ROW grant or lease) by the appropriate MW capacity fee. 
 
The BLM will begin to charge the MW capacity fee once generation of electricity starts or is identified to start in the Plan of Development (POD), whichever comes first.  The generation of electricity may be identified as a point in time, such as the identified commercial operation date, or when system testing has been completed for a project or stage of development and the BLM determines that the project or stage of development is ready for operation. If the solar or wind facility is approved as a staged development as outlined in the POD, the BLM will pro-rate the MW capacity fee and apply applicable “phase-ins” for each stage of development once any portion of that stage begins commercial operations.
 
The BLM will prorate the MW capacity fee for the first year to reflect the amount of time the facility will be operational.  Once the BLM begins to charge the MW capacity fee, the ROW grant or lease holder must pay the MW capacity fee annually on or before January 1 of each succeeding year.
 
The BLM will update the MW capacity fee every five years to reflect market conditions. The BLM will release the next MW capacity fee in 2021.
 
Billing
BLM field staff should use the Lands & Realty Authorization Module (LRAM) to generate courtesy statements requesting the initial acreage rent, and to generate subsequent annual bills to invoice for acreage rent and the MW capacity fee. To calculate the bill total, the BLM will apply either the standard or the scheduled adjustment (see 43 CFR 2806.51 and 43 CFR 2806.61) to the acreage rent and the MW capacity fee, as well as any applicable MW capacity fee “phase-in” (see 43 CFR 2806.52(b)(4), 43 CFR 2806.54(c), 43 CFR 2806.62(b)(4), and 43 CFR 2806.64(c)).
 
The BLM has developed spreadsheets that automatically calculate acreage rents and MW capacity fee for billing purposes using the standard rate adjustment (Attachment 3) and scheduled rate adjustment (Attachment 4), as well as any applicable “phase-in.” The spreadsheets may be used to verify proper acreage rent and MW capacity fees when the BLM issues a new ROW, a ROW project begins generating electricity, a MW capacity fee phase-in period occurs, or there are changes to the BLM’s per acre zone rates.  The spreadsheet calculations should be added to the ROW casefile. Any discrepancies between the spreadsheet calculations and the official amount in LRAM should be rectified before issuing the final annual bill.
 
Initial Implementation of Acreage Rent and MW Capacity Fee for Solar and Wind ROWs Authorized before January 18, 2017
Solar energy ROW grants authorized before January 18th, 2017, that have begun the five year phase-in for the MW capacity fee, as established by the IM 2010-141, will continue to use the five year phase-in for the project or stage of development that has begun generating electricity.  Any subsequent stage of development of the ROW grant that begins generating electricity will use the 3-year phase-in, as outlined in 43 CFR 2806.52(b)(4) and 43 CFR 2806.62(b)(4).
 
Holders of solar and wind energy ROW grants authorized before January 18th, 2017, may also select the scheduled rate adjustments for the remainder of their ROW grant.  ROW grant holders must notify the BLM field or district office that administers their ROW grant by December 19th, 2018 to select the scheduled rate adjustment (43 CFR 2806.51(c), 43 CFR 2806.61(c)). The BLM will continue to apply the standard rate adjustment method until it receives a request to use the scheduled rate adjustment method in the time provided. The ROW grant holder’s selection of either the scheduled rate or standard rate adjustment will apply for the remaining term of the ROW grant and cannot be changed once selected.
 
Acreage Rent and MW Capacity Fee for Wind ROW Grants with Applications before September 30th, 2014 and Authorizations after January 18, 2017
Consistent with 43 CFR 2806.62(c)(2) , the BLM will reduce initial acreage rent and MW capacity fees for wind energy ROW grants if the ROW application, accepted Plan of Development, and cost recovery agreement were submitted to the BLM and established before September 30th, 2014, and the ROW grant was authorized after January 18th, 2017.
 
