Superfund
Information on Cost and Other Issues Related to the Cleanup of the Federal Creosote Site Gao ID: GAO-10-277 February 25, 2010In the 1990s, creosote was discovered under a residential neighborhood in Manville, New Jersey. Creosote, a mixture of chemicals, is used to preserve wood products, such as railroad ties. Some of the chemicals in creosote may cause cancer, according to the Environmental Protection Agency (EPA). EPA found that creosote from a former wood-treatment facility (known as the Federal Creosote site) had contaminated soil and groundwater at the site. Under the Superfund program--the federal government's principal program to clean up hazardous waste--EPA assessed site risks, selected remedies, and worked with the U.S. Army Corps of Engineers to clean up the site. As of May 2009, construction of EPA's remedies for the site had been completed; however, total site costs were almost $340 million and remedial construction costs had exceeded original estimates. In this context, GAO was asked to examine (1) how EPA assessed risks and selected remedies for the site, and what priority EPA gave to site cleanup; (2) what factors contributed to the difference between the estimated and actual costs; and (3) how EPA and the Corps divided responsibilities for site work. GAO analyzed EPA and Corps documents and data on the cleanup effort and its costs, and interviewed officials from these agencies. This report contains no recommendations. EPA generally agreed with GAO's findings on the agency's cleanup costs and actions, while the U.S. Army Corps of Engineers had no comments.
The extent of the contamination in a residential area at the Federal Creosote site was the primary factor influencing EPA's risk assessment conclusions, remedy selection decisions, and how EPA prioritized site work, according to site documents and agency officials. EPA assessed site contamination through multiple rounds of evaluation and concluded that soil and groundwater contamination levels were high enough that EPA needed to take action. Then, EPA evaluated remedies to achieve cleanup goals that it had established for the site and that were consistent with its residential use. EPA selected off-site treatment and disposal of the contaminated soil and long-term monitoring of the groundwater contamination as the remedies for the site. In selecting these remedies, EPA considered a range of alternatives but ultimately determined that certain options would be potentially infeasible or ineffective due to the residential setting. For example, EPA chose not to implement certain alternatives on-site because the agency found that there was insufficient space and they would be too disruptive to nearby residents. In addition, EPA chose not to implement certain alternatives because the agency found that they would be unlikely to achieve the cleanup goals for the site, especially considering the high level of treatment required to allow for unrestricted residential use of the area and the high levels of contamination found at the site. EPA made cleanup of the site a high priority because the contamination was in a residential area. For example, EPA took steps to shorten the cleanup period and prioritized the use of regional Superfund resources on the Federal Creosote site over other sites in the region. The $338 million in total site costs exceeded EPA's estimated remedial construction costs of $105 million by about $233 million, primarily because EPA's estimates focused only on construction costs, and EPA discovered additional contamination during the cleanup effort. EPA prepared preliminary cost estimates during the remedy selection process; however, EPA requires that these estimates include only the costs associated with implementing different remedies it was considering, not all site costs. Also, as a result of the movement of contamination in the ground and sampling limitations during EPA's site investigation, a greater-than-expected amount of contamination was discovered during the cleanup effort, which increased costs. Other factors, such as contractor fraud, affected total site costs to a lesser extent. EPA was responsible for managing the overall site cleanup and community relations, while the Corps was responsible for implementing the cleanup. EPA dedicated a full-time staff member to manage the site cleanup who, according to EPA, maintained a significant on-site presence to ensure that the project remained on schedule and was adequately funded and to work with residents. EPA also oversaw the work of the Corps and its costs. To conduct the actual cleanup work, the Corps hired contractors to design or implement cleanup activities who, in turn, hired subcontractors for some tasks. The Corps oversaw the activities and costs of its primary contractors but, according to Corps officials, was less involved in selecting and overseeing subcontractors.
GAO-10-277, Superfund: Information on Cost and Other Issues Related to the Cleanup of the Federal Creosote Site
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Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
February 2010:
Superfund:
Information on Cost and Other Issues Related to the Cleanup of the
Federal Creosote Site:
GAO-10-277:
GAO Highlights:
Highlights of GAO-10-277, a report to congressional requesters.
Why GAO Did This Study:
In the 1990s, creosote was discovered under a residential neighborhood
in Manville, New Jersey. Creosote, a mixture of chemicals, is used to
preserve wood products, such as railroad ties. Some of the chemicals
in creosote may cause cancer, according to the Environmental
Protection Agency (EPA). EPA found that creosote from a former wood-
treatment facility (known as the Federal Creosote site) had
contaminated soil and groundwater at the site. Under the Superfund
program”the federal government‘s principal program to clean up
hazardous waste”EPA assessed site risks, selected remedies, and worked
with the U.S. Army Corps of Engineers to clean up the site. As of May
2009, construction of EPA‘s remedies for the site had been completed;
however, total site costs were almost $340 million and remedial
construction costs had exceeded original estimates.
In this context, GAO was asked to examine (1) how EPA assessed risks
and selected remedies for the site, and what priority EPA gave to site
cleanup; (2) what factors contributed to the difference between the
estimated and actual costs; and (3) how EPA and the Corps divided
responsibilities for site work. GAO analyzed EPA and Corps documents
and data on the cleanup effort and its costs, and interviewed
officials from these agencies. This report contains no
recommendations. EPA generally agreed with GAO‘s findings on the agency‘
s cleanup costs and actions, while the U.S. Army Corps of Engineers
had no comments.
What GAO Found:
The extent of the contamination in a residential area at the Federal
Creosote site was the primary factor influencing EPA‘s risk assessment
conclusions, remedy selection decisions, and how EPA prioritized site
work, according to site documents and agency officials. EPA assessed
site contamination through multiple rounds of evaluation and concluded
that soil and groundwater contamination levels were high enough that
EPA needed to take action. Then, EPA evaluated remedies to achieve
cleanup goals that it had established for the site and that were
consistent with its residential use. EPA selected off-site treatment
and disposal of the contaminated soil and long-term monitoring of the
groundwater contamination as the remedies for the site. In selecting
these remedies, EPA considered a range of alternatives but ultimately
determined that certain options would be potentially infeasible or
ineffective due to the residential setting. For example, EPA chose not
to implement certain alternatives on-site because the agency found
that there was insufficient space and they would be too disruptive to
nearby residents. In addition, EPA chose not to implement certain
alternatives because the agency found that they would be unlikely to
achieve the cleanup goals for the site, especially considering the
high level of treatment required to allow for unrestricted residential
use of the area and the high levels of contamination found at the
site. EPA made cleanup of the site a high priority because the
contamination was in a residential area. For example, EPA took steps
to shorten the cleanup period and prioritized the use of regional
Superfund resources on the Federal Creosote site over other sites in
the region.
