DOE Real Property: Better Data and a More Proactive Approach Needed to Facilitate Property Disposal
Released: 2015-02-25T00:00:00

Letter

Background

DOE established EM in 1989 to address the environmental legacy of 50 years of nuclear weapons production and government-sponsored nuclear energy research. The office is responsible for the cleanup of large amounts of radioactive wastes, spent nuclear fuel, excess plutonium and uranium, and contaminated soil and groundwater, as well as for the D&D of thousands of excess contaminated facilities. Excess facilities are those deemed by DOE program offices such as the Office of Science or the Office of Nuclear Energy, or the National Nuclear Security Administration (NNSA), a separately organized agency within DOE, as not required to support respective program missions and by DOE as excess to the agency’s needs. EM may be responsible for the disposal of an entire site or of one or more facilities on a site managed by another program office or NNSA. For example, at the Mound Site in Miamisburg, Ohio, where DOE’s active mission had ceased, EM was responsible for disposing of the entire site, including the uncontaminated facilities that did not require D&D. On the other hand, at sites where DOE still has an active mission, such as the Los Alamos National Laboratory site in Los Alamos, New Mexico, managed by NNSA, EM is responsible for disposing of individual excess contaminated facilities.

The D&D process encompasses the many stages of taking a facility to its final end-state (see fig. 1). As such, disposal is one of the last steps in the D&D process. Some of the initial steps in the process—operations shutdown and stabilization, for example—may be completed before EM takes responsibility for the facility. For example, NNSA may stabilize a facility while it waits for EM to accept it. The D&D process can take from several months to several years to complete.

The potential end-states of facilities that require D&D include demolition, entombment, and reuse (see fig. 2). In demolition, all structures and waste are removed, and the facility is demolished. The land underneath the facility may be remediated to brownfield, in which it is suitable for limited, controlled, or industrial uses; or to greenfield, in which it is suitable for unlimited reuse. Entombment, also referred to as in-situ decommissioning, takes advantage of the facility’s structure as a containment mechanism to ensure chemicals and reactive wastes are encapsulated. For facilities that may be reused, contaminated systems are removed and structural materials are decontaminated, but the building remains and may be disposed of by transfer.

EM must clean up radioactive and hazardous substances in accordance with specified standards and regulatory requirements under federal environmental laws, such as the Comprehensive Environmental Response, Compensation, and Liability Act, as amended (CERCLA) and the Resource Conservation and Recovery Act (RCRA), as well as state Environmental Protection Agency officials, as well as officials with laws.environmental agencies in the states where EM sites are located, enforce applicable federal and state environmental laws and oversee and advise EM on its cleanup efforts. In some circumstances, tribal nations, community groups, and the public provide input into cleanup decisions.

To dispose of real property—facilities and land—with reuse potential, DOE may engage the General Services Administration (GSA) or, under certain conditions, exercise its own authorities to transfer the property by sale, lease, or other mechanism to a new owner (see table 1). The Atomic Energy Act (AEA) of 1954 authorizes DOE to sell, lease, and dispose of property. The National Defense Authorization Act for Fiscal Year 1998 (NDAA) required DOE to promulgate regulations for a process of transferring by sale or lease defense nuclear facilities for the purpose of economic development of the property. The NDAA also authorized DOE to offer indemnification—protection against claims of injury resulting from the release or threatened release of hazardous substances—to the transferee. Other statutory provisions, referred to by DOE as “special” or “specific” legislation, also authorize the disposition of DOE’s real property at specific sites. For example, DOE was required to convey to the County of Los Alamos certain properties at the Los Alamos National Laboratory, as well as transfer to the Secretary of the Interior, in trust for the Pueblo de San Ildefonso, administrative jurisdiction over certain parcels of land without compensation.

The primary non-federal recipients of properties for which EM was responsible are CROs, though some local governments have also received EM property. To minimize the negative social and economic impacts of the downsizing and closure of DOE sites, DOE is required to develop a plan for restructuring the workforce at those sites in consultation with various stakeholders such as community groups in affected areas. DOE encouraged the affected communities to participate through the creation of CROs which can receive assistance from DOE for programs that mitigate the impacts of DOE’s workforce restructuring. The principal purpose of the CROs is to facilitate the reuse of former defense nuclear facilities and other unneeded property for industrial, economic, commercial, or civic purposes. Today there are eight active CROs, six of which are pursuing or are interested in pursuing real property transfers at DOE sites (see table 2).

The Vast Majority of the Nearly 2,000 Facilities for Which EM Completed D&D Were Demolished

From 2003 through 2013, Most Facilities That Completed D&D Were Demolished Because They Were Highly Contaminated

According to EM data, from 2003 through 2013 EM disposed of 1,962 facilities across 19 sites in 13 states (see fig. 3). These data includes all facilities—those that were contaminated and went through the D&D process as well as uncontaminated facilities—EM disposed of through demolition, entombment, sale or lease for reuse, or other means.

