Waste Cleanup: Status and Implications of DOE's Compliance Agreements
Released: 2002-07-19T00:00:00

Letter

Background

DOE is responsible for a nationwide complex of facilities created during World War II and the Cold War to research, produce, and test nuclear weapons. Much of the complex is no longer in productive use, but contains vast quantities of nuclear and hazardous waste and other materials related to the production of nuclear material. Since the 1980s, DOE has been planning and carrying out activities around the complex to clean up, contain, safely store, and dispose of these materials. It is a daunting challenge, involving the development of complicated technologies, costing about $220 billion, and expecting to take 70 years or longer. DOE has reported completing its cleanup work at 74 of the 114 sites in the complex, but those were small and the least difficult to deal with. The sites remaining to be cleaned up present enormous challenges to DOE.

DOE’s cleanup program is carried out primarily under two environmental laws: the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, and the Resource Conservation Recovery Act of 1976, as amended. Under section 120 of CERCLA, EPA must, where appropriate, evaluate hazardous waste sites at DOE’s facilities to determine whether the waste sites qualify for inclusion on the National Priorities List, EPA’s list of the nation’s most serious hazardous waste sites. For each facility listed on the National Priorities List, section 120(e) (2) of CERCLA requires DOE to enter into an interagency agreement with EPA for the completion of all necessary remedial actions at the facility. The interagency agreement must include, among other things, the selection of and schedule for the completion of the remedial action. Interagency agreements are revised, as necessary, to incorporate new information, adjust schedules, and address changing conditions. These agreements often include the affected states as parties to the agreements. These agreements may be known as Federal Facility Agreements or Tri-Party Agreements. Under amendments to RCRA contained in section 105 of the Federal Facility Compliance Act of 1992, DOE generally must develop site treatment plans for its mixed-waste sites. These plans are submitted for approval to states authorized by EPA to perform regulatory responsibilities for RCRA within their borders or to EPA if the state does not have the required authority. Upon approval of the treatment plans, the state or EPA must issue an order requiring compliance with the approved plan. The agreements are generally known as Federal Facility Compliance orders.

DOE carries out its cleanup program through the Assistant Secretary for Environmental Management and in consultation with a variety of stakeholders. The Assistant Secretary directs DOE’s cleanup program at those sites under her direct control, including Hanford, Washington; Idaho Falls, Idaho; Savannah River, South Carolina; Rocky Flats, Colorado; and Fernald, Ohio; and is also responsible for the cleanup programs at other DOE sites, including Oak Ridge, Tennessee; the Nevada Test Site, Nevada; and Los Alamos National Laboratory, New Mexico. Many other stakeholders are involved in the cleanup. These include the federal EPA and state environmental agencies, county and local governmental agencies, citizen groups, advisory groups, Native American tribes, and other organizations. In most cases, DOE’s regulators are parties to the compliance agreements. Other stakeholders advocate their views through various public involvement processes including site-specific advisory boards.

Compliance Agreements Are of Three Main Types

The 70 compliance agreements at DOE sites vary greatly but can be divided into three main types: (1) 29 are agreements specifically required by CERCLA to address cleanup of federal sites on EPA’s national priorities list of the nation’s worst hazardous waste sites or by RCRA to address the management of hazardous waste or mixed radioactive and hazardous waste at DOE facilities, (2) 6 are court-ordered agreements resulting from lawsuits initiated primarily by states, and (3) 35 are other agreements, including state administrative orders enforcing state hazardous waste management laws. All of DOE’s major sites have at least one compliance agreement in place, and many of these sites have all three types of agreements. Regardless of type, the agreements all contain enforceable milestones that DOE has agreed to meet. Collectively, as of December 2001, the 70 agreements had almost 7,200 schedule milestones. The milestones range from completing a report or obtaining a permit to finishing small cleanup actions or major cleanup projects. Table 1 shows, for each type of agreement, the number of sites and the number of schedule milestones they contain. See appendix I for a complete list of the 70 compliance agreements and information on the schedule milestones they contain.

Agreements of the first type—those specifically required by CERCLA or by RCRA—are in effect at all of DOE’s major sites. They tend to cover a relatively large number of cleanup activities and have the majority of schedule milestones that DOE must meet. Even within this category of agreements, however, the number of milestones in a particular agreement varies widely. For example, the Tri-Party Agreement at the Hanford site, which implements both CERCLA and RCRA requirements, contains 951 milestones, and more milestones will be added in the future. The agreement addresses nearly all of the cleanup work and many administrative processes to be completed at the site over the next 70 years. At another site, the agreement implementing CERCLA requirements at DOE’s Brookhaven National Laboratory, New York, contains 63 milestones and more milestones will be added in the future. This agreement also addresses most of the cleanup activities that will occur at that site. Several factors can influence the number of milestones in an agreement, including the extent of environmental contamination and the preferences of the regulators.

Agreements that implement court-ordered settlements exist at only a few DOE sites, tend to be focused on a specific issue or concern, and have fewer associated schedule milestones. These agreements are typically between DOE and states. The issues addressed by the agreements ranged from treating high-level waste so it could be disposed of outside the state to submitting permit applications for treating, storing, and disposing of hazardous wastes in specific locations. For example, at the Idaho National Engineering and Environmental Laboratory, a settlement agreement containing 33 milestones was signed that, among other things, established a schedule for removing used (“spent”) nuclear fuel from Idaho. The agreement was between DOE, the state of Idaho, and the U.S. Navy, because spent nuclear fuel from Navy ships is stored at the Idaho Falls site. The settlement agreement resolved a long-standing dispute between Idaho and DOE about shipping waste in and out of the state.

