Long-Term Commitments: Improving the Budgetary Focus on Environmental Liabilities
Published: 2003-01-24T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Although environmental liabilities resulting from federal programs and activities represent the third largest category of the federal government's liabilities, the current cash- and obligation-based budget does not provide information on estimated cleanup costs before waste-producing assets are purchased. As a result, policymakers do not have the opportunity to weigh the full costs of a proposal with their judgment of its benefits. The Chairman of the House Committee on the Budget asked GAO to examine and report on various ways budgeting might be improved for environmental cleanup costs, including some of the benefits, limitations, and challenges associated with each.
section_title: What GAO Found
paragraphs: The federal government is legally required to clean up hazardous wastes that result from its operations. Agencies are currently required to report these environmental liabilities in their financial statements, but these estimates are not recognized until after a waste-producing asset is placed into service. Although agencies are supposed to consider cleanup and disposal costs associated with these assets as part of the acquisition process, they typically do not request the related budget authority until many years after the government has committed to the operation creating the waste, when cleanup is imminent. Alternative approaches to promote up-front consideration of the full costs of environmental cleanup and disposal for assets being proposed for purchase fall along a continuum ranging from supplemental information to enactment of additional budget authority. While each approach has potential benefits and challenges, agencies' lack of experience in estimating future cleanup/disposal costs up front suggest starting at the more modest end of the continuum--providing supplemental information to decision makers. Eventually, however, accruing budget authority for the tail-end cleanup/disposal cost along with the front-end purchase cost estimates would do the most to ensure that these costs are considered before the government incurs the liability.

section_title: Letter
paragraphs: The federal government undertakes a wide range of programs and  activities—such as federal employee pensions, retiree health, and federal  credit—that may create commitments for future spending.  Environmental  liabilities, which result from some federal programs and activities, are one  example of these future commitments and represent the third largest  category of the federal government’s liabilities reported in the 2001  Financial Report of the U.S. Government.  Federal, state, or local laws  and regulations require cleanup that may be done many years after the  activity creating the environmental liability is undertaken.  However,  because the federal budget is primarily calculated on a cash basis,  information on the estimated cleanup costs is not included in the budget  when budgeting decisions are being made about such activities.
You asked us to examine and report on various ways budgeting might be  improved for environmental cleanup costs, including some of the benefits,  limitations, and challenges associated with each.  Accordingly, we reviewed  current budgeting practices at the departments of Energy and Defense,  since they account for about 98 percent of the government’s reported  environmental liabilities.  In addition, we discussed alternative approaches  with staff within these departments, as well as staff in the Office of  Management and Budget (OMB) and the Congressional Budget Office  (CBO).  The focus of this report is forward-looking.  That is, it explores  alternative ways to ensure that the cleanup costs of hazardous waste are  considered by decision makers before the government has committed to  the operation creating the waste.
subsections: section_title: Background
paragraphs: Historically, federal outlays and receipts generally have been reported on a  cash basis.  That is, receipts are recorded when received and outlays are  recorded when paid without regard to the period in which the taxes and  fees were assessed or the costs resulting in the outlay were incurred.  This  has an advantage in that the deficit (or surplus) closely approximates the  cash borrowing needs (or cash in excess of immediate needs) of the  government.  However, over the years analysts and researchers have  raised concerns that the current cash- and obligation-based budget does  not adequately reflect the cost of some programs—such as federal credit or  insurance—in which the government makes a commitment now to incur a  cost, but some or most of the cash flows come much later.  This means that  for some programs the current cash- and obligation-based budget does not  recognize the full costs up front when decisions are made or provide  policymakers the information to compare the full costs of a proposal with  their judgment of its benefits.  Programs such as federal employee  pensions, retiree health care, and environmental liabilities are examples  where the cash basis of accounting does not represent the government’s  full commitments.
