[Federal Register Volume 82, Number 168 (Thursday, August 31, 2017)]
[Proposed Rules]
[Pages 41359-41364]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-17846]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 82 , No. 168 / Thursday, August 31, 2017 / 
Proposed Rules

[[Page 41359]]



DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 11

[Docket No. RM16-19-000]


Annual Charges for Use of Government Lands in Alaska

AGENCY: Federal Energy Regulatory Commission, Department of Energy.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Power Act requires hydropower licensees to 
recompense the United States for the use, occupancy, and enjoyment of 
federal lands. The Commission assesses annual charges for the use of 
federal lands through Part 11 of its regulations. The Commission 
proposes to revise the per-acre land value component of its methodology 
for calculating these annual charges for hydropower projects located in 
Alaska. Under the proposed rule, the Commission would calculate a 
statewide average per-acre land value for hydropower lands in Alaska. 
The Commission would use the statewide average per-acre land value, 
rather than a regional per-acre land value, to calculate annual charges 
for use of federal lands for all hydropower projects in Alaska, except 
those located in the Aleutian Islands Area.

DATES: Comments are due October 30, 2017.

ADDRESSES: Comments, identified by docket number, may be filed in the 
following ways:
    <bullet> Electronic Filing through http://www.ferc.gov. Documents 
created electronically using word processing software should be filed 
in native applications or print-to-PDF format and not in a scanned 
format.
    <bullet> Mail/Hand Delivery: Those unable to file electronically 
may mail or hand-deliver comments to: Federal Energy Regulatory 
Commission, Secretary of the Commission, 888 First Street NE., 
Washington, DC 20426.
    Instructions: For detailed instructions on submitting comments and 
additional information on the rulemaking process, see the Comment 
Procedures section of this document

FOR FURTHER INFORMATION CONTACT: 
Tara DiJohn (Legal Information), Office of the General Counsel, Federal 
Energy Regulatory Commission, 888 First Street NE., Washington, DC 
20426, (202) 502-8671, <a href="/cdn-cgi/l/email-protection#4c382d3e2d622825262324220c2a293e2f622b233a"><span class="__cf_email__" data-cfemail="e99d889b88c78d8083868187a98f8c9b8ac78e869f">[email protected]</span></a>.
Norman Richardson (Technical Information), Office of the Executive 
Director, Federal Energy Regulatory Commission, 888 First Street NE., 
Washington, DC 20426, (202) 502-6219, <a href="/cdn-cgi/l/email-protection#355b5a4758545b1b475c565d544751465a5b75535047561b525a43"><span class="__cf_email__" data-cfemail="3a545548575b5414485359525b485e4955547a5c5f4859145d554c">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

Table of Contents

 
                                                          Paragraph Nos.
 
I. Background...........................................              2.
    A. Order No. 774....................................              4.
        1. Per-Acre Land Value..........................              6.
        2. Per-Acre Land Values for Alaska..............              8.
    B. Fiscal Year 2016 Fee Schedule....................             10.
    C. Petition for Rulemaking..........................             11.
II. Notice of Inquiry...................................             14.
III. Proposed Rule......................................             24.
IV. Regulatory Requirements.............................             30.
    A. Information Collection Statement.................             30.
    B. Environmental Analysis...........................             31.
    C. Regulatory Flexibility Act.......................             32.
    D. Comment Procedures...............................             38.
    E. Document Availability............................             42.
 


    1. The Federal Power Act (FPA) requires hydropower licensees that 
use federal lands to compensate the United States for the use, 
occupancy, and enjoyment of federal lands.\1\ Currently, the Commission 
uses a fee schedule, based on the U.S. Bureau of Land Management's 
(BLM) methodology for calculating rental rates for linear rights of 
way, to calculate annual charges for use of federal lands. The 
Commission's fee schedule identifies a fee for each county or 
geographic area, which is the product of four components: A per-acre 
land value, an encumbrance factor, a rate of return, and an annual 
adjustment factor. The per-acre land value for a particular county or 
geographic area (i.e., a regional per-acre land value) is determined 
using the average per-acre land value identified by the National 
Agricultural Statistics Service (NASS) Census. Under the proposed rule, 
the Commission would use a statewide average per-acre land value for 
the state of Alaska, rather than a regional per-acre land value.
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    \1\ 16 U.S.C. 803(e)(1) (2012).
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I. Background

