Superfund: Operations and Maintenance Activities Will Require Billions of
Dollars (Letter Report, 09/29/95, GAO/RCED-95-259).
The Environmental Protection Agency (EPA) has come up with remedies to
clean up 275 of the nation's most hazardous waste sites. Although
construction has been completed at these sites, additional activities,
known as operations and maintenance, may be necessary to ensure that
remedies continue to function effectively and that the cleanup protects
human health and the environment. The federal government, states, and
responsible parties must perform long-term operations and maintenance at
nearly two-thirds of the 275 sites GAO reviewed. These activities, which
include controlling the erosion of landfill covers, treating
contaminated groundwater, or enforcing restrictions on land or water use
on sites, will continue for decades and in some cases, indefinetly. For
cleanup remedies that EPA or the responsible parties have already
undertaken or will undertake, GAO estimates that about $32 billion will
be needed for operations and maintenance costs nationwide through fiscal
year 2040. The states and responsible parties will bear most of these
costs. At least every five years EPA is required to review conditions at
many sites that need operations and maintenance, and these reviews have
often uncovered problems that the state or responsible parties have had
to correct. However, EPA has a large backlog of overdue reviews and
consequently may be unaware of deteriorating conditions at some site.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: RCED-95-259
TITLE: Superfund: Operations and Maintenance Activities Will
Require Billions of Dollars
DATE: 09/29/95
SUBJECT: Land reclamation
Waste management
Hazardous substances
Environmental monitoring
Future budget projections
Water pollution control
Maintenance costs
Facility maintenance
IDENTIFIER: Superfund Program
EPA National Priorities List
Old Forge (PA)
Norwalk (CT)
Mowbray Engineering Site (AL)
Greenville (AL)
Lehigh Electric Site (PA)
Kellogg-Deering Wellfield Site (CT)
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Cover
================================================================ COVER
Report to the Ranking Minority Member, Committee on Commerce, House
of Representatives
September 1995
SUPERFUND - OPERATIONS AND
MAINTENANCE ACTIVITIES WILL
REQUIRE BILLIONS OF DOLLARS
GAO/RCED-95-259
Superfund O&M Costs
(160290)
Abbreviations
=============================================================== ABBREV
EPA - Environmental Protection Agency
GAO - General Accounting Office
CERCLA - Comprehensive Environmental Response, Compensation, and
Liability Act of 1980
DNAPL - dense nonaqueous phase liquid
FY - fiscal year
NPL - National Priorities List
O&M - operations and maintenance
PCB - polychlorinated biphenyl
ROD - record of decision
Letter
=============================================================== LETTER
B-262242
September 29, 1995
The Honorable John D. Dingell
Ranking Minority Member
Committee on Commerce
House of Representatives
Dear Mr. Dingell:
The Environmental Protection Agency (EPA) has constructed remedies
designed to clean up 275 of the nearly 1,300 contaminated waste sites
on its list of the most hazardous sites in the nation--the National
Priorities List.\1 Even though construction has been completed at
these hazardous waste sites, additional activities, known as
operations and maintenance, may be necessary. These activities are
meant to ensure that the remedy continues to operate effectively and
that the cleanup continues to protect human health and the
environment. Although the states, the parties responsible for the
contamination, and the federal government pay the operations and
maintenance costs, EPA is responsible for monitoring these activities
at all sites.
Because of your concern over the long-term costs and responsibilities
for operations and maintenance at Superfund sites, we reviewed these
activities, focusing on the following issues: (1) the extent to
which operations and maintenance activities are necessary at
Superfund sites, (2) the costs to the federal government, states, and
responsible parties to perform these activities now and in the
future, and (3) EPA's actions to help ensure that the operations and
maintenance activities continue to protect human health and the
environment.
--------------------
\1 The Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 (CERCLA), as amended, authorized the creation
of a "Superfund" to pay for the cleanup of contaminated sites. The
term Superfund is also used to refer to the program for cleaning up
these sites.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
The federal government, states, and responsible parties must perform
some long-term operations and maintenance at almost two-thirds, or
173, of the 275 sites we reviewed that were formerly or are currently
on the National Priorities List and where the cleanup remedy has been
constructed.\2 These activities--which include controlling the
erosion of landfill covers, treating contaminated groundwater, or
implementing and enforcing restrictions on the use of land or water
on or adjacent to the sites--will continue for decades and, in some
cases, indefinitely.
For cleanup remedies that EPA or the responsible parties have already
undertaken or will undertake from now to fiscal year 2005, we
estimate that about $32 billion\3 will be needed for operations and
maintenance costs nationwide through fiscal year 2040. The states
and responsible parties will bear most of these costs. We estimate
that the costs to the federal government, states, and responsible
parties will be $5 billion, $8 billion, and $18 billion,\4
respectively. The expenditures necessary for a given cleanup remedy
are largely determined by the type of remedy EPA selects. For
example, sites whose cleanup plan requires that waste be contained or
that contaminated groundwater be treated both need operations and
maintenance, but the operations and maintenance cost for containment
is about a third of that for treating groundwater.
Although EPA monitors operations and maintenance activities at all
sites, the agency's principal focus until recently has been on
evaluating and cleaning up the sites. Monitoring is important
because the states and responsible parties do not always follow their
operations and maintenance plans and because conditions at the sites
can worsen, requiring further cleanup action. At least every 5
years, EPA is required to review conditions at many sites that need
operations and maintenance, and these reviews have often revealed
potential and actual problems that the states or responsible parties
have had to correct. However, the agency has a significant backlog
of overdue reviews and consequently may be unaware of deteriorating
conditions at some sites.
--------------------
\2 Information on these 275 sites was available to us in May 1995.
EPA may have completed the construction of cleanup remedies at
additional sites since then.