Approximately 85 percent of those facilities were located at 5 sites: the Hanford Site in Washington (29 percent); the Oak Ridge Reservation in Tennessee (20 percent); the Savannah River Site (13 percent) in South Carolina; the Idaho National Laboratory in Idaho (12 percent); and Rocky Flats in Colorado (12 percent). EM is also responsible for completing the disposition of approximately 2,900 additional facilities across 9 of the 19 sites. Approximately two-thirds of the facilities remaining are located at two sites—the Hanford Site (38 percent) and the Savannah River Site (28 percent). By the end of fiscal year 2015, EM projects that it will have completed the disposition of approximately half of the facilities for which it accepted responsibility as of 2001.

According to DOE data, more than 94 percent of facilities—totaling more than 19.6 million square feet—for which EM completed D&D from 2003 through 2013 were demolished. The remaining facilities were disposed of through other mechanisms such as transfer to federal entities or sale to local governments. Disposed facilities can also show statuses that reflect other means of disposition, such as by entombment. As we will discuss later in this report, DOE and EM maintain separate databases with information on facilities for which D&D was completed. DOE’s data contain information on the disposal method that is not captured in EM data, but does not have records for a number of facilities that completed D&D over this time period. As a result, information presented in this report about disposal methods is for the 1,347 facilities DOE identified from its data as having completed decommissioning from 2003 through 2013. Nevertheless, according to EM officials, the vast majority of facilities for which D&D was completed were demolished because they were highly contaminated. EM officials as well as representatives from CROs we interviewed told us that reusing facilities that required D&D was either not possible or highly impractical due to high contamination levels and poor condition. For example, EM officials at the Oak Ridge Reservation initially identified facilities for reuse that they later determined should be demolished. In addition, according to DOE officials, most of DOE’s excess contaminated facilities are between 40 and 60 years old, have had few, if any, upgrades since their construction, and are not conducive to being remodeled for alternate uses. For example, one CRO representative said it can be challenging to justify the high costs of upgrading a facility’s infrastructure to make it usable, while another concluded that the difficulties involved in redeveloping some properties made reusing them not cost-effective.

EM Transferred by Sale a Limited Number of Uncontaminated Facilities and Land Parcels for Reuse

EM completed 21 property disposals through the process of transfer by sale from 2003 through 2013, at no cost and with the provision of indemnification. According to EM officials, from 2003 through 2013, 13 facilities totaling more than 331,000 square feet were transferred by sale from the Oak Ridge Reservation in Oak Ridge, Tennessee to the CRO or local government for economic development. (See appendix III for information on completed facility transfers identified by EM.) None of the facilities, which had been used for a variety of purposes including office buildings and a warehouse, was contaminated and as a result did not require D&D. For example, in addition to transferring 6 office buildings totaling approximately 200,000 square feet to the CRO for reuse as commercial office buildings, EM transferred to the City of Oak Ridge a water treatment plant, which provides potable water and sewer services to the East Tennessee Technology Park (ETTP)—an area of the Oak Ridge Reservation that DOE designated for commercial reuse and set aside for redevelopment. EM was responsible for disposing of these 13 facilities because they were located at ETTP.

According to DOE officials and CRO representatives, land held by DOE, particularly uncontaminated land on or near buffer areas—large areas of land meant to protect the public from hazardous incidents—generally has more reuse potential than facilities or land located in operational areas on sites being used to support DOE missions. According to EM officials, from 2003 through 2013, DOE transferred by sale 8 land parcels totaling approximately 659 acres to non-federal entities for economic development. Again, all 8 were located at ETTP which accounts for approximately 2,200 acres of the approximately 34,000 acre Oak Ridge Reservation and sits just inside its borders. ETTP can be accessed via a public road. (See appendix III for information on completed land transfers identified by EM).

Data Limitations and an Unclear Policy Impede DOE’s Ability to Effectively Manage Its Decentralized Property Disposal Process

DOE Does Not have Timely and Complete Data to Oversee Its Property Disposal Process

Limitations in its data on facilities that are undergoing or have completed D&D may impede DOE’s ability to effectively manage its real property assets, including their disposal. DOE and EM each maintain a database that contains information on facilities that are undergoing or have completed D&D. However, neither system collects all the information DOE would need to effectively manage this subgroup of its real property portfolio. Furthermore, the information that is collected is not always timely and complete—data characteristics that we have previously found necessary for successful asset management and sound decision making. According to internal controls standards, only appropriate, complete, relevant, and timely data can help the agency make informed decisions regarding the allocation of resources and effectively manage its assets.

