Environmental Liabilities:

Cleanup Costs From Certain DOD Operations Are Not Being Reported

GAO-02-117: Published: Dec 14, 2001. Publicly Released: Dec 14, 2001.

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GAO examined the environmental cleanup costs of ongoing operations of the Department of Defense (DOD). These include general property, plant, and equipment facilities or other assets that are being operated or are in use at DOD installations. GAO found that DOD has not developed policies, procedures, and methodologies to ensure that cleanup costs required for all of its ongoing and inactive or closed operations are identified, consistently estimated, and appropriately reported. As a result, DOD's financial statements and environmental reports continue to underreport environmental liabilities and related long-term budgetary needs. The military installations GAO visited had a total of 221 sites with estimated cleanup costs of $259 million. Of these, only 45 sites with estimated cleanup costs of $61 million were being reported for the Defense Environmental Restoration Program Annual Report to Congress, and only that amount was likely included in DOD's financial statements. GAO found DOD was not reporting 149 sites related to ongoing operations with estimated cleanup costs of $91 million and 27 inactive and closed operations with estimated cleanup costs of $107 million. The environmental offices at the six installations GAO visited had comprehensive records for the installation sites subject to cleanup requirements. Although these records were reasonably accurate, the records used to maintain accountability over related land, buildings, and structures were significantly flawed. If properly maintained, the real property records should play a significant role in ensuring the accuracy of environmental site records.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: The Secretary of Defense should designate a focal point with the appropriate authority to oversee and manage the reporting of DOD's liability for the cleanup of all ongoing and inactive/closed operations.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: On May 15, 2001, DOD created the new position of the Deputy Under Secretary of Defense (Installations and Environment), within the Acquisition, Technology and Logistics office, as the focal point for reporting the environmental liability of all ongoing and inactive/closed operations.

    Recommendation: The Secretary of Defense should require the DOD Comptroller to revise the Financial Management Regulation (FMR) to include (1) an expanded definition of cleanup, consistent with Statement of Federal Financial Accounting Standards No. 6, that includes closure/postclosure activities, and (2) guidance that addresses all restoration/cleanup liabilities, regardless of funding source or type of operation, in accordance with federal accounting standards.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: DOD revised its Financial Management Regulations in September 2002 to include (1) an expanded definition of cleanup consistent with Statement of Federal Financial Accounting Standards No. 6 and (2) guidance that addresses all restoration/cleanup liabilities, regardless of funding source in accordance with federal accounting standards.

    Recommendation: The Secretary of Defense should require the Deputy Under Secretary of Defense (Installations and Environment) to ensure that (1) existing errors in real property records are corrected, and (2) real property and environmental site records are periodically reconciled.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: In response to our recommendation, DOD issued an interim change to the Financial Management Regulations dated July 5, 2005 which requires an annual reconciliation of property and environmental site records and correction of instances of disagreement between property and environmental records. On April 4, 2006, DoD published guidance, DoD Instruction 1465.14, which requires the Secretaries of the military services to ensure the accuracy of all real property inventory data, including the changes resulting from the periodic physical inventories and the reconciliations with the Defense Agencies and the DoD Field Operating Activities. This completes DOD substantial compliance with the first part of the recommendation. In October 2005, DoD formally updated its FMR Volume 4, Chapter 13, page 13 with the guidance requiring components to keep an inventory of environmental sites and to reconcile them with Plant, Property, and Equipment at least annually. This completes DOD substantial compliance with the second part of the recommendation.

    Recommendation: The Secretary of Defense should require the designated focal point to work with the appropriate DOD organizations to develop guidance and procedures to implement the revised FMR requirements, to include the following: (1) standardized and validated methodologies for estimating cleanup costs, and (2) a comprehensive, controlled process to systematically capture, summarize, maintain, and report the cleanup sites and costs resulting from all operations known to result in hazardous waste.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: DOD released for comment its Management Guidance for Recognizing, Measuring and Reporting Non-Defense Environmental Restoration Program (DERP) Environmental Disposal and Closure Liabilities to the military services and the Defense Logistics Agency on 4/01/05 with a 4/18/05 response required date. In response to our recommendation, on November 15, 2005 DOD issued Guidance for Recognizing, Measuring, and Reporting Environmental Liabilities Not Eligible for Defense Environmental Restoration Program Funding. The guidance is applicable to all past and ongoing activities involving real property, facilities, equipment, and weapon systems not included in the DERP or another responsible program (e.g., Chemical Agents Destruction). The guidance provides costing methodologies acceptable for each major type of nonDERP environmental site or activity, which is responsive to and completes DOD's compliance with the first part of our recommendation. The guidance also lays out a controlled process to systematically capture, summarize, maintain, and report nonDERP liabilities, which is responsive to and completes DOD's compliance with the second part of our recommendation.

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