Bureau of Land Management Solar Energy Program Western Solar Plan
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Performance and Reclamation Bond

The BLM requires that the holder of all solar energy right-of-way (ROW) grants and leases post a bond.

Title V of the Federal Land Policy and Management Act (FLPMA) of 1976 as Amended and the ROW regulations authorize the BLM to require a ROW holder to provide a bond to secure the obligations imposed by the ROW authorization (43 USC 1764(i) and 43 CFR 2805.20). The BLM requires a Performance and Reclamation bond for all solar energy projects to ensure compliance with the terms and conditions of the ROW authorization. The bond amount for a solar energy ROW grant is determined based on the preparation of a Reclamation Cost Estimate (RCE), but must be no less than $10,000 per acre of land disturbance (43 CFR 2805.20(b)). The bond amount for a solar energy ROW lease is a standard bond of $10,000 per acre as set by the regulations (43 CFR 2809.18(e)).

Acceptable Bond Instruments for ROW Grants and Leases

Acceptable bond instruments (43 CFR 2801.5) include cash; cashier's or certified check; certificate or book entry deposits; negotiable U.S. Treasury securities equal in value to the bond amount; surety bonds from the approved list of sureties (U.S. Treasury Circular 570) payable to the BLM; irrevocable letters of credit payable to the BLM issued by financial institutions that have the authority to issue letters of credit and whose operations are regulated and examined by a Federal agency; or a policy of insurance that provides the BLM with acceptable rights as a beneficiary and is issued by an insurance carrier that has the authority to issue insurance policies in the applicable jurisdiction and whose insurance operations are regulated and examined by a Federal or state agency. The BLM will not accept a corporate guarantee as an acceptable form of bond. If a state regulatory authority requires a bond to cover some portion of environmental liabilities, such as hazardous material damages or releases, reclamation, or other requirements for the project, the BLM must be listed as an additional name insured on the bond instrument. This inclusion would suffice to cover the BLM's exposure, should a holder default in any environmental liability listed in the respective state bond. Each bond instrument will be reviewed by the appropriate Regional or Field Solicitor's Office for the DOI prior to its acceptance by the BLM.

Bond Adequacy for ROW Grants and Leases

The BLM authorized officer will review the RCE and bonds for solar energy ROW grants on an annual basis to ensure adequacy of the bond amount. The bond will also be reviewed at the time of any ROW assignment, amendment, or renewal. The BLM authorized officer may increase or decrease the bond amount at any time during the term of the ROW grant, consistent with the regulations (43 CFR 2805.20(a)). A standard bond has been established for solar energy ROW leases by the regulations in the amount of $10,000 per acre (43 CFR 2809.18(e)) and will be adjusted every 10 years using an inflation index.

Notice to Proceed for Grants and Leases

The BLM authorized officer will identify the total amount of the Performance and Reclamation bond in the decision that supports the issuance of the solar energy ROW grant and approval of the POD. The BLM will require the holder to post the portion of the bond associated with the activities to be approved by the Notice to Proceed prior to the issuance of that notice. For example, if the Notice to Proceed is limited to an initial phase of development, the bond amount required to be posted before issuance of the Notice to Proceed will be limited to that phase. The bond amount required to be posted would increase with the issuance of a Notice to Proceed for future phases of the project. The standard bond for a solar energy ROW lease is required to be provided prior to issuance of a Notice to Proceed or written approval to proceed with ground disturbing activities.

Components of Bond for ROW Grant

The Performance and Reclamation bond for a solar energy ROW grant will consist of three components for purposes of determining its amount. The first component will address environmental liabilities, including hazardous materials liabilities, such as risks associated with hazardous waste and hazardous substances. This component may also account for herbicide use, petroleum-based fluids, and dust control or soil stabilization materials. If a holder uses herbicides extensively, this component of the bond amount may be significant. The second component will address the decommissioning, removal, and proper disposal, as appropriate, of improvements and facilities. All solar energy projects involve the construction of substantial surface facilities, and the bond amount for this component could be substantial. The third component will address reclamation, revegetation, restoration, and soil stabilization. This component will be determined based on the amount of vegetation retained on-site and the potential for flood events and downstream sedimentation from the site that may result in off-site impacts, including Clean Water Act (CWA) violations or other violations of law. The holder of the solar energy ROW grant can potentially reduce the bond amount for this component by limiting the amount of vegetation removal as part of the project design and limiting the amount of grading required for project construction.

Bond Coverage for ROW Grant

Ultimately, the Performance and Reclamation bond for a solar energy ROW grant will be a single instrument to cover all potential liabilities. The entire bond amount could be used to address a single risk event, such as hazardous materials release or groundwater contamination, regardless of the fact that in calculating the total bond amount other risks were also considered. If the bond is used to address a particular risk, the holder would then be required to increase the bond amount to compensate for this use. This approach to establishing a bond is preferable to one allowing holders to maintain separate bonds for each contingency. If separate bonds are held, an underestimation of one type of liability may leave the BLM responsible for making up the difference, because the funds associated with one bond may not be applicable for the purposes of another. Requiring a single, larger bond will ensure that the holders are bonded with a surety that has the capacity to underwrite the entire amount associated with the authorization.

Decommissioning and Site Reclamation Plan for Grants and Leases

A Decommissioning and Site Reclamation Plan that defines the reclamation, revegetation, restoration, and soil stabilization plans for the project area is typically included as a component of the approved Plan of Development (POD) for either a solar energy ROW grant or a solar energy ROW lease. The decommissioning and reclamation activities should ensure expeditious reclamation of construction areas and the revegetation of disturbed areas to reduce invasive weed infestation and erosion and must be approved by the BLM authorized officer as part of the POD approval. The approved POD and reclamation plan will be used as the basis for determining the standard for reclamation, revegetation, restoration, and soil stabilization of the project area, and, ultimately, in determining the full bond amount for a solar energy ROW grant. The standard bond amount established by the regulations for solar energy ROW leases will still be applied, but the lease holder is still held responsible for the decommissioning and reclamation activities included in the approved POD for the lease.

Bond Amount for Grants and Leases

The bond amount for a solar energy ROW grant is determined based on the preparation of a Reclamation Cost Estimate (RCE), but must be no less than $10,000 per acre of land disturbance (43 CFR 2805.20(b)). The bond amount for a solar energy ROW lease is a standard bond of $10,000 per acre as set by the regulations (43 CFR 2809.18(e)). An RCE for a solar energy ROW grant is defined by the ROW regulations at 43 CFR 2801.5 as the "estimate of costs to restore the land to a condition that will support pre-disturbance land uses. This includes the cost to remove all improvements made under the ROW authorization, return the land to approximate original contour, and establish a sustainable vegetative community." The estimate must also include the BLM cost to administer any reclamation contract and may also consider other factors, such as salvage value of materials, when determining the bond amount. The BLM requires that mining operators under the 43 CFR 3809 regulations also submit a RCE to the BLM authorized officer for review to assist in determining the bond amount for hard rock mining operations. The BLM has prepared guidance on determining bonding requirements for 3809 mining operations, as a similar intensive land use of the public lands. This guidance could be used to assist in calculating the bond amount for utility-scale solar energy development projects on public lands. Because the RCE is key to determining the bond amount for a solar energy ROW grant, the BLM requires all solar energy ROW applicants to submit an RCE as part of the Decommissioning and Site Reclamation Plan for a POD for a grant application.

Updated: 12/13/2017