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[House Report 107-563]
[From the U.S. Government Publishing Office]

107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     107-563

======================================================================

 
                REASONABLE RIGHT-OF-WAY FEES ACT OF 2002

                                _______
                                

 July 11, 2002.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Hansen, from the Committee on Resources, submitted the following

                              R E P O R T

                        [To accompany H.R. 3258]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Resources, to whom was referred the bill 
(H.R. 3258) to amend the Federal Lands Policy and Management 
Act of 1976 to clarify the method by which the Secretary of the 
Interior and the Secretary of Agriculture determine the fair 
market value of rights-of-way granted, issued, or renewed under 
such Act to prevent unreasonable increases in certain costs in 
connection with the deployment of communications and other 
critical infrastructure, having considered the same, report 
favorably thereon with amendments and recommend that the bill 
as amended do pass.
  The amendments are as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Reasonable Right-of-Way Fees Act of 
2002''.

SEC. 2. CLARIFICATION OF FAIR MARKET RENTAL VALUE DETERMINATIONS FOR 
                    PUBLIC LANDS AND FOREST SERVICE RIGHTS-OF-WAY.

  (a) Linear Rights-of-Way Under Federal Land Policy and Management 
Act.--Section 504 of the Federal Land Policy and Management Act of 1976 
(43 U.S.C. 1764) is amended by adding at the end the following new 
subsection:
  ``(k) Determination of Fair Market Value of Linear Rights-of-Way.--
(1) Effective upon the issuance of the rules required by paragraph (2), 
for purposes of subsection (g), the Secretary concerned shall determine 
the fair market rental for the use of land encumbered by a linear 
right-of-way granted, issued, or renewed under this title using the 
valuation method described in paragraphs (2), (3), and (4).
  ``(2) Not later than one year after the date of enactment of the 
Reasonable Right-of-Way Fees Act of 2002, and in accordance with 
subsection (k), the Secretary of the Interior shall amend section 
2803.1-2 of title 43, Code of Federal Regulations, as in effect on the 
date of enactment of such Act, to revise the per acre rental fee zone 
value schedule by State, county, and type of linear right-of-way use to 
reflect current values of land in each zone. The Secretary of 
Agriculture shall make the same revisions for linear rights-of-way 
granted, issued, or renewed under this title on National Forest System 
lands.
  ``(3) The Secretary concerned shall update annually the schedule 
revised under paragraph (2) by multiplying the current year's rental 
per acre by the annual change, second quarter to the second quarter 
(June 30 to June 30) in the Gross National Product Implicit Price 
Deflator Index published in the Survey of Current Business of the 
Department of Commerce, Bureau of Economic Analysis.
  ``(4) Whenever the cumulative change in the index referred to in 
paragraph (3) exceeds 30 percent, or the change in the 3-year average 
of the 1-year Treasury interest rate used to determine per acre rental 
fee zone values exceeds plus or minus 50 percent, the Secretary 
concerned shall conduct a review of the zones and rental per acre 
figures to determine whether the value of Federal land has differed 
sufficiently from the index referred to in paragraph (3) to warrant a 
revision in the base zones and rental per acre figures. If, as a result 
of the review, the Secretary concerned determines that such a revision 
is warranted, the Secretary concerned shall revise the base zones and 
rental per acre figures accordingly.''.
  (b) Rights-of-Way Under Mineral Leasing Act.--Section 28(l) of the 
Mineral Leasing Act (30 U.S.C. 185(l)) is amended by inserting before 
the period at the end the following: ``using the valuation method 
described in section 2803.1-2 of title 43, Code of Federal Regulations, 
as revised pursuant to section 504(k) of the Federal Land Policy and 
Management Act of 1976 (43 U.S.C. 1764(k))''.

  Amend the title so as to read:

    A bill to amend the Federal Land Policy and Management Act of 1976 
and the Mineral Leasing Act to clarify the method by which the 
Secretary of the Interior and the Secretary of Agriculture determine 
the fair market value of certain rights-of-way granted, issued, or 
renewed under these Acts.

                          Purpose of the Bill

    The purpose of H.R. 3258, as ordered reported, is to amend 
the Federal Land Policy and Management Act of 1976 and the 
Minerals Leasing Act to clarify the method by which the 
Secretary of the Interior and the Secretary of Agriculture 
determine the fair market value of certain rights-of-way 
granted, issued, or renewed under these Acts.

