With a goal to spur wind and solar development on public lands, the Bureau of Land Management (BLM) is expected to soon release a new rule that will streamline approval of new renewable energy projects.
First proposed for advance notice and comment in 2011, the rule would amend BLM regulations at 43 C.F.R. §§ 2800 and 2880 and implement, among other things, competitive leasing processes, developer incentives, revised rent and fee schedules and new megawatt (MW) capacity fees for wind and solar energy projects on BLM lands.
The provisions depend on whether the project is located inside or outside “designated leasing areas” (DLAs), as determined by the BLM, which include “preferred areas” for development.
Lands within DLAs will be subject to competitive bidding procedures that provide for variable offsets to developers. Bidding developers may also pre-qualify for the offsets – limited to 20 percent of the high bid – by meeting factors set forth in a Notice of Competitive Offer. While these factors will vary from lease to lease, they may include whether the developer has a power purchase or interconnection agreement in place for the project.
Outside DLAs, the proposed rule amends existing regulations to create a competitive bidding process specifically applicable to wind and solar project development. Currently, BLM regulations only provide for competitive bidding where there are “competing applications for the same facility or system.” Under the new regulations, the BLM will be able to use a competitive bidding process to open new lands to wind and solar project development, with the winning bidder becoming a preferred applicant for the right-of-way to the project site.
To incentivize bidding within DLAs, the proposed rule includes, among other incentives:
- Reduced application fees, with a $5 per acre “nomination fee” within DLAs, as opposed to a $15 per acre application fee outside DLAs.
- Streamlined processing and environmental review of projects within DLAs.
- A 30-year fixed lease term within DLAs. Leases outside DLAs are available for up to 30-years, subject to adjustable terms and conditions.
- A 10-year phase-in of the MW capacity fee, outlined below, rather than a three-year phase-in for facilities outside DLAs.
- Standard bonding requirements of $10,000 per acre and $20,000 per acre for solar and wind energy developments, respectively. Outside DLAs, the bond requirement is based on the reclamation cost estimate minimum bond.
Rent and Fees
Updated annual rent schedules are provided for in the proposed rule. These schedules are based on the approved acreage for the development, with a 10 percent encumbrance value for wind projects and a 100 percent encumbrance for solar projects.
MW Capacity Fee
Additionally, the proposed rule establishes a MW capacity fee, based on the approved project MW, average wholesale energy prices, the federal rate of return per a 20-year treasury bond, and the project’s capacity factor, set at:
- 20 percent for solar photovoltaic,
- 25 percent for concentrated solar power,
- 30 percent for concentrated solar power plus storage, and
- 35 percent for wind.
BLM explains that the MW capacity fee is intended to “capture the increased value of a solar or wind energy project on the public lands above the rural land value captured by the acreage rent.”
BLM is implementing the wind and solar energy development rules pursuant to the President’s Climate Action Plan, announced in 2013, which uses “existing authorities to reduce carbon pollution, increase energy efficiency, expand renewable and other low-carbon energy sources and strengthen resilience to extreme weather and other climate impacts.”
Since 2009, the BLM has approved an aggregate capacity of over 9,700 MW in solar, 4,700 MW in wind, and 600 MW in geothermal projects, for a total of approximately 15,000 MW of renewable energy. In 2016 and 2017, BLM expects to review proposals for seven renewable energy projects, including five solar and two geothermal, with generation capacity of approximately 1,300 MW.
We will continue to track this issue, and will report back with readers once the proposed rule has been finalized.
 79 Fed. Reg. 59,022 (Sept. 30, 2014).
 Id. at 59,022-023.
 Id. at 59,024.
 See BLM, Competitive Solar and Wind Energy Leasing Regulations, available at http://www.blm.gov/style/medialib/blm/wo/MINERALS__REALTY__AND_RESOURCE_PROTECTION_/energy/solar_and_wind.Par.70101.File.dat/Public%20Webinar%20Dec%203%202014%20-%20Solar%20and%20Wind%20Regulations.pdf.
 79 Fed. Reg. at 59,023.
 BLM Press Release, Secretary Jewell Announces Competitive Leasing Policy to Encourage Solar and Wind Energy Development on Public Lands, Create Greater Certainty for Developers, Sept. 25 2014, available at http://www.blm.gov/wo/st/en/info/newsroom/2014/september/nr_09_25_2014.html.
 See BLM, Renewable Energy Projects Approved Since the Beginning of Calendar Year 2009, available at http://www.blm.gov/wo/st/en/prog/energy/renewable_energy/Renewable_Energy_Projects_Approved_to_Date.html.
 See BLM, 2016-2017 Renewable Energy Projects, available at http://www.blm.gov/wo/st/en/prog/energy/renewable_energy/2014-15_Renewable_Energy_Projects.html.