BLM Revises Solar Energy Development
Policy
The U.S. Department of the Interior Bureau of Land
Management (BLM) recently issued an Instruction Memorandum
(Update) modifying its Solar Energy Development Policy
(Policy), which is the agency's guidance on issuing
rights-of-way for solar development on federal lands.
The Update revises BLM's practices regarding evaluation of
applications, imposes new procedures and time limits on
development activities and creates criteria that BLM will use
for establishing financial security to be posted by
developers.
Background
The Policy is BLM's procedure for processing applications
for solar projects on federal lands. Developers who
propose to build a solar project on BLM-managed land must
submit an application demonstrating the developer's
capabilities, and, among other requirements, provide a Plan of
Development that describes the planned construction and
operation of the facility. BLM then grants rights-of-way
for the right to construct and operate the proposed
facilities.
Historically, BLM's Policy provided that solar
rights-of-way applications were generally processed on a
first-come, first-served basis. During the application
review, BLM evaluated developers' technical and financial
capability to develop a project, and allowed liberal
supplementation. The Update revises these criteria in an
effort to ensure diligent development of solar facilities and
to provide for expedited screening of applications to
terminate those that are considered speculative.
Demonstrating Capability
Prior Policy
While BLM was allowed to deny applications from those who
could not demonstrate the financial or technical capability to
complete the project, the process of screening was not
aggressively pursued.
Update
BLM will require more robust demonstrations of technical
and financial capability, but will also consider alternative
methods of making such demonstrations. In general, under
the Policy and the Update, technical capability may be
demonstrated by a history of funding, designing, constructing,
or successfully operating an energy generating project.
The Update adds the possibility of demonstrating financial and
technical capability by providing a comprehensive plan for
financing and developing projects. BLM will reject those
applications that fail to demonstrate financial capability,
either through actual ownership or through a sound business
plan.
Development Timelines
Prior Policy
BLM could terminate a right-of-way if construction had not
begun within three years of the grant.
Update
The timeframe has been shortened and all grants of
rights-of-way will be conditioned upon the agency's further
issuance of a Notice to Proceed (NTP) that acts as the formal
trigger for development activities. Construction must
occur within twelve months of the date of the NTP and no later
than twenty-four months after the grant of right-of-way.
Construction must be completed within the timeframes
established in the approved Plan of Development, which may be
no later than twenty-four months after the start of
construction.
A Plan of Development submitted by a developer may call for
a project to be developed in phases. No more than three
phases may be used, and construction of the each phase of
development must occur within the same timeframe described
above. Construction of later phases must begin within
three years of the start of construction of the previous
phase.
If construction does not begin on time, BLM will terminate
the right of way unless the developer can show good cause for
the delay (e.g., equipment delivery, legal challenges or acts
of God).
Financial Security
Prior Policy
Developers were required to post a "bond" to ensure
compliance with the terms of the grant, including reclamation
of the site upon completion of the term, but lacked
specificity.
Update
Financial security may be posted in the form of cash, a
certified check, surety bonds (from approved sureties),
irrevocable letters of credit (from approved financial
institutions), and insurance. Corporate guarantees may
not be used.
BLM will evaluate three criteria in determining the amount
of security, which expand the types of costs for which
developers will be held responsible:
(i) potential environmental liabilities, with a focus on
the use of herbicides, oils, and solvents;
(ii) decommissioning and removal of improvements; and
(iii) site reclamation costs.
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