Defense Infrastructure: Risk Assessment Needed to Identify If Foreign Encroachment Threatens Test and Training Ranges
Published: 2014-12-16T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: For many years, DOD has reported that it faces challenges in carrying out realistic training because of the cumulative result of outside influences—such as urban growth and endangered species habitat—that DOD refers to as encroachment. In January 2014, DOD reported concerns with security encroachment by foreign entities conducting business near its test and training ranges.
GAO was mandated by the House Armed Services Committee report accompanying a bill for the National Defense Authorization Act for Fiscal Year 2014 to review encroachment on DOD's test and training ranges. This report examines the extent to which DOD has (1) conducted a risk assessment to identify the existence and extent of any threats of foreign encroachment and (2) obtained information needed on specific transactions to determine if they pose a threat. GAO reviewed statutes, regulations, and guidance on federal agency oversight of transactions on federal land. GAO interviewed DOD and service officials, as well as officials from other federal agencies identified by DOD as having a role in such transactions.
section_title: What GAO Found
paragraphs: The Department of Defense (DOD) has not conducted a risk assessment that includes prioritizing test and training ranges based on mission criticality, determining their vulnerabilities to foreign encroachment (i.e., foreign entities acquiring assets, such as mines or energy projects, or otherwise conducting business transactions near test and training ranges), and assessing the degree to which foreign encroachment could pose a threat to the mission of the range. Some DOD officials stated that they are concerned about foreign encroachment, which may provide an opportunity for persistent surveillance of DOD test and training activities. However, DOD has not prioritized its ranges or assessed such threats because, among other things, there is no clear guidance on how to conduct assessments of the risks and threats posed by foreign encroachment. Some DOD officials told GAO they have considered conducting such assessments, but DOD has not issued guidance directing the services to conduct these assessments. Officials from the Navy and the Air Force stated that given the unique nature of each range, it would be difficult to assess their criticality. However, Navy officials stated that they had expected to issue guidance for conducting risk assessments sometime in 2015. Without clear guidance from DOD for the services to follow in conducting a risk assessment, DOD may not be able to determine what, if any, negative impact foreign encroachment may be having on its test or training ranges.
DOD has not obtained sufficient information on commercial activity being conducted near test and training ranges in the level of detail officials say they need—such as if a U.S.-based entity is owned or controlled by a foreign entity—to determine if specific transactions on federally owned or managed land in proximity to ranges pose a threat to the range. Such information is generally not collected by other agencies with responsibilities for these transactions because, in some cases, legal, regulatory, or resource challenges may prevent them from collecting information that is unrelated to their agencies' missions. For example, the Federal Aviation Administration collects information about proposed structures that are more than 200 feet in height to support the agency's mission of maintaining a safe and efficient aerospace system, but does not collect information on the ownership of the companies building the structures because it is beyond the scope of its mission. DOD has identified some potential sources of information, but it has not formally collaborated with other federal agencies on how to gather this information. Leading practices state that agencies can enhance and sustain collaboration by engaging in several practices, including addressing needs and leveraging resources and agreeing on roles and responsibilities. Without engaging potential sources of information on commercial activities near its ranges, DOD is hindered in its efforts to determine if a project could present a threat to test or training range activities.
section_title: What GAO Recommends
paragraphs: GAO recommends that DOD (1) develop and implement guidance for conducting a risk assessment on foreign encroachment and (2) collaborate with other federal agencies to obtain additional information on transactions near ranges. In written comments on a draft of this report, DOD concurred with both recommendations.

section_title: Letter
paragraphs: For many years, the Department of Defense (DOD) has reported that it  faces growing challenges in carrying out realistic training at installations  and training ranges because of the cumulative result of outside influences  that inhibit military training and testing, which DOD refers to as  encroachment. Traditionally, DOD has defined encroachment concerns  as urban growth around the ranges; competition for radio frequencies or  airspace; air pollution; noise pollution; unexploded ordnance and  munitions components; endangered species habitat; and protected  marine resources. In 2001, DOD formed the Sustainable Ranges Initiative  to act as the coordinating body for all encroachment issues affecting DOD  ranges and to address encroachment through policy formulation,  legislative initiatives, and compatible land use activities. More recently,  DOD stated in its 2014 Sustainable Ranges Report that it is concerned  with security encroachment by foreign entities acquiring assets (such as  mines or energy projects) or otherwise conducting business near test and  training ranges, which may provide an opportunity for persistent  surveillance of DOD test and training activities. In this report, we use the  term “foreign encroachment” to refer to this issue.