The $338 million in total site costs exceeded EPA‘s estimated remedial
construction costs of $105 million by about $233 million, primarily
because EPA‘s estimates focused only on construction costs, and EPA
discovered additional contamination during the cleanup effort. EPA
prepared preliminary cost estimates during the remedy selection
process; however, EPA requires that these estimates include only the
costs associated with implementing different remedies it was
considering, not all site costs. Also, as a result of the movement of
contamination in the ground and sampling limitations during EPA‘s site
investigation, a greater-than-expected amount of contamination was
discovered during the cleanup effort, which increased costs. Other
factors, such as contractor fraud, affected total site costs to a
lesser extent.
EPA was responsible for managing the overall site cleanup and
community relations, while the Corps was responsible for implementing
the cleanup. EPA dedicated a full-time staff member to manage the site
cleanup who, according to EPA, maintained a significant on-site
presence to ensure that the project remained on schedule and was
adequately funded and to work with residents. EPA also oversaw the
work of the Corps and its costs. To conduct the actual cleanup work,
the Corps hired contractors to design or implement cleanup activities
who, in turn, hired subcontractors for some tasks. The Corps oversaw
the activities and costs of its primary contractors but, according to
Corps officials, was less involved in selecting and overseeing
subcontractors.
View [hyperlink, http://www.gao.gov/products/GAO-10-277] or key
components. For more information, contact John B. Stephenson at (202)
512-3841 or stephensonj@gao.gov.
[End of section]
Contents:
Letter:
Background:
EPA's Risk Assessment, Remedy Selection, and Prioritization Decisions
for the Federal Creosote Site Were Primarily Influenced by the Extent
of the Contamination in a Residential Area:
Total Site Costs Exceeded Early Construction Cost Estimates Largely
because of the Nature of these Estimates and the Discovery of
Additional Contamination:
EPA Provided Overall Project Management and Communicated with
Residents, while the Corps Oversaw Contractor Implementation of the
Remedy:
Agency Comments and Our Evaluation:
Appendix I: Summary of Criminal and Civil Litigation Related to the
Federal Creosote Site:
Appendix II: Objectives, Scope, and Methodology:
Appendix III: Timeline of EPA Actions at the Federal Creosote Site:
Appendix IV: Comments from the Environmental Protection Agency65:
Appendix V: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: EPA's Remedial Alternative Evaluation Criteria:
Table 2: Other Response Costs Not Included in Construction Estimates
for the Federal Creosote Site:
Table 3: Difference between Estimated Soil Quantities in the RODs and
Final Soil Quantities at the Federal Creosote Site, by OU:
Table 4: Estimated and Actual Remedial Construction Costs at the
Federal Creosote Site:
Figures:
Figure 1: Map of the Federal Creosote Site in the Borough of Manville,
New Jersey:
Figure 2: EPA's Site Cleanup Process:
Figure 3: Difference between Estimated Construction and Total Site
Costs at the Federal Creosote Site:
Figure 4: Rustic Mall Areas Remediated at the Federal Creosote Site:
Figure 5: Residential Area Properties Remediated at the Federal
Creosote Site:
Figure 6: Actual Remedial Construction Costs as a Portion of the
Difference between Estimated Construction and Total Site Costs at the
Federal Creosote Site:
Figure 7: Contrasting Methodologies and Contractor Fraud as a Portion
of the Difference between Estimated Construction and Total Site Costs
at the Federal Creosote Site:
Figure 8: Key Events Related to Risk Assessment and Remedy Selection
at the Federal Creosote Site:
Figure 9: Key Events Related to Remedial Design and Action at the
Federal Creosote Site:
Abbreviations:
ATSDR: Agency for Toxic Substances and Disease Registry:
BEI: Bennett Environmental, Inc.
CEFMS: Corps of Engineers Financial Management System:
CERCLA: Comprehensive Environmental Response, Compensation, and
Liability Act of 1980:
EPA: Environmental Protection Agency:
IDIQ: indefinite-delivery/indefinite-quantity:
LTTD: low temperature thermal desorption:
NJDEP: New Jersey Department of Environmental Protection:
NPL: National Priorities List:
OU: operable unit:
PRAC: pre-placed remedial action contract:
RI/FS: remedial investigation/feasibility study:
ROD: record of decision:
RPM: Remedial Project Manager:
SCORPIOS: Superfund Cost Recovery Package Imaging and On-Line System:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
February 25, 2010:
The Honorable Harry M. Reid:
Majority Leader:
United States Senate:
The Honorable James M. Inhofe:
Ranking Member:
Committee on Environment and Public Works: United States Senate:
In the 1990s, creosote contamination was discovered at the Federal
Creosote site, a former wood-treatment facility in the Borough of
Manville, New Jersey, that had been developed into a residential
community of single-family homes and a retail mall. Creosote--a
mixture of approximately 300 chemicals--is used to preserve wood, and
the Environmental Protection Agency (EPA) has identified some of these
chemicals as probable human carcinogens. Under the Superfund program--
the federal government's principal program to clean up hazardous waste
sites--EPA worked with the U.S. Army Corps of Engineers (the Corps) to
construct remedies to address site contamination. This work was
completed in 2008, although some maintenance and groundwater
monitoring efforts continue. Early construction cost estimates for
these remedies totaled $105 million.[Footnote 1] However, as of May
2009, EPA had spent almost $340 million on the cleanup, including $246
million to construct site remedies and $92 million in other response
costs that were not part of EPA's early estimates.[Footnote 2] The
increase in actual remedial construction costs over the agency's
original estimates raised questions about whether EPA had selected the
most cost-effective remedy, given site risks and the extent of
contamination. Furthermore, the Department of Justice (Justice) and
the state of New Jersey are pursuing civil claims against the site's
alleged responsible party related to cost recovery and--as part of the
claims brought by the state of New Jersey--damages;[Footnote 3]
Justice has also filed criminal charges against several parties
involved in the cleanup, asserting claims related to alleged fraud in
awarding subcontracts by contractor personnel.[Footnote 4]
The Comprehensive Environmental Response, Compensation, and Liability
Act (CERCLA) of 1980 established the Superfund program to protect
human health and the environment from the effects of hazardous
substances. Under this program, EPA has the authority to (1) clean up
hazardous waste sites and then seek reimbursement from the parties
responsible for contaminating them or (2) compel the responsible
parties to clean up these sites. The Superfund cleanup process begins
with site discovery or notification to EPA of the possible release of
hazardous substances posing a threat to human health or the
environment. On the basis of an initial evaluation, EPA may select a
site for inclusion on the National Priorities List (NPL), which
catalogs many of the nation's most seriously contaminated sites. For
sites that EPA lists on the NPL, the agency initiates a more extensive
investigation process to identify the nature and extent of
contamination at the site, quantify potential risks to human health
and the environment, and evaluate potential remedies to address site
contamination. Selected remedies are then planned in the remedial
design phase and implemented in the remedial action phase.[Footnote 5]
EPA's initial investigation at the Federal Creosote site identified
contamination from the lagoons and canals of the former wood-treatment
facility beneath the residential portion of the site. After listing
the site on the NPL, EPA conducted additional investigations to
quantify site risks; evaluated potential remedies to address
contamination, including preparing cost estimates; and selected
remedies for the site. EPA tasked the Corps with designing and
implementing these remedies. The Corps hired contractors to perform
the design and construction work, and, in turn, the prime contractor
for the construction work hired subcontractors to perform certain
tasks, such as soil transportation, treatment, and disposal;
landscaping; and wastewater treatment.