    2. Section 10(e)(1) of the FPA requires Commission hydropower 
licensees using federal lands to pay reasonable annual charges, as 
determined by the Commission, to recompense the United States for the 
use and occupancy of its lands.\2\ While the Commission may 
periodically adjust these charges, it must seek to avoid increasing the 
price

[[Page 41360]]

to power consumers by such charges.\3\ In other words, licensees that 
use and occupy federal lands for project purposes must compensate the 
United States through payment of an annual fee, to be established by 
the Commission.\4\
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    \2\ 16 U.S.C. 803(e)(1) (2012). Section 10(e)(1) also requires 
licensees to reimburse the United States for the costs of 
administering Part I of the FPA. Those charges are calculated and 
billed separately from the land use charges, and are not the subject 
of this proposed rule.
    \3\ Id.
    \4\ Pursuant to FPA section 17(a), 16 U.S.C. 810(a) (2012), the 
fees collected for use of government lands are allocated as follows: 
12.5 percent is paid into the Treasury of the United States, 50 
percent is paid into the federal reclamation fund, and 37.5 percent 
is paid into the treasuries of the states in which particular 
projects are located. No part of the fees discussed in this proposed 
rule is used to fund the Commission's operations.
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    3. The Commission has adopted various methods over the years to 
accomplish this statutory directive.\5\ Currently, the Commission uses 
a fee schedule method, based on land values published in the NASS 
Census, to calculate annual charges for use of government lands. The 
Commission adopted this approach in a final rule issued on January 12, 
2013.\6\
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    \5\ See Annual Charges for Use of Government Lands, Order No. 
774, FERC Stats. & Regs. ] 31,341, at PP 3-20 (2013) (cross-
referenced at 142 FERC ] 61,045) (examining the myriad methodologies 
the Commission has used or considered for assessing annual charges 
for the use of government lands since 1937) (Order No. 774).
    \6\ See generally, Order No. 774.
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A. Order No. 774

    4. In Order No. 774, the Commission adopted a fee schedule method 
for calculating annual charges for use of government lands, based on 
BLM's methodology for calculating rental rates for linear rights of 
way. Pursuant to section 11.2 of the Commission's regulations, the 
Commission publishes an annual fee schedule which lists per-acre rental 
fees by county or geographic area.\7\ To calculate a licensee's annual 
charge for use of government lands, the Commission multiplies the 
applicable county or geographic area per-acre fee identified in the fee 
schedule by the number of federal acres used by the hydroelectric 
project, as reported by that licensee.
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    \7\ 18 CFR 11.2 (2017). The fee schedule is published annually 
as part of Appendix A to Part 11 of the Commission's regulations.
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    5. The per-acre rental fee for a particular county or geographic 
area is calculated by multiplying four components: (1) A per-acre land 
value; (2) an encumbrance factor; (3) a rate of return; and (4) an 
annual adjustment factor.
1. Per-Acre Land Value
    6. The first component--the per-acre land value--is based on 
average per-acre land values published in the NASS Census. 
Specifically, the per-acre land value is determined by the applicable 
county or geographic area ``land and buildings'' category \8\ from the 
NASS Census. This NASS-published per-acre value is then reduced by the 
sum of a state-specific modifier (to remove the value of irrigated 
lands) and seven percent (to remove the value of buildings or other 
improvements). The end result is the adjusted per-acre land value.
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    \8\ The ``land and buildings'' is a combination of all land use 
categories in the NASS Census, including croplands (irrigated and 
non-irrigated), pastureland/rangeland, woodland, and ``other'' 
(roads, ponds, wasteland, and land encumbered by non-commercial/non-
residential buildings).
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    7. The NASS Census is conducted every five years, with an 18-month 
delay before NASS publishes the census data. The Commission 
incorporates another 18-month delay to account for revisions, 
consistent with BLM's implementation of its 2008 rule. Therefore, the 
Commission based the 2011-2015 fee schedules on data from the 2007 NASS 
Census. The Commission's 2016-2020 fee schedules will be based on data 
from the 2012 NASS Census; the 2021-2025 fee schedules will be based on 
data from the 2017 NASS Census; the 2026-2030 fee schedules will be 
based on data from the 2022 NASS Census; and so on. State-specific 
adjustments to the per-acre land value are performed in the first year 
that data from a new NASS Census are used, and will remain the same 
until the subsequent NASS Census data are used to calculate the 
forthcoming set of fee schedules.
2. Per-Acre Land Values for Alaska
    8. With regard to Alaska, Order No. 774 explained that the final 
rule would adopt BLM's approach to per-acre land values by designating 
lands in Alaska as part of one of the five NASS Census geographic area 
identifiers: The Aleutian Islands Area, the Anchorage Area, the 
Fairbanks Area, the Juneau Area, and the Kenai Peninsula Area. Several 
commenters asserted that a per-acre statewide value, a category also 
reported by the NASS Census, should be used to establish assessments 
for federal land in Alaska.\9\
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    \9\ Order No. 774 at P 44.
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    9. Order No. 774 considered the arguments raised in support of a 
statewide per-acre value. In particular, several commenters asserted 
that it is inappropriate to use regional per-acre values for Alaska 
because Alaska does not use county designations; the number of farms 
surveyed for the NASS Census in the entire state of Alaska is less than 
the number of farms surveyed in most counties in the lower-48 states; 
and, certain per-acre land values near Anchorage and Juneau are very 
high, resulting in a substantial increase in annual charges for the use 
of government lands by hydropower licensees in these areas. However, 
the Commission ultimately concluded that the commenters had not 
advanced a sufficient explanation for why it was more appropriate to 
use a statewide per-acre value for Alaska, rather than the smallest 
NASS Census defined area for Alaska--the geographic area identifier. 
Although the Commission rejected the use of a statewide per-acre land 
value for Alaska in Order No. 774, the Commission clarified that it 
would not use rates based on the Anchorage Area and the Juneau Area 
values to assess annual land use charges ``because these high, urban-
based rates would not reasonably reflect the value of government lands 
on which hydropower projects are located.'' \10\ Instead, for purposes 
of determining a per-acre land value, the Commission decided to use the 
Kenai Peninsula Area per-acre land value for projects located in the 
Anchorage Area or the Juneau Area.
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    \10\ Id. at P 45.
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B. Fiscal Year 2016 Fee Schedule

