Energy Projects on Federal Lands: Leasing
and Authorization
Adam Vann
Legislative Attorney
September 8, 2009
Congressional Research Service
7-5700
www.crs.gov
R40806
CRS Report for Congress
P
repared for Members and Committees of Congress
Energy Projects on Federal Lands: Leasing and Authorization
Summary
A variety of statutes and agency regulations govern leasing and permitting for energy projects,
including oil and natural gas development as well as alternative energy projects, on federal lands.
This report explains the legal framework for energy leasing and development on federal lands.
The report reviews laws and regulations affecting leasing of federal lands for exploration and
production of oil and natural gas, which have evolved under a complex leasing system over the
last century. The report also addresses existing laws and regulations that affect the use of federal
lands for renewable energy projects, including geothermal, wind, and solar energy.
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Energy Projects on Federal Lands: Leasing and Authorization
Contents
Introduction ................................................................................................................................ 1
Oil and Natural Gas Exploration and Production on Federal Lands .............................................. 1
History and Background........................................................................................................ 1
Public Lands Subject to Oil and Natural Gas Leasing ............................................................ 2
Development of Resource Management Plans ....................................................................... 2
Bureau of Land Management .......................................................................................... 2
U.S. Forest Service ......................................................................................................... 3
The Competitive Leasing Process.......................................................................................... 4
The Noncompetitive Leasing Process .................................................................................... 5
Lease Terms and Conditions.................................................................................................. 6
General Statutory Restrictions ......................................................................................... 6
Payment Terms: Rental Fees and Royalties...................................................................... 6
Lease Terms, Extensions, and Cancellations .................................................................... 7
Applications for Permits to Drill ........................................................................................... 8
Bureau of Land Management .......................................................................................... 8
U.S. Forest Service ......................................................................................................... 9
Renewable Energy Projects on Federal Lands............................................................................ 10
Background ........................................................................................................................ 10
Geothermal Project Leasing ................................................................................................ 11
Background .................................................................................................................. 11
The Leasing Process...................................................................................................... 11
Exploration and Production Under Geothermal Leases .................................................. 13
Authorizations for Wind and Solar Energy Projects ............................................................. 14
Background .................................................................................................................. 14
Title V of the Federal Land Policy and Management Act ............................................... 15
Contacts
Author Contact Information ...................................................................................................... 18
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Energy Projects on Federal Lands: Leasing and Authorization
Introduction
A variety of interrelated statutes and agency regulations govern leasing and permitting for energy
exploration and production on federal lands.1 Generally, these projects can be divided into two
categories, each of which is governed by its own set of statutes and regulations. The first category
is the exploration for and production of fossil fuels, including oil and natural gas. Oil and natural
gas exploration and production on federal lands are generally governed by the Mineral Lands
Leasing Act of 1920 and subsequent amendments to that act, as administered by the Bureau of
Land Management, an agency that is part of the U.S. Department of the Interior. Generally, the
lessee is authorized to explore for and ultimately produce oil or natural gas on federal lands in
exchange for lease payments and royalties paid to the U.S. Government on the production.
Exploration and production activities under a lease must be authorized independently by the
Bureau of Land Management.
The second category pertains to renewable energy projects that are permitted under rights-of-way
or similar property interests granted to applicants in accordance with the Federal Land Policy and
Management Act of 1976. Under that Act, these projects are often undertaken pursuant to a right-
of-way or similar property interest. However, geothermal energy projects are considered mineral
projects and thus are leased under a separate set of laws and regulations in a manner similar to oil
and natural gas project leasing.
Oil and Natural Gas Exploration and Production on
Federal Lands
History and Background
At the start of the 20th century, private entities could explore, develop, and purchase federal lands
containing oil with relative ease. Oil and natural gas resources on these federal lands were
transferred to full private ownership pursuant to the terms of the Mining Law of 1872. This
process was known as “patenting.” Under the patenting process, full ownership of oil lands
“could be obtained for a nominal amount.”2
However, Congress eventually decided that oil and natural gas resources on onshore federal lands
should remain under federal ownership. The enactment of the Mineral Lands Leasing Act of 1920
(MLA) ended the private acquisition of title to onshore federal oil lands by authorizing the
Secretary of the Interior to issue permits for exploration and to lease lands containing oil and
natural gas and other defense-related minerals.3 The MLA thus allowed the federal government to
maintain ultimate control over these federal lands while leasing them to oil and natural gas
1 This report provides a discussion of energy projects on onshore federal lands (i.e., “public lands,” as that term is
defined in the Federal Land Policy and Management Act of 1976). For discussion of offshore energy projects, see CRS
Report RL33404, Offshore Oil and Gas Development: Legal Framework, by Adam Vann; CRS Report R40175, Wind
Energy: Offshore Permitting, by Adam Vann; and CRS Report RL34741, Drilling in the Great Lakes: Background and
Issues, coordinated by Pervaze A. Sheikh.
2 See Pan Am. Petroleum & Transp. Co. v. United States, 273 U.S. 456, 486 (1927) (internal citation omitted).
3 Mineral Lands Leasing Act of 1920 41 Stat. 4373 (1920), codified at 30 U.S.C. §181 et seq.
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companies. The first half of this report details the legal framework for this oil and natural gas
leasing process.