In this context, you asked us to review issues concerning the Federal
Creosote site. Our objectives were to examine (1) how EPA assessed the
risks and selected the remedies for the Federal Creosote site, and
what priority EPA assigned to site cleanup; (2) what factors
contributed to the difference between the estimated and actual costs
of cleaning up the site; and (3) how responsibilities for implementing
and overseeing site work were divided between EPA and the Corps. We
also summarized information on criminal and civil litigation related
to the Federal Creosote site (see appendix I).
To examine how EPA assessed risks and selected remedies for the site
as well as what priority EPA assigned to the cleanup, we analyzed site
documents detailing the results of the agency's activities and
decisions at the site. We also interviewed relevant EPA and other
federal, state, and local officials. To determine what factors
contributed to the difference between the estimated and actual costs
of site cleanup, we obtained and analyzed data on estimated
construction and total site costs from site documents that detailed
EPA's planned activities, EPA and Corps cost-tracking databases, and
contractor cost summary reports. To compare estimated construction and
total site costs, in accordance with our policy, we adjusted the
estimated construction costs using a present value analysis and, to
adjust for inflation, converted all dollar figures into fiscal year
2009 constant dollars. We also analyzed site documents describing the
cleanup effort, reviewed EPA cost-estimating guidance, and conducted
interviews with EPA and Corps officials. To describe how
responsibilities for implementing and overseeing the site work were
divided between EPA and the Corps as well as EPA's oversight actions,
we reviewed EPA interagency agreements with the Corps, site documents,
and EPA guidance and interviewed EPA and Corps officials. To describe
actions that the Corps took to implement its site responsibilities, we
reviewed Corps guidance, Corps correspondence to the contractor, and
contractor requests for approval of certain subcontracts and also
interviewed Corps and EPA officials. To identify civil and criminal
litigation related to the Federal Creosote site, we collected and
reviewed information from publicly available court documents to
summarize the cases and, where applicable, their outcome. We evaluated
the reliability of the site actual cost data used in our analyses by,
for example, comparing the data across different sources and reviewing
agency data reliability controls. We determined that these data were
sufficiently reliable for our purposes. See appendix II for a more
detailed description of our scope and methodology.
We conducted our work from May 2008 through February 2010 in
accordance with all sections of GAO's Quality Assurance Framework that
are relevant to our objectives. The framework requires that we plan
and perform the engagement to obtain sufficient and appropriate
evidence to meet our stated objectives and to discuss any limitations
in our work. We believe that the information and data obtained, and
the analyses conducted, provide a reasonable basis for any findings
and conclusions in this product.
Background:
Creosote is derived by distilling tar; the type of creosote most
commonly used for wood-treating is manufactured from coal tar.
Polycyclic aromatic hydrocarbons--chemicals formed during the
incomplete burning of coal, oil, gas, or other organic substances--
generally make up 85 percent of the chemical composition of creosote.
EPA classifies some of the polycyclic aromatic hydrocarbons in
creosote, such as benzo(a)pyrene, as probable human carcinogens. Some
polycyclic aromatic hydrocarbons also may have noncarcinogenic health
effects, such as decreased liver or kidney weight.
From approximately the early 1910s to the mid-1950s, the Federal
Creosote site was a wood-treatment facility. Untreated railroad ties
were delivered to the site and, to preserve them, coal tar creosote
was applied to the railroad ties at a treatment plant located on the
western portion of the property (see figure 1 for an illustration of
the site). Residual creosote from the treatment process was discharged
into two canals that led to two lagoons on the northern and southern
parts of the site, respectively. After treatment, the railroad ties
were moved to the central portion of the property, where excess
creosote from the treated wood dripped onto the ground. The treatment
plant ceased operations in the mid-1950s. During the late 1950s and
early 1960s, the area where the treatment plant was formerly located
was developed into a 15-acre commercial and retail property known as
the Rustic Mall. Through the mid-1960s, other areas of the property,
including the former canal, lagoon, and drip areas, were developed
into a 35-acre residential neighborhood known as the Claremont
Development, which was made up of 137 single-family homes that housed
several hundred residents.
Figure 1: Map of the Federal Creosote Site in the Borough of Manville,
New Jersey:
[Refer to PDF for image: illustration]
The following are indicated on a map of the Rustic Mall and Claremont
Development residential area:
Drip area:
Former wood-treating facility:
Canal A:
Lagoon A:
Canal B:
Lagoon B:
Source: GAO analysis of EPA site documents.
[End of figure]
Issues with creosote contamination at the site became apparent in
April 1996, when the New Jersey Department of Environmental Protection
(NJDEP) responded to an incident involving the discharge of an unknown
thick, tarry substance from a sump located at one of the residences in
the Claremont Development. Later, in January 1997, the Borough of
Manville responded to complaints that a sinkhole had developed around
a sewer pipe in the Claremont Development. Excavation of the soil
around the sewer pipe identified a black, tar-like material in the
soil. After an initial site investigation, EPA found contamination in
both the surface and subsurface soils as well as in the groundwater
beneath the site. In 1999, EPA placed the site on the NPL and divided
it into three smaller units, called operable units (OU).[Footnote 6]
OU1 consisted of the source contamination (free-product creosote) in
the lagoon and canal areas of the Claremont Development. OU2 included
other soil contamination in the Claremont Development, such as
residually contaminated soil at properties over and near the lagoon
and canal areas and the drip area of the former wood-treatment
facility. OU2 also included contamination at a nearby day-care
facility. OU3 included the Rustic Mall soil contamination as well as
groundwater contamination throughout the site.[Footnote 7]
EPA completed all major site cleanup work in November 2007, and the
site was declared "construction complete" in March 2008.[Footnote 8]
Ultimately, EPA performed cleanup activities on 93 of the 137
properties in the residential area as well as on the commercial
portion of the site. EPA's ongoing activities at the site include
monitoring groundwater contamination, conducting 5-year reviews of
contamination levels to ensure that the remedy remains protective of
human health and the environment, and selling properties that EPA
acquired during the remedial action. According to EPA officials, the
agency could remove the site from the NPL as early as 2011; however,
this decision will depend on the results of contamination monitoring
at the site.