                  Background and Need for Legislation

    Rights-of-way (ROW), similar to long term leases, are 
grants conveying the right to construct, operate, maintain, 
remove, and terminate facilities used for the generation, 
transmission and distribution of electric energy and electric 
signals, communication services, and oil and gas lines crossing 
Federal lands. Section 501 of the Federal Land Policy and 
Management Act (FLPMA) authorizes the Bureau of Land Management 
(BLM) to issue and renew rights-of-way under, over, and through 
lands under its jurisdiction while Section 505 of FLPMA 
authorizes the BLM to recover the reasonable costs of 
processing and monitoring rights-of-way issued under the Act.
    Prior to 1986, the BLM and the USFS used various market 
approaches (appraisals, negotiations, percentage of land 
estimated value, and permittee investment percentages) to 
determine the fair market valuation of lands. Both agencies, 
however, found these methods inconsistent, unpredictable, and 
subject to appeal, which slowed the process of permit 
authorization. Starting in 1986, both the BLM and United States 
Forest Service (USFS) decided to utilize a system of ROW 
valuation known as the ``linear fee rent method.'' This method 
requires the two agencies to evaluate the fair market value (as 
defined in the 1973 Interagency Land Acquisition Conference) 
based upon a rent schedule taking into account inflation 
determined by the GDP-deflator.
    In 1995, the Office of the Inspector General for the 
Department of the Interior and the Government Accounting Office 
(GAO) in 1996 evaluated the rent schedule and found that the 
two agencies were not receiving fair market rent. In 1999, both 
agencies announced that they would begin developing policies to 
change the manner in which they determined rent of right-of-way 
access across Federal lands. Specifically, the agencies would 
abandon the traditional linear fee rent method, where rent is 
calculated based on the area of the right-of-way times the 
market value of the land, in favor of a method where the rent 
would be based on the value of the throughput. This method 
became known as fiberent. In affect, this meant that fiber 
optic telecommunication lines would be charged separate ROW 
value for each strand of cable, instead of the whole cable as a 
single ROW. Concerns were raised that this new valuation method 
would slow the expansion of telecommunications in rural areas, 
and that rents charged for ROW permits would become 
unreasonable.
    For example, the current National Energy Policy indicates 
that approximately 38,000 miles of additional gas and oil 
pipeline is needed to meet current and projected energy demand. 
These pipelines will need to pass through vast areas of public 
lands. If throughput valuation methods are used on these 
pipelines, the ROW rates could increase by as much as 1000% 
over the current linear fee method.
    To address these concerns, Congress included in the 2001 
Interior and Related Agencies Appropriations Act, a provision 
requiring that any changes made in ROW rent policies must be 
completed through a formal rulemaking process.
    H.R. 3258 would end the need for the rulemaking process by 
codifying existing regulations for linear rights-of-way, while 
at the same time, requiring the Secretaries of the Interior and 
Agriculture to revise the per acre rental fee zone value 
schedule to reflect current values of land in each zone.

                            Committee Action

    H.R. 3258 was introduced on November 8, 2001, by 
Congresswoman Barbara Cubin (R-WY), and was referred to the 
Committee on Resources. On November 13, 2001, the bill was 
referred within the Committee to the Subcommittee on National 
Parks, Recreation, and Public Lands, and the Subcommittee on 
Forests and Forest Health. On April 11, 2002, the Subcommittee 
on National Parks, Recreation, and Public Lands held a hearing 
on the bill. On June 26, 2002, the Full Resources Committee met 
to consider the bill. The Subcommittee on National Parks, 
Recreation, and Public Lands, and the Subcommittee on Forests 
and Forest Health were discharged from further consideration of 
H.R. 3258 by unanimous consent. Congresswoman Cubin offered an 
amendment in the nature of a substitute that changed the 
original text as follows: (1) eliminated the concept of 
multiple appraisals; (2) required the Secretary to update the 
rental fee schedule to reflect current land values, and (3) 
codified the regulations under the Federal Land Management and 
Policy Act and the Minerals Leasing Act relating to the rental 
fee schedule. The amendment was adopted by unanimous consent. 
There were no further amendments and the bill, as amended, was 
then ordered favorably reported to the House of Representatives 
by unanimous consent.

            Committee Oversight Findings and Recommendations

    Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII of the Rules of the House of Representatives, the 
Committee on Resources' oversight findings and recommendations 
are reflected in the body of this report.

                   Constitutional Authority Statement

    Article I, section 8 and Article IV, section 3 of the 
Constitution of the United States grant Congress the authority 
to enact this bill.

