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Lesson 7 of 9 · about 16 minutes

Decommissioning Plans and Bonds

You'll be able to

  • Write abandonment triggers and removal deadlines a county can enforce
  • Compute a bond amount under gross and net-of-salvage methods and explain the difference
  • Project how inflation erodes a fixed bond and why periodic updates matter
  • Compare surety bonds, letters of credit and cash or trust funds as security

Every energy facility ends. Panels degrade, turbines wear out, contracts expire, companies go under. The question a county answers at permit time is who pays when that day comes. In the survey attached to Jeff's package, decommissioning assurance drew some of the strongest support of any question. At the Idaho Land Board's 2024 vote on the Arco wind and solar lease, the one member who voted no said he was skeptical because such projects sometimes do not pan out or their builders go bankrupt. The state's answer was in the lease: decommissioning and land restoration if the business fails, backed by bonding. Make sure your county can give that answer and mean it.

Idaho Code 67-6512(d) lets a board attach conditions controlling the duration of development and ensuring it is properly maintained. Decommissioning rules sit squarely inside that power.

The parts of a decommissioning rule

PartJeff's packageNotes for drafting
TriggerAbandonment: 12 continuous months with no electricity generated, stored or dispatched, other than maintenance or repair; also end of permit or closureAdd: failure to keep security in force, and revocation for violations
DeadlinesStart within 12 months of cessation; finish within 24 months after thatRequire a written notice of cessation within 30 days
ScopeAll equipment, structures, foundations, access roads and utilities removed; land returned to pre-existing condition or betterSet a removal depth for foundations and buried cable (for example, 4 feet on cropland), and require soil decompaction and reseeding
EstimateCounty-verified estimate of removal and restoration; soil restoration calculated separately for Tier 3Engineer chosen by the county, paid by the applicant
Amount150% of the verified estimateState whether salvage may be netted (this course says no)
FormTier 2 bond; Tier 3 trust fund, before any land disturbanceSee the security table below
UpdatesRe-estimate every 3 years (Tier 2) or 2 years (Tier 3), plus on material changeTie updates to a published cost index between engineering reviews
TransferOwnership change reported within 30 days; new owner assumes all conditions in writingOld security released only when replacement is posted
County remedyDraw on security and enter the property to do the workRecord a consent-to-entry agreement against the parcels at permit time

The removal depth matters more than it looks. Michigan's state siting process, as implemented by its utility commission, limits decommissioning requirements to above-surface facilities. A county writing its own code can require removal of foundations and cable to a depth that lets farming resume, which is the whole point on cropland.

Gross versus net: the salvage fight

Developers usually argue that steel, copper and aluminum have scrap value, so the bond should cover removal cost minus salvage. Advocates usually argue for the gross cost. Here is why the difference matters.

Example: sizing Highline's security

Highline's revised 93 MW project gets a county-hired engineer's estimate: removal and restoration $14,000,000, including $1,200,000 for soil decompaction and reseeding. Highline's consultant claims $4,000,000 in salvage value.

MethodBaseMultiplierSecurity
Net of salvage, no cushion$14.0M - $4.0M = $10.0M100%$10,000,000
Net of salvage, 150%$10.0M150%$15,000,000
Gross, 150% (Jeff's package)$14.0M150%$21,000,000

Per megawatt: $21,000,000 / 93 = about $226,000 per MW under the gross method, against $107,500 per MW under the first row. These dollar figures are invented for the example. Real estimates should come from an engineer working for the county.

The case against netting salvage is practical. Scrap prices swing. Degraded panels may have negative value once disposal rules apply. In a bankruptcy, secured creditors may claim the equipment before the county does. And a county is not a salvage dealer. A gross-cost bond pays out regardless of any of that. The 50 percent cushion covers estimate error, contractor markup when the county hires the work under pressure, and cost growth between updates.

Inflation and the update clause

A bond posted in year one and never revisited shrinks every year in real terms.

Example: what a fixed bond is worth in year 25

Assume removal costs rise 3 percent a year (an assumption, not a forecast).