For these projects, the BLM will reduce the acreage rent by 50 percent for the initial partial year of the ROW grant. If the BLM requires an upfront rent payment for the initial partial year and next full calendar year, only the partial year rent will be reduced by 50 percent.  The BLM will also reduce the MW capacity fee by 75 percent for the initial partial year and second year and by 50 percent for the third and fourth years for which the BLM requires payment of the MW capacity fee. This reduction to the MW capacity fee applies separately to each stage of development.
 
Alternative Rates and Payment Adjustments
Alternative Requirements for ROW Applicants (43 CFR 2804.40)
A ROW applicant may request an alternative requirement for payments to the BLM if they can show good cause for their inability or anticipated failure to meet the payment requirements, and explain why an alternative is appropriate.  ROW applicants must submit a request for an alternative requirement in writing to the BLM field or district office administering those public lands. The request should include the supporting documentation necessary to show good cause and for the BLM to determine if an alternative requirement is appropriate.
 
Alternative Requirements for ROW Grant or Lease Holders (43 CFR 2805.12(e))
A ROW grant or lease holder may request an alternative requirement for payments to the BLM: (1) if they can show good cause for their inability or anticipated failure to meet the payment requirements and explain why an alternative is appropriate; or (2) for reasons other than their inability or anticipated failure to meet a payment requirement of the BLM. ROW grant or lease holders must submit a request for alternative requirements in writing to the BLM field or district office administering those public lands. The request must explain how the BLM’s requirements, such as using the BLM’s selected methodology for calculating fair market value, are deficient or otherwise inappropriate. The request must also suggest an alternative method that should apply.  Any suggested alternative requirement for a rate must be based on comparable commercial practices, appraisals, or other reasonable valuation methods in order to be considered by the BLM.  Requests for alternative rates will not be considered for authorized grants and leases after a holder has selected the scheduled rental rate adjustment method. 
 
BLM Approvals of Alternative Requirements
The BLM State Director may approve any alternative rate or other payment adjustment on a project-specific or regional basis after receiving concurrence from the Washington Office Assistant Director of Energy, Minerals, and Realty Management (AD-300). [KJR1] 
 
The BLM may also determine that, in response to a request for alternative requirement or on its own initiative in accordance with 43 CFR 2806.70, the BLM’s payment schedules do not apply and determine that an alternative is appropriate. 
 
If requested the BLM staff will provide information regarding the process for requesting a rent exemption to ROW applicants, and grant or lease holders whose facility may be exempt from rent pursuant to the Rural Electrification Act of 1936, as amended (43 CFR 2806.14(a)(4)) (see Instruction Memorandum 2016-122 for more information).  Rent exemptions under the Rural Electrification Act may be applied to the acreage rent but not to the MW capacity fees.
 
ROW Grant and Lease Renewal Billing
If a ROW application, grant holder, or lease holders applies for the renewal of an existing ROW grant or lease, or for a new grant or lease in accordance with 43 CFR 2807.22(f), in a timely and sufficient manner, the existing ROW grant or lease does not expire until the BLM approves or denies the application. In these cases, the BLM will continue to bill the acreage rent and MW capacity fee on an annual basis until the BLM issues a decision on the application.  
 
Standard Language on Payments in ROW Grants and Leases
The BLM has established standard terms in ROW grants and leases to provide for adjustments to the acreage rent and the MW capacity fee, as well as any other payments to the BLM.  These standard terms allow for future adjustments to reflect changes in the technology, market, amendments to the ROW grant or lease, or changes to law or regulation: 

For and in consideration of the rights granted, the holder agrees to pay the Bureau of Land Management fair market value rental, which includes both base rent and a megawatt capacity fee, as determined by the authorized officer unless specifically exempted from such payment by regulation. Provided, however, that the rental may be adjusted by the authorized officer, whenever necessary, to reflect changes in the fair market rental value as determined by the application of sound business management principles, and as far as practicable and feasible, in accordance with comparable commercial practices. The rental provisions of this authorization may also be modified consistent with the provisions of any regulatory changes or pursuant to the provisions of any new or revised statutory authorities.

