Through its Environmental Management (EM) program, DOE is responsible for environmental restoration, waste management, and facility transition and management at 15 major contaminated facilities and more than 100 small facilities in 34 states and territories. These facilities encompass a wide range of environmental problems, including more than 7,000 locations where radioactive or hazardous materials were released into the environment; almost 200 tanks that contain high-level radioactive waste from nuclear weapons production, some of which have leaked or could explode; and 7,000 production facilities that are now idled and in need of deactivation, decontamination, and decommissioning. For decades, DOD has operated industrial facilities that generated, stored, or disposed of hazardous wastes. The types of hazardous wastes and contaminants that require cleanup at the majority of DOD’s installations are also found at most private industrial operations. The primary contaminants are petroleum-related products such as fuels, solvents, corrosives, and paint strippers and thinners. Contamination has usually resulted from improper disposal, leaks, or spills. Some unique military substances, such as nerve agents and unexploded ordnance, are also found at DOD’s installations. In 1984, the Congress established the Defense Environmental Restoration Program (DERP) to evaluate and clean up contamination resulting from DOD’s past activities. DERP’s primary goal is to protect human health and the environment from risks posed by contaminated sites. Since 1984, DOD has identified approximately 20,000 potentially contaminated sites (10,000 of which it believes contaminated) at over 1,700 installations, and approximately 3,200 potentially contaminated sites at about 2,200 formerly used DOD installations in the United States. In cleaning up its sites, DOD and DOE must comply with two major federal environmental laws—the Resource Conservation and Recovery Act of 1976, as amended (RCRA), and CERCLA—as well as with state environmental laws and regulations. RCRA regulates the management of facilities that treat, store, and dispose of hazardous wastes and the cleanup of hazardous wastes released from such facilities. CERCLA governs the cleanup of inactive waste sites—that is, sites where disposal is no longer occurring. The Environmental Protection Agency (EPA) is responsible for administering both acts, but EPA may authorize state agencies to implement all or part of its RCRA responsibility. To implement its responsibilities under these acts, DOE has entered into interagency compliance agreements with EPA and the states. These agreements identify activities—generally called milestones—and schedules for achieving compliance, many of which are legally binding and enforceable. Both departments are also involved in complying with other laws such as the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act, the National Environmental Policy Act, and the Federal Facility Compliance Act. Cleaning up these department’s sites is an enormous task, that, in the case of DOE, is likely to span multiple generations. Over the last several years, the total estimated cost of the DOE cleanup has risen from about $100 billion in 1988 to $230 billion, with a high end estimate of $350 billion. DOD currently estimates its total costs, from its inception, at almost $39 billion. The huge cost of cleaning up the weapons complex has been a matter of growing concern, especially to the Subcommittee on Military Procurement. We have reported repeatedly on many issues that have and will affect the cost of the cleanup, including the need for a national, risk-based strategy to set realistic priorities; the need for DOE to more effectively address the complex technical problems that it faces in cleaning up its most vexing problems, such as the high-level tank wastes at Hanford; and the need for effective contractor management. At your request, we would like to address several issues of specific interest to the Subcommittee. These issues include how legislation can affect cleanup costs, ways to reduce cleanup costs, DOE’s privatization initiative, and how excess carryover balances could be used to fund DOE’s cleanup efforts. Our August 1994 report on the impact of incorporating land use planning decisions into cleanup decision-making stated that incorporating more realistic land use assumptions into the selection process for a cleanup remedy under CERCLA could result in significant cost savings—from $200 million to $600 million annually, according to DOE’s Assistant Secretary for EM. Our report noted that DOE and EPA had been assuming that all of DOE’s facilities would be cleaned up so that they could be used for unrestricted use. Consequently, the most stringent environmental requirements were imposed on every cleanup project. However, we found that because CERCLA does not specifically address using alternative land uses, such as industrial parks, EPA’s policy had been to assume residential use in its decisions—potentially the most costly cleanup requirement. Since our report was issued, DOE has begun to work with local stakeholder groups and develop land use plans for its sites. Additionally, in May 1995, EPA