99–006

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 Rightof-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

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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 rightsof-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-ofway 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 AcquiVerDate Jun 13 2002 15:02 Jul 12, 2002 Jkt 080188 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\HR563.XXX pfrm17 PsN: HR563
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sition 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 unaniVerDate 11-MAY-2000 12:51 Jul 12, 2002 Jkt 099006 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\HR563.XXX pfrm12 PsN: HR563
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mous 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.

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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-ofway. 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

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.

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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):

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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 RIGHTSOF-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 moniVerDate 11-MAY-2000 12:51 Jul 12, 2002 Jkt 099006 PO 00000 Frm 00007 Fmt 6659 Sfmt 6601 E:\HR\OC\HR563.XXX pfrm12 PsN: HR563
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toring 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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