The Facilities Information Management System (FIMS) is DOE’s central database for managing its real property inventory. It includes information on a facility’s size, location, annual maintenance costs, operating status, and, for those facilities for which D&D has been completed, the facility’s end-state—for example, whether the facility was demolished, transferred to another federal agency, or sold. FIMS is used to prepare DOE’s submission to the Federal Real Property Profile (FRPP)—the federal government’s database that was developed to describe the nature, use, and extent of federal real property holdings. In addition, according to DOE policy, officials are to use FIMS data in day-to-day decision making to support DOE’s short- and long-term strategic goals. However, according to one DOE official, FIMS’s primary function is as an inventory of DOE’s property holdings and it is used, for example, to assess DOE’s position with regard to the Freeze the Footprint Initiative and determining how much office or warehouse space DOE may acquire or of which it Officials may not find the data in FIMS support sound must dispose.decision making, in part, due to the following limitations.

Data are not timely. FIMS data do not provide officials with reliable and up-to-date information on the facilities in DOE’s portfolio, as intended. In particular, while FIMS documents a facility’s status (e.g., whether it is operating, shutdown, etc.), the status codes overlap and do not correspond directly with the steps in the D&D process, such as whether the facility is undergoing deactivation or decommissioning. For example, based on our review of FIMS user guidance and a DOE presentation, during the deactivation phase, one official may categorize a facility under the status code “deactivation” while another official might categorize the facility under the broader status of “D&D in progress.” As a result, FIMS may not provide DOE officials with enough information to identify where such facilities are in the D&D process. Furthermore, in the FIMS data we reviewed for facilities for which EM completed D&D, most status codes were outdated. Specifically, approximately 84 percent of the facilities that DOE identified in FIMS as being disposed of after EM completed its D&D had a final status that did not accurately reflect that D&D had taken place. Instead, those records indicated that the facilities were being deactivated or were shutdown for the purpose of eventual D&D. In those cases, decision makers using FIMS would not have accurate, reliable, or timely information about the status of those facilities. DOE’s policy on asset management states that FIMS data must be maintained as complete and current throughout the life cycle of a real property asset, but according to DOE officials, FIMS data are often only updated as necessary to support the agency’s annual FRPP submission. With regard to updating status information, those officials explained that if EM started and completed D&D of a facility within a single reporting year, FIMS may never indicate that D&D of the facility was underway. Instead, FIMS would likely indicate that the facility was awaiting D&D and then demolished. In April 2014, the DOE Inspector General similarly found that sites were only adhering to the minimal FIMS requirement of validating data annually or on an as- requested basis by DOE throughout the fiscal year. As a result, FIMS may only provide decision makers with a snapshot of information on a facility based on the prior year’s data and relying on prior year’s data could impede DOE’s ability to make well-informed real property planning and budgeting decisions.

In addition, FIMS does not contain certain key information that DOE officials at headquarters may find useful to provide real property management oversight of facilities that require D&D. For example, FIMS does not contain information on when EM assumed responsibility for the facility, started D&D, completed D&D, or started disposal activities. According to DOE officials, FIMS was not created to and does not function as a D&D management tool. Rather, it is a property management tool and additional information is not collected because it is not required to support the agency’s FRPP submission. Nevertheless, according to one DOE official, such information could provide an added level of insight and a more complete record of the facilities that comprise DOE’s real property portfolio. Ready access to information about D&D work across sites could allow DOE officials to better manage real property at an agency level, collect information on timeframes for disposing of contaminated excess properties that might be used to improve management practices, and ensure that real property assets support long-term plans.

Data are not complete. Finally, the information that FIMS should maintain is not always recorded. For example, the system does not contain records for all of the facilities for which EM completed D&D from 2003 through 2013. According to federal regulations, agencies must certify the accuracy of real property information submitted to GSA for the Annual Real Property Inventory program; however, according to DOE officials, FIMS does not contain records for all facilities. For example, recent validation efforts found that inventories of facilities were incomplete. Specifically, in 2014, DOE identified facilities at the Hanford and Savannah River Sites—both of which EM is responsible for disposing of Incomplete information in their entirety—which were missing from FIMS.about real property holdings impedes DOE’s ability to manage its portfolio at a site and agency-wide level.

EM maintains a separate database with information on facilities for which it has completed D&D and for which it is currently responsible. The Integrated Planning, Accountability, and Budgeting System (IPABS) is EM’s system for tracking and maintaining information about its activities. According to EM officials, IPABS is a project management system that tracks work—including D&D—and provides the data for EM’s annual performance metrics. Data in IPABS are tracked by project units, which summarize of the major characteristics of a cleanup project, including key performance, scope, and cost information. One project unit may include the D&D of one or more facilities on a site, or it may describe non-facility projects, such as the remediation of groundwater. For performance management purposes, IPABS notes how many facilities are in each project unit and when those project units are completed. According to an EM official, IPABS is the most accurate source of information on the number of facilities EM has completed.