issued a directive indicating that cleanup decision-making should reflect “reasonably anticipated future land use” and that this could lead to more expedited, cost-effective cleanups. The practical effect of this directive is not clear. For example, CERCLA states that cleanup alternatives that permanently treat contaminants are preferred. Since some land uses may rely on institutional controls, such as deed restrictions and fencing, to prevent access to the contaminated area, it is not clear whether EPA will be able to consider these types of controls a permanent solution. As we noted in our report, if the Congress agrees that land use planning should be used in cleanup decisions, it could amend CERCLA to provide EPA with more specific direction. DOE’s facilities are subject to the cleanup actions and procedures specified by EPA under CERCLA as well as to RCRA-related requirements for corrective action established by EPA or a state regulatory agency. The need to coordinate the requirements of RCRA and CERCLA has created the potential for delays and increased costs. For example, our December 1994 report stated that officials at DOE’s Savannah River Site were preparing additional documents to meet CERCLA’s requirements, at a cost of about $33,000, for a facility that had been cleaned up and closed in 1990 under RCRA. DOE officials acknowledged that DOE would not be conducting any additional cleanup or disclosing any new information in preparing the required documents. Such problems could continue, since much cleanup work remains to be done, and additional DOE facilities have come under CERCLA regulation. DOE and EPA have recognized the potential impact of this duplication. DOE has developed an approach where it attempts to avoid duplication by specifying a lead regulator (either EPA or the state) for each cleanup project. Similarly, EPA is developing guidance on designating a lead regulator which it expects to issue in the summer of 1996. While this approach might solve the problem, it will depend on the cooperation of DOE and the EPA regions and states that oversee DOE’s facilities. Absent such cooperation, problems with duplication between RCRA and CERCLA could continue to affect the cost of the cleanup. In July 1995, we issued a report to the Subcommittee on Military Procurement examining DOE’s approach for estimating the savings it could achieve through the deactivation of surplus facilities. We found that deactivation—removing radioactive and hazardous materials from unused buildings—can save money. In estimating the net savings that DOE could realize for the 11 projects for which sufficient data were available for analysis, we found that the projects could yield a net savings of $458 million over their expected life. Despite the significant savings that some deactivation projects can generate, DOE did not have a consistent method for determining the relative savings among projects, and without a more consistent method, DOE could select the wrong priority for projects it intends to deactivate. We recommended that DOE develop a more reliable method for estimating savings and use this method to set priorities for deactivation projects. DOE agreed with our recommendations and said it would develop guidance on estimating savings and use the guidance to determine facility deactivation priorities. Currently, we are examining for you how DOE could use a process known as “removal actions” to speed the environmental restoration of its sites. A removal action shortens or eliminates some of the planning steps, such as the remedial investigation and feasibility study, normally used for full-scale remedial actions under CERCLA. Although removal actions are sometimes used to respond to emergencies or other urgent circumstances, they can also be used in more routine situations at federal facilities. Removal actions have been used for a variety of cleanups, including treating ground and surface water and excavating contaminated soil. While our work is not complete, significant potential exists to use this less-restrictive process at many DOE sites at a significant cost savings. As part of its initiatives to reduce the cost of the cleanup, DOE is now proposing to privatize portions of the cleanup, most notably, the vitrification of the high-level waste in the tanks at its Hanford facility. Rather than constructing and operating its own facilities to treat the tank waste, DOE is considering having a company or a consortium of companies finance, design, build, and operate pretreatment and treatment facilities and deliver the finished product—in this case, vitrified waste encased in stainless steel containers—to DOE for a fee. DOE expects this approach to save billions of dollars because the potential for innovation in the marketplace could lead to greater efficiencies and improved performance. A request for proposals to design the first phase of this effort was issued in February 1996, and DOE expects to award competing contracts in August 1996. It is important to recognize that for all practical purposes, DOE’s activities are already privatized. Specifically, DOE primarily relies on management and operating contractors to conduct its programs at its major sites.