The House Armed Services Committee report accompanying a bill for the  National Defense Authorization Act for Fiscal Year 2014 mandated that  we review DOD’s activities to prevent and mitigate encroachment at  training ranges. This report evaluates the extent to which DOD has (1)  conducted a risk assessment to identify the existence and extent of any  threats posed by foreign encroachment to its domestic air, land, and sea  test and training ranges; and (2) obtained information needed on specific  transactions near test and training ranges to determine if these  transactions pose a threat to the range.
To determine the extent to which DOD has conducted a risk assessment  to identify the existence and extent of any threats posed by foreign  encroachment to its domestic air, land, and sea test and training ranges,  we reviewed statutes, regulations, and guidance pertaining to federal  agencies’ oversight of transactions by private entities on air, land, and  sea. We compared DOD’s efforts to key elements of a risk assessment  from our prior work as well as criteria for identifying and protecting critical  infrastructure that DOD uses in managing its Defense Critical  Infrastructure Program. In addition, we reviewed DOD  counterintelligence guidance and intelligence reporting on surveillance  threats to DOD activities and facilities. We interviewed officials from the  Office of the Secretary of Defense (OSD), the military service  headquarters, intelligence agencies of each of the military departments,  as well as the Defense Intelligence Agency and the Federal Bureau of  Investigation.
To determine the extent to which DOD has obtained information needed  on specific transactions near test and training ranges to determine if  these transactions pose a threat to the range, we interviewed officials  from OSD and the military service headquarters, as well as military  department intelligence agencies, the Defense Intelligence Agency, and  the Federal Bureau of Investigation. We also interviewed officials from  selected federal agencies that DOD interacts with frequently including the  Bureau of Land Management and the Bureau of Ocean Energy  Management within the Department of the Interior, the Federal Aviation  Administration within the Department of Transportation, and the  Department of the Treasury, who all have a role in overseeing  transactions on federal land surrounding DOD’s ranges. We compared  DOD’s efforts in obtaining information to leading practices on decision  making and collaboration from our prior work. We also selected four  domestic DOD test and training ranges and interviewed officials from  these ranges as well as officials of relevant agencies, such as the Bureau  of Land Management and the Federal Bureau of Investigation, with  responsibilities in proximity to these ranges. The four ranges we selected  were the Nevada Test and Training Range at Nellis Air Force Base,  Nevada; the Fallon Range Training Complex at Naval Air Station Fallon,  Nevada; Eglin Air Force Base, Florida; and the Army’s White Sands  Missile Range, New Mexico. We selected these ranges based on  discussions with DOD officials, to include at least one range from each  military department, locations where security encroachment from foreign  countries on federally managed land near test or training ranges has  been raised as a concern, and ranges that are surrounded by federally  owned land requiring coordination with other federal agencies. We  selected these four ranges to gain insight into how range officials view  foreign encroachment concerns. The information from these four ranges  is not generalizable to all of DOD’s domestic ranges. Further, because  the majority of federally managed land is disproportionately located in the  western part of the United States, the majority of our visits and  discussions were with ranges in the western United States. We limited the  scope of this engagement to transactions in which the federal government  plays a role in approving, evaluating, or permitting the project. Appendix I  provides further information on our scope and methodology.
We conducted this performance audit from July 2013 to December 2014  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.
subsections: section_title: Background
subsections: section_title: DOD’s Test and Training Ranges
paragraphs: Military test and training ranges are used primarily to test weapon  systems and to train military forces. Test ranges are used to evaluate  warfighting systems and functions in a natural environment and under  simulated operational conditions. Training ranges include air ranges for  air-to-air, air-to-ground, drop zone, and electronic combat training; live-fire  ranges for artillery, armor, small arms, and munitions training; ground  maneuver ranges to conduct realistic force-on-force and live-fire training;  and sea ranges to conduct ship or submarine maneuvers. In February  2014, DOD reported to Congress that it had 533 test and training ranges  throughout the United States and overseas. These included 456 Army  ranges, of which 384 were in the United States; 23 Navy ranges, of which  18 were in the United States; 40 Air Force ranges, of which 35 were in the  United States; and 14 Marine Corps ranges, of which 13 were in the  United States. Figure 1 shows the location of major DOD test and training  ranges throughout the United States as of June 2014.
section_title: Entities and Processes That Govern Commercial Activities on Areas Under Federal Jurisdiction or Otherwise Subject to Federal Review
paragraphs: Before DOD can determine whether a project or transaction poses a  potential security threat to a range by providing a foreign entity a  permanent platform for observing operations, it must first become aware  of the proposed project or transaction. Multiple federal entities may be  involved in identifying and approving potential business activities near  DOD ranges. DOD, working with these federal entities, uses multiple  methods to determine what activities are occurring in proximity to its  ranges. None of these methods, with the exception of the Committee on  Foreign Investment in the United States (CFIUS), discussed below, was  designed to consider security concerns. The following entities and  processes are available to DOD to become aware of and gather  information on projects located near ranges.
