U.S. DEPARTMENT OF THE INTERIORBUREAU OF LAND MANAGEMENT
EMS TRANSMISSION 03/16/2005
Instruction Memorandum No. 2006-106
To: All Field Office Officials
From: Associate Director, Minerals, Realty and Resource Protection
Subject: Case-by-Case Fees for Solid Minerals Program Authorized in the Final Rule on Energy and Minerals Resources Cost
Recovery (70 FR 58854, October 7, 2005)
PROGRAM AREAS: Coal, Non-Energy Leasable Minerals, Mineral Materials and Mining Law Administration Program
PURPOSE: To provide guidance on newly established case-by-case fees to cover BLM’s costs of processing documents relating to its solid minerals programs.
POLICY: Effective Date of Fee Changes: On November 7, 2005, fixed fees and case-by-case fees listed in the final rule (70 FR 58854, October 7, 2005) became effective. The final cost recovery rule at 3000.10(d) provides that the new fees will not apply to processing documents received by the Bureau of Land Management (BLM) before November 7, 2005, since they are governed by fees required by then-existing regulations (see 70 FR 58872).
The final cost recovery rule establishes case-by-case fees for the following fourteen documents/actions relating to solid minerals:
Coal: Competitive coal lease; coal lease modification; logical mining unit formation or modification; royalty rate reduction.
Non-energy Leasables: Prospecting permit application; preference right lease application; competitive lease; application to suspend, waive, or reduce rental, minimum royalty, production royalty or royalty rate; future or fractional interest lease application.
Mineral Materials Disposal: Noncompetitive sale (excluding sales from community pits or common use areas); competitive sale; competitive contract renewal.
Mining Law Administration: Plan of operations with Environmental Impact Statement (EIS); validity and mineral examinations and reports performed in connection with: (a) a patent application; (b) 43 CFR 3809.100 (operations on segregated or withdrawn lands); or (c) 43 CFR 3809.101 (potential common variety minerals).
Case-By-Case Fee Estimates and Billing:
For documents/actions where a case-by-case fee is designated, 43 CFR 3000.11 (70 FR 58872, October 7, 2005) requires BLM to provide an applicant with a written fee estimate based on the reasonable costs the BLM expects to incur in processing the application before the BLM works on the document/action. In determining what fee to charge the applicant, the BLM has to consider the Federal Land Policy and Management Act’s (FLPMA) reasonableness factors. Section 304(b) of FLPMA, 43 U.S.C. 1734, lists six factors the BLM must consider in deciding what is a reasonable processing fee. Attachment 1 is a list of the FLPMA 304(b) factors.
Upon receiving a document/action that is subject to a case-by-case fee, send a letter to the applicant acknowledging receipt, citing the applicable fee regulations, and informing them that the BLM will determine whether the lands are open for the activity requested before it prepares a fee estimate. The letter should state that if the lands are open to the activity the applicant is pursuing, the BLM will include the cost of the land status determination in its subsequent fee estimate. If the applicant decides not to proceed with the application after receiving BLM’s cost estimate, the BLM will not be able to recover the cost of the land status determination.
As a guide in preparing a cost estimate, begin with the first FLPMA factor identified in Attachment 1, specifically, BLM’s actual costs to process a document. Estimates should include all actual costs BLM expects to incur in processing a document. Actual costs are the sum of both direct and indirect costs. Direct costs include labor (hourly rate according to GS salary schedule), equipment/equipment rental necessary to render a service to a non-Federal recipient, travel, contractual services, and printing costs. Indirect costs include general administrative costs which cannot be tied directly to a particular program, such as rent and overhead for the State or Field Office (State Director and Washington Office management overhead are excluded). Indirect costs are estimated by multiplying the projected direct cost by the indirect cost ratio, which is 19.7 percent for Fiscal Year 2006.
