[Federal Register Volume 71, Number 81 (Thursday, April 27, 2006)]
[Proposed Rules]
[Pages 24836-24838]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-6338]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Parts 2800 and 2880

[WO-350-06-1430-PP]
RIN 1004-AD87


Update of Linear Right-of-Way Rental Schedule

AGENCY: Bureau of Land Management, Interior.

ACTION: Advance Notice of Proposed Rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Bureau of Land Management (BLM) requests comments and 
suggestions to assist in the writing of a proposed rule to update the 
linear right-of-way rental schedule in 43 CFR parts 2800 and 2880. The 
rental schedule covers most linear rights-of-way granted under section 
28 of the Mineral Leasing Act of 1920, as amended (MLA), and Title V of 
the Federal Land Policy and Management Act of 1976, as amended (FLPMA). 
Both laws require the holder of a right-of-way to pay annually, in 
advance, the fair market value to occupy, use, or traverse public lands 
for facilities such as power lines, fiber optic lines, pipelines, 
roads, and ditches.
    Section 367 of the Energy Policy Act of 2005 (the Act) directs the 
Secretary of the Interior to update the per-acre rental fee schedule 
found in 43 CFR 2806.20. This update is to be completed not later than 
one year after the date of enactment of the Act, which occurred on 
August 8, 2005. The Act requires that the BLM revise the per-acre 
rental fee-zone value schedule by state, county, and type of linear 
right-of-way use to reflect current land values in each zone. The Act 
also requires the Secretary of Agriculture (Forest Service) to make the 
same revisions for rights-of-way on National Forest System lands. We 
encourage members of the public to provide comments and suggestions to 
help with updating the BLM's and the Forest Service's rental schedule, 
as described in the Act.

DATES: We will accept comments and suggestions on the Advance Notice of 
Proposed Rulemaking until May 30, 2006.

ADDRESSES: You may submit comments by any of the following methods 
listed below.
    Mail: Director (630) Bureau of Land Management, Administrative 
Record, Room 401 LS, Eastern States Office, 7450 Boston Boulevard, 
Springfield, Virginia 22153.
    Personal or messenger delivery: Room 401, 1620 L Street, NW,, 
Washington, DC 20036.
    Federal eRulemaking Portal: http://www.regulations.gov.
    E-mail: [email protected]. (Include ``Attn: AD87'').

FOR FURTHER INFORMATION CONTACT: For information on the substance of 
the Advance Notice, please contact Christian Crowley at (202) 208-3799. 
For information on procedural matters, please contact Ian Senio at 
(202) 452-5049. Persons who use a telecommunications device for the 
deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-
800-877-8339, to contact the above individuals during business hours. 
FIRS is available twenty-four hours a day, seven days a week.

SUPPLEMENTARY INFORMATION:

I. Public Comment Procedures

Commenting on the Advance Notice of Proposed Rulemaking

    Written comments or suggestions should:
     Be specific;
     Explain the reasoning behind your comments and 
suggestions;
     Address the issues outlined in the Notice; and
     Where possible, reference the specific section or 
paragraph of existing laws or regulations that you are addressing.
    For comments and recommendations to be most useful, and most likely 
to influence decisions on the content of the proposed rule, they 
should:
     Be substantive;
     Facilitate development of a uniform, cost effective 
administrative process for calculating rental payments;
     Result in a fair and reasonable payment of fair market 
rent; and
     Include citations to, and analyses of, applicable laws and 
regulations.
    The BLM is particularly interested in receiving comments and 
suggestions about the topics listed in Section III of this Notice. All 
communication on these topics should refer to RIN 1004-AD87, and may be 
submitted by several methods listed under the ADDRESSES section of this 
Notice.
    Comments received after the close of the comment period (see DATES) 
need not be considered or included in the Administrative Record for the 
proposed rule. Likewise, comments delivered to an address other than 
those listed above (see ADDRESSES) need not be considered or included 
in the Administrative Record for the proposed rule.

Reviewing Comments Submitted by Others

    Comments, including names and street addresses of respondents, will 
be available for public review at the address listed under ``ADDRESSES: 
Personal or messenger delivery'' during regular business hours (7:45 
a.m. to 4:15 a.m.), Monday through Friday, except holidays. Individual 
respondents may request confidentiality, which will be honored to the 
extent allowable by law. Those wishing to withhold their name or 
address (except for the city or town)

[[Page 24837]]

must state this prominently at the beginning of their comment. 
Submissions from organizations or businesses, and from individuals 
identifying themselves as representatives or officials of organizations 
or businesses, will be made available for public inspection in their 
entirety.

