NOTES TO THE FINANCIAL STATEMENTS 106

Note 13. Environmental and Disposal Liabilities

Environmental and Disposal Liabilities as of September 30, 2017, and 2016

(In billions of dollars) 2017 2016

Department of Energy:

Environmental and disposal liabilities ............................................................... 383.8 371.8

Department of Defense:

Environmental restoration liabilities .................................................................. 27.4 26.8

Environmental disposal for military equipment/weapons programs ..................... 16.3 14.8

Other environmental liabilities-non-BRAC......................................................... 11.2 9.3

Chemical weapons disposal program ............................................................... 8.7 7.1

Base realignment and closure installations (BRAC)........................................... 4.7 4.6

Total Department of Defense........................................................................... 68.3 62.6

All other agencies.............................................................................................. 12.4 12.2

Total environmental and disposal liabilities ....................................................... 464.5 446.6

During World War II and the Cold War, DOE (or predecessor agencies) developed a massive industrial complex to

research, produce, and test nuclear weapons. This included nuclear reactors, chemical-processing buildings, metal machining

plants, laboratories, and maintenance facilities that manufactured tens of thousands of nuclear warheads and conducted more

than 1,000 nuclear tests.

At all sites where these activities took place, some environmental contamination occurred. This contamination was

caused by the production, storage, and use of radioactive materials and hazardous chemicals, which resulted in contamination

of soil, surface water, and groundwater. The environmental legacy of nuclear weapons production also includes thousands of

contaminated buildings and large volumes of waste and special nuclear materials requiring treatment, stabilization, and

disposal.

Estimated cleanup costs at sites for which there are no current feasible remediation approaches, such as the Nevada

nuclear test site, are excluded from the estimates, although applicable stewardship and monitoring costs for these sites are

included. DOE has not been required through regulation to establish remediation activities for these sites.

Estimating DOE’s environmental cleanup liability requires making assumptions about future activities and is inherently

uncertain. The future course of DOE’s environmental cleanup and disposal will depend on a number of fundamental technical

and policy choices, many of which have not been made. The sites and facilities could be restored to a condition suitable for

any desirable use, or could be restored to a point where they pose no near-term health risks. Achieving the former conditions

would have a higher cost but may (or may not) warrant the costs, or be legally required. The environmental and disposal

liability estimates include contingency estimates intended to account for the uncertainties associated with the technical

cleanup scope of the program.

DOE’s environmental and disposal liabilities estimates are dependent on annual funding levels and achievement of

work as scheduled. Congressional appropriations at lower than anticipated levels or unplanned delays in project completion

would cause increases in life-cycle costs.

DOE’s environmental and disposal liabilities also include the estimated cleanup and post-closure responsibilities,

including surveillance and monitoring activities, soil and groundwater remediation, and disposition of excess material for

sites. The Department is responsible for the post-closure activities at many of the closure sites as well as other sites. The costs

for these post-closure activities are estimated for a period of 75 years after the balance sheet date, i.e., through 2092 in fiscal

year 2017 and through 2091 in fiscal year 2016. While some post-cleanup monitoring and other long-term stewardship

activities post-2092 are included in the liability, there are others the Department expects to continue beyond 2092 for which

the costs cannot reasonably be estimated.

A portion of DOE’s environmental and disposal liabilities at various field sites includes anticipated costs for facilities

managed by DOE’s ongoing program operations which will ultimately require stabilization, deactivation, and

decommissioning. The estimate is largely based upon a cost-estimating model. Site specific estimates are used in lieu of the
107 NOTES TO THE FINANCIAL STATEMENTS 

cost-estimating model, when available. Cost estimates for ongoing program facilities are updated each year. For facilities

newly contaminated since fiscal year 1997, cleanup costs allocated to future periods and not included in environmental and

disposal liabilities amounted to $0.9 billion and $0.7 billion for fiscal years 2017 and 2016, respectively.

Please refer to the financial statements of the DOE for significant detailed information regarding DOE’s environmental

and disposal liabilities, including cleanup costs.

DOD must restore active installations, installations affected by base realignment and closure, and other areas formerly

used as Defense sites. DOD also bears responsibility for disposal of chemical weapons and environmental costs associated

with the disposal of weapons systems (primarily nuclear powered aircraft carriers and submarines).

DOD follows the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), Superfund

Amendments and Reauthorization Act, Resource Conservation and Recovery Act (RCRA) and other applicable federal or

state laws to clean up contamination. The CERCLA and RCRA require the DOD to clean up contamination in coordination

with regulatory agencies, current owners of property damaged by the Department, and third parties that have a partial

responsibility for the environmental restoration. Failure to comply with agreements and legal mandates puts the DOD at risk

of incurring fines and penalties.

DOD uses engineering estimates and independently validated models to estimate environmental costs. The engineering

estimates are used after obtaining extensive data during the remedial investigation/feasibility phase of the environmental

project.

For general PP&E placed into service after September 30, 1997, DOD expenses associated environmental costs

systematically over the life of the asset using two methods: physical capacity for operating landfills and life expectancy in

years for all other assets. DOD expenses the full cost to clean up contamination for stewardship property, plant, and

equipment at the time the asset is placed into service. DOD has expensed the costs for cleanup associated with general

property, plant, and equipment placed into service before October 1, 1997, except for costs intended to be recovered through

user charges; for those costs, DOD has expensed cleanup costs associated with that portion of the asset life that has passed

since it was placed into service. DOD systematically recognizes the remaining cost over the remaining life of the asset. DOD

is unable to provide an estimate for the unrecognized portion of the cleanup cost associated with general property, plant, and

equipment for fiscal year 2017. The Department is reevaluating its methodology and implementing procedures to address

deficiencies. The unrecognized portion of the cleanup cost associated with general property, plant, and equipment for fiscal

year 2016 is $2.7 billion.

DOD is unable to estimate and report a liability for environmental restoration and corrective action for buried chemical

munitions and agents, because the extent of the buried chemical munitions and agents is unknown at this time. DOD is also

unable to provide a complete estimate for the Formerly Utilized Sites Remedial Action Program. DOD has ongoing studies

and will update its estimate as additional liabilities are identified. DOD has the potential to incur costs for restoration

initiatives in conjunction with returning overseas Defense facilities to host nations. However, DOD is unable to provide a

reasonable estimate at this time because the extent of required restoration is unknown.

Please refer to the financial statements of DOD for further detailed information regarding DOD’s environmental and

disposal liabilities, including cleanup costs.