BLM’s National Renewable Energy  Coordination Office oversees wind and solar development on federal  land. However,  the agency has issued a proposed rule that would, among other things,  establish consistent requirements for the bonding of the two types of  projects. Specifically, in contrast  to the wind policy, the solar policy sets no minimum bond amount for  solar energy development rights-of-way. BLM Has About $100 Million in Bonds for Wind and Solar Projects, but the Systems for Tracking These Bonds Are Not Reliable

BLM has about $100 million in bonds—primarily in the form of letters of  credit and surety bonds—for the reclamation of wind and solar rights-of- way on federal land. Because information in these  two data systems was missing, inaccurate, or out of date, BLM has  limited assurance that either system is reliable for tracking wind and solar  bonds to ensure that bonding policies are being followed and that all 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. BLM also implemented this  recommendation. BLM has taken some limited steps to improve its bonding data. Specifically, we found that 14 wind and solar  development rights-of-way were underbonded by as much as $15 million  in total. Since  BLM accepted a bond amount that was lower than the $10,000-per- turbine minimum, BLM officials acknowledged that BLM was put at  financial risk. Without accurate  documentation that clearly shows how the bond decision was made,  officials have limited assurance that the bonds in place will be adequate  to cover reclamation costs if the right-of-way holder does not meet their  obligations. BLM Does Not Consistently Follow Its Policy for Periodic Reviews of Bond Amounts

BLM inconsistently adheres to its policies for the periodic review of wind  and solar bonds to verify their adequacy. Specifically, BLM has no policies in place to ensure that wind and  solar bond instruments are properly handled and stored, and in one  office, a staff member told us that someone mistakenly shredded some  bonds. For two-thirds of the wind projects  we reviewed, there was little or no documentation to support the bond  amount. BLM  does not have policies that require bond decisions to be documented in  the project files. Specifically, we found instances in both systems where  information was missing, inaccurate, or had not been updated. Recommendations for Executive Action

To help ensure that bonds are adequate to cover reclamation costs for  wind and solar projects on federal land, we recommend that the Secretary  of the Interior direct the Director of the Bureau of Land Management to  take the following five actions: 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. Appendix I: Objectives, Scope, and Methodology

This report examines (1) the Bureau of Land Management’s (BLM)  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. 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 45 wind and solar energy  development project rights-of-way (33 wind and 12 solar) authorized, and  for which BLM held a bond, as of April 15, 2014.
Why GAO Did This Study

Renewable energy projects can affect thousands of acres of federal land and involve significant infrastructure. BLM directs renewable energy developers to obtain bonds to cover the costs of returning the land to its pre-developed condition when the project terminates, a process called reclamation. Reclamation can cost millions and take years to complete.
GAO was asked to review the bonding policies for renewable energy projects on federal land. This report examines (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 these projects, and how BLM tracks the bonds; and (3) the extent to which BLM ensures that bonds for wind and solar rights-of-way are adequate to cover reclamation costs. GAO conducted a file review of all 45 wind and solar development project rights-of-way with a bond as of April 15, 2014; analyzed data from BLM data systems; reviewed relevant federal laws, regulations, and BLM policies and procedures; and interviewed agency officials.

What GAO Found

The Department of the Interior's Bureau of Land Management (BLM) has different policies for the bonding of wind and solar projects on federal land. For example, BLM's 2008 wind policy established minimum bond amounts, but BLM's 2010 solar policy set no minimum. However, the agency has issued a proposed rule that would establish consistent requirements for the bonding of the two types of projects in several areas, including minimum bond amounts.
BLM has about $100 million in bonds for the reclamation of wind and solar projects on federal land. These bonds are primarily letters of credit and surety bonds. BLM has two data systems for tracking bonds, but GAO found that neither system is reliable for this purpose. Specifically, GAO found instances in both systems where information was missing or inaccurate, or had not been updated. The agency does not have a timeliness standard for wind and solar data entry, contrary to having such a standard for its mining program. Without accurate or complete information, BLM has limited assurance that its data systems are reliable for tracking wind and solar bonds to ensure that bonding policies are being followed and that projects have the required bonds.
BLM has limited assurance that bonds for wind and solar rights-of-way will cover reclamation costs, leaving the federal government potentially at financial risk if developers do not complete reclamation. GAO found about one-third of the wind and solar rights-of-way were underbonded by as much as $15 million in total. Also, BLM did not clearly document how it made its bond decisions, contrary to government standards that call for documentation of significant events. Specifically, GAO found that for about two-thirds of the wind rights-of-way, there was little or no documentation to support the bond amount. In addition, BLM does not adequately ensure that wind and solar bond instruments are properly secured, handled, and stored and does not have policies related to this. In one BLM field office, a staff member told GAO that someone mistakenly shredded several bonds. BLM also does not consistently adhere to its policies calling for periodic review of wind and solar bond amounts to verify their adequacy. GAO found about half of the bonds were at least 4 months overdue for review. BLM officials acknowledged that automatic notifications could be established in their data system as to when reviews are due. Without policies to document decisions and properly secure bonds, and steps to ensure bond adequacy reviews, BLM has limited assurance that bonds in place will be adequate to cover reclamation.

What GAO Recommends

GAO recommends, among other things, that BLM develop policies on documenting bonding decisions, the proper handling and storage of bonds, and timely data entry. GAO also recommends that BLM take steps to ensure projects are periodically reviewed to ensure bond adequacy. Interior generally concurred with GAO's recommendations.