The remaining agreements are based on either federal or state environmental laws and address a variety of purposes, such as cleaning up spills of hazardous waste or remediating groundwater contamination, and have a wide-ranging number of milestones. For example, an agreement at DOE’s Fernald, Ohio, site contains only four milestones and addresses neutralizing and removing hazardous waste at the site. In contrast, an agreement at the Nevada Test Site contains 464 milestones and addresses identifying locations of potential contamination and implementing corrective actions and also implementing specific sampling and monitoring requirements.

Most Milestone Dates Have Been Met, but Meeting Milestones Is Not a Good Measure of Cleanup Progress

DOE reported completing 4,558 of the 7,186 milestones in these agreements as of December 2001, about 80 percent of them by the time originally scheduled in the agreements. Many of the milestones completed either have been administrative, such as issuing a report, or have involved completing some kind of step in the cleanup process, such as conducting certain tests. Although such process steps may be important in arriving at eventual cleanup, it is unreliable to use them to judge how much has been accomplished in actually cleaning up the sites. When DOE misses a milestone, regulators have several options, including negotiating a new date or assessing a penalty. Thus far, regulators have generally been willing to negotiate extensions when DOE found itself unable to complete a milestone on time, approving about 93 percent of DOE’s requests for milestone changes. In 13 cases, regulators (generally the EPA) took enforcement actions for not meeting a milestone date. The 13 enforcement actions resulted in DOE making $1.8 million in monetary payments and about $4 million in other penalties (such as added work requirements), and were for problems such as delaying the construction of a mixed-waste laboratory or the selection of a method to remove and treat contamination from soil. At the sites we visited, regulators said that so far, they had been willing to take a collaborative and flexible approach to extending milestones. However, regulators said that they generally were unwilling to extend milestones just to accommodate lower funding levels by DOE. At one site, we found instances in which this concern had grown to the point that DOE decided to adhere to a sensitive milestone rather than to propose using a less expensive approach that would have taken longer.

DOE Completed Most Schedule Milestones on Time

DOE reported completing about two-thirds of the 7,186 milestones contained in its compliance agreements as of December 2001. Of the 4,558 milestones completed, 3,639, or about 80 percent, were finished by the original due date for the milestone. The remainder of the completed milestones were finished either after the original due date had passed or on a renegotiated due date, but DOE reported that the regulators considered the milestones to be met. Currently, DOE has agreed to complete at least 2,400 additional milestones in the future. However, the actual number of milestones DOE will need to complete will likely be higher, as milestones will be added with changes in cleanup strategies or as new work is identified.

Most of the milestones DOE must meet are contained in the compliance agreements at its six largest sites—Hanford, Savannah River, Idaho Falls, Rocky Flats, Oak Ridge, and Fernald. These six DOE sites are important because about two-thirds of DOE’s cleanup funding goes to them. These sites reported completing a total of 2,901 of their 4,262 milestones and met the original completion date for the milestones an average of 79 percent of the time. As table 2 shows, this percentage varied from a high of 95 percent at Rocky Flats to a low of 47 percent at Savannah River. Besides the 1,334 milestones currently yet to be completed, additional milestones will be added in the future.

Number of Completed Milestones Is Not a Good Measure of DOE’s Cleanup Progress, but Milestones Are Useful to Regulators

For several reasons DOE’s success in completing milestones on time is not a good measure of progress in cleaning up the weapons complex. Specifically: Many of the milestones do not indicate what cleanup work has been accomplished. For example, many milestones require completing an administrative requirement that may not indicate what, if any, actual cleanup work was performed. At DOE’s six largest sites, DOE officials reported that about 73 percent of the 2,901 schedule milestones completed were tied to administrative requirements, such as obtaining a permit or submitting a report.

Some agreements do not have a fixed number of milestones, and additional milestones are added over time as work scope is more fully defined. For example, one of Idaho’s compliance agreements establishes milestones for remedial activities after a record of decision has been signed for a given work area. Four records of decision associated with the agreement have not yet been approved. Their approval will increase the number of enforceable milestones required under that agreement. Because the total number of milestones associated with those types of agreements is not yet known, DOE’s overall progress in accomplishing the cleanup is difficult to determine.

Many of the remaining milestones are tied to DOE’s most expensive and challenging cleanup work, much of which still lies ahead. Approximately two-thirds of the estimated $220 billion cost of cleaning up DOE sites will be incurred after 2006. DOE has reported that the cleanup activities remaining to be done present enormous technical and management challenges, and considerable uncertainties exist over the final cost and time frame for completing the cleanup.

Although schedule milestones are of questionable value as a measure of cleanup progress, the milestones do help regulators track DOE’s activities. Regulators at the four sites we visited said that the compliance agreements they oversee and the milestones associated with those agreements provide a way to bring DOE into compliance with existing environmental laws and regulations. They said the agreements also help to integrate the requirements that exist under various federal laws and allow regulators to track annual progress against DOE’s milestone commitments.

