Superfund: Information on Cost and Other Issues Related to the Cleanup of the Federal Creosote Site
Published: 2010-02-25T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In the 1990s, creosote was discovered under a residential neighborhood in Manville, New Jersey. Creosote, a mixture of chemicals, is used to preserve wood products, such as railroad ties. Some of the chemicals in creosote may cause cancer, according to the Environmental Protection Agency (EPA). EPA found that creosote from a former wood-treatment facility (known as the Federal Creosote site) had contaminated soil and groundwater at the site. Under the Superfund program--the federal government's principal program to clean up hazardous waste--EPA assessed site risks, selected remedies, and worked with the U.S. Army Corps of Engineers to clean up the site. As of May 2009, construction of EPA's remedies for the site had been completed; however, total site costs were almost $340 million and remedial construction costs had exceeded original estimates. In this context, GAO was asked to examine (1) how EPA assessed risks and selected remedies for the site, and what priority EPA gave to site cleanup; (2) what factors contributed to the difference between the estimated and actual costs; and (3) how EPA and the Corps divided responsibilities for site work. GAO analyzed EPA and Corps documents and data on the cleanup effort and its costs, and interviewed officials from these agencies. This report contains no recommendations. EPA generally agreed with GAO's findings on the agency's cleanup costs and actions, while the U.S. Army Corps of Engineers had no comments.
section_title: What GAO Found
paragraphs: The extent of the contamination in a residential area at the Federal Creosote site was the primary factor influencing EPA's risk assessment conclusions, remedy selection decisions, and how EPA prioritized site work, according to site documents and agency officials. EPA assessed site contamination through multiple rounds of evaluation and concluded that soil and groundwater contamination levels were high enough that EPA needed to take action. Then, EPA evaluated remedies to achieve cleanup goals that it had established for the site and that were consistent with its residential use. EPA selected off-site treatment and disposal of the contaminated soil and long-term monitoring of the groundwater contamination as the remedies for the site. In selecting these remedies, EPA considered a range of alternatives but ultimately determined that certain options would be potentially infeasible or ineffective due to the residential setting. For example, EPA chose not to implement certain alternatives on-site because the agency found that there was insufficient space and they would be too disruptive to nearby residents. In addition, EPA chose not to implement certain alternatives because the agency found that they would be unlikely to achieve the cleanup goals for the site, especially considering the high level of treatment required to allow for unrestricted residential use of the area and the high levels of contamination found at the site. EPA made cleanup of the site a high priority because the contamination was in a residential area. For example, EPA took steps to shorten the cleanup period and prioritized the use of regional Superfund resources on the Federal Creosote site over other sites in the region. The $338 million in total site costs exceeded EPA's estimated remedial construction costs of $105 million by about $233 million, primarily because EPA's estimates focused only on construction costs, and EPA discovered additional contamination during the cleanup effort. EPA prepared preliminary cost estimates during the remedy selection process; however, EPA requires that these estimates include only the costs associated with implementing different remedies it was considering, not all site costs. Also, as a result of the movement of contamination in the ground and sampling limitations during EPA's site investigation, a greater-than-expected amount of contamination was discovered during the cleanup effort, which increased costs. Other factors, such as contractor fraud, affected total site costs to a lesser extent. EPA was responsible for managing the overall site cleanup and community relations, while the Corps was responsible for implementing the cleanup. EPA dedicated a full-time staff member to manage the site cleanup who, according to EPA, maintained a significant on-site presence to ensure that the project remained on schedule and was adequately funded and to work with residents. EPA also oversaw the work of the Corps and its costs. To conduct the actual cleanup work, the Corps hired contractors to design or implement cleanup activities who, in turn, hired subcontractors for some tasks. The Corps oversaw the activities and costs of its primary contractors but, according to Corps officials, was less involved in selecting and overseeing subcontractors.

section_title: Letter
paragraphs: In the 1990s, creosote contamination was discovered at the Federal  Creosote site, a former wood-treatment facility in the Borough of Manville,  New Jersey, that had been developed into a residential community of  single-family homes and a retail mall. Creosote—a mixture of  approximately 300 chemicals—is used to preserve wood, and the  Environmental Protection Agency (EPA) has identified some of these  chemicals as probable human carcinogens. Under the Superfund  program—the federal government’s principal program to clean up  hazardous waste sites—EPA worked with the U.S. Army Corps of  Engineers (the Corps) to construct remedies to address site  contamination. This work was completed in 2008, although some  maintenance and groundwater monitoring efforts continue. Early  construction cost estimates for these remedies totaled $105 million.  However, as of May 2009, EPA had spent almost $340 million on the  cleanup, including $246 million to construct site remedies and $92 million  in other response costs that were not part of EPA’s early estimates. The  increase in actual remedial construction costs over the agency’s original   estimates raised questions about whether EPA had selected the most cost- effective remedy, given site risks and the extent of contamination.  Furthermore, the Department of Justice (Justice) and the state of New  Jersey are pursuing civil claims against the site’s alleged responsible party  related to cost recovery and—as part of the claims brought by the state of  New Jersey—damages; Justice has also filed criminal charges against  several parties involved in the cleanup, asserting claims related to alleged  fraud in awarding subcontracts by contractor personnel.
The Comprehensive Environmental Response, Compensation, and  Liability Act (CERCLA) of 1980 established the Superfund program to  protect human health and the environment from the effects of hazardous  substances. Under this program, EPA has the authority to (1) clean up  hazardous waste sites and then seek reimbursement from the parties  responsible for contaminating them or (2) compel the responsible parties  to clean up these sites. The Superfund cleanup process begins with site  discovery or notification to EPA of the possible release of hazardous  substances posing a threat to human health or the environment. On the  basis of an initial evaluation, EPA may select a site for inclusion on the  National Priorities List (NPL), which catalogs many of the nation’s most  seriously contaminated sites. For sites that EPA lists on the NPL, the  agency initiates a more extensive investigation process to identify the  nature and extent of contamination at the site, quantify potential risks to  human health and the environment, and evaluate potential remedies to  address site contamination. Selected remedies are then planned in the  remedial design phase and implemented in the remedial action phase.
EPA’s initial investigation at the Federal Creosote site identified  contamination from the lagoons and canals of the former wood-treatment  facility beneath the residential portion of the site. After listing the site on  the NPL, EPA conducted additional investigations to quantify site risks;  evaluated potential remedies to address contamination, including  preparing cost estimates; and selected remedies for the site. EPA tasked  the Corps with designing and implementing these remedies. The Corps  hired contractors to perform the design and construction work, and, in  turn, the prime contractor for the construction work hired subcontractors  to perform certain tasks, such as soil transportation, treatment, and  disposal; landscaping; and wastewater treatment.
In this context, you asked us to review issues concerning the Federal  Creosote site. Our objectives were to examine (1) how EPA assessed the  risks and selected the remedies for the Federal Creosote site, and what  priority EPA assigned to site cleanup; (2) what factors contributed to the  difference between the estimated and actual costs of cleaning up the site;  and (3) how responsibilities for implementing and overseeing site work  were divided between EPA and the Corps. We also summarized  information on criminal and civil litigation related to the Federal Creosote  site (see app. I).
To examine how EPA assessed risks and selected remedies for the site as  well as what priority EPA assigned to the cleanup, we analyzed site  documents detailing the results of the agency’s activities and decisions at  the site. We also interviewed relevant EPA and other federal, state, and  local officials. To determine what factors contributed to the difference  between the estimated and actual costs of site cleanup, we obtained and  analyzed data on estimated construction and total site costs from site  documents that detailed EPA’s planned activities, EPA and Corps cost- tracking databases, and contractor cost summary reports. To compare  estimated construction and total site costs, in accordance with our policy,  we adjusted the estimated construction costs using a present value  analysis and, to adjust for inflation, converted all dollar figures into fiscal  year 2009 constant dollars. We also analyzed site documents describing  the cleanup effort, reviewed EPA cost-estimating guidance, and conducted  interviews with EPA and Corps officials. To describe how responsibilities  for implementing and overseeing the site work were divided between EPA  and the Corps as well as EPA’s oversight actions, we reviewed EPA  interagency agreements with the Corps, site documents, and EPA  guidance and interviewed EPA and Corps officials. To describe actions  that the Corps took to implement its site responsibilities, we reviewed  Corps guidance, Corps correspondence to the contractor, and contractor  requests for approval of certain subcontracts and also interviewed Corps  and EPA officials. To identify civil and criminal litigation related to the  Federal Creosote site, we collected and reviewed information from  publicly available court documents to summarize the cases and, where  applicable, their outcome. We evaluated the reliability of the site actual  cost data used in our analyses by, for example, comparing the data across  different sources and reviewing agency data reliability controls. We  determined that these data were sufficiently reliable for our purposes. See  appendix II for a more detailed description of our scope and methodology.
We conducted our work from May 2008 through February 2010 in  accordance with all sections of GAO’s Quality Assurance Framework that  are relevant to our objectives. The framework requires that we plan and  perform the engagement to obtain sufficient and appropriate evidence to  meet our stated objectives and to discuss any limitations in our work. We  believe that the information and data obtained, and the analyses  conducted, provide a reasonable basis for any findings and conclusions in  this product.
subsections: section_title: Background
paragraphs: Creosote is derived by distilling tar; the type of creosote most commonly  used for wood-treating is manufactured from coal tar. Polycyclic aromatic  hydrocarbons—chemicals formed during the incomplete burning of coal,  oil, gas, or other organic substances—generally make up 85 percent of the  chemical composition of creosote. EPA classifies some of the polycyclic  aromatic hydrocarbons in creosote, such as benzo(a)pyrene, as probable  human carcinogens. Some polycyclic aromatic hydrocarbons also may  have noncarcinogenic health effects, such as decreased liver or kidney  weight.
From approximately the early 1910s to the mid-1950s, the Federal  Creosote site was a wood-treatment facility. Untreated railroad ties were  delivered to the site and, to preserve them, coal tar creosote was applied  to the railroad ties at a treatment plant located on the western portion of  the property (see fig. 1 for an illustration of the site). Residual creosote  from the treatment process was discharged into two canals that led to two  lagoons on the northern and southern parts of the site, respectively. After  treatment, the railroad ties were moved to the central portion of the  property, where excess creosote from the treated wood dripped onto the  ground. The treatment plant ceased operations in the mid-1950s. During  the late 1950s and early 1960s, the area where the treatment plant was  formerly located was developed into a 15-acre commercial and retail  property known as the Rustic Mall. Through the mid-1960s, other areas of  the property, including the former canal, lagoon, and drip areas, were  developed into a 35-acre residential neighborhood known as the  Claremont Development, which was made up of 137 single-family homes  that housed several hundred residents.