Public Lands Subject to Oil and Natural Gas Leasing
The MLA authorizes the Secretary of the Interior to lease oil and gas deposits and onshore public
lands containing oil and gas deposits, with the federal government retaining title to the lands.4
This leasing authority applies to National Forest System lands that are reserved from the public
domain, and to most reserved subsurface mineral estates.5 However, it excludes numerous
categories of lands such as national parks and monuments, as well as lands in incorporated cities,
towns, and villages.6 Also, the Secretary of the Interior cannot issue any lease for National Forest
System lands reserved from the public domain if the Secretary of Agriculture objects.7 Areas
within the National Wilderness Preservation System cannot be leased, but valid property rights
that were already in existence by 1984 are preserved.8
The Secretary of the Interior is also authorized to withdraw public lands so that some or all
potential land uses, including use for oil and natural gas exploration and production, are not
permitted on those lands.9 A withdrawal involves “withholding an area of Federal land from
settlement, sale, location, or entry, under some or all of the general land laws, for the purpose of
limiting activities under those laws in order to maintain other public values in the area or
reserving the area for a particular public purpose or program.”10 However, limitations on the
Secretary’s withdrawal authority exist. For example, Congress can make withdrawals through
legislation, and the Secretary may not modify or revoke a congressional withdrawal.11
Development of Resource Management Plans
Bureau of Land Management
The Bureau of Land Management (BLM), an agency that is part of the Department of the Interior,
administers approximately 253.4 million acres of public lands under the Federal Land Policy and
Management Act of 1976 (FLPMA).12 The Secretary of the Interior must develop and revise
4 30 U.S.C. §181 For purposes of this report, the phrase “public lands” is used to signify “any land and interest in land
owned by the United States ... administered by the Secretary of the Interior through the Bureau of Land Management,
without regard to how the United States acquired ownership, except (1) lands located on the Outer Continental Shelf;
and (2) lands held for the benefit of Indians, Aleuts and Eskimos.” Federal Land Policy and Management Act of 1976,
43 U.S.C. §1702 (e).
5 Id.
6 Id.
7 Id. at §226(h). In addition, the U.S. Forest Service has issued separate regulations governing certain aspects of leasing
and permitting for oil and gas development on lands within its jurisdiction.
8 16 U.S.C. §1133(d)(3) (“Subject to valid rights then existing, effective January 1, 1984, the minerals in lands
designated ... as wilderness areas are withdrawn from all forms of appropriation under the mining laws and from
disposition under all laws pertaining to mineral leasing and all amendments thereto.”).
9 43 U.S.C. §1714 (2000).
10 Id. at §1702(j).
11 43 U.S.C. §§1701(a)(4), 1714(j); 43 C.F.R. §2300.0-3(a).
12 P.L. 94-579, codified at 43 U.S.C. §§1701-1782.
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Resource Management Plans (RMPs) for these public lands that consider the present and
potential future uses for lands managed by BLM.13 These RMPs serve as the initial determinant
of which lands may be subject to leasing, as all activities performed on BLM lands must be
consistent with the RMPs.14
The Secretary generally must apply “multiple use” and “sustained yield” principles when
developing RMPs.15 “Multiple use” principles require:
management of the public lands and their various resource values so that they are utilized in
the combination that will best meet the present and future needs of the American people;
making the most judicious use of the land for some or all of these resources or related
services over areas large enough to provide sufficient latitude for periodic adjustments in use
to conform to changing needs and conditions; the use of some land for less than all of the
resources; a combination of balanced and diverse resource uses that takes into account the
long-term needs of future generations for renewable and non-renewable resources.”16
“Sustained yield” requires the maintenance of “high-level annual or regular periodic output of the
various renewable resources of the public lands.”17 In addition, the Secretary is required to
provide opportunities for the public and various levels of government to participate in the
development of RMPs.18 This can include procedures such as holding public hearings, when
appropriate.19 Regulations require the preparation of an Environmental Impact Statement (EIS) or
an Environmental Assessment (EA) in accordance with the National Environmental Policy Act
(NEPA)20 when producing an RMP.21
U.S. Forest Service
The Forest Service manages approximately 193 million acres under the “multiple use” and
“sustained yield” policies.22 The Forest Service develops land management plans for Forest
13 43 U.S.C. §1712; 43 C.F.R. Parts 1600, 1610.
14 43 C.F.R. §1610.5-3.
15 43 U.S.C. §§1701(a)(7), 1732(a). An exception applies in circumstances “where a tract of such public land has been
dedicated to specific uses according to any other provisions of law [in which case] it shall be managed in accordance
with such law.” 43 U.S.C. §1732(a).
16 Id. at §1702(c).
17 Id. at §1702(h).
18 Id. at §1712(f).
19 Id.
20 42 U.S.C. §§4321 et seq.
21 See 43 C.F.R. §1601.0-6. The regulations stipulate that approval of an RMP constitutes a “major Federal action
significantly affecting the quality of the human environment”; thus, the preparation of an Environmental Impact
Statement (EIS) is required pursuant to NEPA. Id.; see 42 U.S.C. §4332(2)(C). NEPA also requires BLM to take a
“hard look” at the environmental impacts of significant proposed actions. 42 U.S.C. §4332(2)(C). If it is unclear
whether a proposed action will have significant environmental effects, the agency may prepare an Environmental
Assessment (EA). 40 C.F.R. §1501.3. Based on the EA, an agency may issue a finding of no significant impact
(FONSI), thereby concluding the NEPA process, or it may determine that preparation of an EIS is necessary. Id.
§1508.13. An EIS must address numerous issues, including the environmental impact of the proposed action,
alternatives to the proposed action, and any irreversible commitments of resources which would be involved if the
proposed action takes place. 42 U.S.C. §4332(2)(C). For further discussion of NEPA, see CRS Report RS20621,
Overview of National Environmental Policy Act (NEPA) Requirements, by Kristina Alexander.
22 Multiple-Use Sustained-Yield Act, P.L. 86-517, codified at 16 U.S.C. §§528-532.
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Service lands by considering the desired conditions, objectives, suitability of areas for various
uses, and other criteria.23 As with the BLM planning process, the laws governing Forest Service
land management and implementation require public notification and opportunities for public
participation.24 When analyzing Forest Service lands for potential leasing, the Forest Service
classifies lands into three categories:
1. lands that will be “[o]pen to development subject to the terms and conditions of
the standard oil and gas lease form”;
2. lands that will be “[o]pen to development but subject to constraints that will
require the use of lease stipulations”; and
3. lands that will be “[c]losed to leasing, distinguishing between those areas that are
being closed through exercise of management direction, and those closed by law,
regulation, etc.”25
The Forest Service must also comply with NEPA when analyzing NFS lands for potential
leasing.26 Once the Forest Service has completed its analysis of which NFS lands will be
available for leasing, it notifies BLM of its decisions, and subsequently may authorize BLM to
lease the lands in question.27
The Competitive Leasing Process
The MLA authorizes both competitive and noncompetitive leasing processes. Generally, public
lands go through the competitive leasing process first, and if no bids are received, the land will be
offered for noncompetitive leasing.
