oversight

Environmental Protection: Status of Defense Initiatives for Cleanup, Technology, and Compliance

Published by the Government Accountability Office on 1997-05-29.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                   United States General Accounting Office

GAO                Report to Congressional Requesters




May 1997
                   ENVIRONMENTAL
                   PROTECTION
                   Status of Defense
                   Initiatives for Cleanup,
                   Technology, and
                   Compliance




GAO/NSIAD-97-126
                 United States
GAO              General Accounting Office
                 Washington, D.C. 20548

                 National Security and
                 International Affairs Division

                 B-276461

                 May 29, 1997

                 The Honorable James M. Inhofe
                 Chairman
                 The Honorable Charles S. Robb
                 Ranking Minority Member
                 Subcommittee on Readiness
                 Committee on Armed Services
                 United States Senate

                 The Department of Defense (DOD) spends about $5 billion annually to
                 fulfill its environmental mission. In response to your February 3, 1997,
                 request, we examined selected aspects of DOD’s environmental mission.
                 Specifically, this report addresses (1) the time lag between obligations and
                 expenditures for environmental cleanup and its impact on achieving actual
                 cleanup, (2) the basis for funding overseas cleanup, (3) DOD proposal to
                 enter into multistate cooperative agreements for technology certification,
                 and (4) DOD’s need for and efforts toward uniform tracking and
                 management of programs involving compliance with environmental laws
                 and regulations.


                 DOD and other federal facilities are subject to the same environmental,
Background       safety, and health laws and regulations as private industry. To fulfill its
                 environmental mission, DOD organized its program into five elements:
                 compliance, cleanup, conservation, pollution prevention, and technology.
                 This report covers three elements that use about $4.2 billion (90 percent)
                 of DOD’s approximately $4.6 billion funding for environmental protection
                 for fiscal year 1997. They are

             •   cleanup ($2 billion), which includes identification, investigation, and
                 cleanup of contamination from hazardous substances and waste on active,
                 closing, and formerly used DOD sites;
             •   technology ($0.2 billion), under which DOD invests in research,
                 development, demonstration, and validation of new technologies to
                 support the other elements of its environmental program; and
             •   compliance ($2 billion), which ensures adherence to environmental laws
                 and regulations of federal, state, and local jurisdictions. DOD funds
                 domestic cleanup primarily from the Defense Environmental Restoration




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                   Account (DERA).1 Other environmental activities such as overseas cleanup,
                   technology certification, and environmental compliance, are funded
                   directly from several appropriation accounts, primarily operations and
                   maintenance. In August 1996, we reported on the status of major defense
                   initiatives for cleanup, technology, and compliance.2


                   Of the $1.413 billion made available for environmental cleanup through the
Results in Brief   fiscal year 1996 Defense Environmental Restoration Account, DOD reported
                   that it obligated $1.409 billion by the end of that fiscal year, and expended
                   $385 million. As a result, reported expenditures for actual cleanup have
                   not proceeded as rapidly as the obligations shown in DOD’s annual cleanup
                   report to Congress.

                   The primary reasons cited by the defense components for cleaning up
                   overseas sites have been responses to concerns about U.S. personnel
                   health and safety, and compliance with host nation laws or agreements
                   and U.S. standards. Defense components reported that $102 million had
                   been obligated for overseas cleanup during fiscal years 1993-96.

                   DOD told us that it plans to enter into cooperative agreements with states
                   and local governments regarding the certification of environmental
                   technologies. DOD identified candidate technologies for such agreements
                   and expects to sign the first agreement by the end of fiscal year 1997. DOD
                   officials have not estimated the costs for expected cooperative agreements
                   in fiscal years 1997 or 1998 because they do not view the use of these
                   agreements as a separate program and they expect cost savings to offset
                   expenditures.

                   DOD compliance project and cost data, as reported in the 1996
                   Environmental Quality Annual Report to Congress, are not complete or
                   accurate. The DOD-wide funding totals for environmental compliance did
                   not account for all funds or major projects. The report omitted about
                   $250 million in funding and failed to include some major Navy projects.
                   Also, compliance activities with widely varying characteristics are now
                   being combined in DOD’s classification categories. Projects with


                   1
                    Most DOD cleanup actions are funded through DERA and the Base Realignment and Closure (BRAC)
                   account. Congress established DERA in 1984 to fund the cleanup of old contamination sites on active
                   DOD installations and formerly used defense sites, and it later established the BRAC account for
                   closing installations. For fiscal year 1997, the reported DERA funding totaled $1.3 billion, and BRAC
                   expenditures totaled $0.7 billion. BRAC expenditures were discussed in Military Bases: Potential
                   Reductions to the Fiscal Year 1997 Base Closure Budget (GAO/NSIAD-96-158, July 7, 1996).
                   2
                    Environmental Protection: Status of Defense Initiatives for Cleanup, Compliance, and Technology
                   (GAO/NSIAD-96-155, Aug. 2, 1996).


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                compliance milestones in the year 2000 and beyond are now included with
                installations already out of compliance. Thus, DOD, the Environmental
                Protection Agency, and Congress lack the data for environmental
                compliance they need to conduct oversight functions. Because DOD has
                indicated a reluctance to take the necessary actions to correct the
                problems noted in the report, we are suggesting that Congress may wish to
                consider requiring DOD to ensure that the problems are addressed.


                In response to our and Congress’ concerns, DOD reported that
DOD Funds for   environmental funds obligated for actual cleanup at active installations
Cleanup Were    and formerly used defense sites reached about 61 percent in fiscal year
Expended Over   1995 and were projected to reach about 74 percent in fiscal year 1997.3
                Although DOD reported obligating increasing amounts of funds for actual
Several Years   cleanup activities, a significant portion of these funds will not actually be
                expended until after the year of obligation. Officials from the Office of the
                Secretary of Defense (OSD) stated that the expenditure of these funds is
                based on the amount of work that is completed satisfactorily by
                contractors.4 Expenditures are made after a contractor completes a
                portion of the contract and submits a bill for the work done, and the
                government validates the bill and writes a check to pay it.

