Key Issues > High Risk > U.S. Government's Environmental Liability
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U.S. Government's Environmental Liability

The federal government’s environmental liability is vast and growing, and the Departments of Energy (DOE) and Defense (DOD), which bear the bulk of this liability, need to take steps to address the environmental risks and to monitor, report on, and better understand this liability.

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The federal government's environmental liability has been growing for the past 20 years and this rise is likely to continue even as billions are spent each year on cleanup efforts. For fiscal year 2017, the federal government's estimated environmental liability was $465 billion—up from $212 billion since fiscal year 1997. We added this area to our High-Risk List in 2017.

DOE is responsible for the largest share of the liability ($384 billion or about 83 percent) related primarily to retrieving, treating, and disposing of nuclear and hazardous waste. DOD is responsible for the second-largest share ($68 billion or about 15 percent), related primarily to environmental cleanup and restoration activities at its installations. The remaining liability is shared among other agencies, including the Departments of Transportation, Veterans Affairs, Interior, and Agriculture.

DOE’s liability grew by $110 billion (to $494 billion) in fiscal year 2018, primarily due to an increase in the estimated cost of the cleanup at the Hanford Site in Washington State. (The total liability for the rest of the federal government in fiscal year 2018 was not available at the time this report was published.) Even with the increase, however, DOE’s cleanup responsibilities may be underestimated because under federal accounting standards, environmental liability estimates do not include cost estimates for work for which reasonable estimates cannot currently be generated.

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The U.S. Government’s Environmental Liability was first added in 2017 as a high-risk area. Since then, DOD and DOE have partially met the leadership commitment criteria, but have not met any of the other criteria.

Leadership commitment: partially met. Officials at both DOE and DOD have taken steps to focus more attention on the environmental liabilities of their respective agencies. For example, in July 2017, DOE’s Office of Environmental Management (DOE-EM) issued a new cleanup policy that established requirements for DOE’s environmental management cleanup program. In addition, the Assistant Secretary for Environmental Management acknowledged in September 2018 that additional work needs to be done to address DOE’s growing environmental liabilities and announced plans to develop a strategic plan, as well as specific plans for each of its sites.

DOD established an Environmental Liabilities Working Group in 2014 that is co-chaired by senior DOD officials and provides a forum for DOD and its components to share liability estimating methodologies, best practices, and lessons learned. In November 2018, as part of a department-wide audit conducted by the DOD Inspector General, DOD’s environmental liabilities were audited by an independent public accounting firm for the first time. The Inspector General issued a disclaimer of opinion on the department-wide financial statements, with environmental liabilities identified as one of the material weaknesses.

Capacity: not met. Both DOE and DOD have significant gaps in their ability to effectively address their portions of the environmental liability. For instance, DOE-EM does not collect or maintain reliable cost, schedule, or milestone data on its projects. Therefore, it lacks the information needed to evaluate overall project and program performance, and assess whether it has sufficient staff—or the staff with the right skills—to carry out the cleanup mission. In addition, DOE’s budget requests do not disclose the future funding it anticipates needing to meet its schedule milestones for cleanup of legacy defense waste.

The recent audit of DOD’s environmental liabilities found that DOD did not consistently design, document, and implement controls over its environmental and disposal liabilities and did not appropriately prepare cost estimates for certain types of environmental liabilities. For example, auditors found that in developing its environmental liabilities cost estimates, DOD did not (1) include all required cost elements, (2) adjust the estimates to reflect current dollars, (3) use current data and the correct inputs, and (4) ensure estimates were reviewed by an estimator with the appropriate training.

Action plan: not met. Neither DOE nor DOD has fully identified the causes of their growing environmental liability or developed a formal plan to address it.

DOE has made at least two attempts recently to prioritize cleanup activities but neither has been fully implemented. First, in August 2017, DOE-EM instituted a 45-day review to gather input from sites regarding cleanup activities that could be completed quickly. However, this effort stalled with no action plan or report issued. Second, officials acknowledged they have not analyzed in detail the root causes of the growth in its environmental liability, and in August 2018, DOE-EM asked the sites to identify the key obstacles each faced in carrying out its cleanup mission. Senior DOE-EM leaders stated that they are developing corrective actions based on this information.

This effort may provide some insights into challenges at each site, but it is not comprehensive enough to reveal why, each year, DOE’s environmental liabilities are increasing faster than DOE’s spending on cleanup efforts. Without a comprehensive effort that incorporates prior DOE efforts to conduct root cause studies regarding contract and project management issues, it is not clear that DOE will have the information to develop an action plan to effectively address its environmental liabilities.