However, neither DOE nor EM officials can use IPABS data to gain further insight into the facilities that require D&D or to oversee the property-disposal process because the system does not provide information at a sufficiently granular level to provide a basis for real property decision making. Specifically, IPABS does not contain facility- level information; it does not track the status of work at individual facilities, nor does it maintain information on an individual facility’s end-state or expected end-state. This is because IPABS is a project management system and not a property management system. As a result, EM could not tell us definitively how many of the facilities for which it completed D&D from 2003 through 2013 had been demolished, entombed, or made available for reuse. In addition, IPABS could not be used in concert with FIMS to develop a more complete understanding of the status of D&D activities—including disposal—because until 2013, the project units in IPABS did not contain enough detailed information to identify the specific facilities in each unit. Though that information was added for many project units, in order to provide information such as the expected end-state of the facilities that are undergoing D&D, EM officials would still have to manually compile information from IPABS, FIMS, and site-level field reports. In 2010, when EM undertook an effort to provide DOE management with an overview of EM’s D&D activities across sites, officials compiled information from these sources, but noted that doing so was resource intensive and not an efficient way to track a complex program. Without up-to-date information on the status and projected end- states of facilities undergoing D&D, DOE officials may not have a complete understanding of the status of disposal activities and may not be able to make well-informed real property decisions, including those aimed at reducing DOE’s overall footprint.

DOE Has Developed Guidance for Property Management but Does Not Have a Proactive Approach to Property Transfer

DOE has a decentralized approach for managing its real property assets. According to DOE officials, each site is unique; even those sites with similar missions are located in different geographic areas and have varying relationships with the surrounding communities. As a result, according to DOE officials, site-level officials are best situated to make many real property decisions. Under this decentralized process, DOE developed a common approach for sites to manage assets agency-wide by issuing an order entitled, Real Property Asset Management, (“the Order”), as well as a series of related guides and policy documents.Order’s objective is to define a consistent and shared approach across sites by establishing the requirements and responsibilities for the individuals and offices involved in real property management. For example, officials at the site-level are responsible for preparing budget requests, declaring property as excess, developing near- and long-term real property plans, and disposing of excess properties. Officials at headquarters are responsible for developing policies and procedures for asset management—from planning to disposition—and for providing oversight of tasks executed at the site level.

The Order also states that excess real properties that are appropriate for economic development transfer must be identified and disposed of; however, the policy is unclear as it does not identify who is responsible for these tasks or when they should identify such properties. We found that almost none of the officials we interviewed at the site-level nor officials at headquarters was proactively or systematically identifying and disposing of these properties. For example, neither all sites we selected nor DOE maintain an inventory of properties suited for economic development transfers. Instead, according to DOE and CRO officials, transfers by sale or lease of EM properties that did take place from 2003 through 2013 were generally initiated by the recipient—the CRO or local government. According to DOE officials and CRO representatives we interviewed, the transfer process generally began with an informal inquiry or request from the CRO or local government, at which point site-level officials determined whether the property was appropriate and should be made available for transfer. According to CRO representatives, most have a good working relationship with site-level officials and are relatively knowledgeable about the properties that may be available for transfer; however, this was not the case at all sites. For example, representatives from one CRO described learning that a facility it may have been interested in acquiring was to be demolished only after demolition was underway. Even representatives from CROs who were satisfied with their relationship with DOE officials noted that they have different goals and, as a result, different priorities regarding property disposals and transfers. Specifically, the CROs sought to create economic development opportunities for their communities whereas EM’s focus was the cleanup of the contaminated properties for which it was responsible. At times, this has caused frustration on the part of the CROs that have requested that DOE make D&D decisions that support eventual reuse and sought DOE assistance for funding economic impact studies. EM’s mission, though, is not to promote economic development at the sites for which it is responsible, but rather to safely clean up the environmental legacy of nuclear weapons and energy production. Furthermore, according to DOE officials, there is no funding available to support the transfer of EM property holdings for economic development purposes. Nevertheless, according to EM officials, they are the appropriate office to work with the CROs given their extended interaction throughout the D&D process.

By not taking a proactive approach to identifying and transferring property that is suitable for economic development purposes, DOE may forgo opportunities to reduce its overall footprint and achieve efficiencies in the disposal process. In particular, given the scope of DOE’s real property holdings, it is possible that the land on which demolished facilities were built as well as land that surrounds a site’s central campus may be appropriate for sale or lease for the purpose of economic development. For example, according to a representative we interviewed from one CRO, most of the several hundred-square-mile site that his organization is interested in reindustrializing is wilderness and has never been used for operational purposes.economic development transfers as EM continues to D&D facilities and DOE closes sites. Furthermore, if site-level officials proactively identified unneeded land that was appropriate for transfer, they could potentially bundle several land parcels together and conduct the required environmental reviews for larger areas, thus avoiding multiple costly environmental reviews. Officials at one site we visited said that the cost of the necessary environmental reviews DOE must complete prior to transfer was approximately the same regardless of the parcel size, and as a result, bundling land parcels for transfer could be a cost effective approach. However, DOE does not know the extent to which it could decrease its real property holdings through economic development transfers because it has not identified those properties that fit the criteria.