                Table 1 shows that funds appropriated to DERA for fiscal years 1990-95 are
                reported by the defense components as expended over a period of years,
                with less than 30 percent expended in the year of appropriation, except for
                fiscal year 1995.5 DOD officials told us that the expenditure rates were
                generally better than the first-year expenditure rate of 22 percent, which
                was established as reasonable in a December 1993 joint Office of
                Management and Budget and Congressional Budget Office letter on outlay
                rates. OSD officials stated that the expenditure data were obtained from
                requests to defense components—the Army, the Navy, the Marine Corps,
                the Air Force, and the Defense Logistics Agency (DLA)—for data because
                OSD lacks direct access to such defense component reported expenditures.6



                3
                 This figure was taken from the President’s budget submission for fiscal year 1997.
                4
                 We use the term expenditure to refer to the amount of checks issued or other payments made. DOD’s
                July 1996 Financial Management Regulation indicates that the terms disbursement, outlay, and
                expenditure may be used interchangeably.
                5
                 DOD officials told us that the percent for this year may be higher than in other years because of
                rescissions. The total appropriation dropped by $300 million, causing reported expenditures for that
                year to become a larger percentage of the total program funding.
                6
                We have issued a series of reports over the past few years documenting deficiencies in the
                Department’s ability to reliably account for and report on its expenditures.



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                                         Expenditure data showing further breakdowns of cleanup phases, such as
                                        study, oversight, and actual cleanup, were not available for fiscal years
                                        1990-95 but were available for fiscal year 1996.

Table 1: Reported Expenditures From
Cleanup Funds for All Phases of         Fiscal year                                           Percent expended
Cleanup as a Percentage of              appropriations                   FY 90     FY 91     FY 92    FY 93     FY 94     FY 95          FY 96
Environmental Account
                                        1990                              22.6      44.3      18.2        5.4       2.0
Appropriations (fiscal years 1990-95)
                                                                                                                                     a
                                        1991                                        21.4      43.7      18.2        4.6
                                                                                                                                     a       a
                                        1992                                                  26.1      42.5      16.8
                                        1993                                                            27.2      42.6        14.4         4.6
                                                                                                                                 b
                                        1994                                                                      24.5        40.0        15.0
                                        1995                                                                                  37.1        32.8
                                        a
                                         The fiscal year 1995 and 1996 expenditure data for the fiscal year 1991 and 1992 appropriation
                                        years were not available at the time of our review.
                                        b
                                         According to OSD, the Army’s portion of expenditures for this year was estimated based on input
                                        from other defense components and Army data before and after the fiscal year 1995 time frame.

                                        Source: Office of the Deputy Under Secretary of Defense for Environmental Security.



                                        In fiscal year 1996, the defense components and the Defense Finance and
                                        Accounting Service (DFAS) began preparing reports on the components’
                                        accountability for environmental restoration funds. A specific goal for
                                        establishing the reporting requirement was to track expenditures by
                                        phase, such as cleanup in the year of appropriation and subsequent fiscal
                                        years. DFAS data did not include all reported obligations in its first report.
                                        However, it did account for $1.2 billion of the $1.4 billion reported
                                        amounts obligated by DOD in fiscal year 1996 and $325 million of the
                                        $385 million reported expenditures by DOD. Table 2 shows the fiscal
                                        year 1996 DERA expenditure plan in the fiscal year 1997 President’s budget
                                        submission and the end-of-year obligations and expenditures for fiscal
                                        year 1996 by phase, as reported by DFAS.




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Table 2: Reported Obligations and
Expenditures as a Percentage of DERA    Dollars in millions
Funding for Fiscal Year 1996 by Phase               Budget plan                       Obligations                    Expenditures
                                        Phase                      Dollars          Dollars         Percent        Dollars          Percent
                                        Total                       $1,413a          $1,206b              85          $325                  23
                                        Cleanup                         911             757               83            176                 19
                                        Study                           319             329c             103c            91                 29
                                        Oversight                       183             120               65             58                 32
                                        a
                                         The funding, as reported in the budget submission, is $2 million greater than that reported by
                                        DFAS. The higher total includes $1.4 million carried over from prior years, which the DFAS report
                                        does not include.
                                        b
                                            DFAS data did not account for all obligations and expenditures.
                                        c
                                         Although DFAS accounted for less than the total amount obligated, obligations for the study
                                        phase were more than originally estimated.

                                        Source: The President’s fiscal year 1997 budget submission for budget plan data and DFAS for
                                        obligation and expenditure data.



                                        According to DFAS report data as of September 30, 1996, DOD expended
                                        23 percent of the total $1.413 billion of the DERA budget plan in fiscal
                                        year 1996. The reported first-year expenditures for study and oversight,
                                        29 and 32 percent of budget, respectively, exceeded the expenditure rate
                                        for cleanup.

                                        DFAS  officials acknowledge that they cannot presently track detailed
                                        breakouts, such as by cleanup phase, of all expenditure data after the first
                                        year. Officials told us they recently identified problems in capturing Army
                                        and Navy environmental restoration program continuing obligations and
                                        expenditures against the fiscal year 1996 appropriation—the first reporting
                                        year. According to DFAS, the Army’s accounting system does not allow
                                        identification of specific program elements beyond the first year for
                                        operation and maintenance. Although they agreed that they could provide
                                        aggregate expenditure data, Navy officials stated their accounting system
                                        does not permit tracking expenditures by phase of cleanup beyond the
                                        appropriation year, and the Navy did not submit fiscal year 1996 data in
                                        the first quarter of fiscal year 1997. The Air Force had prior difficulty
                                        reporting expenditures but believes it has resolved the problems. OSD
                                        officials said they were working with the Army and the Navy to resolve
                                        these reporting problems.




