1

Economic and Threshold Analysis

for

Revisions to 43 CFR Parts 2800 and 2880

and New Subpart 2809

Competitive Processes, Terms, and Conditions for Leasing Public Lands for Solar and Wind 

Energy Development and Technical Changes and Corrections for 43 CFR Parts 2800 and 2880

Introduction

The Bureau of Land Management (BLM) proposes to amend its existing rights-of-way (ROW) 

regulations to facilitate responsible solar and wind energy development. Among other things, 

the rule would promote the use of designated leasing areas for solar and wind energy 

development and establish competitive processes for issuing solar and wind energy development 

ROWs inside and outside designated leasing areas. It would establish terms and conditions, 

including rent, fee, and bonding requirements. It would also clarify existing regulations and 

codify policies that are already in effect and make the 2880 regulations, to the extent possible, 

consistent with the changes to the 2800 regulations. 

Statutes and Executive Orders

1

require an agency proposing a significant regulatory action to 

provide a qualitative and quantitative assessment of the anticipated costs and benefits of that 

action. Executive Order 12866 requires agencies to assess the benefits and costs of regulatory 

actions, and, for significant regulatory actions, submit a detailed report of their assessment to the 

Office of Management and Budget (OMB) for review. Under Executive Order 12866, a

significant regulatory action is any rule that may:

 Have an annual effect on the economy of $100 million or more or adversely affect in a 

material way the economy, a sector of the economy, productivity, competition, jobs, the 

environment, public health, safety, or State, local, or tribal governments or communities;

 Create a serious inconsistency or otherwise interfere with an action taken or planned by 

another agency;

 Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs

or the rights and obligations of recipients thereof; or

 Raise novel legal or policy issues arising out of legal mandates, the President’s priorities, 

or the principles set forth in the Executive Order.

OMB has determined that this rule is significant because it could raise novel policy or legal 

issues.

For a major rule, as defined by the Small Business Regulatory Enforcement Fairness Act 

(SBREFA), the agency must prepare an initial regulatory flexibility analysis. For SBREFA, a 

rule may be major and require a deeper analysis if it may:

 

1 Executive Order 12866, Regulatory Planning and Review, the Unfunded Mandates Reform Act, and the Small 

Business Regulatory Enforcement Fairness Act.
2

 Have an annual effect on the economy of $100 million or more;

 Create a major increase in costs or prices for consumers, individual industries, Federal, 

State, or local government agencies, or geographic regions; or

 Have significant adverse effects on competition, employment, investment, productivity, 

innovation, or on the ability of United States-based enterprises to compete with foreignbased enterprises in domestic and export markets.

The Regulatory Flexibility Act (RFA) requires that agencies analyze the economic impact of 

proposed and final regulations to determine the extent to which there is a significant economic 

impact on a substantial number of small entities. The RFA establishes an analytical process for 

determining how agencies can best achieve public policy goals without erecting barriers to 

competition, stifling innovation, or imposing undue burdens on small entities. 

Executive Order 13272 reinforces executive intent that agencies give serious attention to impacts 

on small entities and develop regulatory alternatives to reduce the regulatory burden on small 

entities. When the proposed regulation will impose a significant economic impact on a 

substantial number of small entities, the agency must evaluate alternatives that would accomplish 

the objectives of the rule without unduly burdening small entities. Inherent in the RFA is a 

desire to remove barriers to competition and encourage agencies to consider ways of tailoring 

regulations to the size of the regulated entities.

In order to certify a rule as having “no impact” under the RFA, an agency must describe the 

affected entities and the impacts, and in that description clearly justify the certification. The 

agency should state explicitly its reasoning and assumptions underlying its certification in order 

to obtain appropriate public comment. The agency could use this information to re-evaluate the 

certification.2

Statement of Need

The BLM believes that the rule would allow it to operate more efficiently and meet the 

renewable energy goals placed on the program. It would also address some of the 

recommendations made by the Office of the Inspector General (OIG) in a 2012 report titled 

“Bureau of Land Management’s Renewable Energy Program: A Critical Point in Renewable 

Energy Development.”3

In 2005, Congress passed the Energy Policy Act (EPAct) and encouraged the Secretary of the 

Interior (Secretary) to approve at least 10,000 megawatts (MW) of non-hydropower renewable 

energy projects within 10 years of enactment.4 The BLM met that goal in 2012 by approving 

over 12,000 MWs of renewable energy. 

 

2 U.S. Small Business Administration, Office of Advocacy, A Guide for Government Agencies: How to Comply 

with the Regulatory Flexibility Act, May 2003, (http://www.sba.gov/advo/laws/rfaguide.pdf ).

3 OIG Report CR-EV-BLM-0004-2010. Available on the web at http://www.doi.gov/oig/reports/upload/CR-EVBLM-0004-2010Public.pdf.

4

See Section 211, Public Law 109-58, 119 Stat. 660 (2005).
3

Since Congress passed the EPAct, the Secretary issued several Secretarial Orders (SO) 

reiterating that renewable energy development is a continuing Federal priority. The Secretary 

signed SO No. 3283, “Enhancing Renewable Energy Development on the Public Lands,” on 

January 16, 2009. This SO facilitates the Department of the Interior’s (DOI) efforts to achieve 

the goal established by Congress in Section 209 of the EPAct. The Secretary signed SO No. 

3285, “Renewable Energy Development by the Department of the Interior” on March 11, 2009. 

It describes the need for strategic planning and a balanced approach to domestic resource 

development. It was amended by SO No. 3285A1, “Renewable Energy Development by the 

Department of the Interior,” in February 2010. It establishes the development of renewable 

energy on public lands as one of the DOI’s highest priorities.

On June 25, 2013, the President announced the release of the Climate Action Plan to reduce 

carbon pollution, prepare the U.S. for the impacts of climate change, and lead international 

efforts to address global climate change. The Climate Action Plan established a new goal for the 

DOI: To permit enough renewable electricity generation on public lands to power more than 6 

million homes by 2020. This goal will require the approval of 20,000 megawatts (MW) of 

renewable energy projects on the public lands by 2020.

In addition to these policy statements, a 2012 report by the DOI’s Office of the Inspector General 

(OIG)included a number of recommendations for the BLM renewable energy program. These 

recommendations addressed, among other things, competitive leasing of renewable energy, rent, 

bonding, and Federal procedure. Specifically, the OIG recommended that the BLM should:

 Develop and implement procedures to ensure collection of the current rental rate on all 

existing wind energy developments;

 Determine if it could retroactively collect wind revenues;

 Require a bond for all wind and solar projects;

 Reassess the minimum bond requirements;

 Track and manage bond information;

 Develop and implement procedures that if a project is assigned, the first bond would be 

returned to the initial company and a bond would be received from the newly assigned 

company; and

 Develop and implement Bureau-wide guidance for using competitive bidding on wind 

and solar ROWs.

The recommendation regarding a competitive bidding process is one of the principal reasons for 

this rulemaking effort. The BLM has also adopted in the proposed rule some of the 

recommendations regarding bonding.

Background

The BLM, as the land management agency with the responsibility to manage the largest 

inventory of public land within the Federal Government, is leading Federal agencies in 

establishing procedural and regulatory matters for the development of renewable energy. 

Renewable energy development includes wind, solar, geothermal, and biomass projects and the 
4

siting of connected ancillary facilities such as electric transmission lines needed to deliver this 

power to the consumer. 

In June 24, 2005, the BLM completed the Final Programmatic Environmental Impact Statement 

on Wind Energy Development on BLM-Administered Lands in the Western United States 

relating to the authorization of wind energy projects on public lands. The Wind Final 

Programmatic Environmental Impact Statement (EIS) analyzed the environmental impact of the 

development of wind energy projects on public lands in the West and identified approximately 

20.6 million acres of public lands with wind energy development potential. The Final Wind 

Programmatic EIS and associated Record of Decision (ROD) support the BLM wind energy 

development program and best management practices, including requirements such as bonding 

for wind energy projects. 

The Draft Solar Programmatic EIS described how the BLM might offer lands inside designated 

solar energy zones (designated leasing areas) for development on a competitive basis. The 

Supplement to the Draft Solar EIS and Final Solar Programmatic EIS, published on October 28, 

2011 and July 27, 2012, respectively, and the Solar Programmatic EIS ROD, issued on October 

12, 2012, further discuss competitive leasing. The Final Solar EIS identified 17 solar energy 

zones on BLM-managed lands and explained the requirements for solar energy development on 

the public lands, including bonding, rental, competition, nomination of lands, and filing fees.

Wind Energy

The BLM has identified approximately 21 million acres of public lands having wind energy 

development potential. The BLM can approve wind energy development on BLM-administered 

lands under Title V of the Federal Land Policy and Management Act of 1976 (FLPMA) if the 

proposed project is consistent with BLM land use planning. As of May 23, 2013, the BLM 

approved 33 utility-scale wind energy facilities on public lands in California, Wyoming, 

Arizona, Oregon, and Utah, with a total installed capacity of 917 MWs.

There are currently 32 wind energy ROW applications covering approximately 380,000 acres of 

public lands in Arizona, California, Idaho, Nevada, Oregon, Utah, and Wyoming (Table 1 -

Wind Energy Right-of-Way Applications).

Table 1 -Wind Energy Right-of-Way Applications

State Number of Applications Acres

Arizona 1 37,816

California 8 64,447

Idaho 2 15,271

Nevada 7 54,912

Oregon 5 48,233

Utah 4 32,285

Wyoming 5 127,187

Total 32 380,152

Source: BLM, Legacy Rehost System (LR2000), December 18, 2013.
5

Typically, an applicant must reimburse the BLM for its costs in processing the application. If the 

BLM approves a project, the BLM will issue a ROW grant to the applicant for a specified term, 

typically up to 30 years. All projects require environmental review under the National 

Environmental Policy Act (NEPA).

Solar Energy

The BLM has identified approximately 19 million acres of public lands having solar energy 

development potential. The BLM can approve solar energy development on BLM-administered 

lands under Title V of FLPMA if the proposed project is consistent with the BLM’s land use 

plans for a given area. As of December 18, 2013, the BLM had approved 16 utility-scale 

projects with capacities of 20 MWs or greater on public lands. These projects will generate 

electricity that is delivered into the electricity transmission grid. The BLM expects to issue final 

authorization for several additional projects before the end of calendar year 2014.

On December 18, 2013, the BLM had 62 active applications pending for utility-scale solar 

energy projects in Arizona, California, and Nevada that involve approximately 492,037 acres of 

land.

Table 2 - Solar Energy Right-of-Way Applications

State Number of 

Applications

Acres

Arizona 7 62,434

California 28 129,982

Nevada 27 187,378

Total 62 379,794

Source: BLM, LR 2000, December 18, 2013.

Like proposed wind energy projects, the applicant must reimburse the BLM for its costs in 

processing the application and all projects require an environmental review under NEPA. If the 

BLM approves a project, the BLM will issue a ROW grant to the applicant for a specified term, 

typically 30 years. 

