Rights-of-Way, Leasing, and Operations for Renewable Energy rule (2024)

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The Rights-of-Way, Leasing, and Operations for Renewable Energy rule is a significant rule issued by the Bureau of Land Management (BLM) effective July 1, 2024, that reduced acreage rental and capacity fees for new and existing wind and solar energy authorizations and expanded BLM's discretion in processing applications for solar and wind energy generation rights-of-way inside certain leasing locations. BLM issued this rule pursuant to its authority under the Energy Act of 2020.[1]

HIGHLIGHTS
  • Name: Rights-of-Way, Leasing, and Operations for Renewable Energy
  • Agency: Bureau of Land Management (BLM)
  • Action: Final rule
  • Type of significant rule: Economically significant rule

    • Timeline

    The following timeline details key rulemaking activity:

    Background

    The Energy Act of 2020 authorized the Bureau of Land Management to decrease acreage rental rates and capacity fees for wind and solar authorizations if the secretary found the existing rates increased economic hardship or limited commercial interest in a competitive lease sale or right-of-way grant; BLM was authorized to reduce rental and capacity fees also if the secretary finds that it would maximize the use of wind and solar resources. The Energy Act of 2020 also established a goal of producing 25 gigawatts of electricity from wind, solar, and geothermal energy projects on federal lands by 2025.Cite error: Invalid <ref> tag; invalid names, e.g. too many

    In the 2023 proposed rule, BLM posited that it 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," according to the text of the rule. BLM issued the final rule with the aim to increase energy production on federal land after considering public comments received from the proposed rule.[1]

    Summary of the rule

    The following is a summary of the rule from the rule's entry in the Federal Register:[1]

    “

    This final rule updates procedures governing the BLM's renewable energy and right-of-way programs, focusing on two main topics. The first topic is solar and wind energy generation rents and fees, implementing new authority from the Energy Act of 2020 to 'reduce acreage rental rates and capacity fees, or both, for existing and new wind and solar authorizations' and making certain findings required by the statute. The second topic is expanding agency discretion to process applications for solar and wind energy generation rights-of-way inside designated leasing areas (DLAs). In addition to these two main topics, this final rule makes technical changes, corrections, and clarifications to the regulations. This final rule will update the BLM's procedures governing the BLM's administration of rights-of-way issued under Title V of the Federal Land Policy and Management Act (FLPMA), including for solar and wind energy applications and development authorizations.[2]

    		”

    Summary of provisions

    The following is a summary of the provisions from the rule's entry in the Federal Register:[1]

    “

    The final rule provides that, when issuing a grant or lease for solar or wind energy development, or a renewal of such grant or lease, the BLM will set the per-acre rate and the MWh rate (including applicable reductions). The acreage rent and capacity fee will be adjusted annually, however, using an annual adjustment factor set at the beginning of the grant or lease term. Upon renewal of a right-of-way, the per-acre rate and the MWh rate and reductions would be updated based on the then-current rates, as well as any applicable reductions for which the right-of-way holder qualifies at that time.

    Existing right-of-way holders may elect to continue using their current rate setting methodology, which may be updated periodically for changes in the market, or change to the new rate setting methodology in this final rule. Otherwise, the new rate setting methodology would only apply to new or renewed rights-of-way. If an existing right-of-way holder elects to change to the new rate setting methodology, that methodology will apply until the end of the right-of-way term.

    This final rule bases the capacity fee for solar and wind energy generation facilities on actual energy generation at each facility rather than on nameplate capacity. The BLM believes this change more accurately reflects 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 a particular site. This change to the capacity fee indexes the required payment to the projects' energy generation, being greater when the project generates more energy and less when it generates less.

    This rule improves payment predictability for grant and leaseholders by revising 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 right-of-way is issued. In doing so, the per-acre and MWh rates are set for the term of the right-of-way and only adjusted by the annual adjustment factor and, in the case of the capacity fee, by the holder's actual annual energy production. See preamble §§ 2806.50 and 2805.52 for a more detailed discussion of the BLM's proposed methodology for determining the acreage rent and capacity fee.

    ...

    In this final rule, the BLM clarifies that it will review and process applications, including on a non-competitive basis, for proposed solar and energy generation rights-of-way inside DLAs, which are defined at 43 CFR 2801.5(b). The BLM retains discretion to conduct competitive processes, either inside or outside of DLAs, where the authorized officer decides to do so. In the proposed rule, the BLM used the terms 'competitive offer' and 'competitive process' interchangeably.

    ...

    Under this final rule, if no competitive interest exists for a particular parcel, the BLM may issue leases without a competitive process. This change to the rule provides the BLM with increased flexibility and discretion to issue grants and leases through either competitive or non-competitive processes across all public lands inside and outside of DLAs, which is expected to maximize interest in renewable energy leasing and accelerate the deployment of solar and wind energy on the public lands. See subpart 2809 for a discussion of the competitive process for solar and wind energy.[2]

    		”

    Significant impact

    See also: Significant regulatory action

    Executive Order 12866, issued by President Bill Clinton (D) in 1993, directed the Office of Management and Budget (OMB) to determine which agency rules qualify as significant rules and thus are subject to OMB review.

    Significant rules have had or might have a large impact on the economy, environment, public health, or state or local governments. These actions may also conflict with other rules or presidential priorities. Executive Order 12866 further defined an economically significant rule as a significant rule with an associated economic impact of $100 million or more. Executive Order 14094, issued by President Joe Biden (D) on April 6, 2023, made changes to Executive Order 12866, including referring to economically significant rules as section 3(f)(1) significant rules and raising the monetary threshold for economic significance to $200 million or more.[1]


    The text of the Rights-of-Way, Leasing, and Operations for Renewable Energy rule states that OMB deemed this rule a section 3(f)(1) rule under E.O. 12866, as amended by E.O. 14094:

    “

    OIRA has determined that this final rule is a 'significant regulatory action' within the scope of E.O. 12866, as amended by E.O. 14094.

    The BLM's Regulatory Impact Analysis concluded that the rule may have an annual effect on the economy of $200 million or more.[2]

    		”

    Text of the rule

    The full text of the rule is available below:[1]

    See also

    External links

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 Federal Register, "Rights-of-Way, Leasing, and Operations for Renewable Energy," May 21, 2024
    2. ↑ 2.0 2.1 2.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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