Bipartisan House group urges Interior to finish leasing rule

Source: Scott Streater, E&E reporter • Posted: Wednesday, June 22, 2016

A bipartisan House coalition urged Interior Secretary Sally Jewell today to finalize a proposed rule that would establish competitive leasing for renewable energy projects on federal lands across the West.

Fourteen House members led by California Reps. Paul Cook (R) and Alan Lowenthal (D) wrote in a three-page letter to Jewell that completion of the rule unveiled in 2014 is critical to continue the unprecedented effort by the Obama administration to develop commercial-scale solar, wind and geothermal projects on federal lands.

“We strongly encourage you to prioritize completion of this rulemaking,” the lawmakers wrote.

The White House regulatory agenda released last month targets finalizing the rule by midsummer (Greenwire, May 19). A Bureau of Land Management source said the rule could be finalized as early as next month.

The rule would establish a process similar to that guiding oil and natural gas development on public lands, where the industry could bid on nominated parcels for the right to be given a lease. The rule would also set rental and bonding requirements to ensure a fair rate of return to taxpayers (E&ENews PM, Sept. 25, 2014).

Its major impact will be to promote solar development, allowing BLM to hold competitive lease sales inside 19 formally designated solar energy zones (SEZs) covering nearly 300,000 acres, similar to the process in place for proposed oil and natural gas projects on federal land.

In the absence of the leasing rule, BLM has used an interim competitive “auction” process that the industry has criticized at times as confusing. Under the interim process, winning bidders are little more than BLM’s “preferred applicants,” meaning they pay for the right to be first in line to have their right-of-way applications and plans of development processed.

The lawmakers told Jewell the total rent paid to the Treasury in 2014 for solar and wind-power projects on federal lands was only $12.7 million.

But industry demand to develop commercial-scale projects on federal land is growing, they added, noting that a competitive auction held in June 2014 inside the Dry Lake SEZ in southern Nevada saw energy developers bid $5.8 million.

“Transitioning from the antiquated right-of-way process for siting renewable energy projects to a competitive leasing process (as has long been the practice for fossil fuel resources) should generate considerably more revenue for the taxpayer,” the letter says. “Adopting a modern approach to leasing should also benefit the renewable energy industry by streamlining the application process.”

The lawmakers also push Jewell in the letter to include in a long-term renewables development strategy provisions guaranteeing “that a portion of the revenues” derived from projects on public land “are used to assist local communities, help with habitat restoration, and reduce the backlog of renewable energy permits.”

Those priorities, they write, are included in the Public Land Renewable Energy Development Act of 2015, H.R. 2663, sponsored by Rep. Paul Gosar (R-Ariz.). The bill would require the establishment of a royalty for wind and solar production that would be shared among states and counties and help fund permit processing, wildlife habitats and public lands access.

Gosar, whose bill has stalled in the House despite bipartisan support, is not among the 14 congressional members to sign today’s letter.

A companion bill, S. 1407, sponsored by Sen. Dean Heller (R-Nev.), has also stalled (E&E Daily, July 30, 2015).

“We hope the BLM will complete its rulemaking and work with Congress to advance this complimentary legislative solution to expand responsible renewable energy on public lands,” the letter concludes.

The latest letter falls in line with the views of conservation groups like the Wilderness Society, which has said it favors transitioning to a competitive leasing process and believes BLM’s proposed rule will help ensure renewables projects are sited properly.

BLM since late 2011 has been working to develop a formal rule that would establish a competitive leasing process for renewables that replaces the auctions and preferred applicant process. Developers that hold federal leases have legal rights that the preferred applicants in the current interim process do not.

Industry groups, including the Solar Energy Industries Association, have complained that the interim competitive auction process for developing parcels inside the SEZs is confusing and has turned some energy developers off of developing in the zones.

That became clear when BLM held its first competitive auction in 2013, involving three parcels covering 3,700 acres inside two SEZs in Colorado’s San Luis Valley, a region considered to have some of the nation’s best solar energy potential (E&ENews PM, Oct. 24, 2013).

The industry submitted no bids, in part, government and industry officials conceded, because of the confusing “preferred applicant” process.

Still, BLM has permitted 35 solar power projects on federal or tribal lands since 2009. Those projects, if all are built, would have the capacity to produce nearly 10,000 MW of electricity, or enough to power more than 3 million homes.