    10. The Commission used the 2012 NASS Census data to calculate its 
fee schedule for the first time in Fiscal Year (FY) 2016. Due to per-
acre land value increases in the 2012 NASS Census data, hydropower 
projects located in certain geographic areas in Alaska experienced a 
significant increase in federal land use charges when compared to the 
rates assessed in FY 2015.\11\
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    \11\ In the 2012 NASS Census, changes in land values in other 
parts of the country varied widely: Some rose significantly, some 
rose by relatively small amounts, and some decreased.
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C. Petition for Rulemaking

    11. On June 6, 2016, the Alaska Federal Land Fees Group, comprising 
six hydroelectric licensees with projects in Alaska (Alaska Group),\12\ 
petitioned the Commission to conduct a rulemaking to revise its method 
of calculating federal land use charges for hydropower projects in 
Alaska. The Alaska Group's petition focuses solely on the first 
component of the Commission's fee schedule--the per-acre land value--
and requests that the Commission: (1) Calculate an adjusted statewide 
average per-acre land value for Alaska and (2) apply this adjusted

[[Page 41361]]

statewide average per-acre fee to all projects in Alaska, except those 
located in the Aleutian Islands area.\13\
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    \12\ Alaska Electric Light and Power, Bradley Lake Project 
Management Committee (on behalf of licensee Alaska Energy 
Authority), Chugach Electric Association, the Ketchikan Public 
Utilities, Copper Valley Electric Association, and Southeast Alaska 
Power Agency.
    \13\ The Alaska Group requests that any project located in the 
Aleutian Islands Area continue to be assessed annual charges for use 
of government lands based on a regional per-acre land value.
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    12. In support of this proposal, the Alaska Group states that due 
to the small number of farms (and associated acreage) that contribute 
to the data compiled in the NASS Census, there is insufficient data in 
any individual Alaska area (with the exception of the Aleutian Islands) 
\14\ to produce a fair estimate of land values within that area. 
Because there are so few farms outside of the Aleutian Islands area, 
the Alaska Group indicates that the per-acre land values in the other 
four geographic areas of Alaska are extremely sensitive to any changes 
in the voluntary, self-reported farm data compiled by the NASS Census.
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    \14\ The Alaska Group contends that because the Aleutian Islands 
Area contains the greatest amount of farmland in the state (668,016 
acres), the NASS Census data for the Aleutian Islands Area is 
``robust, reliable, and an accurate estimate of fair market value.'' 
Alaska Group's June 6, 2016 Petition for Rulemaking at 18. 
Therefore, the Alaska Group requests that the proposed statewide 
average per-acre land value be applied to all hydropower projects 
located in Alaska, except those projects located in the Aleutian 
Islands Area.
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    13. For these reasons, the Alaska Group asserts that an adjusted 
statewide average per-acre land value would better reflect the diverse 
topography of the state and insulate against land value fluctuations 
caused by individual changes in farm data. The Alaska Group believes 
that this method would produce a more accurate estimate of the fair 
market value of federal lands in Alaska.