Issues with creosote contamination at the site became apparent in April  1996, when the New Jersey Department of Environmental Protection  (NJDEP) responded to an incident involving the discharge of an unknown  thick, tarry substance from a sump located at one of the residences in the  Claremont Development. Later, in January 1997, the Borough of Manville  responded to complaints that a sinkhole had developed around a sewer  pipe in the Claremont Development. Excavation of the soil around the  sewer pipe identified a black, tar-like material in the soil. After an initial  site investigation, EPA found contamination in both the surface and  subsurface soils as well as in the groundwater beneath the site. In 1999,  EPA placed the site on the NPL and divided it into three smaller units,  called operable units (OU). OU1 consisted of the source contamination  (free-product creosote) in the lagoon and canal areas of the Claremont  Development. OU2 included other soil contamination in the Claremont  Development, such as residually contaminated soil at properties over and  near the lagoon and canal areas and the drip area of the former wood- treatment facility. OU2 also included contamination at a nearby day-care  facility. OU3 included the Rustic Mall soil contamination as well as  groundwater contamination throughout the site.
EPA completed all major site cleanup work in November 2007, and the site  was declared “construction complete” in March 2008. Ultimately, EPA  performed cleanup activities on 93 of the 137 properties in the residential  area as well as on the commercial portion of the site. EPA’s ongoing  activities at the site include monitoring groundwater contamination,  conducting 5-year reviews of contamination levels to ensure that the  remedy remains protective of human health and the environment, and  selling properties that EPA acquired during the remedial action. According  to EPA officials, the agency could remove the site from the NPL as early as  2011; however, this decision will depend on the results of contamination  monitoring at the site.
Most Superfund sites progress through the cleanup process in roughly the  same way, although EPA may take different approaches on the basis of  site-specific conditions. After listing a site on the NPL, EPA initiates a  process to assess the extent of the contamination, decides on the actions  that will be taken to address that contamination, and implements those  actions. Figure 2 outlines the process EPA typically follows, from listing a  site on the NPL through deletion from the NPL.
In the site study phase of the cleanup, EPA or a responsible party  conducts a two-part remedial investigation/feasibility study (RI/FS)  process. The first part of this process—the remedial investigation— consists of data collection efforts to characterize site conditions,  determine the nature of the waste, assess risks to human health and the  environment, and conduct treatability testing as necessary to evaluate the  potential performance and cost of the treatment technologies that are  being considered. During the second part of the RI/FS process—the  feasibility study—EPA identifies and evaluates various options to address  the problems identified through the remedial investigation. EPA also  develops cleanup goals, which include qualitative remedial action  objectives that provide a general description of what the action will  accomplish (e.g., preventing contamination from reaching groundwater)  as well as preliminary quantitative remediation goals that describe the  level of cleanup to be achieved. According to EPA guidance, it may be  necessary to screen out certain options to reduce the number of  technologies that will be analyzed in detail to minimize the resources  dedicated to evaluating less promising options. EPA screens technologies  on the basis of the following three criteria:    effectiveness: the potential effectiveness of technologies in meeting the  cleanup goals, the potential impacts on human health and the environment  during implementation, and how proven and reliable the technology is  with respect to the contaminants and conditions at the site; implementability: the technical and administrative feasibility of the  technology, including the evaluation of treatment requirements and the  relative ease or difficulty in achieving operation and maintenance  requirements; and   cost: the capital and operation and maintenance costs of a technology (i.e.,  each technology is evaluated to determine whether its costs are high,  moderate, or low relative to other options within the same category).
After screening the technologies that it has identified, EPA combines  selected technologies into remedial alternatives. EPA may develop  alternatives to address a contaminated medium (e.g., groundwater), a  specific area of the site (e.g., a waste lagoon or contaminated hot spot), or  the entire site. EPA guidance states that a range of alternatives should be  developed, varying primarily in the extent to which they rely on the long- term management of contamination and untreated wastes. In addition,  containment options involving little or no treatment, as well as a no-action  alternative, should be developed. EPA then evaluates alternatives using  the nine evaluation criteria shown in table 1 and documents its selected  alternative in a record of decision (ROD).
Next, either EPA or a responsible party may initiate the remedial action  that was documented in the ROD. Like the RI/FS, implementation of the  remedial action is divided into two phases. The first phase is the remedial  design, which involves a series of engineering reports, documents, and  specifications that detail the steps to be taken during the remedial action  to meet the cleanup goals established for the site. For EPA-led remedial  actions, EPA may either select a private contractor to perform the  remedial design or, under a 1984 interagency agreement with the Corps,  assign responsibility for designing the remedial action to the Corps, which  may select and oversee a private contractor to perform the design work.  The second phase is the remedial action phase, where the selected  remedy, as defined by the remedial design, is implemented. Similar to the  design phase, for EPA-led remedial actions, EPA may either select a  private contractor to perform the remedial action or assign the remedial  action to the Corps, which would be responsible for contractor selection  and oversight during the remedial construction.
When physical construction of all remedial actions is complete and other  criteria are met, EPA deems the site to be “construction complete.” Most  sites then enter into an operation and maintenance phase, when the  responsible party or the state maintains the remedy while EPA conducts  periodic reviews to ensure that the remedy continues to protect human  health and the environment. For example, at a site with soil  contamination, the remedial action could be to build a cap over the  contamination, while the operation and maintenance phase would consist  of monitoring and maintaining the cap. Eventually, when EPA determines,  with state concurrence, that no further remedial activities at the site are  appropriate, EPA may delete the site from the NPL.
section_title: EPA’s Risk Assessment, Remedy Selection, and Prioritization Decisions for the Federal Creosote Site Were Primarily Influenced by the Extent of the Contamination in a Residential Area
paragraphs: The extent of the contamination in a residential area at the Federal  Creosote site was the primary factor that influenced EPA’s risk  assessment conclusions, remedy selection decisions, and site work  priorities. EPA determined that risk levels were unacceptable given the  site’s residential use. EPA then selected remedies for the site, taking into  account space constraints and other challenges associated with a  residential cleanup. Finally, EPA placed a high priority on scheduling and  funding site work because the contaminated area was residential, thereby  reaching key cleanup milestones relatively quickly.
subsections: section_title: EPA Assessed Risks and Selected Cleanup Goals on the Basis of the Site’s Residential Use
paragraphs: From the spring of 1997 to the summer of 2001, EPA conducted multiple  rounds of sampling and risk assessment at the Federal Creosote site and  concluded that human health risks exceeded acceptable levels.   Specifically, EPA assessed the air, groundwater, surface soil, and  subsurface soil as part of an initial site investigation and an RI/FS process.  See appendix III for a timeline of EPA’s risk assessment activities.
EPA’s initial investigation of site contamination, which began in 1997,  included such efforts as assessing whether contamination was affecting  public drinking water supplies; investigating the nature of the bedrock and  the aquifer underlying the site; collecting soil samples from 30 properties  selected on the basis of their proximity to the lagoons, canals, and drip  area of the former wood-treatment facility; and collecting approximately  1,350 surface soil samples (up to 3 inches below the ground surface) from  133 properties in and near the residential development. From this initial  investigation, EPA concluded that site contamination posed unacceptable  human health risks. For example, while EPA found that contamination did  not pose short-term health risks that could require an evacuation of  residents, EPA found that the contamination was extensive and  uncontrolled; had impacted soil, sediment, and groundwater in the area;  and likely posed long-term health risks. For soil contamination in  particular, EPA determined that, in some areas, the contamination was  within 2 to 3 feet of the ground surface; in other areas, EPA found that the  contamination was covered by little or no fill material. According to a  site document, one resident had discovered a large amount of buried tar  when installing a fence on his property. As a result of its concerns that  surface soil contamination could pose a risk to residents, EPA developed a  surface soil risk assessment in January 1999. EPA concluded that soil  contamination levels at 27 properties in the residential area posed long- term human health risks, including carcinogenic or noncarcinogenic risks  (or both), that exceeded acceptable levels. In addition to soil  contamination, EPA’s initial investigation determined that creosote had  contaminated groundwater in the soil as well as in fractures in the  bedrock underlying the site, which was a potential source of drinking  water. Furthermore, EPA’s aquifer investigation showed that groundwater  from the site had the potential to influence the Borough of Manville’s  municipal water supply wells, although Region 2 officials said the nature  of the fractures made it difficult for EPA to determine whether site  contamination would actually affect the wells.
According to Region 2 officials, the purpose of a remedial investigation is  to collect enough data to determine whether there is a need to take a  remedial action. These officials said that an RI/FS for OU1 was not  necessary because EPA had obtained much more information from its  initial investigation on the extent of contamination at properties over the  lagoon and canal source areas than is typically available to support taking  an action. Also, according to EPA, the data that were collected during this  initial investigation were equivalent in scope to that of a remedial  investigation. Therefore, because EPA was trying to address the source  contamination in the residential area on an expedited basis, the agency  chose to incorporate these data into an Engineering Evaluation/Cost  Analysis because it allowed EPA to evaluate remedial alternatives in a  more streamlined way, as compared with an RI/FS report. However, for  OU2 and OU3, EPA initiated an RI/FS process in 1998 to more fully  characterize the extent of soil and groundwater contamination throughout  the site. EPA’s OU2 soil evaluation determined that elevated levels of  creosote contamination close to the surface in the residential area were  generally found near the lagoons and canals, while the drip area generally  had residual levels of contamination close to the surface. Underlying the  site, EPA found that free-product creosote rested on a clay layer  approximately 6 to 10 feet below the surface, although in some areas the  layer was not continuous, and the creosote had migrated as deep as the  bedrock, roughly 25 to 35 feet underground. On the basis of these findings,  in April 2000, EPA developed a human health risk assessment for soil  contamination in the residential area using a sample of six representative  properties: two properties each represented the lagoon and canal areas,  the drip area, and the remaining residential area, respectively. EPA found  that soil contamination exceeded acceptable risk levels at the lagoon and  canal and drip areas, but not at properties representing other areas of the  Claremont Development.
Furthermore, EPA’s OU3 soil analysis revealed that contamination was  generally in three main areas of the mall, with several other “hot spots” of  contaminated material. EPA also determined that most of the soil  contamination was within the first 2 feet below the ground surface;  however, in certain areas, contamination was as deep as 35 feet below the  surface. EPA noted that it did not collect soil samples from under the mall  buildings, although, according to a site document, EPA thought it likely  that contamination remained under at least a portion of one of the  buildings. EPA assessed the human health risks from exposure to soil  contamination in June 2001. At the time of EPA’s assessment, OU3 was a  commercial area. However, the Borough of Manville and the mall owner  had indicated that the area could be redeveloped for a mixed  residential/commercial use. Therefore, EPA evaluated risks for OU3 under  both residential and commercial use scenarios, and found that risks  exceeded acceptable levels for residential use at some areas of the mall  and for commercial use at one area.
