§ 2806.52 - Annual rents and fees for solar and wind energy development.

§ 2806.52 Rents Annual rents and fees for solar and wind energy development grants.

Cross Reference

Link to an amendment published at 89 FR 35680, May 1, 2024.

You must pay the greater of either an annual acreage rent and MW capacity fee for your solar energy development grant or a capacity fee. The acreage rent and capacity fee are determined as follows:

MW

(a) Acreage rent. The BLM will calculate the acreage rent for your grant or lease by multiplying the number of acres of the authorized area (rounded up to the nearest tenth of an acre) within by the authorized area times the annual per-acre zone rate from the solar energy acreage rent schedule in effect at the time the authorization is issuedfor the year in which the payment is due.

(1) Per-acre zone rate. The annual per-acre zone rate rate for your grant or lease is calculated using the State per-acre value from the solar or wind energy acreage rent schedule is calculated using the per acre zone value (as assigned under paragraph (a)(2) of this section), , the encumbrance factor, rate of returnthe year of the grant or lease term, and the annual adjustment factor. The calculation for determining the annual per-acre zone rate is A × B × C × D = E [(1 + C) ^ D] where:

(i) A is the state per-acre zone value = the same per acre zone values described in the linear rent schedule in § 2806.20(c);

(

from the solar or wind energy acreage rent schedule published by the BLM for the year on which your right-of-way grant or lease is issued and is based on the National Agricultural Statistics Service (NASS) Survey of Pastureland Rents. The BLM will prepare the rent schedule by averaging the NASS reported pastureland rents for the most recent 5-year period, using only those years for which rent is reported by NASS. The BLM will update the rent schedule every 5 years consistent with the timing of rent adjustments under § 2806.22.

(ii) B is the encumbrance factor = , which is 100 percent for solar energy and 5 percent for wind energy;

(iii) C is the rate of return = 5.27 annual adjustment factor, which is 3 percent; and,

(iv) D is the annual adjustment factor = the average annual change in the IPD-GDP for the 10-year period immediately preceding the year that the NASS Census data becomes available (see § 2806.22(a)). The BLM will adjust the per acre zone rates each year based on the average annual change in the IPD-GDP as determined under § 2806.22(a). Adjusted rates are effective each year on January 1; and

(v) E is the annual per acre zone rate.

(2) Assignment of counties. The BLM will calculate the per acre zone rate in paragraph (a)(1) of this section by using a State-specific factor to assign a county to a zone in the solar energy acreage rent schedule. The BLM will calculate a State-specific factor and apply it to the NASS data (county average per acre land and building value) to determine the per acre value and assign a county (or other geographical area) to a zone. The State-specific factor represents the percent difference between improved agricultural land and unimproved rangeland values, using NASS data. The calculation for determining the State-specific factor is (A/B)−(C/D) = E where:

(i) A = the NASS Census statewide average per acre value of non-irrigated acres;

(ii) B = the NASS Census statewide average per acre land and building value;

(iii) C = the NASS Census total statewide acres in farmsteads, homes, buildings, livestock facilities, ponds, roads, wasteland, etc.;

(iv) D = the total statewide acres in farms; and

(v) E = the State-specific percent factor or 20 percent, whichever is greater.

(3) Basis of assignment. The initial assignment of counties to the zones on the solar energy acreage rent schedule will be based upon the most recent NASS Census data (2012) for years 2016 through 2020. The BLM may on its own or in response to requests consider making regional adjustments to those initial assignments, based on evidence that the NASS Census values do not accurately reflect the value of the BLM-managed lands in a given area. The BLM will update this rent schedule once every 5 years by re-assigning counties to reflect the updated NASS Census values as described in § 2806.21 and recalculate the State-specific percent factor once every 10 years as described in § 2806.22(b).

(4) Acreage rent payment. You must pay the acreage rent regardless of the stage of development or operations on the entire public land acreage described in the right-of-way authorization. The BLM State Director may approve a rental payment plan consistent with § 2806.15(c).

(5) Acreage rent adjustments. This paragraph (a)(5) applies unless you selected the scheduled rate adjustment method (see § 2806.51). The BLM will adjust the acreage rent annually to reflect the change in the per acre zone rates as specified in paragraph (a)(1) of this section. The BLM will use the most current per acre zone rates to calculate the acreage rent for each year of the grant term.