Environmental liabilities are the result of federal operations that create  hazardous waste that federal, state, or local laws and/or regulations require  the federal government to clean up.  Because these cleanup costs are not  usually paid until many years after the government has committed to the  operation creating the waste, policymakers have not been provided  complete cost information when making decisions about undertaking the  waste-creating operation.  Although all agencies are not yet in compliance,  current federal accounting standards require agencies to estimate and  report in their financial statements their liability for cleanup costs when  they are deemed probable and measurable.  Traditionally, budget guidance  has required agencies to estimate the funds expected to be obligated for  cleanup activities during the budget year in which the funds are needed.    However, in recent years OMB also has issued guidance for agencies to  estimate life-cycle costs when purchasing capital assets.  Among the items  to be included in the total amount of these life-cycle costs are  decommissioning and disposal costs.  The life-cycle cost estimates are  reported to OMB in budget Exhibit 300 and do not separately break out  cleanup and disposal costs.  The exhibits are for OMB’s informational  purposes only; they are not included in the President’s budget request or  agency’s budget justification provided to Congress.  Department of Energy  (DOE) and Department of Defense (DOD) officials told us that the cleanup  portion of these total costs has traditionally not been separated out or  identified at the time of purchase.  This is because estimates developed at  that time were very preliminary, often based only on a percentage of total  costs rather than specific unit costs.
section_title: Objectives, Scope, and Methodology
paragraphs: To examine ways that budgeting might be improved for environmental  liabilities, we focused on three key questions: (1) What are the federal  government’s reported environmental liabilities? (2) How are  environmental liabilities currently valued for financial statements and  budgeted at selected programs within DOD and DOE? and (3) How could  budgeting for these environmental liabilities be improved?
To determine the federal government’s reported environmental liabilities,  we extracted data from agencies’ fiscal year 2001 consolidated balance  sheets.  Because this analysis showed that about 98 percent of the  government’s reported environmental liabilities were associated with DOD  and DOE, we focused our review on the practices of these two  departments.  We reviewed published reports, related guidance, and budget  and financial statement documentation from each agency.  We also  interviewed DOD, DOE, and OMB staff to discuss current budget practices.
To develop alternative approaches to improve budgeting for environmental  liabilities, we discussed ideas with staff from DOD, DOE, OMB, and CBO.   We also met with appropriations subcommittee staff with jurisdiction over  DOD and DOE to discuss the type of information that they would find most  helpful.  We analyzed the pros and cons of the approaches based on the  extent to which they would (1) provide meaningful, full-cost information to  decision makers up front, (2) provide disincentives for artificially low cost  estimates, and (3) present implementation issues, such as additional  administrative burdens for agencies or increased complexity to the budget  and appropriations process.  Finally, to understand how private  organizations provide for environmental cleanup, we conducted limited  research of private sector budgeting practices.  However, little information  was available about up-front decision making.
Our work was done in Washington, D.C., in accordance with generally  accepted government auditing standards. We provided a draft of this report  to the Secretary of Defense, the Secretary of Energy, and the Director of  OMB.  Comments are summarized in the “Agency Comments” section.
section_title: Environmental Liabilities Largely Associated with Defense and Energy
paragraphs: Nearly all of the $307 billion in environmental liabilities reported for fiscal  year 2001 was associated with DOD and DOE.  About 78 percent of these  liabilities were associated with DOE and represent the environmental  legacy resulting from the production of nuclear weapons.  The 21 percent  associated with DOD is primarily for environmental restoration of military  installations and disposal of nuclear materials.  The remaining  environmental liabilities associated with other federal agencies include  such things as replacement of underground storage tanks, asbestos  removal, and lead abatement.  Some of this remaining 1 percent will be paid  out of Treasury’s judgment fund.
DOD and DOE manage environmental cleanup quite differently: DOD’s  decentralized activities are managed within the individual services, at the  program level, while DOE’s activities are centralized within its  Environmental Management (EM) program.  For example, DOD considers  environmental liabilities in two categories: (1) disposal and  (2) environmental restoration/cleanup.  Army’s chemical weapons and  Navy’s nuclear-powered carriers, ships, and submarines dominate DOD’s  disposal liabilities.  Funding for disposal is provided to the Army, Navy, and  Air Force Operation and Maintenance (O&M) accounts.   Restoration/cleanup activities are largely addressed through the Defense  Environmental Restoration Program (DERP), which is funded through five  environmental restoration accounts for Army, Navy, Air Force, Formerly  Used Defense Sites (FUDS), and Defense-wide. The funds in these  accounts are then transferred to the service levels’ O&M budgets.  In  contrast, within DOE, facilities that have reached the end of their useful  lives and require cleanup typically are transferred to EM, along with some  additional funds for surveillance and maintenance.  EM also receives  budget authority directly through an appropriation.  Thus, budgeting and  funding for cleanup is almost entirely handled by EM, not individual  program offices.  EM’s program emphasis is on site closure and project  completion.  Its activities include environmental restoration, waste  management, and nuclear material and facility stabilization.  Figures 1 and  2 illustrate the flow of cleanup funds for these two departments.