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                        According to DOD officials, reasons for cleaning up overseas sites are to
Cleanup of Overseas     (1) respond to known imminent and substantial endangerment to human
Sites Is Largely for    health and safety due to environmental contamination caused by DOD
Host Country and U.S.   operations; (2) ensure that U.S. forces are able to conduct operations; and
                        (3) respond to requirements stipulated by host nations, which are laid out
Requirements            in Status of Forces Agreements or other legal authorities. The degree of
                        cleanup is negotiated with the host nation before starting work. DOD told
                        us that it uses either host nation laws as the standard for cleaning up or
                        U.S. standards, such as the National Contingency Plan under the
                        Comprehensive Environmental Response, Compensation, and Liability Act
                        of 1980, as amended, when host nation standards are not specified.

                        DOD does not routinely report overseas cleanup data, such as numbers,
                        values, or reasons for cleanup. In response to your 1996 inquiry, we asked
                        DOD to provide such information on a one-time basis. Although the data
                        were not complete, we believe the preliminary data provide some useful
                        insight. Information provided by defense components indicates that 69 of
                        355 overseas cleanup projects with documentation of the reason for
                        cleanup were based on host country laws or host nation agreements. Army
                        officials stated that many of the 195 cleanups for which documents did not
                        show a reason also related to host country laws or requirements.

                        Our August 1996 report provides a breakdown of the total reported
                        $102 million for overseas cleanup, including information on the number of
                        sites and projects and funding for fiscal years 1993-96 by service. Table 3
                        shows the basis for and number of overseas cleanup projects reported by
                        defense components. Host nation laws or agreements were cited as the
                        basis for 3 of the Army’s 7 projects for which a basis was reported and for
                        33 of the Navy’s 40 projects. The Marine Corps cited health risks as the
                        basis for projects; the Air Force cited various policies, standards,
                        instructions, and host nation agreements; and DLA cited U.S. responsibility
                        and host nation laws.




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Table 3: Overseas Cleanup Projects
Identified by Defense Component and                                            Basis cited by service component
the Basis Cited for Cleanup (fiscal                              U.S.      Host nation              Host    Basis not
years 1993-96)                        Component             standards       agreement          nation law documented Othera               Total
                                      Army                            0                 0               3             195b          4       202
                                                                                         c
                                      Navy                            0               26                7                0          7           40
                                      Marine Corps                    2                 0               0                0          0            2
                                                                       d                   e
                                      Air Force                      56               31                0                0         17       104
                                      DLA                             5                 0               2                0          0            7
                                      Total                          63               57               12             195          28       355
                                      a
                                          Other category includes training requirements, surveys, and DOD and Air Force policies.
                                      b
                                       The Army did not report a basis for action for 195 of the 202 projects, but officials told us most, if
                                      not all, of the Army’s overseas cleanup expenditures are based on host nation laws or
                                      agreements.
                                      c
                                       These projects were based on final standards governing the cleanup, which are a combination
                                      of the overseas environmental baseline guidance document standards, host nation laws, and
                                      international and Status of Forces Agreements.
                                      d
                                       Of the 56 projects, 22 were based on DOD’s Overseas Environmental Baseline Guidance
                                      Document standards, which provide implementation guidance, procedures, and criteria for
                                      environmental compliance at overseas installations.
                                      e
                                      These projects were based on the host nation’s final standards governing the cleanup.

                                      Source: Defense components.



                                      In reviewing data provided by the Air Force and the Navy, OSD officials
                                      stated that there was no official DOD guidance on overseas cleanup before
                                      late 1995. They stated that data before 1996 were not easily categorized
                                      due to difficulties in differentiating cleanup expenses from compliance
                                      expenses overseas. Funding for both overseas cleanup and compliance
                                      comes from operation and maintenance funds, according to OSD officials,
                                      and some cleanup costs, such as those that refer to Overseas
                                      Environmental Baseline Guidance Document standards, may actually have
                                      been compliance activities. DOD officials are reviewing Air Force and Navy
                                      data to determine the correct basis for cleanup. Also, DOD Inspector
                                      General officials told us that they plan to determine the basis for cleanup
                                      as part of a planned review of overseas cleanup issues.




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                           At OSD’s request, Congress authorized the Secretary of Defense, in fiscal
Cooperative                year 1997, to enter into cooperative agreements with states and local
Agreements for             governments to certify new environmental technologies.7 State
Technology                 environmental authorities supervise many environmental activities and
                           may require demonstration of a new technology before authorizing its use.
Certifications Are Not     DOD officials believe state expertise can be used to address environmental
Yet Established            requirements cost-effectively, improve operational effectiveness, and
                           achieve wider acceptability of technologies. According to DOD, cooperative
                           agreements would provide a mechanism for several states to view a
                           demonstration of an environmental technology in one location and
                           approve and certify the technology. Under the new law, DOD officials
                           identified potential technologies for consideration and anticipated
                           entering into the first of expected cooperative agreements by the end of
                           fiscal year 1997. However, DOD has not estimated the costs involved in
                           entering into cooperative agreements because officials do not view the use
                           of these agreements as a separate program and they expect savings to
                           offset agreement costs.


Legislative Requirements   The Defense Authorization Act for Fiscal Year 1997 allows DOD to enter
for Cooperative            into cooperative agreements for obtaining assistance in demonstrating
Agreements                 environmental technologies, collecting and analyzing data from those
                           demonstrations, and implementing quality assurance and quality control
                           programs.8 The act requires that the Secretary report annually to Congress
                           on the number of agreements reached and the states involved, nature of
                           the technology involved in each agreement, and funds obligated or
                           expended by DOD during that year for each agreement. The Secretary’s
                           authority to enter into agreements terminates at the end of fiscal year
                           2001.


No Agreements to Date      DOD has not yet entered into any cooperative agreements, but it expects to
                           do so by the end of September 1997. To date, DOD has not estimated costs
                           for agreements. DOD officials stated that they view cooperative agreements
                           as tools to enhance existing environmental programs rather than as a
                           separate program. Consequently, they told us they have not developed
                           documents to describe overall goals or project costs.