\3 All dollar figures in this report are in 1994 dollars, unless
otherwise noted. We provided preliminary estimates in testimony
before the Subcommittee on Commerce, Trade, and Hazardous Materials,
House Committee on Commerce: See Superfund: Information on
Operations and Maintenance Activities and Costs (GAO/T-RCED-95-201,
May 24, 1995). The projections provided in this report differ
slightly from the estimates in the testimony statement.
\4 These figures do not add to $32 billion because we excluded
cleanups jointly funded by the federal government and responsible
parties. We forecast that operations and maintenance activities for
these cleanups will cost $700 million.
BACKGROUND
------------------------------------------------------------ Letter :2
Under Superfund, the federal government can pay for site cleanups or
may require the responsible parties to pay for and perform them.
Often the construction of cleanup remedies will also require
subsequent operations and maintenance (O&M) activities to ensure that
the remedy continues to protect human health and the environment.
The costs of O&M are borne by the federal government, states, and
responsible parties. When the federal government pays for the
cleanup, EPA's regulations require that the states pay for most of
the O&M activities. If groundwater treatment is necessary at these
sites, the federal government pays 90 percent of the O&M costs for
the first 10 years of such treatment and the states pay the remaining
costs.\5 At sites where no groundwater treatment is needed, EPA turns
the responsibility for O&M over to the state after ensuring that the
remedy is working properly. The federal government also pays for O&M
activities at federal facilities that have sites on their property on
the National Priorities List (NPL). When the responsible parties
clean up a site, they also pay the costs of O&M activities.
EPA monitors conditions and O&M activities at all these sites to
determine if the sites' O&M plan is being followed. At those sites
that currently can be used only in a limited way because waste
remains in the soil or groundwater, EPA's site project managers are
also required to conduct a formal review of conditions at least every
5 years--known as a "5-year review."
When Superfund was reauthorized in 1986, it called for EPA to prefer
treating the waste in the highly contaminated areas of a site over
containing such waste because treatment was considered to be a
permanent remedy. For example, in areas where soil is highly
contaminated, EPA is to prefer treating the soil (by, for example,
solidifying it to immobilize contaminants or applying a vacuum system
to remove contaminants) instead of containing the soil (by, for
example, installing a waterproof cover over it). Nevertheless, EPA
sometimes selects containment for less-contaminated areas or for
waste that cannot be treated successfully or cost-effectively--for
example, large volumes of landfill waste. At sites where groundwater
is an actual or potential source of drinking water, the law requires
that the groundwater be treated until it reaches the standards
established in the Safe Drinking Water Act.
--------------------
\5 For funding purposes, CERCLA classifies activities during this
10-year period as part of the cleanup, not as O&M. However, since
activities during this period are in fact O&M activities, we
classified their costs as O&M costs in our projections.
LONG-TERM O&M ACTIVITIES ARE
REQUIRED AT A MAJORITY OF THESE
SITES
------------------------------------------------------------ Letter :3
Almost two-thirds, or 173, of the 275 sites we reviewed where the
cleanup remedy is in place\6 will require long-term O&M activities to
ensure that the cleanup remedy continues to protect human health and
the environment. Specifically, we found the following:
60 of the sites use waterproof covers of clay or other materials to
physically contain hazardous waste or contaminated soil. These
covers prevent exposure to the waste and reduce the level of
contaminants entering the groundwater. At these sites,
maintenance--such as erosion control and periodic
inspections--is required for an indefinite period. (See app. I
for more details on O&M activities at specific sites.)
61 of the sites pump and, in some cases, treat groundwater as the
primary cleanup remedy. At these sites, pumps and treatment
systems will need to be operated and maintained, the equipment
kept in repair, and the groundwater's quality monitored until
the cleanup standards are reached.
30 of the sites use both waste containment and groundwater
treatment technologies in combination to address surface and
groundwater contamination. At these sites, erosion control,
inspections, operation of pumps and treatment systems, and
groundwater monitoring will be required.
22 of the sites require local governments or landowners to restrict
land or water use on or near the site to protect the cleanup
remedy or to prevent the public from being exposed to hazardous
waste.\7 Such controls include closing drinking water wells,
prohibiting the drilling of new wells, and/or imposing
restrictions on deeds.
102 of the sites require little or no O&M because EPA decided no
cleanup was needed or selected a remedy that required no O&M,
such as treating surface waste.
Figure 1 shows the distribution of the O&M activities that will be
required at the 275 sites.
Figure 1: O&M Activities
Required at the 275 Superfund
Sites
(See figure in printed
edition.)
Notes: Containment requires protecting an area with a waterproof
cover (cap). The cap must be routinely monitored.
Groundwater "pump and treat" requires extracting water through pumps
and treating the water to reduce contaminants.
Use controls require monitoring and controlling local land or water
use through fencing and/or deed or other restrictions.
Sites using containment and/or groundwater pump and treat may also
require use controls.
The percentages used in this figure reflect information on the sites
as of May 1995.
--------------------
\6 EPA refers to these sites as "construction-complete" when the
selected cleanup remedy has been built. The classification does not
necessarily mean that all hazardous waste has been removed from the
site, particularly if waste has been contained or if waste or
groundwater treatment is ongoing. See GAO/RCED-93-188 for additional
information on construction-complete sites.
\7 Thirty-six of the 151 sites where the remedy included containment
or groundwater pumping also required restrictions on land or water
use.
FUTURE O&M COSTS TO EPA,
STATES, AND RESPONSIBLE PARTIES
------------------------------------------------------------ Letter :4
We estimate that the federal government, states, and responsible
parties will spend $32 billion for O&M costs over the next four
decades; EPA estimated that they will spend $37 billion over this
period.\8 The states and responsible parties will bear most of these
costs. (See app. II for information on how these estimates were
developed.)
--------------------
\8 Our estimate of the total O&M costs is lower than EPA's because we
(1) used a consistent discount rate of 6 percent to better represent
the actual discount rates used by EPA's project managers to estimate
present-value figures; (2) excluded costs from some cleanup plans
that EPA inadvertently classified as O&M costs; and (3) calculated
and used a different, lower average O&M cost per cleanup plan than
EPA used.
