GAO-05-1011R Environmental Cleanup 

United States Government Accountability Office

Washington, DC 20548 

September 16, 2005 

The Honorable James M. Inhofe 

Chairman, Committee on Environment and 

 Public Works 

United States Senate 

Subject: Environmental Cleanup: Transfer of Contaminated Federal Property 

 and Recovery of Cleanup Costs 

Dear Mr. Chairman: 

Ammonium perchlorate (perchlorate) is a primary ingredient in solid rocket 

propellant and has been used for decades by the Department of Defense (DOD), the 

National Aeronautics and Space Administration, and the defense industry in the 

manufacturing, testing, and firing of rockets and missiles. Perchlorate has been 

found in the drinking water, groundwater, surface water, or soil in 35 states, the 

District of Columbia, and 2 commonwealths of the United States. Exposure to 

perchlorate affects the human thyroid, and certain levels of exposure may result in 

hyperthyroidism in adults and developmental delays in children. Although there is no 

specific federal requirement to clean up perchlorate, the Environmental Protection 

Agency (EPA) and state regulatory agencies have used various environmental laws 

and regulations to require cleanup of perchlorate by responsible parties. 

Between 1942 and 1945, new military uses for perchlorate led to an increase in the 

production of perchlorate in the United States. Between 1945 and 1967, the U.S. 

Navy, Western Electrochemical Company, and the American Potash and Chemical 

Company manufactured perchlorate at a facility in Henderson, Nevada. The United 

States owned part of the facility from 1953 to 1962. In 1967, the Kerr-McGee 

Corporation acquired the facility and continued to manufacture perchlorate until 

1998, when it ceased production after the chemical was found in nearby groundwater. 

Kerr-McGee is presently cleaning up perchlorate contamination under a consent 

order with the Nevada state environmental agency. The American Pacific 

Corporation also manufactured perchlorate near Henderson from 1958 until 1988, 

when its facility was destroyed in an explosion. American Pacific relocated its 

perchlorate production to Utah and is currently the sole manufacturer of perchlorate 

in the United States. 

In your recent letter to GAO, you asked us to report on the following: 
Page 2 GAO-05-1011R Environmental Cleanup 

1. What portion of the perchlorate compounds produced at Henderson, 

Nevada, from 1945 until the present went to supply the U.S. government’s 

defense and space programs, either directly through prime contracts or 

indirectly through subcontracts under prime contracts? 

2. From 1945 until the present, what ties did the U.S. government have to 

perchlorate production facilities in Henderson, Nevada, including, but not 

limited to, ownership of land, buildings and production equipment, and 

subsidization of plant capacity expansions? 

3. What was the role of the United States and its prime contractors in 

“making” or “influencing” the market for perchlorate compounds, either by 

determining a large portion of the total demand for perchlorate 

compounds, or by other means? 

4. What costs have been incurred to date by private companies and by the 

United States to remediate perchlorate contamination at the Henderson, 

Nevada, facilities, and what is the best current estimate of potential future 

remediation costs in Henderson? 

5. What financial responsibility, if any, should the United States assume for 

perchlorate contamination at sites that produced perchlorate compounds 

for federal governmental programs? 

The issue of liability for perchlorate cleanup is currently the subject of litigation 

between the Kerr-McGee Corporation and the United States. In 2000, Kerr-McGee 

initiated litigation against the United States, seeking reimbursement for cleanup 

costs. The case is still in the pretrial stage. The information you requested above is 

among the issues being addressed as part of the pending court case. It is a longstanding GAO policy to refrain from taking a position on or addressing matters that 

are pending in litigation. 

During a June 2005 meeting with your staff, we agreed to document why we could not 

undertake the study you originally requested, and we also agreed to report on general 

issues relating to the federal government’s responsibility for environmental cleanup 

on land that it transfers or sells to other parties. This report discusses (1) laws 

governing the transfer of contaminated federal property to private parties, both 

before and after the enactment of a 1986 amendment to the Comprehensive 

Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) that 

specifically governs such transfers, and (2) the degree to which private parties not 

subject to civil actions under CERCLA may seek environmental cleanup costs from 

other responsible parties in the wake of the recent Supreme Court decision in Cooper 

Industries v. Aviall Services, and subsequent cases. In conducting our work, we 

examined statutes and regulations governing the cleanup and transfer of 

contaminated federal property. We also researched and analyzed court cases 

addressing the degree to which private parties may recover the costs they incur in 

cleaning up contaminated properties. 
 