The Solar Programmatic EIS, coauthored by the BLM and the Department of Energy, covers the 

potential development of solar energy projects within the six southwestern states (Arizona, 

California, Colorado, New Mexico, Nevada, and Utah). In addition to this programmatic effort, 

the BLM established 17 solar energy zones (two in Arizona, two in California, four in Colorado, 

five in Nevada, one in New Mexico, and three in Utah) that have received in-depth 

environmental analysis as part of the Solar Programmatic EIS. The total land area in these zones 

is approximately 285,000 acres. Seven applications inside solar energy zones pre-date the Solar 

Programmatic EIS. The number of these solar applications may decrease as a company may 

choose to withdraw its application or fail to meet agency due-diligence requirements.
6

On July 5, 2013, the Secretary withdrew 303,900 acres of public land in the solar energy zones, 

for a period of 20 years, from location or entry under the mining laws on behalf of the BLM to 

protect and preserve solar energy zones for future solar energy development. Previously, as part 

of the withdrawal process, the lands were segregated for up to 2 years from surface entry and 

mining while various studies and analyses were made to support a final decision on the Solar 

Programmatic EIS. The lands remained open to the land disposal, mineral leasing, and mineral 

material laws.

5

The Arizona Restoration Design Energy Project supports the Secretary’s goals for renewable 

energy. In addition to this state-specific programmatic effort, the BLM established two

additional solar energy zones in Arizona that received in-depth environmental analysis. 

The lands within the solar energy ROW applications in southern California are within the BLM 

California Desert District (CDD). Public lands within the CDD are used or are available for 

electrical power generating plants, high-capacity power transmission lines, oil and gas pipelines, 

communication sites, transportation routes, conservation purposes, and a wide range of 

recreational uses. 

Most of the lands within the solar energy ROW applications in southern Nevada are within the 

BLM Southern Nevada District. The Department of the Interior has withdrawn a large 

percentage of the lands within the District for military purposes, and the BLM manages most of 

the remainder for multiple uses. However, the proximity of the public lands to the Las Vegas 

metropolitan area has a significant effect on those uses. 

The BLM Lake Havasu, Yuma, Hassayampa, and Lower Sonoran Field Offices administer most 

of the lands within the solar energy ROW applications in southwestern Arizona. The BLM 

manages these public lands primarily for multiple resource uses, including appropriation under 

the public land laws. In 2008, BLM Arizona experienced a rush of ROW applications for solar 

facilities on the 12.2 million acres of public land in the State. Interest in using public lands for 

solar development continues. 

Summary of Proposed Rule

The proposed rule would amend existing regulations at 43 CFR parts 2800 and 2880 to establish 

a competitive offer process for solar and wind energy development on public lands and would 

also amend regulations pertaining to ROWs for any transmission line 100 kV or more, or for any 

pipeline 10 inches or more in diameter. Part 2800 applies to ROWs under the FLPMA and Part

2880 applies to ROWs under the Mineral Leasing Act. The rule would make technical 

adjustments and changes, corrections, and clarifications within 43 CFR part 2800 to incorporate 

existing requirements previously made through policy and establish the competitive offer process 

for solar and wind energy. The rule would make additional technical adjustments to 43 CFR part 

2880 to maintain continuity in BLM administrative procedures regarding the competitive offer 

process adjustments made to part 2800. 

 

5

74 FR 31308, June 30, 2009.
7

The BLM examined all of the proposed provisions and determined that some would have an 

economic impact. Table 3 briefly summarizes these instances. In addition, we believe that some 

provisions would have an economic impact, but the impact is too speculative to quantify. 

Table 3 - Provisions Estimated to have Economic Impacts

Existing Regulations Proposed Regulations Importance of the 

Change

Incremental Change6

Cost Recovery

BLM assumes costs for

pre-application 

meetings.

Would require 

prospective applicants 

to pay reasonable7or 

actual costs associated 

with pre-application 

meetings for solar and 

wind energy 

development, any 

transmission line 100 

kV or more, or for any 

pipeline 10 inches or 

more in diameter.

Transfers burden 

of the BLM preapplication 

expenses from the 

public to the 

potential applicant.

Pre-application 

meetings cost 

estimates range from 

$5,000 - $15,000 per 

project with the 

average cost being 

$5,000. These costs 

would apply to 

applications outside of 

designated leasing 

areas only.

Based on an 

anticipated 20 projects 

per year, the average 

annual increase in cost 

to potential operators

is $100,000. 

Application / Nomination

BLM does not require 

filing fees when filing a 

solar or wind energy 

application.

Would require 

applicant to pay a 

nonrefundable 

application filing fee of 

$15 per acre for solar 

and wind energy 

development or 

assignment and $2 per 

acre for wind energy 

testing applications. 

Establishes 

requirements to 

discourage

speculation and 

limits the ability to 

tie up the public 

land with an 

application.

Estimated Annual 

cost:

Testing Applications: 

$480,000 per year.

Development 

Applications: 

$990,000 per year.

 

6

Figures presented in Economic Difference column are discussed in detail in the Direct Economic Impacts section 

below and summarized in the Table 11 in the Conclusion section below.

7

Section 304(b) of FLPMA requires that all reasonable costs be recovered.
8

Existing Regulations Proposed Regulations Importance of the 

Change

Incremental Change6

BLM does not require 

payment of costs 

associated with 

nominating a 

competitive lease site.

Would require a 

nonrefundable $5 per 

acre nomination fee for 

solar and wind energy 

leases inside

designated leasing 

areas. 

Supports a 

nominee’s 

selection of 

specific lease area. 

Estimated cost:

$30,000 per year.

Bonding

Existing policy requires 

bonding for solar and 

wind energy 

authorizations based on 

a reclamation cost 

estimate. 

Would increase the 

minimum bond amount 

for wind turbines to 

$20,000 per turbine 

and establish a 

minimum bond amount 

for solar development 

at $10,000 per acre. 

The final bond amount 

for a project would be 

the greater of either the 

reclamation cost 

estimate or the 

minimum bond 

amount. 

Establishes a 

higher minimum 

bond amount to 

account for current 

cost.

We would expect this 

provision to have no 

impact, as it would 

only increase the bond 

amount for projects 

where the minimum 

bond amount exceeds 

the reclamation cost 

estimate.

Existing regulations do 

not address standard 

bond amounts for solar 

or wind projects in 

designated leasing 

areas.

Would establish a 

standard bond amount 

of $20,000 per wind 

turbine and $10,000 

per acre for solar 

development.

No reclamation cost 

estimate is used in 

establishing bond 

amount inside 

designated leasing 

areas.

Increase certainty 

of project costs to 

bidders.

We would expect cost 

savings to operators as 

the standard bond 

amount required is 

generally less than a

reclamation cost 

estimate.

This provision would 

only increase the bond 

amount for projects 

where the standard 

bond amount would 

exceed the 

reclamation cost 

estimate (if it had been 

required).

Rents and Fees
9

Existing Regulations Proposed Regulations Importance of the 

Change

Incremental Change6

Existing regulations 

have a rent late fee of 

$25 or 10 percent of the 

rent owed, not to exceed 

$500.

Would remove the late 

fee cap of $500. 

Incentivize timely 

rent payment.

Based on historic late 

payment fees, 

$480,000 per year 

increase in late 

payment fees. 

Existing policies 

establish the solar and 

wind MW capacity fee 

calculations using a rate 

of return.

Would establish a 

minimum of 4 percent 

for the rate of return.

Ensures that the 

rate of return will 

be no less than the 

minimum.

Historically, rates 

have been higher than 

the proposed 

minimum. Therefore 

we anticipate reduced 

costs for operators.

Existing policies set the 

rent for wind project 

area site testing at a 

minimum of $1,000 per 

authorization or $1 per 

acre, whichever is 

greater.

Would increase the 

rental amount for wind 

project area site testing 

authorizations to a 

$2,000 minimum or $2 

per acre, whichever is 

greater 

Updates rent to 

current market 

conditions.

Estimated $1,212,000

per year increase in 

rental.

Existing policies set the 

MW capacity fee for 

wind energy 

development at $4,155 

per MW. 

Would increase the 

megawatt capacity fee

to $6,209 per MW.

Updated to reflect 

current market 

conditions.

Additional fee will be 

$2,054 per MW per 

year for projects 

Estimated total cost 

range from $980,000 

to $7.33 million per 

year.

No current acreage 

rental for wind energy.

Would establish an 

acreage rent utilizing 

the county rates 

established under 

existing rules at 

43 CFR 2806.20.

Establishes a new 

rental requirement.

$2,916,000 additional 

rent per year.

Existing regulations do 

not address acreage 

rental for solar energy. 

Existing policy

establishes acreage rent

on a county-by-county 

basis using 2010 data.

Would adjust 

concurrently with the 

rental schedule for 

linear rights-of-way.

Provides consistent 

acreage rental 

determinations 

methodologies. 

Generally, an 

additional $33.86 

per acre in rental.

$3,248,000 increase in 

rent per year
10

Existing Regulations Proposed Regulations Importance of the 

Change

Incremental Change6

Existing policy

establishes a phased-in

solar energy MW 

capacity fee where a 

percent of the capacity 

rent is owed, as follows:

Year 1, 20%;

Year 2, 40%;

Year 3, 60%;

Year 4, 80%; and

Year 5 and beyond, 

100%

Would shorten the

phase-in period to 

three years, as follows:

Year 1, 25%;

Year 2, 50%; and

Year 3 and beyond, 

100%;

Accelerates the 

phase-in for 

capacity rent for 

solar operations.

For a solar operation, 

the accelerated phasein would increase the 

MW capacity fee by

$394 in year one, $788 

in year two, $3,154 in 

year three and $1,576

in year four. The rent 

would be the same in 

year five and beyond 

as it is under the 

existing rule.

Existing policy charges 

on a per MW basis, and 

specifies the solar 

energy MW capacity fee 

based on the type of 

technology: 

photovoltaic (PV);

concentrated

photovoltaic or solar 

power without storage 

(CPV); or concentrated 

solar power with storage 

over three hours (CSP).

Establishes the solar 

capacity rent in 

regulation and updates 

the fees.

Updates the rent to 

reflect current 

market conditions.

Annual decrease of 

$2,562/MW after year 

four.

$14.12 million 

prospective decrease 

in rent per year for 

MWs that are 

approved, but not in 

production.

$615,000 decrease 

annually to 

prospective solar rent.

Competitive Offer

Competitive bidding 

process is not 

established by existing 

regulations.

Would establish 

competitive processes 

for solar and wind 

energy development 

inside and outside 

designated leasing 

areas.

Facilitates an 

orderly 

competitive 

process.

No defensible way to 

estimate or calculate 

what the economic 

impact might be.

Existing regulations do 

not provide for 

competitive leasing, as 

such minimum bid 

criteria is not 

established by existing 

regulations or policy.

Would establish 

minimum bid criteria 

for competitive offers.

Provide basis for 

minimum cost of a 

competitive offer.

$50,000 annually for 

minimum bid.
11

Existing Regulations Proposed Regulations Importance of the 

Change

Incremental Change6

Bonus bid is not 

established by existing 

regulations.

Would provide for 

bonus bid within 

competitive offer.

Provide for highest 

bid cost of a 

competitive offer.

Annual bonus bid $4.8

million.

Variable offset is not 

established by existing 

regulations.

Would establish 

potential offsets within 

the competitive 

bidding.

Incentivizes 

prospective bidder 

interest in 

competitive offers.

The estimated total 

cost may range from 

zero dollars to 

$960,000 per year.