O&M COSTS WILL TOTAL
BILLIONS
---------------------------------------------------------- Letter :4.1
On the basis of our analysis of EPA's O&M database, we estimate that
$32 billion will be required for the O&M activities associated with
the cleanup plans already approved or projected to be approved
through fiscal year (FY) 2005.\9 The sites that have already been
placed on the NPL represent $25 billion, or 78 percent of that total,
and the sites that will be added to the list during FY 1995 or later
represent an additional $7 billion. (See app. II for a comparison
of EPA's and our methodologies for estimating future O&M costs.)
While the annual O&M costs were estimated at $148 million in FY 1994,
these costs will increase over time. We estimate that the annual
costs to the federal government, states, and responsible parties will
peak at $1 billion in FY 2010. This figure reflects (1) the
substantial increase in completed cleanups requiring O&M that EPA
projects by the end of the century and (2) the fact that O&M is
typically expected to last at least 30 years. We expect that federal
costs will become relatively level over the next few decades because
EPA has to pay for O&M only at the sites where groundwater is being
treated, and only for 10 years. However, the states' costs will
continue to increase as EPA turns these sites over to the states,
which must continue to perform O&M activities for 20 years or more.
Figure 2 shows the cumulative costs to all parties for the cleanup
plans already approved or projected for approval through FY 2005.
Figure 2: Cumulative O&M Costs
to the Federal Government,
States, and Responsible Parties
(See figure in printed
edition.)
Notes: We estimate that the O&M costs to the federal government,
states, and responsible parties will be $4.8, $8.4, and $17.9
billion, respectively. We excluded from this analysis cleanups
jointly funded by the federal government and responsible parties. We
forecast that the O&M costs for these cleanups will total $700
million.
These projections are based on the site cleanup plans signed during
fiscal years 1982 through 2005. If additional Superfund cleanups are
planned after that period, the total O&M costs will also increase.
Whether the states will be able to meet these future O&M obligations
is not clear. In a recent report,\10 we found that the states,
because of their resource constraints, are already having difficulty
in meeting federal environmental requirements in two water programs
and in overseeing facilities handling hazardous waste. Only five of
the Superfund program managers we interviewed from eight states said
they had done any forecasting to determine their future O&M costs.
--------------------
\9 To make these and subsequent estimates, we analyzed an EPA
database that includes estimates of O&M costs from 1,105 record of
decision (ROD) documents. These RODs contain EPA's official plan for
cleaning up all or a portion of the waste at a site on the NPL. We
refer to RODs as cleanup plans throughout this report. EPA estimates
that the average site requires two RODs.
\10 EPA and the States: Environmental Challenges Require a Better
Working Relationship (GAO/RCED-95-64, Apr. 3, 1995).
TYPE OF CLEANUP DETERMINES
O&M COSTS
---------------------------------------------------------- Letter :4.2
The federal government, states, and responsible parties can expect to
pay an average of $12 million over 30 years for the O&M associated
with a single cleanup plan. These costs vary according to the type
of activities required. For example, we found the following:
When the cleanup remedy uses a technology designed to contain
surface waste, the ongoing O&M activities after the containment
system is built could typically cost $5 million over 30 years.
When the cleanup remedy includes treating groundwater, operating
and maintaining the treatment plant and water pumps after
construction could typically cost $17 million over 30 years.
When the cleanup remedy calls for treating surface waste or
contaminated soil, additional O&M activities are not required.
The actual O&M costs may eventually be greater than these estimates.
When developing estimates of O&M costs, EPA generally assumes that
O&M activities will be required for 30 years. However, EPA recently
surveyed its regional project managers and found that about 20
percent of cleanups will require O&M for more than 30 years. For
example, the sites where waste is contained require O&M
activities--to inspect and repair the cover--indefinitely.
Furthermore, because these containment remedies have been in place
for less than 10 years, the long-term repair costs are not yet known.
Groundwater treatment generally continues until the cleanup standards
are met, but EPA recently concluded that many groundwater treatment
systems are not as efficient as was originally hoped. As a result,
more than 30 years may be required to reach cleanup goals, primarily
because of contaminants in groundwater that are heavier than water\11
and thus very difficult to extract. EPA estimates that these
contaminants may be present at about 60 percent of the sites where
the groundwater is contaminated.
O&M for groundwater treatment constitutes the majority of the costs
that the federal government, states, and responsible parties face.
We estimate that the O&M costs for cleanups that only treat
groundwater represent about 47 percent of the anticipated costs.
Furthermore, we estimate that the O&M costs for cleanups that combine
treating groundwater with containing waste represent about 36 percent
of all O&M costs. For cleanup remedies in which surface waste is
contained but groundwater is not treated, the O&M costs constitute
about 12 percent of the costs that the federal government, states,
and responsible parties will face. Figure 3 illustrates the share of
the O&M costs each party will be expected to pay.
Figure 3: Percentage of O&M
Costs Associated With
Groundwater Treatment and Waste
Containment Remedies
(See figure in printed
edition.)
Note: This analysis is based on the cleanup plans approved during FY
1988 through 1991 because we had specific information on the remedies
selected in these plans.
Changes in EPA's policy or in the Superfund law, particularly in the
guidelines for selecting cleanup remedies, could alter future O&M
costs for the federal government, states, and responsible parties.
For example, in recent discussions about reauthorizing the Superfund
legislation, it has been suggested that the current preference for
treating rather than containing surface waste might be changed to a
preference for containing waste. Such a change would most likely
lead to increased O&M costs because O&M activities would be required
at a higher percentage of sites than is currently the case. (See
app. II for information on how other potential policy changes could
affect responsibilities for O&M.)
--------------------
\11 These contaminants, known as dense nonaqueous phase liquids
(DNAPLs), are difficult to locate and extract through standard
methods for pumping groundwater. DNAPLs release contaminants into
the groundwater over long periods.
