Bureau of Land Management Solar Energy Program Western Solar Plan
PDFROD  ||  Subscribe  |  News  |  Calendar  |  Glossary  |  Related Links

Performance and Reclamation Bond

The BLM will require that a solar energy right-of-way (ROW) holder 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 2805.12(g)). The BLM will require a Performance and Reclamation bond for all solar energy projects to ensure compliance with the terms and conditions of the ROW authorization.

Acceptable Bond Instruments

Acceptable bond instruments 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

The BLM authorized officer will review all bonds 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 authorization, consistent with the regulations (43 CFR 2805.12(g)).

Notice to Proceed

The BLM authorized officer will identify the total amount of the Performance and Reclamation bond in the decision that supports the issuance of the ROW authorization. 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.

Components of Bond

The Performance and Reclamation bond 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 ROW authorization 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.

Cultural Resources

The BLM may also require bond coverage for all expenses tied to cultural resources identification, protection, and mitigation. This may include, but is not limited to, costs associated with ethnographic studies, inventory, testing, geomorphological studies, data recovery, compensatory mitigation programs, curation, monitoring, treatment of damaged sites, and the preparation and submission of reports. Bonding for cultural resource identification, protection, and mitigation is necessary in the event that a ROW holder disturbs a site where such resources are present but discontinues development before taking the necessary steps to complete all analysis, documentation, and proper curation of site contents, and to stabilize or reclaim the cultural and historic properties so that they are returned to a secure condition.

Bond Coverage

Ultimately, the Performance and Reclamation bond 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 (DSRP)

The regulations authorize the BLM to require that applicants submit a Decommissioning and Site Reclamation Plan (DSRP) that defines the reclamation, revegetation, restoration, and soil stabilization requirements for the project area as a component of their Plan of Development (POD) (43 CFR 2804.25(b)). The DSRP shall require 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 prior to the authorization of the ROW. The approved DSRP 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.

Bond Amount

The BLM has issued policy guidance for determining bonding requirements for 43 Part CFR 3809 mining operations on the public lands (IM 2009-153) that provides detailed information about the process for determining the appropriate financial guarantees for intensive land uses on the public lands. This guidance can also be used to assist in calculating the bond amount for utility-scale solar energy development projects on public lands. The guidance requires that mining operators submit a Reclamation Cost Estimate (RCE) to the BLM authorized officer for review to assist in determining the bond amount. Although the ROW regulations do not specifically require that a holder of a ROW submit an RCE to the BLM, the BLM can require a ROW applicant to submit a POD in accordance with 43 CFR 2804.25(b). Because an RCE is key to determining the bond amount, a figure that is set forth in any decision authorizing a solar energy project on the public lands, BLM policy requires all solar energy ROW applicants to submit an RCE as part of the DSRP and the overall POD for a solar energy project. Attachment 1 to IM 2009-153 provides Guidelines for Reviewing RCEs and can be used as a guideline to assist in reviewing RCEs submitted for solar energy projects.

Updated: 5/19/2017