Decommissioning Bond Surety Agreement

DECOMMISSIONING BOND AND SURETY AGREEMENT

Bond Number: [________________________________]

Effective Date: [__/__/____]

TABLE OF CONTENTS

1. Parties
2. Recitals
3. Definitions
4. Bond Amount and Obligation
5. Scope of Decommissioning Work
6. Bond Term and Renewal
7. Bond Amount Adjustments
8. Claims and Payment
9. Release of Bond
10. Indemnification
11. Default and Remedies
12. General Provisions
13. Signatures

PARTIES

PRINCIPAL (Facility Owner/Developer):

Company Name: [________________________________]

Address: [________________________________]

City, State, ZIP: [________________________________]

Phone: [________________________________] Email: [________________________________]

SURETY:

Company Name: [________________________________]

Address: [________________________________]

City, State, ZIP: [________________________________]

NAIC Number: [________________________________]

A.M. Best Rating: [________________________________]

OBLIGEE (Landowner / Government Entity):

Name/Entity: [________________________________]

Address: [________________________________]

City, State, ZIP: [________________________________]

Phone: [________________________________] Email: [________________________________]

Relationship: ☐ Private Landowner ☐ County/Municipality ☐ State Agency ☐ Federal Agency (BLM/USFS) ☐ Other: [____]

RECITALS

WHEREAS, Principal owns, operates, or proposes to construct an energy facility located at [________________________________] ("Facility Site"); and

WHEREAS, Obligee requires financial assurance that Principal will decommission the facility and restore the site upon cessation of operations; and

WHEREAS, Surety is a surety company authorized to do business in the State of [________________________________];

NOW, THEREFORE, the Parties agree as follows:

DEFINITIONS

• Decommissioning — The process of removing energy facility components, restoring the site, and returning the land to its pre-construction condition or a condition approved by the Obligee.
• Decommissioning Cost Estimate (DCE) — A detailed engineering estimate of the costs to complete decommissioning, prepared by a qualified independent engineer.
• Salvage Value — The estimated resale or scrap value of facility components, which may offset decommissioning costs if permitted by the Obligee.
• Penal Sum — The maximum amount payable under the Bond.

BOND AMOUNT AND OBLIGATION

4.1 Facility Description:

4.2 Bond Amount (Penal Sum): $[________]

4.3 Basis for Bond Amount:

☐ Decommissioning Cost Estimate dated [__/__/____], prepared by [________________________________], PE
☐ Net of Salvage Value: DCE ($[________]) minus Salvage Value ($[________]) = Bond Amount ($[________])
☐ Gross (no salvage credit): Full DCE amount

SCOPE OF DECOMMISSIONING WORK

5.1 Decommissioning shall include, at minimum:

☐ Removal of all above-ground structures (panels, turbines, racking, inverters, transformers)
☐ Removal of underground cables and conduit to a depth of [____] feet
☐ Removal of foundations and footings to a depth of [____] feet
☐ Removal of access roads (unless Obligee requests they remain)
☐ Removal of fencing and security equipment
☐ Decompaction and regrading of the site
☐ Revegetation with native species or as approved by Obligee
☐ Proper disposal or recycling of all removed materials
☐ Environmental testing and remediation if required

5.2 Decommissioning shall be completed within [____] months of facility closure or cessation of commercial operations.

BOND TERM AND RENEWAL

6.1 Initial Bond Term: [____] year(s), commencing [__/__/____].

6.2 The Bond shall automatically renew for successive [____]-year terms unless the Surety provides written notice of non-renewal at least [____] days prior to expiration.

6.3 If the Surety issues a non-renewal notice, Principal shall obtain a replacement bond from a qualified surety within [____] days of such notice.

6.4 The Bond shall remain in effect until Obligee provides written confirmation that decommissioning is complete and the site has been satisfactorily restored.

BOND AMOUNT ADJUSTMENTS

7.1 The Bond amount shall be reviewed and adjusted every [____] years based on an updated DCE.

7.2 Updated DCEs shall be prepared by a qualified, independent professional engineer at Principal's expense.

7.3 If the updated DCE exceeds the current Bond amount, Principal shall increase the Bond within [____] days of the updated DCE.

7.4 If the updated DCE is lower than the current Bond amount, the Bond may be reduced with Obligee's written consent.

CLAIMS AND PAYMENT

8.1 The Obligee may make a claim against the Bond if:

☐ Principal fails to commence decommissioning within [____] months of facility closure
☐ Principal abandons decommissioning before completion
☐ Principal becomes insolvent or files for bankruptcy
☐ The Bond is about to expire without replacement and decommissioning is not complete

8.2 Upon receipt of a valid claim, Surety shall either:

☐ Arrange for and pay the cost of completing decommissioning, up to the Penal Sum; or
☐ Pay the Obligee the amount of the claim, up to the Penal Sum

8.3 Surety shall respond to claims within [____] days and complete payment or commence work within [____] days of claim validation.

RELEASE OF BOND

9.1 The Bond shall be released upon written confirmation from the Obligee that:

☐ All facility components have been removed per Section 5
☐ The site has been regraded and revegetated to Obligee's satisfaction
☐ Any required environmental testing confirms no contamination
☐ All regulatory decommissioning requirements have been met

INDEMNIFICATION

10.1 Principal shall indemnify and hold harmless the Surety against all losses, costs, and expenses incurred by the Surety in connection with claims paid under this Bond.

10.2 Principal's indemnification obligation includes reimbursement of any amounts paid by the Surety to the Obligee, plus reasonable attorney fees and costs.

DEFAULT AND REMEDIES

11.1 If Principal fails to maintain the Bond or provide a replacement, Obligee may draw upon the full Penal Sum.

11.2 Obligee's remedies under this Bond are in addition to any other remedies available under the facility permit, lease, or applicable law.

GENERAL PROVISIONS

12.1 Governing Law: State of [________________________________].

12.2 Notices: Written notices to the addresses stated above.

12.3 Waiver: No waiver of any provision shall constitute a continuing waiver.

12.4 Severability: If any provision is unenforceable, the remainder continues in effect.

SIGNATURES

PRINCIPAL:

Signature: [________________________________] Date: [__/__/____]

Printed Name: [________________________________] Title: [________________________________]

SURETY:

Signature: [________________________________] Date: [__/__/____]

Printed Name: [________________________________] Title: [________________________________]

(Surety Seal)

Power of Attorney attached: ☐ Yes ☐ No

OBLIGEE (Acknowledgment):

Signature: [________________________________] Date: [__/__/____]

Printed Name: [________________________________] Title: [________________________________]

EXHIBITS

• Exhibit A — Decommissioning Cost Estimate
• Exhibit B — Site Plan and Facility Layout
• Exhibit C — Permit/Approval Conditions

Sources and References

• BLM IM 2015-138 — Solar and Wind Reclamation Bonds
• Mont. Code Ann. § 75-26-304 — Renewable Energy Decommissioning
• SuretyGroup — Decommission Performance Bonds