Most Superfund sites progress through the cleanup process in roughly
the same way, although EPA may take different approaches on the basis
of site-specific conditions. After listing a site on the NPL, EPA
initiates a process to assess the extent of the contamination, decides
on the actions that will be taken to address that contamination, and
implements those actions. Figure 2 outlines the process EPA typically
follows, from listing a site on the NPL through deletion from the NPL.
Figure 2: EPA's Site Cleanup Process:
[Refer to PDF for image: illustration]
Milestone: NPL Listing.
Phase: Site Study:
* Remedial Investigation;
* Feasibility Study.
Milestone: Record of Decision.
Phase: Remedial Action:
* Remedial design;
* Remedial action.
Milestone: Construction Complete.
Phase: Operation and Maintenance.
Milestone: Deletion from the NPL.
Source: GAO analysis of EPA data.
[End of figure]
In the site study phase of the cleanup, EPA or a responsible party
conducts a two-part remedial investigation/feasibility study (RI/FS)
process.[Footnote 9] The first part of this process--the remedial
investigation--consists of data collection efforts to characterize
site conditions, determine the nature of the waste, assess risks to
human health and the environment, and conduct treatability testing as
necessary to evaluate the potential performance and cost of the
treatment technologies that are being considered.[Footnote 10] During
the second part of the RI/FS process--the feasibility study--EPA
identifies and evaluates various options to address the problems
identified through the remedial investigation. EPA also develops
cleanup goals, which include qualitative remedial action objectives
that provide a general description of what the action will accomplish
(e.g., preventing contamination from reaching groundwater) as well as
preliminary quantitative remediation goals that describe the level of
cleanup to be achieved.[Footnote 11] According to EPA guidance, it may
be necessary to screen out certain options to reduce the number of
technologies that will be analyzed in detail to minimize the resources
dedicated to evaluating less promising options. EPA screens
technologies on the basis of the following three criteria:
* effectiveness: the potential effectiveness of technologies in
meeting the cleanup goals, the potential impacts on human health and
the environment during implementation, and how proven and reliable the
technology is with respect to the contaminants and conditions at the
site;
* implementability: the technical and administrative feasibility of
the technology, including the evaluation of treatment requirements and
the relative ease or difficulty in achieving operation and maintenance
requirements; and:
* cost: the capital and operation and maintenance costs of a
technology (i.e., each technology is evaluated to determine whether
its costs are high, moderate, or low relative to other options within
the same category).
After screening the technologies that it has identified, EPA combines
selected technologies into remedial alternatives. EPA may develop
alternatives to address a contaminated medium (e.g., groundwater), a
specific area of the site (e.g., a waste lagoon or contaminated hot
spot), or the entire site. EPA guidance states that a range of
alternatives should be developed, varying primarily in the extent to
which they rely on the long-term management of contamination and
untreated wastes. In addition, containment options involving little or
no treatment, as well as a no-action alternative, should be developed.
EPA then evaluates alternatives using the nine evaluation criteria
shown in table 1 and documents its selected alternative in a record of
decision (ROD).[Footnote 12]
Table 1: EPA's Remedial Alternative Evaluation Criteria:
Criterion: Overall protection of human health and the environment;
Description: An alternative's ability to protect human health and the
environment through engineered systems and institutional controls that
eliminate, reduce, or control risks.[A]
Criterion: Compliance with applicable or relevant and appropriate
requirements;
Description: An alternative's ability to comply with federal, state,
and local environmental and health regulations, and other advisory or
guidance criteria.
Criterion: Long-term effectiveness and permanence;
Description: The degree of certainty that an alternative will be
successful, considering the risks remaining after the remedial action
and the adequacy and reliability of engineering and institutional
controls.
Criterion: Reduction of toxicity, mobility, or volume through
treatment;
Description: An alternative's ability to permanently and significantly
reduce the toxicity, mobility, or volume of hazardous substances
through treatment.
Criterion: Short-term effectiveness;
Description: An alternative's effects on and risks to workers,
surrounding communities, and the environment during the remedial
action as well as the time required to achieve the remedial action
objectives.
Criterion: Implementability;
Description: The relative ease or difficulty associated with
implementing an alternative, considering the technical and
administrative feasibility of remedial technologies, and the
availability of required labor, equipment, and materials.
Criterion: Cost;
Description: An alternative's capital and operation and maintenance
costs.
Criterion: State/Agency acceptance;
Description: The extent to which the state and other regulatory
agencies support an alternative.
Criterion: Community acceptance;
Description: The extent to which the community supports an alternative.
Source: GAO analysis of EPA site documents.
Note: These criteria are not weighted equally in EPA's evaluation. The
first two are threshold criteria that must be met for an alternative
to be eligible for selection. The third through the seventh (long-term
effectiveness through cost) are balancing criteria used to compare
trade-offs between the alternatives. The last two are modifying
criteria that are considered after a public comment period on EPA's
proposed plan.
[A] Institutional controls, such as deed restrictions on future land
use, are limited measures that are intended to minimize potential
human exposure to contaminants. These measures are typically
implemented along with other technologies because they do not reduce
contaminant levels or prevent migration.
[End of table]
Next, either EPA or a responsible party may initiate the remedial
action that was documented in the ROD. Like the RI/FS, implementation
of the remedial action is divided into two phases. The first phase is
the remedial design, which involves a series of engineering reports,
documents, and specifications that detail the steps to be taken during
the remedial action to meet the cleanup goals established for the
site. For EPA-led remedial actions, EPA may either select a private
contractor to perform the remedial design or, under a 1984 interagency
agreement with the Corps, assign responsibility for designing the
remedial action to the Corps, which may select and oversee a private
contractor to perform the design work.[Footnote 13] The second phase
is the remedial action phase, where the selected remedy, as defined by
the remedial design, is implemented. Similar to the design phase, for
EPA-led remedial actions, EPA may either select a private contractor
to perform the remedial action or assign the remedial action to the
Corps, which would be responsible for contractor selection and
oversight during the remedial construction.