II. Notice of Inquiry

    14. On November 17, 2016, the Commission issued a Notice of Inquiry 
soliciting input on a narrow question related to its current 
methodology for calculating annual charges for the use of government 
lands--whether regional per-acre land values based on data published in 
the NASS Census ``land and buildings'' category result in reasonably 
accurate land valuations for projects that occupy federal lands in 
Alaska. In response to the proposal advanced by the Alaska Group's 
petition for rulemaking, the Notice of Inquiry requested comments on 
several specific questions. First, the Commission asked whether it 
should use a statewide average per-acre land value rather than a 
regional per-acre land value to calculate the adjusted per-acre land 
value for projects that occupy federal lands in Alaska. Second, if a 
statewide average per-acre value is preferred, the Commission sought 
input on whether the statewide value should be applied to (i) all 
projects in Alaska, or (ii) all projects in Alaska except those located 
in the Aleutian Islands Area. Finally, the Commission requested 
commenters to identify which of the five geographic regions of Alaska 
it should use to calculate the statewide average per-acre land value.
    15. In addition, the Notice of Inquiry encouraged commenters to 
submit alternative proposals for determining a reasonably accurate per-
acre land value for projects in Alaska, provided that the proposed 
calculation was based on data published in the NASS Census. The notice 
also invited federal land management agencies to comment on how they 
would view reductions in annual charges for the lands they administer.
    16. The Notice of Inquiry identified five requirements that any 
proposed methodology should satisfy, derived from the Commission's 
statutory obligations under the FPA \15\ and the Commission's past 
experience in implementing various methodologies. Any proposed 
methodology must: (1) Apply uniformly to all licensees in Alaska; (2) 
avoid exorbitant administrative costs; (3) not be subject to review on 
an individual basis; (4) reflect reasonably accurate land valuations; 
and (5) avoid an unreasonable increase in costs to consumers.
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    \15\ See 16 U.S.C. 803(e)(1) (2012).
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    17. In response to the Notice of Inquiry, seven entities filed 
comments: The Alaska Group; U.S. Senator Lisa Murkowski; Homer Electric 
Association, Inc. (Homer Electric); Kodiak Electric Association, Inc. 
(Kodiak Electric); the U.S. Forest Service (Forest Service); Erin 
Noakes; and Chelsea Liddell.
    18. The Alaska Group filed comments reiterating its position that 
the Commission should adopt a statewide average per-acre land value for 
all hydropower projects in Alaska, and that the statewide average 
should be applied to all projects in Alaska, except those located in 
the Aleutian Islands Area. The Alaska Group states that it does not 
believe that the Commission needs to change its methodology for 
calculating annual charges for the Aleutian Islands Area since the 
substantial amount of agricultural acreage represented in the NASS 
Census data results in a fair estimate of land values for this 
particular region.
    19. In support of its position, the Alaska Group states that the 
use of a statewide average per-acre land value would provide ``a more 
robust and representative assessment of fair market value of federal 
lands in [the Kenai and Fairbanks] areas of Alaska, because it draws on 
a larger and more diverse dataset from across the state, and ensures 
that rates are less prone to fluctuation over time.'' \16\ According to 
the Alaska Group, if the Commission were to adopt a statewide average 
per-acre land value for Alaska, it would recognize several unique 
burdens faced by Alaska hydropower licensees and ratepayers, including 
the exclusive responsibility borne by Alaska ratepayers for all costs 
associated with hydropower projects, including annual charge 
assessments and the predominance of federal acreage in Alaska.
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    \16\ The Alaska Group's January 24, 2017 Comments on Notice of 
Inquiry at 16-17.
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    20. Senator Murkowski urges the Commission to use a statewide 
average per-acre land value, stating that the NASS Census data does not 
provide an accurate accounting of land values in Alaska because the 
state has fewer farms and farm acreage than any other state in the 
Pacific Northwest. Homer Electric, an electric distribution cooperative 
that provides service in the Kenai Peninsula, agrees with Senator 
Murkowski's comments that the NASS Census data does not provide an 
accurate accounting of Alaskan land values. Homer Electric also urges 
the Commission to adopt a statewide average per-acre land value for 
Alaska.
    21. Kodiak Electric, a licensee of a hydropower project located in 
the Aleutian Islands Area, states that the regional per-acre land 
values published in the NASS Census result in reasonably accurate land 
valuations for hydropower lands in the Aleutian Islands Area. Because 
of the large number of agricultural acreage reported by the NASS Census 
for the Aleutian Islands Area, Kodiak Electric believes no changes to 
the Commission's current methodology are needed for this geographic 
region. If the Commission decides to adopt a statewide average per-acre 
land value for hydropower projects in Alaska, Kodiak Electric 
recommends that the Commission refrain from applying the statewide 
value to projects located in the Aleutian Islands Area.
    22. The Forest Service observes that from an economic perspective 
the use of a statewide average per-acre land value for Alaska, derived 
from data published in the NASS Census, would result in a significant 
reduction in rental rates for the land in question. However, the Forest 
Service states that it does not recommend the use of a fee schedule