(6) Copies. You may obtain a copy of the current per acre zone rates for solar energy development (solar energy acreage rent schedule) at https://www.blm.gov, from your local BLM state, district, or field office, or by writing: Attention to the National Renewable Energy Coordination Office, U.S. Department of the Interior, Bureau of Land Management, 1849 C Street NW, Mail Stop 2134LM, Washington, DC 20240.

(b) MW capacity fee. The MW capacity fee is calculated by multiplying the approved MW capacity by the MW rate (for the applicable type of technology employed by the project) from the MW rate schedule (see paragraph (b)(2) of this section). You must pay the MW capacity fee annually when electricity generation begins or is scheduled to begin in the approved POD, whichever comes first:

(1) MW rate. The MW rate is calculated by multiplying the total hours per year, by the net capacity factor, by the MWh price, by the rate of return. For an explanation of each of these terms, see the definition of MW rate in § 2801.5(b).

(2)

year of the grant or lease term, which is the number of years the grant or lease has been authorized. For example, the first year (whether partial or full year) would be 0 and the second year would be 1.

(2) You may obtain a copy of the current solar or wind energy acreage rent schedule from any BLM state, district, or field office or by writing the address found under § 2804.14(c) of this part, Attention: Renewable Energy Coordination Office. The BLM also posts the current solar energy acreage rent schedule at http://www.blm.gov.

(b) Capacity fee.

(1) The capacity fee is calculated using the MWh rate or the alternative MWh rate, the MWh rate reduction, the domestic content reduction, the Project Labor Agreement (PLA) reduction, the rate of return, the year of the grant or lease, the annual adjustment factor, and the annual power generated on the right-of-way. You must pay the capacity fee annually, beginning the year in which electricity generation begins or is scheduled to begin in the approved POD, whichever comes first, unless the acreage rent (see paragraph (a) of this section) exceeds the capacity fee in a given year. The calculation for determining the capacity fee is A × B × C × D × [(1 + E) ^F] × G × H where:

(i) A is the MWh rate or the alternative MWh rate. The MWh rate is the annual weighted average wholesale price per MWh for the major trading hubs serving the 11 Western States of the continental United States for the full 5 calendar-year period preceding the year in which your grant or lease was issued, rounded to the nearest dollar increment (see paragraph (7)). An Alternative MWh rate may be approved by the BLM if you have entered into a power purchase agreement, such as with a utility, and that rate is lower than the MWh rate. You must provide proof of the lower rate to the BLM, and if the BLM determines the lower rate is appropriate, the alternative MWh rate will be used in place of the MWh rate.

(ii) B is the MWh rate reduction, which is equal to 80 percent for fee payments due before 2036. Starting 2036, the MWh rate reduction for new authorizations transitions to 20 percent, as follows:

Table 1 to Paragraph (b)(1)(ii)

Calendar year	MWh rate reduction (%)	B— calculation multiplier (%)
2035	80	20
2036	60	40
2037	40	60
2038 and beyond	20	80

(iii) C is the Domestic Content reduction, which is equal to 1.0 for fee payments when a holder's project does not qualify for the domestic content reduction. C is equal to 0.8 when the holder can demonstrate that a facility qualifies for the domestic content reduction. A facility qualifies for the domestic content reduction if a holder documents that the facility would qualify as “Produced in the United States”, consistent with 2 CFR part 184.

(iv) D is the factor for the Project Labor Agreement reduction, which is equal to 1.0 for fee payments when the holder does not execute a PLA. D is equal to 0.8 if the holder executes a PLA for the construction of the project.

(v) Request for conditional approval: Alternative MWh rate, Domestic Content reduction and PLA reduction. The alternative MWh rate, the Domestic Content reduction and PLA reduction (paragraphs (b)(1)(ii) and (iii) and (iv) of this section) may only be applied if a request for conditional approval is received by the BLM prior to the issuance of a grant or lease. A request for conditional approval must be submitted with sufficient documentation to demonstrate that the development qualifies or may later qualify for the rate reductions. A request for conditional approval is subject to the holder demonstrating, to the satisfaction of the BLM's Authorized Officer, that the development qualifies. If energy generation begins before the holder has demonstrated that the facility qualifies, the BLM will charge the holder the full capacity fee, without the alternative MWh rate, Domestic Content reduction, or PLA reduction. The capacity fee may be updated for subsequent calendar years after the holder demonstrates that the facility qualifies, but the BLM will not refund past payments made before the alternative MWh rate, domestic content reduction, or PLA reduction went into effect.