                    Compliance With House Rule XIII

    1. Cost of Legislation. Clause 3(d)(2) of rule XIII of the 
Rules of the House of Representatives requires an estimate and 
a comparison by the Committee of the costs which would be 
incurred in carrying out this bill. However, clause 3(d)(3)(B) 
of that rule provides that this requirement does not apply when 
the Committee has included in its report a timely submitted 
cost estimate of the bill prepared by the Director of the 
Congressional Budget Office under section 402 of the 
Congressional Budget Act of 1974.
    2. Congressional Budget Act. As required by clause 3(c)(2) 
of rule XIII of the Rules of the House of Representatives and 
section 308(a) of the Congressional Budget Act of 1974, this 
bill does not contain any new budget authority, spending 
authority, credit authority, or an increase or decrease in 
revenues or tax expenditures. According to the Congressional 
Budget Office, enactment of this legislation would result in a 
$14 million net reduction in direct spending.
    3. General Performance Goals and Objectives. This bill does 
not authorize funding and therefore, clause 3(c)(4) of rule 
XIII of the Rules of the House of Representatives does not 
apply.
    4. Congressional Budget Office Cost Estimate. Under clause 
3(c)(3) of rule XIII of the Rules of the House of 
Representatives and section 403 of the Congressional Budget Act 
of 1974, the Committee has received the following cost estimate 
for this bill from the Director of the Congressional Budget 
Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                       Washington, DC, July 3, 2002
Hon. James V. Hansen,
Chairman, Committee on Resources, House of Representatives, Washington, 
        DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3258, the 
Reasonable Right-of-Way Fees Act of 2002.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Megan 
Carroll.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 3258--Reasonable Right-of-Way Fees Act of 2002

    Summary: The Federal Land Policy and Management Act (FLPMA) 
and the Mineral Leasing Act (MLA) direct the Secretary of the 
Interior and the Secretary of Agriculture to charge fees for 
linear rights-of-way across federal lands. H.R. 3258 would 
amend current law to require the two agencies to revise the 
rates used to establish those fees.
    CBO expects that enacting H.R. 3258 would increase 
offsetting receipts (a credit against direct spending) from 
fees for rights-of-way. We also expect that the bill would 
increase direct spending for payments to share a portion of 
those increased receipts with the counties in which the fees 
are collected. On balance, CBO estimates that the bill would 
reduce direct spending by $14 million in 2005. Because the bill 
would affect direct spending, pay-as-you-go procedures would 
apply.
    H.R. 3258 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no significant costs on state, local, or 
tribal governments.
    Estimated Cost to the Federal Government: The estimated 
budgetary impact of H.R. 3258 is shown in the following table. 
The costs of this legislation fall within budget functions 300 
(natural resources and environment) and 800 (general 
government).

----------------------------------------------------------------------------------------------------------------
                                                                  By fiscal year, in millions of dollars--
                                                          ------------------------------------------------------
                                                              2003       2004       2005       2006       2007
----------------------------------------------------------------------------------------------------------------
                                           CHANGES IN DIRECT SPENDING

Estimated Budget Authority...............................          0          0        -14          0          0
Estimated Outlays........................................          0          0        -14          0          0
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    Basis of Estimate: The Forest Service (within the 
Department of Agriculture) and the Bureau of Land Management 
(BLM, within the Department of the Interior) issue linear 
rights-of-way across federal land for infrastructure such as 
pipelines, electric and telephone lines, and other uses. FLPMA 
and the MLA authorizes the agencies to charge fair market value 
for such rights-of-way. The fees that the agencies charge are 
based in part on estimates of the value of the federal lands 
where the rights-of-way are located. Those land values are 
based on an assessment that was completed in 1986 and has not 
since been updated except to account for inflation. H.R. 3258 
would require the agencies to update those estimates of land 
values and establish a revised fee schedule for linear rights-
of-way within one year of enactment.
    In recent years, the Forest Service and BLM began to pursue 
a revised fee schedule for linear rights-of-way. Based on 
information from the agencies, CBO expects that, under current 
law, they would complete the revisions and impose new fees in 
2006. According to the Forest Service and BLM, the revisions to 
fees that they would make under H.R. 3258 would be similar to 
those that the agencies are pursuing administratively under 
current law. The bill would require the agencies to revise the 
fees within one year of enactment, but based on information 
from the agencies about the length of time typically required 
to complete such a revision, CBO expects that the agencies 
would not impose the revised fees until 2005, one year sooner 
than under current law.
    According to the Forest Service and BLM, the agencies 
currently collect about $20 million a year in fees for linear 
rights-of-way. Although the agencies are uncertain about how 
much land values have changed, preliminary information suggests 
that collections under the revised schedule may increase by 
between 50 percent and 100 percent. Based on information from 
the agencies, we estimate that H.R. 3258 would increase 
offsetting receipts by at least $15 million in 2005. Of that 
amount, about $1 million would be required to be paid to the 
counties where the fees are generated; hence, the net increase 
in offsetting receipts would be $14 million.
    Pay-as-you-go Considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
changes in outlays that are subject to pay-as-you-go procedures 
are shown in the following table.