[[Page 41362]]

based on NASS Census data for Alaska because of the small number of 
farms in the state. Instead, the Forest Service recommends that the 
Commission calculate federal land charges for Alaska using BLM's 
``Minimum Rent Schedule for BLM Land Use Authorizations in Alaska 
2015.'' The Forest Service also suggests that the Commission consider a 
fee based on power generated, similar to BLM's solar fee schedule.
    23. Erin Noakes and Chelsea Liddell each filed individual comments 
recommending that the Commission decline the request to alter its 
current methodology for calculating federal land charges for hydropower 
projects in Alaska. Ms. Noakes observes that the use of a statewide 
average per-acre land value may result in the under-collection of 
reasonable annual charges for the use of federal lands by hydropower 
projects in Alaska. Ms. Liddell asserts that the Alaska Group has not 
sufficiently demonstrated that a statewide average per-acre land value 
would be any more accurate than a regional per-acre land value.

III. Proposed Rule

    24. The Commission proposes to adopt the use of a statewide average 
per-acre land value, rather than a regional per-acre land value, for 
the purposes of calculating annual charges for hydropower projects that 
occupy federal lands in Alaska.
    25. To calculate the statewide average per-acre land value for 
Alaska, the Commission will average the data published in the ``lands 
and buildings'' category of the NASS Census for two geographic areas: 
the Kenai Peninsula Area and the Fairbanks Area.\17\ Pursuant to the 
Commission's current methodology, this statewide average will be 
reduced by Alaska's state-specific reduction to remove the value of 
irrigated lands, as well as a seven percent reduction to remove the 
value of buildings. The Commission will apply the resulting adjusted 
statewide average per-acre land value to all hydropower projects in 
Alaska except for projects located in the Aleutian Islands Area. 
Because of the large amount of farmland acreage represented in the NASS 
Census for the Aleutian Islands Area, the Commission is satisfied that 
the NASS Census data for this geographic area results in reasonably 
accurate per-acre land values. Therefore, the Commission will continue 
to apply the regional per-acre land value for the Aleutian Islands 
Area.
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    \17\ As we noted earlier, the Commission does not use the NASS 
Census data from the Anchorage Area or the Juneau Area for the 
purpose of determining per-acre land values because the 
predominantly high, urban-based rates do not reasonably reflect the 
value of government lands on which hydropower projects are located. 
See supra P 9.
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    26. We believe this proposal responds to the issues identified by 
the petitioners--the prevalence of federal lands in Alaska, the sparse 
amount of agricultural acreage reflected in the NASS Census, and the 
increase in annual charges that resulted when the Commission began 
using data from the 2012 NASS Census. Combining the value of the 
farmland acreage in the Kenai Peninsula and Fairbanks Areas to 
calculate a statewide average land value will result in a larger, more 
robust data set. A larger data set will be less prone to future 
fluctuation due to changes in the level of participation in NASS Census 
data reporting or specific anomalies in the data reported. We are 
satisfied that a statewide average per-acre land value based on the 
NASS Census data from the ``land and buildings'' category for the Kenai 
Peninsula and Fairbanks Areas will result in reasonably accurate land 
values for hydropower projects that occupy federal lands in Alaska.
    27. While the Commission is proposing to implement a statewide 
average per-acre land value to address these concerns, we are not 
persuaded that the Aleutian Islands Area values, which are lower than 
land values elsewhere in the state, should be used in calculating a 
statewide average that is applied to hydropower projects located 
outside of the Aleutian Islands Area.
    28. The Forest Service recommends that the Commission employ a 