II. Background

Statutory

    Section 367 of the Act, Fair Market Value Determinations for Linear 
Rights-of-Way Across Public Lands and National Forests, directs the 
Secretary of the Interior to: (1) Update 43 CFR 2806.20, which contains 
the per-acre rent schedule for linear rights-of-way; (2) revise the per 
acre rental fee zone value schedule by state, county, and type of 
linear right-of-way uses to reflect current values of land in each 
zone; and (3) complete the update within one year of enactment of the 
Act. The Act also directs the Secretary of Agriculture to make the same 
revisions to the regulations that apply to rights-of-way granted on 
National Forest System (NFS) lands. This provision supplements existing 
Secretarial authority to assess and collect fair market value of the 
right to use, cross, or traverse public or NFS lands.

Current Linear Rent Schedule

    On July 8, 1987, and September 30, 1987, the BLM published 
regulations establishing rental schedules for linear rights-of-way 
granted under Section 28 of the MLA and Title V of FLPMA (52 FR 25818 
and 52 FR 36576). The Forest Service uses these same schedules to 
charge rent for rights-of-way across NFS lands. Therefore, updates to 
these schedules would also impact the Forest Service and users of NFS 
lands.
    The 1987 rental schedule was developed to set fair market rent, 
while minimizing the need for individual real estate appraisals for 
each right-of-way requiring rent payments, as well as to avoid the 
costs, delays, and unpredictability of the appraisal process in 
reasonably setting fair market rent.
    The 1987 rental schedule defines eight fee zones based on the 
distribution of average land values by county in each of the states, 
except Alaska. (The existing rent schedule does not apply to Alaska. 
Linear right-of-way rental fees in Alaska are currently determined on a 
case-by-case basis based on local market values.) A county was assigned 
to one of the eight Zone Values, based on land values in the county: 
lower-value counties were assigned lower-numbered zones. The eight Zone 
Values were set at $50, $100, $200, $300, $400, $500, $600, and $1,000 
per acre. A county's Zone Value is translated into a per-acre Zone Rent 
by use of the adjustment formula described below. To calculate the 
annual right-of-way rental payment, the Zone Rent is multiplied by the 
total acreage within the right-of-way. The formula for Zone Rent is:

Zone Rent = (Zone Value) x (Impact Adjustment) x (Price Index) x 
(Treasury Security Rate)

    The Zone Value term in the formula is the land value that was 
established for each of the eight zones. The Zone Values established in 
1987 have not been updated since that time; however, it is generally 
recognized that land values have increased in most areas over the past 
20 years.
    The Impact Adjustment term in the formula reflects the differences 
in land-use impacts between (1) oil, gas, and other energy-related 
pipelines, roads, ditches, and canals, and (2) electrical transmission 
and distribution lines, telephone lines, and non-energy related 
pipelines. Energy-related pipelines and roads were considered as having 
a greater surface disturbance impact on the land, and were adjusted to 
80 percent of the Zone Value. Electrical transmission and distribution 
lines, phone lines, and non-energy related pipelines with a smaller 
area of disturbance, were adjusted to 70 percent of the Zone Value.
    The Price Index term in the formula allows the rental values to 
increase with inflation. This number changes annually reflecting the 
change in the Gross Domestic Product, Implicit Price Deflator Index.
    The Treasury Security term in the formula reflects a reasonable 
rate of return to the United States for the use of the land within the 
right-of-way. The 1987 regulations were based on a rate of return of 
6.41 percent for a one year Treasury Security.

BLM Right-of-Way Program and Revenues

    The BLM generated over $15 million in right-of-way rental receipts 
for fiscal year 2005. The BLM administers nearly 90,000 rights-of-way, 
of which over 48,000 are subject to a rental payment. Wyoming and New 
Mexico together account for slightly more than 30,000 of the rights-of-
way subject to rent. Seventy-five percent of all right-of-way revenues 
were collected by five BLM State Offices. These five State Offices and 
the revenues collected are listed in Table 1 below.