                           7
                            National Defense Authorization Act for Fiscal Year 1997, Public Law 104-201, September 23, 1996.
                           8
                            To qualify for a cooperative agreement, the Secretary of Defense must determine that the technology
                           could significantly benefit DOD and that there is no private market for the technology without
                           certification.



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                             DOD officials have not estimated costs for cooperative agreements, but
                             they expect any added costs to be minimal partly because the number of
                             technology demonstrations would be reduced. According to DOD officials,
                             each agreement could have different related costs, including employee
                             salaries for demonstration site visits, employee travel costs to
                             demonstration sites, and the cost of analyses required for state reciprocity.
                             DOD expects funding for cooperative agreements to come from projected
                             savings in other environmental funds.

                             DOD officials stated that, before the law’s enactment, they had used the
                             demonstration technology approach. For example, DOD worked with the
                             Departments of Energy and Interior, the Environmental Protection Agency
                             (EPA), and western states to demonstrate a system that measures
                             subsurface conditions. If the system is employed, the parties expect it to
                             reduce the number of core samples and monitoring wells needed to screen
                             sites effectively. In another example, the Navy worked with other federal
                             and state entities and a commercial company to demonstrate new methods
                             to clean up polychlorinated biphenyls, pesticides, and halogenated
                             compounds from soil, sediments, liquids, and other materials. We
                             requested DOD cost and milestone dates, but they stated they had no
                             definitive information.


Potential Technologies and   DOD has identified over 100 technologies as potential candidates under the
States Identified for        new law. For example, table 4 shows 12 projects in DOD’s Environmental
Cooperative Agreements       Security Technology Certification Program that could be developed as
                             cooperative agreements.9 OSD officials stated that DOD is now deciding
                             which technologies, potential uses, and regulatory agencies (federal, state,
                             or local) might be involved in demonstration projects. DOD plans to select
                             technologies based on urgency, acceptability, and utility, and then expects
                             to match validated technology needs with each location.




                             9
                              The program aims to demonstrate and validate technologies that meet DOD environmental needs and
                             environmental security objectives.



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Table 4: Candidates Identified by DOD
for the Use of Cooperative Agreements                                                                          Number of states where
as Part of Its Environmental Security                                                                            technology could be
Technology Certification Program        Project                                  Demonstration state                          applied
                                        Recycling of waste acids                 New York                                          5
                                        Site characterization system             Louisiana                                        50
                                        Containment and recycling of small Kentucky                                               50
                                        arms ammunition
                                        High-temperature destruction of          Virginia                                          9
                                        hazardous waste
                                        Oxidation of explosives in water         Nebraska                                         12
                                        Underground barrier wall                 California                                       45
                                        Groundwater recirculation wells          Massachusetts                                     4
                                        Seismic detection of dense liquids       Pennsylvania                                     50
                                        Fuel contamination treatment             California                                       51a
                                        Fiber-optic sensors                      Washington                                       12
                                        Removal of lead-based paint              Illinois                                         51a
                                        Water oxidation                          Arkansas                                          5
                                        a
                                        Includes Washington, D.C.

                                        Source: Office of the Deputy Under Secretary of Defense for Environmental Security.




                                        DOD has modified its environmental reporting, but environmental
Need to Improve Data                    compliance project and cost data reported by the defense components in
Used for Compliance                     the 1996 Environmental Quality Annual Report to Congress were not yet
Oversight Continues                     complete or accurate. Environmental projects of widely varying
                                        compliance status are being included in DOD’s compliance categories
                                        because changes in DOD’s policy now combine previously distinct
                                        categories and not all service data systems can provide the data for the
                                        revised reporting categories.


DOD Initiatives to Improve              We and OSD have noted that DOD’s budget execution and financial reporting
Compliance Management                   do not provide DOD or Congress with the information needed to provide for
Began in 1995                           oversight of compliance. In 1995, DOD began an environmental quality
                                        initiative to promote consistency in compliance definitions, categories,
                                        and requirements. It planned to identify goals; strategies; budget items;
                                        and measures of performance for compliance, conservation, and pollution
                                        prevention. Accordingly, for the fiscal year 1998 budget planning process,
                                        DOD’s Office of the Under Secretary of Defense for Environmental Security
                                        established new policies and goals for classifying compliance projects and



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                          obtaining needed compliance data. For fiscal year 1999 planning, DOD
                          officials have added explanatory footnotes to budget preparation
                          instructions.

                          OSD officials stated that they asked the defense components to provide
                          funding breakdowns by project and environmental area (such as
                          compliance or pollution prevention) to support fiscal year 1998 data in
                          next year’s annual report for fiscal year 1996. However, they told us that
                          such detail may not be included in the report because data reported by the
                          services were not consistent and could not be standardized for reporting.


Compliance Data Are Not   Although the environmental quality report for the first time included
Complete or Accurate      individual projects at installations, the data were incomplete because they
                          did not account for all environmental funding or include all projects
                          costing $300,000 or more. For instance, the report discussed
                          environmental quality programs, including technology, and showed
                          $2.33 billion planned for DOD’s fiscal year 1997 environmental quality
                          program worldwide.10 However, the President’s 1998 budget for fiscal
                          year 1997 totaled $2.58 billion.11

                          The report’s breakout of projects costing $300,000 or more omitted some
                          projects. Not all costs would be expected to be included in detail because
                          much of DOD’s spending is for recurring costs that are not project based,
                          and many projects fall under the report’s $300,000 threshold. However, the
                          Army’s, the Air Force’s, and the Marine Corps’ detailed project lists
                          accounted for 36, 27, and 25 percent, respectively, of the total they
                          planned to spend, but the Navy’s project lists accounted for only 6 percent.
                          Our visits to Navy locations showed that more projects were eligible to be
                          reported. For example, the fiscal year 1995 DOD Environmental Quality
                          Annual Report released in December 1996 showed that the U.S. Atlantic
                          Fleet planned 4 fiscal year 1997 projects costing $300,000 or more, but data
                          at the U.S. Atlantic Command showed 21 approved projects costing
                          $300,000 or more for fiscal year 1997.