method based on the 2015 Minimum Rent Schedule for BLM Land Use 
Authorizations in Alaska.\18\ Following an analysis of this 
alternative, Commission staff concluded that the use of BLM's Minimum 
Rent Schedule would result in higher per-acre fees compared to the 
Commission's current methodology. BLM's Minimum Rent Schedule for 
Alaska uses land values based on rural sales data. The underlying land 
values for the Kenai Peninsula, Fairbanks, and Aleutian Islands Areas 
are all higher than the corresponding land values published in the NASS 
Census. The Commission does not believe that there is sufficient 
justification for using--only for Alaska--BLM's Minimum Rent Schedule, 
instead of continuing to use NASS Census data to establish federal land 
use charges for all areas of the country.
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    \18\ See generally BLM, Rent for Remote Non-Linear Rights-of-
Way, Permits and Leases, https://www.blm.gov/policy/im-ak-2015-010 
(instruction memorandum describing the U.S. Department of the 
Interior--Office of Valuation Services' April 2015 Minimum Rent 
Analysis & Schedule, which provides guidance and a rental schedule 
for land use authorizations of up to 25 acres across each of BLM's 
district and field offices in Alaska).
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    29. In addition, the Forest Service suggests that the Commission 
consider a fee based on power generated, similar to the solar fee 
schedule. For solar energy right-of-way authorizations, BLM charges a 
combined rent and fee consisting of an acreage rent paid annually 
regardless of the stage of development, and a megawatt capacity fee 
paid annually once electricity generation begins.\19\ BLM uses per-acre 
data from the ``land and buildings'' category of the NASS Census as a 
baseline for determining the acreage rent.\20\ Since this method is 
based on the same regional NASS Census data that the Alaska Group 
questions, and includes a megawatt capacity fee in addition to the 
acreage rent,\21\ it does not address the Alaska Group's suggestion 
that a larger, more robust data set is needed to balance the paucity of 
regional agricultural acreage for Alaska reflected in the NASS Census. 
In addition, the acreage rent is determined using a fee schedule that 
is divided into geographic zones, a practice that the Commission 
previously rejected.\22\ For these reasons, the Commission will not 
consider this alternative further.
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    \19\ See Competitive Processes, Terms, and Conditions for 
Leasing Public Lands for Solar and Wind Energy Development and 
Technical Changes and Corrections, 81 FR 92,122, 92,217-18 (December 
19, 2016) (to be codified at 43 CFR pts. 2800 and 2880).
    \20\ The acreage rent is calculated by multiplying the number of 
acres included in the right-of-way authorization by a per-acre zone 
rate from the solar energy acreage rent schedule. To determine the 
per-acre zone rate, BLM calculates a state-specific factor, applies 
the state-specific factor to NASS-published data, and uses the 
resulting per-acre value to assign a particular county or geographic 
area to the appropriate rent schedule zone.
    \21\ The Commission previously rejected, as unreasonable, 
methods based on power sale revenues or a rate per kilowatt hour 
because such fees would result in a royalty as if the occupied 
federal lands themselves were producing power. Such criticism could 
also be levied against a megawatt capacity fee. See Annual Charges 
for the Use of Government Lands, FERC Stats. & Regs ] 32,684; 137 
FERC ] 61,139, at P 9 (2011) (citing Revision of the Billing 
Procedures for Annual Charges for Administering Part I of the 
Federal Power Act and to the Methodology for Assessing Federal Land 
Use Charges, Order No. 469, FERC Stats. & Regs., Regulations 
Preambles ] 30,741, at 30,589-90 (1987)).
    \22\ See Order No. 774 at PP 23-24 (. . . ``the Commission 
agreed with commenters that BLM's `zone system' inflates the values 
of all counties in a zone except the highest valued county.'').
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IV. Regulatory Requirements