    Table 1.--Right-of-Way Rental Receipts for ``Top Five'' BLM State
                                 Offices
------------------------------------------------------------------------
                                                              Rental
                      State office                         receipts (FY
                                                               2005)
------------------------------------------------------------------------
Nevada..................................................      $3,678,823
California..............................................       2,946,170
Wyoming.................................................       1,804,274
New Mexico..............................................       1,661,834
Arizona.................................................       1,272,795
                                                         ---------------
    Total...............................................      11,363,896
------------------------------------------------------------------------

    Non-linear rights-of-way, including communication site 
authorizations, account for nearly 3,500 authorizations generating over 
$5 million in revenue. Subtracting the communication site revenue from 
the $15 million reported for all rights-of-way results in an average 
rent of approximately $250 for linear rights-of-way. The average rental 
payment in 2005, including communication site authorizations, was 
approximately $320.

Description of Issues

    The rental schedule is a cost-effective means for calculating and 
billing right-of-way holders for the use of public lands. In general, 
the rental schedule must be fair and reasonable and rent must be 
calculated in a consistent manner, depending on the type of authorized 
use.
    To facilitate the billing process, the rental schedule itself must 
be a cost-effective way to administer the right-of-way program relative 
to the amount of revenue collected. In addition, right-of-way holders 
should be able to estimate rental payments and forecast changes in 
billed rent in accordance with the terms and conditions of the right-
of-way. Updating the rental schedule formula will require changes to 
current rental payments; depending on the magnitude of the changes in 
various components of the formula, rents are likely to increase as a 
result of the general increase in land values. Impacts on groups or 
individual holders ultimately depend on the formula options considered.
    As part of the rulemaking process, impacts of any increase in rent 
on current holders and small businesses will be evaluated. In addition, 
the proposed regulation will likely include a phase-in period and other 
provisions designed to facilitate the transition to the new rents. In 
cases where the applicant feels that the calculated rent is excessive, 
additional relief may include provisions for reduction or waiver of 
rent as is currently provided for by 43 CFR 2806.15 or for an 
alternative calculation of rent, based on an appraisal report. For such 
an

[[Page 24838]]

appraisal report to be admissible, the applicant would be required to 
follow applicable Departmental and Agency instructions, pay for the 
cost of the appraisal report, and ensure that the report meets Federal 
standards.
    The BLM is considering using existing published information or 
statistical data for updating the rental schedule, such as information 
published by the National Agricultural Statistic Service (NASS). NASS 
publishes two reports: (1) The Census of Agriculture published every 
five years (Five Year Census), and (2) the annual Land Values and Cash 
Rents Summary (Annual Report).
    The Five Year Census includes land values by county for each state. 
The land values are reported for cropland, woodland, permanent pasture, 
and rangeland and includes buildings.
    The NASS data in the Annual Report includes state average 
pastureland values. The statewide average for pastureland may 
approximate rural agricultural types of land (woodlands and rangelands) 
that are administered by the BLM. You can find more detailed 
information about these two reports at the NASS Web site at: http://www.nass.usda.gov/index.asp.

III. Description of Information Requested

    The BLM is particularly interested in receiving comments on the 
following questions:
    1. What available published information, statistical data, or 
reports should BLM use to update the current linear right-of-way rental 
fee Zone Values?
    2. What, if any, other terms, e.g., impact adjustment or rate of 
return, used in the 1987 rental formula should BLM update, clarify, or 
revise? Should the one-year Treasury Rate (rate of return) used in the 
current formula, i.e., 6.41 percent, be revised to reflect the current 
rate? If yes, should the rate be updated annually?
    3. What, if any, provisions should BLM include in the proposed 
regulation to provide relief from large, unexpected increases in 
individual rental payments?
    4. How should the number of rental zones be changed in the new 
linear right-of-way rental schedule, if at all?
    5. Should the new linear right-of-way rental schedule split some 
states and counties into more than one zone?
    6. Should the new linear right-of-way rental schedule apply to BLM-
administered lands in Alaska?
    The BLM further solicits public comments on other approaches for 
updating the 1987 linear right-of-way rental schedule. Other 
suggestions will be considered inasmuch as they may facilitate updating 
the current schedule.

    Dated: April 17, 2006.
Chad Calvert,
Acting Assistant Secretary of the Interior.
[FR Doc. E6-6338 Filed 4-26-06; 8:45 am]
BILLING CODE 4310-84-P