CFIUS, an interagency committee chaired by the Department of the  Treasury and including DOD as a member, reviews certain covered  transactions to assess the impact on national security of foreign  control of U.S. companies, such as by considering the control of  domestic industries and commercial activity by foreign citizens as it  affects the capability and capacity of the United States to meet the  requirements of national security. DOD has the opportunity to  comment on these transactions, including raising any security  concerns. For more information on CFIUS, see appendix II.
The Bureau of Land Management within the Department of the  Interior administers over 245 million acres of federal land for a variety  of uses, including energy development, recreation, and timber  harvesting. The Bureau issues a wide variety of permits, licenses, or  leases for use of public land, including permits and leases for energy  development, and administers mining claims. According to Bureau of  Land Management and DOD officials, local Bureau of Land  Management personnel may work with DOD installations within their  jurisdictions to notify them of projects in proximity to the installation  and test and training ranges. In some cases, the office may notify the  installation when leases are issued or projects are proposed in  proximity to test and training ranges.
The Bureau of Ocean Energy Management within the Department  of the Interior promotes energy independence and economic  development and manages the natural resources of the Outer  Continental Shelf, including oil and gas, marine minerals, and  renewable energy. Under a 1983 Memorandum of Agreement, the  Bureau and DOD consult to resolve conflicts between Outer  Continental Shelf exploration and development and the requirements  for DOD to use the Outer Continental Shelf for national defense and  security. Following these consultations, DOD and the Department of  the Interior agree on areas that may require deferral from leasing or  that can be leased subject to lessee advisories or lease stipulations  allowing for joint use.
The Bureau of Safety and Environmental Enforcement within the  Department of the Interior works to promote safety, protect the  environment, and conserve resources offshore through regulatory  oversight and enforcement. Key functions of the Bureau include oil  and gas permitting, facility inspections, regulations and standards  development, safety research, data collection, technology  assessments, field operations, incident investigation, environmental  compliance and enforcement, and oil spill prevention and readiness.
The Federal Aviation Administration within the Department of  Transportation works to provide a safe and efficient aerospace system  and reviews proposed structures for obstruction concerns. In addition,  parties proposing any project over 200 feet in height or within certain  distances of an airport or runway are required by law and regulation to  provide notice and certain project information to the Federal Aviation  Administration. As part of its evaluation process, the Federal Aviation  Administration’s obstruction evaluation system automatically notifies  interested agencies, including DOD and the individual military  services, based on the agencies’ preferences. DOD’s Siting  Clearinghouse, which was set up to work with renewable energy  project developers to mitigate encroachment concerns at DOD  installations, is automatically notified about all renewable energy  projects filed with the Federal Aviation Administration.
The National Environmental Policy Act of 1969 process requires  environmental reviews of certain actions on federally controlled land.  As part of this process, the public must be notified of impending action  on federal land and is invited to comment. DOD may be included as a  cooperating agency when a project is located near a DOD installation  or when there is an identified DOD interest involved.
Community Planning and Liaison Officers at Navy and Marine  Corps installations establish relationships with nearby communities  and local governments, and provide a mechanism by which the  installations can become aware of and address any concerns  stemming from proposed projects near ranges.
These entities and processes may apply to a wide variety of activities that  can occur in proximity to DOD test and training ranges, including  renewable and conventional energy projects, mineral extraction (mining),  and oil and natural gas exploration. For example, the Bureau of Land  Management grants mining rights on federal land near DOD ranges.  Moreover, as discussed above, the Bureau also administers minerals  mining claims, including those in proximity to DOD’s test and training  ranges. Figure 2 shows the mining claims on federal land outside of the  Fallon Training Range Complex in Nevada.
