Diligent Performance and Certified Annual Statement

This IM provides instructions for the BLM administration of solar or wind energy development right-of-way (ROW) grant or lease holders’ (holders) compliance with two new annual requirements: filing the certified annual statement and maintaining diligent operations.   

Annual Certified Statement Requirement

Holders of solar or wind energy development ROWs are required to file an annual certified statement by October 1 each year, as outlined in 43 CFR 2806.52(b)(5). See attachment 1 for the certified annual statement that is to be used when:

1.   Providing an estimate in advance of the first calendar year of energy generation;

2.   Reporting actual energy generation in megawatt-hours (MWh) from the previous calendar year; or

3.   Providing a new estimate of MWh energy generation for the upcoming calendar year if energy generation is expected to  increase or decrease by 25 percent or more from the prior year.

The initial energy generation estimate will be used to calculate the initial annual bill once energy generation begins. In subsequent years, the BLM will generally determine each year’s estimated energy generation based on the most recent calendar year’s actual energy generation as reported in the certified annual statement. The actual energy generation will be used to calculate the year’s actual bill and assess whether a solar or wind energy development is over- or underestimating energy generation, as well as determine whether it is diligently operating on public lands. If the year’s actual energy generation exceeds or is less than the amount of energy generation used to calculate the initial bill, the holder will be billed or credited pursuant to 43 CFR 2806.13(e) or 2806.16.  

The BLM anticipates that the second and third years of energy generation would be more than the first year. The first year of energy generation is generally expected to be a partial year or may have lower generation than anticipated due to faulty equipment, different stages of development beginning operation at different times of the year, among other reasons. Due to the timing of the submission of the certified annual statement, the holder may need to submit a new energy generation estimate for their second and third years, or any other year where they expect an increase or decrease of 25 percent or more from the previous year’s actual energy generation.

Diligent Operations Requirement

To comply with diligent operations requirements in 43 CFR 2805.12(c)(8), the ROW holder of a solar or wind energy development must annually maintain energy generation at 75 percent of the energy generation capacity for the authorized development. See the Compliance section in this IM for details on what will occur when a holder fails to meet this requirement.

Allowing for operational changes each year to reduce operations to 75 percent of the development’s energy generation capacity (minimum energy generation capacity) provides holders with flexibility to manage unforeseen circumstances without the need to coordinate with the BLM in advance. A sustained reduction in output, such as for scheduled maintenance, anomalous weather years or loss of generation capacity over time (degradation), that would reduce the energy generation below the 75 percent minimum energy generation capacity for the ROW would require coordination with the BLM to update ROW project information for the period of time affected.

The holder may notify the BLM in advance, through submission of a new estimate in the certified annual statement if they will not generate 75 percent or more of the development’s energy generation capacity. Providing a new estimate may preempt a notice of noncompliance from the BLM and used by the BLM to update the minimum energy generation capacity for the ROW for the specified period of time if approved. Long-term changes to the operational capacity of the ROW will be provided in updates to the Plan of Development for the ROW.

Late Payment Fee

The BLM may assess a late payment fee of 10 percent of actual energy generation for the year in which the holder underestimates energy generation, as specified in 43 CFR 2806.52(b)(5)(vii). Underestimation occurs when the holder underestimates energy generation by 25 percent or more of the actual amount reported in the certified annual statement.

A holder may submit a new estimate for energy generation for the next year in advance in the certified annual statement when they expect to exceed or fall short of the previous year’s actual energy generation by 25 percent or more. The BLM may decide not to assess the late payment fee in certain circumstances, such as if the ROW holder provides adequate justification that the underestimation was reasonably unforeseeable prior to payment of the initial annual bill or the ROW holder provides the BLM with a new estimate, in advance, that energy generation will exceed the previous year's actual generation by more than 25 percent.

A holder may also submit for the BLM’s approval a new estimate for the operational generation capacity of the ROW, including sufficient justification consistent with 2805.12(e) (see Compliance section of this IM). When approved, it would update in advance the minimum operational generation capacities for the ROW, including for short- (inclement weather) or long-term (degradation) operational capacities of the facility.

Compliance

The BLM must notify the holder regarding their noncompliance and potential suspension or termination of their ROW pursuant to 43 CFR 2805.12(c)(8) when the holder of a grant or lease fails to comply with the diligent operation requirements for two consecutive years. The BLM may also address a holder's noncompliance with estimating generation through suspension or termination of the ROW under 43 CFR 2807.17 through 2807.19. The BLM may make such a determination after collecting relevant information, including information required by the BLM pursuant to 43 CFR 2805.12(a)(15), which provides the BLM access to any pertinent technical information, as appropriate, for monitoring and inspection activities.

Prior to suspending or terminating the ROW that does not comply with 43 CFR 2805.12(c)(8), the BLM will send a notice that gives a reasonable opportunity to correct any noncompliance or to start or resume normal ROW operations. To avoid suspension or termination, the ROW holder must provide a written response to the BLM’s notice:

1.  With reasonable justification for any reductions in energy generation;

2.  With the anticipated date in which energy generation at 75% or more of the development’s capacity will resume; and,

3.  Include a written request under 43 CFR 2805.12(e) for extension of the period in which the holder must satisfy the minimum energy threshold. If the Holder does not comply with the requirements of 43 CFR 2805.12(c)(8), the BLM may deny their request for an extension of the period for complying with the minimum energy generation threshold.

For item three above, the ROW holder may also request a long-term adjustment to the minimum energy generation threshold of the ROW, as appropriate, such as for technology degradation resulting in loss of energy generation efficiency. The BLM may not suspend or terminate the ROW if the holder is actively working with the BLM to comply with the diligent operation requirement. This would include providing new energy generation estimates to update project information that reflect the new expected energy generation on the ROW. Reasons that a holder may updated project information include the loss of generation capacity over time (degradation), and end of energy development life-cycle activities, such as decommissioning or repowering of an energy development, among others.