A. Information Collection Statement

    30. The Paperwork Reduction Act \23\ requires each federal agency 
to seek and

[[Page 41363]]

obtain Office of Management and Budget (OMB) approval before 
undertaking a collection of information directed to ten or more persons 
or contained in a rule of general applicability. OMB regulations 
require approval of certain information collection requirements 
contemplated by proposed rules.\24\ This proposed rule does not impose 
or alter existing reporting or recordkeeping requirements on applicable 
entities as defined by the Paperwork Reduction Act.\25\ As a result, 
this proposed rule does not trigger the Paperwork Reduction Act.
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    \23\ 44 U.S.C. 3501-3521 (2012).
    \24\ See 5 CFR 1320.11 (2017).
    \25\ 44 U.S.C. 3502(2)-(3) (2012).
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B. Environmental Analysis

    31. The Commission is required to prepare an Environmental 
Assessment or an Environmental Impact Statement for any action that may 
have a significant effect on the human environment.\26\ Commission 
actions concerning annual charges are categorically exempt from this 
requirement.\27\
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    \26\ Regulations Implementing the National Environmental Policy 
Act of 1969, Order No. 486, FERC Stats. & Regs. ] 30,783 (1987).
    \27\ 18 CFR 380.4 (a)(11) (2017).
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C. Regulatory Flexibility Act

    32. The Regulatory Flexibility Act of 1980 (RFA) \28\ generally 
requires a description and analysis of proposed rules that will have 
significant economic impact on a substantial number of small entities. 
The RFA mandates consideration of regulatory alternatives that 
accomplish the stated objectives of a proposed rule and minimize any 
significant economic impact on a substantial number of small 
entities.\29\
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    \28\ 5 U.S.C. 601-612.
    \29\ 5 U.S.C. 603(c) (2012).
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    33. The Small Business Administration's (SBA) Office of Size 
Standards develops the numerical definition of a small business.\30\ 
The SBA revised its size standard for electric utilities (effective 
January 22, 2014) from a standard based on megawatt hours to a standard 
based on the number of employees, including affiliates.\31\ Under SBA's 
current size standards, a hydroelectric generator is small if, 
including its affiliates, it employs 500 or fewer people.\32\
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    \30\ 13 CFR 121.101 (2017).
    \31\ SBA Final Rule on ``Small Business Size Standards: 
Utilities,'' 78 FR 77,343 (Dec. 23, 2013).
    \32\ 13 CFR 121.201, Sector 22, Utilities (2017).
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    34. Section 10(e)(1) of the FPA requires that the Commission fix a 
reasonable annual charge for the use, occupancy, and enjoyment of 
federal lands by hydropower licensees. To date, the Commission has 
issued 21 active licenses that occupy federal lands in Alaska to 15 
discrete entities. Therefore, the proposed rule will apply to a total 
of 15 entities. Of these 15 entities, 13 entities would be impacted by 
the proposed rule because they hold licenses that occupy federal lands 
in the Kenai Peninsula, Fairbanks, Juneau, or Anchorage Areas. The 
proposed rule adopts the use of a statewide average per-acre land 
value, rather than a regional per-acre land value, for the purpose of 
calculating annual charges for the use of federal lands in Alaska. The 
Commission will apply the statewide average per-acre land value to all 
hydropower projects in Alaska, except for projects located in the 
Aleutian Islands Area. The Commission will continue to apply the 
regional per-acre land value for the Aleutian Islands Area.
    35. Based on a review of the 13 licensees that would be impacted by 
the proposed rule, we estimate that most, if not all, are small 
entities under the SBA definition. These 13 licensees include 
utilities, non-for-profit electric cooperatives, cities, and companies.
    36. Any impact on these small entities would not be significant. 
Under the proposed rule, a statewide average per-acre land value for 
hydropower lands in Alaska would be calculated based on a larger 
agricultural data set, resulting in land values that will be less prone 
to future fluctuation caused by changes in census data reporting. For 
Fiscal Year (FY) 2017, the use of a statewide average per-acre land 
value would result in a lower per-acre fee than that assessed in FY 
2016. Accordingly, the 13 affected licensees would pay lower annual 
charge assessments for use of federal lands in FY 2017 than they did 
the previous fiscal year. Furthermore, six of the 13 affected licensees 
are members of the Alaska Group, which petitioned the Commission to 
revise its methodology for calculating annual charges for use of 
federal lands by establishing a statewide average per-acre land value 
for Alaska. Consequently, the proposed rule should not impose a 
significant economic impact on small entities.
    37. Accordingly, pursuant to section 605(b) of the RFA, the 
Commission certifies that this proposed rule will not have a 
significant economic impact on a substantial number of small entities.