  • Growth factor after 25 years: 1.03^25 = 2.094.
  • Year-1 gross estimate $14,000,000 becomes $14,000,000 x 2.094 = $29,316,000 in year 25.
  • A fixed $21,000,000 bond covers $21,000,000 / $29,316,000 = 72 percent.
  • A fixed bond at 100 percent of year-1 cost would cover 1 / 2.094 = 48 percent.

With a re-estimate every two years, the security never falls more than about two years behind. That is why Jeff's two- and three-year update cycles are worth defending at the hearing.

Which security actually pays

FormHow it worksStrengthsWeaknesses
Cash or trust fundMoney deposited with the county or a trustee, often built up over timeAlready there; no third party to argue withCostly for the developer; trust terms must bar early withdrawals
Irrevocable letter of creditA bank pays the county on demand up to the stated amountFast payment; strong if from a rated bankUsually one-year terms; must auto-renew or the county must draw before expiry
Surety bondAn insurer guarantees performance or paymentCommon and cheap for developersSureties can dispute claims; county must prove default
Parent company guaranteeA parent promises to payCosts nothing up frontWorthless if the parent fails too; accept only alongside real security

State law offers no backstop. In 2025, Idaho House Bill 387 would have required wind project owners to deposit the full cost of decommissioning in cash before starting. It died, with planned amendments to allow other bonding types, according to the Idaho Conservation League's tracker. Counties are on their own, which makes local code the only protection. Even Bannock County's draft replacement for its 2024 ban, reported in September 2026, requires decommissioning bonds and plans.

On federal land the BLM "may require" a performance and reclamation bond for a right-of-way, covering reclamation, revegetation and soil stabilization, and for solar and wind grants outside designated leasing areas a bond is required before the BLM issues a Notice to Proceed: at least $10,000 per disturbed acre for solar, and at least $10,000 per turbine under 1 MW or $20,000 per turbine of 1 MW or more for wind (43 CFR 2805.20). Ask whether one was set, and for how much.

Common mix-ups

  • Claim: The landowner's lease covers removal, so the county need not. What the evidence shows: Leases protect the landowner, if they do at all, and can be renegotiated or broken in bankruptcy. Neighbors and the county are not parties. NRCS's solar guidance tells landowners to build decommissioning duties into the lease, which shows how often they are missing.
  • Claim: A bond posted at approval is enough. What the evidence shows: Without updates, inflation alone can cut its real value in half over a project's life.
  • Claim: Requiring a bond before construction is unusual. What the evidence shows: The Idaho Land Board relies on bonding for its own energy leases, many county energy ordinances require security before construction, and Bannock County's draft requires bonds too.

Reporting angle

  • Request the decommissioning plan, the cost estimate, who prepared it and who paid for it. Check whether salvage was subtracted.
  • Request a copy of the security instrument itself: issuer, amount, expiration date and renewal terms. A letter of credit expiring next year with no auto-renewal is a story.
  • Ask the county clerk or treasurer who tracks expiration dates on posted security, and how.
  • When a project changes hands, ask whether the new owner's replacement security was posted before the old one was released.
  • Ask the Land Board for decommissioning bonds on any energy lease of endowment land in your county.

Research angle

Check yourself

1. An engineer estimates removal and restoration at $14 million, with $4 million of salvage value. What is the security at 150 percent of the gross estimate?

2. Why do advocates resist netting salvage value out of the bond?

3. Removal costs rise 3 percent a year and the bond is never updated. After 25 years, what share of the needed amount does the original bond cover?

4. What happened to Idaho HB 387 (2025), which would have required cash deposits for wind decommissioning?

5. Under Jeff's package, when does a facility count as abandoned?

Terms in this lesson

Decommissioning
Removing a facility's equipment, foundations, roads and wiring and restoring the land at the end of its life or after abandonment.
Financial assurance
Security such as a bond, letter of credit or trust fund that guarantees money for decommissioning if the owner does not do it.
Salvage value
What removed equipment and materials can be sold for, which some estimates subtract from removal cost.
Irrevocable letter of credit
A bank's promise to pay the county on demand up to a set amount, which the owner cannot cancel.
Abandonment
A defined period of non-operation that triggers removal duties.

Full glossary

Sources