Technical and Financial Evaluations for Solar and Wind Energy Rights-of-Way Grants and Leases
United States Department of the Interior
BUREAU OF LAND MANAGEMENT
Washington, DC 20240
September 14, 2017
In Reply Refer To:
EMS Transmission 9/26/2017
Instruction Memorandum No. 2017-099
To: All Field Office Officials
From: Assistant Director, Energy, Minerals, and Realty Management
Subject: Technical and Financial Evaluations for Solar and Wind Energy Rights-of-Way Grants and Leases
Program Area: National Renewable Energy Coordination Office, Solar and Wind Energy
Purpose: This Instruction Memorandum (IM) rescinds IM 2011-060, Solar and Wind Energy Applications – Due Diligence and IM 2011-061, Solar and Wind Energy Applications – Pre-application and Screening, and provides new guidance for solar and wind energy right-of-way (ROW) applications and authorizations.
Policy/Action: When processing an application or permitting use of the public lands, the Bureau of Land Management (BLM) must evaluate the technical and financial capabilities of an applicant or holder of a ROW grant or lease in accordance with the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1764(J)) (FLPMA). This IM provides guidance for implementing this requirement under FLPMA, as well as for assessing the technical and economic feasibility of proposed wind and solar energy projects.
Evaluating Technical and Financial Capabilities of ROW Applicants and Bidders
The ROW regulations (43 CFR 2804.12(a)(5)) require all solar and wind energy ROW applicants to include a statement of their technical and financial capability to construct, operate, maintain, and terminate the project. Under 43 CFR 2804.26(a)(5)(i), a ROW applicant or holder must maintain their technical and financial capability through the application process and the term of the ROW.
For ROW grants, the BLM will determine the technical and financial capabilities of the applicant upon receipt of a completed ROW application. For ROW leases, the BLM will determine the technical and financial capabilities of the bidder upon receipt of a complete competitive bid certification form. Accordingly, the BLM should review and evaluate the following information when receiving a ROW application or a competitive bid certification form, as well as any subsequent ROW Plan of Development (POD).
In order to evaluate an applicant’s technical capability to construct, operate, maintain and terminate the project under 43 CFR 2804.12(a)(5), the BLM should consider any previous experience of the ROW applicants and bidders related to similar renewable energy facilities on either public or non-public lands. More specific documentation may also be relevant, such as power purchase agreements, interconnect agreements, or third-party contracts for the construction, operation, maintenance, and termination of the facility.
In order to evaluate an applicant’s financial capability to construct, operate, maintain and terminate the project under 43 CFR 2804.12(a)(5), the BLM should consider information provided by the applicant regarding the availability of sufficient financial capitalization or other funding to carry out all aspects of the project including preliminary studies, environmental reviews, permitting, construction, operation and termination of the facility. Other documentation may also be relevant to demonstrating financial capability, including project financial plans, including examples of prior project financing, copies of Federal and other loan guarantees, power purchase agreements, interconnect agreements, and third-party engineering, manufacture, or supply contracts.
Determination of Technical and Financial Capability
The BLM will determine the ROW applicant’s or bidder’s technical and financial capability based on the information provided in the ROW application or competitive bid certification form, POD, as well as additional documentation provided to or requested by the BLM. The BLM should not request additional or burdensome documentation if it is not reasonably necessary to determine, in a timely manner, that the ROW applicant or bidder has the technical or financial capability to successfully hold the ROW grant or lease. Documentation that includes proprietary or confidential information that is submitted to the BLM will be treated as such to the extent allowed by law.
The BLM will document its determination (including rationale) of the technical and financial capabilities of the ROW applicant or bidder in the project case file. If the BLM determines that the ROW applicant or bidder does not have the technical and financial capabilities necessary to construct, operate, maintain, and terminate the project, the BLM may deny the ROW application (43 CFR 2804.26(a)(5)) or competitive bid certification.
Not all capabilities specific to a project must be met when submitting an application or in early stages of a lease as this information may not be readily available. Such information must be clearly identified in the POD, as well as the timing for when it will be provided to the BLM. The BLM will inform ROW applicants and bidders that the technical and financial capability requirements must be satisfied for the entire term of the ROW grant or lease. Additionally, the BLM will evaluate the technical and financial capabilities for an assignee when a grant or lease is assigned or if there is a change in control, including corporate mergers or acquisitions not within the same corporate family (43 CFR 2807.21).
Evaluating Project Technical and Economic Feasibility of Proposed Projects
In addition to the technical and financial capabilities of the ROW applicant or bidder, the BLM also evaluates the technical and economic feasibility of the proposed wind or solar energy project. The BLM may deny a proposed ROW for a project that is not technically or economically feasible. The BLM will rely on the information provided in the ROW application, POD, or other project documentation to determine the technical and economic feasibility of a project.
