```

[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]

  		GAO REPORT DOCUMENTS BLM'S CHRONIC MISMANAGEMENT 
  		    OF WIND AND SOLAR RECLAMATION BONDS

=======================================================================

                           OVERSIGHT HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                        Wednesday, June 24, 2015

                               __________

                           Serial No. 114-12

                               __________

       Printed for the use of the Committee on Natural Resources
       
       
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                     COMMITTEE ON NATURAL RESOURCES

                        ROB BISHOP, UT, Chairman
            RAUL M. GRIJALVA, AZ, Ranking Democratic Member

Don Young, AK                        Grace F. Napolitano, CA
Louie Gohmert, TX                    Madeleine Z. Bordallo, GU
Doug Lamborn, CO                     Jim Costa, CA
Robert J. Wittman, VA                Gregorio Kilili Camacho Sablan, 
John Fleming, LA                         CNMI
Tom McClintock, CA                   Niki Tsongas, MA
Glenn Thompson, PA                   Pedro R. Pierluisi, PR
Cynthia M. Lummis, WY                Jared Huffman, CA
Dan Benishek, MI                     Raul Ruiz, CA
Jeff Duncan, SC                      Alan S. Lowenthal, CA
Paul A. Gosar, AZ                    Matt Cartwright, PA
Raul R. Labrador, ID                 Donald S. Beyer, Jr., VA
Doug LaMalfa, CA                     Norma J. Torres, CA
Jeff Denham, CA                      Debbie Dingell, MI
Paul Cook, CA                        Ruben Gallego, AZ
Bruce Westerman, AR                  Lois Capps, CA
Garret Graves, LA                    Jared Polis, CO
Dan Newhouse, WA                     Vacancy
Ryan K. Zinke, MT
Jody B. Hice, GA
Aumua Amata Coleman Radewagen, AS
Thomas MacArthur, NJ
Alexander X. Mooney, WV
Cresent Hardy, NV
Vacancy

                       Jason Knox, Chief of Staff
                      Lisa Pittman, Chief Counsel
                David Watkins, Democratic Staff Director
             Sarah Parker, Democratic Deputy Chief Counsel
                                 
                                 ------                                

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                      LOUIE GOHMERT, TX, Chairman
             DEBBIE DINGELL, MI, Ranking Democratic Member

Doug Lamborn, CO                     Jared Huffman, CA
Raul R. Labrador, ID                 Ruben Gallego, AZ
Bruce Westerman, AR                  Jared Polis, CO
Jody B. Hice, GA                     Vacancy
Aumua Amata Coleman Radewagen, AS    Vacancy
Alexander X. Mooney, WV              Raul M. Grijalva, AZ, ex officio
Vacancy
Rob Bishop, UT, ex officio
                                 ------                                

                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Wednesday, June 24, 2015.........................     1

Statement of Members:
    Dingell, Hon. Debbie, a Representative in Congress from the 
      State of Michigan..........................................     3
        Prepared statement of....................................     6
    Gohmert, Hon. Louie, a Representative in Congress from the 
      State of Texas.............................................     1
        Prepared statement of....................................     3

Statement of Witnesses:
    Ellis, Steven A., Deputy Director for Operations, Bureau of 
      Land Management, U.S. Department of the Interior...........    16
        Prepared statement of....................................    18
        Questions submitted for the record.......................    20
    Fennell, Anne-Marie, Director, Natural Resources and 
      Environment Team, U.S. Government Accountability Office; 
      Accompanied by Elizabeth Erdmann, Assistant Director, 
      Natural Resources and Environment Team, U.S. Government 
      Accountability Office......................................     7
        Prepared statement of....................................     9

Additional Materials Submitted for the Record:

    Bishop, Hon. Rob and Hon. Louie Gohmert, May 1, 2015 Letter 
      to Director Kornze, BLM....................................    43
    Dingell, Hon. Debbie, June 24, 2015 Letter to Chairman Louie 
      Gohmert....................................................     5
    Ellis, Steven A., Deputy Director for Operations, BLM, June 
      3, 2015 Letter to Chairman Rob Bishop......................    45
    List of documents submitted for the record retained in the 
      Committee's official files.................................    46
    Schinkel, De Shann, Realty Specialist, BLM Rawlins Field 
      Office; Jessica Lewis, Analyst, GAO, e-mail correspondence.    46
                                     

 
 OVERSIGHT HEARING ON GAO REPORT DOCUMENTS BLM'S CHRONIC MISMANAGEMENT 
                  OF WIND AND SOLAR RECLAMATION BONDS

                              ----------                              

                        Wednesday, June 24, 2015

                     U.S. House of Representatives

              Subcommittee on Oversight and Investigations

                     Committee on Natural Resources

                             Washington, DC

                              ----------                              

    The subcommittee met, pursuant to notice, at 10:30 a.m., in 
room 1324, Longworth House Office Building, Hon. Louie Gohmert 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Gohmert, Labrador, Radewagen, 
Mooney; Dingell, Huffman, and Polis.
    Mr. Gohmert. The Subcommittee on Oversight and 
Investigations is meeting today to hear testimony concerning 
BLM's ongoing mismanagement of reclamation bonds for wind and 
solar energy projects on Federal land.
    So this Subcommittee on Oversight and Investigations will 
come to order. Under Committee Rule 4(f), any oral opening 
statements at hearings are limited to the Chairman and the 
Ranking Minority Member and the Vice Chair and a designee of 
the Ranking Member. This will allow us to hear from our 
witnesses sooner, and help Members keep to their schedules.
    Our subcommittee is meeting to hear testimony on a GAO 
report documenting BLM's chronic mismanagement of wind and 
solar reclamation bonds. I do politely ask everyone in the 
hearing to please silence your cell phones and anything else 
that makes noise. This will allow minimum distractions for both 
our Members and our guests to ensure that we all gain as much 
from this as we can.
    Since I am not a judge anymore and do not have a bailiff, I 
cannot have you carried out if you make noise--at least not 
immediately--but anyway, please be polite. I didn't even have 
to say anything to the bailiff, he just went and got them out. 
That was kind of nice.
    [Laughter.]
    Mr. Gohmert. I would ask unanimous consent that all of the 
Members' opening statements be made part of the hearing record 
if they are submitted to the Subcommittee clerk by 5:00 p.m. 
today.
    Hearing no objection, so ordered.
    I will now recognize myself for 5 minutes.

   STATEMENT OF THE HON. LOUIE GOHMERT, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Gohmert. Reclamation bonds are used to return solar and 
wind energy rights-of-way to their pre-developed condition 
after authorization to use the land ends. BLM requires right-
of-way holders to provide these bonds so the reclamation costs 
are covered in case the energy developer becomes insolvent or 
is otherwise unable to pay for reclamation.
    If BLM does not have an adequate bond, BLM may have to use 
taxpayer dollars to cover the costs. As of April 2014, BLM held 
over $100 million in reclamation bonds for solar and wind 
projects.
    Unfortunately, GAO found that BLM is chronically 
mismanaging the wind and solar bond program. The computer 
databases BLM uses to track bonds are completely unreliable and 
inconsistent with the project files. BLM has bond adequacy 
review policies that it does not follow, and 50 percent of the 
bonds are overdue for review.
    In some cases, BLM holds bonds below the established 
minimum amount, in violation of current BLM policy. GAO 
estimates that about 30 percent of BLM's wind and solar rights-
of-way are underbonded by a total of about $15 million. Out of 
the 33 wind rights-of-way that BLM has granted, over 60 percent 
have little or no documentation to support the bond amount. The 
remaining 40 percent have inconsistent documentation that 
varied widely.
    These are not new problems. In 2012, the Office of 
Inspector General for the Department of the Interior evaluated 
BLM's Renewable Energy Program and found many of the same 
issues; but instead of taking corrective action, BLM charged 
ahead.
    In fact, in 2013 President Obama proposed to increase 
renewable energy projects and set an even higher goal for 
energy generation on Federal land. The Administration's push 
toward more renewable energy was bolstered by millions of 
dollars in tax credits and loan guarantees for renewable energy 
developers.
    It is still unclear whether these problems were merely a 
symptom of an agency that was in over its head or if these 
breaks on bonding requirements were part of an effort by the 
Administration to coddle a preferred industry.
    The OIG described this rapid expansion of renewables as a 
boom environment and recognized that the volatility of the 
renewable energy industry makes reclamation bonds imperative. 
Instead of heeding this advice, we are here 3 years later to 
hold BLM accountable for the many problems that both the OIG 
and now the GAO have documented.
    We would like to commend the GAO for doing an 
extraordinarily thorough, well-documented, and comprehensible 
review. Some issues, by their nature, tend to catch more 
attention than others. In this case, that would be particularly 
true regarding BLM's inability to demonstrate that it has 
adequately safeguarded bonds entrusted to it.
    This, however, is emblematic of the broader problems 
documented by GAO regarding a program at the Interior that has 
woefully been mismanaged for some time.
    Recognizing and correcting these problems, this time in 
earnest, is particularly important given the emphasis on 
promoting renewable energy projects on Federal land. Hopefully 
we can start down that path today.

    [The prepared statement of Mr. Gohmert follows:]
Prepared Statement of the Hon. Louie Gohmert, Chairman, Subcommittee on 
                      Oversight and Investigations
    The Subcommittee on Oversight and Investigations is meeting today 
to hear testimony concerning BLM's ongoing mismanagement of reclamation 
bonds for wind and solar energy projects on Federal land. This hearing 
coincides with the release of a new Government Accountability Office 
report entitled, ``BLM has Limited Assurance that Wind and Solar 
Projects are Adequately Bonded.''
    Reclamation bonds are used to return solar and wind energy rights-
of-way to their pre-developed condition after authorization to use the 
land ends. BLM requires right-of-way holders to provide these bonds so 
that reclamation costs are covered in case the energy developer becomes 
insolvent or is otherwise unable to pay for reclamation. If BLM doesn't 
have an adequate bond, BLM may have to use taxpayer dollars to cover 
the costs. As of April 2014, BLM held over $100 million in reclamation 
bonds for solar and wind projects.
    Unfortunately, GAO found that BLM is chronically mismanaging the 
wind and solar bond program. The computer databases BLM uses to track 
bonds are completely unreliable and inconsistent with the project 
files. BLM has bond adequacy review policies that it doesn't follow, 
and 50 percent of bonds are overdue for review.
    In some cases, BLM holds bonds below the established minimum 
amount--a violation of current BLM policy. GAO estimates that about 30 
percent of BLM's wind and solar rights-of-way are underbonded by a 
total of about $15 million. Out of the 33 wind rights-of-way that BLM 
granted, over 60 percent have little or no documentation to support the 
bond amount. The remaining 40 percent have inconsistent documentation 
that varied widely.
    These aren't new problems. In 2012, the Office of Inspector General 
for the Department of the Interior evaluated BLM's Renewable Energy 
Program and found many of the same issues.
    But instead of taking corrective action, BLM charged ahead.
    In fact, in 2013 President Obama proposed to increase renewable 
energy projects and set an even higher goal for energy generation on 
Federal land. The Administration's push toward more renewable energy 
was bolstered by millions of dollars in tax credits and loan guarantees 
for renewable energy developers.
    It is still unclear whether these problems were merely a symptom of 
an agency that was in over its head, or if these breaks on bonding 
requirements were part of an effort by the Administration to coddle a 
preferred industry.
    The OIG described this rapid expansion of renewables as a ``boom'' 
environment and recognized that the volatility of the renewable energy 
industry made reclamation bonds imperative.
    Instead of heeding this advice, we are here 3 years later to hold 
BLM accountable for the many problems that both the OIG and now the GAO 
have documented.
    I would like to commend the GAO for doing an extraordinarily 
thorough, well-documented, and comprehensible review. Some issues, by 
their nature, tend to catch more attention than others. In this case, 
that would be particularly true regarding BLM's inability to 
demonstrate that it has adequately safeguarded bonds entrusted to it.
    This, however, is emblematic of the broader problems documented by 
GAO, regarding a program that has been woefully mismanaged for some 
time.
    Recognizing and correcting these problems--this time in earnest--is 
particularly important given the emphasis on promoting renewable energy 
projects on Federal land. Hopefully we can start down that path today.

                                 ______
                                 

    Mr. Gohmert. At this time I would like to recognize the 
Ranking Member for her opening statement. I recognize Mrs. 
Dingell for 5 minutes.

   STATEMENT OF THE HON. DEBBIE DINGELL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mrs. Dingell. Thank you, Mr. Chairman. It is always good to 
be with you, especially on a sunny day after a bad rain last 
night. Hopefully this is not indicative of today's hearing.
    I want to thank the witnesses for taking the time to be 
here today.
    First, I want to applaud the Chairman's focus on whether 
energy developers on Bureau of Land Management land are 
adhering to the polluter pays principle. This common-sense 
principle says that if you cause environmental harm, you are 
responsible for cleaning it up. It is one way to make sure that 
companies do not try to increase their profits by making the 
taxpayer cover the clean-up costs.
    BLM adheres to this principle by requiring developers with 
projects on BLM land to post reclamation bonds. In other words, 
the developer has to set aside money to restore the site if the 
company cannot do it when it is time for them to leave.
    There are a number of reasons a developer might not be able 
to pay the clean-up costs, but the best example is that the 
company has declared bankruptcy. I am finding that in some 
other projects in our own home state right now.
    When that happens and there is no bond or other financial 
assurance, the taxpayer is stuck with the bill to clean up the 
pollution. The GAO report, that is at the center of today's 
hearing, identifies about $100 million in bonds for wind and 
solar projects on BLM lands, so this is a potentially serious 
issue.
    The GAO looked at instances when renewable energy companies 
have left taxpayers on the hook for clean-up costs, and they 
found none. The GAO report found none. Not a single clean 
energy project was abandoned by its developer when they moved 
off the land.
    The GAO report also finds that BLM could be doing a better 
job at managing reclamation bonds, and quite frankly, I agree. 
So does BLM. All five of GAO's recommendations will be 
addressed in a rulemaking that was issued last September, 2014. 
Quite frankly, I think there are bigger fish to fry here.
    Since the Chairman and I appear to have found common ground 
in our concern for preserving the polluter pays principle and 
protecting the American taxpayer from polluters, I think it 
would be a good use of this subcommittee's time to look at the 
issue of self-bonding by the biggest coal companies and 
specifically focusing on the use of subsidiaries to create the 
appearance of financial strength.
    Coal mining companies are able to avoid purchasing the kind 
of reclamation bonds required for projects like wind, solar, 
and oil and gas development by self-bonding if they can 
demonstrate that they are financially strong.
    Coal companies that qualified for self-bonding in the past 
are now facing declining demand for coal and are suffering from 
disinvestment. This is drastically changing the landscape. In 
May 2015, the state of Wyoming notified a company that they no 
longer qualified for self-bonding. If a company is self-bonded 
but cannot cover reclamation costs, in reality who is going to 
pay the bill? The taxpayer, and that is the heart of this 
hearing.
    A 2015 report by the Western Organization of Resource 
Councils and others found that self-bonding by coal companies 
creates a taxpayer exposure that is far greater than that posed 
by clean energy developments on BLM lands. There was an 
estimated $3.5 billion in outstanding coal self-bonds as of 
2014, compared to $100 million in clean energy bonds on BLM 
lands.
    The Office of Surface Mining Reclamation and Enforcement is 
already investigating the issue. Mr. Chairman, I hope this 
subcommittee can build on this hearing today by focusing on 
what, as I discovered in my 2:00 a.m. reading, is an even 
bigger risk to the taxpayer.
    I have respectfully handed you a letter to memorialize this 
request for the record so that we could begin a bipartisan 
investigation into this issue, and I hope that we can work 
together on it.

    [The letter dated June 24, 2015 follows:]

                     U.S. House of Representatives,
                          Committee on Natural Resources,  
                                      Washington, DC 20515,
                                                     June 24, 2015.

Hon. Louie Gohmert, Chairman,
House Subcommittee on Oversight and Investigations,
1324 Longworth House Office Building,
Washington, DC 20515.

    Dear Chairman Gohmert:

    I write to urge you to conduct a bipartisan investigation into the 
practice of self-bonding by coal companies, focusing on the use of 
subsidiaries to meet self-bonding requirements. It is encouraging that 
we have a common interest in this issue, based on today's hearing about 
whether energy developers are setting aside enough money to cover their 
pollution cleanup costs in case they go bankrupt.
    Coal mining companies are able to avoid purchasing the kind of 
reclamation bonds required for projects like wind, solar, oil and gas 
development by self-bonding if they can demonstrate they are in good 
financial health.\1\,\2\ Though only four companies 
qualified last year, there was an estimated $3.5 billion in outstanding 
coal self-bonds.\3\
---------------------------------------------------------------------------
    \1\ 30 CFR 800.12.
    \2\ 30 CFR 800.23.
    \3\ Western Organization of Resource Councils, the Natural 
Resources Defense Council, and the National Wildlife Federation, Fact 
Sheet for Undermined Promise II.
---------------------------------------------------------------------------
    However, those large companies are facing declining demand for coal 
and divestment. A 2015 report by Western Organization of Resource 
Councils, the Natural Resources Defense Council, and the National 
Wildlife Federation entitled ``Undermined Promise II'' used publicly 
available data to demonstrate that three of the four biggest coal 
companies--Arch Coal, Peabody Energy Corporation, and Alpha Natural 
Resources--may not qualify for self-bonding anymore.\4\
---------------------------------------------------------------------------
    \4\ Western Organization of Resource Councils, the Natural 
Resources Defense Council, and the National Wildlife Federation, 
Undermined Promise II.