After estimating the processing cost, consider the remaining FLPMA factors identified in Attachment 1 to determine if any of them might cause a fee to be set at less than the cost of processing the application projected for FLPMA factor 1. If so, then consider whether any of the other FLPMA factors would mitigate against setting the fee at less than the actual cost. BLM cannot charge a fee higher than its actual processing costs.
A written fee estimate can be mailed to an applicant or served personally. It should be accompanied by an interlocutory decision with a 30-day deadline for providing comments on the estimated fee. After receiving and adjudicating comments from the applicant, or if the deadline passes without any comments being received, then mail, or personally serve on, the applicant a written final fee estimate accompanied by a courtesy bill, as discussed below. You should request that the applicant sign the final fee estimate and return it with the payment. Additionally, you should inform the applicant that processing will not begin until payment is received.
The final fee estimate must take into account any pre-approved working agreements for actions the applicant will fund. For example, if it is initially agreed that a third party contractor will be paid directly by the applicant to develop an EIS, the cost of the EIS should not be factored into the final estimate of BLM’s reasonable processing cost. However, the estimate should include the cost of BLM review during the development of the EIS. This includes all steps necessary to complete the EIS: public scoping, public hearings, comments on a draft EIS, and preparation of the final EIS, etc. The final fee estimate should be accompanied by information on filing an appeal of the fee determination with the Interior Board of Land Appeals (IBLA), as provided in 43 CFR 3000.11(b)(7).
Although the cost recovery regulations do not impose time constraints on processing applications, it is advisable to discuss timelines with an applicant. As stated in the preamble to the final rule, “[i]n advance of an application being submitted to BLM, an operator may also discuss the project with BLM and ask for cost projections.” (70 FR 58858).
If you process an application and encounter higher or lower costs than anticipated, you must provide the applicant with a revised fee estimate in writing. Do not stop processing unless an applicant fails to pay any additional processing costs within 30 days of receipt of a bill based on the revised estimate.
The regulations at 43 CFR 3000.11(b)(5)(i) provides for periodic billing. Ifthe total estimated processing time exceeds six months, bill the applicant on a quarterly basis (or more often as explained below), with the first bill issued when you submit the final fee estimate. An applicant always has the option of paying the entire estimated fee at once. If the total estimated processing time is six months or less, bill for the total amount when you submit the final fee estimate. An applicant’s payment is due to BLM 30 days after they receive the bill. Once you receive payment of the first bill from the applicant, a project code can be assigned and processing can begin.
It is important to ensure that BLM processing costs incurred during any billing period do not exceed payments previously submitted by an applicant. At any time you determinethat BLM’s processing costs are likely to exceed funds previously submitted by an applicant, you should bill the applicant before the next regularly scheduled payment is due. Remember that an applicant has 30 days to pay any bill so you must make sure that there are available funds sufficient to cover the next 30 days of your operating costs at the time a bill is sent. If you determine that payment has exceeded BLM’s reasonable processing costs for a billing period, you should adjust the next billing accordingly. The operator cannot deduct funds from its payment unless it has written approval from the BLM. If the last payment requires adjustment, then either refund for overpayment or bill the applicant for underpayment. Before issuing the final document, BLM must receive the entire fee as required by 43 CFR 3000.11(b)(6).
Competitive Sales Where Applicant is Not Successful Bidder:
In determining case-by-case fees for processing competitive lease sales for coal, non-energy leasable minerals, and mineral materials, the final rule clarifies for each type of lease sale what portion of BLM’s costs must be paid by the applicant and when those fees must be paid.
The relevant sections provide that the applicant must initially pay the cost recovery amount to BLM before BLM publishes the sale notice. The successful bidder, if other than the applicant, is required to pay the BLM the cost recovery amount specified in the sale notice and the BLM will refund that amount to the applicant. The successful bidder must also pay all processing costsBLM incurs after the date of the sale notice. In the event there is no successful bidder, the applicant is responsible for all processing fees and there will be no refund. Also, there will be no reimbursement to an applicant for money paid directly to a third party to perform a study or prepare an EIS. For specific provisions relating to the new requirements for competitive sales please refer to the final rule at 43 CFR 3473.2(f) for coal; 43 CFR 3508.12, 3508.14 and 3508.21 for non energy leasables; and 43 CFR 3602.11, 3602.31, 3602.42, 3602.43, and 3602.44 for mineral materials.