The process begins when BLM generates a list of lands available for competitive oil and natural
gas leasing. Private entities may respond by submitting nominations for parcels to be auctioned.28
No unit being auctioned may exceed 2,560 acres, except in Alaska, where the maximum unit
acreage is 5,760 acres.29 In addition, each unit must be “as nearly compact as possible.”30
The Secretary must provide 45 days notice before offering public lands for leasing, including a
30-day period for receiving public comments after notice is published in the Federal Register.31
Competitive bidding must be held on a quarterly basis in each state where public lands are
available for leasing.32 The Secretary may also authorize additional opportunities for bidding if he
considers them to be necessary.33
23 16 U.S.C. §1604; 36 C.F.R. §§219.5, 219.7
24 16 U.S.C. §§1604(d), 1612; 36 C.F.R. §219.9.
25 36 C.F.R. §228.102(c).
26 16 U.S.C. §1604(g); 36 C.F.R. §228.102(a).
27 36 C.F.R. §228.102(d), §228.102(e).
28 See 43 C.F.R. §3120.3-1.
29 30 U.S.C. §226(b)(1).
30 Id.
31 30 U.S.C. §226(f).
32 30 U.S.C. §226(b)(1).
33 Id.
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Once the public notice requirements have been satisfied, the public lands are offered for
competitive leasing through an oral auction.34 A national minimum acceptable bid of $2 per acre
applies to the auction.35 Any bids for less than the national minimum bid must be rejected.36 A
competitive bid constitutes a legally binding commitment and cannot be withdrawn.37 The MLA
requires the Secretary to accept the highest bid from a responsible qualified bidder whose bid
meets or exceeds the national minimum acceptable bid.38
The winning bidder at a competitive auction must submit the following payments on the day of
sale, unless otherwise specified: (1) the minimum bonus bid of $2 per acre; (2) the first year’s
rental payment; and (3) a processing fee as set forth in the BLM’s regulations.39 Then, the balance
of the bonus bid, if applicable, is due within 10 working days.40 The lease is issued within 60 days
of payment of the remainder of the bonus bid.41 The lease is also conditioned upon a royalty
payment of at least 12.5% in amount or value of the production that is removed or sold from the
leased land,42 unless the Secretary suspends, waives, or reduces the royalty.43
The Noncompetitive Leasing Process
If no bids are received at a competitive bidding auction—or if all bids submitted are for less than
the national minimum acceptable bid—the land will be offered for noncompetitive leasing within
30 days.44 This noncompetitive leasing remains available for two years after the competitive
bidding auction.45
The first qualified person who applies for a noncompetitive lease and pays the $75 application fee
is entitled to receive the lease without having to competitively bid.46 All noncompetitive offers
received during the first business day after the last day of the competitive auction are considered
to have been submitted simultaneously; in such cases, a lottery determines the lease winner.47
Unlike competitive bids, noncompetitive offers may be withdrawn by those who submitted them
within 60 days of filing the offer if no lease has yet been signed on the government’s behalf.48 As
with competitive leases, a noncompetitive lease is conditioned upon payment of a 12.5% royalty
in amount or value of the oil or gas removed or sold from the leased land.49 Additionally, there are
34 Id.
35 30 U.S.C. §226(b)(1)(B); 43 C.F.R. §3120.1-2.
36 30 U.S.C. §226(b)(1).
37 43 C.F.R. §3120.5-3(a).
38 30 U.S.C. §226(b)(1).
39 43 C.F.R. §3120.5-2.
40 Id.
41 30 U.S.C. §226(b)(1).
42 Id.
43 30 U.S.C. §209.
44 30 U.S.C. §226(b)(1), (c).
45 Id.
46 30 U.S.C. §226(c)(1).
47 43 C.F.R. §3110.2(a).
48 Id. at §3110.6.
49 30 U.S.C. § 226(c)(1). As mentioned above, the Secretary may suspend, waive, or reduce rentals or royalties under
certain conditions. See, e.g., 30 U.S.C. §209.
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minimum and maximum acreage limitations for noncompetitive leases.50 If these criteria are met,
BLM will issue the lease within 60 days of the Secretary identifying a qualified applicant.51
If no application for a noncompetitive lease is submitted during the two years that the land is
available for noncompetitive leasing, the process for leasing the land will again be a competitive
oral auction.52
Lease Terms and Conditions
General Statutory Restrictions
In addition to the processes affecting where leasing can take place, general restrictions on leasing
address who can lease, as well as how much land they can lease. First, public lands containing oil
and gas deposits may only be leased to U.S. citizens, associations of U.S. citizens, corporations
organized under U.S. laws or the laws of any state, and municipalities.53 In addition, citizens of a
country that denies similar privileges to U.S. citizens and corporations may not control any
interest in federal leases.54 Also, no entity is permitted to own or control oil or gas leases
(including options for such leases) under the MLA in excess of 246,080 acres in any one state
other than Alaska.55 Other aggregate acreage limitations include limitations pertaining to options56
and to combined direct and associational/corporate stockholder interests.57
Payment Terms: Rental Fees and Royalties
Leases are conditioned upon payment to the Government of a royalty of at least 12.5% in amount
or value of oil or gas production that is removed or sold from the leased land.58 The Secretary has
the power to reduce the royalty rate on a noncompetitive lease if he deems it equitable to do so or
if circumstances could “cause undue hardship or premature termination of production” absent
such a reduction.59 For oil and gas leases, the royalty must be paid in value unless the Department
of the Interior specifies that a royalty payment-in-kind is required.60 Once the royalty has been
paid, the Secretary is required to sell any royalty oil or gas “except whenever in his judgment it is
desirable to retain the same for the use of the United States.”61
50 See 43 C.F.R. §3110.3.
51 30 U.S.C. §226(c)(1).