---------------------------------------------------------------------------
    In May 2015, the State of Wyoming, which has regulatory authority 
over the coal mines through SMCRA, notified Alpha Natural Resources 
that they no longer qualified for self-bonding. The state of West 
Virginia is also looking into Alpha's self-bonding qualifications, 
which covers about $262 million in cleanup costs.\5\
---------------------------------------------------------------------------
    \5\ http: // www.reuters.com/article/2015/04/27/us-usa-coal-
exclusive-idUSKBN0NI21220150427.
---------------------------------------------------------------------------
    The right to self-bond is unique to coal as an energy source and it 
amounts to a major subsidy. Self-bonding allowed Alpha ``to avoid 
insurance or provisions of about $400 million for cleanup of mines'' in 
Wyoming \6\ Cloud Peak Energy held $200 million in self-bonds at the 
end of 2014.\7\ The conversion from paying surety premiums saved them 
$2 million per year.\8\ Arch Coal held almost $460 million in self-
bonds and Peabody Energy Corporation held over $1.3 billion in self-
bonds at the end of 2014.
---------------------------------------------------------------------------
    \6\ http: // www.reuters.com/article/2015/05/29/alpha-ntrl-resc-
insurance-idUSL3N0YK5AS2015 0529.
    \7\ Western Organization of Resource Councils, the Natural 
Resources Defense Council, and the National Wildlife Federation, Fact 
Sheet for Undermined Promise II.
    \8\ Western Organization of Resource Councils, the Natural 
Resources Defense Council, and the National Wildlife Federation, 
Undermined Promise II, p. 11.
---------------------------------------------------------------------------
    Because Arch and Peabody are unlikely to be able to qualify on 
their own for self-bonding, they are exploiting vague regulatory 
language \9\ to use their subsidiaries to meet financial fitness 
thresholds.\10\ The distribution of assets and liabilities between the 
parent company and its subsidiary that is necessary to pass the 
financial tests, may still leave the taxpayer at risk. Citizen 
oversight is difficult because SEC filings or other regulatory 
disclosures contain insufficient information to determine that 
distribution for the subsidiary.
---------------------------------------------------------------------------
    \9\ 30 CFR 800.23.
    \10\ Westem Organization of Resource Councils, the Natural 
Resources Defense Council, and the National Wildlife Federation, Fact 
Sheet for Undermined Promise II.
---------------------------------------------------------------------------
    If the mining sites owned by any of these companies are underbonded 
because the company will not be able to afford paying out-of-pocket for 
reclamation, the taxpayer will be responsible for cleanup costs. An 
investigative reporter for Reuters wrote ``If pushed to bankruptcy, 
those coal companies could leave behind more than $2 billion in cleanup 
liabilities and no clear custodian to cover the costs, other than state 
or federal agencies, according to industry officials.'' \11\
---------------------------------------------------------------------------
    \11\ http: // www.reuters.com/article/2015/04/27/us-usa-coal-
exclusive-idUSKBN0NI21220150427.
---------------------------------------------------------------------------
    Congressional oversight is clearly needed in this area. We must 
ensure taxpayer dollars are not needlessly put at risk to cover cleanup 
costs when this could be avoided. I stand ready to assist with this 
investigation and look forward to working with you.

            Sincerely,

                                            Debbie Dingell,
                                                  Ranking Member,  
                      Subcommittee on Oversight and Investigations.

                                 ______
                                 

    Mrs. Dingell. Thank you, Mr. Chairman.

    [The prepared statement of Mrs. Dingell follows:]

    Prepared Statement of the Hon. Debbie Dingell, Ranking Member, 
              Subcommittee on Oversight and Investigations
    Thank you, Mr. Chairman. Thank you to the witnesses for taking the 
time to be here today.
    First, I applaud the Chairman's focus on whether energy developers 
on Bureau of Land Management land are adhering to the ``polluter pays'' 
principle. This common-sense principle says that if you cause 
environmental harm, you are responsible for cleaning it up. It's one 
way to make sure that companies don't try to increase their profits by 
making the taxpayer cover their clean-up costs.
    BLM adheres to this principle by requiring developers with projects 
on BLM land to post reclamation bonds. In other words, the developer 
has to set money aside to restore the site if the company can't do it 
when it's time for them to leave. There are a number of reasons the 
developer might not be able to pay the clean-up costs, but the best 
example is that the company has declared bankruptcy. When that happens 
and there is no bond or other financial assurance, the taxpayer is 
stuck with the bill to clean up the pollution.
    The GAO report that is at the center of today's hearing identifies 
about $100 million in bonds for wind and solar projects on BLM lands. 
So this is potentially a serious issue. The GAO looked at instances 
when renewable energy companies have left taxpayers on the hook for 
clean-up costs, and they found none. Not a single clean energy project 
was abandoned by its developer when they moved off the land.
    The GAO report also finds that BLM could be doing a better job at 
managing reclamation bonds. I agree. So does BLM. All five of GAO's 
recommendations will be addressed in a rulemaking that was proposed in 
September of 2014. Quite frankly, I think there are bigger fish to fry 
here.
    Since the Chairman and I appear to have found common ground in our 
concern for preserving the polluter pays principle and protecting the 
American taxpayer from polluters, I think it would be a good use of 
this subcommittee's time to look at the issue of self-bonding by the 
biggest coal companies and specifically focusing on the use of 
subsidiaries to create the appearance of financial strength.
    Coal mining companies are able to avoid purchasing the kind of 
reclamation bonds required for projects like wind, solar, and oil and 
gas development by self-bonding if they can demonstrate they are 
financially strong.
    Coal companies that qualified for self-bonding in the past are now 
facing declining demand for coal and are suffering from disinvestment. 
This is drastically changing the landscape. In May 2015, the state of 
Wyoming notified a company that they no longer qualified for self-
bonding. If a company is self-bonded but can't cover reclamation costs, 
in reality the taxpayer has to pay the bill. That is the heart of this 
hearing.
    A 2015 report by Western Organization of Resource Councils and 
others found that self-bonding by coal companies creates a taxpayer 
exposure that is far greater than that posed by clean energy 
developments on BLM land. There was an estimated $3.5 billion in 
outstanding coal self-bonds as of 2014, compared to $100 million in 
clean energy bonds on BLM land.
    The Office of Surface Mining Reclamation and Enforcement is already 
investigating the issue. I hope this subcommittee can build on the 
hearing today by focusing on this much bigger risk to the taxpayer.
    Mr. Chairman, I am respectfully sending you a letter to memorialize 
this request for a bipartisan investigation into the issue of self-
bonding in the coal industry and I hope we can work together on this.

                                 ______
                                 

    Mr. Gohmert. Thank you.
    I appreciate the input, the observations, and the homework 
you did, Mrs. Dingell. You are always well prepared.
    At this time we will now introduce our witnesses. First we 
have Ms. Anne-Marie Fennell, who is the Director of the Natural 
Resources and Environment Team at the U.S. Government 
Accountability Office. She is accompanied by Ms. Elizabeth 
Erdmann, who is the Assistant Director of the Natural Resources 
and Environment Team at the U.S. Government Accountability 
Office. We asked her to come since she had been participating 
directly.
    Also we have Mr. Steven Ellis, who is the Deputy Director 
for Operations at the Bureau of Land Management.
    I will remind our witnesses that, per Committee Rules, oral 
statements must be limited to 5 minutes. Your entire written 
statement will be admitted for the record. However, as you 
speak, when you get down to 1 minute, the yellow light will 
come on; and when the red light comes on, you will then need to 
cease your oral statement. So gauge that accordingly.
    The entire panel will be allowed to testify before 
questioning begins, and the Chair at this time recognizes Ms. 
Fennell for 5 minutes.

 STATEMENT OF ANNE-MARIE FENNELL, DIRECTOR, NATURAL RESOURCES 
 AND ENVIRONMENT TEAM, U.S. GOVERNMENT ACCOUNTABILITY OFFICE; 
 ACCOMPANIED BY ELIZABETH ERDMANN, ASSISTANT DIRECTOR, NATURAL 
RESOURCES AND ENVIRONMENT TEAM, U.S. GOVERNMENT ACCOUNTABILITY 
                             OFFICE

    Ms. Fennell. Mr. Chairman, Ranking Member Dingell, and 
members of the subcommittee, I am pleased to be here today to 
discuss our June 2015 report on BLM's policies and practices 
for bonding renewable energy development on Federal land.
    BLM plays a key role in managing energy produced on Federal 
lands, including the growing areas of wind and solar projects. 
To ensure compliance with various requirements, BLM directs 
developers to obtain bonds to cover the cost of returning the 
land to its pre-developed condition when a solar or wind 
project terminates; this process is known as reclamation. If 
the bonds are inadequate to cover these costs, the Federal 
Government may have to pay.
    My testimony today highlights the findings of our 2015 
report. Specifically I will discuss three areas: first, BLM's 
policies for the bonding of wind and solar projects; second, 
the amount of bonds held by BLM for the reclamation of wind and 
solar projects and how BLM tracks these projects and bonds; and 
third, the extent to which BLM ensures that the bonds for wind 
and solar rights-of-way are adequate to cover reclamation 
costs.
    First, BLM has different policies for bonding wind and 
solar projects on Federal land. For example, BLM's 2008 wind 
policy established minimum bond amounts, but its 2010 solar 
policy did not. However, the agency has issued a proposed rule 
that would establish consistent requirements for the bonding of 
wind and solar projects in several areas, including ensuring 
the minimum bond amount.
    Second, we found that BLM has about $100 million in bonds 
to cover reclamation costs associated with wind and solar 
projects on Federal lands. BLM tracks bonds through two data 
systems, but we found that neither system was reliable for this 
purpose.
    Specifically, we found multiple instances in each system 
where information was missing, inaccurate, or had not been 
updated. Furthermore, the agency does not have a timeliness 
standard for wind and solar data entry, contrary to the 
standard for its mining program.
    Third, we found that BLM had limited assurance that bonds 
for wind and solar rights-of-way will cover reclamation costs. 
Specifically, we found that about one-third of the wind and 
solar development rights-of-way were underbonded by about as 
much as $15 million in total.
    In addition, we found wide variation in how BLM staff 
documented bond decisions for wind and solar rights-of-way. For 
example, we found little or no documentation to support the 
bond amount for about two-thirds of the wind rights-of-way we 
reviewed.
    In addition, BLM does not adequately ensure the wind and 
solar bond instruments are properly secured, handled, and 
stored. BLM staff in two field offices told us that bonds were 
stored in files rather than in secured, locked cabinets or a 
safe.
    Furthermore, there are no policies related to the proper 
handling and storage of bond instruments for wind and solar 
projects.
    BLM also inconsistently adheres to its policies for the 
periodic review of the amounts of wind and solar bonds to 
verify their adequacy. For example, we found that about half of 
the bonds were at least 4 months overdue for review.
    In conclusion, BLM does not have detailed policies to 
ensure that decisions are accurately documented, bonds are 
properly maintained and secured, or standards exist for timely 
data entry. As a result, BLM has limited assurance that the 
bonds in place will be adequate to cover reclamation costs if 
the developer does not meet its obligations.
    Given these findings, we made five recommendations in our 
report for BLM to develop policies for documenting decisions, 
for proper handling and storage of bonds, for timely data 
entry, as well as to take steps to ensure projects are 
periodically reviewed to ensure bond adequacy.
    Mr. Chairman, Ranking Member Dingell, and members of the 
subcommittee, this completes my prepared statement.
    I am accompanied by Liz Erdmann, who directly worked on 
this particular report. We will be happy to respond to 
questions.
    [The prepared statement of Ms. Fennell follows:]
 Prepared Statement of Anne-Marie Fennell, Director, Natural Resources 
         and Environment, U.S. Government Accountability Office
    Chairman Gohmert, Ranking Member Dingell, and members of the 
subcommittee, I am pleased to be here today to discuss our June 2015 
report on the Bureau of Land Management's (BLM) policies and practices 
for bonding renewable energy development on Federal land, which was 
released June 23, 2015.\1\ The Department of the Interior's (Interior) 
BLM manages more Federal land than any other agency--more than 245 
million surface acres--and this land is increasingly being tapped to 
meet the Nation's growing demand for energy. BLM plays a key role in 
managing energy produced on these lands, including energy from 
renewable resources. Through the Energy Policy Act of 2005, Congress 
encouraged the Secretary of the Interior to approve non-hydropower 
renewable energy projects, including wind and solar projects, with a 
total capacity to generate at least 10,000 megawatts of electricity on 
Federal lands by 2015. In June 2013, the President proposed an 
expansion in renewable energy construction projects and set a new goal 
for Interior to approve a renewable energy capacity of at least 20,000 
megawatts of electricity from projects on Federal land, which would be 
enough capacity to power more than 6 million homes by 2020. Currently, 
about 1 percent of the Nation's electricity generated from wind and 
solar energy comes from resources on Federal land.
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    \1\ GAO, Renewable Energy: BLM Has Limited Assurance That Wind and 
Solar Projects Are Adequately Bonded, GAO-15-520 (Washington, DC: June 
5, 2015).
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    Projects to produce energy from renewable resources can affect 
thousands of acres of Federal land and involve significant 
infrastructure. The projects may require developers to alter the land's 
topography or remove vegetation, physically or through the use of 
herbicides, and these actions may affect the site itself or have 
potential downstream or off-site effects. As a condition of BLM's 
authorization for renewable energy projects, the developer must agree 
to remove infrastructure elements and return the land to its 
predeveloped condition when the project terminates, a process called 
reclamation. To ensure compliance with applicable requirements, 
including requirements to reclaim project sites, BLM requires operators 
of wind and solar energy projects on Federal lands to obtain bonds. If 
an operator fails to return the land to its predeveloped state, the 
bond can be used to cover any reclamation costs the Federal Government 
may incur. If the bonds are inadequate to cover reclamation costs and 
the Federal Government is unable to recover additional costs from the 
developer, the Federal Government may have to pay the reclamation 
costs.
    Wind and solar projects on BLM land are subject to Federal laws and 
regulations, as well as BLM policy. The Federal Land Policy and 
Management Act of 1976 authorizes BLM to issue rights-of-way on Federal 
land for a variety of purposes, including systems for generating, 
transmitting, and distributing electric energy.\2\ Right-of-way holders 
are required to restore, revegetate, and stabilize the land disturbed 
by wind and solar projects within a reasonable time, to a condition 
satisfactory to BLM, as approved by BLM in its Plan of Development.\3\ 
For projects that may have a significant impact on the environment, the 
act requires applicants to submit a plan of construction, operation, 
and rehabilitation for the right-of-way that complies with applicable 
laws and regulations and the agency's stipulations. Federal regulations 
authorize BLM to require a right-of-way holder to provide a bond to 
secure the obligations imposed by the right-of-way. According to BLM 
policy, a bond is required for each wind and solar facility on Federal 
land. BLM may require an increase or decrease in the value of an 
existing bond at any time during the term of the right-of-way, 
according to Federal regulations.\4\
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    \2\ A right-of-way is an authorization to a qualified individual, 
business, or government entity to use a specific area of Federal land 
for a specific amount of time for a certain purpose and with specific 
terms, conditions, and stipulations that, among other things, are 
intended to protect the environment, Federal property and economic 
interests, and the public interest. Wind and solar projects can be 
composed of multiple rights-of-way.
    \3\ A Plan of Development is a detailed construction, operation, 
rehabilitation, and environmental protection plan.
    \4\ 43 C.F.R. Sec. 2805.12(g) (2014).
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    BLM manages and oversees wind and solar projects in part by 
maintaining data on each project electronically in two data systems--
the Legacy Rehost 2000 System (LR2000) and the Bond and Surety System. 
LR2000 is BLM's electronic case recordation system that is used to 
capture information on the agency's land and mineral projects. In the 
case of wind and solar projects, BLM captures information such as the 
date the right-of-way was issued, acres authorized, project location, 
case status (e.g., authorized, expired, or closed), and the actions 
that have taken place. The system also contains bond information for 
wind and solar projects, including bond numbers, amounts, and bond 
actions, such as the date when a bond was filed, accepted, or returned. 
For wind projects, LR2000 contains the number of authorized turbines 
and towers. The Bond and Surety System contains bond information, such 
as the type and amount of bond, as well as actions taken, including the 
date when a bond was filed, accepted, or returned.\5\ BLM staff enter 
data about wind and solar projects into LR2000, as well as information 
about bonds into the Bond and Surety System.
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    \5\ A bond is considered filed when BLM receives the bond 
instrument from the right-of-way holder. A bond is considered accepted 
once BLM reviews the bond, determines that it has been executed 
properly, and notifies the right-of-way holder of the bond's 
acceptance. A bond is considered returned when BLM returns the bond to 
the right-of-way holder after the holder has successfully completed 
reclamation, at which time a bond is no longer necessary.
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    My testimony today highlights the key findings of our June 2015 
report on BLM's policies and practices for bonding renewable energy 
development on Federal land.\6\ Accordingly, this testimony discusses 
(1) BLM's policies for the bonding of wind and solar projects on 
Federal land; (2) the amount and types of bonds held by BLM for the 
reclamation of wind and solar projects, and how BLM tracks these bonds; 
and (3) the extent to which BLM ensures that bonds for wind and solar 
rights-of-way are adequate to cover reclamation costs.
