§ 2806.52 Annual rents and fees for solar and wind energy development. You must pay the greater of either an annual acreage rent or a capacity fee. The acreage rent and capacity fee are determined as follows: ( a ) *Acreage rent.* The BLM will calculate the acreage rent for your grant or lease by multiplying the number of acres of the authorized area (rounded up to the nearest tenth of an acre) by the annual per-acre rate for the year in which the payment is due. ( 1 ) *Per-acre rate.* The annual per-acre rate for your grant or lease is calculated using the State per-acre value from the solar or wind energy acreage rent schedule, the encumbrance factor, the year of the grant or lease term, and the annual adjustment factor. The calculation for determining the annual per-acre rate is A × B × [(1 + C) ^ D] where: ( i ) A is the state per-acre value from the solar or wind energy acreage rent schedule published by the BLM for the year on which your right-of-way grant or lease is issued and is based on the National Agricultural Statistics Service (NASS) Survey of Pastureland Rents. The BLM will prepare the rent schedule by averaging the NASS reported pastureland rents for the most recent 5-year period, using only those years for which rent is reported by NASS. The BLM will update the rent schedule every 5 years consistent with the timing of rent adjustments under § 2806.22.
( ii ) B is the encumbrance factor, which is 100 percent for solar energy and 5 percent for wind energy;
( iii ) C is the annual adjustment factor, which is 3 percent; and,
( iv ) D is the year of the grant or lease term, which is the number of years the grant or lease has been authorized. For example, the first year (whether partial or full year) would be 0 and the second year would be 1.
( 2 ) You may obtain a copy of the current solar or wind energy acreage rent schedule from any BLM state, district, or field office or by writing the address found under § 2804.14(c) of this part, Attention: Renewable Energy Coordination Office. The BLM also posts the current solar energy acreage rent schedule at *http://www.blm.gov .*
( b ) *Capacity fee.* ( 1 ) The capacity fee is calculated using the MWh rate or the alternative MWh rate, the MWh rate reduction, the domestic content reduction, the Project Labor Agreement (PLA) reduction, the rate of return, the year of the grant or lease, the annual adjustment factor, and the annual power generated on the right-of-way. You must pay the capacity fee annually, beginning the year in which electricity generation begins or is scheduled to begin in the approved POD, whichever comes first, unless the acreage rent (see paragraph (a) of this section) exceeds the capacity fee in a given year. The calculation for determining the capacity fee is A × B × C × D × [(1 + E) ^F] × G × H where: ( i ) A is the *MWh rate* or the *alternative MWh rate.* The MWh rate is the annual weighted average wholesale price per MWh for the major trading hubs serving the 11 Western States of the continental United States for the full 5 calendar-year period preceding the year in which your grant or lease was issued, rounded to the nearest dollar increment (see paragraph (7)). An Alternative MWh rate may be approved by the BLM if you have entered into a power purchase agreement, such as with a utility, and that rate is lower than the MWh rate. You must provide proof of the lower rate to the BLM, and if the BLM determines the lower rate is appropriate, the alternative MWh rate will be used in place of the MWh rate.
( ii ) B is the *MWh rate reduction,* which is equal to 80 percent for fee payments due before 2036. Starting 2036, the MWh rate reduction for new authorizations transitions to 20 percent, as follows: Table 1 to Paragraph (b)(1)(ii)
Calendar year
MWh rate
reduction
(%)
B—
calculation
multiplier
(%) 2035
80
20 2036
60
40 2037
40
60 2038 and beyond
20
80
( iii ) C is the *Domestic Content reduction,* which is equal to 1.0 for fee payments when a holder's project does not qualify for the domestic content reduction. C is equal to 0.8 when the holder can demonstrate that a facility qualifies for the domestic content reduction. A facility qualifies for the domestic content reduction if a holder documents that the facility would qualify as “Produced in the United States”, consistent with 2 CFR part 184.
( iv ) D is the factor for the *Project Labor Agreement reduction,* which is equal to 1.0 for fee payments when the holder does not execute a PLA. D is equal to 0.8 if the holder executes a PLA for the construction of the project.
( v ) *Request for conditional approval: Alternative MWh rate, Domestic Content reduction and PLA reduction.* The alternative MWh rate, the Domestic Content reduction and PLA reduction (paragraphs (b)(1)(ii) and (iii) and (iv) of this section) may only be applied if a request for conditional approval is received by the BLM prior to the issuance of a grant or lease. A request for conditional approval must be submitted with sufficient documentation to demonstrate that the development qualifies or may later qualify for the rate reductions. A request for conditional approval is subject to the holder demonstrating, to the satisfaction of the BLM's Authorized Officer, that the development qualifies. If energy generation begins before the holder has demonstrated that the facility qualifies, the BLM will charge the holder the full capacity fee, without the alternative MWh rate, Domestic Content reduction, or PLA reduction. The capacity fee may be updated for subsequent calendar years after the holder demonstrates that the facility qualifies, but the BLM will not refund past payments made before the alternative MWh rate, domestic content reduction, or PLA reduction went into effect.
( 2 ) E is the annual adjustment factor, which is 3 percent.
( 3 ) F is the year of the grant or lease term, which is the number of years the grant or lease has been authorized. For example, the first year (whether partial or full year) would be 0 and the second year would be 1.
( 4 ) G is the rate of return, which is 7 percent.