52 30 U.S.C. §226(c)(2)(A).
53 30 U.S.C. §181.
54 Id.
55 Id. at §184(d)(1); 43 C.F.R. § 3101.2-1. For Alaska, the limit is 300,000 acres in the northern leasing district and
300,000 acres in the southern leasing district, of which no more than 200,000 acres may be held under options in each
of the two leasing districts. 30 U.S.C. § 184(d); 43 C.F.R. § 3101.2-1.
56 30 U.S.C. §184(d)(2).
57 Id. at §184(e)(1).
58 Id. at §226(b)(1).
59 30 U.S.C. §188(i)(1).
60 30 C.F.R. §§202.100, 202.150.
61 30 U.S.C. §192.
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In addition to royalties, leases are conditioned upon payment of annual rental fees.62 Generally,
the rate for the first five years of a lease is $1.50 per acre per year, with the rate increasing to $2
per acre for each additional year of the lease.63 However, there is some variation in rental fee
amounts for certain specific categories of lands.64 For leases issued after December 22, 1987, a
minimum royalty in lieu of the rental fee is due once oil or gas has been discovered on the leased
land.65 The amount of this minimum royalty is equal to the annual rental fee that would otherwise
have been due.66 Rental payments are not due on acreage for which royalties or minimum
royalties are being paid, “except on nonproducing leases when compensatory royalty has been
assessed in which case annual rental as established in the lease shall be due in addition to
compensatory royalty.”67
Money received from royalties and rental fees is initially paid into the U.S. Treasury.68 Fifty
percent of the funds then go to the state where the land or mineral deposit is located.69 Forty
percent of the funds are allocated into the Reclamation Fund under the Reclamation Act of 1902
for projects that provide water to arid Western states.70 The remaining moneys are credited to the
“miscellaneous receipts.”71 Because Alaska is not served by the Reclamation Fund, 90% of the
funds collected from federal leases in Alaska are allocated to the State of Alaska.72 The Secretary
is authorized to waive, suspend, or reduce rental fees and royalties under certain conditions.73
Lease Terms, Extensions, and Cancellations
The primary term for competitive and noncompetitive leases is 10 years.74 Leases can be
extended to allow for the continuation of exploration operations or oil or gas production. The
existence of an approved cooperative plan can also affect extensions.
First, a lease will be extended for two years because of drilling if three criteria are satisfied:
1. actual drilling operations began before the end of the primary lease term;
2. actual drilling operations are being “diligently prosecuted” at the end of the
primary lease term; and
3. rental fees were paid in a timely manner.75
62 Id. at §226(d).
63 Id.; 43 C.F.R. §3103.2-2(a). The rental payment for the first year of the lease must be included with each competitive
bid or noncompetitive lease offer. 43 C.F.R. §3103.2-1.
64 See 43 C.F.R. § 3103.2-2.
65 Id. at § 3103.3-2(a).
66 Id. at §3103.3-2(a).
67 Id. at §3103.2-2(c).
68 Id. at §191(a).
69 Id.
70 Id.
71 Id.
72 Id.
73 See, e.g., 30 U.S.C. §209.
74 30 U.S.C. §226(e).
75 Id.; 43 C.F.R. §3107.1. Other regulations regarding the continuation, extension, and renewal of leases are set forth in
(continued...)
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Second, a lease that meets these criteria will be extended “so long as oil or gas is being produced
in paying quantities.”76 A lease that has been extended because of production does not terminate
when production stops, as long as the lessee starts reworking or drilling operations within 60 days
after production ceases and conducts them with reasonable diligence during the non-productive
period.77 Furthermore, if a lease initially extended because of drilling begins yielding oil or gas in
paying quantities during the two-year drilling extension, the lease can be extended again.78
Finally, lessees may collectively adopt and operate under a cooperative plan for exploration and
production in a particular area if the Secretary considers such a plan to be in the public interest.79
All leases subject to such a plan will be extended if any of the leases covered by the plan qualify
for a drilling or production extension.80
Any MLA lease can be cancelled or forfeited if the lessee fails to comply with the statute, the
lease’s provisions, or regulations promulgated pursuant to MLA.81 In some situations the
Secretary has the authority to cancel the lease unilaterally, but some circumstances require a
judicial proceeding to cancel the lease.82 In addition, MLA provides for automatic termination
“upon failure of a lessee to pay rental on or before the anniversary date of the lease, for any lease
on which there is no well capable of producing oil or gas in paying quantities.”83 However, the
Secretary may in some circumstances reinstate automatically terminated leases.84
Applications for Permits to Drill
Bureau of Land Management
Operators85 must submit an Application for a Permit to Drill (APD) for each oil or gas well.86
Without an approved APD, operators cannot begin drilling operations or cause surface
disturbances that are preliminary to drilling.87 In fact, the APD process must begin at least 30
days prior to the commencement of operations.88
(...continued)
43 C.F.R. §§3107.1 et seq.
76 30 U.S.C. §226(e) (emphasis added).
77 30 U.S.C. §226(i); 43 C.F.R. §3107.2-2.
78 See 30 U.S.C. §226(e).
79 Id. at §226(m).
80 Id.; 43 C.F.R. §3107.3-1.
81 30 U.S.C. §188(a); 43 C.F.R. §3108.3(a), (b).
82 See 43 C.F.R. §3108.3(a), (b).
83 30 U.S.C. §188(b).