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    \6\ GAO-15-520.
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    To address these objectives, we reviewed the agency's policies 
regarding bonding, the reclamation activities that the bonds are to 
cover, and the frequency with which bonds are to be reviewed. We also 
reviewed BLM's Notice of Proposed Rulemaking--issued in September 
2014--that would revise and codify the agency's current bonding 
policies for wind and solar projects. In addition, we obtained wind and 
solar project data, as of April 15, 2014, from BLM's LR2000 and its 
Bond and Surety System. We worked with BLM officials to resolve data 
discrepancies between the two systems and then analyzed the data to 
identify the bond amounts and types for each right-of-way. To determine 
how BLM tracks these bonds and understand how LR2000 and the Bond and 
Surety System are used, the frequency of updates, and the reliability 
of the data in each system, we interviewed officials in BLM 
headquarters and all 9 BLM state and 11 field offices with wind or 
solar energy development projects.
    To determine the extent to which BLM ensures that bonds for wind 
and solar rights-of-way are adequate to cover reclamation costs, we 
conducted an in-depth file review of all wind and solar energy 
development projects--45 in total--for which BLM held a bond on April 
15, 2014, and interviewed BLM officials and other stakeholders. We 
compared the bond held with what is specified in BLM's wind and solar 
policies, as well as reclamation cost estimates in the project files, 
and we then determined the extent to which documentation of the bond 
decision is consistent with government standards for internal 
control.\7\ We also interviewed BLM officials to determine compliance 
with existing BLM policies, the depth and detail of reclamation cost 
estimates, the extent of documentation supporting bond amounts, and the 
types of staff involved in determining bond amounts. In addition, we 
analyzed whether BLM was conducting reviews to ensure that bonds are in 
place, as is called for in BLM policies. Our June 2015 report includes 
a detailed explanation of the methods used to conduct our work. The 
work on which this testimony is based was performed in accordance with 
generally accepted government auditing standards. Those standards 
require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings and 
conclusions based on our audit objectives. We believe that the evidence 
obtained provides a reasonable basis for our findings and conclusions 
based on our audit objectives.
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    \7\ GAO, Standards for Internal Control in the Federal Government, 
GAO/AIMD-00-21.3.1 (Washington, DC: November 1999).
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 blm has different policies for bonding wind and solar projects, but a 
         proposed rule would establish consistent requirements
    As detailed in our report, in 2008, BLM issued a wind energy 
development policy that includes provisions for bonding wind energy 
projects on Federal land.\8\ Among other things, the policy established 
a minimum bond amount of $2,000 per meteorological tower for site-
specific and project area testing rights-of-way and $10,000 per wind 
turbine for wind energy development rights-of-way.\9\ BLM is to 
determine the bond amount for all wind energy development projects 
during the right-of-way authorization process ``on the basis of site-
specific and project-specific factors,'' but the policy provides no 
further details on these factors or how to calculate the costs. BLM is 
to review all bonds for wind development rights-of-way at least once 
every 5 years to ensure that the bond amount is adequate.\10\
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    \8\ See Bureau of Land Management, IM 2009-043, Wind Energy 
Development Policy (Dec. 19, 2008).
    \9\ A wind site-specific testing right-of-way is an authorization 
to develop individual meteorological towers and instrumentation 
facilities with a term that is limited to 3 years. A wind project area 
right-of-way is an authorization to develop a larger site testing and 
monitoring area, with a term of 3 years that may be renewed. Both wind 
site-specific testing and wind project area testing rights-of-way are 
used to determine whether a site's wind energy resources meet the 
potential for energy development. A wind energy development right-of-
way is an authorization to develop wind energy facilities generally for 
a term of 30 years that may be renewed. Facilities include wind 
turbines, as well as on-site access roads, electrical and distribution 
facilities, and other support.
    \10\ A bond adequacy review is a review to determine whether the 
bond amount is sufficient to cover the cost of reclamation.
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    In 2010, BLM issued a solar energy development policy that includes 
provisions for bonding solar energy projects on Federal land that 
differ from the bonding provisions of the wind policy.\11\ 
Specifically, in contrast to the wind policy, the solar policy sets no 
minimum bond amount for solar energy development rights-of-way.\12\ 
Rather, the policy states that BLM is to base the bond amount on a 
reclamation cost estimate provided by the right-of-way applicant that 
consists of three components: (1) environmental liabilities; (2) 
decommissioning, removal, and disposal of improvements and facilities; 
and (3) reclamation, revegetation, restoration, and soil stabilization. 
A reclamation cost estimate is an estimate of what it would cost a 
third party to reclaim the site.\13\ The policy states that the 
applicant is to submit the estimate as part of the decommissioning and 
site reclamation plan--which defines the reclamation, revegetation, 
restoration, and soil stabilization requirements for the project area--
and the overall Plan of Development. In addition, in contrast to the 
wind policy, BLM staff are to review annually all bonds for solar 
development rights-of-way to ensure that the bond amount is adequate to 
ensure compliance with the right-of-way authorization, including 
requirements to reclaim the disturbed land.
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    \11\ IM 2011-003, Solar Energy Development Policy (Oct. 7, 2010).
    \12\ A solar energy development right-of-way is an authorization to 
develop solar energy facilities for a term not to exceed 30 years that 
may be renewed.
    \13\ BLM's policy for mining operations on public lands, which is a 
reference tool for BLM's solar energy development policy, states that a 
bond must be sufficient to allow BLM to contract with a third party to 
reclaim the operations.
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    To help ensure compliance with provisions of the wind and solar 
bonding policies, BLM has two additional policies that direct BLM state 
directors to certify annually that all wind and solar energy rights-of-
way within their respective states have the required bonds and that the 
bond data are entered into the Bond and Surety System.\14\ This 
certification does not assess whether the amount of the bond would be 
sufficient to cover expected reclamation costs. Rather, the annual 
certification is intended to ensure that a bond has been provided or 
requested for each wind and solar right-of-way. The certification is to 
be submitted to BLM headquarters within 30 days after the end of the 
fiscal year. In addition, field office staff are to enter all bonds 
received for renewable energy projects into LR2000 and the Bonds and 
Surety System.\15\
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    \14\ See Bureau of Land Management, IM 2011-096, Certification of 
Bonding--Wind Energy Site Testing and Wind Energy Development 
Authorizations (Apr. 7, 2011), and IM 2013-034, Oversight and 
Implementation Plan--Renewable Energy Coordination Office (Dec. 20, 
2012).
    \15\ IM 2013-034, Attachment 1, Oversight and Implementation Plan, 
Solar and Wind Energy Policies.
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    In September 2014, BLM issued a Notice of Proposed Rulemaking 
related to wind and solar development on Federal lands and requested 
public comment.\16\ The proposed rule would revise and codify existing 
policies and establish consistent requirements for the bonding of solar 
and wind energy projects. Requirements would differ based on whether 
projects were located in certain preferred areas--called designated 
leasing areas.
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    \16\ Competitive Processes, Terms, and Conditions for Leasing 
Public Lands for Solar and Wind Energy Development and Technical 
Changes and Corrections, 79 Fed. Reg. 59,022 (Sept. 30, 2014) (to be 
codified at 43 C.F.R. pts. 2800 and 2880).

     Projects outside designated leasing areas. The proposed 
            rule would establish a minimum bond amount per turbine of 
            $20,000 for wind energy development projects--a doubling of 
            the minimum amount currently set in BLM policy--and 
            establish a minimum bond amount of $10,000 per acre for 
            solar energy development projects. The minimum bond amount 
            for wind energy site-specific or project area testing 
            projects would remain at the amount currently set in BLM 
            policy, that is, $2,000 per meteorological tower. The 
            proposed rule would require both wind and solar right-of-
            way applicants to submit a reclamation cost estimate to 
            help BLM to determine the bond amount, and it would outline 
            specific bond components that must be addressed when 
            determining the estimated costs. The proposed rule would 
            not require BLM to conduct periodic reviews to assess 
            whether the bonds remain adequate to cover potential 
            reclamation costs, as is specified in the current wind and 
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            solar policies.

     Projects inside designated leasing areas. The proposed 
            rule would establish a standard bond amount for wind energy 
            development of $20,000 per turbine and $2,000 per 
            meteorological tower, as well as a standard bond amount for 
            solar energy development of $10,000 per acre. BLM proposed 
            a standard bond amount because these areas would be 
            identified by BLM as areas with lesser and fewer 
            environmental and cultural resource conflicts. According to 
            BLM officials, when a project terminates inside a 
            designated leasing area, the agency would potentially 
            reoffer the site for new wind or solar energy development. 
            As a result, these sites would require less reclamation 
            than if they needed to be fully reclaimed to their 
            predeveloped condition and the bond amount required would 
            be lower. Under the proposed rule, right-of-way holders 
            would not be required to submit a reclamation cost 
            estimate.

    A BLM official told us that the agency expects the proposed rule to 
be finalized by the end of 2015. Once finalized, the official said BLM 
plans to rescind the current wind and solar policies and replace them 
with policies that would address, among other things, the bonding 
process and adequacy reviews not covered in the proposed rule.
 blm has about $100 million in bonds for wind and solar projects, but 
         the systems for tracking these bonds are not reliable
    We found that BLM has about $100 million in bonds--primarily in the 
form of letters of credit and surety bonds--to cover reclamation costs 
associated with 12 solar rights-of-way and 108 wind rights-of-way on 
Federal land in nine western states, according to our analysis of BLM 
data. See Table 1 for further detail on the values of bond held and 
Table 2 for further detail on the types of bonds held.

 Table 1: Value of Bonds Held by the Bureau of Land Management for Wind and Solar Projects, by Project Type and
                                          Amount, as of April 15, 2014
----------------------------------------------------------------------------------------------------------------
                         Project Type                                    Amount                 Percentage
----------------------------------------------------------------------------------------------------------------
Solar development.............................................              $82,615,899                     82.2
Wind development..............................................              $17,106,164                     17.0
Wind project area testing.....................................                 $720,216                      0.7
Wind site-specific testing....................................                  $36,000                      Missing information. BLM's oversight and implementation 
            plan for solar and wind energy policies directs field 
            offices to enter all bonds received for renewable energy 
            projects into LR2000 and the Bond and Surety System,\17\ 
            but we found instances where bonds had been entered into 
            LR2000, but not into the Bond and Surety System. We also 
            found instances where staff did not always enter in the 
            remarks section of LR2000 the number of wind turbines or 
            meteorological towers authorized and located on Federal 
            land, as directed by BLM's wind policy.
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    \17\ IM 2013-034, Attachment 1, Oversight and Implementation Plan; 
Solar and Wind Energy Policies.

     Inaccurate information. We found instances in LR2000 and 
            the Bond and Surety System where the type of right-of-way 
            entered for the project was incorrect. For example, one 
            wind development project's right-of-way had been 
            incorrectly entered in both systems as a road right-of-
            way.\18\ As a result, the bond had not been included in the 
            annual state bond certification. When BLM reviewed the 
            bond, the agency determined that the bond amount was 
            approximately $90,000 less than the minimum set by BLM's 
            wind policy.
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    \18\ A road right-of-way is an authorization to construct a road on 
a segment of BLM land.

     Information had not been updated. We found instances where 
            a bond's status or amount had not been updated in one or 
            both systems. In some cases, the data were several years 
            out of date. For example, in one case, LR2000 showed that a 
            bond had been accepted for $40,000 in 1994, and an 
            additional bond for the same right-of-way had been accepted 
            for $160,000 in 2011, for a total bond amount of $200,000. 
            However, BLM had not updated the Bond and Surety System to 
            show that the $160,000 bond had been accepted, and the 
---------------------------------------------------------------------------
            system contained no information on the $40,000 bond.

    The LR2000 data standards for BLM's mining program state that all 
data must be routinely entered within 5 business days of each action 
taking place.\19\ However, there is no such standard for entering wind 
and solar project data into LR2000.\20\ Furthermore, BLM has not issued 
data standards for the Bond and Surety System. Because information in 
these two data systems was missing, inaccurate, or out of date, BLM has 
limited assurance that either system is reliable for tracking wind and 
solar bonds to ensure that bonding policies are being followed and that 
all projects have the required bonds.
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    \19\ Bureau of Land Management, H-3809-1, Surface Management (Sept. 
17, 2012).
    \20\ Bureau of Land Management, LR2000 Case Recordation Data 
Standards for the Lands and Realty Program (revised Apr. 10, 2013).
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    BLM has taken some limited steps to improve its bonding data. 
Specifically, to reduce potential errors or omissions in the bonding 
data in LR2000 and the Bond and Surety System, BLM made changes to link 
certain data in the two systems. Starting in late September 2014, when 
an action code showing that a bond has been filed, accepted, or 
returned is entered into the Bond and Surety System for a particular 
right-of-way, the same information is automatically entered into 
LR2000. However, when a bond action code is entered into LR2000, the 
same information must still be entered manually into the Bond and 
Surety System. In addition, these changes only apply to data entered 
into the Bond and Surety System starting in September 2014, so all 
previously entered data will not be added to LR2000 unless manually 
entered.
 blm has limited assurance that bonds for wind and solar rights-of-way 
                      will cover reclamation costs
    BLM has limited assurance that bonds for wind and solar rights-of-
way will cover reclamation costs. Specifically, we found that 14 wind 
and solar development rights-of-way were underbonded by as much as $15 
million in total. In addition, we found wide variation in how BLM staff 
documented bond decisions for wind and solar project rights-of-way. 
Further, BLM does not adequately ensure that wind and solar bond 
instruments are properly secured, handled, and stored. BLM also 
inconsistently adheres to its policies for the periodic review of the 
amounts of wind and solar bonds to verify their adequacy.
    Underbonding of wind and solar development projects. We found that 
14 out of 45 wind and solar development rights-of-way were underbonded 
by as much as $15 million in total--approximately $5.5 million for wind 
rights-of-way and as much as $9 million for solar rights-of-way--
according to our review of BLM project files and data.\21\ 
Specifically, we identified 10 wind rights-of-way where the bond amount 
was lower than the $10,000-per-turbine minimum established in BLM's 
2008 wind policy. These 10 rights-of-way were underbonded by a total of 
approximately $5.5 million. Nine of those rights-of-way were authorized 
prior to the 2008 policy; however, for rights-of-way that were 
authorized before the policy took effect, BLM officials told us they 
directed staff to obtain bonds that meet the $10,000-per-turbine 
minimum. BLM officials told us that they are in the process of 
obtaining bonds for these nine rights-of-way. One right-of-way was 
reauthorized in 2012 at about $1,500 per turbine.\22\ BLM's files show 
that the bond amount for the right-of-way was determined using salvage 
values of the equipment. While salvage values may be considered in 
estimating reclamation costs, BLM officials told us the 2008 policy 
does not permit salvage values to be used to reduce the bond below the 
$10,000-per-turbine minimum.\23\ BLM officials told us they are 
currently developing a reclamation cost estimate for this right-of-way, 
which will help them develop a revised bond.
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    \21\ We reviewed all BLM wind and solar energy development 
projects--45 in total--for which BLM held a bond as of April 15, 2014.
    \22\ This right-of-way was underbonded by approximately $3.9 
million.
    \23\ BLM officials told us that they had originally sought to bond 
this project above the minimum, at $25,000 per turbine based on the 
size of the turbines, but the right-of-way holder appealed the bond 
determination to the Interior Board of Land Appeals. The Interior Board 
of Land Appeals is an appellate review body for the Department of the 
Interior. According to BLM officials, the board decided to remand the 
decision to BLM.
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    We also found four solar rights-of-way that may be underbonded by 
as much as $9 million. These rights-of-way were part of a single solar 
project with a total estimated reclamation cost of approximately $27.5 
million.\24\ This figure includes $18.5 million for decommissioning and 
removal of project structures and equipment and $9 million for 
revegetation and restoration. However, the project is currently bonded 
at $18.5 million, an amount that may only cover the decommissioning and 
removal of structures. BLM officials explained that because the project 
is in California--where recycling of materials is required--the $9 
million estimated for revegetation and restoration would be covered by 
the salvage value of project structures. While the salvage value 
presented in the documents we reviewed may be sufficient to cover those 
costs, the project's documentation did not indicate that BLM officials 
included these costs when setting the total bond amount.
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    \24\ This project consists of four rights-of-way, each with their 
own bond.
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    Unclear documentation of bond decisions. We found wide variation in 
how BLM staff documented bond decisions for wind and solar project 
rights-of-way. Specifically, for 21 of the 33 wind rights-of-way we 
reviewed, there was little or no documentation to support the bond 
amount. For some of these rights-of-way, there was no documentation 
because BLM staff defaulted to the minimum amount set by BLM's wind 
policy without conducting any site- or project-specific analysis. For 
the remaining 12 wind rights-of-way, the project files contained 
documentation that BLM officials used to support their bond decisions; 
however, this documentation varied widely. For example, for 1 right-of-
way, the holder developed a reclamation cost estimate,\25\ but the 
estimate did not reflect the current state of the project and the 
estimated costs were greater than the bond that BLM required. And for 6 
rights-of-way, the documentation outlined the cost of decommissioning 
and removal of structures, but it did not include cost estimates for 
revegetation of the project site. We also found that BLM inconsistently 
documented bonding decisions for 2 solar rights-of-way. Specifically, 
for 1 right-of-way, the holder did not develop a reclamation cost 
estimate, as directed by BLM's 2010 solar policy. As a result, it was 
not clear from the project files what BLM considered in determining the 
amount of the bond that was in place. In another case, BLM allowed the 
right-of-way holder to provide the bond in phases as the project was 
constructed, but there was no documentation demonstrating how each 
phase's reclamation costs were estimated, or what the payment schedule 
and amounts of future bonds would be.