DOE Has Taken Some Actions to Address Property Disposal Challenges

Stakeholders Cited Renovation Costs, Security Restrictions, and Lengthy Processes as Challenges That Limit Property Disposals

DOE officials at headquarters and the site level, CRO representatives, and local government officials we interviewed identified several challenges to disposing of EM properties. For example, DOE officials from headquarters and six of the seven selected sites, as well as four of the nine stakeholders we interviewed reported that limited funding for D&D and, related, long cleanup time frames were challenges to disposing of these properties. We have previously found that when disposition is deferred on excess contaminated facilities, their deterioration results in continued surveillance and increased maintenance costs that can further stress already limited budgets. In addition, a 2011 EM report found that the longer facilities sit idle, the further they degrade, and the more dangerous and costly they are to maintain or dispose.more directly challenges to completing D&D, they are inextricably linked to property disposal in that disposal is the conclusion of the D&D process.

DOE officials and stakeholders we interviewed also identified several challenges to disposing of EM properties through reuse—some specific to contaminated DOE properties and some that we have identified previously as challenges to property disposal generally across the federal government. For example, DOE officials and stakeholders identified challenges related to the condition of facilities for which EM is responsible and the potential stigma associated with a property at a nuclear site. Officials and stakeholders also noted that the location of the facilities on secure sites can be a challenge for reuse—an issue that we have previously found was an impediment to reuse of excess properties at DOE sites. The following are challenges identified by DOE officials and stakeholders we interviewed as potential impediments to reuse of EM properties:

Facility characteristics limit reuse potential of some properties.

According to DOE officials at headquarters and all seven of the selected sites, as well as all nine stakeholders we interviewed, facility characteristics limit the reuse potential for some EM facilities. Specifically, many of these facilities were built for a unique purpose and their construction makes reuse for other purposes difficult. For example, the K-31 complex is a 1.5 million-square-foot facility formerly used for uranium enrichment processing at ETTP on the Oak Ridge Reservation (see fig. 4). According to an EM site official, its size and location—accessible via public roads—theoretically make it attractive as a commercial warehouse; however, specialized, densely packed steel support beams needed to support heavy enrichment equipment would make reuse as a warehouse difficult. As such, DOE decided not to pursue reuse options and is in the process of demolishing the facility. In addition, according to some CRO representatives, EM properties may have limited reuse potential because of the stigma associated with their prior use in developing or housing nuclear or radiological materials. For example, according to one CRO representative, a German manufacturing company that initially expressed interest in land held by DOE later decided it did not want to be associated with a former nuclear site. Similarly, one CRO representative said that financing and insurance for projects in formerly contaminated areas can be difficult to obtain without the protection of indemnification, which can make selling property for reuse challenging.

Facilities require significant renovation prior to reuse. DOE officials from headquarters, EM officials from six of the seven selected sites, and four of nine stakeholders we interviewed stated that facilities held by EM were generally old, in poor condition, and would require significant renovations prior to reuse. In many cases, facilities would need extensive improvements to meet modern building-code standards. According to one CRO representative, though EM transferred them by sale at no cost, his organization spent more than $1.5 million on necessary aesthetic and mechanical improvements to four facilities before it could market them to private sector entities. A representative from another CRO also noted that his organization had to renovate the interiors of EM facilities his organization acquired in order to attract commercial tenants.

Selling or leasing properties within the boundaries of secure sites may pose security concerns. DOE officials from headquarters, EM officials from four selected sites, and three stakeholders reported that security restrictions at some sites reduce opportunities for non-federal entities to reuse both land and facilities. According to EM officials at one site we visited, previous DOE commitments to state environmental regulators stipulated that for security and safety reasons, there would be no modifications to the site’s perimeter. As a result, no facilities or land parcels located within the existing fence-line, other than portable structures such as trailers, were suitable for transfer by sale to non- federal entities. Though officials also said while there have been preliminary discussions about the future possibility of moving the fence to allow access to some uncontaminated facilities via public roads—potentially making them available for reuse to non-federal entities—DOE did not foresee doing so in the near future. According to an official from the associated CRO, it was for this reason his organization has not requested any non-portable facilities for transfer and reuse at the site.

