Draft Bill Could Increase Fees for Wind and Solar Projects on Federal Lands

On May 1, 2025, the House Natural Resources Committee released a draft budget reconciliation bill that, if enacted, could increase long-term costs for wind and solar energy projects on federal lands.

The bill would replace the Bureau of Land Management’s (BLM) current capacity fee formula with a flat percentage of gross revenue, double acreage rent for wind projects, and eliminate BLM’s discretion to lower charges.

The bill is currently in draft form and has not been signed into law. As part of the budget reconciliation process – a legislative procedure that allows certain fiscal measures to bypass the Senate filibuster and pass with a simple majority – this provision could be enacted as part of a larger budget package, even without bipartisan support. However, the outcome will depend on broader political negotiations and whether the proposed language survives committee markup and floor amendments.

The draft legislation would replace BLM’s current rent and fee structure codified in 43 CFR § 2806.52. As under the existing system, renewable energy ROW grantees would pay acreage rent during the construction phase and capacity fees once a project becomes operational. Acreage rent would be largely the same for solar projects, but for wind projects acreage rent would double relative to the current framework owing to a higher encumbrance factor.

Capacity fees would almost certainly be higher for both wind and solar: the new bill sets a statutory capacity fee of 4.58 percent of gross annual proceeds, replacing BLM’s current eight-factor formula in the existing regulations and the alternative rates in BLM’s 2022 interim rent guidance. Industry sources suggest this new formula could increase capacity fees by a factor of three or more for some projects. As perhaps a small comfort, the draft bill would offer a 20 percent capacity fee reduction to wind energy projects that are co-located with other uses.

Of particular significance, the draft bill would eliminate BLM’s discretion to reduce rents and fees as currently authorized by Section 3103 of the Energy Act of 2020. BLM has relied on Section 3103 to lower rental rates to their current levels in response to renewable energy industry claims that BLM’s fees exceeded the fair market value mandate of the Federal Land Policy and Management Act. Section 3103 allowed BLM to reduce rents without admitting they previously exceeded fair market value; therefore, the draft bill could make it harder to resolve rental disputes with BLM.

It is important to note that the bill does not propose a wholesale rewrite of BLM’s renewable energy regulations. It narrowly targets rent and fee provisions, leaving intact other elements of the agency’s right-of-way framework, such as diligence requirements and environmental compliance standards. If enacted, however, the bill would supersede conflicting regulatory provisions, setting new baseline rates for new and existing rights-of-way that could alter project feasibility across BLM-managed lands.

Developers with projects at any stage – from preliminary planning to operational – should evaluate how the proposed fee structure could affect their business models. While the bill promises greater clarity in rent and fee calculations, it also raises the prospect of significantly higher costs in an already competitive development landscape. With reconciliation legislation subject to rapid change, stakeholders should closely track congressional developments and consider engaging in the comment or advocacy process to shape final outcomes.

Bell Kearns specializes in advising on the review and entitlement of large-scale renewable energy and battery storage projects. If you have any questions regarding this article, please feel free to contact the author at +1.415.471.2294 or reed@bell-kearns.com.