( 5 ) H is the annual energy generated on the right-of-way and will be provided to the BLM by the grant or leaseholder in an annual certified statement. The BLM will bill to coincide with the start of the calendar year. The first-year payment in advance will be based on estimated energy generation and the BLM will determine final payment for the first year based on actual energy generation. Subsequent payments in advance will be based on the most recent calendar year's actual energy generation reported on the certified statement, unless exception is approved in paragraph (vi) of this section. ( i ) The holder must submit the annual certified statement to the BLM before the first year of energy generation begins or is scheduled to begin as approved in the Plan of Development, whichever comes first. Certified annual statements must be submitted to the BLM by October, each year.
( ii ) Prior to the start of energy generation, the holder must submit to the BLM in the certified statement the estimated energy generation of the development for the first year.
( iii ) Once energy generation has begun, the holder must submit to the BLM in the certified statement the most recent calendar year's actual energy generation of the development.
( iv ) The BLM will calculate the capacity fee from the certified statement. For projects that include generation on public and non-public lands, the holder will prorate the total energy generation by the percentage of the right-of-way footprint on public lands relative to the total development area footprint.
( v ) If the year's actual energy generation exceeds or is less than the amount of energy generation used to bill for the payment in advance, the holder will be billed, credited, or refunded for the underpayment or overpayments pursuant to §§ 2806.13(e) and 2806.16. In no event will the total payment be less than the annual acreage rent.
( vi ) The BLM may approve a request made by a right-of-way holder to provide a new estimate of energy generation to the BLM in the annual certified statement to use for billing the next year's payment in advance if: the right-of-way holder has planned maintenance activities, or other interruptions to energy generation, that would reduce the amount of energy generated by 25 percent or more; or, the right-of-way holder is aware that the energy generation in the subsequent year will exceed the actual energy generation for the previous year by 25 percent or more. See § 2805.12(c)(8)(i) through (iii) for the steps to follow when failing to meet diligent operation requirements.
( vii ) If the right-of-way holder underestimates energy generation by 25 percent or more of the actual energy generation or does not provide the BLM with a new estimate when energy production will exceed the previous year's actual production by more than 25 percent, the BLM may assess the holder a late payment fee of 10 percent of the actual generation for each year of underestimation. This section applies unless the BLM has approved a request to provide a new estimate under § 2806.52(b)(5)(vi), and the approved new estimate does not underestimate energy generation by 25 percent or more of actual energy generation or if the holder can provide the BLM with justification consistent with § 2805.12(e).
( 6 ) *MWh rate schedule.* You may obtain a copy of the current MWh rate schedule from any BLM state, district, or field office or by writing the address found under § 2804.14(c) of this part, Attention: Renewable Energy Coordination Office. The BLM also posts the current MWh rate schedule at *http://www.blm.gov .*
( 7 ) *Periodic adjustments.* ( i ) The MWh rate applicable to your right-of-way will be the MWh rate in effect the first year for your grant or lease and will not be updated with subsequent MWh rate schedule adjustments. The MWh rate applicable to your right-of-way will only be updated each year by the annual adjustment factor under paragraph (b)(2) of this section.
( ii ) The MWh rate schedule for new grants and leases will be adjusted once every 5 years consistent with the timing of rent adjustments under § 2806.22 of this part and consistent with paragraph (b)(1) of this section.
( 8 ) The general payment provisions for rents described in this subpart, except for § 2806.14(a)(4), also apply to the capacity fee.
( c ) *Implementation of the acreage rent and capacity fee.* The rates for acreage rent and capacity fees apply to all grants and leases issued after the effective date of this rule, and to existing grants and leases if the holder elects to continue paying under the rate setting methodology established at the time of your authorization per § 2806.51(c).
( d ) *Scheduled rate adjustment.* Under the scheduled rate adjustment method (see § 2806.51), the BLM will update your per acre zone rate and MW rate as follows: ( 1 ) The BLM will calculate your payments using the per acre zone rate (see § 2806.52(a)(1)) and MW rate (see § 2806.52(b)(1)) in place when your grant is issued, or for existing grants, the per acre zone rate and MW rate in place prior to December 19, 2016, as adjusted under paragraph (d)(6) of this section;
( 2 ) The per acre zone rate will increase: ( i ) Annually, beginning after the first full calendar year plus any initial partial year following issuance of your grant, by the average annual change in the IPD-GDP as described in § 2806.22(b); and
( ii ) Every 5 years, beginning after the first 5 calendar years, plus any initial partial year, following issuance of your grant, by 20 percent;
( 3 ) The MW rate will increase by 20 percent every 5 years, beginning after the first 5 years, plus the initial partial year, if any, your grant is in effect;
( 4 ) The BLM will not apply the phase-in to your MW rate under § 2806.52(b)(4) or the reduction under § 2806.52(c);
( 5 ) If the approved POD for your project provides for staged development, the BLM will calculate the MW capacity fee using the MW capacity approved for the current stage plus any previously approved stages, multiplied by the MW rate, as described under this section.
( 6 ) For grants in place prior to January 18, 2017 that select the scheduled rate adjustment method offered under § 2806.51(c), the per acre zone rate and the MW rate in place prior to December 19, 2016 will be adjusted for the first year's payment using the scheduled rate adjustment method as follows: ( i ) The per acre zone rate will increase by the average annual change in the IPD-GDP as described in § 2806.22(b) plus 20 percent;
( ii ) The MW rate will increase by 20 percent; and
( iii ) Subsequent increases will be performed as set forth in paragraphs (d)(2) and (3) of this section from the date of the initial adjustment under this paragraph (d).
[81 FR 92217, Dec. 19, 2016, as amended at 89 FR 25964, Apr. 12, 2024; 89 FR 35680, May 1, 2024]