Lengthy property-disposal process limits reuse. According to DOE officials from four of the selected sites and all nine stakeholders we interviewed, the length of the process was a challenge to transferring properties available for economic development purposes. According to EM-provided information, on average, it took 2.8 years between the date when a CRO or local government submitted a formal request for property and when it assumed ownership for the property. Long and uncertain disposal timeframes made it difficult for some CROs to secure tenants. For example, one CRO representative we interviewed reported that he is often unable to give potential tenants a reliable estimate of the time it will take for the CRO to acquire a property. As a result, some potential commercial partners have lost interest, and the community has lost economic development opportunities. In one instance, the CRO and DOE initially considered approximately 25 facilities to be appropriate for reuse at the outset of the D&D process, but the condition of those facilities deteriorated as they proceeded through D&D, and the companies on whose behalf the CRO had been seeking approximately 8 of those properties sought options elsewhere.

DOE officials and CRO representatives said the length of the transfer process for economic development purposes was related to (1) implementation of environmental requirements and (2) reviews by DOE headquarters of the conditions of proposed transfers by sale or lease. Before a property can be disposed of, certain environmental reviews and radiological surveys must be completed, certifying the safety of the property for reuse. According to three stakeholders we interviewed, the steps involved in meeting environmental requirements contribute to the length of the transfer process. In particular, the scope of cleanup analysis is determined by the intended use of the site—for example, whether the site will be used for industrial or residential purposes. Completing these reviews can be difficult, particularly if the future use of the site is unknown. According to one CRO representative we interviewed, the organization’s request to lease DOE property for economic development did not advance due in part to difficulties in negotiations with DOE over the scope of the cleanup review necessary. Specifically, to appropriately scope the cleanup review, site officials wanted information on the type of However, the CRO could not industry that would be using the property.supply that information because it was seeking to acquire the property before it had a tenant, and as part of that effort was pursuing different types of industrial clients based on a reuse study that had previously identified several potential uses for the property, including nuclear-related projects.

In addition, the DOE headquarters’ reviews of the proposals for transfers by sale or lease can lengthen the disposal process. Site-level officials propose the terms and conditions of the real property transaction, which is then forwarded to headquarters for approval. According to DOE officials, the duration of the disposal process is highly situational, and if DOE needs more information from the site or the requesting CRO or if the CRO amends its original request, the process may be delayed. For example, in response to a 2010 CRO proposal request for the transfer by sale of 1,300 acres for economic development, DOE headquarters responded that the requester had not provided all the documentation needed to process the proposal request. In another instance, in response to a 2008 proposal to transfer by sale a parcel of land in a buffer area at the Oak Ridge Reservation to the CRO, DOE headquarters requested in 2013 that the site consider using disposal authorities other than DOE’s, including by using GSA as the disposal agent. During the review, according to EM officials at Oak Ridge, officials at headquarters began to reconsider the practice of transferring uncontaminated properties by sale According to site-level officials, at no-cost and providing indemnification.similar properties—land from the site’s buffer areas—had previously been approved for disposal through the process of transferring property by sale for the purpose of economic development at no cost and with the provision of indemnification. According to site-level officials, the absence of established practices on disposing of this type of property slowed the disposal process. Since then, officials at the site-level, in concert with officials at headquarters have developed a site-specific strategy enumerating when property will be disposed of using DOE’s authorities and when property will be disposed of by engaging GSA. Ultimately, the property that prompted the review was transmitted to GSA for a targeted asset review in May 2014, more than 6 years after it was formally requested for transfer by the CRO.that review, in which cultural resource issues were identified, the requesting organization indicated it was no longer interested in the property. DOE plans to continue maintaining the property, and as of December 2014, disposing of it was not a priority for the site.

According to DOE officials, following Finally, some CRO representatives expressed concern that DOE reviews of transfer requests may take longer due to the removal in November 2013 of a 90-day response time requirement from the regulations governing DOE transfers by sale or lease for economic development. DOE officials told us that they do not expect the removal of the regulatory requirement will extend overall time frames to transfer properties by sale or lease—rather, the steps of the process are reordered. Prior to the change, a CRO would request a property and within 90 days DOE would respond whether it thought the transfer could potentially occur. At that point, DOE would start the environmental and radiological safety review process and the two parties would develop transfer documents to create a package for headquarters review. Now that the response requirement has been removed, DOE may respond to a request after the required environmental and radiological safety reviews have been completed. According to DOE officials, the response-time requirement was removed because it was unclear to which part of the process it applied and to allow DOE to complete the required reviews. This could potentially allow DOE to make better-informed transfer decisions. Since the length of time necessary for completing the environmental and radiological reviews remains unchanged, DOE officials said DOE does not expect the overall transfer time frames to be affected.

