DOD is subject to various laws dating back to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) as amended by the Superfund Amendments and Reauthorization Act (SARA) of 1986 that govern remediation (cleanup) of contamination on military installations. DOD must also follow federal accounting standards that establish requirements for DOD to recognize and report the estimated costs for the cleanup of training ranges in the United States and its territories. Increasing public concern about potential health threats has affected not only the present operations of these training ranges but also the management, cleanup, and control of this training range land that has been, or is in the process of being, transferred to other agencies and public hands. DOD defines a range as any land mass or water body that is used or was used for conducting training, research, development, testing, or evaluation of military munitions or explosives. DOD classifies its ranges into the following five types. Active ranges are currently in operation, construction, maintenance, renovation, or reconfiguration to meet current DOD component training requirements and are being regularly used for range activities. Examples of these ranges would include ranges used for bombing, missiles, mortars, hand grenades, and artillery testing and practice. Inactive ranges are ranges that are not currently being used as active ranges. However, they are under DOD control and are considered by the military to be a potential active range area in the future, and have not been put to a new use incompatible with range activities. Closed ranges have been taken out of service and are still under DOD control but DOD has decided that they will not be used for training range activities again. Transferred ranges have been transferred to non-DOD entities such as other federal agencies, state and local governments, and private parties, and are those usually associated with the formerly used defense sitesprogram. Transferring ranges are in the process of being transferred or leased to other non-DOD entities and are usually associated with the base realignment and closure program. Congress addressed environmental contamination at federal facilities under SARA in 1986. This legislation established, among other provisions, the Defense Environmental Restoration Program and the Defense Environmental Restoration Account as DOD’s funding source under the Act. The goals of the Defense Environmental Restoration Program include (1) identification, investigation, research and development, and cleanup of contamination from hazardous substances, pollutants, and contaminants and (2) correction of other environmental damage such as detection and disposal of unexploded ordnance which creates an imminent and substantial danger to the public health or welfare or to the environment. The Office of the Deputy Under Secretary of Defense for Environmental Security (DUSD(ES)) was created in 1993. That office has overall responsibility for environmental cleanup within DOD and includes the Office of Environmental Cleanup that manages the Defense Environmental Restoration Program. Carrying out any remediation or removal actions under applicable environmental laws, including SARA, would likely require the immediate or future expenditure of funds. Federal accounting standards determine how those expenditures are accounted for and reported. The Chief Financial Officers’ Act of 1990, as expanded by the Government Management and Reform Act of 1994, requires that major federal agencies, including DOD, prepare and submit annual audited financial statements to account for its liabilities, among other things. Two federal accounting standards, Statement of Federal Financial Accounting Standards (SFFAS) Nos. 5 and 6, establish the criteria for recognizing and reporting liabilities in the annual financial statements, including environmental liabilities. SFFAS No. 5, Accounting for Liabilities of the Federal Government, defines liability as a probable future outflow of resources due to a past government transaction or event. SFFAS No. 5 further states that recognition of a liability in the financial statements is required if it is both probable and measurable. Effective in 1997, SFFAS No. 5 defines probable as that which is more likely than not to occur (for example, greater than a 50 percent chance) based on current facts and circumstances. It also states that a future outflow is measurable if it can be reasonably estimated. The statement recognizes that this estimate may not be precise and, in such cases, it provides for recognizing the lowest estimate of a range of estimates if no amount within the range is better than any other amount. SFFAS No. 6, Accounting for Property, Plant, and Equipment, further defines cleanup costs as costs for removal and disposal of hazardous wastes or materials that because of quantity, concentration, or physical or chemical makeup may pose a serious present or potential hazard to human health or the environment. The Office of the Under Secretary of Defense (Comptroller) issues the DOD Financial Management Regulation containing DOD’s policies and procedures in the area of financial management, which require the reporting of environmental liabilities associated with the cleanup of closed, transferred, and transferring ranges in the financial statements.DOD has taken the position that the cleanup of these ranges is probable and measurable and