Weekly Compliance Digest – BLM Solar and Wind Energy Rule
Bureau of Land Management’s (BLM) Final Solar and Wind Rule
What is it?
Last week, the Bureau of Land Management (BLM) finalized its rule governing solar and wind energy development on public lands. The rule strengthens existing policies and creates a new leasing program to support renewable energy development through competitive leasing processes and incentives to encourage development in suitable areas. The rule formalizes key aspects of the BLM’s existing “Smart from the Start” approach to renewable energy development. The rule aims to:
- Incentivize development in areas with the highest generation potential and fewest resource conflicts by: 1) providing financial incentives to developers, including less frequent adjustments to rent and longer phase-ins for other fees; 2) allowing standard bonds as opposed to bonds based on full reclamation costs; 3) awarding leases in these areas through competitive processes; and 4) streamlining the leasing process by, for example, granting applicants site control earlier.
- Ensure transparency and predictability in rents and fees – for example, by giving developers the option of selecting fixed rate adjustments instead of market-based adjustments.
- Update the BLM’s current fee structure in response to market conditions, which will bring down near-term costs for solar projects, the BLM says.
- Broaden the BLM’s authority to use competitive processes outside of designated leasing areas.
In addition, the rule complements the Department’s landscape-scale planning efforts, including the Western Solar Plan, California’s Desert Renewable Energy Conservation Plan, and Arizona’s Restoration Design Energy Project, which were designed to streamline development in areas with high generation potential, while protecting environmental, cultural and recreational resources.
Who is affected?
The final rule affects developers with solar and wind energy projects across the lands managed by the BLM. The rule’s competitive leasing provisions are specifically targeted at renewable energy development projects located on the 700,000 acres of public lands that have been identified in Arizona, California, Colorado, Nevada, New Mexico and Utah. The 700,000 acres include 19 formally designated solar energy zones (SEZs) covering nearly 300,000 acres, and 388,000 acres of “development focus areas” identified in the Desert Renewable Energy Conservation Plan in Southern California.
What are the provisions?
The final rule includes a number of changes to the current policy. Here’s a summary of changes for some of the main issues:
- Approach to Obtaining Fair Market Value for Solar Energy
- Current policy: Policy includes acreage and MW rates. Rates are based on National Agricultural Statistics Service (NASS) land survey data and power market conditions from 2010. Does not allow phase-in of MW rates.
- Final Rule: Final rule includes acreage and MW rates. Initial rates are based on NASS land data and valuation of power pricing for five-year period (2010-2014). Provides for MW rate phase-in. MW rates are lower than current policy.
- Approach to Obtaining Fair Market Value for Wind Energy
- Current policy: Policy includes acreage and MW rates. Rates are based on NASS data and valuation of power pricing in 2008. Does not provide for the phase-in of MW capacity rates following commencement of power generation.
- Final rule: Final rule includes acreage and MW rates (aligns approach for wind and solar). Initial rates based on NASS land data and valuation of power pricing for five-year period (2010-2014). Provides for MW rate phase-in. Rule’s rates based on market surveys prepared by the Office of Valuation Services.
- Approach to Competitive Leasing
- Current policy: Competition allowed only when applicants submit competing applications for rights of way in the same area. No competitive leasing allowed at BLM’s own initiative.
- Final rule: Allows BLM to use competitive processes at its own initiative or when there are competing applications.
- Within designated leasing areas (DLAs), allows lease award to highest bidder.
- Outside of DLAs, highest bidder obtains “preferred applicant status.”
The regulations will become effective 30 days after they are published in the Federal Register.
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To learn more about EHS, Sustainability and Risk trends, we encourage you to read the NAEM 2016 Trends Report: Planning for a Sustainable Future, which presents the ideas and issues that will shape EHS and Sustainability Management in 2016 and beyond.