Regulators Have Generally Been Willing to Accommodate Delayed or Missed Milestones

Regulators have generally been flexible in agreeing with DOE to change milestone dates when the original milestone cannot be met. DOE received approval to change milestone deadlines in over 93 percent of the 1,413 requests made to regulators. Only 3 percent of DOE’s requests were denied. Regulators at the four sites we visited told us they prefer to be flexible with DOE on accomplishing an agreement’s cleanup goals. For example, they generally expressed willingness to work with DOE to extend milestone deadlines when a problem arises due to technology limitations or engineering problems. Because regulators have been so willing to adjust milestones, DOE officials reported missing a total of only 48 milestones, or about 1 percent of milestones that have been completed.

Even in those few instances where DOE missed milestone deadlines and regulators were unwilling to negotiate revised dates, regulators have infrequently applied penalties available under the compliance agreements. DOE reported that regulators have taken enforcement actions only 13 times since 1988 when DOE failed to meet milestone deadlines. These enforcement actions resulted in DOE paying about $1.8 million in monetary penalties, as shown in table 3.

In addition to or instead of regulators assessing monetary penalties, several DOE sites agreed to other arrangements valued at about $4 million. For example, for missing a milestone to open a transuranic waste storage facility at the Rocky Flats site, the site agreed to provide a $40,000 grant to a local emergency planning committee to support a chemical safety in schools program. At the Oak Ridge site, because of delays in operating a mixed waste incinerator, site officials agreed to move up the completion date for $1.4 million worth of cleanup work already scheduled. Also, at three sites—Paducah, Kentucky; Lawrence Livermore Main Site, California; and Nevada Test Site, Nevada—the regulators either did not impose penalties for missed milestones or the issue was still under discussion with DOE.

Regulators May Be Less Flexible if Level of Effort Declines

While the consequences so far of not meeting schedule milestones have been few, regulators at individual sites may be less tolerant if DOE’s level of effort declines at their site. Regulators at the four sites we visited told us while they were willing to renegotiate milestone deadlines for technical uncertainties, they were far less inclined to be flexible if delays occurred because DOE did not provide the funding needed to accomplish work by the dates agreed to in the compliance agreements. The federal and state regulators told us that they prefer to be flexible and work with DOE to renegotiate milestone deadlines that will allow DOE to develop appropriate strategies to accomplish the work. However, these regulators also noted that a lack of funding was not a valid reason for DOE to avoid meeting its compliance requirements.

At DOE’s Idaho Falls site, DOE has chosen not to pursue potentially less expensive ways to accomplish cleanup work in order to comply with a court-ordered milestone for shipment of wastes off-site. For example, DOE agreed with its regulators to characterize and prepare for shipment off-site about 15,000 barrels of untreated transuranic waste by December 31, 2002. This milestone is part of an agreement that also allows separate shipments of spent nuclear fuel from navy ships to be received at DOE’s Idaho Falls site. According to a February 1999 report by its inspector general, DOE could save about $66 million by deferring the processing and shipment off-site of the transuranic waste until a planned on-site treatment facility was completed, thus reducing the waste volume and cost to prepare it for shipment. But doing so would have caused DOE to miss the deadline set in the site’s compliance agreement to ship the waste from the state. Although missing the deadline carries no monetary penalties under this agreement, missing it would allow the state to suspend shipments of DOE spent nuclear fuel into the Idaho site for storage. To avoid this possibility, DOE decided not to wait until March 2003 or later, when DOE estimated a new treatment facility would be operational to prepare the waste for shipment at a substantially reduced cost. Instead, DOE chose to comply with the milestone to characterize, repackage, and ship the waste without treatment, even though it was the more expensive option.

DOE’s Budget Request Does Not Identify the Funding Needed to Meet Compliance Requirements

The president’s budget proposal for DOE, which is the version of the DOE budget submitted to the Congress, does not specifically identify the cost of complying with compliance agreements. DOE is not required to provide this information. As part of formulating their budget requests for DOE headquarters, individual DOE sites go through a process that includes developing compliance estimates. However, in the process that DOE headquarters uses to finalize the DOE-wide budget request, the site-level estimates become absorbed without specific identification into broader budget considerations that revolve around DOE-wide funding availability and other needs. As DOE headquarters officials adjust the budget amounts in the process of reconciling various competing funding needs, the final budget submitted to the Congress has, with few exceptions, no clear relationship to the amounts sites estimated were needed to fund compliance requirements. Even if it were possible to trace this relationship in the final budget, the figure would have limited significance, because sites’ compliance cost estimates are based primarily on the expected size of the budget. If the funding sites receive is insufficient to accomplish all of the compliance activities planned for that year, sites must decide which activities to defer to future years. If sites receive more funding than anticipated in a particular year, they have an opportunity to increase the amount of money spent on compliance requirements.

Cost of Compliance Requirements Is Not Identified in the Budget Submitted to the Congress

The president’s budget submitted to the Congress does not provide information on the amount of funding requested for DOE’s compliance requirements. DOE sites prepare budget estimates that include compliance cost estimates and submit them for consideration by DOE headquarters. DOE headquarters officials evaluate individual site estimates and combine them into an overall DOE-wide budget, taking into account broader considerations and other priorities that DOE must address as part of the give and take of the budget process. The budget sent to the Congress has summary information on DOE’s programs and activities, but it provides no information on the portion of the budget needed to fund compliance requirements. DOE is not required to develop or present this information to the Congress. The president’s budget typically states that the DOE funding requested is sufficient to substantially comply with compliance agreements, but the total amount of funding needed for compliance is not developed or disclosed.