When physical construction of all remedial actions is complete and
other criteria are met, EPA deems the site to be "construction
complete." Most sites then enter into an operation and maintenance
phase, when the responsible party or the state maintains the remedy
while EPA conducts periodic reviews to ensure that the remedy
continues to protect human health and the environment. For example, at
a site with soil contamination, the remedial action could be to build
a cap over the contamination, while the operation and maintenance
phase would consist of monitoring and maintaining the cap. Eventually,
when EPA determines, with state concurrence, that no further remedial
activities at the site are appropriate, EPA may delete the site from
the NPL.
EPA's Risk Assessment, Remedy Selection, and Prioritization Decisions
for the Federal Creosote Site Were Primarily Influenced by the Extent
of the Contamination in a Residential Area:
The extent of the contamination in a residential area at the Federal
Creosote site was the primary factor that influenced EPA's risk
assessment conclusions, remedy selection decisions, and site work
priorities. EPA determined that risk levels were unacceptable given
the site's residential use. EPA then selected remedies for the site,
taking into account space constraints and other challenges associated
with a residential cleanup. Finally, EPA placed a high priority on
scheduling and funding site work because the contaminated area was
residential, thereby reaching key cleanup milestones relatively
quickly.
EPA Assessed Risks and Selected Cleanup Goals on the Basis of the
Site's Residential Use:
From the spring of 1997 to the summer of 2001, EPA conducted multiple
rounds of sampling and risk assessment at the Federal Creosote site
and concluded that human health risks exceeded acceptable
levels.[Footnote 14] Specifically, EPA assessed the air, groundwater,
surface soil, and subsurface soil as part of an initial site
investigation and an RI/FS process. See appendix III for a timeline of
EPA's risk assessment activities.[Footnote 15]
EPA's initial investigation of site contamination, which began in
1997, included such efforts as assessing whether contamination was
affecting public drinking water supplies; investigating the nature of
the bedrock and the aquifer underlying the site; collecting soil
samples from 30 properties selected on the basis of their proximity to
the lagoons, canals, and drip area of the former wood-treatment
facility; and collecting approximately 1,350 surface soil samples (up
to 3 inches below the ground surface) from 133 properties in and near
the residential development. From this initial investigation, EPA
concluded that site contamination posed unacceptable human health
risks. For example, while EPA found that contamination did not pose
short-term health risks that could require an evacuation of residents,
EPA found that the contamination was extensive and uncontrolled; had
impacted soil, sediment, and groundwater in the area; and likely posed
long-term health risks. For soil contamination in particular, EPA
determined that, in some areas, the contamination was within 2 to 3
feet of the ground surface; in other areas, EPA found that the
contamination was covered by little or no fill material.[Footnote 16]
According to a site document, one resident had discovered a large
amount of buried tar when installing a fence on his property. As a
result of its concerns that surface soil contamination could pose a
risk to residents, EPA developed a surface soil risk assessment in
January 1999. EPA concluded that soil contamination levels at 27
properties in the residential area posed long-term human health risks,
including carcinogenic or noncarcinogenic risks (or both), that
exceeded acceptable levels. In addition to soil contamination, EPA's
initial investigation determined that creosote had contaminated
groundwater in the soil as well as in fractures in the bedrock
underlying the site, which was a potential source of drinking water.
Furthermore, EPA's aquifer investigation showed that groundwater from
the site had the potential to influence the Borough of Manville's
municipal water supply wells, although Region 2 officials said the
nature of the fractures made it difficult for EPA to determine whether
site contamination would actually affect the wells.
According to Region 2 officials, the purpose of a remedial
investigation is to collect enough data to determine whether there is
a need to take a remedial action. These officials said that an RI/FS
for OU1 was not necessary because EPA had obtained much more
information from its initial investigation on the extent of
contamination at properties over the lagoon and canal source areas
than is typically available to support taking an action. Also,
according to EPA, the data that were collected during this initial
investigation were equivalent in scope to that of a remedial
investigation. Therefore, because EPA was trying to address the source
contamination in the residential area on an expedited basis, the
agency chose to incorporate these data into an Engineering
Evaluation/Cost Analysis because it allowed EPA to evaluate remedial
alternatives in a more streamlined way, as compared with an RI/FS
report.[Footnote 17] However, for OU2 and OU3, EPA initiated an RI/FS
process in 1998 to more fully characterize the extent of soil and
groundwater contamination throughout the site.[Footnote 18] EPA's OU2
soil evaluation determined that elevated levels of creosote
contamination close to the surface in the residential area were
generally found near the lagoons and canals, while the drip area
generally had residual levels of contamination close to the surface.
Underlying the site, EPA found that free-product creosote rested on a
clay layer approximately 6 to 10 feet below the surface, although in
some areas the layer was not continuous, and the creosote had migrated
as deep as the bedrock, roughly 25 to 35 feet underground. On the
basis of these findings, in April 2000, EPA developed a human health
risk assessment for soil contamination in the residential area using a
sample of six representative properties: two properties each
represented the lagoon and canal areas, the drip area, and the
remaining residential area, respectively.[Footnote 19] EPA found that
soil contamination exceeded acceptable risk levels at the lagoon and
canal and drip areas, but not at properties representing other areas
of the Claremont Development.
Furthermore, EPA's OU3 soil analysis revealed that contamination was
generally in three main areas of the mall, with several other "hot
spots" of contaminated material. EPA also determined that most of the
soil contamination was within the first 2 feet below the ground
surface; however, in certain areas, contamination was as deep as 35
feet below the surface. EPA noted that it did not collect soil samples
from under the mall buildings, although, according to a site document,
EPA thought it likely that contamination remained under at least a
portion of one of the buildings. EPA assessed the human health risks
from exposure to soil contamination in June 2001. At the time of EPA's
assessment, OU3 was a commercial area. However, the Borough of
Manville and the mall owner had indicated that the area could be
redeveloped for a mixed residential/commercial use. Therefore, EPA
evaluated risks for OU3 under both residential and commercial use
scenarios, and found that risks exceeded acceptable levels for
residential use at some areas of the mall and for commercial use at
one area.[Footnote 20]
Finally, EPA's OU3 RI/FS investigation determined that contaminated
groundwater in the soil above the bedrock had not migrated far from
the original source areas of the lagoons and canals. However, free-
product creosote had penetrated as deep as 120 feet into the fractured
bedrock, and groundwater contamination in the bedrock had moved
through the fractures toward two nearby rivers.[Footnote 21] On the
basis of these results, in July 2001, EPA evaluated the potential
human health risks from groundwater contamination to on-site and off-
site residents (i.e., residents who lived on or near the site) and
commercial workers, and found that risks for on-site residents and
workers exceeded acceptable levels for carcinogenic and
noncarcinogenic contaminants.