Existing regulations 

allow a competitive 

process for all ROWs 

only when there are two 

or more competing 

applications.

Would establish that

the BLM may also 

hold a competitive 

offer on its own 

initiative.

Allow the BLM to 

initiate competitive 

offer for all ROWs 

when the agency is 

prepared.

No defensible way to 

estimate or calculate 

what the economic 

impact might be.

Provisions that were Analyzed and Determined to have no Economic Impact

Many provisions in the proposed rule codify existing requirements that are already established 

by policy. The preamble of the proposed rule provides specific discussions of each section of the 

proposed rule. These provisions do not represent a change and will have no economic impact. 

They are as follows:

 Application – Provision would require no less than two pre-application meetings for solar 

and wind energy generation projects outside of designated leasing areas.

 Application – Provision would require no less than two pre-application meetings for any 

transmission line 100 kV or more, or for any pipeline 10 inches or more in diameter.

 Application – Provision would require that screening criteria be applied to all solar and 

wind applications.

 Application – Provision would require that solar and wind applications be prioritized.

 Application – Provision would require that the BLM evaluate a solar or wind application 

and either deny it or continue to process it.

 Application – Provision would require a POD conforming to the template and a schedule 

for when it would be submitted to the BLM for solar and wind energy, any transmission 

line 100 kV or more, or for any pipeline 10 inches or more in diameter.

 Application – Provision would establish and consolidate the requirements for when a 

ROW holder must notify the BLM.

 Bonding – Provision would require bonds for all wind energy testing and development 

authorizations and all solar energy development authorizations. Bonding would be based 

on the reclamation cost estimate for authorizations outside the designated leasing areas.

 Bonding – Provision clearly restates the requirement that liabilities would continue 

regardless of the amount of bond required by the BLM.

 Rental – Provision would specifically establish when rent may be retroactively collected.
12

 Rental – Provision would establish rental rates specific to wind testing and solar and wind 

energy development in the regulations.

 Rental – Provision would establish a phase-in period for solar and wind energy 

development.

This rule would address pre-application requirements for ROW applications for solar or wind 

energy development projects, any transmission line 100 kV or more, or for any pipeline 10 

inches or more in diameter. Screening criteria would be applied to each solar or wind energy 

ROW application and the applications would be prioritized based on that evaluation. Based upon 

the pre-application meetings, screening criteria and the prioritization of the application, the BLM 

may deny an application prior to a NEPA analysis and its resulting decision. These new 

regulatory requirements do not create any new burden to the lessees/operators, as existing policy 

provides these requirements. 

This rule would require the submittal of a POD to the BLM for all solar or wind energy 

development projects, any transmission line 100 kV or more, or for any pipeline 10 inches or 

more in diameter. The proposed rule would require a schedule at the time of grant or lease 

issuance for the submittal of a POD conforming to the approved template. The BLM currently 

has discretionary authority to require submittal of a POD through existing regulations and policy 

for such developments. The submittal of the schedule is intended to facilitate coordination of 

permit processing activities and reduce costs in the overall process. There is a cost to a ROW 

holder when preparing a POD for a development, but providing a POD to the BLM is currently 

required through policy and practice so there is no change in cost.

This rule would require that a ROW holder contact the BLM under certain circumstances. 

Existing regulations require that the BLM be notified of substantial deviations or changes in 

ownership of the ROW. This rule would codify requirements of existing policy regarding name 

changes in ownership of a ROW facility. The situations described are identified within the 

existing regulations as amendments and assignments. For changes in ownership, this rule 

introduces the policy requirement for name changes, where there are no changes in ownership, 

but the change in the name of the ROW owner. These are existing requirements of the 

regulations and policy and are not an economic impact of this rulemaking.

This rule would require a performance and reclamation bond for a ROW to cover losses and

damages to the environment or property in connection with the ROW and allow for termination 

of the authorization. The BLM uses a reclamation cost estimate to determine the amount of a 

performance and reclamation bond for a ROW outside of a designated leasing area. The 

reclamation cost estimate is specific for each authorization and its unique environmental and 

technological concerns. Therefore, it is problematic to provide an estimated cost of such bond 

instruments beyond the required minimum amounts; the analysis below discusses the costs. 

The proposed rule would establish the annual rental for wind energy authorizations that reflects

current market conditions. This analysis discusses the solar and wind rent amounts below in the 

Direct Economic Impacts section, under the Rental heading.
13

This rule would carry forward the existing requirement that a bond be based on a reclamation 

cost estimate, which determines the costs for reclaiming and restoring the public lands. This 

amount would include the administrative costs for the BLM to administer a contractor to reclaim 

and restore the lands in the authorization. The reclamation cost estimate would only be for 

ROWs outside of designated leasing areas. For a ROW inside a designated leasing area, no 

reclamation cost estimate would be required when bonding is as described below in the Direct 

Economic Impacts section under the heading of Bonding. There is a cost to a ROW holder when 

preparing a reclamation cost estimate. However, providing a reclamation cost estimate to the 

BLM is an existing requirement of policy; therefore, the costs in preparing one would not be an 

increase.

There would be no impact for a bond established either by a reclamation cost estimate outside a 

designated leasing area or by standard bond inside a designated leasing area should it be 

insufficient to cover a bonded requirement, such as reclamation of the project. The proposed 

rule would repeat the clear requirement of the existing regulations that should a bond amount be 

insufficient or not in place, for whatever reason, the holder of the authorization would be 

responsible to cover the costs for fulfilling the requirements of the authorizations (see section 

2807.13).

This rule would clarify when the BLM would retroactively collect rent. A holder must pay all 

rent for a ROW under the existing terms and conditions. Under the current rules, the BLM 

collects rent, when appropriate. The BLM only collects rent retroactively when there is an error 

or omission in the billed or unbilled rent amount to a holder. This rule proposes to codify these 

instances to clarify when the BLM would retroactively collect rent of a ROW in order to 

facilitate the orderly administration of these rents. The BLM would only retroactively collect 

rent when there is: 1) an unbilled rent; 2) a clerical error identified; 3) an adjustment to rent 

schedules is not applied; or 4) an omission or error in complying with the terms and conditions 

of the authorized ROW is identified. This is consistent with existing regulations and policy; 

therefore, this change would have no economic impact 

Alternative Approaches

The BLM considered alternative approaches when developing the proposed rule. This section 

describes those alternatives and their estimated impacts, where quantifiable.

Pre-application cost recovery: By policy, the BLM requires a series of meetings between the 

BLM, the project proponent, and other Federal, State, and tribal governments during the preapplication stage of any solar or wind energy project proposal. The BLM funds these preapplication meetings, which generally cost about $5,000 for the entire pre-application period, but 

may cost as much as $15,000. The range reflects the number of meetings, the project’s

complexity, and resource concerns. In the proposed rule, the BLM would require prospective 

applicants to pay the reasonable or actual costs associated with the pre-application meetings. 

As one alternative, the BLM considered establishing a flat fee for the pre-application meetings. 

A flat fee might be desirable for two primary reasons. It might be easier to administer and 

applicants would have a clear expectation of what costs they would incur. Assuming 20 projects 
14

per year, a flat fee of $5,000 (roughly the average cost) per pre-application engagement would 

potentially cost applicants $100,000 per year. A flat fee of $7,500 would potentially cost 

applicants $150,000 per year. A flat fee of $10,000 (the midpoint of the range) would potentially 

cost applicants $200,000 per year. Ultimately, the BLM determined that a flat fee might not 

promote fairness, since pre-application costs may vary by the complexity and resource concerns

of the proposed project.

The BLM also considered whether the cost recovery payment for the pre-application period 

should be voluntary for the applicants. The BLM rejected this idea as it believes it would likely 

bear the costs of the pre-application period and that the expense should be borne by the 

applicant. 

Application Filing Fees and Nomination Fees: The BLM currently does not require filing fees 

when applicants file a solar or wind energy application or nomination fees when applicants 

nominate a competitive lease site. The proposed rule would require an applicant to pay a 

nonrefundable application filing fee of $15 per acre for solar and wind energy development and a 

fee of $2 per acre for wind energy testing. It would require a nonrefundable $5 per acre 

nomination fee for solar and wind energy leases inside designated leasing areas. The proposed 

application filing fees would be higher than nomination fees, reflecting the various potential uses 

for the areas that could be impacted or precluded by an application. Nomination fees are lower, 

reflecting the limited and intended use of the area nominated for a competitive lease. 

Rather than setting a uniform per acre fee, the BLM initially considered setting filing fees on a 

county-by-county basis, which is similar to the acreage fee process for solar developments. This 

would have allowed for a 12-tier schedule of filing fees for an application based upon the general 

land value of the area and identified further by an encumbrance factor of 0 to 100 percent. The 

county areas would have been broken down by the National Agricultural Statistics Service 

census data and would likely have had an Implicit Price Deflator, Gross Domestic Product (IPDGDP) index value added to the fees that would vary from year to year. The BLM considered this 

system since the land valuation process was already in place and used for rental schedules for 

linear and solar rentals. However, the BLM determined that this alternative would have been

overly complex and may have led to inaccurate filing fees. 

Capacity Fee and Acreage Rent: Existing policies set the MW capacity fee for wind energy 

development at $4,155 per MW. There is currently no acreage rental for wind energy. The 

BLM is proposing to increase the fee to $6,209 per MW, to reflect market conditions, and to 

establish a new rental requirement. 

The BLM originally considered increasing the MW rate to $6,740 per year based on a market 

study completed for the BLM by the DOI’s Office of Valuation Services (OVS). The BLM also 

considered using an encumbrance factor of 20 percent for wind energy developments. Further, 

the BLM considered adjusting the current 3-year phase-in of the MW rate for wind energy to a 5-

year phase-in. 

The BLM did not include these alternatives in the proposed rule. The OVS conducted a market 

study of wind rental rates in early 2012. The market study identified a variety of royalty rates 
15

and payment structures. The BLM does not have the statutory authority to collect a royalty for 

wind and solar energy on public lands to match the current market practices; therefore, the BLM 

identified a rate of return as a comparable percentage to use for returning market value. 

A range of discounted rates consistent with a phase-in period were also identified in the study

ranging from 2 to 5 years that support both existing agency phase-in periods of 3 and 5 years. 

Further, a review of the existing authorized wind energy development facilities showed that the 

actual encumbrance factor for wind developments was lower than initially considered. 

Considering the current market data and the methodology proposed for determining the MW 

capacity fee, the BLM is proposing a MW capacity fee of $6,209 per MW and not $6,740 per 

MW. The MW capacity fee of $6,740 reflects older market data and was therefore not proposed 

in the rule. A $6,740 per MW fee would have cost the industry an additional $1.23 million to 

$8.84 million per year. The lower bound represents the incremental gains from existing projects 

alone. The upper bound represents incremental gains from existing projects and potential 

projects.

The BLM established the existing solar rental by policy with a 5-year phase-in period for the

MW capacity fee. The BLM considered leaving the solar phase-in period as established by 

policy. On February 27, 2012, the comment period closed for the Advanced Notice of Proposed 

Rulemaking (ANPR) for the competitive leasing of solar and wind energy on public land. 