84 See id. at §188(c)-(e), (g), (j).
85 BLM Regulations define an Operator as “any person or entity including but not limited to the lessee or operating
rights owner, who has stated in writing to the authorized officer that it is responsible under the terms and conditions of
the lease for the operations conducted on the leased lands or a portion thereof.” 43 C.F.R. §3160.0-5.
86 Id. at §3162.3-1(c); see 43 U.S.C. §1732(b).
87 43 C.F.R. §3162.3-1(c).
88 Id. at §3162.3-1(d).
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A complete APD must include the following:
• a drilling plan;
• a surface use plan of operations, including drillpad locations and plans for
reclaiming the surface;
• evidence of bond coverage;
• a BLM form; and
• any other information that may be required.89
Once BLM receives an APD, it must make available information for public inspection for at least
30 days before it may act on the APD.90 Another pre-approval requirement is that BLM must
prepare an environmental record of review or an environmental assessment.91 Based on these
documents, BLM decides whether an EIS is required.92 Additionally, an adequate bond or other
financial arrangement is required before the operator begins any surface-disturbing activities.93
Within five working days of the end of the public notice period, BLM must choose one of four
options:
1. approve the application as submitted;
2. approve the application with modifications and/or conditions;
3. disapprove the application; or
4. delay final action.94
BLM must also approve a surface use plan of operations addressing proposed surface-disturbing
activities before a permit to drill on lands BLM manages may be granted.95
U.S. Forest Service
An approved surface use plan of operations addressing proposed surface-disturbing activities is
also required before a permit to drill on Forest Service lands may be granted and before any
surface-disturbing operations may begin.96 The operator must submit its proposed surface use
plan of operations to BLM as part of its APD.97 When the proposal pertains to NFS lands, BLM
forwards the proposed surface use plan of operations to the Forest Service.98
89 Id. at §3162.3-1(d), (f).
90 30 U.S.C. §226(f); 43 C.F.R. §3162.3-1(g).
91 43 C.F.R. §3162.5-1(a).
92 Id.
93 30 U.S.C. §226(g).
94 43 C.F.R. §3162.3-1(h).
95 30 U.S.C. §226(g).
96 30 U.S.C. §226(g); 36 C.F.R. §228.106(a).
97 Id.
98 Id.
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The level of detail required in a proposed plan varies depending upon the “type, size, and
intensity of the proposed operations and the sensitivity of the surface resources that will be
affected by the proposed operations.”99 When evaluating a proposed surface use plan of
operations, the Forest Service must ensure that the proposal is consistent with the approved forest
land and resource management plan for that area of land.100 During the evaluation process, the
Forest Service must also comply with NEPA, as well as appropriate Forest Service regulations
and policies.101 In addition, the Forest Service can require that the operator increase the amount of
its bond if it “determines [that] the financial instrument held by [BLM] is not adequate to ensure
complete and timely reclamation and restoration” of the NFS lands.102
Ultimately, the Forest Service must decide among four options:
1. approve the plan;
2. approve the plan “subject to specified conditions”;
3. disapprove the plan; or
4. delay the plan because additional time is needed to reach a decision.103
Once it has made its decision regarding the proposed surface use plan of operations, the Forest
Service forwards the decision to BLM, which conducts the leasing of the relevant land in
accordance with its regulations.104
Renewable Energy Projects on Federal Lands
Background
In recent years, concern over the impact of emissions from fossil fuel-fired power plants has
resulted in increased interest in renewable energy sources. Because the federal government
controls land in areas with topography that is considered suitable for renewable energy projects,
BLM has issued leases or rights-of-way for a number of renewable energy projects. This section
discusses the relevant statutes and regulations applicable to such projects.
The generally applicable requirements and restrictions for public lands managed by BLM
discussed previously in this report also apply to this discussion of renewable energy projects on
public lands. Renewable energy uses can be considered during the formulation of Resource
Management Plans (RMPs) for public lands. Because the energy source does not expire and
because the requisite gathering facilities often leave a relatively small footprint, renewable energy
can often be an attractive option when applying the “multiple use” and “sustained yield”
principles during the RMP process as described supra in the section of this report titled
“Development of Resource Management Plans.”
99 30 U.S.C. §228.106(c).
100 16 U.S.C. §1604(i); 36 C.F.R. §228.107(a)(2).
101 36 C.F.R. §228.107(a).
102 36 C.F.R. §228.109(a).
103 Id. at §228.107(b).
104 Id. at §228.107(d).
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Geothermal Project Leasing
Background
Geothermal energy is energy that is produced from heat stored under the surface of the earth.
Geothermal energy is produced by releasing cold water under the surface into a “hot” area in
order to generate steam to fuel the generation of power. BLM has the delegated authority to lease
247 million acres of lands in the Western United States and Alaska (including 104 million acres of
lands managed by the Forest Service)105 with geothermal potential.106 BLM currently manages
530 geothermal energy leases, with 58 leases producing 1,275 megawatts of electricity, about half
of the total amount of U.S. geothermal energy capacity.107
Geothermal energy projects administered by BLM differ from most other renewable energy
projects on public lands in that they are operated pursuant to a lease, rather than a more limited
authorization like a right-of-way. The governing law for steam leasing is the Geothermal Steam
Act of 1970.108 The act sets forth detailed provisions governing the issuance and administration of
geothermal steam leases. The processes for both are similar to the principles and process for oil
and natural gas leasing on federal lands described in detail earlier in this report.
The Leasing Process
The Geothermal Steam Act, like the MLA, authorizes both competitive and noncompetitive
leasing processes. The competitive process begins when BLM receives nominations for parcels to
be auctioned from a qualified company or individual.109 Nominated areas may not exceed 5,120
acres unless the lease area includes an irregular subdivision.110 Qualified companies or
individuals may request that nominated parcels be offered as a block for competitive leasing.111
The Secretary must provide 45 days notice by posting in the applicable BLM office before
offering public lands for geothermal leasing.112 BLM must hold competitive bidding for
geothermal leases at least once every two years.113 Once the public notice requirements have been
105 According to the Geothermal Steam Act, the Secretary of the Interior may issue leases for developments and
utilization of geothermal resources in any federal lands administered by BLM, or in national forests administered by the
Forest Service, or in lands conveyed by the United States if the conveyance reserved the rights of the United States to
the geothermal resources therein. 30 U.S.C. §1002. The act also establishes a number of exceptions to this general
leasing authority for certain protected lands. 30 U.S.C. §1014.