                          The Navy reported planned spending of about $737 million for its fiscal
                          year 1997 U.S. environmental quality program, but it reported 56 projects

                          10
                            According to DOD, its environmental quality program is divided into six major functions: planning,
                          compliance, pollution prevention, conservation, education and training, and environmental
                          technology.
                          11
                            Our draft report reflected a difference of over $200 million based on the 1997 President’s budget for
                          fiscal year 1997, a total of $2.55 billion ($220 million greater than the $2.33 billion in DOD’s annual
                          report).



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costing $300,000 or more, valued at about $41 million (about 6 percent of
its reported total). In discussing this issue, Navy headquarters officials
stated that (1) most Navy projects fall under the $300,000 reporting
threshold, but the project amounts may later increase; (2) some proposed
requirements may be validated later; and (3) new requirements may arise
after approval. However, the supporting documentation we examined,
such as U.S. Atlantic Fleet project costs, indicated that although better
data were available at the time, the Navy did not provide that information
to DOD.

Also, reported summary and detailed data are not always accurate. Our
comparison of planned funding for environmental quality for fiscal
year 1997, as estimated in DOD’s two most recent reports, varied
significantly in aggregate totals by state and other localities. DOD’s planned
environmental quality funding for fiscal year 1997 in the two most recent
reports was similar in total but varied widely for aggregations, even at the
state level. The total difference between the fiscal year 1994 report at
$2.083 billion and the fiscal year 1995 report at $2.016 billion was a
reduction of about $67 million, a difference of only 3 percent. Even though
it is reasonable to expect year-to-year differences in program estimates,
more than half of the states and localities varied by significant amounts.
Allocations for 29 states and other localities for fiscal year 1997 varied by
more than either $30 million or 30 percent from the plans as estimated in
DOD’s fiscal year 1994 report versus the fiscal year 1995 report. Data from
only nine states and other localities varied by less than 10 percent from
one report to the next. Table 5 shows the variations exceeding $10 million.




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Table 5: Fiscal Year 1997 Planned
Spending in Fiscal Year 1994 and 1995       Dollars in millions
Defense Environmental Quality                                         Fiscal year       Fiscal year              Dollar           Percent
Reports                                     State                    1994 dollars      1995 dollars         difference         difference
                                            Colorado                         $21.9             $33.3              $11.5                    53
                                            Connecticut                        20.8              9.5              –11.3                   –54
                                            District of Columbia             234.6             172.0              –62.6                   –27
                                            Florida                          100.1              63.2              –36.9                   –37
                                            Hawaii                             89.8             53.7              –36.0                   –40
                                            Louisiana                          31.0             16.4              –14.6                   –47
                                            Missouri                           30.4             10.9              –19.5                   –64
                                            New Jersey                         16.8             46.7               29.8                   177
                                            Ohio                               20.9             45.7               24.8                   118
                                            Pennsylvania                       26.2             39.0               12.8                    49
                                            Rhode Island                        5.9             25.7               19.8                   337
                                            Virginia                        $344.1           $302.4              $-41.7                   –12
                                            Source: Defense Environmental Quality Program Annual Reports to Congress, Fiscal Years 1994
                                            and 1995.



                                            In discussing state-level variances, DOD officials told us they believe some
                                            major changes could be attributed to practices such as initially identifying
                                            funds for a nationwide initiative to a single headquarters unit and then
                                            later identifying specific locations. Also, major decisions, such as closing
                                            of bases through the base closure process, could cause some significant
                                            changes. In addition, DOD advised us that requirements generated under
                                            federal, state, and local environmental statutes and regulations become
                                            effective without regard to DOD’s budget cycle, and may necessitate shifts
                                            in funding. DOD stated the extent of variance would preclude meaningful
                                            year-to-year comparisons of spending in different states.

                                            Our comparison of fiscal year 1997 allotments to individual installations
                                            with information in DOD’s December 1996 report for fiscal year 1995
                                            showed significant differences at the selected installations. Records at
                                            these installations showed that all had changes to their programs from that
                                            reflected in the DOD reports. Some programs were reported with
                                            reasonable accuracy, whereas others showed large differences in costs
                                            and projects in the 1995 report. (Except as described below, neither we
                                            nor DOD has followed up to reconcile the differences.) For example:

                                        •   Fort Bliss, Texas, data in DOD’s report showed $25 million planned for the
                                            environmental quality program for fiscal year 1997, including 21 projects



                                            Page 13                                         GAO/NSIAD-97-126 Environmental Protection
                                B-276461




                                costing over $300,000 or more each, totaling $14.5 million. Data at that
                                location in January 1997 showed only $18.8 million for the fiscal year 1997
                                environmental quality program. Of the original 21 projects, 4 were
                                discontinued, 3 were deferred, 4 were funded early, and 4 were funded at
                                less than $300,000, the minimum for inclusion in the report. In addition,
                                seven new projects were added at a reported total cost of $4.4 million.
                            •   DOD’s report showed $24 million in expenditures at Navy Public Works
                                Center, Norfolk, Virginia, for fiscal year 1996, but data at the Center
                                showed it had spent only about $9.5 million for that period. An installation
                                official said that the Center had incorrectly reported its fiscal year 1996
                                program to higher levels. We requested, but have not received, data on
                                planned projects costing $300,000 or more for fiscal year 1997.
                            •   Data in DOD’s report from Quantico Marine Corps Base, Virginia, showed a
                                total of $22.5 million. The total was $5.9 million higher than the
                                $16.6 million that service officials reported. The Navy, which coordinates
                                Marine Corps input, erroneously made two changes that affected the data.
                                The Navy counted an $8.9 million military construction sanitary landfill
                                project twice and erroneously assessed a $3-million environmental budget
                                reduction. Quantico’s current fiscal year 1997 environmental program has
                                increased to $17.3 million.
                            •   Data from Aberdeen Proving Ground, Maryland, were relatively more
                                accurate: the fiscal year 1995 report showed $24.9 million planned for
                                fiscal year 1997, and data at the installation showed planned fiscal
                                year 1997 funding of $21.7 million. However, the installation’s data showed
                                a greater portion of projects costing $300,000 or more. Nine projects were
                                added, increasing the projects’ total, previously valued at $6.3 million, to
                                $11.7 million.