section_title: Current Budget Information Does Not Include Environmental Liabilities Before Acquisition
paragraphs: Current budget guidance and accounting standards both require agencies  to estimate cleanup and disposal costs.  However, neither requires that  these costs be separately estimated for decisions when assets are being  considered for purchase—before the government is legally committed to  paying these costs.  While information about private sector decision  making on these costs is limited, at least some organizations set aside  funds to address these future cleanup and disposal costs.
Agencies have little or no budgetary incentive to develop estimates of  future cleanup costs.  With respect to primary budget data, agencies do not  reflect associated cleanup costs in their budget requests for new waste- producing assets.  Funding for such cleanup costs is not requested until  many years later when the waste produced is ready to be cleaned up or  disposed of.  Budget guidance does require agencies to estimate cleanup  costs as part of total life-cycle costs when requesting funds for new assets.   However, agencies are not required to specifically break out the cleanup  portion of these costs.  DOD and DOE officials told us that separating out  the cleanup/disposal component from total life-cycle costs would be  relatively difficult because their estimates of cleanup costs are very  preliminary.  Often, a percentage of the purchase price instead of a specific  unit cost is used as the cost estimate.  Moreover, they noted that future,  unknown changes in regulatory requirements and technology make it  difficult to develop what they believe to be reasonable and credible cost  estimates at the time an asset is acquired.  However, since estimates for  retiring assets are being made under today’s regulatory requirements and  technology, the same methodology might be used for preliminary estimates  with respect to new assets.  This would permit comparisons between or  across different assets.  Over time, as laws and technology change, periodic  cleanup cost reestimates could be made.  Clear definitions for hazardous  substances also may need to be resolved to ensure that reasonable  estimates are developed.  For example, the Federal Accounting Standards  Advisory Board (FASAB) defines hazardous wastes in relatively broad  terms (see footnote 1) for accounting purposes.  However, the  Comprehensive Environmental Response, Compensation, and Liability Act  of 1980 (CERCLA), which requires the cleanup of waste sites, provides a  substantially more detailed definition.
While accounting standards promote an earlier recognition of  environmental liabilities than does the budget, they do not call for  estimates of environmental liabilities before an acquisition decision is  made because they recognize these cleanup costs only after a transaction  has occurred and an asset is put into service.   Given that these conditions  are met, agencies must estimate the environmental liabilities associated  with all existing assets. Despite this, not all agencies comply with  accounting standard requirements to estimate the environmental liabilities  associated with all of their assets.  For example, DOD typically records the  liabilities associated with assets for which cleanup or disposal is imminent.   DOD’s inability to comply with requirements for environmental liabilities  was one of several reasons why independent auditors were not able to  render an opinion about DOD’s fiscal year 2001 financial statements.   Absent budgetary incentives to estimate future environmental liabilities,  these cost estimates will not be developed as assets are considered for  purchase—the time when decision makers still have an opportunity to  judge whether the government should commit to these costs.
Data about how non-federal organizations consider environmental  liabilities when planning to purchase assets or start new projects were  largely unavailable.   However, there are cases where companies set aside  funds for future cleanup costs.  For example, the Nuclear Regulatory  Commission (NRC) requires private utilities to accumulate the funds  necessary to decommission their nuclear power plants and most  established sinking funds so that the decommissioning funds are  accumulated over the operational life of a nuclear power plant as part of  the cost charged to customers for the electricity they use.  With the  deregulation of electric utilities and the resultant industry restructuring, we  recently reported that in most of the requests to transfer licenses to own or  operate nuclear power plants approved by NRC, the financial arrangements  have either maintained or enhanced the assurance that adequate funds will  be available to decommission those plants.  For example, projected  decommissioning funds were generally prepaid by the selling utility.  Also,  an Environmental Protection Agency contracted study recommended that  a Canadian hydroelectric company establish a liability fund to accumulate  funds to finance asset removal, decommissioning, irradiated fuel disposal,  and low-to-intermediate radioactive waste disposal.
section_title: Alternative Approaches to Consider Environmental Liabilities
paragraphs: Alternative approaches to promote more complete consideration of the full  costs of environmental cleanup and disposal associated with the  acquisition of new assets fall along a continuum from provision of  supplemental information to accrual of those costs in budget authority up  front, as assets are acquired.  We explored three approaches along this  continuum ranging from the relatively simple one of providing more  information but making little other change to current budgeting, to a more  complicated one involving significant changes to what is included in  primary budget data.  The approaches along this continuum represent the  degree of certainty that the costs will be considered in decision making.   Figure 3 summarizes the three approaches along the continuum.