  
Solar and Wind Energy Testing ROW Grants
The BLM may issue two types of solar and wind energy testing ROWs: site-specific testing and project-area testing.
 
Under 43 CFR 2806.58(a) and 2806.68(a), rent is generally $100 per year per ROW for site-specific tests that consist of a single meteorological tower or instrumentation facility location.  The authorized officer may use an approved small site rent schedule if the rent in the schedule is more than $100 per year. 
 
Under 43 CFR 2806.58(b) and 2806.68(b), the rent is either $2,000 per year or $2 per acre per year, whichever is greater, for a project-area testing authorization that includes one or more meteorological towers or instrumentation facilities.  When issuing a ROW for a project-area testing, the BLM may authorize the use of a reasonable amount of additional acreage associated with a larger area for the meteorological towers or instrumentation facilities. 
 
Consistent with 43 CFR 2805.11(b), ROWs with a term of 3 years or less expire on the anniversary date of their issuance.  As specified in 43 CFR 2806.12(a), the ROW holder must pay rent in advance, either annually or for the term of the grant. 
 
The BLM may accept multiple applications for site-specific and project-area testing ROWs on the same land. However, the BLM will not approve site-specific or project-area testing ROWs that inhibit any existing site-specific or project-area testing ROWs already in place on the land.
 
Acreage Rent for Support Facilities Authorized Under Separate ROW Grant(s)
Acreage rent for separate ROW grants authorizing support facilities for solar and wind energy developments (e.g., administration building, groundwater wells, construction lay down and staging areas, surface water management and control structures) or linear ROW facilities (pipelines, roads, power lines, etc.) are determined using the rent schedule established for linear ROWs (43 CFR 2806.20) or as otherwise determined appropriate by the BLM.
 
Timeframe:  This policy is effective immediately. Pending solar and wind energy applications will be processed consistent with the provisions of this IM.
 
Budget Impact:  The application of this policy will have minimal budget impact. The administration of solar and wind energy payments are subject to processing cost recovery (43 CFR 2804.14) for some initial payments or to monitoring cost recovery for all other payments (43 CFR 2805.16).
 
Background:  Section 211 of the Energy Policy Act of 2005 established a goal for the Department of the Interior to approve non-hydropower renewable energy projects on the public lands with at least 10,000 MWs of capacity by 2015.  To achieve and exceed this goal, the BLM has now authorized over 17,000 MWs of non-hydropower renewable energy projects.  The BLM continues to prioritize renewable energy development on public lands.
 
Manual/Handbook Sections Affected:  This IM transmits policy that will be incorporated into BLM Manual Series 2806, Rents during the next revision.
 
Coordination:  The BLM National Renewable Energy and Rights-of-Way Coordination Office (WO-301) coordinated preparation of this IM with the Division of Lands, Realty and Cadastral Survey (WO-350), the State Offices and the Solicitor’s Office reviewed and provided input to this policy prior to its finalization.
 
Contact:  If you have any questions concerning the content of this IM, please Stephen Fusilier, Acting Chief National Renewable Energy and Rights-of-Way Coordination Office at 202-912-7148 or sfusilie@blm.gov; or Michael Hildner, Planning and Environmental Analyst, at 202-912-7419 or mhildner@blm.gov.
 
Signed by:
Timothy Spisak
Acting Assistant Director,
Energy, Minerals, and Realty Management
 
Authenticated by:
Catherine Emmett
WO-870, IT Policy and Planning
 
5 Attachments
     1 – Solar Energy Acreage Rent and MW Capacity Fee Schedules (1p)
     2 – Wind Energy Acreage Rent and MW Capacity Fee Schedules (1p)
     3 – Standard Rate Adjustment Method Calculation Spreadsheets (3pp)
     4 – Scheduled Rate Adjustment Method Calculation Spreadsheets (3pp)
     5 – Adjusted 2012 NASS Census Per Acre L/B Values and Rent schedule Zones