The Department of the Interior (DOI) announced Thursday, May 15th, that it’s rescinding last year’s rule that cut some wind and solar fees by 80% on certain public lands. It’s a welcome step toward eliminating the preferential treatment received by wind and solar on federal lands.
Under the original rule, proposed in June 2023 and finalized in May 2024, wind and solar developers received a steep discount on leasing lands managed by the Bureau of Land Management (BLM). Wind and solar projects must pay two annual fees, acreage fees and capacity fees, which are paid before the lease is issued and prior to the start of energy generation, respectively.
The rule slashed capacity fees, which are based on the wholesale price of electricity and the project’s generating capacity, by 80%. The rule went even further to decide that if the discounted capacity fee is larger than the acreage fee, the agency will only charge the capacity fee instead of adding the acreage fee. These discounts would have remained in effect until 2035 and ratcheted downward toward a 20% discount in 2038.
In the Interior Department’s press release, Secretary of the Interior Doug Burgum said:
Eliminating the Biden administration’s preferential treatment of unaffordable, unreliable ‘intermittent’ projects and dismantling excessive, one-sided restrictions on traditional energy sources like oil, gas, and critical minerals will unlock the full potential of America’s natural resources. This step will restore balance, strengthens our energy independence, and ensures taxpayers get the maximum return from the responsible use of our public lands.
The federal government has a duty to ensure that right-of-way holders of federal lands pay “fair market value” for leased public lands, as established under the Federal Land Policy and Management Act (FLPMA) in 1976. The Energy Act of 2020 granted renewables developers an exception, with the BLM arriving at a price through a series of nebulous factors such as “economic hardship” and if a lower fee is necessary to “promote the greatest use of wind and solar energy resources.” It is hard to see how leasing public lands at a steep discount to only certain kinds of projects can still give taxpayers a fair return on public lands.
The Interior Department’s proposed rule rescission will be evaluated first by the Office of Information and Regulatory Affairs and then made available for public comment. It may take years for the process to be completed, but it is an important step toward allowing all sources of energy to compete in the free market on their merits—not preferential treatment.