Fixed Fees Converted to Case-By-Case Fees:
The regulations at 43 CFR 3000.11(a) provide authority for converting a fixed fee to a case-by-case fee if it is determined that the document/action will have a unique processing cost. Re-designation of a fixed fee to a case-by-case fee should occur if costs associated with a processing step are significantly higher than customary for that fixed fee category. Costs of efforts such as an EIS, a major cultural resource survey, or threatened and endangered species consultation may be considered unique since they are not customarily required in processing fixed fee documents/actions.
If an applicant disagrees with BLM’s determination that an application for a fixed fee category should be a case-by-case fee, the applicant may appeal the determination to the IBLA under 43 CFR 3000.11(b)(7). In BLM’s notice that it is converting a fixed fee to a case-by-case fee, the BLM must inform the applicant of its appeal rights. When an applicant appeals, you must stop processing the document until the appeal is resolved, unless the applicant pays the proposed fee under protest while the appeal is pending. See 43 CFR 3000.11(b)(7). If the applicant prevails in an appeal, BLM will charge only the fixed fee and will refund any excess amounts paid to the BLM that were part of the disputed fee.
Cost Estimate Worksheets:
Attachment 2 consists of worksheets identifying basic processing steps for each solid minerals document/action for a case-by-case processing fee. The cost estimate worksheets are provided as templates for internal use in preparing fee estimates. In addition to capturing estimated staff time and hourly wages, the worksheets are set up to capture direct processing costs such as per diem expenses and equipment use/rental in conjunction with required field work, reproduction costs, etc., as well as indirect costs. Attachment 3 is an example of a completed worksheet.
Attachment 4 is a template for use in providing a written fee estimate to the applicant. As previously stated under the heading “Case-By-Case Fee Estimates and Billing,” make sure you request that the applicant sign and return the final fee estimate along with the payment.
You must keep track of all processing costs when processing a document/action that is subject to a case-by-case fee. It is recommended that you maintain working files with this information. Each office should designate a program lead and/or budget staff responsible for tracking all processing costs for a solid minerals case-by-case document/action. Please seethe Budget Impact section, below, for information relating to the new subactivity code, as well as project codes and program elements tobe used for solid minerals case-by-case documents/actions.
General Information on Energy and Minerals Cost Recovery:
The Washington Office Solid Minerals Group (WO-320) is updating its internal homepage to include relevant information on energy and mineral resources cost recovery, including links to pdf files for the final and proposed rules, Office of Management and Budget (OMB) Circular A-25, Part 346 of the Departmental Manual, the Solicitor’s Opinion on cost recovery, and other pertinent reference materials.
It is anticipated that the internal homepage will also include a “Questions and Answers” section that will address questions submitted to WO-320 concerning case-by-case fee determinations and this Instruction Memorandum (IM).
TIMEFRAME: The guidance in this IM applies to new/increased fixed fees and case-by-case fees for solid minerals that became effective on November 7, 2005.
New Subactivity and Project Codes:
The new cost recovery rule increases revenues from fixed fees for energy and mineral resources document processing currently deposited into subactivity 5104 and authorizes new case-by-case fees. To assist in maintaining accountability for cost recovery fees and BLM’s processing costs, the National Business Center has assigned a new subactivity for case-by-case fees for energy and minerals document processing. The new subactivity is 5110 and requires use of project codes. Requests for project codes should be made to the appropriate State budget office. Use of subactivity 5110 with an accompanying project code is necessary to track BLM costs for processing a particular case-by-case document/action filed on or after November 7, 2005. Please see discussion in “Tracking Costs” section (above) regarding the need for all BLM offices to designate appropriate staff to ensure tracking of processing costs.