Officials at DOE headquarters told us that they did not think information on funding to meet compliance requirements was needed in the president’s budget. They noted that budget guidance from the Office of Management and Budget does not require DOE to develop or present information on the cost of meeting compliance requirements, and they said doing so for the thousands of milestones DOE must meet would be unnecessarily burdensome. They said their approach has been to allocate funds appropriated by the Congress and make it the sites’ responsibility to use the funds in a way that meets the compliance agreement milestones established at the site level.

Compliance Estimates at the Site Level Mainly Reflect Anticipated Budget Levels

Although DOE is not required to identify its compliance costs in the budget request that goes to the Congress, DOE does develop this information at the site level. This occurs because many of the compliance agreements require DOE to request sufficient funding each year to meet all of the requirements in the agreements. Also, DOE must respond to Executive Order 12088, which directs executive agencies to ensure that they request sufficient funds to comply with pollution control standards. Accordingly, each year DOE’s sites develop budget estimates that also identify the amount needed to meet compliance requirements.

The sites’ process in developing these compliance estimates shows that a compliance estimate is a flexible number. DOE sites develop at least two budget estimates each year, and each estimate includes an amount identified as compliance requirements. Two budget estimates typically completed by the sites each year are the “full requirements” estimate and the “target” estimate. The full requirements estimate identifies how much money a site would need to accomplish its work in what site officials consider to be the most desirable fashion. The target estimate reflects a budget strategy based primarily on the amount of funding the site received the previous year and is considered a more realistic estimate of the funding a site can expect to receive. For each of these budget estimates, DOE sites also include an estimate of their compliance costs. As a result of this process, DOE sites usually have different estimates of their compliance costs for the same budget year. Table 4 shows how the compliance cost estimates related to compliance agreements changed under different budget scenarios.

The multiple estimates of compliance costs developed by DOE sites indicate that DOE sites have alternative ways of achieving compliance in any given year. When we asked DOE officials to explain how the sites can have different estimates of the cost of meeting compliance requirements in the same year, they said that how much DOE plans to spend on compliance activities each year varies depending on the total amount of money available. Because many of the compliance milestones are due in the future, sites estimate how much compliance activity is needed each year to meet the future milestones. If sites anticipate that less money will be available, they must decide what compliance activities are critical for that year and defer work on some longer-term milestones to future years. On the other hand, if more money is available, sites have an opportunity to increase spending on compliance activities earlier than absolutely necessary.

DOE is concerned that deferring activities that support milestones in future years may cause future milestones to be missed or renegotiated. In general, the sites’ target estimates and actual funding received have been below the sites’ full requirements estimates. DOE officials in headquarters and the sites we visited are concerned that recurring years of funding below the “full requirements” level could result in a growth of future funding needs that eventually may cause DOE to fail to meet milestone dates and/or require it to renegotiate the milestones. As an alternative to receiving more funding, DOE occasionally is able to identify operational efficiencies that accomplish the work for less money. DOE officials also acknowledged that DOE’s current initiative to reassess its overall cleanup approach may result in identifying alternative cleanup approaches that could eliminate the need to perform some of the future cleanup work that has been deferred.

Compliance Agreements Are Site Specific and Do Not Allow for Managing Risks across DOE Sites

Compliance agreements are site-specific and are not intended as a way to manage environmental risks across DOE’s many sites. The agreements generally reflect cleanup priorities established by local stakeholders and set out a sequence for accomplishing the work. Risk is one factor considered in sequencing the cleanup work at the sites, but other factors such as demonstrating cleanup progress and reducing the overall cost of maintaining facilities are also considered. DOE has not developed a comprehensive, relative ranking of the risks that it faces across its sites; as a result, it has no systematic way to make decisions among sites based on risk. DOE has tried to develop such a methodology in the past but has been unsuccessful in doing so. Instead, DOE has provided relatively stable funding to its sites each year and generally allowed local stakeholders to determine their priorities for sequencing work at the sites. This approach may change: the department’s recently announced initiative to improve the performance of the environmental management program includes, as a key step, developing a risk-based cleanup strategy. DOE is currently evaluating how best to proceed in developing the risk-based strategy.

Compliance Agreements Do Not Provide a Basis for Setting Cleanup Priorities across DOE Sites

DOE’s compliance agreements focus on environmental issues at specific sites. Because they are site-specific and do not include information on the risks being addressed, the agreements do not provide a means of prioritizing among sites and, therefore, do not provide a basis for decision- making across all DOE sites. For example, a compliance agreement at Savannah River focuses on achieving compliance with applicable CERCLA and RCRA requirements but does not specify the level of risks being addressed by specific cleanup activities.

In developing the compliance agreements, risk is only one of several factors considered in setting agreement milestones. Other factors include the preferences and concerns of local stakeholders, business and technical risk, the cost associated with maintaining old facilities, and the desire to achieve demonstrable progress on cleanup. The schedules for when and in what sequence to perform the cleanup work reflect local DOE and stakeholder views on these and other factors. For example, Savannah River regulators told us that they were primarily concerned that DOE maintain a certain level of effort linked to the compliance agreement and they expected DOE to schedule this work to most efficiently clean up the site. DOE developed a decision model to determine how to allocate its cleanup dollars at Savannah River to achieve this efficiency. A group of outside reviewers assessing the system at the request of site management concluded that the model was so strongly weighted to efficiency that it was unlikely that serious risks to human health or the environment could alter the sequencing of work. DOE officials said they revised the model so that serious risks receive greater emphasis.