Page 3 GAO-05-1011R Environmental Cleanup

Three Principal Federal Laws Govern the Transfer of Contaminated Federal 

Property to Private Parties 

While there are numerous laws that have some impact on the transfer of 

contaminated federal property to private parties,1

 the following three federal statutes 

(and associated regulations) specifically require some combination of cleanup 

actions, notice of contamination, and retained federal cleanup responsibility 

following transfer of the property: 

• Federal Property and Administrative Services Act of 1949 (Federal Property 

Act 

• Comprehensive Environmental Response, Compensation, and Liability Act of 

1980 (CERCLA) 

• Superfund Amendments and Reauthorization Act of 1986 (SARA 

Under the Federal Property Act, each federal agency has a continuing responsibility 

to identify property that has become excess—no longer needed by the agency to 

carry out its programs or activities. The agency must report such property to the 

General Services Administration (GSA). GSA then must determine if any other federal 

agency, mixed-ownership government corporations,2

 or the District of Columbia has a 

need for the property. If no other agency needs the property, GSA declares it 

unneeded by the government and identifies it as surplus. Generally, surplus property 

must be disposed of after publicly advertising for bids. 

Regulations under the Federal Property Act have long recognized the importance of 

decontaminating federal property prior to transfer, but the regulations were initially 

drafted in very general terms and provided no specific procedures for ensuring 

compliance. For example, since 1964, GSA regulations have required any agency 

reporting excess property that is dangerous or hazardous to health and safety to state 

the extent of such contamination, the plans for decontamination, and the extent to 

 

1

 For a comprehensive list of statutes affecting federal property transfers, including environmental 

statutes, see GAO, Real Property Dispositions: Flexibility Afforded to Meet Disposition Objectives 

Varies, GAO/GGD-92-144FS (Washington, D.C.: Sept. 18, 1992). 2

 Mixed-ownership corporations include such entities as the Federal Deposit Insurance Corporation 

and the Federal Home Loan Banks. 
Page 4 GAO-05-1011R Environmental Cleanup 

which the property could be used without further decontamination.3 The 1964 

regulations made the landholding agency responsible for all expense to the 

government and for supervising the decontamination of excess and surplus property 

under the agency’s jurisdiction. The regulations required the agency to inform GSA 

of any hazards related to such property “in order to protect the general public from 

such hazards and to preclude the government from any and all liability resulting from 

indiscriminate disposal or mishandling of contaminated property.” However, the 

regulations did not specifically oblige the government to transfer the property free of 

contamination, notify the transferee of the contamination, or provide any procedures 

for making claims against the government in the event the property was 

contaminated. In addition, any potential legal action against the government would 

have been impeded by the federal government’s sovereign immunity.4

 

CERCLA established the Superfund program to clean up highly contaminated 

hazardous waste sites.5

 CERCLA authorizes EPA to compel parties responsible for 

the contamination to clean up the sites; allows EPA to pay for cleanups and seek 

reimbursement from responsible parties; and establishes a trust fund (known as the 

Superfund) to help EPA pay for cleanups and related program activities.6

 The law 

also allows responsible parties who have undertaken efforts to clean up properties 

contaminated by hazardous substances to seek contribution from other parties liable 

under CERCLA for cleanup costs incurred. 

CERCLA established that past owners or operators of contaminated property, 

including the U.S. government, may be held responsible for the contamination. The 

law waived the federal government’s sovereign immunity, providing that each agency 

shall be subject to and must comply with the act in the same manner and to the same 

 

3

 The 1964 regulations defined “decontamination” to mean “the complete removal or destruction by 

flashing or explosive powders; the neutralizing and cleaning out of acid and corrosive materials; the 

removal, destruction or neutralizing of toxic or infectious substances; and the complete removal and 

destruction by burning or detonation of live ammunition from contaminated areas and buildings.” 41 

C.F.R. § 101-47.103-5 (1964). This definition remains the same today. 41 C.F.R. § 102-71.20 (2004). 