Comments received on the ANPR indicated that a shorter phase-in period for the MW capacity 

fee was appropriate for solar developments. In consideration of the comments received, the 5-

year phase-in period for the solar energy was not carried forward in the proposed rule as 

indications of a longer phase-in period for non-competitive authorizations, while favorable to a 

developer, were not typical of the market or supported by the public. The preamble to the 

proposed rule contains a discussion of the comments received that responded to questions in the 

ANPR.

The BLM established the solar MW capacity fee by policy in 2010, and the BLM considered 

maintaining it because it is recent. However, the BLM determined to maintain uniformity 

between the solar and wind MW capacity fee structures in this rule. In order to maintain 

uniformity, it would be necessary to update the solar MW capacity fees using the methodology 

proposed in this rule for determining rent. 

Bonding: The BLM conducted an internal review of bond adequacy and the review indicated 

that it should revise minimum bond amounts. The proposed rule would increase the minimum 

bond amounts to reflect increased reclamation costs. The BLM did not consider amounts 

deviating from that which it proposes, because the other amounts would be inappropriate.

For projects inside designated leasing areas, the BLM is proposing to make the new minimum 

bond amount the standard bond amount, and not require or consider a reclamation cost estimate. 

Another alternative would be to treat all projects equally, regardless of location, and require a 

bond amount that is either the minimum bond or the reclamation cost estimate, whichever is 

higher. 
16

Competitive offer: Procedures for solar and wind energy competitive offers are currently 

authorized by existing regulations. The BLM has used a variety of competitive offer methods, 

including various means of bidding methodologies, in other contexts (e.g., coal leasing, oil and 

gas development). In the proposed rule, the BLM does not specify the exact mechanics of the 

competitive offer so that it may maintain flexibility. Meaning, the BLM may use different types 

of offers to ensure greater participation and competition.

Number of Potentially Affected Entities

The proposed rule would primarily affect individuals and companies that will obtain 

authorizations to develop wind and solar resources on public lands. To a lesser extent, the 

proposed rule would also affect companies that will obtain authorizations for certain 

transmission or pipeline projects.

There are currently 8 distinct entities holding solar authorizations, 26 entities holding wind 

authorizations, and 625 entities holding pipeline and transmission authorizations. We believe 

that these entities generally characterize the types of entities that will obtain authorizations in the 

future. 

Table 4 – Number of Current BLM Authorizations

Type of 

Authorization

Number of 

Approved

Authorizations

Number of 

Distinct Entities

Estimated 

Number of 

Authorizations 

per Year

Solar 12 8 3

Wind 36 26 2

Pipeline 504 484 1

Transmission 162 141 5

The proposed provisions (see preamble to the proposed rule) that have the potential to have an 

economic effect on entities include the pre-application cost recovery, application filing fee, and 

rental rules. Renewable energy development ROWs on public lands are a discretionary action by 

the BLM. Because the BLM may not approve some applications for a renewable energy 

development, this analysis assumes fewer authorizations than applications.

 On an annual basis, the BLM anticipates an average of 20 pre-application meeting 

periods, involving 12 entities, which will be subject to the proposed cost recovery 

provision.

 The BLM anticipates 10 new solar and wind energy development applications and 40 

wind testing applications per year. These 50 filings, involving an estimated 30 entities, 

will potentially be affected by the proposed application filing fee provision.

 The proposed changes to the rental provisions will affect both existing and new wind 

development authorizations. There are currently 101 wind testing authorizations, 

involving 70 entities, and 36 wind development authorizations involving 26 entities. In 
17

addition, the BLM anticipates 15 new wind testing applications that are not a renewal of 

an existing authorization, involving eight entities, and two new wind development 

authorizations, involving two entities per year.

 The proposed changes to the rental provisions will affect both existing and new solar 

authorizations. There are currently 12 solar authorizations involving 8 entities. In 

addition, the BLM anticipates three new solar authorizations involving three entities per 

year.

 For comparison purposes of this analysis, the BLM assumes one lease area nomination 

and competitive offer per year of equal size to the average application and anticipates

three entities competing for that lease parcel.

Affected Small Entities

The BLM reviewed the potentially affected entities to determine the extent to which the affected 

entities are small businesses, as defined by the Small Business Administration (SBA). Further, 

we examined the extent to which the proposed rule would economically impact the affected 

small entities.

Upon this review, we determined that the rule would potentially affect a substantial number of 

small entities. However, we determined that the proposed rule would not pose a significant 

economic impact on a substantial number of small businesses. The basis for these 

determinations is as follows.

The SBA assigns size standards to industries for the purpose of carrying out the Small Business 

Act. Table 5 shows the industries that would be affected by the rule, their North American 

Industry Classification System (NAICS) codes, and the SBA size standards for determining 

whether an entity within the industry is considered a small business. The definitions are 

available at 13 CFR 121.201, as amended at 78 FR 77343, 77351 (Dec. 23, 2013).

Table 5 – NAICS Code Definitions

NAICS 

Code

NAICS U.S. Industry 

Title

Size Standards 

in Millions of 

Dollars

Size Standards 

in Number of 

Employees

Relevance

221114 Solar Electric Power 

Generation 250 Solar energy

221115 Wind Electric Power 

Generation 250 Wind energy

221121

Electric Bulk Power 

Transmission and 

Control

500

Transmission lines

with a capacity of 

100 kV or more

486110

Pipeline 

Transportation of 

Crude Oil

1,500 Pipelines 10 inches 

or more in diameter
18

NAICS 

Code

NAICS U.S. Industry 

Title

Size Standards 

in Millions of 

Dollars

Size Standards 

in Number of 

Employees

Relevance

486210

Pipeline 

Transportation of 

Natural Gas

$25.5 Pipelines 10 inches 

or more in diameter

486910

Pipeline 

Transportation of 

Refined Petroleum 

Products

1,500 Pipelines 10 inches 

or more in diameter

486990 All Other Pipeline 

Transportation $34.5 Pipelines 10 inches or more in diameter

There are currently 659 distinct entities with authorizations for solar and wind energy,

transmission lines 100 kV or more, and pipelines 10 inches or more in diameter. The BLM 

reviewed these entities to determine whether they are small businesses as defined by the SBA. 

The reference material included company annual reports or other materials and annual filings to 

the U.S. Securities and Exchange Commission.

Regarding entities with approved or active authorizations for wind and solar development, we 

found that many entities are subsidiaries of larger parent (or holding) companies that generally 

exceed the size criteria and are not small entities according to the SBA. However, we also found 

several entities that did not exceed the size criteria and are small entities according to the SBA. 

For this reason, we believe that the rule could potentially affect a substantial number of small 

entities in those industries. 

Regarding entities with pipeline or electric transmission authorizations, we could not determine 

whether the entities are small as defined by the SBA. Therefore, we assume that the proposed

rule would potentially affect a substantial number of small entities in those industries.

To determine the extent to which the proposed rule would impact these small entities, we took 

two approaches. First, we attempted to measure the direct costs of the proposed rule as a portion 

of the net incomes of affected small entities. However, we were unable to obtain the financial 

records for a representative sample. 

Next, we measured the direct costs of the proposed rule as a portion of the total costs of a 

project. 

As a result of this proposed rule, a developer of wind and solar energy would incur the following 

costs, which we discuss in the direct economic impacts portion of this analysis:

 Application or nomination filing fees;

 Pre-application meetings;

 Acreage rent;

 MW capacity fee;

 Bonding; and
19

 Bonus Bids.

Tables 6 and 7 show the cost of the proposed rule as a percent of the total solar or wind project 

cost (for both large and small projects). The BLM further calculated the upper threshold of a 

bonus bid in the event that a competitive offer is held. Competitive offers may provide for 

variable offsets that would reduce the total bonus bid amount by up to 20 percent. Impact ranges 

for a project are provided below each table that identify the cost of the rule, upper threshold of a 

bonus bid and the maximum variable offset.

The BLM has provided a range of impacts to costs for individual projects using two set project 

sizes. Developing higher cost projects would be more cost effective than lower cost projects 

due to economies of scale. Table 6 represents the estimated costs for a high project cost for a 

6,000 acres and 80 MW of energy capacity. Table 7 represents the estimated costs for a low 

project cost for a 40 acres and 5 MW of energy capacity. 

The BLM used solar PV costs in this estimation since solar PV is the most commonly deployed 

solar technology on both public and private lands. The BLM used information from the National 

Renewable Energy Laboratory (NREL)8and the Western Electricity Coordination Council 

(WECC).9 This information estimated costs such as materials, financing, and acquiring site 

control (e.g., a BLM permit or private lease). This information is an estimate of the cost, per 

acre, to develop a solar or wind energy project. 

Table 6 – Comparison of Project and Proposed Rule Costs Per Project (Large)

6,000 Acres 

and 80 MWs

Project 

Cost

Impact of 

Proposed Rule

Upper Threshold 

Bonus Bid Amount

% of Total 

Project Cost

Solar (Low) $1.3 

billion

$1.2 million $ 0 0.09 %

Solar (High) $6.3 

billion

$1.3 million $4.8 million 0.10 %

Wind (Low) $180 

million

$290,000 $ 0 0.16 %

Wind (High) $420 

million

$350,000 $4.8 million 1.21 %

With Competitive Offer: Assuming an upper threshold for variable offsets in a competitive offer

for larger projects equal to $960,000 (amount up to 20 percent of the bonus bid), the range of 

estimated impacts to a project would change to be 0.08 percent to 0.99 percent of the total 

project cost.

Table 7 – Comparison of Project and Proposed Rule Costs Per Project (Small)

 

8

http://www.nrel.gov/analysis/tech_size.html

9

http://www.wecc.biz/Lists/Calendar/Attachments/5892/140212_WECC_GenCapitalCostRecommendations_Final.p

df
20

40 Acres and 

5 MWs

Project 

Cost

Impact of 

Proposed Rule

Upper Threshold Bonus 

Bid Amount

% of Total 

Project Cost

Solar (Low) $8.7 

million

- $ 3,256 $ 0 - 0.04 %

Solar (High) $42.3 

million

- $ 2,900 $ 31,800 0.07 %

Wind (Low) $1.2 

million

 $ 12,000 $ 0 1.00 %

Wind (High) $2.8 

million

 $ 12,000 $ 31,800 1.58 %

With Competitive Offer: Assuming an upper threshold for variable offsets in a bonus bid for 

smaller projects equal to $6,360 (amount up to 20 percent of the bonus bid), the range of 

estimated impacts to a project would change to be -0.04 percent to 1.35 percent of the total 

project cost.

The proposed rule would also impact potential developers of transmission lines 100 kV or more 

and pipelines 10 inches or more in diameter. The only provision that would impact these entities 

would be cost recovery for pre-application meetings. Table 8 compares the costs that a 

developer would incur for transmission line and pipeline projects to the cost of the rule. 

The BLM used information from the WECC’s report for estimating the capital costs for 

transmission and substations10 in preparing the transmission line estimate for this analysis. This 

information estimated costs such as materials, financing, and acquiring site control (e.g., a BLM 

rent). This information did not include the cost for attaining site control of a project or cost 

recovery for a Federal agency. Cost recovery would increase the overall project costs, reducing 

the proposed rule’s percentage of the cost impact of total project costs. 