DOE’s Past Attempts to Develop a Risk-based Approach to Cleanup Were Unsuccessful

In response to concerns expressed by the Congress and others about the effectiveness of the cleanup program, DOE has made several attempts to develop a national, risk-based approach to cleanup. As early as 1993, the Congress was urging DOE to develop a mechanism for establishing priorities among competing cleanup requirements. In 1995, we reported that unrealistic cleanup plans had impeded DOE’s progress and that DOE needed to adopt a national risk-based cleanup strategy. DOE’s efforts to do so occurred over several years. For example, In 1995, DOE developed risk data sheets as part of the budget development process. First used to develop the budget estimate for fiscal year 1998, the risk data sheets were used to assign scores based on such elements as public and worker health and environmental protection. The approach suffered from data limitations, poor definitions of the activities, inconsistent scoring of risk, and inadequate involvement with stakeholders. Finally, in 1997 DOE abandoned this effort. In 1997, DOE established risk classifications as part of its project baseline summaries. The project baseline summaries contained a component that addressed each project’s environmental risk. However, DOE did not have a clear basis for classifying risks, and the effort was not implemented consistently or generally accepted by DOE field staff. After 1998, this information was no longer developed. In 1999, DOE pilot tested the use of site risk profiles at 10 DOE offices. The profiles were intended to provide risk information about the sites, make effective use of existing data at the sites, and incorporate stakeholder input. However, reviewers found that the site profiles failed to adequately address environmental or worker risks because the risks were not consistently or adequately documented. In 2001, DOE eliminated a support group responsible for assisting the sites with this effort, and the risk profiles are generally no longer being developed or used.

A 1999 DOE-funded study to evaluate its efforts to establish greater use of risk-based decision making concluded that none of the attempts had been successful. Common problems identified by the study included poor documentation of risks and inconsistent scoring of risks between sites. The study reported that factors contributing to the failure of these efforts included a lack of consistent vision about how to use risk to establish work priorities, the lack of confidence in the results by DOE personnel, the unacceptability of the approaches to stakeholders at the sites, and DOE’s overall failure to integrate any of the approaches into the decision- making process. However, the study concluded that the use of risk as a criterion for cleanup decision-making across DOE’s sites was not only essential, but was feasible and practical, given an appropriate level of commitment and effort by DOE.

Without a national, risk-based approach to cleanup in place, DOE’s budget strategy has been to provide stable funding for individual sites and let the sites determine what they needed most to accomplish. For example, over the last 5 years, funding for Savannah River has ranged from $1.1 billion to $1.2 billion and Rocky Flats received from $621 million to $665 million. DOE’s Associate Deputy Assistant Secretary for Policy, Planning, and Budget told us that this approach allowed sites to allocate their funding based on their site-specific risk, compliance, and closure objectives.

DOE’s Current Initiative to Improve the Cleanup Program Has Identified Accelerated Risk Reduction as a Central Theme

DOE plans to shift its cleanup program to place greater focus on rapid reduction of environmental risk. In February 2002, DOE released a report describing numerous problems with the environmental management program and recommending a number of corrective actions. The report concluded that, among other things, the cleanup program was not based on a comprehensive, coherent, technically supported risk prioritization; it was not focused on accelerating risk reduction; and it was not addressing the challenges of uncontrolled cost and schedule growth. The report recommended that DOE, in consultation with its regulators, move to a national strategy for cleanup. In addition, the report noted that the compliance agreements have failed to achieve the expected risk reduction and have sometimes not focused on the highest risk. The report recommended that DOE develop specific proposals and present them to the states and EPA with accelerated risk reduction as the goal.

DOE’s new initiative provides additional funds for cleanup reform and is designed to serve as an incentive to sites and regulators to identify accelerated risk reduction and cleanup approaches. DOE’s fiscal year 2003 budget request includes a request for $800 million for this purpose. Moreover, the Administration has agreed to support up to an additional $300 million if needed for cleanup reforms. The set-aside would come from a reduction in individual site funding levels and an increase in the overall funding level for the cleanup program. The money would be made available to sites that reach agreements with federal and state regulators on accelerated cleanup approaches. Sites that do not develop accelerated programs would not be eligible for the funds. As a result, sites that do not participate could receive less funding than in past years. One initial response has been at Hanford, where DOE and the regulators signed a letter of intent in March 2002 to accelerate cleanup at the site by 35 years or more. DOE and the regulators agreed to consider the greatest risks first as a principle in setting cleanup priorities. They also agreed to consider, as targets of opportunity for accelerated risk reduction, 42 potential areas identified in a recent study at the site. While accelerating the cleanup may hold promise, Hanford officials acknowledged that much technical, regulatory, and operational work is required to actually implement the proposals in the new approach.