Current GSA regulations contain more detailed provisions governing the decontamination of property 

to be transferred out of federal ownership, much of which reflects the language of section 120(h) of 

CERCLA, which we discuss in more detail below. See, for example, 41 C.F.R. § 102-75.125 (property 

title report must include a statement indicating whether any hazardous substance activity took place 

during the time that the property was owned by the United States); 41 C.F.R. § 102-75.340(b) (property 

conveyance document must include a statement that the government has taken all cleanup action 

necessary to protect human health and the environment); and 41 C.F.R. § 102-75.955 (landholding 

agency is responsible for supervising decontamination of excess and surplus real property that has 

been contaminated with hazardous materials of any sort). 

4

 Absent a statutory waiver, sovereign immunity shields the federal government and its agencies from 

suit. For example, Department of Army v. Blue Fox, 525 U.S. 255, 260 (1999). 5

 EPA places the nation’s most seriously contaminated sites, which typically are expensive and can 

take many years to clean up, on its National Priorities List (NPL). EPA uses its Hazard Ranking 

System, a numerical scoring system that assesses the hazards a site poses to human health and the 

environment, as the principal mechanism for determining which sites are eligible for placement on the 

NPL. 

6

 In addition, the law establishes a process for cleaning up hazardous waste at federal facilities, 

although the Superfund trust fund is generally not available to fund these federal cleanups, which are 

funded from federal agency appropriations. 
 

Page 5 GAO-05-1011R Environmental Cleanup

extent, both procedurally and substantively, as a nongovernmental entity, including 

with regard to liability. As a result of the sovereign immunity waiver and CERCLA’s 

broad definition of liability, the government has in some instances been held liable 

under CERCLA for cleanup costs at properties that are privately owned. 

Court cases assessing whether the federal government is liable for cleanup costs have 

engaged in fact-intensive inquiries. For example, in FMC v. Department of 

Commerce, a federal appellate court held that the federal government had substantial 

control over a facility producing war-related products during World War II because, 

among other things, the government determined what product the facility would 

manufacture and controlled the supply and price of the facility's raw materials and, 

thus, could be considered operator of the facility under CERCLA.7

 However, in East 

Bay Municipal Utility District v. U.S. Department of Commerce, a federal appellate 

court held that the federal government did not exercise actual control over 

operations at a zinc mine during World War II, so as to render it liable as an operator, 

even though it imposed price and labor restrictions intended to protect its efforts to 

acquire zinc for munitions production, provided financial backing for the mine and, 

entered into an output contract with the mine8. 

In 1986, Congress passed SARA which amended CERCLA and contained provisions 

authorizing, and in some cases requiring, the cleanup of federal property prior to its 

transfer into private hands. Specifically, the law added section 120, which 

established a program for cleaning up federal facilities, including section 120(h), 

which governs the transfer of certain contaminated federal property. 

Under section 120 of CERCLA, EPA must, where appropriate, evaluate hazardous 

waste sites at federal facilities to determine whether the waste sites qualify for 

inclusion on the National Priorities List, which is EPA’s list of the nation’s most 

serious hazardous waste sites. For each facility listed on the National Priorities List, 

section 120(e)(2) of CERCLA requires the landholding agency to enter into an 

interagency agreement with EPA for the completion of all necessary remedial 

actions. The interagency agreement must include, among other things, the selection 

of and schedule for the completion of the remedial actions. 

Moreover, section 120(h)(3) requires that the federal government include in any deed 

transferring property to a private party after October 16, 1990, a covenant warranting 

that 

 

7

 29 F.3d 833, 843 (3d Cir. 1994). Also see, FMC v. Department of Commerce, 786 F.Supp. 471, 486 

(E.D. Pa. 1992) (federal government ownership of installations, equipment, and pipelines associated 

with a high-tenacity rayon plant made the government liable as an owner for cleanup costs); E.I. 

Dupont de Nemours v. United States, 365 F.3d 1367, 1372 (Fed. Cir. 2004) (federal government was 

liable for CERCLA costs under an open-ended contract indemnification clause in the contract with the 

owner and operator of the ordnance plant). 