Similar to the large number of mining claims near the Fallon Range  Training Complex, there is also extensive oil and gas exploration in the  Gulf of Mexico near many onshore Navy and Air Force installations,  including Eglin Air Force Base, where DOD set up the Integrated Training  Center for the F-35 Joint Strike Fighter. In 2006, Congress passed the  Gulf of Mexico Energy Security Act of 2006of the Gulf of Mexico to new oil and gas leasing, but also placed a  moratorium on oil and gas leases in portions of the gulf, in part to avoid   which opened several areas  interfering with DOD’s training mission.gas activity as of October 2013 in the Gulf of Mexico and the moratorium  area.
section_title: Risk Assessment Process
paragraphs: Our prior work has shown that utilizing a risk management approach  allows an agency to more effectively prioritize its resources and enhance  its ability to respond to a threat. Under DOD Instruction 3020.45, DOD  utilizes a risk management approach to manage its critical infrastructure  program. According to DOD, risk management is the process of  identifying, assessing, and controlling risks arising from operational  factors and making decisions that balance risk cost with mission benefits.
A key step in this approach is to conduct a risk assessment to provide a  way to continuously evaluate and prioritize risks and recommend  strategies for mitigation. DOD’s risk assessment process has three core  elements: criticality, vulnerability, and threats.
Criticality identifies the consequence of the loss of a particular asset  based on national security concerns or the impact to DOD’s missions.  A criticality assessment identifies key assets and infrastructure that  support DOD missions, units, or activities and are deemed mission  critical by military commanders or civilian agency managers.
Vulnerability is a weakness or susceptibility of an installation,  system, asset, application, or its dependencies that could cause it to  suffer a degradation or loss as a result of having been subjected to a  certain level of threat or hazard. A vulnerability assessment is a  systematic examination of the characteristics of an installation,  system, asset, or its dependencies to identify vulnerabilities.
Threats refer to an adversary having the intent, capability, and  opportunity to cause loss or damage.
section_title: DOD Has Not Conducted a Risk Assessment on Foreign Encroachment at Its Test and Training Ranges
paragraphs: DOD has not conducted a risk assessment that includes prioritizing  ranges based on mission criticality, determining their vulnerabilities to  foreign encroachment, and assessing the degree to which foreign  encroachment could pose a threat to the mission of the ranges. As a  result, the department does not know the extent to which foreign  encroachment poses a threat to its test and training ranges.
Neither DOD nor the services have determined which of their ranges are  the most critical to protect or assessed any vulnerabilities and threats  posed by foreign encroachment. As discussed above, utilizing a risk  management approach, which includes conducting a risk assessment,  allows an agency to more effectively prioritize its resources and enhance  its ability to respond to a threat. A DOD instruction governing its critical  infrastructure program states that determining the criticality of key assets  is a core element of conducting a risk assessment.provides a framework that could be used to manage critical infrastructure  across the department, it does not specifically mention risk assessment in  relation to foreign encroachment. Rather, it establishes policy to manage  the identification, prioritization, and assessment of defense critical  infrastructure as a comprehensive program. Therefore, this instruction  could be used by DOD as a model for how to deal with the issue of  foreign encroachment.
Navy and Air Force officials said that the lack of an established  methodology or criteria, as well as the unique mission capabilities of each  range, make it difficult to determine the relative criticality of each range as  it relates to foreign encroachment, including which ranges would be the  most valuable collection points for foreign adversaries trying to gather  intelligence and which ranges house the most sensitive test and training  activities. In addition, the services do not have guidance on how to  conduct such an assessment because the issue of foreign encroachment  is new. However, DOD has resolved similar challenges in the past. For  instance, in an October 2009 review of DOD’s management of electrical  disruptions, we found that DOD had not developed guidelines for  addressing the unique challenges related to conducting some  vulnerability assessments of electrical power assets. We recommended  that DOD develop explicit guidelines, based on existing Defense Critical  Infrastructure Program guidance, for assessing critical assets’  vulnerabilities to long-term electrical power disruptions. with this recommendation and developed a tool for assessing critical  assets’ vulnerabilities to power disruptions. Similarly, specific guidance on  foreign encroachment could assist DOD and the services in managing  this issue.
GAO, Defense Critical Infrastructure: Actions Needed to Improve the Identification and  Management of Electrical Power Risks and Vulnerabilities to DOD Critical Assets,  GAO-10-147 (Washington, D.C.: Oct. 23, 2009). guidance designed to assess the criticality of Navy ranges in terms of  foreign encroachment and expect this guidance to be issued sometime  during 2015; however, as of December 2014, little progress has been  made in developing this guidance. These officials further stated that, once  guidance is finalized, they intend to begin the assessment process.  Officials told us that they expect that, once this assessment process is  complete, it will be a critical component of any effort to prioritize ranges  by their importance. This, in turn, could support any Navy efforts to  address foreign encroachment by targeting counter-intelligence activities  on the most critical ranges.