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    \25\ BLM's wind policy does not direct applicants to develop a 
reclamation cost estimate for a wind project right-of-way. However, 
according to BLM officials, BLM may direct an individual applicant to 
develop a reclamation cost estimate or may develop one itself.
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    We also found discrepancies between information in the project 
files and what was recorded in LR2000 or the Bond and Surety System in 
13 of the 45 wind and solar rights-of way. For example, for 1 wind 
right-of-way, the files indicated the applicant's initial plan to build 
24 turbines, but LR2000 showed the project had 20 turbines. A BLM 
official told us that since the right-of-way's original authorization 
in the 1980s, the type and number of turbines had changed over time. 
However, there was no documentation of these changes in the files, and 
the BLM official told us that, as a result of our inquiry, he had to go 
and physically inspect the right-of-way to confirm the type and number 
of turbines. Federal standards for internal control call for 
transactions and other significant events to be clearly documented and 
that the documentation should be readily available for examination.\26\ 
BLM has not issued policies that direct BLM staff to document 
information related to bond decisions in the project files. According 
to BLM officials, they will develop these policies once the proposed 
rule is finalized.
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    \26\ GAO/AIMD-00-21.3.1.
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    Inadequate handling and storing of bonds. BLM also does not 
adequately ensure that wind and solar bond instruments are properly 
secured, handled, and stored. BLM staff in two field offices told us 
bonds were stored in the files for the rights-of-way, rather than in a 
locked cabinet or safe. In one of these offices, a staff member told us 
that about 20 percent of the bond instruments were stored in the 
project files, and the remaining bond instruments were stored in a 
safe. However, in that office, that staff member told us that someone 
had mistakenly shredded the bond instruments kept in the safe because 
the individual did not know what they were. According to BLM's manual 
regarding records administration,\27\ offices should ensure that 
appropriate internal controls and safeguards are in place to prevent 
the loss of official documentation. BLM has general guidance on records 
retention and storage, and at least one office within BLM's Energy, 
Minerals, and Realty Management Directorate has detailed guidance on 
the acceptance, assessment, and storage of bond instruments.\28\ 
However, the National Renewable Energy Coordination Office, which 
oversees wind and solar energy projects, does not have policies or 
guidance related to the proper handling and storage of bond 
instruments. As a result, BLM cannot assure that all bonds are properly 
maintained and secured, leaving the Federal Government potentially at 
risk financially if reclamation costs are not covered by the right-of-
way holders.
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    \27\ Bureau of Land Management, BLM Manual, MS-1270: Records 
Administration (October 1992).
    \28\ Bureau of Land Management, Fluid Minerals Bond Processing User 
Guide (December 1996).
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    Inconsistent adherence to periodic review policies. BLM 
inconsistently adheres to its policies for the periodic review of wind 
and solar bonds to verify their adequacy. BLM's wind and solar policies 
direct officials to review the adequacy of wind bonds every 5 years and 
solar bonds every year. Of the 45 wind and solar rights-of-way we 
reviewed, 23 had bonds that were at least 4 months overdue for an 
adequacy review. Some BLM officials responsible for these reviews told 
us that they were not aware that bonds were supposed to be reviewed. 
Others told us they were aware that bonds were to be reviewed but had 
not completed the reviews due to workload and staffing constraints. BLM 
officials told us that LR2000 contains information such as the 
authorization date that can be used to determine when a right-of-way is 
due for review. However, LR2000 does not automatically notify BLM 
officials that a right-of-way is due for its periodic review. Several 
BLM officials told us that it would be possible to set up an action 
code in LR2000 to provide such automatic notification. If reviews of 
bond amounts are not conducted in a timely manner, BLM officials cannot 
be sure that bonds in place are adequate to cover reclamation costs.
    BLM does not have detailed policies to ensure that all bonds are 
properly maintained and secured and bond decisions accurately 
documented in project files. In addition, BLM has no standard for the 
timely entering of data of wind and solar project data into LR2000 and 
no data standards for the Bond and Surety System. As a result, BLM may 
not have accurate and complete information with which to track wind and 
solar bonds, and BLM has limited assurance that the bonds in place will 
be adequate to cover reclamation costs if the right-of-way holder does 
not meet its obligations. As a result of these findings and to help 
ensure that bonds are adequate to cover reclamation costs for wind and 
solar projects on Federal land, we made five recommendations to the 
Secretary of the Interior in our June 2015 report. Specifically, we 
recommended that the Secretary direct the Director of the Bureau of 
Land Management to:

     develop detailed policies for processing wind and solar 
            bonds to ensure bonds are properly secured, handled, and 
            stored;

     develop policies that detail how information related to 
            bonding decisions should be documented in project files;

     develop a policy that all data for wind and solar energy 
            projects be entered in LR2000 and the Bond and Surety 
            System within 10 business days;

     establish data standards for the Bond and Surety System; 
            and

     develop an LR2000 action code to automatically notify BLM 
            staff that a right-of-way is due for a bond adequacy 
            review.

    In its comments on a draft report, the agency concurred with each 
of these recommendations.
    Chairman Gohmert, Ranking Member Dingell, and members of the 
subcommittee, this completes my prepared statement. I would be pleased 
to answer any questions that you may have at this time.
                 gao contact and staff acknowledgments
    If you or your staff members have any questions about this 
testimony, please contact me. Other individuals who made key 
contributions to this testimony include Elizabeth Erdmann (Assistant 
Director), Morgan Jones, Jessica Lewis, Susan Malone, and Jarrod West. 
Cheryl Arvidson, Antoinette Capaccio, Kirsten B. Lauber, and Dan Royer 
also made important contributions.

                                 ______
                                 

    Mr. Gohmert. Thank you, Ms. Fennell. I appreciate your 
testimony.
    At this time I would recognize Mr. Ellis for 5 minutes.

 STATEMENT OF STEVEN A. ELLIS, DEPUTY DIRECTOR FOR OPERATIONS, 
   BUREAU OF LAND MANAGEMENT, U.S. DEPARTMENT OF THE INTERIOR

    Mr. Ellis. Mr. Chairman, Ranking Member Dingell, and 
members of the subcommittee, thank you for the opportunity to 
be here today.
    BLM manages nearly 250 million acres of surface property 
and 700 million acres of subsurface estate in the Nation. That 
means 10 percent of the Nation's surface, or nearly a third of 
its mineral estate.
    We manage these lands under a dual framework of multiple 
use and sustained yield. Facilitating the responsible 
development of renewable energy resources on public lands is a 
cornerstone of the Administration's energy strategy. Since 
2009, the BLM has approved 55 renewable energy generation and 
transmission projects. This includes 32 solar projects, 11 wind 
farms, 12 geothermal plants.
    These projects will provide more than 14,500 megawatts of 
power, or roughly enough electricity to power 4.9 million homes 
and provide over 24,000 jobs in construction and operations.
    Renewable energy projects on public lands have already 
generated an estimated $8.6 billion in total capital 
investments, with the potential for an additional $28 billion 
for approved projects that are pending construction.
    As stewards of America's public lands, we take very 
seriously our responsibility to sustain the health and 
diversity of those lands. To ensure that lands are restored 
after a project is decommissioned, we require project 
developers to post bonds to cover future expenses.
    As with all development on public lands, the BLM is 
committed to ensuring appropriate bonding of solar and wind 
energy projects. We continue to take steps to improve the 
processes and procedures for solar and wind energy bonding. For 
example, in September of 2014, the BLM issued a proposed 
comprehensive leasing rule for solar and wind energy 
development that includes mandatory bonding requirements. We 
are currently in the process of reviewing comments on the 
appropriate minimum bond amounts and will make a determination 
as part of that final rule.
    Further, as part of the implementation of the final rule, 
we plan to update policies to improve recordkeeping and 
processing of renewable energy bonds. These policies will 
identify standards for proper project file documentation and 
establish automated notifications that a right-of-way is due 
for bond adequacy review.
    The policies will also include a variety of internal 
controls: an annual certification by managers that bonds are 
properly processed, held in secure locations, and readily 
available.
    The BLM also has been engaged with GAO to ensure the bonds 
for reclamation costs of wind and solar projects are adequately 
documented. We appreciate the work of the GAO and generally 
agree with their recommendations. We believe that through the 
publication and implementation of the proposed competitive 
solar and wind leasing energy rule all of GAO's recommendations 
will be fully addressed.
    We take our responsibility to maintain proper documentation 
of bond instruments seriously. We will continue to take steps 
to address any identified shortcomings, including training 
staff and updating office-specific procedures.
    BLM's responsibility to ensure appropriate bonding for 
energy projects extends to all types of development on public 
lands. For example, we recently solicited public input on 
bonding requirements for oil and gas projects on public lands, 
updating potentially outdated regulations.
    We are also reviewing individual oil and gas well bonds on 
a case-by-case basis and raising bonding requirements where 
appropriate using existing authorities.
    In conclusion, Mr. Chairman and members of the committee, 
we remain committed to ensuring that development of all types 
of public lands occurs in an environmentally sound manner, and 
we will continue to take steps to ensure that projects are 
bonded appropriately.
    Thank you.
    [The prepared statement of Mr. Ellis follows:]

Prepared Statement of Steve Ellis, Deputy Director, Operations, Bureau 
          of Land Management, U.S. Department of the Interior
    Chairman Gohmert, Ranking Member Dingell, and members of the 
subcommittee, thank you for the opportunity to testify on the Bureau of 
Land Management's (BLM) policies and practices regarding bonding for 
wind and solar energy development on Federal lands.
                               background
    The BLM is responsible for protecting the resources and managing 
the uses of our Nation's public lands, which are located primarily in 
12 western states, including Alaska. The BLM administers more land--
over 245 million surface acres--than any other Federal agency. The BLM 
also manages approximately 700 million acres of onshore Federal mineral 
estate throughout the Nation, including subsurface estate overlain by 
properties managed by other Federal agencies such as the Department of 
Defense and the U.S. Forest Service. That's more than 10 percent of the 
Nation's surface and nearly a third of its minerals.
    Facilitating the responsible development of renewable energy 
resources on public lands is a cornerstone of the Administration's 
energy strategy. Prior to 2009, the BLM had approved approximately 
2,500 MWs of wind and geothermal energy projects or enough electricity 
to power nearly a million homes. No solar energy projects had been 
approved prior to 2009. Since 2009, the BLM has approved 55 utility-
scale renewable energy generation and transmission projects, including 
32 utility-scale solar facilities, 11 wind farms, and 12 geothermal 
plants, with associated transmission corridors and infrastructure to 
connect with established power grids. If fully built, these projects 
will provide more than 14,500 MWs of power, or enough electricity to 
power 4.9 million homes, and will provide over 24,000 construction and 
operations jobs. The BLM successfully accomplished the Energy Policy 
Act of 2005's goal of authorizing over 10,000 megawatts (MWs) of 
renewable energy on public lands 3 years ahead of schedule. The BLM 
continues to work toward the President's goal to increase permitting of 
new renewable electricity generation capacity on public lands to 20,000 
megawatts by 2020. Renewable energy projects authorized by the BLM 
constitute a major contribution not only to the Nation's energy grid, 
but also to the national economy. Projects on public lands have already 
garnered an estimated $8.6 billion in total capital investments, with 
the potential for an additional $28 billion for approved projects 
pending construction.
    The BLM is also improving the way it sites and reviews renewable 
energy applications by moving toward a competitive process in preferred 
development areas, which have been selected to minimize conflict and 
increase efficiency. In October 2012, the Department finalized the 
Western Solar Plan that identified 17 Solar Energy Zones (SEZs) and 
established a blueprint to fast track utility-scale solar energy 
permitting within these areas. On June 1, 2015, three projects within 
the Dry Lake SEZ in Nevada were approved under this streamlined 
permitting process. Using the expedited review process established by 
the Western Solar Plan, reviews and approval of these three projects 
were completed in 10 months, less than half the amount of time it took 
to review and approve projects under the previous application-by-
application process. The Western Solar Plan also provides the 
foundation for the BLM's current rulemaking process to codify 
competitive solar and wind energy leasing within designated areas.
                        renewable energy bonding
    As stewards of America's public lands, the BLM takes seriously its 
responsibility to sustain the health, diversity, and productivity of 
those lands. To ensure that projects are reclaimed and that impacts to 
the land are restored after a project is decommissioned, the BLM 
requires that project developers post bonds to cover potential future 
expenses. As with all development on public lands, the BLM is committed 
to ensuring appropriate bonding of solar and wind energy projects and 
has taken steps to improve the processes and procedures for solar and 
wind energy project bonding.
    The BLM authorizes renewable energy projects on public lands using 
a right-of-way grant under Title V of the Federal Land Policy and 
Management Act (43 U.S.C. 1761-1771). The BLM requires project 
developers to submit bonds in an amount that the agency has determined 
will be adequate to cover the potential costs for hazardous 
liabilities, decommissioning, and reclamation of the project site, 
should the developer be unable or unwilling to conduct those 
activities.
    Currently, the BLM requires minimum bond amounts of $2,000 per wind 
energy test site, and $10,000 per wind turbine. There is currently no 
minimum bond amount for solar energy projects. The BLM does not assess 
the bond based on minimum requirements. Rather, the agency determines 
the appropriate bond amount based on site- and project-specific 
factors, including intensity and duration of impacts as well as 
potential reclamation and administrative costs. The reclamation cost 
estimate is also based in part on a third party estimate provided to 
the BLM. In many cases, the bond amount exceeds the wind energy minimum 
requirement, particularly when bonding development projects rather than 
test sites. A bond is released only once reclamation has been 
satisfactorily completed. The BLM periodically reviews and updates 
required bond amounts to ensure that projects are adequately bonded. Of 
the 43 wind and solar projects approved by the BLM since 2009, the 
agency has required and secured a total of $154 million worth of bond 
assurances to cover potential costs associated with reclamation.
    On September 30, 2014, the BLM issued a proposed rule that 
describes a competitive leasing process for solar and wind energy 
leases in designated leasing areas. The proposed rule includes 
mandatory bonding requirements for solar and wind energy to ensure 
consistency and predictability across the program, including a minimum 
bond amount of $10,000 per acre for solar energy development, $20,000 
per wind energy turbine, and $2,000 per energy testing site. The BLM is 
in the process of reviewing public comments received on appropriate 
minimum bond requirements before the rule is finalized. As part of the 
implementation of the final rule, the BLM plans to update polices to 
improve recordkeeping and processing of renewable energy bonds, such as 
identifying proper project file documentation, requiring routine data 
on a more timely basis, and establishing an automated notification 
process for BLM staff that a right-of-way is due for a bond adequacy 
review. The policies will also include a variety of internal controls, 
including an annual certification by managers that bonds are properly 
processed, held in secure locations, and readily available.
    The BLM has also been engaged with the U.S. Government 
Accountability Office (GAO) to ensure that bonds are adequately 
documented and reviewed to ensure adequacy for reclamation costs for 
wind and solar projects on Federal land. Based on the GAO's ongoing 
review, the BLM has identified and is implementing improvements to its 
recordkeeping and processing procedures for renewable energy bonds. The 
finalization and implementation of the competitive solar and wind 
leasing rule will fully address the GAO's recommendations. The BLM will 
continue to take steps to address office-specific shortcomings, 
including training staff and updating procedures.
    The BLM takes seriously its responsibility to maintain proper 
documentation of bond instruments. During the GAO audit, the BLM was 
made aware of a concern that some reclamation bonds for renewable 
energy projects in the Rawlins Field Office in Wyoming may have been 
mistakenly removed from a safe and shredded. In response, the BLM has 
conducted a preliminary review of the bonding status of its renewable 
energy projects in the Rawlins Field Office and can confirm that the 21 
bonds required for the 18 renewable energy projects within that field 
office are adequately documented and in compliance with BLM policy for 
holding bond instruments.
                        bonding on public lands
    In addition to the renewable energy arena, the BLM is working to 
ensure appropriate bonding for other types of development on public 
lands. For example, the BLM's current regulations governing minimum 
bonding requirements for oil and gas were established in the 1950s and 
1960s and have not been updated since. These minimum requirements--
$10,000 for a lease bond, $25,000 for a statewide bond, and $150,000 
for a nationwide bond--no longer bear a relationship to the costs of 
reclamation for an oil and gas development site. As a result, the GAO 
previously reported that bonds covering oil and gas projects on public 
lands may be as much as $968 million below what reclamation would cost 
for those wells.
    In response to the GAO report and in recognition of its potentially 
outdated regulations, the BLM has published an Advance Notice of 
Proposed Rulemaking soliciting public input on bonding requirements for 
oil and gas projects on public lands. The BLM is also concurrently 
reviewing individual oil and gas well bonds on a case-by-case basis 
using existing authorities. Based on these reviews, the BLM is taking 
steps to raise bonding requirements where appropriate to ensure that 
bonding levels are commensurate with identified operational risks. 