8

 142 F.3d 479, 484-85 (D.C. Cir. 1998). 
Page 6 GAO-05-1011R Environmental Cleanup 

(i) all remedial actions necessary to protect human health and the environment with 

respect to any hazardous substance remaining on the property have been taken 

before the date of transfer and 

(ii) any additional remedial action found to be necessary after the date of such 

transfer shall be conducted by the United States.9

Section 120(h)(3) only applies to federal property on which hazardous substances 

were (a) stored for 1 year or more, (b) known to have been released, or (c) disposed 

of. Thus, some contaminated federal properties are not covered by section 120(h)(3). 

For example, because the definition of hazardous substance excludes petroleum, 

those properties contaminated solely with petroleum would not be covered. 

Section 211 of SARA established the Defense Environmental Restoration Program 

that requires DOD to identify, investigate, and clean up environmental contamination 

and other hazards at active and closing installations as well as formerly used defense 

sites.10 DOD's policies for administering cleanup programs are outlined in its guidance 

for managing its environmental restoration program and generally follow the 

CERCLA process for identifying, investigating, and remediating sites contaminated by 

hazardous substances. 

Parties Who Carry Out Voluntary Cleanups Have Limited Ability to Recover 

Cleanup Costs 

Courts have interpreted the liability of responsible parties under CERCLA to be joint 

and several. Under joint and several liability, when the harm done is indivisible, one 

party can be held responsible for the full cost of the cleanup, even though that party 

may be responsible for only a portion of the hazardous substances at the site. Such a 

party may then seek to recover a portion of its cleanup costs from other responsible 

parties. However, a recent Supreme Court decision has limited the ability of 

responsible parties who voluntarily clean up their property to recover costs from 

other responsible parties under CERCLA 11 

Between 1980 and 1986, several courts held that a voluntary party—that is a private 

party that has incurred cleanup costs, but that has done so voluntarily and is not itself 

subject to suit under CERCLA—could seek to recover some of those cleanup costs 

from other parties under section 107(a), which is the CERCLA provision that 

establishes cleanup liability.12 In 1986, CERCLA was amended to include a specific 

 

9

 42 U.S.C. § 9620(h)(3)(B). Section 120(h) also requires the government to notify potential buyers of 

all known hazardous substances on the property. 42 U.S.C. § 9620(h)(3)(A). 10A formerly used defense site is a property that DOD formerly owned, leased, possessed, operated, or 

otherwise controlled, and that was transferred from DOD prior to October 17, 1986. 11 In this report, we refer to such parties as “voluntary parties.” 

12 See, for example, Wickland Oil Terminals v. Asarco, Inc., 792 F.2d 887, 890-892 (9th Cir. 1986); and 

Philadelphia v. Stepan Chemical Co., 544 F.Supp. 1135, 1140-1143 (E.D. Pa. 1982). In this report, we 

also use the term “voluntary party” to refer to parties subject to enforcement action under statutes 

other than CERCLA, such as parties compelled to clean up their facilities under state hazardous waste 

programs under the Resource Conservation and Recovery Act. 
 

Page 7 GAO-05-1011R Environmental Cleanup

action for “contribution,” codified as section 113(f) of CERCLA.13 Section 113(f)(1) 

states that “any person may seek contribution from any other person who is liable or 

potentially liable under section 107(a) of this title, during or following any civil 

action” under CERCLA.14

In 2004, the Supreme Court in Cooper Industries v. Aviall Services held that this 

statutory language prohibits a voluntary party from seeking contribution from 

another responsible party.15 The plaintiff in Aviall, Aviall Services, purchased an 

aircraft maintenance business from the defendant, Cooper Industries, and continued 

operating the business for a number of years. When Aviall Services learned that it 

and Cooper Industries had polluted the site, Aviall Services notified the Texas state 

environmental agency. The state then instructed Aviall Services to clean up the site 

under the threat of an enforcement action. Aviall Services cleaned up the site and 

then filed suit against Cooper Industries under section 113(f)(1), seeking 

contribution. Since Texas did not take formal enforcement action against Aviall 

Services, its cleanup action is considered to be voluntary. 

In reversing a lower court decision, the Supreme Court held that Aviall Services was 

not entitled to seek recovery under section 113(f)(1) because Aviall Services had not 

been sued under CERCLA. The Court focused on the language in the provision 

stating that “any person may seek contribution . . . during or following any civil 

action” under CERCLA.16 The Supreme Court explained that reading the statute to 

allow contribution claims to occur in the absence of such an action at any time would 

render the italicized language superfluous. 