EM and DOE Have Taken Steps to Address Some Cited Disposal Challenges

EM and DOE have taken some actions to accelerate the D&D and property disposal processes. Officials at some sites have instituted processes to allow for accelerated D&D, steps that they said saves on maintenance and other costs, and have created more flexible cleanup processes that they said have resulted in quicker disposal. For example, at one site, EM reprioritized its project list to more quickly complete D&D on a facility with a collapsing roof. Officials said that taking the building down sooner than planned allowed EM to avoid spending operating funds maintaining a facility that would later be demolished. Similarly, as part of a reindustrialization program at ETTP, EM transferred by sale 13 facilities and 8 land parcels to the CRO for economic development. The intent of the reindustrialization program was to establish a commercial industrial park at ETTP and to accelerate cleanup of DOE facilities at a reduced cost by making facilities that had previously been leased to the CRO available for transfer by sale. DOE reported that the reindustrialization program has resulted in cost savings that have allowed EM to direct additional funds to clean up, and therefore accelerate D&D at Oak Ridge. Specifically, DOE reported in May 2013 that the program resulted in about $110 million in cost savings from, among other things, $37.1 million in avoided facility surveillance and maintenance and $12.6 million in avoided facility demolition. Finally, by instituting the “Mound 2000” process at DOE’s former Mound Site, DOE and site regulators focused cleanup efforts on small parcels of land and individual buildings identified for industrial reuse. EM officials and representatives of the CRO said this allowed groups of properties to be strategically transferred as they were deemed clean, resulting in quicker reuse time frames than would have been accomplished by transferring the whole site only after it was cleaned in its entirety.

DOE has also taken steps to develop strategies to improve property disposal, but does not plan to require implementation or changes to its processes. DOE established the Asset Revitalization Initiative Task Force in 2011 to identify opportunities to promote more efficient business practices and encourage public-private collaboration for the reuse of assets on and near DOE sites. Task force members developed proposals for improving the property disposal approval and notification processes, as well as disposal timelines, and for exploring additional steps DOE could take toward improvement in these areas. According to DOE officials, there was never the intention to require implementation of the task force’s proposals about potential ways to address challenges across DOE. Instead, DOE officials described the task force, with members from several DOE sites as well as headquarters and NNSA, as an effort for sites to learn from one another.

Conclusion

Though federal agencies have taken steps to improve the management of excess properties, they continue to face many of the same challenges that we have reported for over a decade. For DOE, those challenges are compounded by the fact that some of its excess properties have been contaminated as a result of their use in supporting the development of nuclear weapons and nuclear energy research. DOE’s ability to manage the disposal of these properties is impeded by its reliance on data that are not always timely or complete. Without up-to-date information on the status of all facilities undergoing D&D, of their projected end-state, or major milestones DOE may not be able to make well-informed decisions about this subgroup of its property holdings.

In addition, though the vast majority of these contaminated facilities are disposed of via demolition, there is potential for other facilities—such as the uncontaminated facilities for which EM is responsible—and some land that EM holds to be disposed of via transfers by sale for economic development. While disposing of unneeded land may not produce significant cost-savings since it does not require large amounts of resources to maintain, continuing to hold real property that may no longer be needed does not present a positive image of the federal government in local communities, particularly if another entity may be able to put the property to better use. Although DOE’s policy is to identify and dispose of properties that are appropriate for economic development, currently, neither officials at headquarters nor the site-level have taken a proactive or systematic approach to implementing this policy. As a result, DOE does not have a consolidated inventory of properties that might be appropriate for this type of disposal. A fuller understanding of the size and scope of the properties that fit this category could facilitate a more proactive disposal approach and reduce DOE’s overall property holdings as well as assist economic development in selected areas.

Recommendations for Executive Action

To help DOE make more informed decisions regarding its management and disposal of real property held by EM, we recommend that the Secretary of Energy take the following actions:

DOE should take steps to ensure that its real property data systems provide timely and complete data on the status and major milestones of facilities undergoing D&D at a level of detail that supports sound decision making.

DOE should develop and document an approach to property transfer consistent with DOE’s policy to identify and transfer properties appropriate for economic development, including clearly defining who is responsible for identifying those properties, when they should be identified, and how.

Agency Comments

We provided a draft of this report to the Secretary of Energy for review and comment. DOE concurred with our recommendations and provided technical clarifications, which we incorporated as appropriate. DOE’s comments are discussed below and the written response is reprinted in appendix II.

DOE agreed with our recommendation that it should ensure that its real property data systems provide timely and complete data on the status and major milestones of facilities undergoing D&D. DOE stated that it intends to address this recommendation by (1) making revisions to its data system to ensure that the range of status options covers the entire lifecycle of an asset and does not overlap; (2) proposing to its data system governance bodies new data elements for each asset, where applicable; and (3) applying data entry processes consistent with internal accounting guidance.

With regard to our recommendation that DOE develop and document an approach to property transfer consistent with its policy to identify and transfer properties appropriate for economic development purposes, DOE responded that it will issue a policy memorandum that will (1) assign responsibility for identifying such properties and (2) include the timeframe and manner of identification and any resulting notification. DOE indicated it will include portions of the guidance, as appropriate, in future updates to any related directives.