According to DOD, another core element of a risk assessment is to  determine vulnerabilities, or the weakness of an asset that could cause it  to suffer a loss. DOD and the services have raised concerns about the  level of vulnerability facing some of their test and training ranges with  regard to foreign encroachment. Specifically, Navy and Air Force  headquarters officials as well as officials from all four of the ranges in our  review told us that they had concerns about the number of investment- related projects by foreign entities occurring near their respective  ranges—projects that they stated could pose potential security threats.  Those officials told us that they were particularly concerned that foreign  entities may have an increased ability to observe sensitive military testing  or training activities if they are able to establish a persistent presence  outside the services’ test or training ranges. Further, officials at all four of  the ranges in our review expressed such concerns to varying degrees.  For example, officials from the Fallon Range Training Complex and the  Nevada Test and Training Range, both of which are used to provide  realistic air-to-ground combat training, told us that they have observed a  number of energy development and mining projects near both ranges that  may be owned or controlled by foreign entities. Officials at Eglin Air Force  Base, where the Air Force conducts land, air, and water test and training,  and at White Sands Missile Range, where the services evaluate new  weapon systems, also expressed concerns about the potential for foreign  entities to observe testing and training activities at their respective  ranges. DOD officials noted, however, that the services have not  conducted formal assessments to determine the extent to which these  vulnerabilities exist at their ranges.
According to DOD’s instruction, along with establishing the criticality and  vulnerability of assets, the third core element of a risk assessment is to  assess the threats and hazards. Counterintelligence officials from the  services’ criminal investigation agencies said that they have conducted  some threat or risk assessments on specific locations or installations, as  well as investigated some individual instances of commercial activity.  However, they have not conducted threat assessments focused on  foreign encroachment across DOD’s test and training ranges. Although  these counterintelligence officials have investigated some individual  instances of commercial activity, they have not conducted a systematic  assessment of this potential threat because in most of the cases that they  have investigated, they have not seen evidence that foreign  encroachment posed a threat to the range. Therefore, they were reluctant  to assign additional resources to this issue. DOD officials stated that  given the uncertainty surrounding this issue, a risk assessment would be  beneficial. However, DOD has not taken steps to initiate such a risk  assessment or established a time frame for doing so. Without guidance  from DOD for the services to follow in conducting a risk assessment that  establishes a time frame for completion, identifies critical ranges, and  then assesses vulnerabilities and threats to these ranges, DOD may not  be able to determine what, if any, negative impact foreign encroachment  may be having on its test or training ranges.
section_title: DOD Does Not Have Sufficient Information to Fully Identify Instances of Foreign Encroachment near Its Domestic Test and Training Ranges
paragraphs: DOD does not have information that officials say they need, such as the  ownership of companies conducting business on federally managed land  near DOD’s ranges, to determine if specific transactions on federally  owned or managed land pose a threat to ranges. Leading practices state  that to support decision-making, it is important for organizations to have  complete, accurate, and consistent information. Range officials at all  four installations in this review stated that they need more specific  information to determine whether an individual transaction poses a threat  to their range. Further, DOD officials have identified some possible  sources or methods for obtaining this information but have not formally  collaborated with other federal agencies on how to gather this  information. Collaboration can be broadly defined as any joint activity that  is intended to produce more public value than could be produced when  organizations act alone. Leading practices state that agencies can  enhance and sustain collaborative efforts by engaging in several  practices that are necessary for a collaborative working relationship.  These practices include identifying and addressing needs by leveraging  resources; agreeing on roles and responsibilities; and establishing  compatible policies, procedures, and other means to operate across  agency boundaries.
In order for DOD to determine if an entity engaging in investment  activities near one of its test or training ranges poses a potential risk for  foreign encroachment, DOD officials said that they would need additional  identifying information from governing federal agencies responsible for  issuing public land-use permits or leases. Such information could include,  for example, identification of any parent companies or whether a U.S.- based entity is owned or controlled by a foreign entity. Service  headquarters and range officials at all four ranges in our review said that  they generally have good informal working relationships with governing  federal agencies that allow them to find out some information about  transactions on federal land near the ranges and that federal agency  officials, including those from the Bureau of Land Management or the  Bureau of Ocean Energy Management, frequently contact them to  informally let them know of a proposed transaction near the range.