Mining Law Fees - Clarification:
With the exception of those specific case-by-case items listed on page 7, fees relating to recording and processing mining claims or patents should continue to be deposited into the same accounts as they were deposited prior to November 7, 2005.
New Program Elements (PEs):
To assist in tracking BLM processing costs, new program elements (PEs) have been created for solid minerals case-by-case documents/actions filed on or after November 7, 2005 (the effective date of the final cost recovery rule). Attachment 5 includes descriptions of the new PEs. Time spent processing any solid minerals case-by-case documents/actions filed on or after November 7, 2005, should be charged/coded to the appropriate PEs listed below:
competitive coal lease GA
coal lease modification GB
logical mining unit formationor modification GC
royalty rate reduction GD
prospecting permit application GE
preference right lease application GF
competitive lease GH
application to suspend, waive, reduce rental, minimum royalty GI
production royalty or royalty rate
future or fractional interest lease application GJ
Mineral Materials Disposal:
noncompetitive sale (excluding sales from community pits GK
or common use areas)
competitive sale GL
competitive contract renewal GM
Mining Law Administration:
plan of operations with EIS GN
validity and mineral examinations & reports performed in GO
connection with: (a) a patent application; (b) 43 CFR
3809.100 (operations on segregated or withdrawn lands) or
(c) 43 CFR 3809.101 (potential common variety minerals)
Time spent processing documents/actions filedprior to November 7, 2005, should continue to be charged/coded to previously established program elements. Attachment 6 includes revised descriptions of PEs for solid minerals documents/actions filed prior to November 7, 2005. These documents/actions are covered by fixed fees.
The preamble to the final rule states at 70 FR 58861: “BLM intends to structure its budget processes to return fees collected to the BLM office which processes the actions.” State Offices and Field Offices should coordinate with one another for the distribution of funds received from energy and mineral resources cost recovery fees.
On October 7, 2005, a final rule was published in the Federal Register (70 FR 58854) to amend BLM’s mineral resources regulations to increase certain fees and to impose new fees to cover BLM’s costs of processing documents relating to its minerals programs. The final rule provides for case-by-case fees as well as fixed fees. (See Table 1 at 70 FR 58856-57).
The new regulation at 43 CFR 3000.12 (70 FR 58873, October 7, 2005) provides that fixed fees are nonrefundable and must be paid at the time a document is filed. Also, underpaid fees and service charges relating to the Mining Law Administration Program (MLAP) are still governed by regulations at 43 CFR 3830.93 through 3830.96 which address curable defects regarding underpaid fees or service charges.
The fee changes in the final rule are based on statutory authorities that authorize the BLM to charge for its processing costs, policy guidance from the OMB (OMB Circular A-25 – Revised, “User Charges”), Part 346 of the Departmental Manual, and Solicitor’s M-Opinion 36987 (December 5, 1996). The general Federal policy as stated in OMB Circular A-25 is that a charge will be assessed against an identifiable recipient for special benefits derived from Federal activities beyond those received by the public (see 70 FR 58854).
MANUAL/HANDBOOK SECTIONS AFFECTED: Policy guidance included in this IM will be incorporated into appropriate handbooks and manuals for solid minerals programs. Additionally, collections and billing handbooks will also be updated. Attachment 7 contains procedures relating to collections and billings for case-by-case solid minerals documents/actions.
COORDINATION: Guidance contained in this IM has been reviewed by staff from the Office of the Solicitor and the WO budget office as well as by certain staff from various BLM State Offices and field offices.
CONTACTS: Please address any questions concerning this IM to Mary Linda Ponticelli at (202-452-5083) or Ted Murphy at (202-452-0350), Solid Minerals Group, WO-320.
5- New Program Element Descriptions (for Case-by-Case documents/actions filed on/after November 7, 2005) (16 pp)
6 - Revised Program Element Descriptions (for documents/actions filed prior to November 7, 2005) (13 pp)