Widely Varying Activities       We reported in March12 and August 1996 that changes made by DOD in
Are Included Within DOD’s       definitions for EPA classes used to set priorities for compliance projects in
                                DOD’s fiscal year 1998 budget could increase the number of highest priority
New Compliance
                                projects. These changes could dilute the usefulness of the highest priority
Categories                      category by reducing management oversight. Our follow-up work indicates
                                that the defense components have encountered difficulty in providing data
                                in the new categories.

                                We also reported in March 1996 that, for its fiscal year 1998 budget
                                process, DOD developed new definitions for four of the five EPA classes. We
                                agreed with DOD’s general approach but expressed concern that the class

                                12
                                 Environmental Protection: Issues Facing the Energy and Defense Environmental Management
                                Programs (GAO/T-RCED/NSIAD-96-127, Mar. 21, 1996).



                                Page 14                                         GAO/NSIAD-97-126 Environmental Protection
    B-276461




    definitions in DOD’s plan (1) were a significant departure from DOD’s past
    definitions, (2) differed from EPA’s definitions, and (3) expanded the
    number of projects that qualify for funding under compliance Class I
    without distinguishing among different project types, as shown in the
    following examples:

•   Although EPA explicitly limits Class I to facilities currently out of
    compliance, as documented by notices of violation or consent agreements,
    DOD’s new definition added projects to address requirements in facilities
    that may not be out of compliance for 2 or more years.
•   DOD’s descriptions also indicated that items that EPA includes in Class III
    (such as inventories, surveys, studies, and assessments) could also be
    routinely funded as Class I projects.
•   EPA stated that designating a project as Class III does not mean the project
    is necessarily less important than one in Classes I or II. Nonetheless, the
    inclusion of greater numbers of indistinguishable projects under a
    redefined Class I could reduce management oversight. OSD officials stated
    it was not their intent to dilute the compliance priority setting process. As
    we reported in August 1996, DOD said it would act to ensure that priorities
    are not diluted in the compliance priority setting process. We have not yet
    seen changes to do this.

    After we issued our March and August 1996 reports, DOD updated its
    environmental compliance guidance (DOD Instruction 4715.6) to reflect the
    new definitions. Our discussions and review of records showed some
    concerns about the definitions. For example, in a December 1996
    memorandum, the Army’s Training and Doctrine Command stated that it
    disagreed with DOD’s revised policy because it is not consistent with the
    original class definitions. It stated that clear, logically consistent, and
    stable definitions are useful in managing an environmental program and
    that changing the definition of classes will make it harder to track, justify,
    and explain requirements.

    The data gathered by DOD under the old or new system do not meet EPA’s
    data needs. According to an April 1996 EPA memorandum, DOD agreed to
    separately provide EPA with project-level data and supplemental project
    listings with the details needed to support EPA’s automated system. EPA had
    believed that the additional detail would allow it to recategorize DOD
    projects under EPA definitions for governmentwide comparability.
    However, the data DOD provided to EPA varied by service and omitted
    elements such as federal facility identification numbers and unique project
    numbers. Also, the Navy did not specify statutory authority data needed by



    Page 15                                GAO/NSIAD-97-126 Environmental Protection
                      B-276461




                      EPA,and DOD did not provide compliance status information. Without the
                      compliance status information beyond DOD’s classification, it is difficult to
                      determine or compare the urgency of projects.

                      In discussing this issue, an OSD official did not agree that the changes in
                      compliance classes have reduced oversight. The official stated that, even
                      though individual organizations may have opposed the changes, Army
                      headquarters has agreed to the change. Furthermore, the official said DOD
                      provided the same data to EPA last year as it did to Congress and that EPA
                      had not requested additional information this year. According to EPA, it
                      was too late in the budget cycle to ask DOD for additional fiscal year 1997
                      data.


                      We support DOD’s continuing efforts to resolve defense components’
Conclusions and       information system weaknesses that limit the accuracy and completeness
Recommendations       of reported data. We also agree with DOD’s efforts to provide project-level
                      data for compliance oversight but believe that the initiative is impeded by
                      the decision to combine previously distinct compliance categories and the
                      services’ inability to provide the requested project-level data. Therefore,
                      we recommend that the Secretary of Defense direct the

                  •   Secretaries of the Army, the Navy, and the Air Force to establish
                      milestones and time frames for providing environmental compliance
                      funding estimates, obligations, and expenditures, including data at the
                      project level and
                  •   Deputy Under Secretary of Defense for Environmental Security to
                      reconsider changes in compliance class definitions so that the data permit
                      better oversight and are more consistent with governmentwide reporting
                      to EPA.


                      DOD’s inconsistent funding and reporting practices can lead to adverse
Matter for            budget consequences. DOD’s planned actions appear to be insufficient to
Congressional         ensure that only the highest priority projects are funded. Because DOD’s
Consideration         comments indicate that it does not plan to take the necessary actions to
                      correct the problems identified in this report, Congress may wish to
                      consider requiring DOD to issue guidance for environmental compliance
                      funding. As stated in our recommendations, the guidance should address
                      (1) milestones and time frames needed for obtaining environmental
                      compliance funding estimates, obligations, and expenditures, including




                      Page 16                                GAO/NSIAD-97-126 Environmental Protection
                     B-276461




                     project-level data and (2) changes to DOD’s compliance class definitions
                     that are more consistent with governmentwide reporting to EPA.