Further, in an effort to strengthen our oil and gas inspection and 
oversight capability, the BLM has repeatedly proposed to create a fee 
system that would cover the BLM's inspection and enforcement activities 
as part of the Administration's budget requests. Those fees will help 
the BLM to improve production accountability, safety and environmental 
protection, and would parallel a fee system already in place for 
offshore oil and gas programs. The BLM continues to look for additional 
opportunities to ensure appropriate reclamation of projects while 
minimizing potential liability to taxpayers.
                               conclusion
    The BLM is committed to ensuring that development of all types on 
public lands occurs in an environmentally sound manner and will 
continue to take steps to ensure that all projects are bonded 
appropriately. The BLM looks forward to working with Congress as we 
continue to address important aspects of bonding on public lands. Thank 
you for the opportunity to testify, I am happy to answer any questions 
the subcommittee may have.

                                 ______
                                 

Questions Submitted for the Record by Chairman Gohmert to Mr. Steven A. 
    Ellis, Deputy Director for Operations, Bureau of Land Management

Mr. Ellis did not submit responses to the Committee by the appropriate 
deadline for inclusion in the printed record.

    Question 1. The Department of the Interior's Office of Inspector 
General (OIG) issued a report in June 2012 on BLM's renewable energy 
program. The OIG's 2012 report ``found that BLM [was] poised for a 
massive expansion of wind and solar projects'' and that ``BLM ha[d] 
taken aggressive action to increase its processing of renewable energy 
rights-of-way (ROW) grants.'' The OIG noted that ``BLM's focus on 
increasing the number of renewable energy projects . . . exposed some 
weaknesses in financial accountability and resource protection 
including obligations to protect the Government's financial interests 
by collecting rental revenues, managing the bond process, and by 
appropriate monitoring and enforcing ROW requirements.'' In light of 
these findings, the OIG made nine recommendations, including three that 
specifically addressed bonding:

     Issue an updated wind IM that clearly requires bonds on 
            all projects.

     Reassess the minimum bond amounts for wind projects as 
            well as methods for determining the bond amount, including 
            expanding the use of a bond review team.

     Track and manage bond information on all renewable energy 
            projects, including the amount of the bond, when BLM 
            requested and received the bond, contact information for 
            the bonded party, the type of bond, and when the bond 
            requires updating.

    Despite these recommendations--with which BLM substantially 
concurred--the Government Accountability Office issued a report in June 
2015 that found many of the same problems documented by the OIG 3 years 
before were still ongoing. Please explain in detail how BLM implemented 
the OIG's 2012 recommendations, including any policy or management 
changes that were made, and explain how the deficiencies identified by 
the OIG were not corrected over the past 3 years.

    Question 2. After reviewing the OIG's report in 2012, BLM asserted 
that it would make sure (1) its bonding policies and procedures were 
followed; (2) that BLM staff understood the policies BLM had in place; 
and (3) that bond information was accurately and promptly entered into 
the computer system. Based on the GAO's 2015 report, it appears that 
BLM has made no progress in these areas. Please provide the name(s) and 
title(s) of the BLM official(s) who was/were responsible for 
implementing the OIG's recommendations and describe any steps BLM has 
taken to hold such official(s) accountable.

    Question 3. BLM points to the September 2014 proposed rule for 
bonding as a cure-all for the myriad deficiencies with the wind and 
solar bond program. However, BLM has many policies in place currently 
that it simply chooses not to follow (e.g., periodic bond reviews). 
Please describe how BLM will ensure compliance with the new regulation, 
when it has continually and demonstrably failed to ensure compliance 
with existing policy.
    Question 4. The proposed rule does not include a periodic bond 
adequacy review requirement--not even a generic requirement that would 
allow flexibility in establishing specific review periods. Given that 
fully half of all wind and solar project rights-of-way are past due for 
review under BLM's current policy, please explain BLM's rationale for 
omitting a periodic bond adequacy review requirement from the new rule.

                                 ______
                                 

    Mr. Gohmert. Thank you, Mr. Ellis. I appreciate your 
testimony.
    At this time we will begin questioning. First of all, Ms. 
Fennell, some of your recommendations are almost identical to 
recommendations by the Office of the Inspector General that had 
been done several years ago, and I wanted to follow up on some 
of those.
    But I also appreciated the Ranking Member's comments.
    I am recognized for 5 minutes. Sorry.
    She made a comment that we had not had any losses as far as 
right-of-way damage at this point. Something that had concerned 
me--I had seen that out of 31 authorized wind rights-of-way, 21 
have been reassigned or had their names changed. Two of those 
have gone through bankruptcy, and subsequently a reassignment. 
Eight of the 21 have gone through three or more name changes. 
Those are the kinds of things that cause concern, that perhaps 
we need to be prepared for in the event one of those 
bankruptcies in the future does not afford the land and 
environment being properly repaired back to where it was before 
they came in with the right-of-way.
    Ms. Fennell, your team reviewed every single wind and solar 
right-of-way for which BLM held a bond as of April 15, 2014. Is 
that correct?
    Ms. Fennell. Yes, it is.
    Mr. Gohmert. During the course of review, GAO conducted 
interviews with BLM staff, as I understand it, across the whole 
country. Is that right?
    Ms. Fennell. Yes, we did interview BLM headquarters, state, 
and field office officials that had wind and solar projects.
    Mr. Gohmert. Do you know if it was someone with GAO who 
interviewed the realty specialist in the Rawlins Field Office 
that was responsible for managing the wind and solar bonds?
    Ms. Fennell. Yes, we did interview the realty specialist in 
the Rawlins office.
    Mr. Gohmert. And it was her job to make sure that BLM had a 
bond for each wind and solar right-of-way that was managed by 
the Rawlins office, correct?
    Ms. Fennell. Yes, that is correct.
    Mr. Gohmert. Did the realty specialist advise GAO during 
her review that she only found about 20 percent of the bond 
instruments in the project files?
    Ms. Fennell. Yes, she did. In the course of our review, she 
was describing the process that she used for the annual 
certification process. At that point, she indicated 20 percent 
were found in project files.
    Mr. Gohmert. And actually those should have been in the 
safe. Is that not correct?
    Ms. Fennell. They should have been retained in a properly 
secured storage cabinet or safe.
    Mr. Gohmert. Right. About the other 80 percent, did she 
comment on what happened to those?
    Ms. Fennell. She did. She indicated that she was not able 
to find them. They were surety bonds, which means that they 
could be replaced, but she was not able to locate them.
    Mr. Gohmert. Well, it appears that she had indicated that 
those were shredded. Is that not correct?
    Ms. Fennell. During the course of the conversation she did 
indicate that she believed that the bonds had been mistakenly 
shredded in a safe.
    Mr. Gohmert. Yes. I have noted in an e-mail from De Shann 
Schinkel on March 20, 2015, just 2 or 3 months ago, that she 
did not know the value of all the bonds that were shredded. So 
even as recently as March, she was still indicating that those 
bonds were shredded, correct?
    Ms. Fennell. Yes, that is correct. That was part of an e-
mail that was following up on a number of questions that we had 
for her, including the shredding.
    Mr. Gohmert. Right, and I had seen that e-mail following 
up. Did anybody inquire as to specifically why those bonds 
would have been shredded?
    Ms. Fennell. She had indicated to us that she thought they 
had been mistakenly shredded, but she did not provide any other 
elaboration.
    Mr. Gohmert. All right. So basically, in summary, we had 20 
percent of the bonds that were in project files instead of 
being secured as required by policy, and then 80 percent were 
gone, apparently shredded, correct?
    Ms. Fennell. Yes, at the time of our review, that is what 
we were informed.
    Mr. Gohmert. Mr. Ellis, I did want to ask you about your 
June 3, 2015 letter saying that all the bonds in the Rawlins 
office are currently accounted for. You did not elaborate or 
answer the questions that were submitted to you by Mr. Bishop 
and me, and I am curious why that ended up being glossed over.
    Mr. Ellis. Mr. Chairman, when we learned of this matter 
through the draft GAO report, I talked to our Acting State 
Director in Wyoming, Mary Jo, and asked her to look into this 
and to conduct an internal review to see if she could 
substantiate this claim and examine the bonding status.
    Mr. Gohmert. My question before time expired was very 
specific as to why you glossed over this. I was not looking for 
an account of what you did, but why you glossed over the fact 
that those were missing.
    Mr. Ellis. It is my understanding, Mr. Chairman, from the 
Wyoming BLM Acting State Director that the bonds are not 
missing; that all bonds are accounted for.
    Mr. Gohmert. All right. Well, we will have to pursue that 
in a second round then.
    At this time I will recognize the Ranking Member, Mrs. 
Dingell, for 5 minutes.
    Mrs. Dingell. Thank you, Mr. Chairman.
    I am going to try to get two lines of questioning here 
because I myself am confused by some of the last; but I want to 
get to what I think is the very important crux of the matter.
    Obviously, the GAO report made some findings that disturb 
us all; we want to work together and corrective action is 
needed. So, Director Ellis, the Majority claims that BLM has 
not taking corrective action since these issues were reported 
by the Inspector General.
    I do not think that is true. Is it not true that you have 
issued a rule? Can you talk about that?
    When do you think it is going to be final, and when will 
things be such that this will be tightened?
    Also, what are you doing in the meantime to tighten things 
internally before the rule is final?
    Mr. Ellis. Well, we have actually made significant 
improvements in the process of assessing bonds for renewable 
energy products in response to the IG's report of 2012. In the 
summer of 2012, the BLM issued policy to ensure field offices 
were complying with the existing bonding policy. For example, 
it required state directors to certify annually that all right-
of-way bonds are up to date and consistent with policy and 
required field offices to enter all bonds into the LR2000 
System and the Bond and Surety System.
    We also entered into this rulemaking process that you 
referred to for wind and solar, to ensure consistency and 
predictability across the program. We have not yet completed 
that process, but we hope to do so as expeditiously as 
possible.
    Mrs. Dingell. So, can I just be clear for the record? It 
sounds to me like you were following very closely the 
recommendations that the external reviews have given you. You 
are taking the issues that need to be addressed in rulemaking 
and putting them in a rule.
    That rule still has to be finalized. You are using the 
tools you have, like issuing internal policies and conducting 
staff training, to correct other issues. Is that accurate?
    Mr. Ellis. That is correct.
    Mrs. Dingell. Thank you.
    Let's go to shredding. I am about as confused as anybody 
from what I just heard. Did I just hear that you shredded 80 
percent of the bonds? Ms. Fennell?
    Ms. Fennell. During the course of a conversation with the 
reality specialist to have an understanding of what their 
procedures were for conducting annual certifications, we 
learned at that point in time that 20 percent of the bonds were 
found in project files that were not in a secured cabinet or a 
safe.
    The remaining 80 percent we were informed, which were 
surety bonds and which had been indicated through the two 
database systems that BLM has still existing, were not able to 
be found.
    Mrs. Dingell. But does it mean they were shredded?
    Ms. Fennell. The realty specialist went on to inform us 
that she had heard that the bonds had been in the safe and then 
were mistakenly shredded.
    Mrs. Dingell. So this is hearsay. Let me ask you another 
question. One type of bond that can be held is a check. Is that 
not correct?
    Ms. Fennell. Yes, that is correct.
    Mrs. Dingell. And presumably copies are made of that check 
for any number of reasons, including information redundancy. Is 
that correct?
    Ms. Fennell. I believe that is.
    Mrs. Dingell. And, Mr. Ellis, you could help me answer. 
Both of you were participating in this discussion.
    Those checks have personally identifiable information. Do 
you have protocols for protecting personally identifiable 
information that might include shredding copies of checks after 
they have been cashed or rendered unnecessary?
    Mr. Ellis. We do protect personally identifiable 
information. That is true. We do protect that.
    Mrs. Dingell. So is it in the universe of options that the 
bonds at issue in the secondhand account--hearsay--of possible 
bond shredding mentioned in the GAO report were copies of 
checks that were no longer necessary to keep on hand and that 
contained personally identifiable information?
    One of you want to respond?
    Mr. Ellis. Well, I might respond in this way. I was not 
part of this group to do the investigation. I have talked to 
our Acting State Director, Mary Jo Rugwell. She has indicated 
to me that all of the bonds are accounted for. She indicated 
that if anything may have been shredded, it could have been----
    Mrs. Dingell. So you disagree that 80 percent of the bonds 
are missing or not accounted for?
    Mr. Ellis. No, all of the bonds are accounted for. The 
bonds are accounted for. They are in the safe. That is what I 
was told.
    Mrs. Dingell. Well, I would just hope--we have to be very 
clear--no hearsay or thirdhand information. GAO in its report 
said that they had investigated. I think it is very clear we 
have to tighten; but I do not want rumors to start off that are 
not true either, Mr. Chairman.
    Mr. Gohmert. Thank you.
    To be clear, my question was about the 80 percent that were 
not available previously, not currently, so to set the record 
straight there.
    At this time the Chair recognizes Mrs. Radewagen for 5 
minutes.
    Mrs. Radewagen. Thank you, Mr. Chairman and the Ranking 
Member.
    I also would like to thank the panel for appearing today.
    Ms. Fennell, can you explain the reclamation process for 
wind and solar projects and describe why reclamation bonds are 
important?
    Ms. Fennell. Reclamation bonds are important because they 
ensure that there is no financial risk to the Federal 
Government in the event that the developer is unable to meet 
the obligation for reclaiming the land to its preconditioned 
state.
    Mrs. Radewagen. Now, in some cases reclamation can be very 
expensive, and if it is a large project and there is a lot of 
infrastructure, reclamation can cost tens of millions of 
dollars. Is that right?
    Ms. Fennell. Yes, that is correct.
    Mrs. Radewagen. What is the total value of wind and solar 
bonds held by BLM?
    Ms. Fennell. Currently it is $100 million for wind and 
solar projects.
    Mrs. Radewagen. And that is for how many rights-of-way?
    Ms. Fennell. It is 120 rights-of-way, which does include 45 
for wind and solar energy development, and then the remainder 
would be for wind testing, either project area or site-specific 
area.
    Mrs. Radewagen. So GAO looked at every single right-of-way 
that required a bond, right?
    Ms. Fennell. We looked at the processes that BLM had in 
place, the policies that they had in place, as well as the 
practices that they had in place in general. Then we did a 
detailed file review of 45 wind and solar projects.
    Mrs. Radewagen. Can you explain how GAO determined those 
numbers? Did they come from BLM or did you independently verify 
them?
    Ms. Fennell. We utilized the BLM data systems to ascertain 
the number of wind rights-of-way and solar rights-of-way 
projects. In the process of that, we found discrepancies in the 
data; so we went and worked with the BLM officials to ensure 
that the numbers that we had were correct, and that we were 
able to report them in our report.
    Mrs. Radewagen. When the GAO team began looking at the data 
from BLM, was it consistent?
    Ms. Fennell. We did find that the LR2000 and the Bond and 
Surety System did have information that was either missing, 
inaccurate, or that had not been updated. We were----
    Mrs. Radewagen. So the answer would be no?
    Ms. Fennell. Correct.
    Mrs. Radewagen. The BLM has two separate databases for 
tracking wind and solar bond information. During the review, 
did you find that they were reliable?
    Ms. Fennell. We did not find that they were reliable for 
the purpose of tracking the wind and solar rights-of-way.
    Mrs. Radewagen. Were the two databases at least consistent 
with each other?
    Ms. Fennell. We did find discrepancies between the two 
systems.
    Mrs. Radewagen. During the review, did GAO find that the 
two systems were missing information?
    Ms. Fennell. Yes, we did.
    Mrs. Radewagen. What kind of information?
    Ms. Fennell. We found that there was either bond amounts 
that were in one system but not in the other system, that dates 
would be different, or that project information was not up to 
date. So we did find discrepancies between the two systems and 
what was contained in both.
    Mrs. Radewagen. What about timeliness? Were the databases 
at least up to date?
    Ms. Fennell. They were not up to date. We did find issues 
with both databases in terms of either information in one 
database that was up to date and not in another, or sometimes 
we found information in the project files that was more up to 
date than what was contained in the databases or vice versa.
    Mrs. Radewagen. So without implementing GAO's 
recommendations, BLM could not have confidence that the 
information it keeps on wind and solar bonds is accurate?
    Ms. Fennell. Yes, that is correct. That is why we made 
several recommendations to ensure that policies or data 
standards should be put into place in order to ensure that the 
information is up to date, that the data systems are accurate, 
and that there is timely entry of information in the data 
systems.
    Mrs. Radewagen. Thank you, Mr. Chairman.
    Mr. Gohmert. I thank the gentlelady.
    At this time the Chair recognizes Mr. Huffman for 5 
minutes.
    Mr. Huffman. Thank you, Mr. Chairman.
    I find it noteworthy that the Majority's information on 
this hearing, the focus of this hearing, and the questioning 
that has happened to date has been strangely silent about dirty 
fossil energy projects, and whether they might suffer from some 
of the same problems that are being leveled at clean renewable 
energy projects, or maybe even worse problems.
    Now, Ms. Fennell, the GAO has written many reports on lax 
bonding policies and practices regarding the oil and gas 
program, too, correct?
    Ms. Fennell. Yes, that is correct.
    Mr. Huffman. When were the oil and gas bond amounts last 
updated?
    Ms. Fennell. In our last report that we did in 2011, I 
believe that we found that the minimum bond amounts had not 
been updated in 50 years.
    Mr. Huffman. Right. Since the Eisenhower presidency, I 
believe. You have also made findings about the adequacy of the 
current bond amounts for oil and gas projects. Is it fair to 
say you have found those to be woefully inadequate?