The Department of Health and Human Services' Agency for Toxic
Substances and Disease Registry (ATSDR) also evaluated the risks from
site contamination and published a series of studies that expressed
concern about site contamination levels.[Footnote 22] Between May 1997
and February 1999, ATSDR published five health consultations that
responded to EPA requests to answer specific questions, such as
whether consuming vegetables grown in site soils posed a health
threat. For example, ATSDR's first consultation concluded that
subsurface soil contamination levels posed a threat to residents if
the contamination was dug up, or if similar levels of contamination
were discovered in surface soils. Then, in September 2000, ATSDR
published a public health assessment that evaluated site contamination
and concluded that past and present exposures to surface soil (at that
time) did not represent an apparent health hazard.[Footnote 23]
However, the assessment also stated that this conclusion did not rule
out the need for remedial action because subsurface contamination
posed a long-term hazard if soil 2 feet below the ground in certain
areas was disturbed.
ATSDR and EPA officials told us that ATSDR's conclusion that surface
soil contamination did not pose a public health hazard did not mean
that EPA's action to remediate the site was unwarranted. In
particular, officials from both agencies cited differences in the
agencies' risk assessment views and processes as a reason why they
could reach alternative conclusions about site risks. For example,
ATSDR officials indicated that ATSDR's assessment focused on
conditions in the first 6 inches of soil to evaluate what
contamination exposures residents may have been subject to in the past
and at the time of the assessment. However, the officials said that
EPA's risk assessment would have been more focused on the hypothetical
situation where subsurface soil contamination is brought to the
surface in the future.[Footnote 24] Therefore, the officials said
that, in fact, ATSDR would have had very serious concerns if the site
had not been remediated because of the potential for high levels of
contamination in the subsurface soil to be brought to the surface
through activities such as tree planting or house remodeling. ATSDR
also had concerns about potential exposures to groundwater
contamination.[Footnote 25] As a result, the officials stated that
ATSDR's assessment recommended that EPA continue its plans to
implement a remedial action to remove source material from the site.
On the basis of its conclusions about site risks, EPA set cleanup
goals for different areas of the site that, when achieved, would
reduce risks to acceptable levels for residential use. For example,
EPA established site-specific qualitative objectives for its remedial
actions, such as preventing human exposure to contamination, cleaning
up areas of source contamination to allow for unrestricted land use
and prevent future impacts to groundwater quality, and minimizing
disturbance to residents and occupants of the Rustic Mall during a
remedial action. EPA also developed quantitative remediation goals to
identify the level at which remedial actions would need to be
implemented to protect human health. According to site documents,
there were no federal or state cleanup standards for soil
contamination at the time of the cleanup effort. Therefore, EPA
established risk-based remediation goals that would reduce excess
carcinogenic risks to a level of 1 in 1 million, and that were
consistent with New Jersey guidance for residential direct contact
with soil.[Footnote 26] For the groundwater contamination, EPA used
both federal and state chemical-specific standards to set risk-based
remediation goals.
According to site documents and Region 2 officials, risk levels
required a remedial action regardless of the site's future use. The
officials said that EPA considered what level of waste could be left
on-site while still allowing for unrestricted residential use of
properties; however, they noted that, with unrestricted residential
use, there is a very low threshold for the level of waste that can be
left on-site. They said that even the residually contaminated soil was
sufficiently contaminated that EPA dug between 10 and 14 feet deep to
allow for unrestricted use of residents' properties. Similarly, EPA
determined that source material in the Rustic Mall needed to be
remediated because of the potential future residential use of the
site.[Footnote 27] According to a site document, EPA determined that,
under a current use scenario (at the time of its risk assessment in
2001), there were likely no unacceptable human health risks from
contamination under the mall because contaminants were covered by
buildings and pavement. However, the contamination could be exposed if
these covers were removed during site redevelopment. Therefore, EPA
identified the level of site cleanup required on the basis of the most
conservative future use scenario.[Footnote 28]
EPA's Remedy Selection Decisions Were Influenced by the Residential
Nature of the Site:
To select remedies to address the soil and groundwater contamination
at the Federal Creosote site, EPA identified potential remedial
technologies from agency guidance[Footnote 29] as well as from other
publications and databases that listed potentially available
technologies.[Footnote 30] After identifying potential technologies,
EPA screened out less viable technologies, combined selected
technologies into remedial alternatives, evaluated the alternatives,
and selected a preferred remedy for each OU. See appendix III for a
timeline of EPA's remedy selection efforts.
Region 2 officials told us that, to identify technologies for site
remediation, EPA identifies a range of technologies on a site-specific
basis. According to agency guidance, EPA prefers three technologies
for treating the type of soil contamination found at the Federal
Creosote site: bioremediation--using microbes to degrade contaminants
and convert them to carbon dioxide, water, microbial cell matter, and
other products; low temperature thermal desorption (LTTD)--heating
contaminated material to temperatures less than 1,000 degrees
Fahrenheit to physically separate contaminants from soils; and
incineration--heating contaminated material to temperatures greater
than 1,000 degrees Fahrenheit to destroy contaminants.[Footnote 31]
EPA also identified other technologies to cap, contain, excavate,
extract, treat, or dispose of site soil or groundwater contamination,
including a number of emerging or innovative technologies.
For the soil contamination, the range of technologies EPA considered
varied among the OUs at the site. During its remedy selection process
for OU1, EPA primarily evaluated the three technologies preferred by
agency guidance for soil contamination at wood-treatment sites.