The first approach would be to report long-term environmental liability  costs associated with new assets as supplemental information along with  the budget authority and outlay amounts requested in the budget.  For  example, the program and financing schedules within the President’s  budget appendix could be expanded to report these associated costs by  budget account or program.  This would enable those being asked to make  a decision to see the full cost information along with currently requested  funds.  Although the estimates provided in the supplemental information  would not be precisely correct, they would clearly be closer to correct than  the current implication of no cost.  If a running tally of total environmental  liabilities is desired, periodic reestimates would be needed.
A second approach would move beyond providing supplemental  information to establishing budget process mechanisms to require explicit  disclosure and prompt consideration of the full costs of the environmental  liability associated with a proposed asset acquisition.  Thus, Congress  could revise its rules to permit a point of order against legislation that does  not disclose estimates for environmental liabilities associated with the  acquisition of new assets to be funded in the bill.  This would have the  effect of requiring cleanup cost estimates to be made, either by the  executive branch or CBO, so that the estimates could be considered.
At the other end of the continuum is the more comprehensive approach of  accruing amounts for environmental liabilities associated with new assets  in any requested budget authority for new assets.   This approach  represents the largest departure from current budgeting practices.  Along  these lines, OMB is developing a legislative proposal to require programs  that generate hazardous waste to “pay the accruing cost to clean up  contaminated assets at the end of their useful life.  These payments would  go to funds responsible for the cleanup.”
Implementation of an approach that would include budget authority for  environmental liabilities would require development of new budgeting  mechanisms. The provision to accumulate budget authority over an asset’s  life would require a means of “fencing off” the budget authority to ensure  that it is actually used for cleanup.  Also, since no such amounts were set  aside for existing assets, it would be necessary to continue financing the  cleanup of existing assets while implementing the new approach for new  assets.  One way to do this is to use a pair of accounts—a liquidating  account and a cleanup fund account—in each department involved in  budgeting for the cleanup costs.  The liquidating account would obtain  discretionary budget authority for the past share of cleanup costs of assets  already in operation and for the cleanup costs of retired assets.  It would  pay the past share of cleanup costs for operating assets to the cleanup fund  and would conduct or contract for the cleanup of assets no longer in use at  the inception of this new approach.  Given technological and other  changes, regular reestimates of cleanup costs would be necessary.
The cleanup fund account would obtain budget authority from two  sources:  (1) from the liquidating account for the past share of the cleanup  cost for assets that are in operation when the new approach is established  and (2) for new assets, from programs that operate assets that generate  cleanup needs.  The cleanup fund account would receive annual accruing  cost payments from programs based on the estimated (and reestimated)  cost of cleanup for all operating assets—those purchased after the new  approach is implemented and those already in service.  These payments  would be a required part of the discretionary appropriations for running  any program that generates cleanup costs.  When needed, the cleanup fund  accounts could also request additional budget authority for the assets in  operation at its inception. These appropriations could be made to the  liquidating account and paid to the cleanup fund account when the assets  are ready for cleanup.  Once in the cleanup fund account, the budget  authority from the programs and liquidating accounts could be permanent,  indefinite authority available for cleanup, subject only to the usual  apportionment process.  Figure 4 below illustrates one possible flow of  funds through accounts.
section_title: Each Approach Has Potential Benefits and Challenges
paragraphs: Each of the three approaches described offer both potential benefits and  challenges to consider.  All three would be likely to improve the quality of  cleanup estimates.  Although agencies are required to develop these  estimates for financial statement purposes, they are not developed until  after the asset is purchased. Also, not all agencies have completely  complied with financial accounting standards.  For example, in December  2001, we reported that DOD was not estimating and reporting liabilities  associated with a significant portion of property, plant, and equipment that  was no longer being used in its operations. Moreover, DOD’s financial  statements did not provide cleanup cost information on all of its closed or  inactive operations known to result in hazardous wastes. In addition, in  1997 and 1998 we issued a series of reports on DOD environmental  liabilities that were not being reported, even though they could be  reasonably estimated.