                     DOD stated that it partially concurred with our recommendations, but that
Agency Comments      (1) existing milestones were sufficient and the military departments were
and Our Evaluation   improving their ability to meet them and (2) DOD recently reviewed the
                     classification systems for environmental projects and made minor
                     modifications. DOD indicated that it was working to improve the accuracy
                     of the annual report’s list of projects in excess of $300,000 and to monitor
                     the execution of those projects during a semi-annual review process.
                     However, DOD noted that, at both the summary and project levels,
                     expenditure reporting depends on the appropriation from which the
                     efforts are funded. DOD also indicated that the EPA classification system is
                     not sufficient to support budget development or longer range financial
                     planning.

                     Despite DOD’s partial concurrence with our recommendations, we are
                     concerned that its response actually means that little additional effort will
                     be taken to address the issues related to the accuracy and completeness of
                     data, and the dilution of priorities by combining previously distinct
                     compliance categories. For example, DOD’s comments give no specific
                     indication as to how DOD intended to improve the accuracy of the data or
                     how it would overcome the difficulties in tracking, justifying, and
                     explaining environmental requirements within DOD’s broadened class
                     definitions.

                     DOD’s comments are reprinted in appendix I. DOD also provided suggested
                     editorial and technical changes and supplied updated information. We
                     have incorporated this additional information in the report where
                     appropriate.


                     To determine the time lag between obligations and expenditures for
Scope and            environmental cleanups and its impact on achieving actual cleanup, we
Methodology          collected and analyzed DFAS reports on cleanup-phase expenditures for
                     fiscal years 1990-96. We discussed the reports and their accuracy with
                     officials from the Office of the Under Secretary of Defense for
                     Environmental Security, and the Office of Program Integration. We
                     compared data for locations visited with corresponding DOD databases, but
                     we did not verify overall database accuracy. However, we have issued a
                     series of reports over the past few years documenting deficiencies in the



                     Page 17                                GAO/NSIAD-97-126 Environmental Protection
B-276461




Department’s ability to reliably account for and report on its expenditures.
Consequently, it was not practical for us to identify, collect, and report
more reliable expenditure data as a part of this assignment.13

To determine the basis for funding overseas cleanup, we obtained and
analyzed documents provided by the defense components on cleanup
costs by project for fiscal years 1993-96. We also discussed overseas
cleanup issues with DOD officials from the Offices of International Affairs
and Program Integration. We discussed the accuracy of the data and
specific errors discovered by officials but did not verify the reports to
overseas source data. We also obtained, reviewed, and analyzed laws,
regulations, and other relevant documents.

To determine the status of DOD’s proposal to enter into multistate
cooperative agreements for technology certifications, we obtained and
examined listings of potential projects and related data. We discussed
related issues with officials from the Office of the Under Secretary of
Defense for Environmental Security.

To obtain information on DOD’s compliance programs and tracking and
management system, we met with and obtained information from officials
in the headquarters offices of EPA and the Office of the Deputy Under
Secretary of Defense for Environmental Security and in headquarters and
field offices of the Army, the Navy, the Air Force, and the Marine Corps.
We discussed issues with DOD officials from the Army Training and
Doctrine Command, Fort Monroe, Virginia; Air Force Materiel Command,
Wright-Patterson Air Force Base, Ohio; and U.S. Atlantic Fleet, Norfolk,
Virginia. We reviewed pertinent documents, laws, and regulations as they
related to various projects, but did not verify the extent to which projects
would comply with applicable laws and regulations. We visited and
obtained information on program planning, budget execution,
requirements determination, resource allocation, and financial operations
for fiscal years 1994-2001 from the following military installations:
Aberdeen Proving Ground, Maryland; Fort Bliss, Texas; Kirtland Air Force
Base, New Mexico; Quantico Marine Corps Base, Virginia; Navy Public
Works Center and Naval Station, Norfolk, Virginia; and Naval Air Facility,
El Centro, California. The locations selected were from installations with
larger compliance funding for each service in the eastern, central, and
western United States.



13
   In DOD Problem Disbursements (GAO/AIMD-97-36R, Feb. 20, 1997), we identified significant errors
in DOD expenditure reports.



Page 18                                           GAO/NSIAD-97-126 Environmental Protection
B-276461




We conducted our work from November 1996 to March 1997 in
accordance with generally accepted government auditing standards.


Unless you publicly announce its contents earlier, we plan no further
distribution of this report until 30 days from its issue date. At that time, we
will send copies to appropriate congressional committees, the Secretaries
of Defense, the Army, the Navy, and the Air Force; the Commandant,
Marine Corps; and the Director, Office of Management and Budget. We will
also make copies available to others on request.

If you or your staff have any questions concerning this report, please
contact me on (202) 512-8412. Major contributors to this report are listed
in appendix II.




David R. Warren, Director
Defense Management Issues




Page 19                                 GAO/NSIAD-97-126 Environmental Protection
Contents



Letter                                                                                              1


Appendix I                                                                                         22

Comments From the
Department of
Defense
Appendix II                                                                                        29

Major Contributors to
This Report
Tables                  Table 1: Reported Expenditures From Cleanup Funds for All                   4
                          Phases of Cleanup as a Percentage of Environmental Account
                          Appropriations
                        Table 2: Reported Obligations and Expenditures as a Percentage              5
                          of DERA Funding for Fiscal Year 1996 by Phase
                        Table 3: Overseas Cleanup Projects Identified by Defense                    7
                          Component and the Basis Cited for Cleanup
                        Table 4: Candidates Identified by DOD for the Use of Cooperative           10
                          Agreements as Part of its Environmental Security Technology
                          Certification Program
                        Table 5: Fiscal Year 1997 Planned Spending in Fiscal Year 1994             13
                          and 1995 Defense Environmental Quality Reports




                        Abbreviations

                        BRAC      Base Realignment and Closure account
                        DERA      Defense Environmental Restoration Account
                        DFAS      Defense Finance and Accounting Service
                        DLA       Defense Logistics Agency
                        DOD       Department of Defense
                        EPA       Environmental Protection Agency
                        OSD       Office of the Secretary of Defense


                        Page 20                              GAO/NSIAD-97-126 Environmental Protection
Page 21   GAO/NSIAD-97-126 Environmental Protection
Appendix I

Comments From the Department of Defense




Note: GAO comments
supplementing those in
the report text appear at
the end of this appendix.
DOD comments identified
as editorial are not
included.