We are sending copies of this report to the appropriate congressional committees and the Secretary of Energy. In addition, the report will be available at no charge on GAO’s website at http://www.gao.gov.

If you or your staff have any questions, please contact me at (202) 512- 2834 or wised@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IV.

Appendix I: Objectives, Scope, and Methodology

Our objectives were to (1) describe the number and characteristics of facilities for which the Department of Energy’s (DOE) Office of Environmental Management (EM) completed the deactivation and decommissioning (D&D) process from 2003 through 2013, (2) assess DOE’s management of the disposal of properties that were EM’s responsibility, and (3) identify the challenges DOE faced in disposing of these properties and actions it has taken to address those challenges. The focus of this report was DOE’s management of the disposal of facilities that required D&D once they had reached their end-state. We did not assess or examine DOE’s management of the D&D process itself in this report. For example, we did not assess the process or DOE’s decision making regarding the selection of a facility’s end-state or prioritizing D&D work.

To describe the facilities for which EM completed D&D from 2003 through 2013, we obtained and analyzed DOE and EM data for that period. From DOE, we obtained data from the Facilities Management Information System (FIMS), the agency’s central real property database. To identify facilities for which EM completed D&D from 2003 through 2013, DOE officials queried FIMS for facility records that met two criteria: (1) the record indicated that the facility was deactivated, shutdown pending the start of D&D, or that D&D was in progress at any point during that time period and (2) the record for that facility was archived in a subsequent year, which indicated that the facility had been disposed of and thus implying D&D was complete. Using data from this query we developed summary statistics to describe the facilities of interest. We posed questions to knowledgeable DOE officials about data collection and reporting practices and reviewed related documentation. We identified a number of shortcomings of FIMS data related to their completeness and use as a management tool; however, we determined that the data were sufficiently reliable to use, in concert with other data sources, to describe the size and disposition of the facilities of interest. To supplement information gathered from FIMS, we also obtained and analyzed data from EM’s Integrated Planning, Accountability, and Budgeting System (IPABS). We used the annual performance metrics produced from that system to develop a comprehensive understanding of the total number of facilities for which EM had completed disposal from 2003 through 2013 and their location, as well as the scope and location of future disposal efforts. Similarly, we posed questions to knowledgeable EM officials about data collection and reporting practices and reviewed related documentation, and we determined that the data were sufficiently reliable for the descriptive purposes for which they were used. To gather additional information about these facilities and DOE’s approach to their disposal, we reviewed relevant laws and regulations and interviewed DOE officials at headquarters and seven sites (see table 3). We visited four of those sites in person and collected and reviewed supporting documentation as necessary. We selected sites to visit that would provide variation in site attributes, including size, location, whether it was a closure or non-closure site, and the extent to which property at the site had been transferred by sale for reuse. Observations made from these sites are not generalizable to all DOE properties; rather, they provide specific, detailed examples of issues that were described in general terms by agency officials.

To assess DOE’s management of the disposal of properties that were EM’s responsibility, we analyzed DOE’s policies and guidance related to real property management and interviewed officials at headquarters and at the site level about the disposal of these properties in practice. We also interviewed representatives of the six active community reuse organizations (CRO) that received, requested, or were interested in requesting EM properties—the primary non-federal recipients of these properties—as well as an organization that represents a coalition of CRO’s and two local governments that had been the recipients of DOE properties (see table 4). We then compared those practices with (1) GAO’s Standards for Internal Control in the Federal Government and (2)

DOE’s policies on real property management, including Real Property Asset Management.

To identify the challenges, if any, that DOE faced in disposing of EM properties and the actions it was taking to address those challenges, we interviewed officials at DOE headquarters and at the seven selected sites and conducted 9 stakeholder interviews with representatives from the active CROs and local governments. As previously mentioned, we also conducted four site visits to observe the properties of interest and gather additional context for the challenges DOE faced.

We conducted this performance audit from March 2014 to February 2015 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Appendix II: Comments from the Department of Energy

Appendix III: Completed Facility and Land Transfers by the Department of Energy’s Office of Environmental Management, 2003 through 2013

We asked officials from the Department of Energy’s Office of Environmental Management (EM) to provide information on real property—facilities and land—held by EM that was transferred by sale to non-federal entities from 2003 through 2013 (see table 5). All 21 properties that were transferred by sale during this time period were at the East Tennessee Technology Park, a collection of facilities designated for commercial reuse and land set aside for redevelopment that is EM’s responsibility at the Oak Ridge Reservation in Tennessee.

Appendix IV: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact named above, Nancy Lueke, Assistant Director; Gary Guggolz, Delwen Jones, Joshua Ormond, Alexander Ray, Jack Wang, Crystal Wesco, Jessica Wintfeld, and Elizabeth Wood made key contributions to this report.