Despite these relationships, DOD and range officials expressed concerns  that these governing agencies are not able to provide DOD with the  necessary information to identify potential encroachment. Officials from  the Bureau of Land Management, the Bureau of Ocean Energy  Management, and the Bureau of Safety and Environmental Enforcement  within the Department of the Interior and the Federal Aviation  Administration within the Department of Transportation told us that they  face legal, regulatory, or resource challenges that may prevent them from  collecting information that is unrelated to their respective missions,  leading to knowledge gaps that may be acceptable for approving leases  or permits on federal lands but could adversely affect DOD’s ability to  identify potential security threats near the ranges. For example:
The Paperwork Reduction Act of 1980 requires, among other things,  that agencies undertake a number of procedural steps before  collecting information from the public, including justifying the need for  such information collection to the Office of Management and Budget.  As part of this process individual agencies are required to certify to  the Office of Management and Budget, among other things, that  proposed collections of information are necessary for the proper  performance of the functions of the agency. As a result, Department  of the Interior officials said that they generally limit the information  they collect to what is directly tied to the agencies’ respective  missions of effective land or resource management. Officials from the  Bureau of Land Management said that the information that they are  permitted to collect on potential lease-holders or permit applicants is  prescribed by regulation based on a longstanding interpretation of  their authorizing statute. Further, Federal Aviation Administration  officials told us that while they have a process for collecting  information about proposed structures that are more than 200 feet in  height or are within certain distances of airports or runways, this  process is designed to support the agency’s mission of maintaining a  safe and efficient aerospace system, not to collect the information that  DOD would need to help identify instances of foreign encroachment  on its ranges. Therefore, officials from these agencies expressed that  they believe they would need some type of change in either their  authorizing statutes or regulations to be able to collect this  information.
Agency officials also raised resource challenges as an issue in  collecting additional information. Department of the Interior officials  expressed concerns that any changes to either their statutory  authorities or implementing regulations in order to collect additional  information may create additional costs to the Department of the  Interior as its bureaus conduct their respective missions. The officials  told us they recognize the challenges DOD faces in identifying  potential cases of foreign encroachment, but they also said their  agencies’ respective missions have little to do with national security  issues and agency officials questioned whether, under current law,  their appropriations could properly be used to finance data collection  unrelated to their mission and for DOD’s exclusive use. These officials  expressed concerns that changes to their authorities or additional  requirements imposed upon them may be burdensome, given their  limited available resources.
DOD has had some success in obtaining information that could be used  to identify activities that could provide opportunities for foreign  encroachment, but has not discussed options for obtaining additional  information with other federal agencies. However, as discussed above,  DOD officials said that when they do find out that an entity proposing a  project near a range is foreign-owned, they generally obtain information  on an informal basis through developed interagency relationships and not  through any systematic process. For example, at some DOD installations,  officials work with Bureau of Land Management district and field office  managers to receive notifications on or discuss projects that may have an  impact on DOD activities or interests. At one location—Naval Air Station  Fallon—the Navy and the Bureau of Land Management have established  a military liaison position to provide further coordination on both Navy and  Bureau of Land Management interests due to the large number of energy  development and mining projects occurring near the Fallon Range  Training Complex. This military liaison position is funded by the Navy and  the duties of the liaison include coordinating with the Navy on use of  public lands and providing advice on highly technical and complex  programs. In addition, Bureau of Land Management and DOD installation  officials said that other DOD installations have good working relationships  with their local Bureau of Land Management offices to discuss issues of  importance to both agencies. Through these relationships, individual  ranges are often notified of potential transactions near the ranges, but  due to reasons stated above, range officials at the four installations in our  review stated that they still feel that they need additional information on  the transactions to be able to assess whether a transaction poses a threat  to the range. The Navy, through the Center for Naval Analysis, recently  conducted a study on this issue and identified additional sources of  information that DOD could possibly leverage, including the Bureau of  Economic Analysis within the Department of Commerce. Because this is  an emerging issue for DOD, DOD has not taken steps to fully identify all  potential sources of information or to reach out to other federal agencies  that may have this information to discuss options for obtaining it. Without  engaging potential sources of information on commercial activities near  its ranges, DOD is hindered in its efforts to determine if a project could  present a threat to test or training range activities.