EPA'S MONITORING ACTIVITIES
HAVE BEEN LIMITED
------------------------------------------------------------ Letter :5
EPA is responsible for monitoring O&M to ensure that these activities
are performed as planned and that the cleanups continue to protect
human health and the environment. However, until recently, the
agency has focused on getting sites evaluated and cleaned up rather
than on monitoring those sites where the cleanup remedy is in place.
EPA is responsible for two types of monitoring: (1) reviewing
actions that the states and responsible parties have taken to comply
with the sites' O&M plan and (2) evaluating, at least every 5 years,
the condition of certain sites where waste remains on-site. Although
O&M has been ongoing at some sites for several years, EPA is just now
developing guidance to monitor how the states and responsible parties
perform O&M activities. In addition, EPA is significantly behind in
performing its 5-year reviews.
O&M MONITORING
---------------------------------------------------------- Letter :5.1
We reviewed O&M activities at 57 sites: 43 sites at which 5-year
reviews had been performed (including 3 sites for which we conducted
case studies) and an additional 14 sites for which we also conducted
case studies. For 11 sites, we found that EPA had not been closely
monitoring whether the states and responsible parties were following
their required action plans for O&M. At these sites, the plan was
not being followed; at some sites, conditions had deteriorated after
the cleanup was completed. For example, the states or responsible
parties were not maintaining the waterproof covers over contaminated
soil, were allowing trees and brush to grow and potentially damage
the covers, and were not performing the groundwater sampling called
for in the plan. (See app. III for additional examples of EPA's
monitoring of O&M activities.)
We also found a site at which EPA's monitoring helped to prevent
deterioration of the cleanup. At the Lehigh Electric site in Old
Forge, Pennsylvania, EPA had removed all surface debris, equipment,
and soil contaminated with PCBs.\12 Consequently, in 1986 the site
was deleted from the NPL. However, ongoing groundwater monitoring
revealed that PCB contamination levels were increasing.
Consequently, EPA has recommended a new study to determine the source
of contamination and possible cleanup methods.
EPA currently has no guidance for site project managers on monitoring
O&M, but the agency plans to issue a new directive in December 1995.
Without guidance on the day-to-day monitoring of O&M activities,
EPA's project managers may not be able to adequately monitor the
states and responsible parties. More importantly, without guidance
these project managers cannot ensure that the cleanups continue to
protect human health and the environment.
--------------------
\12 PCBs are polychlorinated biphenyls--organic chemicals that are
carcinogenic.
FIVE-YEAR REVIEWS
---------------------------------------------------------- Letter :5.2
EPA must also complete more formal reviews at some sites at least
every 5 years. The 1986 Superfund reauthorization called for these
5-year reviews to occur at certain future sites where waste remaining
after the cleanup prevented unlimited access to or use of the site.
Subsequently, EPA decided to also conduct these reviews at certain
sites where the remedies were selected before 1986 and at sites where
more than 5 years will be required to reach the cleanup goals. As
noted above, these reviews are important in that they often identify
when O&M activities are being neglected or conditions at the site are
deteriorating. Thus, these reviews are needed to ensure that the
remedy continues to protect human health and the environment.
For example, the 5-year review conducted at the Kellogg-Deering
Wellfield Superfund site in Norwalk, Connecticut, identified problems
with groundwater sampling. The site's responsible party was not
sampling the groundwater, as required, at some wells used for
monitoring. EPA's purpose in requiring the groundwater sampling was
to provide an "early warning system" to detect the migration of
contaminants. As part of ongoing work at other areas of the site,
EPA has now approved a sampling plan that will monitor the cleanup's
effectiveness.
In another example, a 5-year review identified problems at the
Mowbray Engineering site in Greenville, Alabama. No maintenance had
ever been performed at the site, and trees were growing on the
landfill cover that had been placed over the contaminated soil.
Despite the benefits of the 5-year reviews, EPA's Inspector General
found that EPA has a significant backlog of such reviews.\13 EPA
officials told us that 66 reviews had been completed as of August 31,
1995, and that an additional 84 are due by September 30, 1995. The
officials expect that most of these unfinished reviews will not meet
the deadline. As a result of this backlog, the agency may not be
aware of problems that may be occurring at other Superfund sites.
EPA is trying to reduce the size of the backlog by verifying which
sites need a review and when it is due. The agency has also decided
to narrow the scope of the review at those sites where the cleanup
remedy is not fully in place. EPA's Inspector General concluded that
adding 5-year reviews to the tasks for which regions have assigned
annual targets could give the regions an incentive to improve
performance. To address these concerns, the Assistant Administrator
for Solid Waste and Emergency Response is taking measures to set more
specific deadlines for 5-year reviews and to establish accountability
for completing them.
--------------------
\13 Backlog Warrants Higher Priority for Five-Year Reviews, EPA,
Office of Inspector General (Mar. 24, 1995).
CONCLUSIONS
------------------------------------------------------------ Letter :6
The majority of sites in the Superfund program will require long-term
operations and maintenance, especially those sites requiring waste
containment or groundwater treatment. These operations and
maintenance costs will constitute a substantial portion of the funds
the federal government, states, and responsible parties spend to
clean up the environment even after they have paid millions of
dollars to construct the required cleanup remedy. Because operations
and maintenance costs largely depend on the remedies selected for
Superfund sites, the level of these costs will be strongly influenced
by policy decisions, such as whether the cleanup remedies emphasize
treatment or containment. Although some state officials told us that
they expected operations and maintenance to become a considerable
burden in the coming decades, most state officials we interviewed had
not attempted to forecast the actual amount of these costs.
Oversight of operations and maintenance has been given a lower
priority than other Superfund activities that EPA must implement and
monitor. As a result, the states and responsible parties have not
always performed the operations and maintenance activities required.
The guidance that EPA intends to develop on how to oversee operations
and maintenance activities should help to remedy this situation.