According to Region 2 officials, EPA considered a limited range of
technologies for OU1 because, originally, the agency was evaluating
whether it would need to evacuate residents to protect them from site
contamination. Consequently, EPA conducted a more streamlined remedy
selection process for OU1 to speed decision making. Alternatively, for
OU2 (and later for OU3), EPA evaluated a wider range of technologies,
including several emerging technologies. In addition, Region 2
officials stated that differences in the contamination between the OUs
impacted the range of technologies considered. Specifically, the
officials said that the OU1 material was the more sludge-like, free-
product creosote, whereas the OU2 contamination might not have been
visible. The officials noted that, with less contaminated soils, more
treatment options might become viable, since some options that might
have difficulty treating more highly contaminated material might
successfully treat less contaminated material. However, while EPA
considered a wider range of technologies for OU2 and OU3, in general,
EPA screened out the emerging technologies in favor of those that were
identified as preferred in its guidelines.[Footnote 32] Ultimately,
EPA determined that off-site thermal treatment and disposal of the
soil contamination would best achieve its cleanup goals and were
consistent with residential use of the site. In implementing this
remedy, EPA determined that it would need to purchase some houses--
where contamination was inaccessible without demolishing the houses--
and permanently relocate these residents, while residents in other
houses would only need to be relocated temporarily.[Footnote 33]
For the groundwater contamination, Region 2 officials said that EPA
tried to determine how to clean up the contaminated groundwater in the
fractured bedrock but ultimately concluded that none of the options
would be effective; moreover, many of the options would be expensive
and take a long time to implement.[Footnote 34] As a result, EPA
determined that attenuation of the groundwater contamination over
time, long-term monitoring, and institutional controls to prevent the
installation of wells at the site would be the best alternative to
address contamination in the fractured bedrock. To select this remedy,
EPA invoked a waiver for technical impracticability, which allowed it
to select an alternative that would not comply with requirements to
clean up the groundwater to levels that would meet site cleanup
goals.[Footnote 35] Region 2 officials stated that one of the
presumptions EPA makes in using a waiver for technical
impracticability is that it has put forth its best effort to remove
source contamination. Therefore, according to the officials, on the
basis of agency guidance, EPA needed to clean up the source material
that was contaminating the groundwater to justify a waiver for
technical impracticability.[Footnote 36] Moreover, the officials said
that by removing the source material, EPA may have helped prevent the
contaminated groundwater area from getting larger. Also, the officials
said that, in their judgment, EPA's action would help the
contamination in the bedrock attenuate more quickly, although they
were unable to quantify this impact.
In selecting these remedies, EPA's decisions were influenced by
several challenges associated with a residential cleanup, including
(1) space constraints that limited on-site implementation of actions,
(2) a determination that some options would not achieve the site
cleanup goals, and (3) concerns about some options' community impacts.
Space constraints. According to Region 2 officials, space constraints
posed by the residential nature of the site limited EPA's ability to
remediate contamination on-site. For example, the officials said that
soil contamination in the lagoons and canals was interspersed
throughout the residential area. As a result of the lack of available
open land and the residential nature of the site, a site document
indicated that options for on-site treatment and disposal of excavated
material were not considered for OU1.[Footnote 37] Also, while EPA
considered on-site treatment technologies and alternatives for OU2 and
OU3, Region 2 officials said EPA did not consider buying additional
houses to create more open space.[Footnote 38] They said that once EPA
determined that the majority of houses in the residential area could
be saved, it tried to avoid demolishing as many homes as
possible.[Footnote 39] The officials also noted that EPA could have
placed a treatment facility in a corner of the Rustic Mall, but that
the mall was still a functioning commercial area at the time EPA was
selecting remedies. The mall was in the middle of the town, and,
according to the officials, feedback from local citizens indicated
that the community relied heavily on the mall. As a result, EPA did
not formally consider taking over additional areas of the mall to
create more open space as part of a remedial alternative. Region 2
officials acknowledged that, after EPA began the cleanup, the owner
decided to demolish the mall. However, they stated that, when EPA made
its remedy selection decisions, it did not have sufficient
justification to purchase or demolish the mall.
In particular, EPA Region 2 officials told us that the challenge of
space constraints was a key factor in why EPA chose not to implement
bioremediation or LTTD--two of EPA's preferred remedies for treating
creosote contamination--on-site. For example, the officials noted that
bioremediation of excavated material on-site would have required a lot
of space to store the material while it was being treated with
microbes that would help degrade the contamination. Similarly, the
officials said that there was not sufficient space to stockpile
material for treatment using LTTD. That is, to operate an LTTD unit
efficiently, the officials said that EPA would have needed to feed
material into the unit constantly. However, they said doing so was not
possible at the site because, while EPA might excavate 100 tons of
soil on some days, on other days, EPA was unable to excavate as much
since it needed to work by hand around residents' houses. Given EPA's
inconsistent rate of excavation, the agency would have needed to
stockpile material to ensure a constant flow into an LTTD unit.
However, according to Region 2 officials, there was not enough space
to stockpile contaminated material awaiting treatment, and, as a
result, the officials estimated that EPA could have operated an on-
site LTTD unit only 25 percent of the time, which they said would not
have been cost-effective. Specifically, the officials said that it
would take around 60,000 square feet for all of the operations
associated with an LTTD unit. They noted that a space roughly this
size was available in the northeast corner of the Rustic Mall.
However, because of constraints, such as fire code access requirements
for a bowling alley that bordered this area, the officials estimated
that the total available space was actually only about 43,000 square
feet. Also, EPA would have needed additional space for other
facilities related to the cleanup. In addition, while EPA determined
that bioremediation and LTTD could be used to treat contamination off-
site, EPA found that they would be difficult to implement because of a
lack of permitted commercial facilities.[Footnote 40] As a result, EPA
relied on incineration because incineration facilities were the most
readily available for off-site treatment of material from the site.
Level of cleanup required. EPA had concerns about whether certain
technologies would effectively treat contamination to required levels,
given the residential nature of the site. For example, EPA determined
it was unlikely that such technologies as bioremediation of
contaminated material in place would achieve the agency's soil
remediation goals, because EPA was uncertain whether the
bioremediation microbes could be distributed evenly in contaminated
areas since some of the contamination was under residents'
homes.[Footnote 41] Region 2 officials also said it was unlikely that
EPA could have achieved its cleanup goals using bioremediation because
of the high levels of soil contamination at the site. They said that
if contamination levels are high, the microbes introduced into the
soil could be killed before they have a chance to degrade the
contaminants. Moreover, because of the high contamination levels and
treatment requirements at the site, the officials said they had
concerns about the effectiveness of using LTTD. They stated that LTTD
treats material using lower temperatures than incineration, and that
it removes about 80 percent of the contamination each time material is
passed through the unit. As a result, sometimes material must be
treated multiple times before it meets residential standards. The
officials indicated that this would have probably been the case with
the Federal Creosote material because it was so highly contaminated.
They said, given the nature of the contamination at the site,
incineration was a more efficient method of treatment to achieve the
agency's remediation goals.
