Implementing New Rates for Acreage Rent, Capacity Fee, Reductions and Payment Requirements for Solar and Wind Energy Developments

This policy includes instructions for implementing several rent and fee provisions in the Bureau of Land Management’s (BLM) final rule for solar and wind energy development, including: (1) processing requests from existing right-of-way (ROW) holders who seek to convert to the new rate schedule; (2) calculating the new rates for acreage rent, capacity fee, and reductions; (3) scheduling for payments; and (4) billing for rent and fees. Consistent with the Energy Act of 2020, 43 U.S.C. 3003, and Title V of the Federal Land Policy and Management Act, 43 U.S.C. 1761 et seq. (FLPMA), the BLM determined through the final rule that changes to the acreage rents and capacity fees for solar and wind energy ROWs on public lands are necessary in order to “promote the greatest use of wind and solar energy resources” and to maximize “commercial interest.” The final rule provides a reduction to the megawatt hour (MWh) rate when setting the capacity fee and two elective reductions to the capacity fee that ROW holders may qualify for: a Domestic Content reduction and a Project Labor Agreement (PLA) reduction. The final rule also codifies a new rate-setting methodology, changes the definition of capacity fees to reflect actual capacity, and revises the key data used for determining the acreage rent and the capacity fee to be set when the ROW is issued.  

The BLM authorizes ROW grants and leases for solar and wind energy generation projects under Title V of the FLPMA and its implementing regulations at 43 CFR Part 2800. As described below, the new rates for acreage rent and capacity fees apply to all solar and wind energy development grants and leases issued on or after July 1, 2024, and to existing grants and leases issued prior to July 1, 2024, if the holder elects to convert their rate setting methodology (43 CFR 2806.51(c)). The BLM must provide notification to existing solar and wind energy grant or lease holders no later than October 1, 2024, of their opportunity to convert their rates to the new methodology and the reductions in the final rule. 

The new solar and wind energy development rates reflected in the final rule and discussed in this IM do not apply to ROWs issued for ancillary facilities, such as a stand-alone battery energy storage or transmission or generation tie-in lines, access roads, or other facilities that are not included as part of the energy development grant or lease.  

Payment for new ROW Holders and Re-issued Holders 

Consistent with Section 504(g) of the FLPMA, 43 U.S.C. 1764(g), the final rule requires the ROW holder to pay in advance for the use of the public lands and their resources. The new rates will be in effect for any new ROW issued on or after July 1, 2024. The BLM will not apply the new rate retroactively or calculate partial year payments for existing holders choosing to convert to the new rates. Rather, the new rate would be applied in the billing cycle for the next calendar year.  

Under 43 CFR 2806.52, solar and wind ROW holders must pay the greater of either an acreage rent, which is calculated in advance of issuing the authorization, or a capacity fee, which is calculated each year upon the start of energy generation. The per acre rate and the MWh rate used to calculate acreage rent and the capacity fee are set at the time a ROW is issued. The BLM will issue the ROW grant or lease by signing it and transmitting it back to the new holder (43 CFR 2805.10(c)). Once set by the BLM, the rates will continue until the end of the ROW term and will only be adjusted by the annual adjustment factor.  

Existing ROW Holders 

The rate-setting methodology in this IM, including its reductions, only apply to new, re-issued per 43 CFR 2806.51(c), and renewed ROWs. For those holders of a ROW who do not choose to apply for the new rents and fees, the existing rate methodology applicable to their authorization would continue to apply for the remaining duration of the ROW.  

Existing ROW holders as of July 1, 2024, have until July 1, 2026, to submit a request to the BLM to convert from their existing rates to the new rate methodology provided in the final rule per 43 CFR 2806.51(c). When converting the ROW to incorporate the new rates under section 2806.51(c), the BLM would change the rate setting methodology and operational due diligence requirements under §§ 43 CFR 2805.12 and 2806.52 for the remainder of the ROW term but should not make other changes to ROW authorizations without further coordination with HQ-330. 

The BLM field, district, and state offices responsible for administering the ROWs will notify existing holders by October 1, 2024, of the opportunity to convert their rates (Attachment 1, sample letter). ROW holders that elect to convert their rates will have their rates set for the year in which their ROW is re-issued. The rates set for a specific ROW are determined using the acreage rent schedule and MWh rate schedule. The new rates will be effective for the next full calendar year’s billing, available to existing holders for the 2025 billing year. 