106 Renewable Energy and the BLM: Geothermal, fact sheet, available at http://www.blm.gov/pgdata/etc/medialib/blm/
wo/MINERALS__REALTY__AND_RESOURCE_PROTECTION_/energy.Par.74240.File.dat/
09factsheet_Geothermal.pdf.
107 Id.
108 P.L. 91-581, codified at 30 U.S.C. §§1001 et seq.
109 43 C.F.R. §3203.10(a). The qualifications for nomination and bidding are set forth at 32 C.F.R. §3202.10.
110 Id. at §3203.10(b).
111 Id. at §3203.11.
112 Id. at §3203.15(b).
113 Id. at §3203.13.
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satisfied, the public lands are offered for competitive leasing through an auction at the time, date,
and place specified in the public notice.114
Bidders must make a minimum acceptable bid of $2 per acre for the first year, $3 per acre for
years 2-10, and $5 per acre for every year after year 10 of the lease.115 A competitive bid
constitutes a legally binding commitment and cannot be withdrawn.116 BLM will accept the
highest bid from a qualified bidder.117 The winning bidder must pay 20% of the bid amount, the
total amount of the first year’s rental, and a processing fee to BLM by the close of business on the
day following the day of the lease sale.118 The remainder of the bid amount must be submitted to
BLM within 15 calendar days of the day of the sale.119
Lands offered at a competitive lease sale that receive no bids are made available for
noncompetitive leasing for a two-year period beginning the first business day following the date
of the lease sale.120 For the first 30 days following the lease sale, leases are available only for
parcels as configured for the lease sale; after 30 days, BLM accepts applications for any available
lands covered by the lease sale.121 Holders of mining claims on federal lands may apply for
noncompetitive geothermal leases within the lands on which they hold claims.122
Geothermal steam project leases can also be obtained though “direct use” leasing. Direct use of
geothermal energy involves the use of geothermal hot water directly for its intended end use,
rather than for transfer into electricity that is then transmitted to the end user. Applicants can
obtain direct uses leases if: (1) the lands in question are open for geothermal leasing; (2) BLM
determines that the lands are appropriate for direct use operations without sale for purposes other
than commercial generation of electricity; (3) BLM has published notice of the proposal to use
the land for direct use leasing; (4) during the 90-day period following the publication of such
notice, BLM does not receive any nomination to include the land in question in the next
competitive lease sale; and (5) BLM determines there is not competitive interest in the
resource.123
Geothermal leases generally have an initial primary term of 10 years, with a number of extensions
that can extend the term at the discretion of BLM.124 The first five-year extension is granted if the
lessee has expended a minimum of $40 per acre in development activities that provide additional
geologic or reservoir information.125 Subsequent extensions may be granted upon showings of
continued annual expenditures and progress in the development of geothermal resources.126
114 Id. at §3203.14 (a)(2).
115 30 U.S.C. §1004(a)(3).
116 43 C.F.R. §3203.15(c).
117 Id. at §3203.15(b).
118 Id. at §3203.17(b).
119 Id. at §3203.17(c).
120 Id. at §3204.5(a).
121 Id. at §3204.11(a).
122 Id. at §3204.12.
123 Id. at §3205.6(a).
124 Id. at §3207.5.
125 Id. at §3207.11(a).
126 Id. at §3207.12.
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Lessees are required to make annual rental payments to BLM. For leases acquired in a
competitive lease sale and issued on or after August 8, 2005, the annual rent is $2 per acre for the
first year and $3 per acre for the second through the tenth year.127 For leases acquired non-
competitively, the annual rent is $1 per acre for the first 10 years of the lease.128 For both types of
leases, the annual rent is $5 per acre each year after the tenth year.
Lessees must also make royalty payments on electricity produced from geothermal steam on
federal lands. For leases issued on or after August 8, 2005, the royalty rate is 1.75% of gross sales
for the first 10 years of production, and 3.5% thereafter.129 If the lessee sells the geothermal
resources to a third party who then uses those resources to produce electricity, the royalty rate on
the sale is 10%.130 Direct use lessees do not have to pay royalties unless they sell the geothermal
steam resources to a third party; instead, they must pay a direct use fee in accordance with a fee
schedule published by the Minerals Management Service, an agency within the Department of the
Interior.131
Geothermal leases can be suspended or cancelled at the discretion of the Secretary of the Interior.
The Secretary may suspend leases in the interest of conservation of resources, and may terminate
leases for any violation of the BLM regulations or the lease terms.132 The Secretary is also
authorized to waive, suspend, or reduce the rental or royalty rates for any lease in the interest of
conservation.133 The lessee may also suspend the lease on their own motion in the interest of
conservation.134
Exploration and Production Under Geothermal Leases
As with oil and natural gas leasing, a geothermal lease alone does not entitle the lessee to
commence drilling and production. In order to conduct exploration for geothermal resources, the
lessee must submit to BLM a Notice of Intent to Conduct Geothermal Resource Exploration
Operations.135 Exploration operations must be conducted in a manner that (1) protects the quality
of surface and subsurface waters, air, and other natural resources; (2) protects the quality of
cultural, scenic, and recreational resources; (3) accommodates other land uses; and (4) minimizes
noise.136 Data collected during exploration operations must be shared with BLM.137
Lessees must also submit a geothermal drilling program and obtain a drilling permit before
commencing drilling operations for geothermal resources on leased land.138 The drilling program
127 Id. at §3211.11(b)(1)-(2). For both competitive and non-competitive leases issued before August 8, 2005, the royalty
rate is the rate prescribed by regulation as of the date of the issuance of the lease.