DOE is proceeding with the selection and approval of accelerated programs at the sites, as well as identifying the funding for those accelerated programs. At the same time, DOE is considering how to best develop a risk-based cleanup strategy. DOE’s Assistant Secretary for Environmental Management said that in developing the risk-based approach, DOE should use available technical information, existing reports, DOE’s own knowledge, and common sense to make risk-based decisions. Because DOE’s approach to risk assessment is under development, it is unclear how effective it will be or whether in implementing it, DOE will be able to overcome the barriers encountered during past efforts to formalize a risk-assessment process. In the interim, DOE headquarters review teams were evaluating the activities at each site and were qualitatively incorporating risk into those evaluations.

Compliance Agreements Were Not a Barrier to Past Management Improvements, but Impact on February 2002 Initiative Is Unclear

Compliance agreements have not been a barrier to previous DOE management improvements, but it is not clear if the agreements will be used to oppose proposed changes stemming from the February 2002 initiative. In the past, DOE has tried other management initiatives, within the framework of the compliance agreements. These initiatives generally have not involved significant changes in cleanup approach or the potential for significant reductions in funding at individual sites. We found no evidence that the compliance agreements were a barrier to implementing such initiatives or were a factor in their success or failure. Instead, the agreements have been used primarily to hold DOE accountable, through enforceable milestones, for cleaning up environmental hazards using whatever management strategy DOE employed to do so.

The outcome could be different if regulators at individual sites perceive DOE’s latest initiative as an attempt to reduce the level of cleanup activity at the sites. Although DOE generally did not involve regulators in developing its February 2002 initiative to implement faster, risk-based cleanup of its sites, based on our discussions with regulators at several sites, it is unlikely that the compliance agreements would be a barrier to the initiative, as long as DOE’s approach is consistent with environmental laws and results in no reduction in funding at individual sites. However, the discussions indicated that DOE could encounter opposition if its realignment of cleanup priorities results in a site’s receiving significantly less funding and therefore accomplishing considerably less work than called for in the agreement. Parties to the compliance agreements indicated that if this occurs, they may not be willing to negotiate with DOE to extend schedule milestones further. In addition, it is unclear if regulators will use the compliance agreements to resist other aspects of DOE’s initiative, such as reclassifying waste to different risk categories in order to increase disposal options.

Compliance Agreements Have Not Been a Barrier to DOE’s Past Management Initiatives

DOE has implemented or tried to implement a number of management initiatives in recent years to improve its performance and address uncontrolled cost and schedule growth. For example, in 1994 it launched its contract reform initiative, in 1995 it established its privatization initiative, and in 1998 it implemented its accelerated path-to-closure initiative. These initiatives affected how DOE approached the cleanup work, the relationship DOE had with its contractors, and in some cases the schedule for completing the work. Based on reviewing past evaluations of these initiatives and discussions with DOE officials, it appears that DOE proceeded with these initiatives without significant resistance or constraints as a result of the compliance agreements. For example: DOE’s contract reform initiative involved a number of separate efforts, including greater use of fixed-price contracts and performance-based contracts, and a shift to greater use of management and integrating contracts that encourage using a greater number of specialized contractors and an integrating contractor to coordinate the various activities. DOE has implemented these reforms at many of its sites, including all of its large cleanup sites. Although the overall result of DOE’s contract reform initiative is difficult to measure, the various contracting reforms occurred within the framework of the existing cleanup approaches reflected in the compliance agreements in effect at those sites.

DOE’s privatization initiative was intended to reduce the cost of cleanup by attracting “best in class” contractors with fixed-price contracts that required contractors to design, finance, build, own, and operate treatment facilities and to receive payments only for successfully treating DOE’s wastes. Although this approach required substantially different contracting and financing arrangements and there was considerable uncertainty about its eventual success, DOE implemented privatization projects at a number of its major sites, even though doing so sometimes required delaying or renegotiating near-term milestones in the compliance agreements. For example, to implement a privatization contract for the Hanford tank waste project, DOE renegotiated several milestones with its regulators. The state of Washington and EPA eventually agreed to the changes, even though they had concerns about DOE’s approach. This privatization project failed a few years later, stemming primarily from significant cost growth, poor contractor performance, and inadequate DOE management.

DOE’s path-to-closure initiative was aimed at developing more efficient ways to conduct cleanup and, as a result, accelerate cleanup and closure of DOE sites. DOE’s goal was to clean up 41 of its 53 remaining contaminated sites by 2006. It proceeded to establish new cleanup and closure goals at many of its sites within the framework of the existing compliance agreements. For example, the planned closure of the Rocky Flats site was changed from 2010 to 2006 through a revision of the project baseline and award of a new closure contract. State of Colorado and EPA regulators supported those changes, even though they were not consistent with milestone dates in the site agreement.

Regulators at the DOE sites we visited acknowledged that compliance agreements have not been a barrier to DOE’s management improvement initiatives. They said that although the agreements hold DOE accountable for its cleanup responsibilities, the agreements do not prescribe how DOE should manage its program. Several milestones in the compliance agreements have been renegotiated because DOE wanted to incorporate changes in its management approach with a resulting effect on specific projects. For example, DOE’s spent nuclear fuel project at Hanford is an effort to stabilize about 2,100 metric tons of highly radioactive spent fuel stored in aging basins and move the stabilized fuel farther from the Columbia River. Regulators agreed to revised interim milestones for the work after DOE proposed changes that would save money and reduce the risk of radiation exposure to workers.

