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It's Going to Cost More to Lay Pipes, Transmission on BLM Land

Interior Department's Bureau of Land Management (BLM) Friday published a final rule that allows it to charge oil and natural gas pipelines, power transmission companies and fiber optics firms higher rental fees for linear rights-of-way (ROW) to reflect the changes in land values over the past two decades.

"It's going to impact companies differently" depending on where their projects are located, said BLM spokesman Tom Gorey. He noted that projects in and around Las Vegas, NV, and Southern California, where land values are exceptionally high, would be hardest hit by the BLM changes.

BLM estimates that the rental receipts for linear ROW for the top 10 western states, where most of the BLM-managed lands (except for Alaska) are located, will total about $5.15 million this year. But in 2009, even after a 25% discount is taken into account, that figure will jump 73% to $8.92 million, and is projected to spike to $10.73 million in 2010 and $19.86 million in 2011 under the new rule.

BLM manages approximately 178 million acres in the Lower 48 states and 80 million acres in Alaska.

Five western states would see the biggest increases in rental receipts for linear ROW: California, rising to $2.42 million in 2009 from $890.401 this year; Nevada, climbing to $1.75 million in 2009 from $1.14 million this year; Wyoming, rising to $1.31 million in 2009 from $752,756 this year; and Arizona, collecting nearly $1.l million in receipts in 2009 compared to $508,308 this year, according to BLM.

But there are two states where rental rates for linear ROW are projected to fall: New Mexico, from $797,933 this year to $601,054 in 2009; and Montana, from $76,696 to $49,639 in 2009, the BLM said.

Despite the changes in land values over the years, the Interior agency said this is the first time it has updated its rental fees for linear ROWs since 1987. The Energy Policy Act of 2005 mandated that the BLM adjust the existing rental fee schedule for linear ROW to reflect changes in land values.

BLM estimates that there are more than 96,000 ROW grants on BLM lands, of which about half (48,600) are subject to rent, generating more than $20 million in revenues in fiscal year (FY) 2007. The rents, which are paid annually, are required for both the linear ROW (pipelines and transmission facilities) and site-specific ROW (communications sites and wind and solar power generators).

In FY 2007, the five states that generated the most ROW rental receipts (both linear and site-specific) were Nevada ($4.4 million), Wyoming ($4.1 million), California ($3.2 million), New Mexico ($2.7 million) and Arizona ($1.4 million).

The rule takes effect 30 days after its publication in the Federal Register.

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