as such should be reported as a liability in its financial statements. Under the presumption that active and inactive ranges will operate or be available to operate indefinitely, the DOD Financial Management Regulation does not specify when or if liabilities should be recognized in the financial statements for these ranges. The Senate Report accompanying the National Defense Authorization Act for Fiscal Year 2000 directed DOD to provide a report to the congressional defense committees, no later than March 1, 2001, that gives a complete estimate of the current and projected costs for all unexploded ordnance remediation. As of March 30, 2001, DOD had not issued its report. For the purposes of the March 2001 report, DOD officials had stated that they would estimate cleanup costs for active and inactive training ranges just as they would for closed, transferred, and transferring ranges. Thus, the cleanup costs shown in this report would have been significantly higher than the training range liabilities reported in the financial statements, which only include estimates for closed, transferred, and transferring ranges. However, in commenting on a draft of our report, DOD officials informed us that they would not be reporting the cleanup costs of active and inactive training ranges in their March report. As DOD downsizing and base closures have increased in recent years, large numbers of military properties have been, and are continuing to be, turned over to non-DOD ownership and control, resulting in the public being put at greater risk. DOD uses a risk-based approach when transferring ranges from its control to reduce threats to human health and the environment. DOD attempts to mitigate risk to human health on transferred and transferring ranges. In instances where DOD has not removed, contained, and/or disposed of unexploded ordnance and constituent contamination from training ranges prior to transfer, it implements institutional controls to restrict access to transferring ranges and to transferred ranges where risks are found. Institutional controls include implementing community education and awareness programs, erecting fences or barriers to control access, and posting signs warning of the dangers associated with the range. Figure 1 shows signs posted at Fort McClellan, Alabama, warning of unexploded ordnance. Fort McClellan has been designated for closure under the base realignment and closure program and, as such, is in the process of transferring base properties out of DOD control. DOD officials have estimated that approximately 16 million acres of potentially contaminated training ranges have been transferred to the public or other agencies. The risk to the public was further discussed by an Environmental Protection Agency (EPA) official in a letter dated April 22, 1999, to DUSD(ES). The EPA official cautioned that many training ranges known or suspected to contain unexploded ordnance and other hazardous constituents have already been transferred from DOD control, and many more are in the process of being transferred, and the risks from many of these have not been adequately assessed. The letter went on to state that risks correspondingly increase as ranges that were once remote are encroached by development or as the public increases its use of these properties. An example of the development of sites adjacent to training ranges is the planned construction of two schools and a stadium by the Cherry Creek School District adjacent to the Lowry Bombing Range, a transferred range, near Denver. Construction is expected to begin in May 2001. Most training range contamination is a result of weapons systems testing and troop training activities conducted by the military services. Unexploded ordnance consists of many types of munitions, including hand grenades, rockets, guided missiles, projectiles, mortars, rifle grenades, and bombs. Figure 2 shows examples of some of the typical unexploded ordnance that has been removed from training ranges. Risks from this unexploded ordnance can encompass a wide range of possible outcomes or results, including bodily injury or death, health risks associated with exposure to chemical agents, and environmental degradation caused by the actual explosion and dispersal of chemicals or other hazardous materials to the air, soil, surface water, and groundwater. For example, according to an EPA report, EPA surveyed 61 current or former DOD facilities containing 203 inactive, closed, transferred, and transferring ranges and identified unexploded ordnance “incidents” at 24 facilities. These incidents included five accidental explosions, which resulted in two injuries and three fatalities. According to an EPA official, the three fatalities identified in their limited survey were two civilian DOD contractors and one military service member. Although DOD reported its unexploded ordnance cleanup liability on training ranges at about $14 billion in its fiscal year 2000 agencywide financial statements, it is likely that the financial statements are substantially understated. Further, significant cleanup costs will not be included in the planned March 2001 report. DOD officials and Members of Congress have expressed concern over the potential liability the government may be faced with but are still uncertain how large the liability may be. Various estimates have shown that cleanup of closed, transferred, and transferring training ranges could exceed $100 billion.