Effect of Compliance Agreements on Current Management Initiative Is Unclear

DOE’s management reform initiative is in the early stages and site-specific strategies are only beginning to emerge. DOE has begun discussions with officials in several states to implement this accelerated initiative. However, because DOE’s cleanup reform initiative is in its early stages, it is unclear how the site compliance agreements will affect implementation of DOE’s latest cleanup reforms. For example, it is not yet known how many sites will participate in DOE’s initiative and how many other sites will encounter cleanup delays because of reduced funding.

Parties to the agreements at the sites we visited were supportive of DOE efforts to improve management of the cleanup program, but expressed some concerns about proposals stemming from the February 2002 review of the program. They said that DOE’s efforts to accelerate cleanup and focus attention on the more serious environmental risks are welcomed and encouraged because such initiatives are consistent with the regulators’ overall goals of reducing risks to human health and the environment. Most regulators added, however, that DOE generally had not consulted with them in developing its reform initiative and the regulators were concerned about being excluded from the process. They also said that DOE’s initiative lacked specifics and that they had numerous questions about the criteria DOE will use to select sites and the process DOE will follow at those sites to develop an implementation plan to accelerate cleanup and modify cleanup approaches. Most regulators said they would not view as favorable any attempt by DOE to avoid appropriate waste treatment activities or significantly delay treatment by reducing funding available to sites. In such a case, these regulators are likely to oppose DOE’s initiative. They told us that they most likely would not be willing to renegotiate milestones in the compliance agreements if doing so would lead to delays in the cleanup program at their sites. In addition, these regulators said that if DOE misses the milestones after reducing the funding at individual sites, they would enforce the milestones in the compliance agreements.

The effect of compliance agreements on other aspects of DOE’s initiative, especially its proposal to reclassify waste into different risk categories to increase disposal options, is also unclear. Some of the proposed changes in waste treatment, such as eliminating the need to vitrify at least 75 percent of the high-level waste, which could result in disposing of more of the waste at DOE sites, would signal major changes in DOE assumptions about acceptable waste treatment and disposal options. For example, DOE is considering the possibility of reclassifying much of its high-level waste as low-level mixed waste or transuranic waste based on the risk attributable to its actual composition. Most of the high-level waste is located at DOE’s Hanford site. In addition, DOE officials at Hanford are considering relaxing the requirement to transport a portion of its transuranic waste to New Mexico, allowing instead for disposal on-site. While these options could reduce treatment and disposal costs and time frames, DOE would need to obtain regulatory and stakeholder agreement to alter key commitments. These types of changes in treatment approach would require modifications to current compliance agreements. It is unclear whether DOE’s regulators will be supportive of these changes. At Hanford, the regulators have agreed to discuss these types of changes in cleanup strategy. However, at all four sites we visited, regulators said that, although they supported DOE efforts to improve its operations, they also wanted DOE to meet its compliance commitments. The regulators commented that it is unclear how DOE’s proposed initiatives will be implemented, what technologies will be considered, and whether the changes will result in reduced cost and accelerated cleanup while adequately protecting human health and the environment.

DOE generally did not seek input from site regulators or other stakeholders when developing its latest initiative. DOE’s review team leader said that at the time the review team visited individual sites, the team had not formulated its conclusions or recommendations and so did not seek regulator input. Furthermore, the team leader said that, during the review, internal discussions were being held within DOE about improving ineffective cleanup processes, such as contracting procedures. To include regulators on the review team during these discussions, according to the team leader, could have created the impression that the criticism of DOE processes was regulator driven rather than reflecting the views of DOE and contractor staff. According to the Associate Deputy Assistant Secretary for Planning and Budget, since the proposals coming from the review team were made public in February, DOE has held discussions with regulators at all sites and headquarters about implementing the proposals.

Conclusions

DOE carries out its cleanup program in a complex legal and regulatory environment. Compliance agreements are one mechanism used to organize these legal and regulatory requirements and set priorities for cleanup at specific sites. As such, the agreements are not a useful tool, nor were they intended to be, for managing DOE’s cleanup program from a national, system-wide perspective.

It is unclear if compliance agreements will be a potential barrier to DOE’s current national cleanup reform initiative. This initiative involves placing a greater focus on rapidly reducing environmental risks and, as a result, restructuring how DOE allocates its funding for cleanup across its sites. In some cases DOE is also considering dramatically different cleanup approaches than regulators and other stakeholders have come to expect. DOE’s compliance agreements could be a potential barrier to these changes, particularly at those sites where funding may be reduced as a result of implementing the new initiatives or where a significantly different approach is being proposed.

DOE faces two main challenges in going forward with its initiative. The first is following through on its plan to develop and implement a risk- based method to prioritize its various cleanup activities. Given past failed attempts to implement a risk-based approach to cleanup, management leadership and resolve will be needed to overcome the barriers encountered in past attempts. The second challenge for DOE is following through on its plan to involve regulators in site implementation plans. DOE generally did not involve states and regulatory agencies in the development of its management improvement initiative. Regulators have expressed concerns about the lack of specifics in the initiative, how implementation plans will be developed at individual sites, and about proposals that may delay or significantly alter cleanup strategies. Addressing both of these challenges will be important to better ensure that DOE’s latest management improvement initiative will achieve the desired results of accelerating risk reduction and reducing cleanup costs.

Agency Comments

We provided a copy of our draft report to the Department of Energy for review and comment. DOE’s Assistant Secretary for Environmental Management responded that our draft report accurately presented information on the current status of compliance agreements, and generally agreed with the findings of the report. In addition, DOE provided technical clarifications and corrections to our report, which we incorporated as appropriate.