(2) E is the annual adjustment factor, which is 3 percent.

(3) F is the year of the grant or lease term, which is the number of years the grant or lease has been authorized. For example, the first year (whether partial or full year) would be 0 and the second year would be 1.

(4) G is the rate of return, which is 7 percent.

(5) H is the annual energy generated on the right-of-way and will be provided to the BLM by the grant or leaseholder in an annual certified statement. The BLM will bill to coincide with the start of the calendar year. The first-year payment in advance will be based on estimated energy generation and the BLM will determine final payment for the first year based on actual energy generation. Subsequent payments in advance will be based on the most recent calendar year's actual energy generation reported on the certified statement, unless exception is approved in paragraph (vi) of this section.

(i) The holder must submit the annual certified statement to the BLM before the first year of energy generation begins or is scheduled to begin as approved in the Plan of Development, whichever comes first. Certified annual statements must be submitted to the BLM by October, each year.

(ii) Prior to the start of energy generation, the holder must submit to the BLM in the certified statement the estimated energy generation of the development for the first year.

(iii) Once energy generation has begun, the holder must submit to the BLM in the certified statement the most recent calendar year's actual energy generation of the development.

(iv) The BLM will calculate the capacity fee from the certified statement. For projects that include generation on public and non-public lands, the holder will prorate the total energy generation by the percentage of the right-of-way footprint on public lands relative to the total development area footprint.

(v) If the year's actual energy generation exceeds or is less than the amount of energy generation used to bill for the payment in advance, the holder will be billed, credited, or refunded for the underpayment or overpayments pursuant to §§ 2806.13(e) and 2806.16. In no event will the total payment be less than the annual acreage rent.

(vi) The BLM may approve a request made by a right-of-way holder to provide a new estimate of energy generation to the BLM in the annual certified statement to use for billing the next year's payment in advance if: the right-of-way holder has planned maintenance activities, or other interruptions to energy generation, that would reduce the amount of energy generated by 25 percent or more; or, the right-of-way holder is aware that the energy generation in the subsequent year will exceed the actual energy generation for the previous year by 25 percent or more. See § 2805.12(c)(8)(i) through (iii) for the steps to follow when failing to meet diligent operation requirements.

(vii) If the right-of-way holder underestimates energy generation by 25 percent or more of the actual energy generation or does not provide the BLM with a new estimate when energy production will exceed the previous year's actual production by more than 25 percent, the BLM may assess the holder a late payment fee of 10 percent of the actual generation for each year of underestimation. This section applies unless the BLM has approved a request to provide a new estimate under § 2806.52(b)(5)(vi), and the approved new estimate does not underestimate energy generation by 25 percent or more of actual energy generation or if the holder can provide the BLM with justification consistent with § 2805.12(e).

(6) MWh rate schedule. You may obtain a copy of the current

MW

MWh rate schedule

for solar energy development at https://www.blm.gov, from your local

from any BLM state, district, or field office

,

or by writing

: Attention to the National

the address found under § 2804.14(c) of this part, Attention: Renewable Energy Coordination Office

, U.S. Department of the Interior, Bureau of Land Management, 1849 C Street NW, Mail Stop 2134LM, Washington, DC 20240.

(3) Periodic adjustments in the MW rate. This paragraph (b)(3) applies unless you selected the scheduled rate adjustment method (see § 2806.51). The BLM will adjust the MW rate applicable to your grant every 5 years, beginning in 2021, by recalculating the following two components of the MW rate formula:

(i) The adjusted MWh price is the average of the annual weighted average wholesale price per MWh for the major trading hubs serving the 11 Western States of the continental United States for the full 5 calendar-year period preceding the adjustment, rounded to the nearest dollar increment; and

(ii) The adjusted rate of return is the 10-year average of the 20-year U.S. Treasury bond yield for the full 10 calendar-year period preceding the adjustment, rounded to the nearest one-tenth percent, with a minimum rate of return of 4 percent.