The BLM has provided a range of impacts to costs of individual transmission projects using two 

set project sizes. Developing higher cost projects would be more cost effective than lower cost 

projects due to economies of scale. Table 8 represents the estimated costs for a high project cost 

for a 100-mile long, dual circuit 500 kV transmission line on monopole structures and for a low

project cost for a 1-mile single circuit 230 kV transmission line on lattice structures. 

For pipeline projects, the BLM was unable to find a range of costs per mile or other measurable 

scale. The BLM analyzed application filings submitted to the Federal Energy Regulatory 

Commission (FERC) for interstate and international pipelines, which included project cost 

estimates and sizing information.. The BLM compared the costs of the proposed rule cost to the

information found in the application filings.

 

10http://www.wecc.biz/committees/BOD/TEPPC/TAS/121012/Lists/Minutes/1/121005_TransCapCostReport_finald

raft.pdf
21

The range of project costs identified in Table 8 compare higher cost and a lower cost pipeline 

project to the cost of the proposed rule. The projects used were those for Ruby Pipeline Project, 

a high cost pipeline project, and for the City of Clarksville Gas and Water Natural Gas 

Interconnect Pipeline Project, a low cost pipeline project. The high cost project is a 42 inch 

pipeline that is 678 miles long and the low cost project is a 12 inch pipeline that is 13 miles long.

Table 8 – Comparison of Project and Proposed Rule Costs Per Project

(Pipeline/Transmission Lines)

Project Cost Impact of Proposed 

Rule

% of Total Project 

Cost

Transmission (Low) $2.5 million $ 5,000 0.20 %

Transmission (Hi) $4.8 billion $ 5,000 0.0001%

Pipeline (Low) $20 million $ 5,000 0.03 %

Pipeline (High) $3 billion $ 5,000 0.0002%

To conclude, for the various types and sizes of projects, we found that the impacts of the 

proposed rule represented a small percent of the total project costs. As such, we determined that 

that the proposed rule would not pose a significant economic impact on a substantial number of 

small businesses. 

Direct Economic Impacts

The BLM has identified five general provisions proposed in the rule that would have quantifiable 

direct economic impacts on entities involved in the development of wind and solar resources on 

public lands. The pre-application cost recovery provision would require individuals and 

companies interested in obtaining an authorization to develop renewable energy resources on 

public lands to pay the government’s costs associated with pre-application meetings and other 

activities. The proposed application filing fee and nomination fees would require applicants for 

renewable energy authorizations to pay a fee when filing an application or submitting a 

nomination. The proposed rule would also add new rental requirements to wind energy 

authorizations and update solar rent. The proposed minimum bonding requirements would 

require companies authorized for solar and wind energy developments to provide minimum bond 

amounts outside designated leasing areas and standard bond amounts inside designated leasing 

areas. The BLM would establish a competitive offer process for both inside and outside of 

designated areas and clarify the procedures and costs of these actions.

Application

Pre-application cost recovery. The proposed rule would expand existing cost recovery authority 

to include the pre-application stage of a project proposal. The portion of this fee that is not used 

for this stage is refundable to applicants or may be carried over for processing of the application 

and included in those cost recovery monies. The pre-application cost recovery fee is based upon 

estimated costs for the BLM to process a project application through this stage of the project. 

This fee would be a minimal cost to a project proponent and an average estimate of $5,000 for 
22

each project is used for this analysis. The estimated average cost is based upon the BLM’s 

experience in proceeding through the pre-application process of projects. This fee is dependent 

on many factors such as project siting, resource conflicts, and technology type. Each factor 

influences the pre-application cost recovery fee estimates for projects as the fee is based on 

Federal labor costs. 

As discussed above, the BLM estimates this provision would affect approximately 20 preapplications per year. At an average of $5,000 per project, this would increase costs to the 

industry by about $100,000 per year. This cost is actually a transfer payment,

11 and as such, the 

provision would not affect the total resources available to society, but rather who bears the cost.

For areas inside designated leasing areas, there would be no required pre-application meetings 

and no change in the cost. However, through BLM’s experience with reviewing these projects, it 

is anticipated that meetings would occur with a lessor to discuss a project and cover material 

similar to what is addressed in pre-application meetings. The cost of these meetings with a 

lessor would be reimbursable to the BLM under its existing regulations for monitoring and 

therefore would not be a change in costs.

Application Filing Fees. The proposed rule includes a fee for filing an application for solar and 

wind energy development for projects proposed outside of an established designated leasing 

area. The application filing fee is fixed at $2 per acre for wind site testing and $15 per acre for 

solar and wind energy developments. The applicant must submit this nonrefundable fee with its

application. The total filing fee for an application may vary since it is dependent on the number 

of acres in the application. 

Using an assumed average acreage of 6,000 acres per application, based upon a BLM review of 

its renewable energy records, the filing fee would be about $12,000 per application for a wind 

testing site. The BLM estimates there will be 40 new wind testing applications annually, for a 

total estimated annual cost of $480,000.

For the anticipated 10 new solar and wind energy development applications the BLM will 

receive annually, using an average acreage of 6,000 acres per application, the BLM estimates 

filing fees could total about $900,000, or approximately $90,000 per application. For purposes 

of this analysis, the BLM further anticipates that one solar or wind energy development will be 

assigned per year. Such assignments require an application submittal to the BLM and an 

application filing fee based upon the acreage of the ROW assigned. This would result in an 

approximately $90,000 in application filing fees for assignments.

 

11 Note, an important, but sometimes difficult, problem in cost estimation is to distinguish between real costs and 

transfer payments. Transfer payments are not social costs, but rather are payments that reflect a redistribution of 

wealth. While transfers should not be included in the economic analysis estimates of the benefits and costs of a 

regulation, they may be important for describing the distributional effects of a regulation. Scarcity rents and 

monopoly profits, insurance payments, government subsidies and taxes, and distribution expenses are four potential 

problem areas that may affect both social benefits and costs as well as involve significant transfer payments. (See 

Economic Analysis of Federal Regulations Under Executive Order 12866, January 11, 1996, 

http://www.whitehouse.gov/omb/inforeg_riaguide.)
23

Nomination fee. The proposed rule includes a fee for filing a lease area nomination for solar or 

wind energy developments for areas inside an established designated leasing area. The lease 

area nomination fee is a fixed amount of $5 per acre for solar and wind energy developments. 

The interested party must forward this nonrefundable fee at the time they submit a nomination to 

the BLM. The total nomination fee for a lease area may vary since it is dependent on the number 

of acres nominated. While it is problematic to estimate with any level of accuracy the number of 

lease nominations and the number of acres that may be nominated, this analysis assumes one 

lease area nomination per year of equal size to the average application area of a 6,000-acre lease 

area. This equates to an estimated $30,000 in nomination fees per year.

Rents and Fees

Wind testing rent. One hundred thirty-three existing wind energy authorizations would be 

subject to the proposed rental provisions. One hundred and one of those authorizations involve 

wind project area testing. These projects would see their rental payments double from an 

estimated average of $12,000 to $24,000 per year, for a total increase of about $1.2 million per 

year. The BLM also anticipates 15 new wind testing applications per year, but anticipates that 

15 existing wind testing applications will be relinquished per year, for no net annual increase in 

wind testing applications. 

Wind MW rate adjustment. Thirty-two existing wind energy development authorizations would 

also be affected by the proposed changes. Rental for wind energy development would be 

increased by adjusting the wind MW capacity fee of $4,155 per MW to $6,209 per MW. The 

BLM estimates the 36 existing authorizations would have the total MW fees increase by 

approximately $980,000 due to the proposed increase of $2,054 per MW, a 49 percent increase

in fees on the existing wind energy ROWs currently in production. The BLM has approved 

3,568 MWs for production. If energy generation begins for the remaining MWs, the total MW 

capacity fee increase would be $7.33 million each year. Based on the BLM’s experience, it is 

not likely that all wind energy developments will go into production. Therefore, the potential 

annual increase due to the approved MWs that are placed into production is likely an upper 

threshold of increased rent per year. 

Wind acreage rent. The rule would implement an acreage rent for wind energy generation 

authorizations where there previously was no acreage rent. The proposed rule would base its 

rental on the acreage rent established in existing regulations on a per acre county rate that is 

adjusted annually by the Implicit Price Deflator, Gross Domestic Product (IPD-GDP) for linear 

ROWs. The acreage rent is calculated to reflect the wind encumbrance on the land. The 

proposed wind energy acreage rent would reflect a 10 percent encumbrance value of the land 

compared to linear rental’s 50 percent. The encumbrance factor identifies a percentage value 

that indicates the exclusion of other public land uses

Using the average of 6,000 acres per project, the BLM estimates the per acre rental for the wind 

energy development authorizations would range from about $10,000 to $400,000, depending on

the location of the authorization and the zone designation for the county. The range is 

established using zone county rates of one through eight from the existing linear rent schedule. 

The estimated average zone for such developments is zone five. Using an estimated average
24

increase of $81,000 for acreage rent per authorization, based on the calendar year 2014 rate, the 

total annual per acre rent for all 36 projects could increase by approximately $2.9 million per 

year. 

The BLM anticipates two new wind energy development authorizations per year. These new 

projects would be subject to the same rent increases as existing operations. The MW rate

increase would raise fee costs by approximately $980,000 per year once energy generation is 

charged at the full phase-in rate, based on an estimated average of 80 MW per wind project. 

Assuming 6,000 acre projects and depending on location, the BLM estimates new wind energy 

development authorizations will be subject to a per acre rental of approximately $90,000 per 

year.

Solar. The BLM is proposing three different adjustments from existing policy to solar rents and 

fees that are analyzed below. First, an adjustment to the phase-in of the MW capacity fee is 

analyzed to illustrate the proposed change to the phase-in. Second, an updated MW capacity fee

is analyzed to illustrate the change in the rent. Third, an update to the zone-by-zone designation 

for acreage rent would be made. A summary that includes the combined change for the phase-in 

and the MW capacity fee is provided for the solar rental.

Solar phase-in. The proposed adjustment to the phase-in period will not affect existing 

collection of rental for solar energy generation that is already in production. Only future solar 

energy that is put into production would be subject to the proposed phase-in period. For years 1

and 2 of the 3-year phase-in, the rental for the MW rate would increase by approximately $394

annually, or a total increase of $394 for year 1 and $788 for year 2. For year 3, the total rate

would increase by approximately $3,154 per MW of capacity. For years 4 and 5 of the solar 

MW capacity, a diminishing rate of increased fees are realized, for the 3-year phase-in. The 

diminishing rate of increased fees is because the existing 5-year phase-in rate draws closer to the 

rate of the proposed 3-year phase-in rate. By the fifth year, the increase in the proposed 3-year 

phase-in has captured only 25 percent more fees than the existing 5-year phase-in. 

The highest dollar value established by BLM policy for solar MW rate is for concentrated solar 

with storage over three hours (CSP). Using the established MW rate of $7,884 per MW would 

result in a total increase of $5,913 per MW for the first 4 years of the proposed 3-year phase-in. 

Similar changes for the other solar technology types with MW rate that is established by policy 

are proposed in the rule. The other technology types for which the rate is already established by 

policy, are PV and concentrated PV or concentrated solar power without storage (CPV) which

are not analyzed here since their rate per MW is less than CSP. The policy established rate for 

PV is $5,256 per MW and the rate for CPV is $6,570 per MW. The proposed change to the 

phase-in for all solar technology types will follow the same analysis as described in Table 9.