Each of the three approaches would result in decision makers having  information about costs and benefits of a proposed acquisition while there  is still the opportunity to make a choice—before the government actually  incurs an environmental liability.  Since the cleanup costs for any asset will  become a future claim on federal resources regardless of whether these  costs were considered at the outset, good budgeting principles call for up- front consideration of these costs.  Given that agencies are not currently  experienced in separately estimating cleanup/disposal costs before assets  are purchased, reasonable and credible estimates may take time to  develop.  This, however, is not an insurmountable issue. We have reported  on numerous occasions that environmental liabilities can be estimated and  have pointed out how estimation methodologies can be improved.  For  example, in December 2001 we recommended that, among other things,  DOD correct real property records, develop and implement standard  methodologies for estimating related cleanup costs, and systematically  accumulate and maintain the site inventory and cost information needed to  report this liability.
Of the three approaches described, the supplemental information and the  budget process mechanism approaches would be easiest to implement and  could be done separately or together.  Neither requires the enactment of  budget authority and so would not increase reported budget totals.   Supplemental reporting requirements would be the easiest to implement  since OMB could require it under OMB’s current authority.  However,  unless agencies see that the new supplemental information is used in  decision making, they may have less incentive to develop meaningful  estimates.  The budget process mechanism approach would increase the  perceived importance of these estimates by permitting a point of order that  could block legislation lacking appropriate cost information.  For example,  unfunded mandates legislation permits a point of order to be raised against  proposed legislation containing significant intergovernmental mandates if a  CBO estimate of the cost of the mandate has not been published in the  committee report or the Congressional Record. Unlike supplemental  reporting alone, the budget mechanism approach has the potential to  promote improved estimates because it could present members an  opportunity to challenge legislation without appropriate cost information.   Implementing a budget process approach with a point of order would  require an amendment either to the Congressional Budget Act of 1974 or a  change to committee rules.
The third approach, accruing budget authority over the life of the asset,  represents the largest departure from current budgeting practices.  By  requiring that agencies obtain budget authority before acquiring new  assets, this approach would ensure consideration of environmental  cleanup costs before an asset is acquired.  Such an approach would require  legislation.  If Congress and the Administration agree to take such action, it  would ensure that each program’s costs are fully reflected in program  budgets.  Requiring that agencies accrue budget authority for cleanup costs  would likely increase the attention paid to improving the quality of  estimates.  All in all, given the current quality of agency estimates and  significant implementation issues, such an approach may best be viewed as  something to be considered in the future.
Beyond the issue of developing reasonable and credible estimates early on,  this third approach also would present administrative and structural  challenges such as developing mechanisms to ensure that (1) budget  authority provided for cleanup is adequately fenced off for cleanup,  (2) agencies adequately track and manage that budget authority, and  3) reestimates provide positive incentives to reflect the best approximation  of the government’s total environmental liabilities.  When demand for  current funding is great, fencing off budget authority for future use can be a  challenge.  One way to address this would be to have payments into the  cleanup fund come from discretionary appropriations, but once in the fund,  the budget authority would become permanent, subject only to the usual  apportionment process.  Providing higher levels of budget authority now  for expenses that may not be paid until well into the future may be difficult.   It is important to note that this approach would not in fact change the costs  of future cleanups—in effect these have already been determined by the  decision to acquire the asset.  Rather, this would only shift the timing of  their recognition.
Ensuring that agencies adequately track and manage the earmarked budget  authority would be a second challenge to successful implementation of this  approach.  For example, there is more than one way to manage the budget  authority needed to clean up assets already in operation at the inception of  the new approach.   One way would be to transfer budget authority from a  liquidating account to a cleanup fund for such assets when they are ready  to be cleaned up.  Alternatively, the full amount of budget authority for the  past share of the cleanup cost could be enacted in one lump sum for the  cleanup fund.  This would simplify implementation since it would apply the  new accrual concept fully to all assets in operation.  Since this could be a  considered a concept change, any discretionary caps on budget authority  (if renewed) would be adjusted upward to accommodate the additional  budget authority—but it would still increase reported budget authority  totals.  Some believe that covering all of the costs immediately would be a  cleaner, more consistent application of full costing since it would eliminate  a lengthy and possibly confusing transition period.  However, such a  decision to provide budget authority for retired assets could shift the  control over the timing of the cleanup from Congress to the Administration.