    Ms. Fennell. We did find that there were problems 
associated with the adequacy of the information that is also 
contained in their database systems.
    Mr. Huffman. Thank you.
    Deputy Director Ellis, on this theme of taxpayer risk from 
potential pollution, can you tell me how many renewable energy 
projects on Federal land have not been cleaned up by the 
developer before they left?
    In other words, how many wind and solar projects have ever 
left taxpayers on the hook?
    Mr. Ellis. To this point, there have been none.
    Mr. Huffman. How about oil and gas sites? Could you say the 
same of those?
    Mr. Ellis. No. I do not have all the numbers with me; I 
think in the last 3 years I was made aware that there were 
seven instances on oil and gas where there were some 
reclamation costs and we did have to go the bond.
    Mr. Huffman. I have reference here to a 2010 GAO report 
finding that BLM spent $3.8 million to reclaim 295 orphaned 
wells in 10 states. Does that sound about right?
    Mr. Ellis. I cannot validate those numbers for sure, but I 
can tell you we do have orphaned wells--and we have had to 
spend some money on orphaned wells--but many of these orphaned 
wells, such as those in Alaska were not bonded. They are very 
old. They were not bonded.
    Mr. Huffman. I believe BLM has identified an additional 144 
orphaned wells in seven states that need to be reclaimed as 
well; so we are looking at a pretty sizable taxpayer exposure 
for orphaned wells and other problems related to inadequate 
bonding from oil and gas projects. Is that fair to say?
    Mr. Ellis. Yes. The orphaned wells, it is an issue, 
particularly in Alaska.
    Mr. Huffman. Well, thank you.
    Mr. Chairman, I am really struck by what this hearing could 
have been if we were really interested in oversight of taxpayer 
exposure from these energy projects, and if we did not have an 
unwritten rule in this committee and with the House Majority 
right now that we can never say anything bad about fossil fuel 
energy projects; we have to always pick on clean renewables.
    If we were interested, we could take a look at the 
inadequate bonding rates that go back to the Eisenhower 
administration. We could take a look at this one-of-a-kind, 
self-bonding give away to the coal industry that puts them in 
an even more risky position relative to protecting the 
taxpayer. We could look at the fact that that self-bonding 
program inures to the benefit of major coal companies in 
millions of dollars each and every year, that we have had 
independent reports suggesting that the failing financial 
health of those coal companies underscores the risk to 
taxpayers right now, and that they may be playing games with 
their subsidiaries in order to continue enjoying this one-of-a-
kind self-bonding status that is not available to clean, 
renewable energy programs.
    All of that is something that we could have addressed. We 
could have talked about the fact that instead of picking on 
clean renewable energy, which has never cost the taxpayers a 
dime, where we have identified some inadequacies and 
discrepancies that are being addressed by BLM right now, fixed 
in a rulemaking. Instead of that, we could talk about the 
actual loss to taxpayers that is occurring and the significant 
risk that we face because of these lopsided policies that 
continue to tilt the energy playing field in favor of dirty 
fossil fuel energy projects.
    That all could have made for a great hearing, but 
unfortunately we are left with this very shallow farce of an 
oversight hearing, and I think that is a tragedy.
    With that, I will yield the balance of my time.
    Mr. Gohmert. Thank you
    At this time I will yield to Mr. Labrador for 5 minutes.
    Mr. Labrador. I yield back to the Chairman.
    Mr. Gohmert. You yield back or you yield?
    Mr. Labrador. I yield.
    Mr. Gohmert. Well, thank you.
    I realize the gentleman had just come in, but that would 
allow me to follow up on a couple of matters. We may want to 
look into what we are characterizing as the give aways to coal 
companies. I know it surely appears to people that are mining 
coal in my district and friends from West Virginia that there 
really appears to be a war on coal and so many have been put 
out of business. We have so many coal miners that are in the 
country that are out of work, and they certainly were not aware 
of any give aways since their companies have been put out of 
business.
    But we also may want to have a hearing on the gentleman's 
comment that clean renewables have never cost the taxpayers a 
dime. They are costing us a fortune every year, especially when 
you look back at Solyndra and some of those that we continue to 
prop up with taxpayer monies. Some industries, like coal and 
oil and gas, they're allowed to deduct the cost of doing 
business as any manufacturer is; yet in the renewables, we just 
give money away trying to get people into those businesses, 
but----
    Mr. Huffman. Would the gentleman yield?
    Mr. Gohmert. Well, let me get back to that.
    As of this writing, we have not found evidence that bonds 
were shredded. Mr. Ellis, you said that. Did you look into 
that, as to whether or not they were shredded?
    Mr. Ellis. Mr. Chairman, I have indicated that I spoke with 
our Acting State Director of Wyoming. I asked her to look into 
the matter. She got back to me.
    Mr. Gohmert. That was not my question. I was asking if you 
did. You are here testifying, and you said as of this writing 
we have not found evidence. Having investigated things as a 
prosecutor, I know you have to go to the source; and we have an 
e-mail as of March that again says that she did not know the 
value of the documents that were shredded.
    Let me ask you this. It was mentioned that sometimes these 
are checks that are used instead of bonds. Do you know if those 
were checks that were taken from the safe or that were not 
accountable, or were they actually bonds that later were 
replaced?
    Mr. Ellis. I do not know, Mr. Chairman, the specifics of 
checks. I can tell you that we are very pleased that the 
Inspector General is looking into this matter. We support----
    Mr. Gohmert. I am not interested in who else is looking at 
it. I am interested in your department. One of the things that 
disturbs me to no end--I like people being held accountable 
when they cost the government tremendous amounts of money 
unnecessarily--we had someone with Interior that left out 
language back in the Clinton administration that has cost this 
country billions of dollars in revenue from offshore drilling. 
We kept trying to find somebody to be held accountable, and we 
were told by Interior, ``Well, we think maybe the person that 
did that is no longer with the government.''
    She had gone to work for, as we understood it, an oil and 
gas company. Now, as I understand it, that person is back with 
the Obama administration.
    We have to start holding people accountable that do not 
follow the rules and that create problems. The letter that 
Chairman Bishop and I sent asked you specific questions, or 
asked Director Kornze on what date were the bonds shredded. Who 
removed the bonds from the safe? Who destroyed the bonds? Are 
the individuals responsible for removing and destroying the 
bonds currently employed by BLM? Who had access to the safe? 
Why were the bonds removed from the safe? Were the entire 
contents of the safe removed at the time the bonds were 
removed? Were the entire contents of the safe destroyed at the 
time the bonds were destroyed? When did the Rawlins Field 
Office notify the state office that the bonds had been 
destroyed? How was notification provided?
    It does not give me any comfort that you say the OIG is 
investigating. We were asking for answers from you, and the 
best we get in your letter is, ``As of this writing we have not 
found evidence that bonds were shredded;'' then you gloss over 
it as if there was never a problem in saying the bonds are 
appropriately documented and the assets are protected.
    Once again, it is like Interior is trying to gloss over 
this whole issue where somebody took those bonds out of the 
safe, from what we understand; and something happened to them. 
Indications were--whether it is hearsay or not--the best thing 
we have understood so far is that they were shredded; and yet 
we do not have an account from you that you have actually 
looked into this serious matter.
    Have you looked into these specific matters?
    Mr. Ellis. Mr. Chairman, as I responded in my letter and 
earlier, the Acting State Director of Wyoming looked into it 
and told me that all the bonds were accounted for, that based 
on their looking into this, that the bonds were not shredded.
    Mrs. Dingell. Mr. Chairman.
    Mr. Gohmert. Well, you are not answering the question, 
clearly. His letter did not answer the question, but my time 
has expired.
    I yield 5 minutes to Mr. Polis.
    Mrs. Dingell. Would you be willing to yield one moment for 
a clarification?
    I do think that the Inspector General, it is my hope and 
intent I've been told, has an ongoing investigation where all 
of the questions that you have asked should be answered; and 
that when there are IG investigations, management is asked not 
to become involved in the investigations, which would appear to 
be intimidating employees.
    Is that also part of what we are dealing with right now, 
that the IG's office is doing this investigation?
    Mr. Gohmert. Well, let's go to Mr. Polis, and then we will 
come back. The problem is that we sent a specific letter to the 
Director of BLM; and they are dodging it saying, ``Hey, well, 
it looks like there is an OIG investigation now.''
    So anyway, Mr. Polis, you are recognized for 5 minutes.
    Mr. Polis. Thank you, Mr. Chairman.
    I want to thank the Chairman for holding this hearing 
today, not because of some of the non-issues that the Majority 
continues to raise, but because I think this hearing speaks to 
the need for improvement in the development of renewable 
energies on public lands.
    Along those lines, I introduced a bill earlier this month 
with Representative Gosar, the bipartisan bill--H.R. 2663, the 
Public Lands Renewable Energy Development Act, that would 
streamline the regulatory and permitting process for wind and 
solar development on public land.
    It has been very frustrating to me as a policymaker how oil 
and gas is able to develop on public lands without doing NEPA 
studies, with minimum permitting delays--usually in a period of 
weeks or months--but renewable energy projects often take years 
to be able to permit on public lands.
    I was going to ask Deputy Director Ellis if he would agree 
that encouraging the development of renewable energies on 
public lands is a critical national priority and what can the 
Federal Government do to streamline and make less costly and 
faster the permitting process for renewable energy projects on 
public lands?
    Mr. Ellis. Well, Congressman, I might respond this way. We 
are very proud of the role that the BLM plays in providing the 
Nation's energy needs, including renewable energy.
    Regarding the bill, the department and the BLM are 
committed to responsibly mobilizing the tremendous renewable 
energy resources that are available on public lands; and we 
share your interest in identifying efficiencies that are 
consistent with their multiple use and sustained yield mandate.
    We are very proud of the record that we have had, 
particularly since 2009. As I indicated in my testimony, when 
all of these projects get online, it will be 14,500 megawatts 
of power, which is enough to supply a lot of homes. I indicated 
in my testimony we are proud of this. This is energy that is 
clean. It is renewable; it is clean. It is environmentally 
sound energy.
    Also with that said, we still have oil and gas. We have 
geothermal. We have coal. We have a complete portfolio on 
public land.
    Mr. Polis. Is there more that you can do administratively, 
of course, in addition to Congress and this committee taking up 
H.R. 2663, to streamline and reduce the cost or timeline for 
approving renewable energy projects?
    Mr. Ellis. Let me respond this way, Congressman. As you 
probably know, a few years ago we did an environmental impact 
statement to identify solar energy zones. I believe there are 
about 17 of these. We went through that process so industry 
would know that there were areas that they could go where we 
felt that the resource conflicts were less than they were in 
other areas; and since we had an umbrella EIS over these zones, 
we could do the NEPA work faster.
    So it really encourages industry to go to those areas.
    Mr. Polis. What is the estimate of the time frame for the 
NEPA work in those preferential areas?
    Mr. Ellis. Boy, in some of those we have been able to get 
that NEPA work done in a matter of a year, which is pretty 
quick.
    Mr. Polis. Would you consider it an analogous project for 
wind and geothermal and other forms of renewable energy?
    Mr. Ellis. It can take longer if it is outside those zones. 
It really depends upon----
    Mr. Polis. Well, those were solar zones. Would you consider 
a similar process around creating streamlined zones for wind 
and geothermal?
    Mr. Ellis. Congressman, we have had those discussions.
    Mr. Polis. I think that would be welcomed. If you can 
submit later, we would love to see a comparison between the 
NEPA process in the preferred solar zones and the regular NEPA 
process around solar outside of those zones, assuming there has 
been some of those pending.
    Also, we would love to be updated on your process around 
establishing similar zones for other forms of renewable energy 
and look forward to working with you on that.
    I want to encourage you to take a look at H.R. 2663 as 
well, the bipartisan bill that would facilitate zoning for 
renewable energy projects on public land.
    I yield back the balance of my time.
    Mr. Gohmert. I thank the gentleman.
    We will start a second round.
    Mr. Ellis, were you aware that at least 50 of the orphaned 
wells in Alaska were originally drilled years ago by the U.S. 
Navy, and it was the Navy that abandoned them?
    Mr. Ellis. Yes, Mr. Chairman. I am aware that some of those 
are Navy wells. I do not know if it is 50, but I am aware that 
some are Navy wells.
    Mr. Gohmert. OK, and this is a direct question. Were you 
aware or were any of the bonds that were in the Rawlins Field 
Office replaced?
    Now, you said they are there. But were bonds in the Rawlins 
Field Office, any of them, actually replaced?
    Mr. Ellis. All right. If I may for clarification purposes, 
you are suggesting that the bonds are accountable, that maybe 
there were some that were not there and now they are back? Is 
that it?
    Mr. Gohmert. Unless you are deaf, you have heard another 
witness testify that 80 percent of the bonds were not available 
in the Rawlins Field Office. Twenty percent were in project 
files. Your letter says all of the bonds were accounted for. I 
am asking you whether you know whether some or all of the 80 
percent that were originally missing, as testified to today, 
were replaced.
    Mr. Ellis. What I am aware of is that all of the bonds 
today are accounted for.
    Mr. Gohmert. Have you heard the testimony today that 80 
percent of the bonds were missing?
    Mr. Ellis. I did hear what GAO had to say.
    Mr. Gohmert. Have you investigated whether or not any were 
ever missing?
    Mr. Ellis. The question I asked the Acting State Director 
of Wyoming was to find out, based on what was read in the draft 
report, if some bonds had been shredded and if the bonds are 
accounted for, and I said earlier----
    Mr. Gohmert. Did you ever see the letter that Chairman 
Bishop and I sent to Director Kornze?
    Mr. Ellis. I did.
    Mr. Gohmert. So you ignored all of those questions that we 
were asking and you just simply asked, ``Are the bonds there 
now? ''
    Mr. Ellis. Yes. We asked BLM in Wyoming to look into the 
matter and see if there had----
    Mr. Gohmert. You just testified that you asked them if the 
bonds were there. Is that what you asked?
    Mr. Ellis. We asked them, Mr. Chairman, to look into the 
matter based on what we saw in the draft report. They responded 
to us that the bonds were not shredded, and that all of the 
bonds are accounted for and in the safe.
    Mr. Gohmert. By the way, I did not swear you in--I think we 
are going to start swearing witnesses in--but even if you are 
not sworn in, it is a crime to testify untruthfully before a 
congressional committee.
    Now, the question that I have been trying to get an answer 
to is, what happened to the 80 percent? And you are testifying 
to this committee, of your own knowledge, that there were no 
bonds ever shredded. Is that what you are testifying to?
    Mr. Ellis. That is the information that I was given from--
--
    Mr. Gohmert. You are willing to stand on that, that no 
bonds were ever shredded. You are willing to stand on that 
under penalty of testifying falsely?
    Mr. Ellis. That----
    Mr. Gohmert. Because a lawyer would advise you that if you 
do not know, you had better say, ``I do not know.'' But if you 
are saying they were not shredded based on the evidence that I 
had, then there is an obligation you have to make sure you have 
the proper evidence and not mislead this Congress.
    So let me ask you again--are you testifying that no bonds 
were ever shredded?
    Mr. Ellis. Mr. Chairman, as I indicated earlier in my 
testimony and in response----
    Mr. Gohmert. I am asking you a direct question. Is it your 
testimony that no bonds were ever shredded?
    Mr. Ellis. I can only testify to what I was told.
    Mr. Gohmert. You had better testify to what you know of 
your own personal knowledge. Are you testifying to this panel, 
to this committee that no bonds were ever shredded? Yes or no?
    Mr. Ellis. Mr. Chairman, I asked a question of our Acting 
State Director, to look into this.
    Mr. Gohmert. So your testimony is the bonds were not 
shredded. Is that right? Yes or no?
    Mr. Ellis. My testimony is what I had in the record, what I 
have----
    Mr. Gohmert. So why don't you say, ``I do not know'' ? That 
would be a safer answer than saying yes, you inquired and no 
bonds were shredded. Because if you say, ``I inquired and no 
bonds were shredded,'' I am telling you, Mr. Ellis, you are 
misleading this committee. I am asking you--do you want that on 
the record? Your testimony is that no bonds were shredded.
    Mr. Ellis. I was told by the Acting Director of the state 
of Wyoming----
    Mr. Gohmert. I am asking you if you stand by what you were 
told.
    Mr. Huffman. Point of parliamentary inquiry, Mr. Chairman. 
I have just heard you interrupt the witness, I think no less 
than 10 times.
    Mr. Gohmert. When a person asking the question----
    Mr. Huffman. Are we entitled to actually get his testimony 
or do you intend to shout him down and not let him talk?
    Mr. Gohmert. Your point is invalid because a witness is 
required to answer the question.
    The gentleman is out of order.
    Mr. Huffman. The Chairman is out of order.
    Mr. Gohmert. Thank you.
    If we are not allowed to get questions answered by 
witnesses, then these hearings are worthless.
    Mr. Huffman. Exactly, so let him answer and then it will 
not be worthless.
    Mr. Gohmert. He would not answer the question.
    Mr. Huffman. You can shout on YouTube any time you want.
    Mr. Gohmert. I am asking the question one final time. I 
realize we do not have a Department of Justice that has carried 
out any prosecutions so far, but some day we will; and I am 
asking you--are you standing by testimony that no bonds were 
shredded?
    Mr. Ellis. Mr. Chairman, I will respond in two ways. One, 
the Inspector General is investigating this. I look forward to 
the Inspector General getting down and finding the facts of----
    Mr. Gohmert. Well, that is not answering the question. You 
are saying that you did not do your job. You will let somebody 
else investigate.