See pp. 16-17.




                            Page 22   GAO/NSIAD-97-126 Environmental Protection
                 Appendix I
                 Comments From the Department of Defense




See pp. 16-17.




See pp. 16-17.




                 Page 23                                   GAO/NSIAD-97-126 Environmental Protection
                 Appendix I
                 Comments From the Department of Defense




Now on p. 1.
See comment 1.



Now on p. 2.
See comment 1.




Now on p. 2.
See comment 2.



Now on p. 2.
See comment 1.

Now on p. 2.
See comment 3.



See comment 4.




See comment 4.




                 Page 24                                   GAO/NSIAD-97-126 Environmental Protection
                 Appendix I
                 Comments From the Department of Defense




Now on p. 3.
See comment 1.

Now on p. 3.
See comment 5.




Now on p. 3.
See comment 1.


Now on p. 5.
See comment 1.



Now on p. 10.
See comment 6.



Now on p. 11.
See comment 3.




Now on p. 11.
See comment 7.


Now on p. 13.
See comment 8.




Now on p. 13.

See comment 7.




                 Page 25                                   GAO/NSIAD-97-126 Environmental Protection
                  Appendix I
                  Comments From the Department of Defense




Now on p. 15.

See comment 7.




Now on p. 15
See comment 4.




Now on p. 15.
See comment 9.


Now on p. 15.
See comment 10.



Now on p. 16.
See comment 6.




                  Page 26                                   GAO/NSIAD-97-126 Environmental Protection
               Appendix I
               Comments From the Department of Defense




               The following are GAO’s comments on the Department of Defense’s (DOD)
               letter dated April 23, 1997.


               1. We revised our report to reflect DOD’s suggested changes.
GAO Comments
               2. We did not make the suggested change because the term “most”
               accurately describes that a large percentage but not all of DOD cleanup
               actions are funded through the Defense Environmental Restoration
               Account and the Base Realignment and Closure account. For example,
               Defense Logistics Agency cleanups are commonly funded through its
               working capital fund.

               3. DOD acknowledged that its annual report did not reflect all of the
               defense agencies’ projects. However, it indicated that the understatement
               was only $40 million, and not the $250 million we reported. Even though
               DOD’s annual report lists technology as one of its six major environmental
               quality program functions, DOD officials told us they did not consider
               technology as part of the environmental quality program and thus
               excluded such amounts from reported totals. Our calculations, showing a
               difference of $250 million between the President’s budget and the annual
               report, included totals for the defense agencies and technology programs
               that DOD omitted. The President’s 1998 budget for fiscal year 1997 totaled
               $2.58 billion, including technology. The $2.37 billion excludes technology.
               Since the President’s budget included technology programs and the annual
               report did not indicate that technology programs were being excluded
               from reported totals, we have not changed our calculations.

               4. We recognize that DOD defines Class I to include (1) requirements that
               will be out of compliance if funds are not provided in the fiscal year
               requested and (2) inventories, surveys, studies, and assessments required
               by various federal, state, and local laws to stay in compliance. We
               addressed the impact of DOD’s expanded Class I definitions and the
               differences between DOD and Environmental Protection Agency (EPA)
               definitions in prior reports.1 The EPA Class II definition recognizes those
               requirements that need funding by the end of the fiscal year, and the
               Class III definition recognizes what is needed to maintain compliance
               beyond the near term. In addition, we recognize that inventories and
               assessments may be required by law, but note that EPA’s definition


               1
                Environmental Protection: Status of Defense Initiatives for Cleanup, Compliance, and Technology
               (GAO/NSIAD-96-155, Aug. 2, 1996) and Environmental Protection: Issues Facing the Energy and
               Defense Environmental Management Programs (GAO/T-RCED/NSIAD-96-127, Mar. 21, 1996).



               Page 27                                           GAO/NSIAD-97-126 Environmental Protection
Appendix I
Comments From the Department of Defense




necessitates current non-compliance with requirements to warrant
inclusion in Class I, whereas DOD’s definition does not.

5. We revised the report to be more precise. The data presented in table 1
show that a significant portion of obligated cleanup funds are not
expended in the year in which they are obligated.

6. Our draft report cited a 1994 working group that the Office of the
Secretary of Defense (OSD) Deputy Comptroller established to develop
budgeting procedures for compliance activities. We deleted reference to
that working group because DOD officials stated that they intended for the
authorization for an environmental security working group to be limited to
cleanup activities.

7. OSD officials told us the components were to provide the collected data
to DOD in April 1996, and much of the data were provided late. As indicated
in our report, we noted similarities at service installations in that project
amounts may later increase, proposed requirements may be validated
later, and new requirements may arise after approval. We also noted that
additional Navy data were available at the time the Navy provided
information to DOD.

8. We revised our report to reflect the challenges DOD encounters with
respect to new requirements that arise during a fiscal year, and the
necessary funding shifts associated with these requirements.

9. We did not state that DOD contemplated classification changes. We
indicated only that DOD officials had stated they would ensure that
priorities are not diluted.

10. We revised our report to be more precise. We indicated that data
gathered by DOD under its old or new systems do not meet EPA’s needs.




Page 28                                   GAO/NSIAD-97-126 Environmental Protection
Appendix II

Major Contributors to This Report


                        Charles I. Patton, Jr.
National Security and   Uldis Adamsons
International Affairs   Elizabeth G. Mead
Division, Washington,   Robert B. Brown
                        Richard Meeks
D.C.                    Joanne Jurmu
                        George Shelton


                        David Marks
Dallas Field Office
                        Ed Soniat
Norfolk Field Office    Johnnie Phillips


                        Lynn Gibson
Office of the General   Margaret Armen
Counsel




(709221)                Page 29                  GAO/NSIAD-97-126 Environmental Protection
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