Finally, a way to budget for inevitable reestimates of cleanup costs would  have to be designed.  If agencies must obtain additional budget authority  for these reestimates, they will have less incentive to make artificially low  initial estimates but may be reluctant to provide upward reestimates.  On  the other hand, one could envision agencies forwarding a low estimate  “today” with the idea that they could worry about “tomorrow” later.   Alternatively, reestimates could be handled as they are with credit  programs, that is, agencies could automatically receive permanent,  indefinite budget authority for upward reestimates of cleanup costs.  This  would hold agencies harmless for additional costs that result from  technological or regulatory changes.  It would also, however, provide an  incentive to make artificially low initial estimates.
section_title: Conclusions
paragraphs: Because the federal budget does not recognize the full costs of a program  that will have cleanup costs when decisions to commit to the program are  being made, policymakers do not have sufficient information to compare  the full costs of a particular program with their judgment of its benefits.   Cleanup costs are in fact a liability associated with the ownership of many  assets.  Decision makers need to consider these costs before committing to  acquire the waste-producing asset.
Agencies generally do not yet have experience in estimating future  cleanup/disposal costs up front, before the decision to purchase the waste- producing asset is made.  Accordingly, all of the alternative approaches we  discuss for providing this information represent a challenge for both  agencies and OMB to develop an estimation methodology.  Increasing the  visibility of cost estimates may increase the effort spent on them and  ultimately improve both the quality of the estimates and enhance decision  making.  As a first step, we believe that OMB and agencies should provide  supplemental information.  This can be expected to improve the focus and  attention and permit improvements in estimating models.  As this proceeds,  further consideration should be given to budget process and budget  accounting changes.  Ultimately, accruing budget authority for the tail-end  cleanup/disposal costs along with the front-end purchase costs of assets  would best ensure that the cleanup/disposal costs are considered before  the government incurs the liability, but raises significant implementation  challenges.
section_title: Recommendations for Executive Action
paragraphs: We recommend that the Director of OMB require supplemental reporting in  the budget to disclose future environmental cleanup/disposal costs for new  acquisitions.  To this end, agency and OMB officials should consult with  legislative branch officials to ensure that useful information on estimated  environmental cleanup/disposal costs is provided to congressional decision  makers when requesting appropriations to acquire waste-producing assets.
section_title: Agency Comments
paragraphs: The Secretary of Defense had no comments on our draft report. We did not  receive comments from the Secretary of Energy in time to be considered  and included in this report.  In consultation with OMB staff, GAO was  commended for its useful analysis and noted that the ideas discussed merit  consideration.  OMB staff also provided technical clarifications, which we  incorporated as appropriate.
As agreed with your office, unless you release this report earlier, we will  not distribute it until 30 days from the date of this letter.  At that time we  will send copies to the Ranking Minority Member of the House Committee  on the Budget and the chairmen and ranking minority members of the  Senate Committee on the Budget; the subcommittees on Defense and on  Energy and Water Development, Senate Committee on Appropriations; and  the subcommittees on Defense and on Energy and Water Development,  House Committee on Appropriations.  We are also sending copies to the  Director, Office of Management and Budget.  In addition, we are sending  copies to the Secretary of Defense and of Energy.  Copies will also be made  available to others upon request. In addition, the report is available at no  charge on GAO’s Web site at http://www.gao.gov.
This report was prepared under the direction of Christine Bonham,  Assistant Director, Strategic Issues, who may be reached at (202) 512-9576.   Other major contributors were Carol Henn and Brady Goldsmith.  Please  contact me at (202) 512-9142 if you or your staff have any questions  concerning the report.
section_title: Breakout of Environmental Liabilities
paragraphs: About a dozen federal agencies report environmental liabilities in their  financial statements.  This appendix provides additional detail on the  environmental liabilities reported by the Department of Energy (DOE) and  the Department of Defense (DOD) and about those reported by the other  federal agencies.  These data were extracted from agencies’ fiscal year 2001  consolidated balance sheets and represent existing assets—not proposed  acquisitions.  Because DOD and the National Aeronautics and Space  Administration auditors disclaimed an opinion on their financial  statements, it is not certain that these amounts fairly present their  liabilities.