Table 9 - 3-year vs. 5-year Rate Phase-in Comparison

Concentrated 

Solar Power 

w/Storage

Year One -

Dollar 

(percent 

phase-in)

Year Two -

Dollar 

(percent 

phase-in)

Year Three -

Dollar 

(percent 

phase-in)

Year Four -

Dollar 

(percent 

phase-in)

Year Five –

Dollar 

(percent 

phase-in)
25

Three Year 

$7,884/MW $1,971(25%) $3,942(50%) $7,884(100%) $7,884(100%) $7,884(100%)

Five Year 

$7,884/MW $1,577(20%) $3,154(40%) $4,730(60%) $6,307(80%) $7,884(100%)

Change in 

Dollars $394 $788 $3,154 $1,577 $0

If the remaining MWs were to be placed into production, the total fee change resulting from the 

phase-in would be best represented by the change analyzed for the MW rate. The MW rate

update demonstrates the rate per MW at the full phase-in of the MW rate. 

Chart 1 – 3-year vs. 5-year rent phase-in comparison

As seen in Table 9 and Chart 1, the greatest increase for rates is year 3 of the 3-year phase-in. 

This is an increase of $3,154 per MW. No increase in rates is seen in years 5 or later as both 

phase-in periods are at full phase-in rates of 100 percent for the MW capacity fee. The annual 

increase in rates averaged out for the first four years is $1,478.

MW Capacity fee. The BLM has approved 36 wind projects and many of them are producing 

power and incurring a MW capacity fee. The BLM collected approximately $2 million in MW 

capacity fees in 2012 for wind energy authorizations. Total fees received are anticipated to 

increase in 2013 as an additional 141 MWs of generation are placed into production, equaling 

approximately $146,000 of additional fees for the first year of phase-in and $293,000 of 

additional rent for the second year of the phase-in. The proposed rule would increase the wind 

MW rate to present market conditions of $6,209 per MW of capacity. In addition, this rule 

would implement an acreage rent for wind energy authorizations where there was previously no 

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

1 2 3 4 5

5 year phase-in

3 year phase-in
26

acreage rent. The acreage rent would be established on a per acre county rate that is adjusted by 

the IPD-GDP and will be available on the BLM Web site once the final rule is published.

12

The BLM has approved 16 solar projects. Of those 16 projects, one is producing power and has 

incurred a MW capacity fee of $50,000. The solar rent phase-in would be decreased by this rule 

from a 5-year phase-in to a 3-year phase-in, in order to consistently match the phase-in period 

with the current market and that of wind energy authorizations. Further, the BLM proposes to 

update the solar MW capacity fee to current market conditions.

Solar MW rate adjustments. Adjustments to the solar MW rate include adjustments to

technology-specific rents for PV, CPV, and CSP. The MW rates are currently established by 

policy on a per MW basis at $5,256 for PV, $6,570 for CPV, and $7,884 for CSP. The MW rates 

would be decreased by the proposed rule on a per MW basis to $3,548 for PV, $4,435 for CPV, 

and $5,322 for CSP. The BLM proposes to adjusts MW rates for solar energy to reflect current 

market conditions, which would be a reduction of 32.5 percent from the currently established 

MW rates. Using the highest dollar value technology type per MW capacity for CSP, the 

reduction of 32.5 percent in the MW capacity is a decrease of $2,562 per MW of capacity as seen 

in Table 10. Should generation of the approved 5,512 MWs begin the total MW capacity fee

decrease would be $14.12 million each year. Based on the BLM’s experience, it is not likely that 

all solar energy developments will go into production. Therefore, the potential annual decrease 

in total received MW capacity fees is likely an upper threshold of decreased rent per year.

Table 10 - Updated Solar MW Capacity Fee Comparison

PV CPV CSP

Proposed Updated 

MW Capacity Fee $3,548 $4,435 $5,322

Current Established 

MW Capacity Fee $5,256 $6,570 $7,884

Change in Dollars ($1,708) ($2,135) ($2,562)

Table 11 compares the combined change of the proposed phase-in and MW rate decrease to the 

current phase-in and MW rate. For years 1 and 2 of the 3-year phase-in, the aggregate total 

rental for the MW rate would be a 16 percent reduction to fees over the first and second years of 

the 5-year phase-in. For year 3, the aggregate of the total fees would be approximately 2 percent 

less than the third year of the 5-year phase-in. For years 4 and 5 of the solar MW capacity, a 

diminishing rate of fees would be realized for the 3-year phase-in as the existing 5-year phase-in 

with current MW rates draws closer the full MW rate. By the fifth year, the change in the 

proposed 3-year phase-in would capture 16 percent less fees than the existing 5-year phase-in. 

The highest dollar value established for solar MW rates would be for concentrated solar with 

storage over 3 hours. Using the proposed MW rate of $5,322 per MW would result in a total 

decrease of $1,133 per MW by year 4. Table 12 demonstrates in greater detail the proposed 

adjustments to the phase-in and the MW rates in a comparison to the existing phase-in and MW 

 

12 Appendix A to this analysis is the solar rent and fee schedule, and Appendix B to this analysis is the wind rent and 

fee schedule.
27

rates. Years subsequent to year 4 of the phase-in would reflect a flat yearly difference of $2,562 

per MW in rates between the proposed and existing phase-in as seen in Table 11. For example, 

year 6 would be a difference of $6,257 and year 7 would be a difference of $8,819.

Table 11 - Proposed Phase-in and Fees Compared to Existing Phase-in and Fees

Year One –

Dollar 

(percent 

phase-in)

Year Two –

Dollar 

(percent 

phase-in)

Year Three –

Dollar 

(percent 

phase-in)

Year Four –

Dollar 

(percent 

phase-in)

Year Five –

Dollar 

(percent 

phase-in)

Proposed 

MW 

Capacity 

Fee and 

Phase-in

$1,331

(25%)

$2,661

(50%)

$5,322

(100%)

$5,322

(100%)

$5,322

(100%)

Existing 

MW 

Capacity 

Fee and 

Phase-in

$1,577

(20%)

$3,154

(40%)

$4,730

(60%)

$6,307

(80%)

$7,884

(100%)

CSP 

w/storage

$7,884/MW

($246) ($493) $592 ($985) ($2,562)

Chart 2 – Proposed Phase-in and Fees Compared to Existing Phase-in and Fees

$0.00

$1,000.00

$2,000.00

$3,000.00

$4,000.00

$5,000.00

$6,000.00

$7,000.00

$8,000.00

$9,000.00

1 2 3 4 5

3 year phase-in

5 year phase-in
28

The greatest change for rental, as seen in Table 12 and Chart 2, is year 3, which reflects an 

increase in rental of $592 per MW of capacity. Years 1, 2, 4, and 5 show a decrease in the MW 

rate. Years following year 5 would show a decrease in rental of $2,562 per MW per year. 

Whether a solar energy plant goes into production is beyond the authority and control of the 

BLM. Holders of solar energy ROWs determine when to put a project into production, if ever. 

Therefore, it is difficult to analyze beyond a potential cumulative fee amount what the impacts of 

the adjusted rates would be. The BLM anticipates three new solar energy development 

authorizations per year. These new projects would be subject to the change of the MW rate, the 

same as existing operations. The MW rate decrease would decrease prospective fee costs by 

approximately $615,000 per year once energy production begins, based on an estimated average 

of 80 MW per solar project of CSP. 

Solar acreage rent. The rule would implement an update to the solar acreage rent for solar 

energy generation authorizations. The update would allow the acreage rent to be adjusted at the 

same time other comparable acreage rents, such as those for linear facilities, would be adjusted. 

The solar acreage rent would remain as it currently is established, based upon the linear acreage 

rental in existing regulations on a per acre county rate that is adjusted annually by the IPD-GDP. 

The proposed solar energy acreage rent would reflect a 100 percent encumbrance value of the 

land as compared to linear rental’s 50 percent. 

The update to the acreage rent would allow the zone designation to adjust the county zone 

designation of the acreage rent calculation. The BLM would perform this once every 5 years and 

may move a county upward or downward in the zone designations of the rent schedule. The 

higher it moves up, the more acreage rent would increase. With the establishment of the 

proposed rule, the average adjustment would be upward one county zone designation in the rent 

schedule. One county zone designation is a change of $33.86 for the typical zone adjustment

(zone four to zone five) for the year 2014. Using the average of 6,000 acres per project, the 

BLM estimates that the per acre rental for a solar energy development authorizations would 

range from about $100,000 to $2 million, depending on the location of the authorization and the 

zone designation for the county. Using an estimated average increase of $203,000 for the 

acreage rent per authorization, based upon the estimated range of $100,000 to $2 million per

authorization, the total annual per acre rent for all 16 projects could increase by approximately 

$3.25 million per year.

Table 12 shows the estimated total rents for 2012 and 2013 which are calculated before the 

implementation of the final rule. The proposed MW rate phase-in period does not apply to 

capacity that was previously installed for solar, but MW rates would apply once the rule is final. 

Rental for solar projects and the increase to the MW rate noted in table 12 represent the change 

in the phase-in period for the second year of an existing project in 2013, using the proposed MW 

rate adjustment. Projected rents and fees for 2014 include the proposed adjustments to the 

estimated total rents and fees for existing solar and wind energy generation. 
29

Table 12 -Total Estimated Annual Wind and Solar Rents and fees

2012 2013 2014

Acreage 

Rents

MW Fees Acreage 

Rents

MW Fees Acreage 

Rents

MW Fees

Wind NA $2,000,000 NA $2,146,000 $2,600,000 $3,198,000

Solar $7,000,000 $50,000 $7,000,000 $100,000 $9,842,000 $150,000

Bonding. The rule would codify the existing policy for bonding solar and wind projects. Under 

the proposed rule, in processing each project for lands outside of designated leasing areas, the 

applicant would provide a reclamation cost estimate to the BLM that would determine the total 

costs necessary to reclaim the public lands back to an acceptable condition. The proposed rule 

includes a minimum bond amount at $2,000 per meteorological tower and test site, $20,000 per 

wind turbine, and $10,000 per acre for a solar development. The BLM’s review of recent solar 

and wind energy project bonds and their reclamation cost estimates support the minimum bond 

amounts proposed. Based upon site-specific requirements, the necessary bond amount is likely 

to be higher than the minimum bond amount and will be determined based on the reclamation 

cost estimate. The BLM review of recent solar and wind energy authorizations has shown 

reclamation estimates for meteorological towers have been as high as $10,000, as high as 

$60,000 per wind turbine, and as high as $20,000 per acre for solar projects. 

An average capacity size of one MW per turbine, or 80 turbines for an average project, is used 

for this analysis. The minimum bond amount for an average wind project would be $1.6 million, 

an increase of $800,000 per project over the current bonding minimum. Typically, a developer 

will not pay a cash value of the bond, but instead provide a surety bond. The cost of a surety 

bond to a developer is typically an annual cost of 1 to 2 percent of the total surety bond amount, 

but can be as high as 4 percent. It is not normal to pay a higher percentage for a surety bond and 

for purposes of this analysis, a 2 percent annual rate will be used. Therefore, an increase of 

$800,000 per project in minimum bonding amounts is likely to cost a developer about $16,000 

per project per year. 