128 Id. at §3211.11(b)(3).
129 Id. at §3211.17(a). For earlier leases, the royalty rate varies on a case-by-case basis.
130 Id. at §3211.17(iii).
131 Id. at §3211.18.
132 30 U.S.C. §§1010-1011.
133 Id. at §1012.
134 Id. at §1010.
135 43 C.F.R. §3251.10. Content requirements for the Notice of Intent are set forth at 43 C.F.R. §3251.11.
136 Id. at §3252.11.
137 Id. at §3253.10.
138 43 C.F.R. Subpart 60.
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must set forth a detailed drilling program submitted to BLM.139 Similar to exploration operations,
drilling operations must be conducted in a matter that (1) protects the quality of surface and
subsurface waters, air, and other natural resources; (2) protects the quality of cultural, scenic, and
recreational resources; (3) accommodates other land uses; (4) minimizes noise; and (5) prevents
property damage and unnecessary or undue degradation of the lands.140 Lessees must also meet
BLM’s geothermal well abandonment requirements upon completion of operations.141
Authorizations for Wind and Solar Energy Projects
While oil, gas, and geothermal projects are permitted by BLM under leasing processes, those
interested in producing wind or solar energy on public lands do not seek leases. Instead, they seek
more limited authorizations for development of their energy projects pursuant to Title V of the
Federal Land Policy and Management Act (FLPMA).142
Background
As with oil, gas and geothermal leasing, not all public lands are available for wind and solar
renewable energy project rights-of-way. Lands designated as Wilderness Areas and Wilderness
Study Areas, National Monuments, National Conservation Areas (with the notable exception of
the California Desert Conservation Area), National Wild and Scenic Rivers, and National Historic
and Scenic Trails, are categories of land not open to solar and wind energy development.143 In
addition, some special management areas, such as Areas of Critical Environmental Concern, may
not be suitable for development.144
Public lands also have significant capacity for wind energy production. BLM manages 20.6
million acres of public lands with wind potential in 11 Western states.145 BLM completed a PEIS
for wind energy permitting in June 2005, and in 2006 issued a policy to provide guidance on best
management practices to mitigate potential negative environmental impacts, including impacts on
birds and wildlife habitat.146 As of July 2009, BLM had authorized a total of 206 rights-of-way
for use of public lands in wind energy production.147
The Southwestern United States has some of the highest solar radiation levels in the world, a
characteristic that makes it a possible candidate for solar energy development.148 Although BLM
139 The requirements of the drilling operations plan to be submitted to BLM can be found at 43 C.F.R. §32261.13.
140 43 C.F.R. §3262.11.
141 43 C.F.R. Subpart 3263.
142 P.L. 94-579, 43 U.S.C. §§1767 et seq.
143 Renewable Energy and the BLM: Solar, July 2009, available at http://www.blm.gov/pgdata/etc/medialib/blm/wo/
MINERALS__REALTY__AND_RESOURCE_PROTECTION_/energy.Par.28512.File.dat/09factsheet_Solar.pdf.
144 Id. Areas of Critical Environmental Concern are defined as “those areas within the public lands where special
management attention is required ... to protect and prevent irreparable damage to important historical, cultural or scenic
values, fish and wildlife resources or other natural systems or processes, or to protect life and safety from natural
hazards.” 43 U.S.C. §1702(a).
145 Renewable Energy and the BLM: Wind, July 2009, available at http://www.blm.gov/pgdata/etc/medialib/blm/wo/
MINERALS__REALTY__AND_RESOURCE_PROTECTION_/energy.Par.82982.File.dat/09factsheet_Wind.pdf.
146 Id.
147 Id.
148 Id.
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has not yet approved any rights-of-way on public lands for solar projects, it has received more
than 225 applications for utility-scale solar projects, covering more than 1.8 million acres of
public land.149 BLM continues to develop its Programmatic Environmental Impact Statement
(PEIS) for solar energy project licensing, and the publication of the PEIS for the program is the
next significant step towards development of solar resources on public lands.
Title V of the Federal Land Policy and Management Act
Title V of FLPMA authorizes BLM and the Secretary of Agriculture (managing Forest Service
lands) to “grant, issue or renew rights-of-way over, upon, under or through” their administered
lands for “systems for generation, transmission and distribution of electric energy.”150 Neither
Title V of FLPMA nor the accompanying regulations address wind or solar energy projects
specifically. However, because wind and solar projects on federal lands are conducted via rights-
of-way, many of the provisions of FLPMA and the accompanying regulations are relevant.
The agencies may exercise their discretion to grant rights-of-way on any lands under their
jurisdiction, unless: (1) prohibited by a statute, regulation or public land order that specifically
excludes rights-of-way; (2) the lands are specifically segregated or withdrawn from the use
contemplated by the right-of-way; or (3) the agency has identified the area in land use plans as
inappropriate for right-of-way uses.151
BLM Rights-of-Way
Parties applying for BLM rights-of-way for development of wind or solar energy projects must
satisfy a number of requirements in their application, as set forth by the Secretary of the
Interior.152 These include disclosures regarding information related to the use of the right-of-way,
information regarding the identification of business partners and other affiliated entities, and
information regarding plans for use of the right-of-way.153 Applications for rights-of-way on BLM
lands must be accompanied by a processing fee as set forth in BLM regulations.154 All filed
information is kept confidential to the extent allowed by law.155
Rights-of-way granted by the BLM function differently from leases in several respects. Perhaps
the most significant difference between leases and rights-of-way are the substantial rights to use
of the land in question retained by the lessor, the United States. BLM retains the right to:
1. access the lands covered by the right-of-way, including any facilities constructed
on the right-of-way;
2. require common use of the land (including subsurface and air space) and to
authorize others to use the right-of-way for compatible uses;
149 Id.
150 43 U.S.C. §1761(a)(5).
151 43 C.F.R. §2802.10(a).
