Decommissioning Bond Escrow Trust Agreement Draft (FERC-Compliant)

This agreement serves as a cornerstone of regulatory risk mitigation in federally licensed renewable infrastructure—particularly for FERC-licensed hydropower projects, pumped storage facilities, and certain interstate transmission-connected wind/solar assets subject to FERC jurisdiction. Its design reflects FERC’s emphasis on 'financial assurance certainty': funds must be held in an escrow trust with a qualified institutional trustee (e.g., a nationally chartered bank or trust company), governed by explicit fiduciary standards, and structured to survive bankruptcy under 11 U.S.C. § 362(b)(3). Key structural features include: (1) a dynamic bond amount calculation tied to updated engineering cost estimates certified annually by a qualified independent engineer; (2) mandatory periodic verification of trust sufficiency against current decommissioning scope and inflation indices (e.g., ENR Construction Cost Index); and (3) multi-tiered release mechanisms—partial disbursements only upon verified completion of discrete restoration phases (e.g., turbine removal, soil remediation, re-vegetation), with final release contingent upon FERC-issued Certificate of Completion. Unlike generic surety bonds, this instrument integrates technical decommissioning engineering specifications directly into legal covenants—requiring alignment with ASTM E2895-23 (Standard Guide for Renewable Energy Project Decommissioning Planning) and EPA Region-specific closure criteria. Enforcement provisions empower FERC or delegated state agencies to step in and draw funds if the licensee defaults, ensuring public and environmental protection remains prioritized over creditor claims.