When converting the ROW, the per-acre rate and the MWh rate are set for the remaining term of the ROW once it is re-issued. The holder is required to pay the greater of (1) the acreage rent or (2) capacity fee each year. Only the annual adjustment factor will affect the rates for subsequent years during the remaining term of the ROW. 

Acreage Rent 

Under 43 CFR 2806.52(a), the BLM will calculate the acreage rent for a solar or wind energy ROW by multiplying the acres authorized (rounded up to the nearest tenth of an acre) by the annual per-acre rate set for the ROW at the time of grant or lease issuance (or re-issuance per 43 CFR 2806.51(c))). The annual per-acre rates for a solar or wind energy development ROW are provided in Attachment 2. 

Capacity Fee 

Once a facility begins to generate electricity, the BLM will calculate the capacity fee for solar or wind energy development ROWs by multiplying the megawatt hour rate (MWh rate), set for a specific ROW at the time of issuance (or re-issuance per 43 CFR 2806.51(c)), by the amount of power generated on the ROW for that calendar year (43 CFR 2806.52(b)). The BLM may approve the use of an alternative MWh rate in lieu of the MWh rate or the alternative MWh rate when calculating the capacity fee. The formula and a detailed explanation of how to calculate the capacity fee for solar or wind energy ROWs is provided in Attachment 3.  

Capacity Fee Reductions  

Reductions specific to the capacity fee calculation must be approved by the BLM office issuing the ROW in writing before or at the time it issues the ROW. The capacity fee includes a MWh rate reduction (80 percent through 2035) that is applied to all solar and wind energy ROWs, without further action from the BLM, and will generally continue for the term of the ROW, even if that ROW is assigned to another holder. There are two other reductions that may be available to an applicant or existing holder. The Domestic Content reduction reduces capacity fees by 20 percent if the products used in the energy generation facility meet the thresholds identified in the guidance for Buy America Preferences for Infrastructure Projects at 2 CFR part 184 (2806.52(b)(1)(iii)). The PLA reduction provides a 20 percent reduction in capacity fees for projects that use a PLA to develop and construct a solar or wind energy generation facility (2806.52(b)(1)(iv)). As part of a ROW renewal, the holder must provide the BLM with adequate documentation of which reductions would continue to apply to a wind or solar energy development. Each of these reductions are discussed in more detail in Attachment 3.  

Conditional Approval 

Applicants, including existing holders seeking to convert to the new rates, may request conditional approval of the ROW for an alternative MWh rate, Domestic Content reduction, and PLA reduction before grant issuance or re-issuance in accordance with 43 CFR 2806.52(b)(1)(v). The BLM will not accept any requests for conditional approval after issuance or re-issuance of the energy development ROW. Conditional approvals do not go into effect until the holder can satisfactorily demonstrate to the BLM that they have qualified, and the BLM has stated in writing that the facility qualifies. The BLM will include the alternative MWh rate or reductions in the calculation for the capacity fee for the next billing year once the BLM determines, in writing, that the facility qualifies for the reduction. Conditionally approved reductions will not be applied retroactively to the capacity fee for current or prior years’ bills.  

Acreage Rent Schedule and MWh Rate Schedule 

The solar or wind energy acreage rent schedules are attachments 2.a and 2.b, and the MWh rate schedule is attachment 3.a, to this IM. The rate schedules published with this IM are effective for new or re-issued ROWs through 2025. These schedules will be updated at the same time as the linear rent schedule, next occurring for calendar years 2026 through 2030. 

Billing 

For new ROWs, the BLM field, district or state office (the field) responsible for administering the ROW will bill the initial partial year (if any) and the first full year acreage rents consistent with 43 CFR 2806.11 and 43 CFR 2806.12(a)(1)(ii). The field must use the Mineral and Land Record System (MLRS) when generating bills. Until MLRS billing functionality is complete, the field will use the calculation spreadsheet (attachment 4) to calculate the acreage rent and the capacity fee for ROWs. The Accounting Operations Branch of the National Operations Center, Centralized Billing Team Section (OC-625), will bill for subsequent years, including calculating capacity fees using the annual certified statement and determining which is the greater of the acreage rent or capacity fee. The certified annual statement is due to the BLM by October each year. 

Existing ROWs that timely convert to the new rates will first be billed by OC-625 for calendar year 2025 using the attached calculation spreadsheet. The bill will be for the greater of the acreage rent or the capacity fee, not both.