----------------------------------------------------------------------------------------------------------------
                                                      By fiscal year, in millions of dollars--
                                  ------------------------------------------------------------------------------
                                    2002   2003   2004    2005    2006   2007   2008   2009   2010   2011   2012
----------------------------------------------------------------------------------------------------------------
Changes in outlays...............      0      0      0      -14      0      0      0      0      0      0      0
Changes in receipts..............                                  Not applicable
----------------------------------------------------------------------------------------------------------------

    Intergovernmental and Private-Sector Impact: H.R. 3258 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no significant costs on state, 
local, or tribal governments. Enacting this legislation would 
benefit some county governments because they currently receive 
a portion of these fees and would share in the increase brought 
about by this bill. CBO estimates that the counties where fees 
are generated would receive additional payments totaling about 
$1 million in 2005.
    Estimate Prepared by: Federal Costs: Megan Carroll. Impact 
on State, Local, and Tribal Governments: Majorie Miller. Impact 
on the Private Sector: Lauren Marks.
    Estimate Approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                    Compliance With Public Law 104-4

    This bill contains no unfunded mandates.

                Preemption of State, Local or Tribal Law

    This bill is not intended to preempt any State, local or 
tribal law.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

   SECTION 504 OF THE FEDERAL LAND POLICY AND MANAGEMENT ACT OF 1976

                           GENERAL PROVISIONS

  Sec. 504. (a) * * *

           *       *       *       *       *       *       *

  (k) Determination of Fair Market Value of Linear Rights-of-
Way.--(1) Effective upon the issuance of the rules required by 
paragraph (2), for purposes of subsection (g), the Secretary 
concerned shall determine the fair market rental for the use of 
land encumbered by a linear right-of-way granted, issued, or 
renewed under this title using the valuation method described 
in paragraphs (2), (3), and (4).
  (2) Not later than one year after the date of enactment of 
the Reasonable Right-of-Way Fees Act of 2002, and in accordance 
with subsection (k), the Secretary of the Interior shall amend 
section 2803.1-2 of title 43, Code of Federal Regulations, as 
in effect on the date of enactment of such Act, to revise the 
per acre rental fee zone value schedule by State, county, and 
type of linear right-of-way use to reflect current values of 
land in each zone. The Secretary of Agriculture shall make the 
same revisions for linear rights-of-way granted, issued, or 
renewed under this title on National Forest System lands.
  (3) The Secretary concerned shall update annually the 
schedule revised under paragraph (2) by multiplying the current 
year's rental per acre by the annual change, second quarter to 
the second quarter (June 30 to June 30) in the Gross National 
Product Implicit Price Deflator Index published in the Survey 
of Current Business of the Department of Commerce, Bureau of 
Economic Analysis.
  (4) Whenever the cumulative change in the index referred to 
in paragraph (3) exceeds 30 percent, or the change in the 3-
year average of the 1-year Treasury interest rate used to 
determine per acre rental fee zone values exceeds plus or minus 
50 percent, the Secretary concerned shall conduct a review of 
the zones and rental per acre figures to determine whether the 
value of Federal land has differed sufficiently from the index 
referred to in paragraph (3) to warrant a revision in the base 
zones and rental per acre figures. If, as a result of the 
review, the Secretary concerned determines that such a revision 
is warranted, the Secretary concerned shall revise the base 
zones and rental per acre figures accordingly.
                              ----------                              

                 SECTION 28 OF THE MINERAL LEASING ACT

                           GRANT OF AUTHORITY

  Sec. 28. (a) * * *

           *       *       *       *       *       *       *

                         REIMBURSEMENT OF COSTS

  (l) The applicant for a right-of-way or permit shall 
reimburse the United States for administrative and other costs 
incurred in processing the application, and the holder of a 
right-of-way or permit shall reimburse the United States for 
the costs incurred in monitoring the construction, operation, 
maintenance, and termination of any pipeline and related 
facilities on such right-of-way or permit area and shall pay 
annually in advance for the fair market rental value of the 
right-of-way or permit, as determined by the Secretary or 
agency head using the valuation method described in section 
2803.1-2 of title 43, Code of Federal Regulations, as revised 
pursuant to section 504(k) of the Federal Land Policy and 
Management Act of 1976 (43 U.S.C. 1764(k)).

           *       *       *       *       *       *       *

                                  
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