Because EPA has responded to the Inspector General's findings on
5-year reviews by developing plans to track the reviews more closely
and establish accountability for completing them in a timely manner,
we are not making any recommendations in this report.
AGENCY COMMENTS
------------------------------------------------------------ Letter :7
We provided copies of a draft of this report to EPA for its review
and comment. On August 30, 1995, we met with officials from EPA's
Office of Emergency and Remedial Response--the office charged with
implementing the Superfund program--to obtain the agency's comments.
These officials included, among others, the Acting Deputy Director of
the Hazardous Site Control Division--the division responsible for
policy on operations and maintenance. These officials told us they
agreed with the facts and findings in the report and were pleased
with its objectivity and accuracy. They also suggested a number of
technical corrections, which we have incorporated in the report.
SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :8
To determine the extent of O&M required at Superfund sites, we
reviewed information about the 275 sites where the cleanup remedy has
been built and determined whether the sites would require O&M. To
project future O&M costs to the federal government, states, and
responsible parties, we used and modified an EPA database of
estimates of the O&M costs associated with individual cleanup plans.
We obtained this database from EPA's Office of Emergency and Remedial
Response. We combined data from this database with information in a
database that we had previously developed on cleanup remedies in
order to determine the O&M costs associated with different types of
cleanups. In addition, we conducted case studies at 17 sites to
determine the actual O&M activities and costs at these sites. We
also interviewed state Superfund program managers and EPA site
cleanup managers for information on O&M activities and expenditures
at the sites and on the states' financial capacity to fund O&M.
We reviewed EPA's draft guidance on O&M and the agency's guidance on
5-year reviews; we also used information from an evaluation of 5-year
reviews by EPA's Inspector General. We interviewed EPA headquarters
and regional managers about EPA's policy, guidance, and progress on
5-year reviews. We also reviewed and evaluated 43 reports on 5-year
reviews that had been completed through March 1995. We conducted our
work between August 1994 and September 1995 in accordance with
generally accepted government auditing standards.
---------------------------------------------------------- Letter :8.1
As arranged with your office, unless you publicly announce its
contents earlier, we plan no further distribution of this report
until 30 days after the date of this letter. At that time, we will
send copies to the Administrator of EPA. We will also make copies
available to others on request.
Please call me at (202) 512-6112 if you or your staff have any
questions about this report. Major contributors are listed in
appendix IV.
Sincerely yours,
Peter F. Guerrero
Director, Environmental
Protection Issues
RESULTS OF CASE STUDIES
=========================================================== Appendix I
We conducted case studies of hazardous waste sites in order to
acquire information on actual experiences with and costs for
operations and maintenance (O&M). We found 17 sites where the remedy
had been built and that met the following criteria:
The cleanup was funded by the federal government;
the Environmental Protection Agency (EPA) had constructed either a
groundwater pump and treat remedy or a waste containment remedy,
thus requiring O&M; and
EPA had completed construction of the cleanup at least 2 years
before we began this work.
Table I.1 summarizes information for each of the 17 sites, including
the location, type of remedy, and estimated and actual costs incurred
by EPA and the states for O&M at each site.
Table I.1
Information on O&M Costs at 17 Sites
Groundwa Total O&M O&M costs
ter Cleanup plan's costs incurred incurred
EPA treatmen Containm annual O&M by EPA\b to by
Site region t ent estimate\a date states\c
-------- ------ -------- -------- -------------- -------------- ----------
Bruin III � $21,920 $282,229 $183,787
Lagoon, over 2 months over 2
PA years
and 3
months
Lehigh III � $70,840 $15,540 $117,594
Electri over 2 years over 9
c, PA and 6 months years
A.L. IV � Not available $111,026 $8,658
Taylor, over 1 year over 1
KY and 3 months year
and 2
months
Distler IV � $155,632 $1,312,832 Not
Farm, over 3 years available
KY
Independ IV � $29,475 $17,719 $58,849
ent over 3 months over 4
Nail, years
SC and 6
months
Lees IV � $174,593 $88,294 0\d
Lane over 1 year
Landfil
l, KY
Mowbray, IV � 0 $5,422 Not
AL over 13 months available
Newport IV � $82,530 $409,450\d 0\d
Dump, over 3 years
KY
SCRDI IV � $97,183 $528,226 $251,432
Dixiana, over 2 years over 2
SC years
Eau V � $276,900 $411,342\d Not
Claire over 6 years applicable
Municip \e
al
Wellfie
ld, WI
Old V � $63,900 $1,500,601 Not
Mill, over 5 years applicable
OH \e
Tri- V � Not available $28,453\d Not
State over 1 year applicable
Plating and 3 months \e
, IN
Arkansas VII � $3,780 $44,240 $400
City over 1 year over 9
Dump, months
KS
Del IX � 0 $286,000\f Not
Norte over 2 years available
Pestici
de, CA
Mountain IX � 0 $1,073 Not
View over 1 year available
Mobile
Homes,
AZ
Silver X � $46,390 $4,620 Not
Mountain over 2 years applicable
Mine, \e
WA
United X � $357,570 $131,000\d 0\d
Chrome over 6 years
Product and 3 months
s, OR
--------------------------------------------------------------------------------
\a Represents annual O&M estimate converted to 1994 dollars.
\b These estimates were adjusted to 1994 dollars. Where we did not
have information on annual expenditures, we assumed that the costs
were distributed evenly over the period in which the costs were
incurred. Costs are as of October or December 1994.
\c EPA assumes responsibility for the first 10 years of O&M at sites
where groundwater is treated. The states are responsible for O&M
after the first 10 years. Thus, the data given for the states' costs
are not final.
\d The responsible parties have agreed to pay for O&M. If EPA has
incurred costs, the responsible parties have reimbursed or will
reimburse those costs.
\e Not applicable means that EPA has not yet turned the site over to
the state or responsible parties.
\f Project manager's estimate
Source: Information on actual costs provided by EPA and state
officials.