Finally, EPA’s OU3 RI/FS investigation determined that contaminated  groundwater in the soil above the bedrock had not migrated far from the  original source areas of the lagoons and canals. However, free-product  creosote had penetrated as deep as 120 feet into the fractured bedrock,  and groundwater contamination in the bedrock had moved through the  fractures toward two nearby rivers. On the basis of these results, in July  2001, EPA evaluated the potential human health risks from groundwater  contamination to on-site and off-site residents (i.e., residents who lived on  or near the site) and commercial workers, and found that risks for on-site  residents and workers exceeded acceptable levels for carcinogenic and  noncarcinogenic contaminants.
The Department of Health and Human Services’ Agency for Toxic  Substances and Disease Registry (ATSDR) also evaluated the risks from  site contamination and published a series of studies that expressed  concern about site contamination levels. Between May 1997 and  February 1999, ATSDR published five health consultations that responded  to EPA requests to answer specific questions, such as whether consuming  vegetables grown in site soils posed a health threat. For example, ATSDR’s  first consultation concluded that subsurface soil contamination levels  posed a threat to residents if the contamination was dug up, or if similar  levels of contamination were discovered in surface soils. Then, in  September 2000, ATSDR published a public health assessment that  evaluated site contamination and concluded that past and present  exposures to surface soil (at that time) did not represent an apparent  health hazard. However, the assessment also stated that this conclusion  did not rule out the need for remedial action because subsurface  contamination posed a long-term hazard if soil 2 feet below the ground in  certain areas was disturbed.
ATSDR and EPA officials told us that ATSDR’s conclusion that surface soil  contamination did not pose a public health hazard did not mean that EPA’s  action to remediate the site was unwarranted. In particular, officials from  both agencies cited differences in the agencies’ risk assessment views and  processes as a reason why they could reach alternative conclusions about  site risks. For example, ATSDR officials indicated that ATSDR’s  assessment focused on conditions in the first 6 inches of soil to evaluate  what contamination exposures residents may have been subject to in the  past and at the time of the assessment. However, the officials said that  EPA’s risk assessment would have been more focused on the hypothetical  situation where subsurface soil contamination is brought to the surface in  the future. Therefore, the officials said that, in fact, ATSDR would have  had very serious concerns if the site had not been remediated because of  the potential for high levels of contamination in the subsurface soil to be  brought to the surface through activities such as tree planting or house  remodeling. ATSDR also had concerns about potential exposures to  groundwater contamination. As a result, the officials stated that ATSDR’s  assessment recommended that EPA continue its plans to implement a  remedial action to remove source material from the site.
On the basis of its conclusions about site risks, EPA set cleanup goals for  different areas of the site that, when achieved, would reduce risks to  acceptable levels for residential use. For example, EPA established site- specific qualitative objectives for its remedial actions, such as preventing  human exposure to contamination, cleaning up areas of source  contamination to allow for unrestricted land use and prevent future  impacts to groundwater quality, and minimizing disturbance to residents  and occupants of the Rustic Mall during a remedial action. EPA also  developed quantitative remediation goals to identify the level at which  remedial actions would need to be implemented to protect human health.  According to site documents, there were no federal or state cleanup  standards for soil contamination at the time of the cleanup effort.  Therefore, EPA established risk-based remediation goals that would  reduce excess carcinogenic risks to a level of 1 in 1 million, and that were  consistent with New Jersey guidance for residential direct contact with  soil. For the groundwater contamination, EPA used both federal and  state chemical-specific standards to set risk-based remediation goals.
According to site documents and Region 2 officials, risk levels required a  remedial action regardless of the site’s future use. The officials said that  EPA considered what level of waste could be left on-site while still  allowing for unrestricted residential use of properties; however, they  noted that, with unrestricted residential use, there is a very low threshold  for the level of waste that can be left on-site. They said that even the  residually contaminated soil was sufficiently contaminated that EPA dug  between 10 and 14 feet deep to allow for unrestricted use of residents’  properties. Similarly, EPA determined that source material in the Rustic  Mall needed to be remediated because of the potential future residential  use of the site. According to a site document, EPA determined that,  under a current use scenario (at the time of its risk assessment in 2001),  there were likely no unacceptable human health risks from contamination  under the mall because contaminants were covered by buildings and  pavement. However, the contamination could be exposed if these co were removed during site redevelopment. Therefore, EPA identified the  level of site cleanup required on the basis of the most conservative futu use scenario.
section_title: EPA’s Remedy Selection Decisions Were Influenced by the Residential Nature of the Site
paragraphs: To select remedies to address the soil and groundwater contamination at  the Federal Creosote site, EPA identified potential remedial technologies  from agency guidance as well as from other publications and databases  that listed potentially available technologies. After identifying potential  technologies, EPA screened out less viable technologies, combined  selected technologies into remedial alternatives, evaluated the  alternatives, and selected a preferred remedy for each OU. See appendix  III for a timeline of EPA’s remedy selection efforts.
Region 2 officials told us that, to identify technologies for site remediation,  EPA identifies a range of technologies on a site-specific basis. According  to agency guidance, EPA prefers three technologies for treating the type of  soil contamination found at the Federal Creosote site: bioremediation— using microbes to degrade contaminants and convert them to carbon  dioxide, water, microbial cell matter, and other products; low temperature  thermal desorption (LTTD)—heating contaminated material to  temperatures less than 1,000 degrees Fahrenheit to physically separate  contaminants from soils; and incineration—heating contaminated material  to temperatures greater than 1,000 degrees Fahrenheit to destroy  contaminants. EPA also identified other technologies to cap, contain,  excavate, extract, treat, or dispose of site soil or groundwater  contamination, including a number of emerging or innovative  technologies.
For the soil contamination, the range of technologies EPA considered  varied among the OUs at the site. During its remedy selection process for  OU1, EPA primarily evaluated the three technologies preferred by agency  guidance for soil contamination at wood-treatment sites. According to  Region 2 officials, EPA considered a limited range of technologies for OU1  because, originally, the agency was evaluating whether it would need to  evacuate residents to protect them from site contamination. Consequently,  EPA conducted a more streamlined remedy selection process for OU1 to  speed decision making. Alternatively, for OU2 (and later for OU3), EPA  evaluated a wider range of technologies, including several emerging  technologies. In addition, Region 2 officials stated that differences in the  contamination between the OUs impacted the range of technologies  considered. Specifically, the officials said that the OU1 material was the  more sludge-like, free-product creosote, whereas the OU2 contamination  might not have been visible. The officials noted that, with less  contaminated soils, more treatment options might become viable, since  some options that might have difficulty treating more highly contaminated  material might successfully treat less contaminated material. However,  while EPA considered a wider range of technologies for OU2 and OU3, in  general, EPA screened out the emerging technologies in favor of those that  were identified as preferred in its guidelines. Ultimately, EPA determined  that off-site thermal treatment and disposal of the soil contamination  would best achieve its cleanup goals and were consistent with residential  use of the site. In implementing this remedy, EPA determined that it would  need to purchase some houses—where contamination was inaccessible  without demolishing the houses—and permanently relocate these  residents, while residents in other houses would only need to be relocated  temporarily.
For the groundwater contamination, Region 2 officials said that EPA tried  to determine how to clean up the contaminated groundwater in the  fractured bedrock but ultimately concluded that none of the options  would be effective; moreover, many of the options would be expensive  and take a long time to implement. As a result, EPA determined that  attenuation of the groundwater contamination over time, long-term  monitoring, and institutional controls to prevent the installation of wells at  the site would be the best alternative to address contamination in the  fractured bedrock. To select this remedy, EPA invoked a waiver for  technical impracticability, which allowed it to select an alternative that  would not comply with requirements to clean up the groundwater to levels  that would meet site cleanup goals. Region 2 officials stated that one of  the presumptions EPA makes in using a waiver for technical  impracticability is that it has put forth its best effort to remove source  contamination. Therefore, according to the officials, on the basis of agency  guidance, EPA needed to clean up the source material that was  contaminating the groundwater to justify a waiver for technical  impracticability. Moreover, the officials said that by removing the source  material, EPA may have helped prevent the contaminated groundwater  area from getting larger. Also, the officials said that, in their judgment,  EPA’s action would help the contamination in the bedrock attenuate more  quickly, although they were unable to quantify this impact.
In selecting these remedies, EPA’s decisions were influenced by several  challenges associated with a residential cleanup, including (1) space  constraints that limited on-site implementation of actions, (2) a  determination that some options would not achieve the site cleanup goals,  and (3) concerns about some options’ community impacts.
Space constraints. According to Region 2 officials, space constraints  posed by the residential nature of the site limited EPA’s ability to  remediate contamination on-site. For example, the officials said that soil  contamination in the lagoons and canals was interspersed throughout the  residential area. As a result of the lack of available open land and the  residential nature of the site, a site document indicated that options for on- site treatment and disposal of excavated material were not considered for  OU1. Also, while EPA considered on-site treatment technologies and  alternatives for OU2 and OU3, Region 2 officials said EPA did not consider  buying additional houses to create more open space. They said that once  EPA determined that the majority of houses in the residential area could  be saved, it tried to avoid demolishing as many homes as possible. The  officials also noted that EPA could have placed a treatment facility in a  corner of the Rustic Mall, but that the mall was still a functioning  commercial area at the time EPA was selecting remedies. The mall was in  the middle of the town, and, according to the officials, feedback from local  citizens indicated that the community relied heavily on the mall. As a  result, EPA did not formally consider taking over additional areas of the  mall to create more open space as part of a remedial alternative. Region 2  officials acknowledged that, after EPA began the cleanup, the owner  decided to demolish the mall. However, they stated that, when EPA made  its remedy selection decisions, it did not have sufficient justification to  purchase or demolish the mall.
In particular, EPA Region 2 officials told us that the challenge of space  constraints was a key factor in why EPA chose not to implement  bioremediation or LTTD—two of EPA’s preferred remedies for treating  creosote contamination—on-site. For example, the officials noted that  bioremediation of excavated material on-site would have required a lot of  space to store the material while it was being treated with microbes that  would help degrade the contamination. Similarly, the officials said that  there was not sufficient space to stockpile material for treatment using  LTTD. That is, to operate an LTTD unit efficiently, the officials said that  EPA would have needed to feed material into the unit constantly.  However, they said doing so was not possible at the site because, while  EPA might excavate 100 tons of soil on some days, on other days, EPA was  unable to excavate as much since it needed to work by hand around  residents’ houses. Given EPA’s inconsistent rate of excavation, the agency  would have needed to stockpile material to ensure a constant flow into an  LTTD unit. However, according to Region 2 officials, there was not enough  space to stockpile contaminated material awaiting treatment, and, as a  result, the officials estimated that EPA could have operated an on-site  LTTD unit only 25 percent of the time, which they said would not have  been cost-effective. Specifically, the officials said that it would take  around 60,000 square feet for all of the operations associated with an  LTTD unit. They noted that a space roughly this size was available in the  northeast corner of the Rustic Mall. However, because of constraints, such  as fire code access requirements for a bowling alley that bordered this  area, the officials estimated that the total available space was actually only  about 43,000 square feet. Also, EPA would have needed additional space  for other facilities related to the cleanup. In addition, while EPA  determined that bioremediation and LTTD could be used to treat  contamination off-site, EPA found that they would be difficult to  implement because of a lack of permitted commercial facilities. As a  result, EPA relied on incineration because incineration facilities were the  most readily available for off-site treatment of material from the site.