(4) MW rate phase-in. This paragraph (b)(4) applies unless you selected the scheduled rate adjustment method (see § 2806.51). If you hold a solar energy development grant, the MW rate will be phased in as follows:

(i) There is a 3-year phase-in of the MW rate when electricity generation begins or is scheduled to begin in the approved POD, whichever comes first, at the rates of:

(A) 25 percent for the first year. This rate applies for the first partial calendar year of operations, from the date electricity generation begins until Dec. 31 of that year;

(B) 50 percent for the second year; and

(C) 100 percent for the third and subsequent years of operations.

(ii) After generation of electricity starts and an approved POD provides for staged development:

(A) The 3-year phase-in of the MW rate applies to each stage of development; and

(B) The MW capacity fee is calculated using the authorized MW capacity approved for that stage plus any previously approved stages, multiplied by the MW rate.

(5

. The BLM also posts the current MWh rate schedule at http://www.blm.gov.

(7) Periodic adjustments.

(i) The MWh rate applicable to your right-of-way will be the MWh rate in effect the first year for your grant or lease and will not be updated with subsequent MWh rate schedule adjustments. The MWh rate applicable to your right-of-way will only be updated each year by the annual adjustment factor under paragraph (b)(2) of this section.

(ii) The MWh rate schedule for new grants and leases will be adjusted once every 5 years consistent with the timing of rent adjustments under § 2806.22 of this part and consistent with paragraph (b)(1) of this section.

(8) The general payment provisions for rents described in this subpart, except for § 2806.14(a)(4), also apply to the

MW

capacity fee.

(c) Initial implementation Implementation of the acreage rent and MW capacity fee. This paragraph (c) applies unless you selected the scheduled rate adjustment method (see The rates for acreage rent and capacity fees apply to all grants and leases issued after the effective date of this rule, and to existing grants and leases if the holder elects to continue paying under the rate setting methodology established at the time of your authorization per § 2806.51). If you hold a solar energy grant and made payments for billing year 2016, the BLM will reduce by 50 percent the net increase in annual costs between billing year 2017 and billing year 2016. The net increase will be calculated based on a full calendar year.(c).

(d) Scheduled rate adjustment. Under the scheduled rate adjustment method (see § 2806.51), the BLM will update your per acre zone rate and MW rate as follows:

(1) The BLM will calculate your payments using the per acre zone rate (see § 2806.52(a)(1)) and MW rate (see § 2806.52(b)(1)) in place when your grant is issued, or for existing grants, the per acre zone rate and MW rate in place prior to December 19, 2016, as adjusted under paragraph (d)(6) of this section;

(2) The per acre zone rate will increase:

(i) Annually, beginning after the first full calendar year plus any initial partial year following issuance of your grant, by the average annual change in the IPD-GDP as described in § 2806.22(b); and

(ii) Every 5 years, beginning after the first 5 calendar years, plus any initial partial year, following issuance of your grant, by 20 percent;

(3) The MW rate will increase by 20 percent every 5 years, beginning after the first 5 years, plus the initial partial year, if any, your grant is in effect;

(4) The BLM will not apply the phase-in to your MW rate under § 2806.52(b)(4) or the reduction under § 2806.52(c);

(5) If the approved POD for your project provides for staged development, the BLM will calculate the MW capacity fee using the MW capacity approved for the current stage plus any previously approved stages, multiplied by the MW rate, as described under this section.

(6) For grants in place prior to January 18, 2017 that select the scheduled rate adjustment method offered under § 2806.51(c), the per acre zone rate and the MW rate in place prior to December 19, 2016 will be adjusted for the first year's payment using the scheduled rate adjustment method as follows:

(i) The per acre zone rate will increase by the average annual change in the IPD-GDP as described in § 2806.22(b) plus 20 percent;

(ii) The MW rate will increase by 20 percent; and

(iii) Subsequent increases will be performed as set forth in paragraphs (d)(2) and (3) of this section from the date of the initial adjustment under this paragraph (d).

[81 FR 92217, Dec. 19, 2016, as amended at 89 FR 25964, Apr. 12, 2024; 89 FR 35680, May 1, 2024]