The BLM expects no change in cost to industry. If the reclamation cost estimate were less than 

the minimum bond amount, there could be a total annual cost to the industry of up to $32,000. 

Since the BLM currently sets the actual amount of wind bonds based on the full cost of 

reclaiming the property, the BLM does not anticipate that the proposed bonding provisions 

would increase bonding costs.

An average acreage size of 6,000 acres for a solar ROW is used for this analysis. The minimum 

bond amount for an average solar project would be about $60 million per project. There is 

currently no minimum bonding amount for a solar project, however an increase in cost would 

only occur if the minimum bond amount were greater than a RCE . RCEs are performed on a 

case-by-case basis and this bond amount would not be known until a RCE is prepared for a 

particular project. A solar developer will typically not pay a cash value of the bond and instead 

would provide a surety bond with an annual cost of 1 to 2 percent of the total surety amount. 

Therefore, $60 million in bonding requirements at a 2 percent annual rate would be an annual 

cost of up to $1.2 million to developers. Since the BLM currently sets the actual amount of solar 
30

bonds based on the full cost of reclaiming the property, the BLM does not anticipate that the 

proposed bonding provisions would increase bonding costs.

The proposed rule would establish a standard bond amount for leases inside a designated leasing 

area for solar or wind energy developments. The standard bond would equal the proposed 

minimum bond amounts outside a designated leasing area for energy development. As proposed, 

bonding for projects inside designated leasing areas would be inadequate if a reclamation project 

were completed and its costs exceed the standard bond amount. In cases where a grant or lease 

holder defaults, the burden of the shortfall could potentially fall on the BLM. 

The standard bond amounts would be $20,000 per wind turbine and $10,000 per acre for a solar 

development. No reclamation cost estimate would be required for authorizations inside a 

designated leasing area. This standard bond would be a known cost to a prospective bidder on a 

competitively offered lease inside a designated area. The known cost for bonding before an offer 

is made would reduce uncertainty to a developer. The increase to the certainty of project costs 

would raise the probability that a developer would bid higher on a lease and would be an

incentive to develop inside designated leasing areas. 

This analysis assumes only one competitive offer a year and therefore would use the higher cost 

of solar standard bonding to determine economic impacts. However an increase in cost would 

only occur if the standard bond amount is greater than a RCE would be if one was required by 

current policy. The estimated costs are calculated in the same way as for minimum bonding and 

would include $1.2 million per year for standard bonding inside designated leasing areas for 

solar and $32,000 for wind. Standard bond amounts inside a designated leasing area would be 

updated using the change in the IPD-GDP once every 10 years and rounded to the nearest 

hundred dollars. The update to the standard bond amount would be based on the published 10-

year change in the IPD-GDP that occurred prior to the update. Since the BLM currently sets the 

actual amount of wind and solar bonds based on the full cost of reclaiming the property, the 

BLM does not anticipate that the proposed bonding provisions would increase bonding costs but 

reduce costs, since an RCE would not be required to be completed by developers. 

Under current and proposed rules, a developer would be responsible for all liabilities associated 

with their authorization. Operator liabilities would continue regardless of the amount of the 

bond required by the BLM. 

Competitive Bidding. 

Minimum and bonus bid. The proposed rule would allow the BLM to use any type of 

competitive process or procedure to conduct a competitive offer. The rule allows for several 

options, such as oral auctions, sealed bidding, modified competitive bidding, and others. The 

BLM office conducting the offer will identify the competitive process and minimum bid in a 

notice of competitive offer. The BLM would require each competitive offer to have a minimum 

bid determined by the authorized officer and consist of two components. The first would

reimburse the BLM for administrative costs associated with preparation of the competitive offer. 

The reimbursement of the BLM’s administrative costs is a transfer of costs from the Government 

to the successful bidder in preparation of the competitive offer. The BLM estimates the first 
31

component of the minimum bid to be approximately $10,000 and this includes personnel costs

and costs for notification in a newspaper and the Federal Register. The second component of the 

minimum bid is an amount determined by the authorized officer based on the known or potential 

value of the land. This amount may be based upon acreage rent, potential MW capacity fees,

mitigation values of the land, or other known value of the land or the prospective ROW. These 

costs of the minimum bid may be determined as a percentage value of the known value of the 

land or prospective ROW. The successful bidder would pay the minimum bid and any bonus bid 

amounts. The BLM would return any monies paid by unsuccessful bidders during the bidding 

process to the unsuccessful bidders. 

There is a cost increase to the Federal Government to prepare the minimum bid; however, this is 

determined on a case-by-case basis and may depend on various factors that are unknown at this 

time. For purposes of this analysis, the BLM will use 5 percent of the first year’s acreage rent as 

the second component of the minimum bid. This is consistent with a competitive offer in 

Colorado that was held on October 24, 2013. Using the average of 6,000 acres per project, the 

BLM estimates that the amount of the per acre rent for a solar energy13 development 

authorization would range from about $5,000 to $203,000, depending on the zone location. 

Using an estimated average increase of $40,000, the minimum bid for a solar project would be 

$50,000. This includes the $10,000 estimated costs for the preparation of the competitive offer. 

For comparison purposes, the BLM assumes that it will hold only one competitive offer each 

year. The BLM would set the minimum bond costs on a case-by-case basis and post it in the 

notice published prior to the offer. Potential bidders would have the minimum bid information 

prior to the offer. The BLM anticipates that the competitive offer process set out by the 

proposed rule has the potential to lead to bids higher than the minimum amount and expects that 

this process would lead to more income to the Federal Government than other offer processes.

Generally, the filing of a ROW application, or successfully bidding in a competitive lease offer is 

an early step in a long process that may eventually result in a revenue-generating activity for the 

successful ROW grant or lessee. The competitive process reduces the time that a successful 

bidder will wait before receiving a lease, further facilitating the solar or wind development and 

its revenue generation. The BLM would issue a lease, after holding a competitive offer, no less 

than 30 days after publication of a notice of offer. Processing an application can take several 

years before the BLM approves or denies it. Generating meaningful estimates of the potential 

value of a BLM authorization to a successful bidder for a competitive lease or a BLM 

authorization to a developer via an application and subsequent grant would be speculative. 

Many factors influence the cost to individual bidders, including the business models for each 

bidder, solar or wind energy technology uses, and the time horizons for each based upon local 

and state regulatory frameworks in place at the location of a competitive lease offer. These 

factors vary and are influenced by statutory and geographic changes. 

A competitive lease offer process provides a shortened timeframe for a successful bidder and 

facilitates the potential to generate bonus bids in addition to the BLM’s minimum bid amount. 

 

13 Acreage rent for solar energy developments are 10 times the acreage rent for wind energy developments.
32

The BLM intends to collect the fair market value14 of the lease through the bids, acreage rents

and MW capacity fees. 

The BLM has not proposed a single auction format in this proposed rule in order to maintain 

flexibility and approximate fair market value. For example, an open ascending-bid auction 

would net the second-best price for a parcel. Meaning, the winning bid will be just above the 

second-best bid and not necessarily the final amount that the winning bidder would have been 

willing to pay. Sealed-bid auctions can net the best price or second-best price, depending on the 

mechanics of the auction. For all of these auctions, however, the level of competition is central 

to the idea that the BLM will receive the fair market value for a given parcel through a 

competitive bidding process. 

The BLM piloted a competitive bidding process for wind energy development in 2004 and 

selected a winning bonus bid of $795 per acre. However, this process resulted in the selection of 

a preferred applicant and the winning bidder followed the BLM’s application process for a wind 

energy development. The parcel was centrally located in a known high-wind energy 

development area and, therefore, would generate a premium over other parcels not so well 

located. For purposes of this analysis, the BLM will use the minimum bid discussed above as a 

lower bound for competitive process and use the $795 per acre as evidenced in the competitive 

process as an upper bound. This establishes a bid range of approximately $14,000 to $4.8 

million dollars per parcel for bids, or approximately $4.8 million dollars per parcel for a bonus 

bid. This bonus bid analysis is used as a comparison for both solar and wind energy for purposes 

of this analysis. Estimating one competitive offer per year, the annual impact would be $4.8 

million.

Variable offset. The successful bidder of a competitive offer inside a designated leasing area 

could qualify for variable offsets of up to 20 percent. Such offsets may include those for a 

preferred technology use or those for bidders with existing interconnect agreements. The 

specific amount for an offset would be described in the competitive offer notice and may vary 

from one competitive offer to the next. Using the estimated competitive bid amount of $4.8 

million per year, a range for variable offset would be zero dollars to $960,000 annually.

Proposed Changes That Were Analyzed, But Not Quantified

Rents and Fees

Minimum Rate of Return. The current MW rate is set within existing policies for solar and wind 

energy development. The calculation used to determine the MW rate for both solar and wind is 

the same and is referred to as the MW rate formula in this rule. This formula is the net capacity 

factor multiplied by the hours per year (total number of hours in a 365 day year) multiplied by 

the rate of return multiplied by the MW hour (MWh) price. The net capacity factor and hours 

 

14 26 CFR § 20.2031-1(b) : http://www.gpo.gov/fdsys/pkg/CFR-2012-title26-vol14/pdf/CFR-2012-title26-vol14-

chapI-subchapB.pdf. Federal regulations define fair market value as “the price at which the property would change 

hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both 

having reasonable knowledge of relevant facts.” 
33

per year are fixed values for the technology types of solar and wind; however, the rate of return 

and MWh price of electricity are adjustable values, all of which are described in detail in the 

preamble discussion for proposed sections 2806.50 and 2806.60. 

This rule proposes a 4.5 percent rate of return that can be adjusted, but not below the minimum 

rate of 4 percent. The rate of return for solar and wind energy is the 10-year average (2003-

2012) of the 20-year Treasury bond yield, rounded up to the nearest one-half percent. The rate 

of return would be recalculated every 5 years. The rate may adjust upward and downward with 

the 10-year average of the 20-year Treasury bond yield, but no less than the minimum rate of 4 

percent. 

The MWh price is the 5-year average of the annual weighted average of the Intercontinental

Exchange trading hubs for the wholesale price of electricity in the 11 western states. This 5-

year average would be the MWh price for electricity used in the MW rate formula and is used as 

the market value for electricity. Both the rate of return and MWh price may be adjusted in the 

future. As the rate of return and the MWh price of electricity would both be adjusted at future 

intervals based upon the preceding year’s average values, a meaningful analysis is problematic,

as it would result in a highly speculative inputs to the economic impact analysis.

Competitive Offer.

Bidding process. This rule proposes a new regulation describing the procedure for a competitive 

offering of lands for solar and wind energy developments on the public land. The procedures 

include a notice in a newspaper and/or other media sources in the area affected by the 

competitive offer and a notice in the Federal Register to solicit expressions of interest for an 

area. Such notices would include specifics for the competitive offer area and procedures such as 

a legal description of the competitively offered parcel, bidding methodology, minimum and 

bonus bid information, and bidder qualifications for a variable offset. Discussed below are 

minimum bid amounts and several options for the bidding, such as oral auctions and sealed 

bidding, and other offer methods that are available in the proposed rule. The BLM expects this 

proposed rule to remove procedural uncertainty, encourage competition during a competitive 

offer, and increase the predictability of bidding for potential bidders. 

