Environmental Cleanup:

Transfer of Contaminated Federal Property and Recovery of Cleanup Costs

GAO-05-1011R: Published: Sep 16, 2005. Publicly Released: Oct 17, 2005.

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Ammonium perchlorate (perchlorate) is a primary ingredient in solid rocket propellant and has been used for decades by the Department of Defense (DOD), the National Aeronautics and Space Administration, and the defense industry in the manufacturing, testing, and firing of rockets and missiles. Perchlorate has been found in the drinking water, groundwater, surface water, or soil in 35 states, the District of Columbia, and 2 commonwealths of the United States. Exposure to perchlorate affects the human thyroid, and certain levels of exposure may result in hyperthyroidism in adults and developmental delays in children. Although there is no specific federal requirement to clean up perchlorate, the Environmental Protection Agency (EPA) and state regulatory agencies have used various environmental laws and regulations to require cleanup of perchlorate by responsible parties. Between 1942 and 1945, new military uses for perchlorate led to an increase in the production of perchlorate in the United States. Between 1945 and 1967, the U.S. Navy, Western Electrochemical Company, and the American Potash and Chemical Company manufactured perchlorate at a facility in Henderson, Nevada. The United States owned part of the facility from 1953 to 1962. In 1967, the Kerr-McGee Corporation acquired the facility and continued to manufacture perchlorate until 1998, when it ceased production after the chemical was found in nearby groundwater. Kerr-McGee is presently cleaning up perchlorate contamination under a consent order with the Nevada state environmental agency. The American Pacific Corporation also manufactured perchlorate near Henderson from 1958 until 1988, when its facility was destroyed in an explosion. American Pacific relocated its perchlorate production to Utah and is currently the sole manufacturer of perchlorate in the United States. In a recent letter to GAO, Congress asked us to report on the costs, liability and financial responsibility related to perchlorate cleanup. The issue of liability for perchlorate cleanup is currently the subject of litigation between the Kerr-McGee Corporation and the United States. In 2000, Kerr-McGee initiated litigation against the United States, seeking reimbursement for cleanup costs. The case is still in the pretrial stage. The information requested above is among the issues being addressed as part of the pending court case. It is a longstanding GAO policy to refrain from taking a position on or addressing matters that are pending in litigation. During a June 2005 meeting with Congressional staff, we agreed to document why we could not undertake the study originally requested, and we also agreed to report on general issues relating to the federal government's responsibility for environmental cleanup on land that it transfers or sells to other parties. This report discusses (1) laws governing the transfer of contaminated federal property to private parties, both before and after the enactment of a 1986 amendment to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) that specifically governs such transfers, and (2) the degree to which private parties not subject to civil actions under CERCLA may seek environmental cleanup costs from other responsible parties in the wake of the recent Supreme Court decision in Cooper Industries v. Aviall Services, and subsequent cases.

While there are numerous laws that have some impact on the transfer of contaminated federal property to private parties, the following three federal statutes (and associated regulations) specifically require some combination of cleanup actions, notice of contamination, and retained federal cleanup responsibility following transfer of the property: (1) Federal Property and Administrative Services Act of 1949 (Federal Property Act), (2) Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), and (3) Superfund Amendments and Reauthorization Act of 1986 (SARA). Under the Federal Property Act, each federal agency has a continuing responsibility to identify property that has become excess--no longer needed by the agency to carry out its programs or activities. The agency must report such property to the General Services Administration (GSA). GSA then must determine if any other federal agency, mixed-ownership government corporations, or the District of Columbia has a need for the property. If no other agency needs the property, GSA declares it unneeded by the government and identifies it as surplus. Generally, surplus property must be disposed of after publicly advertising for bids. Courts have interpreted the liability of responsible parties under CERCLA to be joint and several. Under joint and several liability, when the harm done is indivisible, one party can be held responsible for the full cost of the cleanup, even though that party may be responsible for only a portion of the hazardous substances at the site. Such a party may then seek to recover a portion of its cleanup costs from other responsible parties. However, a recent Supreme Court decision has limited the ability of responsible parties who voluntarily clean up their property to recover costs from other responsible parties under CERCLA.

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