ESTIMATING FUTURE O&M COSTS
========================================================== Appendix II
EPA used estimates of O&M costs, developed as part of each cleanup
plan, to forecast the total O&M costs as well as the states' share of
these costs for all current and anticipated Superfund sites. For
sites expected to be listed on the National Priorities List (NPL)
through fiscal year (FY) 2005, EPA estimated that the total O&M costs
will be $37.3 billion and that the states will pay $11.9 billion of
this total.\14 In developing these estimates, however, EPA did not
separately forecast the O&M costs that the federal government and
responsible parties will be expected to pay. In addition, the
estimate of average O&M costs that EPA used to forecast O&M costs did
not distinguish among the types of cleanups. These costs can vary
widely depending on the type of cleanup selected.
We obtained EPA's database of the O&M estimates to make additional
cost projections, including (1) the O&M costs that the federal
government will be expected to pay, (2) the O&M costs that the
responsible parties will be expected to pay, (3) the average O&M
costs for those sites with and without groundwater contamination, and
(4) the proportions of the total forecast O&M costs that are for
current Superfund sites and sites EPA anticipates adding to the NPL
in the future.
We estimated that the total O&M costs for cleanup plans expected to
be signed through FY 2005 will be $32 billion, with the federal
government, states, and responsible parties paying about $5, $8, and
$18 billion, respectively.\15 Our estimate of total O&M costs is
lower than EPA's estimate because we (1) used a consistent discount
rate of 6 percent to better represent the actual discount rates used
by EPA's project managers to estimate present-value figures, (2)
removed costs in some cleanup plans that EPA inadvertently classified
as O&M costs, and (3) calculated and used a different, lower average
O&M cost--$337,000 per year--for each cleanup plan as opposed to the
average cost of $434,000 per year calculated by EPA. This different
average annual cost resulted both from decreased O&M costs for some
cleanup plans because of the lower discount rate we used and from our
inclusion of cleanup plans which involved no O&M costs when
calculating the average.
--------------------
\14 Estimated O&M Costs for RODs: Historical Trends and Projected
Costs Through FY 2040, prepared for EPA by CH2M Hill (May 31, 1995).
The O&M cost estimates are reported in 1994 dollars.
\15 These figures do not add to $32 billion because some cleanups
were jointly funded by the federal government and responsible
parties. We estimate that the O&M costs for these cleanups will
total about $700 million.
EPA'S APPROACH AND ASSUMPTIONS
-------------------------------------------------------- Appendix II:1
For its analysis, EPA began with the O&M estimates for the sites with
cleanup plans signed during FY 1982 through 1992. To project future
O&M costs for the cleanup plans it signed during FY 1993 and 1994, in
addition to those it anticipates signing during FY 1995 through 2005,
EPA used an average O&M estimate of $434,000 per year for each
cleanup plan.\16 On the basis of historical data, EPA anticipates
preparing 175 cleanup plans per year.
The 1,105 cleanup plans signed during FY 1982 through 1992 reported
O&M estimates as either present-value figures\17 or annual figures.
To use the estimates reported in present-value figures in its
analysis, EPA annualized the estimates using a 10-percent discount
rate\18 in order to calculate the total O&M costs over the duration
of the cleanup. Unless the cleanup plan specified otherwise, EPA
assumed the O&M activities would continue for 30 years. EPA also
assumed a 5-year lag between the time the cleanup plan was signed and
the start of the O&M activities, unless actual data were available.
To allow for comparison, EPA converted all dollar figures to 1994
dollars, using a uniform 4-percent annual rate of inflation.
To estimate the states' share of future O&M costs, EPA categorized
the cleanup plans as either non-groundwater or groundwater cleanups.
For EPA-funded cleanups not including groundwater contamination, EPA
assumed that the states pay 100 percent of the O&M costs over the
entire cleanup period. In the absence of specific data, for the
EPA-funded cleanups including groundwater contamination, EPA assumed
that contaminated soil or other surface waste was also being cleaned
up. EPA then assumed that the O&M costs would be split evenly--50
percent to address groundwater contamination and 50 percent to
address the other contamination. Consequently, during the first 10
years of the cleanup, EPA assumed that the states will pay 50 percent
of the O&M costs for the surface waste and the federal government
will pay the remaining 50 percent of the O&M costs for pumping and
treating groundwater. For the remaining 20 years, the state will pay
100 percent of all the O&M costs for these sites.
--------------------
\16 EPA did not use the cleanup plans signed from FY 1982 through
1986 in developing the estimate of average O&M costs. These cleanup
plans were prepared before passage of the Superfund amendment, which
occurred in October 1986. That amendment substantially affected
responsibilities for O&M costs. For instance, it placed an increased
emphasis on treating rather than containing waste, thus decreasing
the total O&M costs. In addition, EPA subsequently increased its
efforts to identify responsible parties to clean up the waste at
Superfund sites, which consequently increased the responsible
parties' O&M costs.
\17 When selecting a cleanup remedy, EPA chooses between several
alternatives. In certain cases, EPA calculates the cost of a remedy
at its present value; in other cases, it uses different methods.
Such calculations are necessary to compare a stream of expenditures,
such as O&M costs over several decades, with expenditures for a
different alternative and time frame.
\18 The discount rate is a percentage adjustment used in calculating
present value. It adjusts cost estimates for (1) inflation and (2)
the time value of money. The discount rate may be viewed as the rate
of return on the best alternative investment opportunity for the
funds, or the cost of borrowing the funds.
GAO'S APPROACH AND ASSUMPTIONS
-------------------------------------------------------- Appendix II:2
To begin our analysis, we performed quality assurance checks to
ensure that the estimates of O&M costs in EPA's database were valid
and reliable. We checked a random sample of cases to see whether the
estimates of these costs in the cleanup plans were recorded
accurately in the database and were properly adjusted to 1994
dollars. We also checked whether cleanup plans were properly
categorized as involving groundwater contamination or not. We did
not find any significant discrepancies. Because we were concerned
about whether the estimates in the cleanup plans were a good
indicator of actual O&M costs, we compared the estimates for the 17
sites for which we performed case studies with the actual O&M costs
incurred. Some costs were higher or lower than the estimates, but we
did not detect any bias in one direction or the other that would
affect the use of these estimates to forecast future costs. (See
app. I for additional information on our case studies.)