D. Comment Procedures

    38. The Commission invites interested persons to submit comments on 
the matters and issues proposed in this notice to be adopted, including 
any related matters or alternative proposals that commenters may wish 
to discuss. Comments are due October 30, 2017. Comments must refer to 
Docket No. RM16-19-000, and must include the commenter's name, the 
organization they represent, if applicable, and their address.
    39. The Commission encourages comments to be filed electronically 
via the eFiling link on the Commission's Web site at http://www.ferc.gov. The Commission accepts most standard word processing 
formats. Documents created electronically using word processing 
software should be filed in native applications or print-to-PDF format 
and not in a scanned format. Commenters filing electronically do not 
need to make a paper filing.
    40. Commenters that are not able to file comments electronically 
must send an original of their comments to: Federal Energy Regulatory 
Commission, Secretary of the Commission, 888 First Street NE., 
Washington, DC 20426.
    41. All comments will be placed in the Commission's public files 
and may be viewed, printed, or downloaded remotely as described in the 
Document Availability section below. Commenters on this proposal are 
not required to serve copies of their comments on other commenters.

E. Document Availability

    42. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and print the contents of this document via the 
Internet through the Commission's Home Page (http://www.ferc.gov) and 
in the Commission's Public Reference Room during normal business hours 
(8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A, 
Washington, DC 20426.
    43. From the Commission's Home Page on the Internet, this 
information is available on eLibrary. The full text of this document is 
available on eLibrary in PDF and Microsoft Word format for viewing, 
printing, and/or downloading. To access this document in eLibrary, type 
the docket number excluding the last three digits of this document in 
the docket number field.
    44. User assistance is available for eLibrary and the Commission's 
Web site during normal business hours from the Commission's Online 
Support at 202-502-6652 (toll free at 1-866-208-3676) or email at 
<a href="/cdn-cgi/l/email-protection#c1a7a4b3a2aeafada8afa4b2b4b1b1aeb3b581a7a4b3a2efa6aeb7"><span class="__cf_email__" data-cfemail="680e0d1a0b07060401060d1b1d1818071a1c280e0d1a0b460f071e">[email protected]</span></a>, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at 
<a href="/cdn-cgi/l/email-protection#a7d7d2c5cbcec489d5c2c1c2d5c2c9c4c2d5c8c8cae7c1c2d5c489c0c8d1"><span class="__cf_email__" data-cfemail="6a1a1f0806030944180f0c0f180f04090f180505072a0c0f1809440d051c">[email protected]</span></a>.

[[Page 41364]]

List of Subjects in 18 CFR Part 11

    Dams, Electric power, Indians-lands, Public lands, Reporting and 
recordkeeping requirements.

    By direction of the Commission.

    Issued: August 17, 2017.
Nathaniel J. Davis, Sr.,
Deputy Secretary.

    In consideration of the foregoing, the Federal Energy Regulatory 
Commission proposes to amend Part 11, Chapter I, Title 18, Code of 
Federal Regulations, as follows:

PART 11--ANNUAL CHARGES UNDER PART I OF THE FEDERAL POWER ACT

0
1. The authority citation for part 11 continues to read as follows:

    Authority: 16 U.S.C. 792-828c; 42 U.S.C. 7101-7352.

0
2. In Sec.  11.2, add paragraph (c)(1)(iv) to read as follows:
* * * * *
    (c) * * *
    (1) * * *
    (iv) For all geographic areas in Alaska except for the Aleutian 
Islands Area, the Commission will calculate a statewide average per-
acre land value based on the average per-acre land and building values 
published in the NASS Census for the Kenai Peninsula and the Fairbanks 
Areas. This statewide average per-acre value will be reduced by the sum 
of the state-specific modifier and seven percent. The resulting 
adjusted statewide average per-acre value will be applied to all 
projects located in Alaska, except for those projects located in the 
Aleutian Island Area.
* * * * *
[FR Doc. 2017-17846 Filed 8-30-17; 8:45 am]
BILLING CODE 6717-01-P


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