By Janice Schneider and Joshua Marnitz

Last week, the Bureau of Land Management (BLM) published in the Federal Register an Advance Notice of Proposed Rulemaking outlining a competitive process for leasing public lands for solar and wind energy development.  76 Fed. Reg. 81906 (December 29, 2011).  BLM believes that a competitive process will better enable it to capture fair market value for the use of public lands, as required under the Federal Land Policy and Management Act (FLPMA) (43 U.S.C. 1764(g)), and ensure fair access to leasing opportunities for renewable energy development.  BLM will accept public comments on its proposal until February 27, 2012.

The proposed rulemaking would establish competitive bidding procedures for lands within designated solar and wind energy development leasing areas, define qualifications for potential bidders, and structure the financing arrangements necessary for the process.  The public lands available for competitive bidding would include those identified by BLM as Solar Energy Zones (SEZ) once it finalizes the Draft Programmatic Environmental Impact Statement for Solar Energy Development in Six Southwestern States (Draft Solar PEIS).  [A discussion of SEZs and BLM’s October 2011 proposal to restrict further the amount of public land available for solar energy development is available here.]  As BLM did not designate potential wind energy development leasing areas in the Final Programmatic Environmental Impact Statement on Wind Energy Development on BLM-Administered Lands in the Western United States (Final Wind PEIS) or its associated Record of Decision (ROD), it anticipates needing to subsequently establish Wind Energy Zones before applying its competitive leasing program to wind.

The rulemaking would enable BLM to offer lands through a call for nominations and a competitive process to solicit interest in parcels of land instead of simply through the existing application process.  While competitive leasing might potentially maximize federal revenues, the proposal would mandate additional procedures and would appear to require a new and redundant environmental review process for leasing.  These additional requirements could ultimately delay development of individual projects on the ground and potentially limit the ability to develop in areas not offered for leasing.

BLM states that the new regulations could also require:

  • Publication of a Notice of Competitive Offer, which would include a legal description of the lands involved, the process for conducting the competitive offer, a minimum bid requirement, the qualifications for potential bidders, and due diligence requirements for the successful bidder to submit a Plan of Development (POD).
  • Definition of a bonus bid competitive process or other competitive procedures, including sealed bids, oral auctions or ascending bidding, two-stage (i.e., a combination of sealed and oral auctions) bidding, or multiple-factor bidding, possibly structured similar to the method that the Bureau of Ocean Energy Management provides for offshore wind leasing (30 CFR 285.220). 
  • BLM would issue a competitive ROW lease to the successful bidder, and require a POD within specified timeframes.  The review and approval process for the POD would again require compliance with NEPA and other Federal laws and regulations.  Approved PODs would include due diligence development requirements to ensure timely actual development.
  • BLM proposes that competitive ROW leases be 30-year fixed-term leases with specific terms and conditions, available for renewal.

 BLM is currently seeking comments on the following issues, among others:

  • How the competitive process should be structured for leasing public lands within designated solar or wind energy development areas;
  • Whether a competitive process should be implemented for leasing public lands outside designated solar or wind energy development areas (and if so, how the process should be structured);
  • What competitive bidding procedures should be adopted;
  • What is the appropriate term for leases;
  • How fees should be determined; and
  • What due diligence requirements should be incorporated into competitive ROW leases and thus required of project developers.

BLM’s proposal has the potential to impact not only project proponents’ ability to site solar and wind energy projects on public lands, but also the costs, terms and conditions of doing so.  Entities with an interest in these areas should consider participating actively in this process.