We performed our review from July 2001 through May 2002 in accordance with generally accepted government auditing standards.

Appendix I: Compliance Orders and Agreements Affecting DOE’s Environmental Management Cleanup Program

This appendix presents information provided by DOE and from a questionnaire we administered to each of the operations offices that have sites with compliance agreements. The agreements are categorized into three types: “1” indicates agreements specifically required by section 120(e) (2) of CERCLA or by RCRA (as amended by section 105 of the Federal Facility Compliance Act of 1992), “2” indicates court-ordered agreements resulting from lawsuits, “3” indicates all other agreements. We defined a “compliance agreement” as a legally enforceable agreement between DOE and another party or parties that contained enforceable milestones defining cleanup activities that DOE must achieve by specified or ascertainable dates and that are funded by DOE’s EM program.

DOE; New Mexico Environment Department; University of California dispose of covered mixed wastes at the laboratory (incorporates Site Treatment Plan)

Number of milestones completed on original date 5 If an agreement was signed on multiple dates by the various parties, the latest date was used in this appendix.

This agreement has been completed.

Site was transferred to DOE’s Office of Science and receives no further environmental management funding.

Appendix II: Comments from the Department of Energy

Appendix III: Scope and Methodology

To determine the types of compliance agreements and what progress DOE is making in meeting milestone commitments, we administered a questionnaire to all DOE sites with compliance agreements funded by DOE’s Environmental Management program. We defined a “compliance agreement” as a legally enforceable agreement between DOE and another party or parties that contained enforceable milestones defining cleanup activities that DOE must achieve by specified or ascertainable dates and that are funded by DOE’s EM program. To determine the universe of compliance agreements, we obtained a list of all EM-funded compliance agreements from DOE. We also compared this list to EM sites listed on the EPA’s National Priorities List, which are required to have compliance agreements implementing CERCLA requirements. We discussed these agreements with staff from the DOE Chief Counsel’s office and the EM program to validate both the number of sites with agreements and the number of agreements. We removed from our study any agreement that did not contain enforceable milestones that DOE was required to meet. In addition, we did not include RCRA permits in our universe because (1) the great majority of DOE’s cleanup work is covered under compliance agreements and very little of that work is required under RCRA permits and (2) cleanup activities required as a condition of RCRA permits are generally also included in compliance agreements at DOE sites.

Some of the compliance agreements we identified had been subsequently amended or replaced by other agreements. We included in the universe milestones from the original agreements if they were unique to those agreements and not repeated in the subsequent agreements. In addition, five of the agreements are no longer active because all the milestones associated with the agreements had been completed. We included those agreements and their milestones in our study. For each DOE site having one or more compliance agreement, we requested, for each agreement, information on the type of agreement, the scope of cleanup activities covered by the agreement, and information on the schedule milestones in the agreement. We also asked officials at each site to verify that the list of compliance agreements for their site was complete. We did not independently verify the accuracy of the information provided by each DOE site, but at the four sites we visited, we selectively tested the reasonableness of the information by reviewing site records and discussing compliance agreements with DOE officials. At some sites, DOE officials were unable to provide exact numbers, especially concerning the number of milestone dates that had been changed and the number of milestones that would be completed in the future. In these cases, DOE officials said the information provided represented their best estimates.

To determine the extent that compliance with DOE agreements is reflected in the DOE budget submitted to the Congress, we reviewed numerous budget formulation documents at DOE sites and at DOE headquarters, budgeting guidance and standards, and we analyzed information from DOE’s integrated planning and budgeting system. We visited four of DOE’s largest environmental management program offices—the Richland, Idaho, Oak Ridge, and Savannah River operations offices—to document how these offices include compliance agreement requirements in their budget submittals to DOE headquarters. Although sites develop estimates of the compliance costs associated with compliance agreements as well as federal, state, or local environmental laws and regulations, in this report, compliance costs are limited to those costs associated with DOE’s compliance agreements. To determine how DOE headquarters uses site budget submittals, including compliance requirements, in its final budget submittal to the Congress, we reviewed budget documentation and interviewed officials at DOE’s headquarters office of the environmental management program and the Office of Management and Budget.

To identify whether compliance agreements could be used to prioritize cleanup work across DOE sites, we reviewed the compliance agreements, interviewed DOE headquarters and site staff involved in the EM program to determine how environmental risks are considered in carrying out the cleanup program, and discussed the agreements with federal and state regulators at the four sites we visited. We also reviewed various studies and reports prepared by DOE and other organizations that discussed risk- based decision-making in the EM program.

To assess the implications of compliance agreements on DOE’s initiatives to improve its EM program, we discussed the initiatives with DOE managers and staff in headquarters, including the leader of DOE’s February 2002 report, A Review of the Environmental Management Program. We also reviewed the proposal coming out of that report and discussed it with staff at the four field offices we visited as well as the regulators we interviewed about those sites. In addition, we reviewed other related documents and reports as well as reports issued by us and others on past EM management reform initiatives attempted or implemented by DOE.

Appendix IV: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the person named above Chris Abraham, Doreen Feldman, Rachel Hesselink, Rich Johnson, Nancy Kintner-Meyer, Tom Perry, Ilene Pollack, Laura Shumway, and Stan Stenersen made key contributions to this report.