After the Court’s decision in Aviall, voluntary parties have instead sought 

contribution from other responsible parties under section 107(a), which had 

previously been used in some cases before the enactment of section 113. However, a 

majority of district courts confronting the issue since Aviall have held that voluntary 

parties may not pursue contribution actions against other responsible parties under 

section 107. For example, in Mercury Mall Associates v. Nick’s Market, the district 

court held that section 113(f) provided the only avenue for a responsible party to 

seek cleanup costs from another.17 The court noted that in a pre-Aviall case, the 

Fourth Circuit had held that section 113(f) was the only CERCLA provision under 

 

13 Section 113(f)(1) provides in full as follows: "Any person may seek contribution from any other 

person who is liable or potentially liable under section 107(a) of this title, during or following any civil 

action under section 106 of this title or under section 107(a) of this title. Such claims shall be brought 

in accordance with this section and the Federal Rules of Civil Procedure, and shall be governed by 

Federal law. In resolving contribution claims, the court may allocate response costs among liable 

parties using such equitable factors as the court determines are appropriate. Nothing in this 

subsection shall diminish the right of any person to bring an action for contribution in the absence of a 

civil action under section 106 of this title or section 107 of this title." 

14 Section 113(f)(3)(B) provides that a party who has resolved its cleanup liability in a settlement with 

the federal government or a state government may also seek contribution from other responsible 

parties who have not settled. 

15 125 S. Ct. 577 (2004). 

16 125 S. Ct. 583 (emphasis added). 

17 368 F. Supp. 513 (E.D. Va. 2005). 
Page 8 GAO-05-1011R Environmental Cleanup 

which one responsible party could sue another, and that nothing in the Aviall case 

had changed that result. However, the court also observed that leaving voluntary 

parties without a remedy against other responsible parties “seems to undermine the 

twin purposes of the statute, which are to promote prompt and effective cleanup of 

hazardous waste sites and the sharing of financial responsibility among the parties 

whose actions created the hazard.”18

In contrast, a few courts have held that voluntary parties may continue to recover 

costs from other parties under section 107. For example, in Vine Street LLC v. 

Keeling, the court held that the current owner of a contaminated lot could maintain a 

claim against another potentially responsible party (in this case, a chemical 

company) under section 107, despite the fact that the current owner was also a 

potentially responsible party.19 The court explained that section 107 specifically 

authorizes voluntary parties to seek costs from other responsible parties, while 

section 113(f) created a separate cause of action, allowing parties that have been 

subject to cost recovery actions to allocate liability among themselves. 

No federal appellate courts have ruled on this issue since Avill,

20 making it difficult to 

determine the case’s impact on voluntary cleanup activities. The Aviall decision may 

complicate efforts to clean up contaminated properties by providing a disincentive 

for parties to voluntarily carry out such cleanups. On the other hand, the decision 

may provide an incentive for parties to settle their CERCLA liability with the federal 

government since parties who enter into an administrative or judicially approved 

settlement with the government may obtain contribution under CERCLA. 

Nonetheless, as the court in Mercury Mall observed, the result of the Aviall decision 

is not likely to facilitate the prompt and effective cleanup of contaminated properties. 

- - - - - - - - - - - - - - - - - - 

As agreed with your office, we plan no further distribution of this report until 30 days 

after the date of this report. At that time, the report will be available on GAO’s home 

 

18 368 F. Supp. 513, 519. 19 362 F. Supp.2d 754, 760 (E.D. Tex. 2005). 20 In dictum, the United States Court of Appeals for the Tenth Circuit in Young v. United States, 394 

F.3d 858, 862 (10th Cir. 2005), indicated that a pre-Aviall Tenth Circuit case that restricted responsible 

party contribution claims to section 113(f) remained the controlling precedent. 
 

Page 9 GAO-05-1011R Environmental Cleanup

page at http://www.gao.gov. If you have any questions, please contact me at (202) 

512-3841. 

Sincerely yours, 

Anu K. Mittal 

Director, Natural Resources 

 and Environment 

(360584) 
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