section_title: Conclusions
paragraphs: DOD’s concerns about various forms of encroachment have been long- standing. As potential opportunities for foreign encroachment have  presented themselves, some in DOD have become increasingly  concerned about the potential vulnerability and risk to its domestic air,  land, and sea test and training ranges from such encroachment.  However, DOD has not determined the likelihood of foreign  encroachment through persistent presence on federally owned or  managed lands in proximity to the test and training ranges, versus other  means that may give foreign adversaries the opportunity to observe new  weapon systems and operational tactics. Although the Navy has taken  steps to develop guidance on assessing the risk of foreign encroachment  to its ranges, as of December 2014, this guidance has not been issued.  Further, the other departments have not taken any steps toward  developing this type of guidance. Without guidance from DOD for the  military departments to follow in conducting a risk assessment—including  a time frame for completion—that identifies critical ranges, then assesses  vulnerabilities and threats to these ranges, DOD may not be able to  determine what, if any, negative impact foreign encroachment may be  having on its test or training ranges. In addition, without a means to  collect more information on the entities conducting business in proximity  to its ranges, DOD cannot adequately assess individual transactions as to  their potential threat to a range. Because of the degree to which DOD and  other agencies must manage legal, regulatory, and resource constraints  in taking action to identify and address any significant encroachment  concerns, it is critical that DOD have a complete picture of where it is at  greatest risk, what information is needed to fully assess any risks, and  what options are available to mitigate or manage risks in a manner that is  consistent with DOD and other agencies’ missions and resources.
section_title: Recommendations for Executive Action
paragraphs: To improve the ability of the Department of Defense and the military  departments to manage the potential for foreign encroachment near their  test and training ranges, we recommend that the Secretary of Defense, in  consultation with the military departments, develop and implement  guidance for assessing risks to test and training ranges from foreign  encroachment in particular, to include: determining the criticality and vulnerability of DOD’s ranges and the  level of the threat; and a time frame for completion of risk assessments.
To identify potential foreign encroachment concerns on federally-owned  land near test and training ranges, we recommend that the Secretary of  Defense collaborate with the secretaries of relevant federal agencies,  including at a minimum the Secretaries of the Interior and Transportation,  to obtain additional information needed from federal agencies managing  land and transactions adjacent to DOD’s test and training ranges. If  appropriate, legislative relief should be sought to facilitate this  collaborative effort.
section_title: Agency Comments
paragraphs: In a written response on a draft of this report, DOD concurred with both  recommendations. In addition, the Department of the Interior and the  Department of Treasury provided technical comments, which we  incorporated in our report as appropriate. The Department of Justice and  the Department of Transportation did not provide any comments. DOD’s  comments are reproduced in their entirety in appendix III.
We are sending copies of this report to the appropriate congressional  committees; the Secretaries of Defense, the Army, the Navy, and the Air  Force; the Secretaries of Interior, Transportation, and Treasury; the  Attorney General of the United States; and the Director, Office of  Management and Budget. In addition, the report is available at no charge  on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-4523 or leporeb@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last   page of this report. GAO staff who made key contributions to this report  are listed in appendix IV.
section_title: Appendix I: Scope and Methodology
paragraphs: To determine the extent to which DOD has conducted a risk assessment  to identify the existence and extent of any threats posed by foreign  encroachment to its domestic air, land, and sea test and training ranges,  we reviewed statutes, regulations, and guidance pertaining to federal  agencies’ oversight of transactions by private entities on air, land, and  sea. We compared DOD’s efforts to key elements of conducting a risk  assessment that we previously developed as well as criteria for identifying  and protecting critical infrastructure that DOD uses in managing its  Defense Critical Infrastructure Program. We also reviewed DOD  counterintelligence guidance and intelligence reporting on surveillance  threats to DOD activities and facilities. To understand DOD’s concerns  related to the potential presence of foreign entities near its test and  training ranges, we interviewed appropriate officials from the Office of the  Secretary of Defense as well as the Departments of the Navy, Army, and  Air Force. We interviewed officials from DOD and the services’  intelligence agencies, as well as the Defense Intelligence Agency and the  Federal Bureau of Investigation, to understand the extent to which any  foreign encroachment concerns raised are based on information provided  by the intelligence community. We also interviewed appropriate officials  from the entities that govern activities on federally managed land in order  to understand how and the extent to which DOD works with civilian  governing agencies to identify areas of potential foreign encroachment.,  i.e., the Bureau of Land Management and Bureau of Ocean Energy  Management (both within the Department of the Interior), which have  responsibility for approving and administering permits and leases for  projects on public lands, and the Federal Aviation Administration (within  the Department of Transportation), which is responsible for reviewing  potential obstructions to aviation safety. Finally, we interviewed officials  from the Department of the Treasury, which chairs the Committee on  Foreign Investment in the United States (CFIUS).