When making these checks, we learned that EPA had used a 10-percent
discount rate to adjust those estimates that were reported in
present-value form. However, most EPA managers had originally
estimated these values using a 5-percent discount rate, as prescribed
by EPA guidance issued in October 1988, although some managers used
other rates. EPA's use of a 10-percent discount rate to annualize
these values thus resulted in an overstatement of the original
estimates of O&M costs in the cleanup plans. EPA used this
10-percent rate following the guidelines recommended by the Office of
Management and Budget. For our estimates of annual O&M costs, we
used a 6-percent rate to better represent the rates actually used by
all EPA project managers.\19
For a small number of cleanup plans signed during FY 1988 through
1991, we decided to adjust the estimates of O&M costs. In
particular, we determined that for these plans, EPA's projections of
O&M costs included the costs of treating surface waste. According to
EPA officials, such costs are not O&M costs but rather cleanup costs.
Therefore, we revised the estimates for some of these cleanup plans
to reflect this correction.
In order to conduct our analysis, we developed a model for estimating
O&M costs that considered (1) when cleanup plans were signed, (2) who
will pay O&M costs--the federal government, states, or responsible
parties, (3) what type of remedy was used (groundwater treatment or
not), and (4) whether the costs are for current or future NPL sites.
Our model projected future O&M costs for cleanup plans signed during
FY 1993 through 2005 on the basis of plans signed after Superfund
amendments passed in October 1986 because the changes affected
responsibilities for O&M costs. We also assumed that 45 new sites
will be added to the NPL each year beginning in FY 1995. We based
our assumptions about who will pay O&M costs on Superfund
regulations, extensive conversations with EPA officials, and our
analysis of O&M costs at specific types of sites.
--------------------
\19 We were unable to determine which cleanup plans signed in FY 1989
used present-value estimates.
ESTIMATING FEDERAL COSTS
------------------------------------------------------ Appendix II:2.1
In our model, we assumed that the federal government's O&M costs
consist of (1) all O&M costs at federal facilities and (2) the
federal portion of O&M costs for the cleanup plans at sites where EPA
funds the cleanup and the remedy addresses groundwater contamination.
To estimate these latter costs, we took the following steps, using
650 cleanup plans signed during FY 1988 through 1991 and their
estimated O&M costs for the first 10 years:
First, we estimated the groundwater treatment portion of O&M costs
for cleanups addressing both groundwater contamination and
surface waste. We estimated this portion to be 75 percent. We
arrived at this figure by dividing the average O&M cost for the
220 cleanup plans that address only groundwater contamination by
the sum of this average and the average O&M cost for the 168
cleanup plans that involved only containment of surface waste.
Second, we estimated the ratio of the groundwater treatment portion
of O&M costs to the total O&M costs for all 360 cleanup plans
involving groundwater treatment, whether alone or in combination
with surface waste containment. We determined this ratio to be
89 percent. As described above, for cleanup plans involving
both groundwater treatment and surface waste containment, we
assumed that 75 percent of the O&M costs are due to the
groundwater treatment. For plans addressing only groundwater
contamination, we assumed that 100 percent of the O&M costs are
due to groundwater treatment.
Finally, we estimated the federal portion of O&M costs for cleanup
plans involving groundwater treatment. By statute, the federal
government pays 90 percent of the total O&M costs during the
first 10 years of such cleanups. Therefore, we multiplied this
90 percent by 89 percent, our estimate of the share of O&M costs
represented by groundwater treatment, as described above. This
calculation resulted in our assumption that the federal portion
of O&M costs for EPA-funded cleanups is 80 percent for the first
10 years of cleanups involving groundwater treatment. This
differs from EPA's assumption that the federal portion is 50
percent because EPA did not go through such steps to more
specifically estimate groundwater-related O&M costs.
Table II.1 shows where GAO's and EPA's assumptions differ on the
portion of O&M costs that will be paid by the federal and state
governments.
Table II.1
Share of O&M Costs at EPA-Funded
Cleanups Under GAO's and EPA's
Assumptions
Federal State Federal State
Type of cleanup share share share share
------------------------------ -------- -------- -------- --------
Includes groundwater treatment 80% 20% None 100%
(GAO) (GAO)
50% 50% None 100%
(EPA) (EPA)
Does not include groundwater None 100% None 100%
treatment
----------------------------------------------------------------------
ESTIMATING STATES' COSTS
------------------------------------------------------ Appendix II:2.2
We assumed that the states will pay 100 percent of the O&M costs for
cleanups addressing surface waste that were originally funded by EPA.
For EPA-funded cleanups that include groundwater treatment, the
states are assumed to pay the remainder of O&M costs that the federal
government does not cover. As noted above, we estimated that the
federal portion of these cleanups is 80 percent; thus, the states are
responsible for the remaining 20 percent of costs for the first 10
years. After the 10th year of O&M activities, we assume that the
state pays 100 percent of O&M costs.
ESTIMATING RESPONSIBLE
PARTIES' COSTS
------------------------------------------------------ Appendix II:2.3
We identified all the O&M costs associated with responsible parties'
cleanups to estimate their O&M costs. We excluded the O&M costs for
cleanups performed jointly by EPA and the responsible parties from
estimates of the costs to the federal government, states, and
responsible parties since these costs were a small portion of the
total O&M costs.
GAO'S O&M COST PROJECTIONS
------------------------------------------------------ Appendix II:2.4
Our analysis of the total O&M costs is presented in table II.2.