Level of cleanup required. EPA had concerns about whether certain  technologies would effectively treat contamination to required levels,  given the residential nature of the site. For example, EPA determined it  was unlikely that such technologies as bioremediation of contaminated  material in place would achieve the agency’s soil remediation goals,  because EPA was uncertain whether the bioremediation microbes could  be distributed evenly in contaminated areas since some of the  contamination was under residents’ homes. Region 2 officials also said it  was unlikely that EPA could have achieved its cleanup goals using  bioremediation because of the high levels of soil contamination at the site.  They said that if contamination levels are high, the microbes introduced  into the soil could be killed before they have a chance to degrade the  contaminants. Moreover, because of the high contamination levels and  treatment requirements at the site, the officials said they had concerns  about the effectiveness of using LTTD. They stated that LTTD treats  material using lower temperatures than incineration, and that it removes  about 80 percent of the contamination each time material is passed  through the unit. As a result, sometimes material must be treated multiple  times before it meets residential standards. The officials indicated that this  would have probably been the case with the Federal Creosote material  because it was so highly contaminated. They said, given the nature of the  contamination at the site, incineration was a more efficient method of  treatment to achieve the agency’s remediation goals.
While the high treatment levels required because of the residential nature  of the site impacted EPA’s choices about individual soil remediation  technologies, they also influenced decisions about whether to dispose of  treated and untreated material on-site, or at an off-site location. According  to Region 2 officials, if EPA disposed of excavated material on-site, the  agency would have had to ensure, through treatment and testing, that the  soil met residential standards. Consequently, the officials concluded that if  EPA disposed of excavated material on-site, it would have had to treat and  test the material more extensively than it did for off-site disposal. The  officials said that only about 35 percent of the material excavated from the  site needed to be thermally treated before it could be disposed of off-site.  The rest of the excavated material could be disposed of without treatment  at a hazardous or nonhazardous waste landfill. However, they said, if EPA  had disposed of material on-site, it would have had to test and possibly  treat 100 percent of the material to ensure that it met residential  standards. Due to the potential expense of additional treatment and  sampling, EPA determined that off-site disposal would be more cost- effective.
For the groundwater contamination, according to site documents, EPA  found that none of its remedial alternatives, including those based on  extracting or treating the contamination in place, would be able to achieve  its cleanup goals effectively and reliably within a reasonable time frame.  For example, EPA found that some of the groundwater contaminants  could take decades to move through the groundwater, and, as a result, it  would take an extremely long time to remediate these contaminants using  an extraction technology. Moreover, EPA estimated that the technology  that was most likely to be able to achieve its remediation goals— extracting contaminants using steam—would cause significant disruption  to the residential neighborhood and would be much more expensive than  EPA’s other alternatives. On the basis of its experience at other sites, EPA  determined that complete removal of the groundwater contamination in  the bedrock at the site was not practicable. In addition, EPA found that  several of the treatment technologies it considered would not be effective  at treating the highly contaminated free-product creosote found in  portions of the site.
Community impacts. The residential nature of the site and the  importance of the Rustic Mall to the community also influenced EPA’s  remedy selection, given the effects that different technologies and  alternatives might have on the community. For example, according to  EPA, some of the substances that could be used to immobilize soil  contamination in the ground were potentially more toxic than the creosote  contamination. Also, certain options that treated contamination in place or  extracted it from the soil or groundwater would have emitted heat or gas  that could have posed risks to residents and the community. Moreover,  EPA determined that some options would have significantly disrupted the  community because of the need to install equipment, wells, and piping  throughout the residential and commercial areas.
Also, because EPA was implementing a remedial action in a residential  neighborhood at the site, it was concerned about the length of the cleanup  and other timing impacts on the community. Region 2 officials said that  EPA generally does not use certain alternatives unless the agency has the  flexibility to accomplish remediation over a long time frame on the basis  of the current land use (e.g., the site is abandoned). Under these  circumstances, EPA could use a remedy like bioremediation of  contaminated material in place, which would cause long-term disruption if  implemented in a residential neighborhood. Also, Region 2 officials said  that, if EPA had used on-site LTTD to treat contaminated material, it could  not have operated the unit in the most efficient way—24 hours a day— because the residents in houses within 200 feet of where the unit would  have been located would have been negatively affected by its lights and  noise during the night. However, the officials said, if EPA had only run the  LTTD unit 8 hours a day, the cleanup effort would have taken much  longer. The length of time involved was a particular concern in EPA’s  evaluation of groundwater remediation alternatives. According to the  Region 2 officials, the best alternative to extract contaminated  groundwater from the bedrock would have taken 18 to 20 years to  implement and would have covered the site with machinery.
Finally, EPA factored future land use impacts into its remedy selection  decisions. For example, EPA found that options that relied on  containment or deed restrictions, but that left contamination under and  around the residential community, were not viable alternatives. Region 2  officials said capping the contamination would not have supported use of  the land as a residential area because residents would have had to sign  agreements not to disturb the cap, which would have restricted their use  of the properties. Also, because of these restrictions, the officials said it is  likely that some owners would have refused to sign the necessary  agreements, and EPA would have had to take an enforcement action.  Similarly, EPA avoided certain remedies for the Rustic Mall because of the  impacts that they could have on the community’s ability to redevelop the  mall as well as on the operation of the mall. A Borough of Manville official  told us that the Rustic Mall was the “hub of the town” and was located  directly behind buildings on the town’s Main Street. As a result, he said the  community was very opposed to alternatives that would have left or  treated contamination on-site. He said that, in the town’s view, the  contamination under the mall needed to be cleaned up. Otherwise, it  would have been difficult to get tenants into the mall in the future, and the  town might have ended up with a blighted area in the center of the  community. He also said the community was concerned that no one would  want to come and shop at the mall if there was a treatment facility in the  parking lot.
section_title: EPA Placed a High Priority on Cleaning Up the Federal Creosote Site
paragraphs: EPA placed a high priority on scheduling and funding the Federal Creosote  site work because the contamination was in a residential area. According  to Region 2 officials, it is rare to find source contamination, such as the  free-product creosote, under a residential area, and most sites with the  level and extent of contamination found at the Federal Creosote site are  abandoned. The officials said EPA places the highest priority on  addressing the principal threats at residential sites first. As evidence of  this prioritization, EPA initiated efforts to study, select a remedy for, and  begin cleanup of the residential part of the site before undertaking similar  efforts for the Rustic Mall. For example, Region 2 officials said that EPA  decided relatively early in the cleanup process to break the site into three  OUs to allow work to proceed as quickly as possible. EPA determined that  it needed to get to work immediately on OU1, and that the groundwater  contamination and commercial area could wait until after EPA had  decided what to do with the residential area. The Region 2 officials said  that breaking the site into different OUs was important because EPA knew  that it needed to relocate some OU1 residents, and this process can be  time-consuming—one official noted that residents who must permanently  relocate have 1 year to do so. While this process took less time at the  Federal Creosote site, EPA did not know that would be the case initially.  Moreover, the Region 2 officials said that the first couple of years EPA  spent studying the site caused a great deal of anxiety for residents,  because they did not understand the risks of remaining in their homes and  could not sell their homes if the homes would need to be demolished. The  officials said the OU1 ROD informed residents that most of the homes in  the neighborhood would not need to be demolished, and this helped  reduce residents’ anxiety.
EPA also took steps to shorten the time needed to select, design, and  implement the remedial actions. For example, Region 2 officials said that,  because of the residential nature of the site, the site investigation process  was both unusually extensive and expedited in comparison to other sites.  Region 2 officials said that EPA began sampling early because, when the  site was discovered, the agency was concerned that contamination risks  could be so significant that residents might need to be evacuated. As a  result, they said that the agency gathered a large amount of information  about site contamination before listing the site on the NPL. The officials  said this data collection effort helped EPA move forward with site work  quickly because, with a large amount of data to use to gauge its overall  approach to the site, EPA was able to compress the removal evaluation,  listing process, and RI/FS into a relatively short amount of time. In  addition, EPA tried to streamline work by configuring its sampling efforts  to satisfy postexcavation requirements to confirm that contaminated  material no longer remained on-site. Specifically, site documents show  that to meet New Jersey requirements, EPA took samples on 30-by-30 foot  grids to confirm that contamination was no longer present along the sides  and bottom of an excavated area. Rather than wait until the excavation  was completed to take additional samples to confirm that contamination  was not present, EPA incorporated these requirements into earlier  sampling efforts. As a result, if samples were clean, EPA could  immediately backfill an area, which reduced the overall length of the  cleanup effort. Finally, in an effort to expedite the cleanup effort, EPA  Region 2 officials said that more of the region’s resources were devoted to  the site relative to other sites that the region needed to address at that  time.
As a result of these efforts to prioritize and expedite site cleanup work, the  Federal Creosote site reached key cleanup milestones in less time than  some other site cleanups. Region 2 officials said that they completed the  three RODs for the site in about 3 years, which they said is a very quick  time frame to complete such analyses. They noted that issuing a ROD is an  intensive process that at another site, for example, took over a decade.  Also, the Federal Creosote site reached EPA’s construction complete stage  more quickly than other megasites—that is, sites at which actual or  expected total cleanup costs, including removal and remedial action costs,  are expected to amount to $50 million or more. In July 2009, we reported  that, based on EPA data through fiscal year 2007, the median length of  time it took for megasites to reach construction complete after NPL listing  was 14.8 years. However, according to EPA data, the Federal Creosote  site reached construction complete in just over 9 years.
section_title: Total Site Costs Exceeded Early Construction Cost Estimates Largely because of the Nature of these Estimates and the Discovery of Additional Contamination
paragraphs: Total site costs exceeded construction estimates at the Federal Creosote  site by roughly $233 million, primarily because (1) EPA’s early  construction estimates were not designed to include all site-related  expenses and (2) additional quantities of contaminated material were  discovered during the cleanup effort. Other factors, such as  methodological variation for estimating site costs and contractor fraud,  accounted for a smaller portion of the cost difference.
subsections: section_title: Total Site Costs Exceeded Construction Estimates by Approximately $233 Million
paragraphs: According to our analysis, total site-related costs, including remedial  construction and other response costs at the Federal Creosote site through  the spring of 2009, were approximately $338 million, a roughly $233  million difference from the estimated remedial construction costs of $105  million. Total site costs were higher than construction estimates for  several reasons. As shown in figure 3, of the $233 million difference, 39.6  percent (or about $92 million) is due to other response costs that were not  included in EPA’s construction estimates; 47.5 percent (or about $111  million) is from an increase in remedial construction costs—mostly  directly related to the discovery of additional contaminated material; and  12.9 percent (or about $30 million) is due to other factors—primarily  differences in cost estimation methodology and, to a smaller extent,  to a smaller extent,  contractor fraud.  contractor fraud.