This rule would expand when the BLM may hold a competitive offer for a ROW. Currently, a 

competitive offer may be held when there are two or more competing applications for the same 

system or ROW. This rule would expand this authority to allow for competitive offers to be held 

on the BLM’s own initiative, as well as when there are competing applications. Current 

regulations would have the BLM wait for competing applications for the same system or utility 

before holding a competitive offer. Under this rule, the BLM intends competitive offers to be 

held for designated leasing areas, which are based upon planning decisions on current 

environmental knowledge. Waiting for competing applications would likely result in dated 

planning decisions should too much time pass between the planning decision to hold a 

competitive offer and receipt of the competing applications. This would result in lost Federal 

resources spent on planning decisions to hold the competitive offer. The BLM expects that this 

proposed rule would address this potential increase in costs and expedite the competitive offer 
34

process. The proposed rule is intended to reduce unnecessary costs by removing procedural 

uncertainty. 

Conclusion

The RFA requires agencies to analyze the economic impact of proposed and final regulations to 

determine the extent to which a significant economic impact on a substantial number of small 

entities is possible. Based on the available data, the BLM does not anticipate that this 

rulemaking will have a significant economic impact on a substantial number of small entities, as 

defined by the SBA. 

Executive Order 12866, the Unfunded Mandates Reform Act, and the Small Business and 

Regulatory Flexibility Act require agencies to assess, where practical, the anticipated costs and 

benefits of regulatory actions to determine if it is a significant regulatory action. The BLM

estimates the annual effect on the economy of the regulatory changes would be less than $100 

million and would not adversely affect in a material way the economy, a sector of the economy, 

productivity, competition, jobs, the environment, public health or safety, or State, local or tribal

governments or communities. This rule would not create inconsistencies or otherwise interfere 

with an action taken or planned by another agency. In addition, this rule would not materially 

affect the budgetary impact of entitlements, grants, loan programs, or the rights and obligations 

of their recipients.

The BLM anticipates the proposed changes to the rule would increase costs to applicants, 

lessees, and operators by an estimated increase of no more than $5,941,000 per year. Of this 

increase in costs to operators, $4.8 million of this total figure is the amount of the estimated bids. 

The increase in fees and rentals over the fees and rentals currently set by policy primarily reflect 

changing market conditions. Increases in the minimum bond amounts also reflect increases in 

estimated reclamation costs. Table 13 provides the calculations associated with proposed 

changes in the fees, rents, and bonding, and provides a brief description and calculation used for 

the determination of economic impacts. These economic impacts are described briefly in Table 

1 and more completely in the Direct Economic Impacts portion of this analysis.

Table 13

Calculations Table

Rule Description Calculation

Cost Recovery

Pre-Application

Meetings

Average Cost of Pre-Application x 

Estimated number of Pre-Applications per 

year = 

-or-

$5,000 x 20 =

$100,000 per year

Application / 

Nomination
35

Application Filing 

Fee

Average Acreage per Application x 

Application Filing Fee x Estimated Annual 

Applications =

-or6,000 acres x $2 (testing) x 40 =

-and6,000 acres x $15 (development) x 11 = 

Testing 

Applications: 

$480,000 per year

Development 

Applications: 

$990,000 per year

Total of $1.47

million per year

Lease Area 

Nomination Fee

Acres Nominated Per Year x Per Acre 

Nomination Fee=

-or6,000 acres x $5=

$30,000 per year

Bonding

Wind Energy 

Development 

Minimum Bonding

(no cost increase)

Estimated Number of Turbines Per Project 

x Minimum Bond Amount Per Turbine

Increase x Number of Estimated Annual 

Authorizations x Percent Rate for Surety 

Bond=

-and (use highest value)-

Reclamation Cost Estimate x 2 Percent 

Rate =

-orEstimated 80 Turbines x $10,000 Per 

Turbine x 2 Projects Per Year x 2 Percent 

Rate=

-and (use highest value)-

Reclamation Cost Estimate x 2 Percent 

Rate =

-or80 Turbines x $10,000 Per Turbine x 2 

Projects Per Year x 2 Percent Rate =

Final bond amount 

determined by 

Reclamation Cost 

Estimate times a 2 

percent surety 

bond rate

Or

$32,000 annually. 

No cost increase 

unless RCE is less 

than the minimum.

Wind Energy 

Standard Bonding

Estimated Number of Turbines Per Project 

x Standard Bond Amount Per Turbine x 

Number of Estimated Annual 

Authorizations x Percent Rate for Surety 

Bond=

-andEstimated 80 Turbines x $20,000 Per 

Turbine x 1 Project Per Year x 2 Percent 

Rate=

$32,000 Per Year. 

No change to cost. 

Operator cost 

savings for no 

RCE requirement.
36

Solar Energy 

Development 

Minimum Bonding

(no cost increase)

Estimated Number of Acres x Minimum 

Bond Amount Per Acre x Number of 

Estimated Annual Authorizations x Percent 

Rate for Surety Bond=

-and (use highest value)-

Reclamation Cost Estimate x 2 Percent 

Rate =

-orEstimated 6,000 acre x $10,000/acre x 3

Projects Per Year x 2 Percent Rate=

-and (use highest value)-

Reclamation Cost Estimate x 2 Percent 

Rate =

Final bond amount 

determined by 

Reclamation Cost 

Estimate times a 2 

percent surety 

bond rate

$3.6 million

annually. No cost 

increase unless 

RCE is less than 

the minimum.

Solar Energy 

Standard Bonding

Estimated Number of Acres x Standard

Bond Amount Per Acre x Number of 

Estimated Annual Authorizations x Percent 

Rate for Surety Bond=

-andEstimated 6,000 acres x $10,000/acre x 1 

Project Per Year x 2 Percent Rate=

$1.2 million per 

year. No change 

to cost. Operator 

cost savings from 

no RCE 

requirement.

Rent and Fees

Late Payment Fee Number Late Payments x Difference in 

Late Payments = 

-or80 Late Payments x $6,000 Difference =

$480,000 per year 

increase in late 

payment fees.

Wind Project Area 

Site Testing

Existing Wind Project Area Site Testing 

Authorizations x Increase in Rental =

-or101 Authorizations x $12,000 Increase in 

Rental =

$1,212,000

additional rent per 

year

Wind Megawatt 

Capacity Fee

Current Estimated Fee x Approximate 

Percentage Increase in Rate = 

-or-

$2,000,000 x 49% Increase =

-andNumber of Approved MWs x Dollar 

Increase in Rental Per MW=

-or3,568 Approved MWs x $2,054 Per MW 

Increase=

Estimated 

$980,000 

additional fees per 

year (lower bound)

Up to $7.33

million in fees per 

year for (upper 

bound).

Wind Acreage Rent Number of Authorized Projects x Estimated 

Average Acreage Rent =

-or36 Projects x $81,000 =

$2,916,000

additional rent per 

year
37

Solar Megawatt 

Phase-in 

Variable - See Table 9 Average Annual 

Increase $1,478 

per MW for first 

four years.

Solar Megawatt 

Capacity Fee

Variable – See Table 8

Existing MW Rate – Updated MW Rate = 

-or-

$7,884 x -32.5 % =

-andNumber of Approved MWs x Dollar 

Decrease in Rental Per MW=

-or5,512 Approved MWs x $2,562 Per MW 

Decrease=

-andEstimated Average MWs for Solar Project 

x Number of Future Prospective Projects

Per Year x Dollar Decrease in Rental Per 

MW=

-or80 MWs x 3 Projects Per Year x ($2,562)

Per MW=

Annual decrease of 

$2,562/MW after 

year four.

$14.12 million 

decrease rent per 

year for approved,

but not in 

production MWs.

(upper threshold)

$615,000 decrease

annually to 

prospective solar 

rental

Solar Acreage Rent 

Adjustment

Number of Authorized Projects x Estimated 

Average Acreage Rent Increase =.

-or16 Project x $203,000

$3,248,000

increase in rent per 

year

Competitive Offer

Minimum Bid 

(lower bound)

Estimated Administrative Costs + Assumed 

Opening Bid x Assumed Annual 

Competitive Offers =

-or-

$10,000 + $40,000 x 1 Competitive Offer=

$50,000 annually 

for minimum bid.

Variable Offset. Estimated Annual Bid x Variable Offset 

Range = 

-or-

$4.8 million x 0% =

-and-

$4.8 million x 20% =

Estimated annual 

range of Variable 

Offset is:

$0.00

and

$960,000
38

Bonus Bid

(upper bound –

inclusive of 

minimum bid)

Estimated Average Parcel Acreage x Upper 

Threshold Bonus Bid Acreage Value x 

Number of Parcels Per Year=

-or6,000 acres x $795 per acre x 1 parcel= 

Annual Bonus Bid

$4.8 million.

Total Economic 

Impacts

$5,941,000

Table 14

Incremental Change Table

Appendices

Rule Description Incremental Change

Cost Recovery

Pre-Application Meetings $100,000

Application / Nomination

Application Filing Fee $1,470,000

Lease Area Nomination Fee $30,000

Bonding

Wind Energy Development Minimum Bonding

(no cost increase) 

$0

Wind Energy Standard Bonding $0

Solar Energy Development Minimum Bonding 

(no cost increase)

$0

Solar Energy Standard Bonding $0

Rent and Fees

Late Payment Fee $480,000

Wind Project Area Site Testing $1,212,000

Wind Megawatt Capacity Fee $7,330,000

Wind Acreage Rent $2,916,000

Solar Megawatt Phase-in $0

Solar Megawatt Capacity Fee (Existing) - $14.120,000

Solar Megawatt Capacity Fee (Future) - $615,000

Solar Acreage Rent Adjustment $3,248,000

Competitive Offer

Minimum Bid (lower bound) $50,000

Variable Offset. - $960,000

Bonus Bid 

(upper bound – inclusive of minimum bid)

$4,800,000

Total Economic Impacts $5,941,000
39

A – Sample Solar Energy Rent and Fee Schedule

B – Sample Wind Energy Rent and Fee Schedule
40

References

Executive Office of the President, Office of Management and Budget, Regulatory Analysis 

Circular A-4, September 17, 2003, http://www.whitehouse.gov/omb/inforeg/circular_a4.pdf.

U.S. Department of the Interior, Bureau of Land Management, Wind Energy Fact Sheet, October

2011, 

http://www.blm.gov/style/medialib/blm/wo/MINERALS__REALTY__AND_RESOURCE_PR

OTECTION_/energy.Par.82982.File.dat/09factsheet_Wind.pdf. 

U.S. Department of the Interior, Bureau of Land Management, LR2000, July 2012.

U.S. Department of the Interior, Bureau of Land Management, Final Programmatic 

Environmental Impact Statement on Wind Energy Development on BLM-Administered Lands in 

the Western United States, FES 05-11, June 2005.

U.S. Department of the Interior, Bureau of Land Management, Final Programmatic 

Environmental Impact Statement for Solar Energy Development in Six Southwestern States, FES 

12-24, July, 2012, http://windeis.anl.gov/.

U.S Department of the Interior, Bureau of Land Management and Department of Energy, Office 

of Energy Efficiency and Renewable Energy, July 2012, 

http://solareis.anl.gov/guide/environment/index.cfm.