To determine the extent to which DOD has obtained information on  specific transactions near test and training ranges that it needs to  determine if these transactions pose a threat to the range, we interviewed  officials from OSD and the military service headquarters, as well as  military department intelligence agencies, the Defense Intelligence  Agency, and the Federal Bureau of Investigation. We also interviewed  officials from selected federal agencies including the Bureau of Land  Management and Bureau of Ocean Energy Management within the  Department of the Interior, the Federal Aviation Administration within the  Department of Transportation, and the Department of the Treasury, who  all have a role overseeing transactions on federal land surrounding  DOD’s ranges. We compared DOD’s efforts in obtaining information to  leading practices on decision making and collaboration from our prior  work.
For both objectives, we spoke with officials from selected DOD test and  training ranges: the Nevada Test and Training Range, Nevada (Air  Force); the Fallon Range Training Complex, Nevada (Navy); Eglin Air  Force Base, Florida (Air Force); and White Sands Missile Range, New  Mexico (Army). After discussions with DOD officials, we selected  locations (1) that included at least one range from each military  department, (2) where security encroachment from foreign countries on  federally owned land near test or training ranges has been raised as a  concern, and (3) where ranges were surrounded by federally controlled  land or ocean areas, thus requiring coordination with other federal  agencies. At the Nevada Test and Training Range and the Fallon Range  Training Complex we also interviewed officials from the Bureau of Land  Management and the Federal Bureau of Investigation, as these agencies  have responsibilities for the approval of public-use leases and permits or  domestic counterintelligence efforts outside of both of these locations,  respectively. Because federally owned land is disproportionately located  in the western United States, the majority of our visits and discussions  were with ranges in that area. The information from these four ranges is  not generalizable to all of DOD’s domestic ranges. We limited the scope  of this engagement to projects in which the federal government plays a  role in approving, evaluating, or permitting the project.
In addressing our objectives, we contacted officials representing a wide  range of organizations (see table 1).
We conducted this performance audit from July 2013 to December 2014  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.
section_title: Appendix II: Committee on Foreign Investment in the United States
paragraphs: The only formal option in regard to transactions involving foreign  companies or entities that accounts for national security concerns is the  Committee on Foreign Investment in the United States (CFIUS) process.  However, the CFIUS process is limited in two main ways. First, CFIUS  only reviews transactions that meet certain criteria. Specifically, the  CFIUS process reviews covered transactions, which include any merger,  acquisition, or takeover that results in foreign control of any person  engaged in interstate commerce in the United States. However, there  are also many types of non-covered transactions that could result in a  foreign entity having access to or a persistent presence near DOD  ranges. These non-covered transactions include starts-ups, as well as  acquisitions of assets other than an interest in a U.S. company, such as  equipment or intellectual property. In addition, foreign purchases or  leases of private real property—for business or non-business uses—near  installations would not be covered by CFIUS. Second, CFIUS primarily  relies on voluntary reporting of transactions by the involved parties to  bring covered transactions to its attention, although the President or any  member of CFIUS can also initiate a review of a covered transaction  should they discover its occurrence. In the absence of voluntary  reporting by the parties involved or independent discovery of the  transaction by CFIUS, however, covered transactions will not be  reviewed.
For covered transactions it does review, CFIUS determines the effects of  the transaction on national security, which includes consideration of a  number of factors, including the potential national security-related effects  on United States critical infrastructure. After a review of a covered transaction is initiated, the Committee evaluates the transaction and then  either approves the transaction, approves the transaction with mitigation  or makes a recommendation to the President to block the transaction. In  the case of transactions that the Committee approves with mitigation, the  Committee and participating companies typically execute national security  agreements that impose some type of limitations or monitoring of  projects, such as limitations on the citizenship of employees of the  company or reporting of visitation by foreign citizens. However, according  to DOD and installation officials, these agreements are often difficult to  enforce. Finally, if the President finds that (1) there is credible evidence  that the foreign interest exercising control might take action that will  impair the national security and that (2) other laws, in the judgment of the  President, do not provide adequate and appropriate authority for the  President to protect national security, then the President can direct that  the transaction be suspended or prohibited. This has only happened  rarely, though. For example, in 1990 the President ordered a foreign- owned company to divest its acquisition of a manufacturing firm  producing metal parts and assemblies for aircraft, and in 2012 the  President blocked a foreign acquisition of a U.S. energy firm that was  constructing a wind-turbine plant near a specialized Navy training facility.
section_title: Appendix III: Comments from the Department of Defense
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, GAO staff who made key  contributions to this report include Maria Storts, Assistant Director; Mark  Wielgoszynski, Assistant Director; Leslie Bharadwaja; Simon Hirschfeld;  Terry Richardson; Amie Lesser; Erik Wilkins-McKee; Michael Willems;  and Richard Winsor.