Other response costs not included in  construction estimates (about $92 million)
Remedial construction costs potentially  related to greater contaminated soil  quantities (about $111 million)
section_title: EPA’s Construction Cost Estimates Intentionally Did Not Include All Site Costs
paragraphs: EPA intentionally included only costs related to the construction and  maintenance of the selected remedies rather than total sitewide costs in its  early cost estimates, which follows its guidance, according to the agency.  EPA prepares these preliminary estimates during the remedy selection  process to compare projected construction costs across different remedial  action alternatives. Specifically, the National Contingency Plan directs  EPA to consider the capital costs of construction and any long-term  operation and maintenance costs as part of the remedial alternative  screening process. According to EPA guidance, these estimates are not  intended to include all site-related expenses, and certain expenses, such as  early site investigation and EPA enforcement costs, are beyond the scope  of these early estimates because these costs are not linked to a specific  remedial alternative and, therefore, would not affect the relative  comparison of alternatives. For example, while site investigation studies  were conducted for each operable unit, these studies were completed  prior to remedy selection to inform the selection process and, therefore,  were not linked to any particular remedy. Similarly, the removal cleanup  of surface soils in the residential area occurred prior to remedy selection  and, therefore, was not related to the construction costs of any particular  remedial alternative. Table 2 summarizes costs for activities that were not  included in EPA’s remedial construction cost estimates—other response  costs—at the Federal Creosote site.
section_title: The Need to Remediate Greater-than-Expected Quantities of Contaminated Material Contributed Most to the Gap between Estimated and Actual Construction Costs
paragraphs: During excavation, contractors discovered greater-than-expected amounts  of contaminated material requiring remediation across all OUs, which  contributed most to the difference between estimated and actual  construction costs. Based on our analysis of EPA documents, the initial  ROD estimates for the site indicated that approximately 154,100 to 164,400  tons of material would need to be excavated for treatment or disposal;  however, EPA ultimately found that roughly 456,600 tons of material  needed to be excavated—an increase of at least 178 percent. As shown in  table 3, according to our analysis, increased amounts excavated from the  OU1 and OU3 areas contributed the most to the difference between the  estimated and actual excavated amounts across the site as a whole.
According to EPA officials, it is common for EPA to remove more soil than  originally estimated at Superfund sites because of the uncertainty inherent  in using soil samples to estimate the extent of underground contamination.  For example, EPA guidance indicates that the scope of a remedial action is  expected to be continuously refined as the project progresses into the  design stage and as additional site characterization data and information  become available. However, both Corps and EPA officials stated that the  Federal Creosote site posed a particular challenge for estimating soil  quantities prior to excavation because of the way in which the waste  moved at the site and, in some cases, because of access restrictions during  sampling. According to EPA’s Remedial Project Manager (RPM) for the  site, soil contaminants generally either stay in place or migrate straight  down; however, while some of the creosote waste at the site stayed in  place, some of the waste migrated both horizontally and vertically. The  RPM said that this migration made it difficult to predict the waste’s  location through sampling. For example, during excavation, contractors  found seams of contaminated material, some of which led to additional  pockets of creosote waste, while others did not. Given the diameter of the  sampling boreholes (which were generally 2 to 4 inches wide) and the  width of the seams of creosote waste (which in some cases were only 6  inches wide), the sampling process could not detect all of the creosote  seams at the site, despite what EPA officials considered to be the  extensive sampling during the early site investigations that formed the  basis for the initial cost estimates. Additionally, sampling during the site  investigations for the residential area as well as the Rustic Mall was  limited by the location of buildings and access restrictions, according to  EPA’s RPM. For example, site documents indicate that no samples could  be taken from under the mall during the OU3 soil investigation because  the buildings were being used. It was not until the mall owners decided to  demolish the existing structures as part of a town revitalization plan that  mall tenants left and EPA was able to take samples in the areas covered by  the buildings. These areas were found to contain additional areas of  creosote waste, as shown in figure 4.
Although the mobility of the waste in the subsurface soil and sampling  limitations hindered EPA’s ability to determine the total quantity of  material requiring excavation during the pre-ROD site investigation when  the initial cost estimates were prepared, soil sampling during this stage  was generally successful at identifying which residential properties  contained contamination, according to our analysis of site documents. For  example, pre-ROD soil sampling allowed EPA to correctly identify 83 of  the 93 residential properties that would eventually require remediation, as  shown in figure 5.
According to EPA guidance, because of the inherent uncertainty in  estimating the extent of site contamination from early investigation data,  cost estimates prepared during the RI/FS stage are based on a conceptual  rather than a detailed idea of the remedial action under consideration. The  guidance states that these estimates, therefore, are expected to provide  sufficient information for EPA to compare alternatives on an “order of  magnitude” basis, rather than to provide an exact estimate of a particular  remedy’s costs. For example, the guidance also states that preliminary  cost estimates prepared to compare remedial alternatives during the  detailed analysis phase of the RI/FS process are expected to range from 30  percent below to 50 percent above actual costs.
However, at the Federal Creosote site, actual construction costs were  more than twice what EPA estimated. Specifically, we found that sitewide  remedial construction costs increased by $141 million over EPA’s  estimated amounts. According to site documents, increases in the quantity  of material requiring excavation, transportation, treatment, or disposal  resulted in higher construction costs across all OUs. Our analysis of site  cost data indicated that construction costs potentially associated with the  additional quantity of contaminated material accounted for most of this  increase ($111 million, or about 78.7 percent). In particular, soil  excavation, transportation, treatment, and disposal costs constituted  approximately 56.1 percent ($62 million) of the increased construction  costs potentially related to additional quantities of material, and 26.7  percent of the overall $233 million difference between estimated  construction and total site costs, as shown in figure 6.
According to EPA’s RPM, both the need to excavate greater amounts of  material and the reclassification of excavated material from nonhazardous  waste to hazardous waste affected excavation, transportation, treatment,  and disposal costs. For example, the discovery of additional pockets of  creosote waste increased the overall amount of material requiring  excavation and treatment or disposal because, in addition to removing the  waste itself, any soil overlying the contamination needed to be removed  and disposed of to access the creosote waste. Additionally, if a pocket of  creosote waste was unexpectedly discovered in an area of soil that had  already been designated for excavation and disposal in a landfill without  treatment because prior sampling indicated it was less contaminated, the  overall amount of soil to be excavated would not be affected, but costs  would increase because treatment is more expensive than landfill  disposal.
In addition, EPA and Corps officials said that the need to remediate  greater quantities of material contributed to increases in other sitewide  construction costs, such as general construction requirements and site  restoration costs. Our analysis showed that such costs accounted for  another 20.9 percent of the difference between estimated construction  costs and total site costs—although the exact extent to which additional  amounts of material contributed to the difference in costs is not clear.  EPA’s RPM stated that the effect of increased quantities varied, depending  on the OU. However, EPA and Corps officials said that in general, more  extensive excavation would increase design engineering, inspection, and  other costs as well as costs for general construction requirements and for  site restoration, as shown in table 4. For example, the decision to  remediate additional contaminated material under the Rustic Mall  buildings led to increased design engineering costs because the original  excavation plans were created under the assumption that the mall would  remain standing, and further rounds of design sampling were needed to  identify the extent and location of contamination once the buildings were  demolished. Additionally, our analysis of site documents indicated that the  increased time required to excavate additional material could have led to  greater project costs for general construction requirements, such as  temporary facility rental, site security, and health and safety costs.  Similarly, site restoration costs, such as costs for backfill soil, could have  increased because more backfill would be required to restore the site after  excavation.
According to the RPM, EPA and the Corps instituted certain controls at  the site to minimize costs. In particular, the RPM stated that the Corps  took steps to ensure that material was not unnecessarily excavated and  sent for treatment and disposal. For example, if contractors found an  unexpected pocket of creosote waste during excavation, they were  required to notify the Corps official on-site, who would decide whether  additional excavation was required depending upon visual inspection and  additional testing, as needed. The contractor was not allowed to excavate  beyond the original excavation limits without Corps approval. According  to the RPM, the Corps’ approach of reevaluating the original excavation  depth on the basis of additional sampling results and a visual inspection of  the soil led to cost savings because in some areas less material needed to  be excavated than originally planned. Furthermore, EPA and Corp officials  stated that this process minimized unnecessary treatment and disposal  costs that might be incurred if “clean” soil was sent for treatment or  hazardous waste disposal. Additionally, EPA’s decision in November 2002  to allow treated soil to be disposed of in a nonhazardous waste facility if it  met the facility’s criteria for contamination levels helped reduce unit costs  for treatment and disposal because disposing of soil at a hazardous waste  facility is more expensive. For example, in a bid for a contract to treat and  dispose of soil following EPA’s decision, the selected subcontractor  submitted a unit price for treatment and disposal at a nonhazardous waste  facility that was $80 (or 16 percent) less than its unit price for treatment  and disposal at a hazardous waste facility—which for that particular  contract saved $800,000.
Furthermore, on the basis of information gathered from site documents  and from statements made by EPA and Corps officials, EPA and the Corps  took other steps intended to minimize costs. For example, a Corps official  said that reducing the duration of the project could help minimize certain  site costs. Specifically, according to our analysis of site documents, to  reduce the amount of time spent waiting for sampling results prior to  backfilling an excavated area, EPA and the Corps incorporated state  postexcavation sampling requirements into their design sampling plans for  earlier investigations. Accordingly, unless additional excavation was  required to meet the cleanup goals, these samples could be used to  confirm that the boundaries of the excavation areas had been tested for  contamination. Additionally, our analysis of site documents showed that  the Corps tested various odor control measures before beginning  excavation at certain areas of the site, which allowed it to use less  expensive odor control alternatives than originally planned and saved  approximately $1.1 million in implementation costs. These measures also  helped to speed up the construction work. Finally, according to the RPM,  the Corps was able to minimize costs by managing the work to avoid  costly contractor demobilization and remobilization expenses. For  example, the Corps dissuaded the contractors from removing idle  equipment and worked with the RPM to resolve administrative or funding  issues or questions about the work as they arose to prevent an expensive  work stoppage.
section_title: Contrasting Cost- Estimating Methodologies and Contractor Fraud Explain a Smaller Portion of the Difference between Estimated Construction and Total Site Costs
paragraphs: Other factors, including different cost-estimating methodologies and  contractor fraud, explain a smaller portion of the difference between  estimated construction and total site costs at the Federal Creosote site. In  developing its estimates, EPA followed agency guidance, which states that  as a simplifying assumption, most early cost estimates assume that all  construction costs will be incurred in a single year. According to EPA,  since the estimated implementation periods for EPA’s remedial actions  were relatively short periods of time, EPA did not discount future  construction costs in its estimates, and, therefore, these estimates were  higher than they would have been otherwise. In accordance with our best  practices regarding the use of discounting, we adjusted the initial cost  estimates to reflect that costs were projected to accrue over several years  and that, therefore, future costs should be discounted. However, by  discounting future construction costs prior to adjusting for inflation, our  discounted values were lower than EPA’s original estimates in site  documents. According to our analysis, discounting estimated costs  accounted for approximately 12 percent of the $233 million difference  between estimated construction and total site costs (see fig. 7).