    Mr. Ellis. No, what I am saying is that we inquired. I had 
the Acting State Director inquire----
    Mr. Gohmert. And you believe that? That is your testimony. 
No bonds were shredded.
    Mr. Ellis. That is the information that was provided to me.
    Mr. Gohmert. And you stand by that. You believe it.
    Mr. Ellis. The information that was provided to me. With 
that said, I look forward to reading the----
    Mr. Gohmert. Do you believe it or not?
    Mr. Ellis [continuing]. Inspector General's report.
    Mr. Gohmert. I am just trying to get an answer. You 
provided that information to Congress. Do you believe no bonds 
were shredded?
    Mr. Ellis. All I can go by, Mr. Chairman, is what I am told 
by----
    Mr. Gohmert. I am asking you: do you believe no bonds were 
shredded?
    Mr. Ellis. It is my understanding from the BLM in Wyoming--
--
    Mr. Gohmert. Do you believe no bonds were shredded?
    Mr. Ellis. I can only go by what I was told.
    Mr. Gohmert. Do you believe no bonds were shredded?
    Mrs. Dingell. Point of order, Mr. Chairman.
    Mr. Gohmert. We are trying to get an answer to the question 
that the witness will not answer.
    Do you believe it or not? You are the Assistant Director. 
Just answer the question.
    Mrs. Dingell. Mr. Chairman, can I respectfully say that we 
have an Inspector General's investigation going on. We are 
dealing in hearsay, period. I do not like anybody's reputation 
and integrity being done on hearsay.
    I think the GAO study looked at it, and they could not find 
enough information. The Inspector General is. We are all very 
concerned about hearsay reports, but even when the GAO looked 
at it--badgering the witness today is not going to get us any 
further. I think we look forward to the Inspector General's 
study.
    Mr. Gohmert. There is an explanation. Credibility is always 
an issue. This gentleman made inquiry, and his testimony as to 
the credibility of the information he got is always going to be 
an issue, whether the OIG looks into it or not. If he did not 
believe the information he got, that is certainly important 
whether the OIG looks into it or not.
    But, frankly, I am so tired of government officials hiding 
behind some other answer and not doing their jobs when laws and 
regulations are being violated. They put people in prison for 
violating them if you are not in the government, and yet nobody 
is held accountable in the government. I want that to stop, and 
that is why I kept pushing for an answer.
    So, sir, do you believe that no bonds were shredded based 
on the credibility of the people that told you?
    Mr. Ellis. Mr. Chairman, based on what I know of our Acting 
State Director--she indicated that based on them inquiring and 
looking at that, that no bonds were shredded.
    Mr. Gohmert. Were they replaced?
    Mr. Ellis. I have full confidence in Mary Jo's feedback on 
this.
    Mr. Gohmert. All right. My time has expired.
    The gentlelady, Mrs. Dingell, is recognized for 5 minutes. 
And if they do not answer your questions, then you have however 
long it takes to get an answer.
    Mrs. Dingell. So, Mr. Chairman, I really wanted to get into 
some more substantive issues; but I really want to say, first 
of all, none of us wants to see things and we need to tighten 
the process. The GAO study is there, two different rulemakings. 
A second one I want talk about, too, on oil and gas.
    But I want to be clear for the record. Is it not true that 
we keep original bond instruments because it is best for 
recordkeeping, but holding the original bond document does not 
impact the ability of the BLM to use the bonds if necessary. In 
order for that bond to be released back to the project 
component, the BLM still has to submit a request to the bond 
company asking for that to occur?
    In the event that BLM does not have the original document, 
a duplicate can be made by that bonding company that serves as 
appropriate documentation for that bond. So while we are 
looking at processes that none of us approve of and we are 
getting cleaned up, is it not true that that could be how we 
now have the rest of those bonds accounted for?
    Mr. Ellis. Congresswoman, yes, we do have to go back to the 
company if there was----
    Mrs. Dingell. But you can account for 80 percent of those 
documents if they were not found when somebody was initially 
looking at it. So that would account for the discrepancy 
between the 20 percent and the 80 percent, potentially.
    Mr. Ellis. I cannot say from my----
    Mrs. Dingell. You do not know how, but that would be one 
form.
    Mr. Ellis. That would be one form.
    Mrs. Dingell. Thank you. That is all I want, a simple yes 
or no.
    I do not want to have a war on anything, Mr. Chairman, but 
even the Pope has said that we have to worry about the 
environment. So I worry about all of this.
    I want to put this in context though. In a report from 
2010, the GAO calculated that we not only have proposed 
rulemaking on wind and solar, but there is one right now on oil 
and gas as well. The GAO calculated that over 20 years BLM has 
reclaimed 295 oil and gas wells at a cost of $3.8 million. That 
is about $13,000 per well.
    That seems low to me since those numbers are probably 
higher now that fracking is so widespread, but I will go with 
it.
    Mr. Ellis, do you know how many wells there are on public 
lands right now?
    Mr. Ellis. Approximately 95,000.
    Mrs. Dingell. OK. So 95,000 wells at $13,000 per well comes 
to about $1.2 billion in well reclamation cost BLM could have 
to cover if the bonds are not enough to cover them. So does BLM 
hold $1.2 billion bonds from the oil and gas industry?
    Mr. Ellis. We do not. That number is about $186 million.
    Mrs. Dingell. So are you saying that the potential cost of 
reclaiming these wells is at least $1 billion more than what 
you actually hold from oil and gas companies? And why?
    Mr. Ellis. Congresswoman, if you look at the oil and gas 
bonds, they are based on a number of factors, and that includes 
the past reclamation performance of the company. We often do 
not require full bonding in oil and gas for the reclamation.
    In fact, part of it is based on the track record of the 
company. If the company has a good track record, then sometimes 
we hold less than the full reclamation amount. Now, that could 
be accounting for part of this. Generally oil and gas 
companies, our experience has been they are pretty good at 
reclaiming these areas.
    Mrs. Dingell. I think in my 2:00 a.m. reading I heard that 
called performance bonding. Is that correct?
    Do you allow performance bonding for renewable energy 
companies?
    Mr. Ellis. We do for renewable energy under this rule that 
we are working on.
    Mrs. Dingell. But do you right now? Under existing law, do 
you?
    Mr. Ellis. No, we do not for wind and solar.
    Mrs. Dingell. Is it not true that you require bonds for the 
full calculated cost of liabilities to the United States?
    Mr. Ellis. It is for wind and solar.
    Mrs. Dingell. So, BLM gives exceptional leniency to oil and 
gas companies compared to renewable energy companies; and BLM 
requires performance bonding for oil and gas projects, but not 
for renewable energy projects.
    It sounds as though BLM is tough on renewable energy 
developers. In fact, I think it sounded even tougher. Since my 
colleagues on the other side of the aisle are interested in 
this underbonding, I trust that they will support BLM's 
advanced notice of proposed rulemaking of April 2015 that tries 
to correct oil and gas underbonding.
    A statement on the Majority's Web site indicates opposition 
to that, which I cannot understand given your interest in the 
renewables.
    Thank you, Mr. Chairman. You can have my 7 seconds back. 
Thank you.
    Mr. Gohmert. The Chair recognizes Mrs. Radewagen for 5 
minutes.
    Mrs. Radewagen. Thank you, Mr. Chairman.
    Ms. Fennell, when GAO reviewed all the bonds that BLM had, 
you found that most of the bonds are held as letters of credit 
or surety bonds; but there was one bond worth almost $50,000 
that is described as undetermined. In the report, it says BLM 
could not provide the bond type.
    How can BLM hold a bond that is undetermined?
    Ms. Fennell. We asked that very question, and they were not 
able to provide an answer. This was how it was recorded in the 
databases. So, when we replicated the table that you're 
referring to in our report, where we list out the various types 
of bonds, we did include that, given that that was part of the 
total.
    Mrs. Radewagen. Did GAO try to determine the bond type?
    Ms. Fennell. We followed up with questions, but we did not 
determine the bond type because we were not able to receive 
responses to our questions as to what it was.
    Mrs. Radewagen. It seems like this is yet another example 
of missing or inaccurate information that BLM has on these 
bonds.
    In another example, the GAO report says that a BLM employee 
had to drive out to the right-of-way and count the number of 
wind turbines that were on the property because the databases 
in the project file were so confused. Is that correct?
    Ms. Fennell. As part of our review of the data, when we 
found discrepancies or inaccurate information, we would go back 
and speak with the BLM officials to clean up the data. As a 
result of our inquiry, that was, indeed, the case where they 
did go out and verify the number of turbines.
    Mrs. Radewagen. The OIG report issued in 2012 covered a lot 
of the same issues that the GAO report covers. Ms. Fennell, are 
you aware of any other documents that identified concerns with 
handling wind and solar bonds?
    Ms. Fennell. The IG report and our report, I believe, are 
the more recent reports related to the bonding for wind and 
solar.
    Mrs. Radewagen. What about bond handling policies? Does BLM 
have any specific policies for properly storing wind and solar 
bonds?
    Ms. Fennell. They do not. As a result of not having a 
policy in place, we made a recommendation that one should be 
developed so that there would be proper handling, accounting, 
and storing of wind and solar bonds.
    Mrs. Radewagen. If there is no real guidance, then where 
are these bonds being stored?
    Ms. Fennell. We found that in two field offices, they had 
indicated to us that there were bonds that were maintained in 
project files that were not properly secured in a locked 
cabinet or safe. Those are illustrative of the problems that we 
found, which is that there is no guidance. Therefore, we made 
the recommendation that guidance should be established.
    Mrs. Radewagen. Mr. Ellis, the 2012 IG report highlights 
the need for close supervision of solar projects on Federal 
land and perhaps explains why BLM is required to review bonds 
annually. The report found that solar projects frequently go 
through name changes, reassignments, and of course, 
bankruptcies. Some of us may have heard of Solyndra.
    Have renewable projects been pushed to expand at a pace 
that BLM cannot keep up with?
    Also, why are BLM employees not aware that bonds were 
supposed to be reviewed as discussed in the GAO report?
    Mr. Ellis. The things that we do--we have turnover of 
employees; and sometimes employees, it is possible they may not 
all be as familiar with the time frames of when they are 
supposed to look at these things.
    This is being clarified in the new rule that we are working 
on, and so it is not inconceivable that we would have 
situations out there where employees may not be totally 
familiar with these things. I think what our goal is to do, and 
we have taken these steps, is to try to train these employees 
and help them understand what the rules are as far as looking 
at these things.
    It is being clarified in the new rule to provide greater 
consistency across the landscape.
    Mrs. Radewagen. Is this a management task too large for BLM 
to responsibly administer?
    Mr. Ellis. No. We are a very complex agency. We do many, 
many things. This is one of those things that we do in a 
multiple use and sustained yield mission. So we have many, many 
tasks and many things. Right now, we are dealing with a severe 
fire situation in Alaska. We have many things in our portfolio. 
With that being said though, I would say that the GAO, in this 
instance, what they bring to us is always valuable. We always 
learn from these things. It is very valuable.
    And as we indicated in the recommendations that they have--
I believe there are five of them. In four of them, we say we 
are going to accept these recommendations. I think there was 
one where we went partially, because we think that by accepting 
these we will get at some of the very things, Congresswoman, 
you mentioned.
    Mrs. Radewagen. Thank you, Mr. Chairman.
    Mr. Gohmert. I thank the gentlelady.
    At this time--I could not remember if you had had a second 
round or not. Mr. Huffman is recognized for 5 minutes----
    Mr. Huffman. Thank you, Mr. Chairman.
    Mr. Gohmert [continuing]. Or however long it takes to get 
answers to your questions.
    Mr. Huffman. Well, I will let the witness actually answer 
when I ask questions, and we will see how that goes.
    We have had this hearing that is supposed to be about the 
policies and practices for the bonding of energy projects on 
Federal land, BLM specifically. That is nominally the subject 
of this hearing. It is focused on clean renewable energy 
projects and a few discrepancies that are being addressed, that 
have been acknowledged, but that have not cost the taxpayer any 
money.
    When we point out the lopsided nature of exposure to 
taxpayers and costs to taxpayers when it comes to dirty fossil 
fuel energy projects, twice now in this hearing there has been 
some intellectual sleight of hand by the Majority.
    They brought up Solyndra. Now, I just want to ask you, 
Deputy Director Ellis, did Solyndra ever have an energy project 
on BLM land?
    Mr. Ellis. No.
    Mr. Huffman. No. So they would never have any bonding 
issues with Solyndra if we were talking about the subject of 
this hearing, right?
    Solyndra, in fact, was a technology that received some loan 
guarantees through a Department of Energy program. It has 
nothing whatsoever to do with the subject of this hearing, but 
it has come up twice when we point out something that should be 
the subject of this hearing, and that is the enormous taxpayer 
exposure from inadequate bonding rates for oil and gas projects 
set in the 1950s and 1960s and the hugely permissive self-
bonding, one-of-a-kind rule for coal energy projects.
    When we talk about those things, the Majority changes the 
subject and talks about Solyndra. Now, we could talk about the 
subsidy issue. We could talk on that side of it about the 
equally disproportionate subsidies that have gone to fossil 
fuel energy projects over the decades and that continue to this 
day. It would tell a similar story about a playing field for 
energy that is hugely tilted in favor of dirty fossil projects.
    We could have that conversation, but that would probably 
best occur in the Energy and Commerce Committee. Here in this 
committee, though, I want the record to be crystal clear that 
we could have focused on things that are really costing the 
taxpayers money right now, and that is the inadequate bonding 
of dirty fossil energy projects.
    Instead, we have chosen this ``tempest in a teapot'' over 
some anomalies and discrepancies involving clean renewable 
projects; none of which have failed, none of which have cost 
the taxpayers any money. As you have testified, Deputy Director 
Ellis, at the end of the day, it appears that all of the bonds 
are going to be accounted for.
    So I just want to say to you, Deputy Director, that you 
have kept your composure and kept your cool in the face of some 
questioning that I find disappointing, to be charitable. Never 
have I seen so much hostility, bullying, and animus directed at 
something that was just so disproportionately and relatively 
insignificant, frankly, in the scheme of things. It's as if 
this were a Benghazi hearing over a few discrepancies that are 
already being addressed in a rulemaking.
    Mr. Gohmert. If the gentleman is accusing me of animus, I 
would ask that----
    Mr. Huffman. My apologies to you. This is my time, Mr. 
Chairman. My apologies to you that you have suffered through 
some questioning that I think is beneath the dignity of this 
committee and the House of Representatives.
    Mr. Gohmert. I would ask that the gentleman's words be 
taken down for accusing me of animus. That is an improper 
accusation under the House rules.
    Mr. Huffman. When you say that someone is lying and being 
dishonest, that is not animus?
    Mr. Gohmert. I did not accuse anybody of lying; and, no, 
you can make the allegation without animus. Animus violates the 
rules, and I would ask the gentleman's words be taken down.
    Mr. Huffman. There will be a lot of words taken down, I'm 
sure Mr. Chairman, including many of yours.
    Mr. Gohmert. The Chair recognizes Mr. Labrador for 5 
minutes.
    Mr. Labrador. Ms. Fennell, thank you for being here.
    During your examination of BLM's bonding of wind and solar 
projects, did you examine the information in the two data 
systems, the LR2000 and the Bond and Surety System?
    Ms. Fennell. Yes, we did.
    Mr. Labrador. In your report, you state that you worked 
with BLM officials to resolve data discrepancies. Were the 
officials you worked with familiar with how the two systems 
operated?
    Ms. Fennell. Yes, they were.
    Mr. Labrador. Did the BLM officials you worked with provide 
an explanation for the missing, inaccurate, and out-of-date 
information in the systems?
    Ms. Fennell. For each case that we asked questions about, 
they were able to work with us to explain what the information 
should be. We went back and forth multiple times in order to 
ensure that the data was reliable enough for purposes of 
reporting out in our report.
    Mr. Labrador. But if the data was inaccurate, how were you 
able to rely on their statements about what the data should be?
    Ms. Fennell. We reviewed documentation in the project 
files. We looked at the data that was contained in both 
databases, and then we continued to work with the BLM officials 
to clean up the data so that we could report out on the 
numbers.
    However, we did find that, for tracking purposes, neither 
system was reliable, because we found information that was 
missing, or inaccurate, or that had not been updated.
    Mr. Labrador. Was it that the systems were not reliable, or 
unreliable, or was it that the data was not being input into 
the system?
    Ms. Fennell. There were a combination of factors. In fact, 
some of the data entry issues became the basis of some of the 
recommendations that we have made in order to ensure that 
policies and standards are put into place to allow for timely 
data entry and for also ensuring that data standards are 
established for the Bond and Surety System.
    Mr. Labrador. So what was their explanation for not 
inputting the data correctly?
    You say the data was available. What was their explanation 
for just not doing their job correctly?
    Ms. Fennell. There were several reasons that were cited, 
including that there had been a downsizing of the land 
examiners that did a lot of the data entry, leaving a lot of 
the work to the realty surety specialist; and they had workload 
and resource constraints.
    In addition, some cited training as well, in terms of not 
being as familiar with some of the coding and some of the data 
entry requirements for the systems; so there were a combination 
of factors that explained why there were timeliness issues 
associated with the data entry.
    Mr. Labrador. Mr. Ellis, thank you for being here.