Among other factors, the BLM will consider the specific renewable energy technology, project siting and configuration, technological advances, relevant pilot projects, access to transmission, and site characteristics (e.g. slope and solar insolation). The BLM should recommend to project proponents that they provide examples of successfully built facilities that are similar to the proposed project.
Among other factors, the BLM will consider current market conditions including renewable portfolio standards, the price of electricity and the capital costs of the renewable energy facility. The BLM should recommend to project proponents that they include copies of conditional or confirmed loan guarantees or power purchase agreements. The BLM’s evaluation of economic feasibility does not necessarily require a cost-benefit analysis or speculation about an applicant’s costs and profit. Rather, the BLM will consider whether the successful construction, operation, and termination of the ROW is likely, given past and current practices and technology, and using common practice (NEPA Handbook Section 6.6.3).
Determination of Technical and Economic Feasibility
The BLM’s determination of the technical and economic feasibility of proposed wind and solar energy facilities are primarily reflected in the National Environmental Policy Act (NEPA) process. The BLM may eliminate any alternative, including the alternative proposed by the ROW applicant or leaseholder, from detailed analysis in the NEPA process if the BLM determines that the alternative is not technically or economically feasible (BLM NEPA Handbook Section 6.6.3). Alternatives fully analyzed in a NEPA document are considered to be technically and economically feasible, unless it is noted otherwise in the NEPA document.
Alternatives, including the alternative proposed by the ROW applicant or leaseholder, that are determined to either not be economically or technically feasible will be identified in the section of the NEPA document for Alternatives Considered but Dismissed from Detailed Analysis. A brief explanation for this determination should be included in the NEPA document.
Obtaining the Appropriate Expertise
It is the BLM’s responsibility to determine the technical and financial capabilities of ROW applicants and bidders, as well as the technical and economic feasibility of proposed wind and solar energy projects. However, the BLM may seek assistance from other Federal, State, or local agencies that have appropriate expertise when making its determination.
BLM offices may also use third party contractors, as necessary, in making timely and appropriate determinations. BLM[KJR1] offices should strongly consider using third party contractors, in particular, when reviewing proposed wind and solar energy projects that use new technology, propose non-traditional site plans, or rely on complex financial arrangements. In Fiscal Year 2018, the National Renewable Energy and Rights-of-Way Coordination Office (WO-301) will develop national-level contracts with third party contractors that BLM offices will be able to use. Until a national-level contract is established, BLM offices may review and approve a contractor, provided by the proponent, to complete a necessary determination.
The BLM has developed information sheets for evaluating the technical and financial capabilities of applicants, bidders, and projects. This information is useful in evaluating project specific information, including the amount of land necessary for specific technologies, anticipated installation costs, average rates of return, and efficiency factors. During their determination, offices should validate project specific information that is outside the values or criteria established on these technology sheets.
Timeframe: This policy is effective immediately. Pending solar and wind energy applications will be processed consistent with the provisions of this IM.
Budget Impact: The application of this policy will have minimal budget impact. The administration of solar and wind energy applications and ROWs are subject to processing cost recovery (43 CFR 2804.14) or to monitoring cost recovery (43 CFR 2805.16).
Background: In December 2015, the Department of the Interior Office of Inspector General (OIG) issued its final report “Inspection Report – The Bureau of Land Management’s Determination Processes for Wind Energy Projects Proposed on Public Lands” (Report No. 2015-EAU-037). The report contained recommendations to enhance the BLM’s administration of its wind energy program. This Instruction Memorandum addresses recommendations identified by the OIG, and provides guidance on BLM’s financial and technical determination processes for wind energy and solar energy ROWs.
Manual/Handbook Sections Affected: This IM transmits policy that will be incorporated into BLM Manual 2803, Qualifications for Holding FLPMA Grants, and BLM Manual 2804, Applying for FLPMA Grants, during the next revision. This IM also rescinds IM 2011-060, Solar and Wind Energy Applications – Due Diligence, and IM 2011-061, Solar and Wind Energy Applications – Pre-application and Screening.
Coordination: The BLM National Renewable Energy and Rights-of-Way Coordination Office (WO-301) prepared this IM in coordination with the Division of Decision Support, Planning and NEPA (WO-210). The Solicitor’s Office reviewed and provided input to this policy prior to its finalization.
Contact: If you have any questions concerning the content of this IM, please contact Stephen Fusilier, Acting Chief, National Renewable Energy and Rights-of-Way Coordination Office at 202-912-7148 or firstname.lastname@example.org; or Michael Hildner, Planning and Environmental Analyst, at 202-912-7419 or email@example.com.
Timothy R. Spisak
Acting Assistant Director
Energy, Minerals, and Realty Management
WO-870, IT Policy and Planning
1 – PV Technology Sheet (2 pp)
2 – CSP Technology Sheet (2 pp)
3 – Wind Technology Sheet (2 pp)