Contractor fraud also contributed to the difference between estimated  construction and total site costs, but to a small degree. However, while  some parties have pled guilty to fraud, the full extent of the effect of fraud  on site costs will not be known until all investigations are complete. Court  documents alleged that employees of the prime contractor at the site, as  well as some subcontractors, were engaged in various kickback and fraud  schemes, which resulted in inflated prices for certain subcontractor  services. For example, a subcontractor for soil treatment and disposal  agreed to pay approximately $1.7 million in restitution to EPA for fraud in  inflating its bid prices. In addition, court documents alleged that  fraudulent price inflation also affected other site costs, including certain  subcontracts for items such as wastewater treatment, backfill, landscaping  services, and utilities. To date, our analysis of available court documents  indicated that at least approximately $2.1 million in inflated payments may  be directly attributable to fraud at the Federal Creosote site. On the basis  of currently available information, this figure represents less than 1  percent of the difference between estimated construction and total site  costs. However, since the fraud investigations are ongoing and additional  charges may be filed, the full extent of contractor fraud is not currently  known. See appendix I for more information about site-related fraud  investigations.
section_title: EPA Provided Overall Project Management and Communicated with Residents, while the Corps Oversaw Contractor Implementation of the Remedy
paragraphs: EPA managed the overall cleanup and communicated with residents  through a dedicated on-site staff presence, among other actions. The  Corps implemented the cleanup work by hiring and overseeing  contractors; the Corps was less involved in selecting and overseeing  subcontractors at the site.
subsections: section_title: EPA Managed the Cleanup and Communicated with Residents
paragraphs: According to a 1984 interagency agreement between EPA and the Corps  for the cleanup of Superfund sites, EPA maintains statutory responsibility  for implementing the Superfund program. In addition to selecting the  remedy at a site, EPA provides overall management of the cleanup,  ensures that adequate funding is available, and manages relationships with  other interested parties, such as residents. If EPA decides that Corps  assistance is needed to conduct cleanup work, EPA establishes site- specific interagency agreements. These agreements outline the specific  tasks and responsibilities of the Corps at the site and provide a proposed  budget for the activities listed. Once the site-specific agreements are  established, EPA’s primary responsibilities are to make sure that the work  continues without interruption and that adequate funding is available,  according to EPA officials. EPA officials also noted that the agency does  not have the authority to direct Corps contractors at the site; rather, all  instruction and direction to contractors goes through the Corps.
To fulfill its project management and community outreach responsibilities,  EPA dedicated a full-time RPM to the Federal Creosote site, according to  Region 2 officials. Although RPMs generally have two or more sites for  which they are responsible at any given time, Region 2 officials stated that  the size and complexity of the site required a higher level of EPA  involvement. For example, the officials said that the relatively large size of  the site and stringent cleanup goals meant that a large area was excavated,  and the complexity of the cleanup process led to a greater number of  questions from the Corps and its contractors that required EPA’s attention.  According to the officials, the RPM was on-site at least two to three times  per week; however, during some segments of the work, he was on-site  almost every day. They noted that the design phase in particular required  close coordination with the Corps because design activities for different  areas of the site occurred simultaneously and were often concurrent with  construction. Consequently, the RPM said he was on-site working with  the Corps and its design contractor to design new phases of the work;  revise existing designs; and answer any questions regarding ongoing  construction activity, such as whether to excavate additional pockets of  waste found during the construction phase. According to the RPM,  although the Corps was required to ask EPA for approval only to expand  excavation to properties that were not included in the RODs, in practice,  Corps officials kept him informed whenever additional excavation was  required, and, in many cases, he made the decision regarding whether to  broaden or deepen the excavated area.
To monitor project progress and funding, the RPM had weekly on-site  meetings with the Corps and received weekly and monthly reports on  progress and site expenditures, according to EPA officials. At the weekly  meetings, the RPM would answer Corps questions regarding the work and  be informed of any contracting or subcontracting issues that might delay  or stop work at the site. Moreover, as part of EPA’s oversight of site  progress, the RPM said he reviewed Corps documents regarding any  changes in the scope of the work. Because EPA provided funding to the  Corps on an incremental basis, the RPM also closely monitored the rate of  Corps expenditures to ensure sufficient funding to continue the work,  according to EPA officials. The RPM explained that he also reviewed  Corps cost information for unusual charges and, with the exception of a  few instances of labor charge discrepancies, most of the time the Corps  reports did not contain anything surprising. In the few instances where the  RPM found a discrepancy, he contacted Corps officials, and they were able  to explain the reason for the discrepancy—for example, a problem with  the Corps’ billing software. The RPM stated that, under the interagency  agreement with the Corps, he did not review contractor invoices or  expenditures because the Corps had both the responsibility and the  expertise necessary to determine whether the contractor charges were  appropriate, given the assigned work.
Additionally, EPA officials stated that the residential nature of the site  necessitated a substantial investment in community relations to manage  residents’ concerns about the contaminated material under their homes  and the Rustic Mall. As part of these efforts, EPA used such tools as flyers,  newsletters, resident meetings, and media interviews to communicate with  concerned citizens. According to the RPM, managing community  relations required the second largest commitment of his time, after  designing the work. He said that he spent a great deal of time working with  residents to help them understand the situation during the early site  investigation stage, when it was not clear who was going to need to move  out of their homes and residents were concerned about their health and  property. The RPM said that he also worked personally with residents  during the design and implementation of the remedy to minimize the  impact to the community and to inform it of any additional actions needed,  such as excavating contamination across a property line or closing roads.
According to site documents and a local official, EPA’s community  relations efforts were successful at reducing residents’ anxieties. For  example, in a summary of lessons learned from the cleanup effort, site  documents indicate that EPA’s policy of promptly responding to  community inquiries and the regular presence of EPA personnel at the site  helped to establish and preserve a high level of public acceptance and  trust with the community. Also, a Borough of Manville official noted that  the continuity provided by having one RPM dedicated to the site for the  duration of the project was particularly helpful in maintaining good  communication because it allowed EPA officials to know almost all of the  residents on a first-name basis and encouraged their participation in the  cleanup process. For example, the RPM stated that he worked closely with  residents to address their concerns and minimize impacts to the  community during the excavation of contaminated material and the  restoration of affected areas of the neighborhood. Similarly, according to  the Borough of Manville official, EPA and the contractors effectively  coordinated with town officials to ensure that the cleanup effort went  smoothly. For example, to minimize disruption, EPA consulted with town  officials about which roads would be best to use, considering the routes  and weight limitations of trucks leaving the site. In the official’s view,  EPA’s outreach efforts ensured that residents and the community as a  whole had sufficient information to feel comfortable about the cleanup.  Consequently, despite the size and scope of the cleanup effort, the official  could recall very few complaints from residents.
section_title: The Corps Selected and Oversaw Contractors’ Design and Implementation of the Remedy but Had a Limited Role in the Subcontracting Process
paragraphs: At the Federal Creosote site, the Corps selected and oversaw private  contractors’ design and implementation of the remedial action; however,  the Corps was less involved in the subcontracting process. Under the 1984  interagency agreement with EPA, the Corps selects and oversees private  contractors for all design, construction, and other related tasks at  Superfund sites, in accordance with Corps procedures and procurement  regulations. According to Corps officials, the Corps selected a contractor  to perform the design for the three OUs at the Federal Creosote site from a  list of qualified vendors and then negotiated a price for the contracts. For  construction, the Corps selected a prime contractor from a pool of eligible  contractors under a cost-reimbursement, indefinite-delivery/indefinite- quantity (IDIQ) contract. According to EPA and Corps guidance, this  system provides more flexible and responsive contracting capabilities for  Superfund sites, which may require a quick response and often lack a  sufficiently defined scope of work for price negotiation.
The Corps’ prime contractor performed some of the work and  subcontracted some tasks to other companies. For example, the prime  contractor excavated contaminated material but awarded subcontracts for  transportation, treatment, and disposal of the excavated material. Other  subcontracted services included providing backfill soil and landscaping  for site restoration, and treating wastewater. To subcontract, the prime  contractor solicited bids from potential vendors and, for smaller  subcontracts, provided the Corps with advance notification of the award.  To award larger subcontracts, the prime contractor requested Corps  approval.
To carry out its oversight responsibilities, the Corps monitored changes in  the scope of the work, contractor progress and costs, and work quality.  For example, Corps officials stated the following:    The Corps had to approve any changes in project scope, such as  excavating greater quantities of material, or any increases in other  construction services or materials beyond the amounts originally  negotiated between the Corps and the prime contractor. According to EPA  officials, this chain of command helped prevent any unauthorized  expansion of work at the site.
To monitor project progress and contractor costs during construction, the  Corps reviewed prime contractor cost summary reports for each phase of  the work. These reports contained detailed information on contractor  costs and work progress, and, according to Corps officials, they were  updated, reviewed, and corrected if necessary on a daily, weekly, and  monthly basis. For example, Corps officials explained that they reviewed  the daily reports primarily for accuracy and unallowable costs. For weekly  and monthly reports, the Corps also examined whether the contractor was  incurring costs more quickly than expected, which could indicate that a  cost was incorrectly attributed or that a change in project scope was  necessary (i.e., because particular aspects of the work were more costly  than anticipated, and, therefore, a scope revision was needed to complete  planned activities). However, Corps officials commented that the  contractor data were generally accurate, and that errors were infrequent.  The officials also said that, during the most active periods of the work,  they discussed the cost reports and project progress, including any  potential changes in unit costs, during the weekly meetings with the  contractor.
The Corps also monitored work quality at the site. According to site  documents, the Corps was required to implement a quality assurance plan  as part of its oversight responsibilities and had a quality assurance  representative at the site during construction. For example, in a July 2002  notice to the prime contractor, the Corps identified several workmanship  deficiencies that the contractor had to address to retain its contract for  that portion of the work.