At DOD, officials acknowledged that the agency will likely incur costs for restoration initiatives in conjunction with base closures and with returning overseas DOD facilities to host nations. However, DOD reported that it is unable to provide a reasonable estimate of those costs because the extent of required restoration is unknown. Specifically, DOD has not 1) fully estimated costs for all its liabilities because the cost to clean up some known sites is not yet estimable, 2) fully inventoried all sites and general property, plant, and equipment needing cleanup, and 3) established a consistent methodology to adequately gather data and develop estimates.

Monitoring: not met. DOE and DOD do not have the information needed to monitor the effectiveness of their actions to address the environmental liabilities facing their departments. In February 2019, we found that DOE’s performance measures for cleanup activities do not provide a clear picture of overall performance. Specifically, the systems used by DOE and its contractors to track cleanup progress do not follow project management best practices and do not link performance to cost and schedule. In April 2018, we found that DOE-EM does not have adequate quality control processes in place at Hanford’s Waste Treatment and Immobilization Plant—the largest project in DOE’s cleanup program—to monitor engineering and construction deficiencies. As a result, some problems have recurred, causing cost increases and schedule delays.

DOD continues to face challenges in developing reliable information on its environmental liabilities. In April 2018, DOD provided guidance on a department-wide audit strategy and methodology for the military services and its components to use in developing auditable environmental liability estimates that would standardize the business practices for reporting environmental liabilities department-wide. However, in November 2018, the DOD Inspector General identified deficiencies within DOD’s environmental liabilities audit approach, specifically related to DOD’s ability to substantiate the completeness and amount of its environmental liability estimate. As a result, the Inspector General identified DOD’s environmental liability as a material weakness.

Demonstrated progress: not met. DOE has made proposals to address some waste and legal challenges, but Congress may need to take action to provide more clarity on DOE’s authority in this area for it to demonstrate progress, as we noted in May 2017. DOE has begun to explore a less expensive waste treatment alternative—grouting waste rather than turning it into glass—aimed at reducing the overall cost of the cleanup at one of its largest and most expensive cleanup site at Hanford in Washington State. However, DOE’s effort to demonstrate alternative technologies for treating waste was not funded in the fiscal year 2019 budget.

Overall, DOE’s environmental liability continues to grow: In the past two fiscal years, DOE has spent over $12 billion on cleanup activities while the reported liability has grown by $122 billion. Similarly, DOD’s liability has remained largely unchanged in recent years despite billions spent on environmental cleanup projects. More remains to be done by DOE and DOD to demonstrate progress toward fully understanding, disclosing, and reducing their environmental liability.

Both DOE and DOD have open recommendations that, if implemented, would improve the quality of the environmental liability estimates and begin to address the growing liability. Among these are the following key recommendations.

DOE should:

  • develop a program-wide strategy that outlines how DOE will direct available resources to address human health and environmental risks across and within sites;
  • include information on annual growth in environmental liability estimates by site and the causes of that growth in DOE-EM’s Future Years Defense Environmental Management Plan, as well as an explanation of significant differences between lifecycle cost estimates in DOE-EM’s annual budget submission with the environmental liability estimates; and
  • disclose the funding needed to meet all of its enforceable cleanup milestones in, for example, supplemental reports or the annual Future-Years Defense Environmental Management Plan.

DOD should:

  • effectively implement its program for financial management review, approval, assessment, and monitoring of the estimation and reporting processes for environmental liabilities;
  • improve compliance with federal accounting standards and Financial Management Regulations guidance;
  • design a process and controls at the department level to reconcile installation-level environmental records to installation property records and then using the corrected site inventories to determine that all sites with cleanup or corrective action costs are included in its financial reports of environmental liabilities; and
  • report all costs required to complete environmental cleanup at each base realignment and closure installation.

In addition to taking the actions listed above, attention to open recommendations will be key to making progress to address this high-risk area. As of December 2018, 29 of our recommendations related to this high-risk area had not been implemented, 17 of which were made since we last reported on this high-risk area in 2017.

Congressional Actions Needed

Congress should consider clarifying, in a manner that does not impair the regulatory authorities of EPA and the state of Washington and in consultation with the Nuclear Regulatory Commission, DOE’s authority at Hanford to determine whether portions of the supplemental low activity waste can be managed as other high-level waste. Providing clear authority to DOE may allow it to use alternative waste treatment approaches to treat Hanford’s supplemental low activity waste, which could reduce certain risks by neutralizing the waste faster and save tens of billions of dollars.

Looking for our recommendations? Click on any report to find each associated recommendation and its current implementation status.
  • portrait of Allison Bawden
    • Allison Bawden
    • Director, Natural Resources and Environment
    • 202-512-3841