Table II.2
Estimated O&M Costs for FY 1982-2005
Cleanup Plans
(1994 dollars in millions)
Fiscal year Non- Non- Non-
of cleanup Groundwa groundwa Groundwa groundwa Groundwa groundwa Total\
plan ter ter ter ter ter ter a
------------ -------- -------- -------- -------- -------- -------- ------
1982-86 $119 0 $208 $241 $186 $29 $894
1987-92 1,102 $36 1,721 556 4,730 679 9,077
1993-2005 2,168 254 2,924 1,015 7,596 875 15,068
(sites
added to
NPL before
10/94)
1993-2005 983 115 1,325 460 3,444 397 6,831
(360 sites
added to
NPL 10/94
or later)
================================================================================
Total $4,371 $404 $6,178 $2,273 $15,956 $1,980
================================================================================
Grand total $4,776 $8,450 $17,936 $31,87
0
--------------------------------------------------------------------------------
Notes: The estimates for FY 1982 through 1986 and 1987 through 1992
are based on the O&M cost estimates contained in EPA's database of
cleanup plans. The estimates for FY 1993 through 2005 are based on
projections from our model.
Some totals do not add because of rounding.
\a Figures in the total column include an estimated $708 million in
O&M costs for cleanups funded jointly by the federal government and
responsible parties.
PROGRAMMATIC CHANGES THAT WOULD
AFFECT OUR ESTIMATES
-------------------------------------------------------- Appendix II:3
We reviewed past and current Superfund reauthorization proposals that
could affect future O&M costs. The policy changes under
consideration include the following:
Changing the preference for treating highly contaminated waste to
also consider the option of containing this waste. Because O&M
costs are associated with containing waste, not with treating
waste, O&M cost responsibilities will fluctuate depending on how
often containment options are used.
Changing the rules on the time frames for responsible parties'
liability. The responsible parties are currently liable for
cleaning up contamination that occurred before Superfund was
passed in 1980. If this requirement is eliminated, the federal
government's and the states' portions of O&M costs would
increase.
Changing the rules on responsible parties' liability. The
responsible parties may currently be required to pay for all
site cleanup, even if they did not contribute all the waste.
Proposals for reauthorizing Superfund have called for the
federal government to pay for those costs that cannot be
allocated to responsible parties, thus increasing the federal
share of O&M costs.
Changing the current O&M cost-share provisions between the federal
government and the states. Recently proposed legislation would
have implemented different cost-sharing provisions. Doing so
would shift O&M cost responsibilities between the federal
government and the states.
Limiting the number of new sites added to the NPL. Proposals for
reauthorizing Superfund have called for placing a cap on the
sites added to the NPL in the future. If this proposal is
adopted, the O&M costs for future NPL sites will be lower than
the $7 billion we estimated.
ADDITIONAL EXAMPLES OF MONITORING
O&M ACTIVITIES
========================================================= Appendix III
As stated in the report, monitoring O&M activities is important
because it provides assurance that the cleanup remedies continue to
protect human health and the environment. Both we, through our
review of 17 case studies and our analyses of 43 5-year reviews, and
EPA's Inspector General have identified cases in which covers were
not maintained and groundwater sampling was not performed as required
in the O&M plans. The following cases highlight these instances.
In our discussions with officials in EPA's Region IV, we identified a
significant problem in monitoring O&M activities at the A.L. Taylor
site (Valley of the Drums), located in Bullitt County, Kentucky. The
state is now responsible for monitoring the waterproof cover used to
contain chemical waste. However, local land-use controls to prevent
activities that could potentially damage the cover have not been
implemented. EPA and the state have had difficulty implementing
land-use controls because the site is privately owned. Implementing
land-use controls could have been critical at this site because the
landowner was using the site as a junkyard for cars, potentially
damaging the cover. After discussions with the state, however, the
landowner agreed to remove the cars. Such a situation stresses the
importance of continuous monitoring. Without it, EPA may not be
aware of similar problems that may be occurring at other sites.
EPA's Inspector General, during a site visit, identified a
significant problem in monitoring O&M activities at the Heleva
Landfill site in Lehigh County, Pennsylvania. A pond adjacent to the
landfill receives much of the site's surface water runoff. The pond
overflowed onto the waterproof cover, damaging it. In addition, the
project manager responsible for monitoring the site was unaware of
the requirement to sample surface water, such as the pond, even
though the cleanup plan required doing so at least once every 3
months. In fact, no sampling had been performed since the waterproof
cover was installed in 1990. Animals had also damaged the cover by
burrowing holes in it.
In our analysis of reports on EPA's 5-year reviews, we identified
instances in which EPA had developed recommendations to address
problems with maintaining covers. For example, at the Mowbray
Engineering site in Greenville, Alabama, EPA recommended that the
responsible party mow the cover regularly to prevent grass from
growing too high. In addition, EPA recommended that the responsible
party prevent trees from growing on top of the cover because the tree
roots can potentially damage the cover. EPA also recommended that
the fence surrounding the site be cleared of kudzu, a vine-like
vegetation, so that the fence can be readily inspected.
We also identified some sites in which EPA developed recommendations
to address problems with sampling the groundwater. In EPA's 5-year
review of the Middletown Road Dump site in Annapolis, Maryland, EPA
recommended that further groundwater sampling be conducted. Although
EPA collected groundwater samples during its review, it could not
conclude whether the groundwater was still a health threat.
Therefore, additional sampling was recommended. In another example,
for the Triangle Chemical Company Superfund site in Bridge City,
Texas, EPA recommended that the state conduct groundwater sampling
more frequently because contamination levels are still above
acceptable levels.
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix IV
Philip Farah, Economist
Fran Featherston, Senior Social Science Analyst
Mary D. Feeley, Evaluator
Josephine Gaytan, Information Processing Assistant
Angelia Kelly, Evaluator
Eileen Larence, Assistant Director
Rosa Maria Torres Lerma, Evaluator
Mehrzad Nadji, Assistant Director for Economic Analysis
Katherine Siggerud, Evaluator-in-charge