According to Corps guidance and officials, the Corps had a limited role in  the subcontracting process at the Federal Creosote site. For example, the  prime contractor was responsible for selecting and overseeing  subcontractors. In particular, Corps guidance states that since  subcontracts are agreements solely between the prime contractor and the  subcontractor, the Corps does not have the authority to enforce the  subcontract provisions. Rather, the guidance indicates that the Corps  oversees the prime contractor’s management systems for awarding and  administering subcontracts through periodic reviews of the contractor’s  subcontracting processes and ongoing reviews of subcontract awards.  According to Corps officials, the Corps’ main responsibility in the  subcontracting process at the Federal Creosote site was to review  subcontract decisions and approve subcontracts above a certain dollar  threshold. As Corps officials explained, subcontracts between $25,000 and  $100,000 did not need to be approved by the Corps; rather, the prime  contractor sent the Corps an “advance notification” package, which  documented that the contractor had competitively solicited the work and  why the contractor selected a particular subcontractor over others.  However, for subcontracts greater than $100,000, the prime contractor had  to submit a “request for consent” package to the Corps, which contained  similar documentation as an advance notification but required Corps  approval prior to awarding a subcontract.
According to federal acquisition regulations and policies, when evaluating  request for consent packages, Corps contracting officers should consider  whether there was sufficient price competition, adequate cost or price  comparison, and a sound basis for selecting a particular subcontractor  over others, among other factors. Early in the project, the Corps identified  several issues with the prime contractor’s performance at the site,  including the award of subcontracts. According to a letter the Corps sent  to the prime contractor, the Corps noted that after repeated unsuccessful  attempts to address these issues, the Corps would initiate proceedings to  terminate the contract for site work unless the contractor took corrective  action. However, Corps officials said the contractor demonstrated  sufficient improvement in its documentation practices. Then, in 2003, the  Corps raised the request for consent threshold from $100,000 to $500,000  because of the high volume of these packages that the Corps was  receiving. A Corps official noted that while the Corps reviews and  consents to the subcontracting decisions of its contractors as appropriate,  it avoids becoming too involved in the subcontracting process because of  bid protest rules regarding agency involvement in that process. According  to the official, under these rules, a subcontract bidder cannot protest a  subcontract award unless it can show that the overseeing agency was  overly involved in the subcontracting process.
Concerning contractors at the Federal Creosote site, the Department of  Justice and EPA’s Office of Inspector General have ongoing investigations,  some of which have resulted in allegations of fraud committed by  employees of the prime contractor and several subcontracting firms. For  example, court documents alleged bid-rigging, kickbacks, and other  fraudulent activity related to the award of several subcontracts for a  variety of services and materials. According to Corps officials, the Corps  did not suspect issues of fraud in the subcontracting process until 2004  when, in one instance, a subcontract bidder objected to the award of a soil  transportation, treatment, and disposal subcontract to another firm whose  bid was substantially higher. Upon further review of the documents, Corps  officials found that the prime contractor had not conducted a proper  evaluation of the bid proposals, and the Corps withdrew its consent to the  subcontract—ultimately requesting that the prime contractor solicit bids  under a different process. In the revised bidding process, the firm that  had won the earlier subcontract reduced its price from $482.50 to $401.00  per ton of contaminated material—only 70 cents below the competing bid  submitted by the firm that had protested the original subcontract. On this  basis, the prime contractor again requested consent to subcontract with  the firm to which it had awarded the earlier subcontract. According to a  Corps official, the Corps was suspicious of illegal activity given how close  the two bids were, and Corps officials discussed whether to take formal  action against the prime contractor. However, Corps officials decided they  did not have sufficient evidence of wrongdoing to support a serious action  but did cooperate with others’ investigations of fraud at the site. For more  information on site-related fraud, see appendix I.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Secretary of the Army and the  Administrator of the Environmental Protection Agency for review and  comment. The Secretary, on behalf of the Corps of Engineers, had no  comments on the draft report. EPA generally agreed with our findings  regarding the agency’s actions and costs to clean up the Federal Creosote  site, and provided a number of technical comments, which we  incorporated as appropriate. EPA’s written comments are presented in  appendix IV.
In its comments, EPA noted that the draft report accurately described the  cleanup of the site and correctly compared the site’s estimated and final  remedial construction costs. However, EPA stated that comparing  estimated remedial construction costs to total site costs is not an “apples  to apples” comparison because some costs, such as amounts spent on  removal actions or EPA personnel salaries (referred to as “other response  costs” in this report), are purposely excluded from EPA’s early estimates  of remedial construction costs. We agree that to identify the extent to  which site costs increased over agency estimates, one should only  compare estimated and actual remedial construction costs, as we do in  table 4 of this report. However, our objective was, more broadly, to  identify what factors contributed to the difference between the estimated  remedial construction costs ($105 million) and the actual total site costs  ($338 million). We found that the difference between these two amounts  was $141 million in remedial construction cost increases—which were  largely due to increases in the amount of contaminated material requiring  remediation—and $92 million in other response costs that were not  included in EPA’s original estimates. We believe it was necessary to  provide information on these other response costs to more fully answer  our objective and to provide a more informative accounting of the total  costs that EPA incurred in cleaning up the Federal Creosote site.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution of it until 30 days from  the date of this report. At that time, we will send copies of this report to  the appropriate congressional committees, the Secretary of the Army, the  Administrator of the Environmental Protection Agency, and other  interested parties. In addition, the report will be available at no charge on  GAO’s Web site at http://www.gao.gov.
If you or your staffs have any questions about this report, please contact me  at (202) 512-3841 or stephensonj@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page of  this report. Key contributors to this report are listed in appendix V.
section_title: Appendix I: Summary of Criminal and Civil Litigation Related to the Federal Creosote Site
paragraphs: Court records show that several cases have been brought concerning the  Federal Creosote site cleanup. First, the Department of Justice (Justice)  and the state of New Jersey have filed claims to recover cleanup costs.  Second, Justice has brought criminal charges in a series of cases against  one employee of the prime contractor, three subcontractor companies,  and eight associated individuals involved in the cleanup, alleging fraud,  among other things. Third, the prime contractor has brought a civil suit  against a former employee alleged to have committed fraud and other  offenses during his employment as well as against associated  subcontractors. The information in this appendix provides a brief  summary of known actions related to the Federal Creosote site cleanup.
subsections: section_title: Cost Recovery and Natural Resources Damages Claims
paragraphs: United States v. Tronox, LLC: The Comprehensive Environmental  Response, Compensation, and Liability Act of 1980 (CERCLA) provides  that parties incurring costs to respond to a release or threatened release of  a hazardous substance may recover such costs from legally responsible  parties, including persons who owned or operated a site, among others. In  this regard, the Environmental Protection Agency (EPA) identified  Tronox, LLC, the successor to the companies that owned and operated the  Federal Creosote site, and, for 2 years, EPA and Tronox participated in  alternative dispute resolution concerning EPA’s cost recovery claims. In  August 2008, Justice, on behalf of EPA, filed a civil action in the United  States District Court for the District of New Jersey against Tronox, seeking  recovery of costs that the government incurred for the Federal Creosote  site cleanup. The complaint asserted that the government had incurred at  least $280 million in response costs and would incur additional costs. In  October 2008, the New Jersey Department of Environmental Protection  and the Administrator of the New Jersey Spill Compensation Fund filed  suit in the same court against Tronox, seeking recovery of costs incurred  for the site, as well as damages for injury to natural resources—under both  CERCLA and the New Jersey Spill Compensation Act—and public  nuisance and trespass claims. In December 2008, the federal and state  cases were consolidated. Tronox has stated its intent to vigorously defend  against these claims. In early 2009, Tronox filed for voluntary Chapter 11  bankruptcy in federal bankruptcy court and initiated an adversary  proceeding in that court, seeking a declaratory judgment on the status of  the EPA and New Jersey claims with respect to the bankruptcy.
Subsequently, both courts entered a stipulation filed by both the  government plaintiffs and Tronox to stay the cost recovery case as well as  the adversary proceeding to allow the parties to resolve the claims. As of  the date of this report, the stays remain in effect.
section_title: Criminal Cases Involving Alleged Contractor Fraud at the Site
paragraphs: United States v. Stoerr: Norman Stoerr, a former employee of the prime  contractor at the Federal Creosote site, pled guilty to three counts related  to his activities as a contracts administrator at the site. Court documents  alleged that over a 1-year period, the employee conspired with others to  rig bids for one subcontractor at the site, resulting in EPA being charged  inflated prices. In addition, the documents alleged that over several years,  the employee solicited and accepted kickbacks from certain  subcontractors at the Federal Creosote site and another site, and allowed  the kickbacks to be fraudulently included in subcontract prices that were  charged to EPA. To date, Stoerr has not been sentenced.
United States v. McDonald et al: In August 2009, the United States  indicted Gordon McDonald—a former employee of the prime contractor at  the Federal Creosote site—as well as representatives of two  subcontractors who worked at the site, for various counts, including  kickbacks and fraud. The indictment charged that the prime contractor’s  employee, a project manager, solicited and accepted kickbacks from  certain subcontractors in exchange for the award of site work, and that  these kickbacks resulted in EPA being charged an inflated price for the  subcontractors’ work. The indictment also charged that the project  manager disclosed the bid prices of other vendors during the  subcontracting process, which resulted in the government paying a higher  price for services than it would have otherwise paid. One of the indicted  employees (James Haas)—representing a subcontractor who provided  backfill material to the site—has pled guilty of providing kickbacks and  submitting a bid that was fraudulently inflated by at least $0.50 per ton of  material. Haas agreed to pay more than $53,000 in restitution to EPA as  part of his guilty plea, and has been sentenced to serve 33 months in jail  and to pay a $30,000 criminal fine. McDonald’s case is proceeding, and  charges against a third defendant are still pending.
United States v. Bennett Environmental, Inc.: Bennett Environm Inc. (BEI), a subcontractor providing soil treatment and disposal services  to the Federal Creosote site cleanup, entered a plea agreement admitting  to one count of fraud conspiracy. Court documents alleged that over 2  years, the company paid kickbacks to an employee or employees of the  prime contractor, in return for receiving favorable treatment in the award  of subcontracts, and inflated its prices charged to EPA. BEI was sentence to 5 years’ probation and ordered to pay $1.662 million in restitution to  EPA, plus a $1 million fine.
United States v. Tejpar: Zul Tejpar, a former employee of BEI, entered a  plea of guilty to one count of fraud conspiracy. Court documents alleged  that Tejpar, along with coconspirators, provided kickbacks to  employees  of the prime contractor to influence the award of subcontracts at the site  and fraudulently inflated the company’s bid price after an employee of the  prime contractor revealed the other bid prices. To date, T ejpar is awaiting  sentencing.
United States v. Griffiths: Robert P. Griffiths entered a plea of guilty to  three counts related to fraudulent activity at the Federal Creosote site  when he was an officer of BEI. Griffiths, along with coconspirators,  provided kickbacks to employees of the prime contractor to influence the award of subcontracts at the site, fraudulently inflated the company’s  invoices that the prime contractor charged to EPA, and fraudulently  received the bid prices of other bidders prior to award of a subcontract.  To date, Griffiths is awaiting sentencing.
