(a) You must include payment of bonds, insurance, or alternative forms of security with your application for a right-of-way in amounts that cover:

(1) The highest annual rental specified in the grant, unless compensation is a one-time payment;

(2) The estimated damages resulting from the construction of any permanent improvements;

(3) The estimated damages and remediation costs from any potential release of contaminants, explosives, hazardous material or waste;

(4) The operation and maintenance charges for any land located within an irrigation project;

(5) The restoration of the premises to their condition at the start of the right-of-way or reclamation to some other specified condition if agreed to by the landowners.

(b) The bond or other security must be deposited with us and made payable only to us, and may not be modified without our approval, except for tribal land in which case the bond or security may be deposited with and made payable to the tribe, and may not be modified without the approval of the tribe. Any insurance must identify both the Indian landowners and the United States as additional insured parties.

(c) The grant will specify the conditions under which we may adjust the bond, insurance, or security requirements to reflect changing conditions, including consultation with the tribal landowner for tribal land before the adjustment.

(d) We may require that the surety provide any supporting documents needed to show that the bond, insurance, or alternative form of security will be enforceable, and that the surety will be able to perform the guaranteed obligations.

(e) The bond, insurance, or other security instrument must require the surety to provide notice to us, and the tribe for tribal land, at least 60 days before canceling a bond, insurance, or other security. This will allow us to notify the grantee of its obligation to provide a substitute bond, insurance, or other security before the cancellation date. Failure to provide a substitute bond, insurance or security is a violation of the right-of-way.

(f) We may waive the requirement for a bond, insurance, or alternative form of security:

(1) For individually owned Indian land, if the Indian landowners of the majority of the interests request it and we determine, in writing, that a waiver is in the Indian landowners' best interest considering the purpose of and risks associated with the right-of-way, or if the grantee is a utility cooperative and is providing a direct benefit to the Indian land or is a tribal utility.

(2) For tribal land, deferring, to the maximum extent possible, to the tribe's determination that a waiver of a bond, insurance or alternative form of security is in its best interest.

(g) We will accept a bond only in one of the following forms:

(1) Certificates of deposit issued by a federally insured financial institution authorized to do business in the United States;

(2) Irrevocable letters of credit issued by a federally insured financial institution authorized to do business in the United States;

(3) Negotiable Treasury securities; or

(4) Surety bonds issued by a company approved by the U.S. Department of the Treasury.

(h) We may accept an alternative form of security approved by us that provides adequate protection for the Indian landowners and us, including but not limited to an escrow agreement or an assigned savings account.

(i) All forms of bonds or alternative security must, if applicable:

(1) State on their face that BIA approval is required for redemption;

(2) Be accompanied by a statement granting full authority to BIA to make an immediate claim upon or sell them if the grantee violates the terms of the right-of-way grant;

(3) Be irrevocable during the term of the bond or alternative security; and

(4) Be automatically renewable during the term of the right-of-way.

(j) We will not accept cash bonds.

(k) The requirements of this section do not apply to Federal, State, Tribal, or local governments who are prohibited by law from providing a bond, insurance, or other security. Federal, State, Tribal, or local governments seeking this exemption must include with their application a certification, including a citation to applicable law, that they are prohibited by law from providing security. Federal, State, Tribal, or local governments must also notify landowners that they are prohibited by law from providing security when they notify the Indian landowners of their application under §169.107.

[80 FR 72534, Nov. 19, 2015, as amended at 84 FR 42808, Aug. 19, 2019]