    Are you familiar with the process BLM employees use to 
enter bonding information into the LR2000 and the Bond and 
Surety System?
    Mr. Ellis. I am aware of the two systems that we have, 
Congressman. Also, in the GAO report, they did have some 
findings here; and we acknowledge that we need to establish a 
requirement for routine data entry. We acknowledge this, and 
this is something we are working on.
    We realize that there were some issues between the two 
systems.
    Mr. Labrador. So how often is this information supposed to 
be updated?
    Mr. Ellis. Well, the requirement--what GAO recommended was 
5 business days. This is difficult. In our new policy that we 
are coming out with, we pushed this to 10 business days. 
Really, Congressman, our employees, who would have to be land 
law examiners, have a lot on their plates, and so we think----
    Mr. Labrador. So who is ultimately responsible to make sure 
that the information is properly recorded?
    Mr. Ellis. Generally our staff in the field offices in the 
districts, our realty specialist and land law examiners are the 
individuals that input that data.
    Mr. Labrador. Are all BLM employees trained on how to use 
the LR2000 and the Bond and Surety System?
    Mr. Ellis. They are not. For example, if employees 
generally do not work in that arena, no, they would not be 
trained. But our goal is to train the people that normally use 
the system as part of their job.
    Mr. Labrador. So after the Inspector General found 
inaccurate bond information in the system, can you tell me what 
steps were taken after the report was issued to ensure that the 
information was properly recorded?
    Mr. Ellis. What we have asked the employees to do is to 
look at those deficiencies that were found and update the 
information.
    Mr. Labrador. And are they doing that? Has that been done?
    Mr. Ellis. It is my understanding that they are doing it. I 
cannot tell you if it has all be completed, but I can get back 
to you on that.
    Mr. Labrador. Thank you.
    Mr. Gohmert. The gentleman yields back. At this time Mrs. 
Radewagen, you are recognized for 5 minutes.
    Mrs. Radewagen. Thank you, Mr. Chairman.
    Ms. Fennell, does BLM consistently follow its current 
periodic review policy?
    Ms. Fennell. We found that for half of the rights-of-way 
that they were delayed in terms of conducting those reviews. 
The policy states the frequency by which adequacy reviews are 
to be conducted, and we found that in half of the time they did 
not follow that. In fact, half were overdue by at least 4 
months.
    Mrs. Radewagen. When GAO looked at how often BLM conducted 
periodic reviews, what did you find?
    Ms. Fennell. We found that for the projects that were due 
to have a periodic review based on the policies that are in 
place, that half of them were at least 4 months overdue in 
terms of having those reviews conducted.
    Mrs. Radewagen. The report says 23 out of 45 wind and solar 
development rights-of-way were at least 4 months overdue for an 
adequacy review. That is over 50 percent.
    When GAO asked the BLM officials who were responsible for 
conducting these periodic reviews why they had not been done, 
the officials had three excuses: some said they did not know 
the bonds were supposed to be reviewed; some said they were too 
busy to review the bonds; and some said the computer system had 
not alerted them when it was time to review the bonds.
    The excuses were, number one, ``I do not know.''
    Number two, ``I was too busy.''
    Number three, ``The computer system did not remind me.''
    Ms. Fennell. Yes, that is correct. Those were the reasons 
that were cited, which led to the basis for one of our 
recommendations, which is to adjust the LR2000 System to 
establish a code that would allow for a triggering mechanism to 
remind the staff that reviews are to be conducted.
    Mrs. Radewagen. Thank you, Ms. Fennell.
    Mr. Ellis, do you think it is acceptable for BLM officials 
to not do their jobs because they do not know what their job 
is, they are too busy to do their job, or because the computer 
did not remind them to do their job?
    Mr. Ellis. Congresswoman, first of all, the GAO report 
flagged this issue of the alert system; we think that is a 
great idea, and we do plan to implement that.
    As indicated about the 5-day time frame, oftentimes a 
realty specialist will go to the field on a Monday, and they 
might be out of the office for 5 days. They may not even be 
back in until the following Monday, and so we think it is 
important that this work be done. Don't get me wrong. It is 
important that this information be entered. Anything that we 
can do, such as an alert system to help remind employees, 
telling supervisors that this is something that has to be done 
in a timely manner, these are processes and steps that we 
intend to implement. We are taking this recommendation very 
seriously from GAO.
    Mrs. Radewagen. Thank you, Mr. Chairman. I yield back.
    Mr. Gohmert. The gentlelady yields back.
    I just have a couple of quick questions for Ms. Fennell, 
and I am looking at page 30 of your report, not your testimony, 
Ms. Fennell. You had indicated specifically in the conclusions 
that BLM has no policies in place to ensure that wind and solar 
bond instruments are properly handled and stored.
    Do you still stand by that statement in your report, Ms. 
Fennell?
    Ms. Fennell. Yes, that is correct.
    Mr. Gohmert. And you indicated earlier that 20 percent of 
the bonds were in project files and not in a secure place. 
Eighty percent were not available.
    Do you have an explanation as how there are bonds now that 
are representing those 80 percent that were missing?
    Ms. Fennell. I do not have an explanation at this time. 
What we were told is that bonds, when they are missing, can be 
replaced.
    Mr. Gohmert. So, I take it your opinion is they were 
probably replaced?
    Ms. Fennell. I believe that the BLM replied to our report 
indicating that they had now accounted for the documents; so I 
would assume that they had been replaced based on the 
conversations that they had when we asked them what would 
happen when bonds were missing.
    Mr. Gohmert. So you do not know whether they were replaced 
or found, and obviously Mr. Ellis does not know either. You do 
not know of your own volition, your own knowledge?
    Ms. Fennell. We do not know. We spoke with these 
individuals at the BLM field offices. What we found was that 
this was illustrative of the issue that there was no guidance 
in place in terms of how to properly store, secure, and handle 
wind and solar bonds, which then became the basis of our 
recommendation, Mr. Chairman.
    Mr. Gohmert. All right. Thank you.
    Do you care for any follow-up?
    Mr. Huffman. I have no questions.
    Mr. Gohmert. All right. At this time we appreciate all of 
the participants in the hearing today. If anyone wishes to ask 
additional questions in writing, they have up to 5 business 
days in which they can be included in the record. That would 
also include any other Members who wish to submit additional 
information. They will have up to 5 business days in which they 
can be submitted.
    Members of the committee, thank you for your participation.
    I need to introduce into the record a letter dated June 3, 
2015, from Steven A. Ellis, Deputy Director of Operations, U.S. 
Department of the Interior to the Honorable Rob Bishop, 
Chairman. I also ask unanimous consent to include as part of 
the record, a letter to the Honorable Neil Kornze, Director of 
BLM from Chairman Bishop and me, dated May 1, 2015. Also, an e-
mail of March 20, 2015, from De Shann Schinkel to Jessica 
Lewis, and below that is a November 3, 2014 e-mail from Jessica 
Lewis to Ms. Schinkel, so that there is no question about what 
they said. I ask unanimous consent that those be submitted as 
part of the record.

    Hearing no objection, so ordered.

    [The letters dated May 1, 2015 and June 3, 2015, and e-
mails dated March 20, 2015 and November 3, 2014 follow:]

            SUBMISSIONS FOR THE RECORD FROM CHAIRMAN GOHMERT

                 U.S. House of Representatives,    
                    Committee on Natural Resources,
                                      Washington, DC 20515,
                                                       May 1, 2015.

Hon. Neil Kornze, Director,
Bureau of Land Management,
U.S. Department of the Interior,
1849 C Street NW, Room 5665,
Washington, D.C. 20240.

    Dear Director Kornze:

    The Subcommittee on Oversight and Investigations (``Subcommittee'') 
recently learned that a number of reclamation bonds for renewable 
energy projects on federal lands managed by the Bureau of Land 
Management's (``BLM'') Rawlins Field Office were removed from a safe 
and shredded. The wrongful destruction of these bonds, which are 
intended to cover the removal costs of improvements and facilities, as 
well as re-vegetation, restoration, and soil stabilization of the 
project area, is deeply concerning and raises questions about gross 
mismanagement on the part of BLM.

    In order for the Subcommittee to better understand the 
circumstances surrounding the destruction of these bonds, and the 
policies, procedures, and safeguards BLM has in place to ensure the 
safekeeping of sensitive financial instruments, the following 
information and documents are necessary and required to be furnished:

 (1)   Please answer the following questions regarding the destroyed 
            bonding instruments stored at the Rawlins Field Office:

          a.  On what date were the bonds shredded?

          b.  Who removed the bonds from the safe?

          c.  Who destroyed the bonds?

          d.   Are the individuals responsible for removing and 
        destroying the bonds currently employed by BLM?

          e.  Who had access to the safe?

          f.  Why were the bonds removed from the safe?

          g.   Were the entire contents of the safe removed at the time 
        the bonds were removed?

          h.   Were the entire contents of the safe destroyed at the 
        time the bonds were destroyed?

          i.   When did the Rawlins Field Office notify the State 
        Office that the bonds had been destroyed? How was notification 
        provided? Who provided the notification?

          j.   When was the Washington, D.C. BLM Office, the Department 
        of the Interior, the Department of Justice, or any other 
        federal agency notified that the bonds had been destroyed? How 
        was notification provided? Who provided the notification?

          k.   At the time the bonds were removed and destroyed, were 
        valuables or cash kept in the Rawlins Field Office safe? What 
        is the total actual or estimated value of any such valuables or 
        cash that were maintained in the safe?

 (2)   Please describe how BLM determined which bonds were kept in the 
            safe and which were not.

 (3)  Please describe how BLM identified which bonds were destroyed.
 (4)   Please describe any policies in effect at the time the bonds 
            were destroyed governing access to the safe in the Rawlins 
            Field Office (e.g., who has the combination, what documents 
            are to be kept there, destruction of documents kept in the 
            safe, etc.) and provide copies of any such policies.

 (5)   Please describe any policies in effect at the time the bonds 
            were destroyed governing the proper receipt and storage of 
            bonds for renewable energy right-of-ways and provide copies 
            of any such policies.

 (6)  Please provide a list of the bonds that were destroyed, 
            including:

          a.  The amount of the bond;

          b.   The type of bond instrument (e.g., letter of credit, 
        surety bond, U.S. treasury securities, etc.);

          c.  The right-of-way holder who provided the bond;

          d.  The project or site covered by the bond; and

          e.  The issuer of the bond, if applicable.

 (7)   Please confirm that a number of bonds kept in the Rawlins Field 
            Office were not secured in the safe and were not destroyed. 
            Please provide a list of any such bonds, including:

          a.  The amount of the bond;

          b.   The type of bond instrument (e.g., letter of credit, 
        surety bond, U.S. treasury securities, etc.);

          c.  The right-of-way holder who provided the bond;

          d.  The project or site covered by the bond; and

          e.  The issuer of the bond, if applicable.

 (8)   Please provide copies of the LR2000 and B&SS records for each 
            renewable energy bond kept by the Rawlins Field Office 
            since January 2012.

 (9)   Please confirm the current bonding status for each right-of-way 
            for which a bond was destroyed, and describe any steps BLM 
            has taken to replace the bonds.

(10)   Please confirm that BLM halted operations on sites for which the 
            applicable bond was destroyed, until such time as BLM 
            obtained a replacement bond.

(11)   Please provide all emails and communications between the Rawlins 
            Field Office, the Wyoming State Office, and the Washington, 
            D.C. BLM Office concerning the destruction of the bond 
            instruments. For all individuals involved in such 
            communications, please identify their titles and contact 
            information.

(12)   Please provide all emails between BLM and the Department of the 
            Interior or its bureaus, the Department of Justice, or 
            other federal agencies concerning the destruction of the 
            bond instruments. For all individuals involved in such 
            communications, please identify their titles and contact 
            information.

(13)   Please provide all emails and communications concerning the 
            destruction of the bonds between BLM officials or staff and 
            the right-of-way holders whose bonds were shredded.

    It is expected that all requested documents and information will be 
provided to the Committee by May 15, 2015. Instructions for complying 
with this request are attached.

            Sincerely,

                                      Rob Bishop, Chairman,
                                    Committee on Natural Resources.

                                   Louie Gohmert, Chairman,
                        Subcommittee on Oversight & Investigations.

                                 ______
                                 

      United States Department of the Interior,    
                         Bureau of Land Management,
                                    Washington, D.C. 20240,
                                                      June 3, 2015.

Hon. Rob Bishop, Chairman,
Committee on Natural Resources,
Washington, DC 20515.

    Dear Chairman Bishop:

    Thank you for your letter dated May 1, 2015, to Director Neil 
Kornze regarding reclamation bonds for renewable energy projects in the 
Bureau of Land Management (BLM) Rawlins Field Office (RFO) in Wyoming. 
Director Kornze asked that I respond to you on his behalf.
    You stated that the Committee's belief is ``that a number of 
reclamation bonds for renewable energy projects on Federal lands 
managed by [BLM RFO] were removed from a safe and shredded.'' The BLM 
takes seriously its responsibility as steward of America's public lands 
and is committed to sustaining the health, diversity, and productivity 
of those lands. Adequate bonding to ensure full reclamation of projects 
on Federal lands is important to the BLM fulfilling its mission. A 
preliminary review of the bonds for the renewable energy projects 
within the RFO indicates that all bonds are appropriately documented 
and that Federal assets are fully protected. As of this writing, we 
have not found evidence that bonds were shredded. We understand that 
the Inspector General is conducting an inquiry into this matter and we 
stand ready to cooperate fully with those efforts.
    As a general matter, the BLM authorizes renewable energy projects 
on public lands under its management using a right-of-way grant under 
Title V of the Federal Land Policy and Management Act. The BLM requires 
project developers to submit bonds to the agency to cover the potential 
cost of reclamation should the developer be unable or unwilling to 
conduct those activities itself. A bond is released when reclamation is 
satisfactorily completed, or when a project is cancelled or 
discontinued after preliminary survey work and reclamation is not 
required.
    For the RFO, the BLM has processed 18 renewable energy projects 
that required bonds, with some of those projects requiring more than 
one bond to cover different aspects of the development. As a result, 
the RFO entered into 21 bond agreements worth a total of $170,000. The 
BLM has confirmed that the documentation for all 21 bonds is currently 
in compliance with BLM policy for holding bond instruments.
    The BLM is committed to ensuring appropriate bonding for all energy 
development on public lands. In fact, the BLM recently worked with the 
Government Accountability Office (GAO) to identify areas of improvement 
in the processing and recordkeeping of wind and solar project bonds. 
The BLM has issued a proposed rule that would, among other things, 
standardize bonding requirements for solar and wind projects. The BLM 
intends to proceed to a final rule in the coming months and will 
implement process improvements consistent with the GAO's 
recommendations.
    In addition to the renewable energy arena, the BLM is also working 
to ensure appropriate bonding of other types of development on public 
lands. In response to a GAO report on oil and gas projects, and as part 
of a broader conversation about oil and gas reform, the BLM has 
solicited public input on bonding for oil and gas projects on public 
lands. The BLM looks forward to working with Congress as we continue to 
address that important aspect of bonding on public lands.
    We appreciate your interest in this matter. If you or your staff 
has additional questions, please feel free to contact me. A similar 
letter is being sent to Representative Louie Gohmert, Chairman of the 
Subcommittee on Oversight and Investigations, who cosigned your letter.

            Sincerely,

                                           Steven A. Ellis,
                                    Deputy Director for Operations.
From: Schinkel, De Shann
Sent: Friday, March 20, 2015 3:36 PM
To: Lewis, Jessica M
Subject: Re: Foote Creek Wind documents

Hello Jessica,

I was working on Foote Creek casefile this week and could not find 
where I followed up on your e-mail. Please excuse my tardiness in 
getting this information for you, and find below the followup.

If you have any questions please let me know . . . Thanks!

1. Bond Acceptance Letter is attached.

2. POD date: August 17, 1995

3. I do not know the value of all bonds that were shredded.

De Shann B. Schinkel
Realty Specialist
Bureau of Land Management
Rawlins Field Office
1300 N Third Street/P.O. Box 2407
Rawlins, Wyoming 82301

* * * *

On Mon, Nov 3, 2014 at 1:54 PM, Lewis, Jessica M wrote:
Hi Ms. Schinkel,

I just wanted to follow up with you regarding the Foote Creek Wind 
(ROW#: WYWY-142464) project documents that were discussed during the 
conversation with GAO a couple weeks ago. Do you have the bond 
acceptance letter for this project and can you send it to me 
electronically? Also, did you find a date for the plan of development 
for the project? Lastly, do you know the value of all the bonds that 
were shredded?

Thank you for your assistance and please let me know if you have any 
questions.

Jessica M. Lewis
Analyst, Natural Resources and Environment Team
Government Accountability Office
441 G Street NW
Washington, DC 20548

                                 ______
                                 

    Mr. Gohmert. And if there is nothing further, then this 
hearing is adjourned.

    [Whereupon, at 12:10 p.m., the subcommittee was adjourned.]

[LIST OF DOCUMENTS SUBMITTED FOR THE RECORD RETAINED IN THE COMMITTEE'S 
                            OFFICIAL FILES]

GAO-15-520. U.S. Government Accountability Office Report, June 
2015. RENEWABLE ENERGY--BLM Has Limited Assurance That Wind and 
Solar Projects Are Adequately Bonded

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