152 43 U.S.C. §1761(b).
153 Id. A detailed review of the information that must in included in an application for a FLPMA right-of-way grant can
be found at 43 C.F.R. Subpart 2804.
154 43 C.F.R. §2804.14.
155 Id. at §2804.13.
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3. retain ownership of the resources of the land;
4. determine whether or not the grant is renewable; and
5. change the terms and conditions of the right-of-way as a result of changes in
legislation or regulation or as otherwise necessary to protect public health or
safety or the environment.156
BLM may also include in a right-of-way grant any terms, conditions, or stipulations that it
determines to be in the public interest, including modifications of proposed routes or changes to
the location of certain facilities.157 Rights-of-way may also completely prohibit use of the land
until BLM has approved a Plan of Development for the land and issued a Notice to Proceed to the
right-of-way holder.158 The terms of rights-of-way vary, but those with terms longer than 20 years
must include periodic reviews at the end of the 20th year and at 10-year intervals thereafter.159
Holders of BLM rights-of-way are also required to make rent payments as set forth by BLM.
Rent is payable on a monthly basis,160 and waivers or reductions can be obtained.161 BLM
regulations provide that rent for non-linear rights-of-way for purposes other than communications
uses will be determined through a process based on comparable commercial practices, appraisals,
competitive bidding, or other reasonable methods.162
Forest Service Special Use Authorizations
The Forest Service also does not have regulations that specifically address wind and solar energy
rights-of-way, so the agency would look to generally applicable laws and regulations as guidance
for the authorization of wind or solar projects. The Forest Service does not currently authorize
any such projects on its lands. Applicants seeking to make use of Forest Service lands for such a
project would apply for “special use authorization” under the generally applicable regulations for
such authorizations.
All uses of National Forest System lands other than road usage, grazing and livestock use, sale
and disposal of timber and other forest products, and mineral usage are designated as “special
uses.”163 Before conducting a special use on these lands, individuals or entities must submit a
proposal to a Forest Service-authorized officer164 and must obtain “special use authorization”
from that authorized officer, unless that requirement is waived under regulations that are likely
not applicable to energy projects.165 Among the permitted authorizations are “permits, leases and
156 Id. at §2805.15(e).
157 Id. at §2805.10(a)(1).
158 Id. at §2805.10(a)(2).
159 Id. at §2805.10(a)(3).
160 Id. at §2806.12.
161 Id. at §2806.15.
162 Id. at §2806.50.
163 36 C.F.R. §251.50(a).
164 The Forest Service Chief is considered the “authorized officer,” and the Regional Foresters, Forest Supervisors,
District Ranger, or other officer can all serve as “authorized officers” though delegation. 36 C.F.R. §251.52.
165 36 C.F.R. §251.52.
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easements ... for rights-of-way for ... systems and related facilities for generation, transmission
and distribution of electric energy,”166 which would authorize wind or solar generation facilities.
Applicants for special use authorizations must contact the Forest Service office(s) responsible for
management of the affected land as early as possible in advance of the proposed use.167 Upon
receipt, the authorized officer screens the application in two phases to ensure that the proposed
use is consistent with the laws, regulations, orders, and policies establishing or governing
National Forest System lands,168 that the proposed use is consistent with the standards and
guidelines in the applicable forest land and RMP,169 that the proposed use will not create an
exclusive or perpetual right of use or occupancy,170 and that other Forest Service initial screening
concerns are satisfied.171 After this second-level screening, a formal application is submitted and
processed,172 and federal, state, and local agencies and the public are afforded the opportunity to
comment on the application.173 After review and a decision to approve, the authorized officer may
issue a special use authorization.174
Special use authorizations are subject to a number of limitations. All rights not expressly granted
are reserved to the United States, including:
1. continuing rights of access to all Forest System lands;
2. a continuing right of physical entry to any part of the authorized facilities; and
3. the right to require common use of the land or to authorize the use by others in
any way not inconsistent with a holder’s existing rights and privileges after
consultation.175
A number of other mandatory terms and conditions apply to the Forest Service-issued special use
authorizations, as set forth in the regulations.176 Special use authorization holders also must pay
an annual rental fee for the authorization, as determined by the authorized officer based on the
fair market value of the rights and privileges authorized, as determined by appraisal or other
sound business management principles.177 The Forest Service also may collect processing fees
from applicants and holders to recover its costs.178
The Forest Service may suspend, revoke, or terminate a special use authorization under any of the
grounds articulated in its regulations.179 The regulations do not provide specific guidance on
166 Id. at §251.53(l)(4).
167 Id. at §251.54(a).
168 Id. at §251.54(e)(1)(i).
169 Id. at §251.54(e)(1)(ii).
170 Id. at §251.54(e)(1)(iv).
171 Id. at §§251.54(e)(1)(iii), (v)-(ix), and (e)(5).
172 Id. at §251.54(g).
173 Id. at §251.54(g)(2)(ii).
174 Id. at §251.54(g)(5).
175 Id. at §251.55(b).
176 Id. at §2151.56.
177 Id. at §251.57(a).
178 Id. at §251.58.
179 Id. at §251.59(a).
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duration and renewability of special use authorizations, providing simply that “[i]f appropriate,
each special use authorization will specify its duration and renewability. The duration shall be no
longer than the authorized officer determines is necessary to accomplish the purpose of the
authorization and to be reasonable in light of all circumstances concerning the use.”180 Where
renewal is provided for, the authorized officer will renew the authorization if the project or
facility is still being used for the purpose(s) previously authorized and is being operated and
maintained in accordance with all the provisions of the authorization.181 Where no such renewal
provision is in place, the authorization can be renewed at the authorized officer’s discretion upon
request of the holder.182
Author Contact Information
Adam Vann
Legislative Attorney
avann@crs.loc.gov, 7-6978
180 Id. at §251.56(b).
181 Id. at §251.64(a).
182 Id. at §251.64(b).
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