United States v. JMJ Environmental, Inc.: JMJ Environmental, Inc., a  subcontractor providing wastewater treatment supplies and services, and  John Drimak, Jr., its president, entered guilty pleas related to fraudulent  activity at the Federal Creosote site and another site. At the Federal  Creosote site, JMJ Environmental and Drimak, along with coconspirators,  provided kickbacks to employees of the prime contractor to influence the  award of subcontracts at the site, fraudulently inflated the company’s  prices that the prime contractor charged to EPA, and arranged for  intentionally high, noncompetitive bids from other vendors. To date, JMJ  Environmental and Drimak are awaiting sentencing.
United States v. Tranchina: Christopher Tranchina, an employee of  subcontractor Ray Angelini, Inc., which provided electrical services and  supplies, entered a plea of guilty to fraud conspiracy for activities at the  Federal Creosote site. Tranchina, along with coconspirators, provided  kickbacks to employees of the prime contractor to influence the award of  subcontracts at the site and fraudulently inflated the company’s prices that the prime contractor charged to EPA. Tranchina was sentenced to  imprisonment of 20 months and ordered to pay $154,597 in restitution to  EPA.
United States v. Landgraber: Frederick Landgraber, president of  subcontractor Elite Landscaping, Inc., entered a plea of guilty to fraud  conspiracy for activities at the Federal Creosote site. Landgraber, along  with coconspirators, provided kickbacks to employees of the prime  contractor to influence the award of subcontracts at the site and  submitted fraudulent bids from fictitious vendors to give the appearance  tive process, resulting in EPA paying higher prices than if  of a competi procurement regulations were followed. Landgraber was sentenced to  imprisonment of 5 months and ordered to pay $35,000 in restitution to  EPA and a $5,000 fine.
United States v. Boski: National Industrial Supply, LLC, a pipe supply  company, and coowner Victor Boski entered guilty pleas for fraud  conspiracy at the Federal Creosote site and another site. At the Feder Creosote site, National Industrial Supply and Boski, along with  coconspirators, provided kickbacks to em to influence the award of subcontracts at the site and fraudulently inflated  ms  the company’s prices that the prime contractor charged to EPA. The terployees of the prime contractor  of the plea agreement require National Industrial Supply and Boski to have available $60,000 to satisfy any restitution or fine imposed by the court,  among other items. To date, they are awaiting sentencing.
section_title: Prime Contractor Civil Suit
section_title: Appendix II: Objectives, Scope, and Methodology
paragraphs: This appendix provides information on the scope of work and  methodology used to examine (1) how EPA assessed the risks and  selected remedies for the Federal Creosote site, and what priority EPA  assigned to site cleanup; (2) what factors contributed to the difference  between the estimated and actual remediation costs of the site; and (3)  how responsibilities for implementing and overseeing the site work w divided between EPA and the U.S. Army Corps of Engineers (the Corp also discusses our methodology for summarizing criminal and civil  litigation related to the Federal Creosote site.
To examine how EPA assessed the risks and selected remedies for the  Federal Creosote site, as well as what priority it assigned to the clean we reviewed EPA’s Superfund site investigation  and cleanup processes,  including applicable statutes, regulations, and agency guidance. We also  reviewed documentation from the site’s administrative record, which  detailed the agency’s activities and decisions at the site. As part of this  review, we analyzed public comments that were documented in site  records of decision to identify key issues with the cleanup effort. To  obtain additional information on these and other site cleanup issues, we  interviewed EPA Region 2 officials involved with the site, including  officials from the Emergency and Remedial Response Division, the Public  Affairs Division, and the Office of Regional Counsel. Furthermore, we  interviewed and reviewed documentation obtained from officials with the  Agency for Toxic Substances and Disease Registry regarding its  determination of site risks. We also consulted with New Jersey and  Borough of Manville officials to obtain their views on the cleanup effort.  Finally, we interviewed representatives of the potentially responsible party  for the site to obtain the party’s views on EPA’s risk assessment, remedy  selection, and site prioritization.
To determine what factors contributed to the differences between the  estimated and actual costs of site cleanup, we obtained and analyzed data  on estimated and actual site costs from several sources. For estimated  site costs, we combined EPA’s estimates for selected remedies from site  records of decision and remedial alternative evaluations. In developing  these estimates, EPA applied a simplifying assumption that all  construction costs would be incurred in a single year, and, therefore did not discount future construction costs, even though work was  projected to occur several years into the future as a result of design  activities and resident relocations as well as EPA’s estimated constructio time frames. However, our discount rate policy guidance recommends  that we apply a discount factor to future costs. Consequently, to convert  EPA’s estimated costs into fiscal year 2009 dollars, we (1) conducted present value analysis to discount future site c original estimate (base year) for each remedy, using EPA’s recommended  discount rate of 7 percent, and (2) converted the present value of each  estimate into fiscal year 2009 dollars. To calculate the present value of osts to the dollar year of the  estimated costs, we identified the projected construction time frames for each remedy from site documents. Because the documents did not provid information on how construction costs would be distributed over the  projected time frame, we calculated the midpoint of a range of values,  assuming that all costs for particular activities comprising EPA’s sele remedies would either be incurred at the beginning of the projected t frame (the maximum value of these costs) or at the end of the projected  time frame (the minimum value). To adjust the present values from t base year to fiscal year 2009 constant dollars, we divided the present  values by the inflation index for the base year and weighted the  calculation to convert the base year from calendar years to fiscal years.
To identify actual sitewide costs, we compiled data from multiple so including EPA’s Superfund Cost Recovery Package Imaging and On-Line  System (SCORPIOS) for data on site costs through April 30, 2009; the  Corps of Engineers Financial Management System (CEFMS) for data on  gh various dates in April and early May,  Corps and contractor costs throu 2009; and contractor-generated project cost summary reports for data on  urces,  contractor costs for each phase of the cleanup through Februar We relied on multiple data sources for our analysis because none of the  sources provided a sufficient level of specificity for us to comprehe determine when and for what purpose costs were incurred. In partic the SCORPIOS data provided specific dates of when EPA incurred costs  but for some costs, especially those related to site construction work, th e  data did not generally provide detailed information on why the costs were incurred. Therefore, to obtain more detailed information on the reason f incurring certain costs, we used the data from CEFMS and the contractor’s  project cost summary reports. However, the CEFMS and contractor  project cost summary report data did not generally provide specific  information on when costs were incurred. Consequently, to determine  actual site costs in fiscal year 2009 dollars, we used two approaches. For  costs taken from the SCORPIOS data or when detailed information on the  date of a particular cost was available, we applied the inflation index f the particular fiscal year in which EPA incurred the cost. For costs take from the other data sources, we used the midpoint of the range of  inflation-adjusted values for the construction start and end dates for  individual work phases, as recorded in site documents.  y 15, 2009.
We worked with EPA Region 2 officials to categorize site costs, includ those that were part of EPA’s original construction estimates as  those that were not part of EPA’s estimates. After identifying the costs th were not included in EPA’s original estimates, we took the difference  between estimated and actual construction costs, according to categories  that we discussed with EPA, to identify where actual costs changed the  most from EPA’s estimates. Then, to identify the factors that contribute d  the most to the difference in these cost categories, we analyzed the typesof costs in each category and interviewed EPA Region 2 and Corps  officials responsible for the cleanup. In addition, we analyzed data from  site documents on the estimated and actual amounts of contaminated  material at various stages of the cleanup process to obtain further  information on the extent to which increased amounts of contaminated  material affected site costs. To examine the impact of alternative  methodologies on the disparity between estimated and actual costs, we  reviewed EPA cost-estimating guidance and calculated the effect of  discounting future estimated costs within our analysis. To determine how fraud impacted site costs, we reviewed civil and criminal litigation  documents describing the monetary values exchanged in various  schemes.
To ensure the reliability of the actual cost data we used for this report, we  reviewed the data obtained from the SCORPIOS and CEFMS databases as  well as the contractor-generated cost summary reports that the Corps  provided. For each of these data sources, we reviewed agency documents  and interviewed EPA and Corps officials to obtain information on their  data reliability controls. We also electronically reviewed the data and  compared them across all sources as well as with other information on sit costs as available. For example, we compared contractor cost data  provided by the Corps with similar data from the contractor-generated  cost summary reports. Similarly, we compared Corps cost data from  CEFMS with analogous data from EPA’s SCORPIOS database. Generally,  we found that discrepancies among comparable data from different  sources were most likely attributable to the potential delay between when  a cost is incurred by a contractor and when it is invoiced and processed,  first by the Corps and later by EPA. On the basis of our evaluation of these sources, we concluded that the data we collected and analyzed were  sufficiently reliable for our purposes. However, because some costs  incurred prior to early May 2009 may not have been processed through the  Corps and EPA’s cost-tracking systems at the time of data collection, site  cost data in this report are considered to be approximate. Moreover,  because our methodology relied on calculating the midpoint of a range of  costs for both the present value calculations and adjusting data for  inflation, we consider the data we present in this report on estimated and  actual costs and the difference between these costs also to be  approximate. reviewed agency guidance regarding EPA’s responsibilities at Superf sites. To obtain information on EPA’s oversight actions, we interviewed  EPA and Corps officials responsible for site cleanup and contracting We also reviewed site meeting minutes, monthly progress reports, correspond General reports. To further describe the Corps’ responsibilities at the  Federal Creosote site, we reviewed Corps guidance for the cleanup of  hazardous waste projects, Corps contract management best practices, and  t  relevant procurement regulations. To obtain information on actions tha the Corps took to implement its site responsibilities, we reviewed Corps  correspondence to the contractor and contractor requests for approval o soil treatment and disposal subcontracts. We also interviewed Corps  officials responsible for site cleanup and contracting work as well as EPA  orps’  Region 2 officials. However, we did not assess the adequacy of the C efforts or its compliance with Corps guidance and federal procurement  regulations.   work. ence to the Corps, and relevant EPA Office of Inspector  To examine issues regarding civil and criminal litigation related to th Federal Creosote site, we collected case data from the Public Access to  Court Electronic Records system. We then qualitatively analyzed  documents obtained from this system to identify the issues involved and  the status of each case as well as the outcomes, if any, of the cases.  However, because criminal investigations are ongoing and confidenti could not determine whether any additional criminal charges were under  consideration, but relied solely on the publicly available information for  charges that had been filed as of November 2009.
section_title: Appendix III: Timeline of EPA Actions at the Federal Creosote Site
section_title: Appendix IV: Comments from the Environmental Protection Agency
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Vincent P. Price, Assistant  Director; Carmen Donohue; Maura Hardy; Christopher Murray; Ira  Nichols-Barrer; and Lisa Van Arsdale made key contributions to this  report. Elizabeth Beardsley, Nancy Crothers, Alexandra Dew, Richard  Johnson, and Anne Stevens also made important contributions.