While the high treatment levels required because of the residential
nature of the site impacted EPA's choices about individual soil
remediation technologies, they also influenced decisions about whether
to dispose of treated and untreated material on-site, or at an off-
site location. According to Region 2 officials, if EPA disposed of
excavated material on-site, the agency would have had to ensure,
through treatment and testing, that the soil met residential
standards. Consequently, the officials concluded that if EPA disposed
of excavated material on-site, it would have had to treat and test the
material more extensively than it did for off-site disposal. The
officials said that only about 35 percent of the material excavated
from the site needed to be thermally treated before it could be
disposed of off-site.[Footnote 42] The rest of the excavated material
could be disposed of without treatment at a hazardous or nonhazardous
waste landfill. However, they said, if EPA had disposed of material on-
site, it would have had to test and possibly treat 100 percent of the
material to ensure that it met residential standards. Due to the
potential expense of additional treatment and sampling, EPA determined
that off-site disposal would be more cost-effective.
For the groundwater contamination, according to site documents, EPA
found that none of its remedial alternatives, including those based on
extracting or treating the contamination in place, would be able to
achieve its cleanup goals effectively and reliably within a reasonable
time frame. For example, EPA found that some of the groundwater
contaminants could take decades to move through the groundwater, and,
as a result, it would take an extremely long time to remediate these
contaminants using an extraction technology. Moreover, EPA estimated
that the technology that was most likely to be able to achieve its
remediation goals--extracting contaminants using steam--would cause
significant disruption to the residential neighborhood and would be
much more expensive than EPA's other alternatives. On the basis of its
experience at other sites, EPA determined that complete removal of the
groundwater contamination in the bedrock at the site was not
practicable. In addition, EPA found that several of the treatment
technologies it considered would not be effective at treating the
highly contaminated free-product creosote found in portions of the
site.
Community impacts. The residential nature of the site and the
importance of the Rustic Mall to the community also influenced EPA's
remedy selection, given the effects that different technologies and
alternatives might have on the community. For example, according to
EPA, some of the substances that could be used to immobilize soil
contamination in the ground were potentially more toxic than the
creosote contamination. Also, certain options that treated
contamination in place or extracted it from the soil or groundwater
would have emitted heat or gas that could have posed risks to
residents and the community. Moreover, EPA determined that some
options would have significantly disrupted the community because of
the need to install equipment, wells, and piping throughout the
residential and commercial areas.
Also, because EPA was implementing a remedial action in a residential
neighborhood at the site, it was concerned about the length of the
cleanup and other timing impacts on the community. Region 2 officials
said that EPA generally does not use certain alternatives unless the
agency has the flexibility to accomplish remediation over a long time
frame on the basis of the current land use (e.g., the site is
abandoned). Under these circumstances, EPA could use a remedy like
bioremediation of contaminated material in place, which would cause
long-term disruption if implemented in a residential neighborhood.
Also, Region 2 officials said that, if EPA had used on-site LTTD to
treat contaminated material, it could not have operated the unit in
the most efficient way--24 hours a day--because the residents in
houses within 200 feet of where the unit would have been located would
have been negatively affected by its lights and noise during the
night. However, the officials said, if EPA had only run the LTTD unit
8 hours a day, the cleanup effort would have taken much
longer.[Footnote 43] The length of time involved was a particular
concern in EPA's evaluation of groundwater remediation alternatives.
According to the Region 2 officials, the best alternative to extract
contaminated groundwater from the bedrock would have taken 18 to 20
years to implement and would have covered the site with machinery.
Finally, EPA factored future land use impacts into its remedy
selection decisions.[Footnote 44] For example, EPA found that options
that relied on containment or deed restrictions, but that left
contamination under and around the residential community, were not
viable alternatives. Region 2 officials said capping the contamination
would not have supported use of the land as a residential area because
residents would have had to sign agreements not to disturb the cap,
which would have restricted their use of the properties. Also, because
of these restrictions, the officials said it is likely that some
owners would have refused to sign the necessary agreements, and EPA
would have had to take an enforcement action. Similarly, EPA avoided
certain remedies for the Rustic Mall because of the impacts that they
could have on the community's ability to redevelop the mall as well as
on the operation of the mall. A Borough of Manville official told us
that the Rustic Mall was the "hub of the town" and was located
directly behind buildings on the town's Main Street. As a result, he
said the community was very opposed to alternatives that would have
left or treated contamination on-site.[Footnote 45] He said that, in
the town's view, the contamination under the mall needed to be cleaned
up. Otherwise, it would have been difficult to get tenants into the
mall in the future, and the town might have ended up with a blighted
area in the center of the community. He also said the community was
concerned that no one would want to come and shop at the mall if there
was a treatment facility in the parking lot.
EPA Placed a High Priority on Cleaning Up the Federal Creosote Site:
EPA placed a high priority on scheduling and funding the Federal
Creosote site work because the contamination was in a residential
area. According to Region 2 officials, it is rare to find source
contamination, such as the free-product creosote, under a residential
area, and most sites with the level and extent of contamination found
at the Federal Creosote site are abandoned. The officials said EPA
places the highest priority on addressing the principal threats at
residential sites first. As evidence of this prioritization, EPA
initiated efforts to study, select a remedy for, and begin cleanup of
the residential part of the site before undertaking similar efforts
for the Rustic Mall. For example, Region 2 officials said that EPA
decided relatively early in the cleanup process to break the site into
three OUs to allow work to proceed as quickly as possible. EPA
determined that it needed to get to work immediately on OU1, and that
the groundwater contamination and commercial area could wait until
after EPA had decided what to do with the residential area. The Region
2 officials said that breaking the site into different OUs was
important because EPA knew that it needed to relocate some OU1
residents, and this process can be time-consuming--one official noted
that residents who must permanently relocate have 1 year to do so.
While this process took less time at the Federal Creosote site, EPA
did not know that would be the case initially. Moreover, the Region 2
officials said that the first couple of years EPA spent studying the
site caused a great deal of anxiety for residents, because they did
not understand the risks of remaining in their homes and could not
sell their homes if the homes would need to be demolished. The
officials said the OU1 ROD informed residents that most of the homes
in the neighborhood would not need to be demolished, and this helped
reduce residents' anxiety.[Footnote 46]
EPA also took steps to shorten the time needed to select, design, and
implement the remedial actions. For example, Region 2 officials said
that, because of the residential nature of the site, the site
investigation process was both unusually extensive and expedited in
comparison to other sites. Region 2 officials said that EPA began
sampling early because, when the site was discovered, the agency was
concerned that contamination risks could be so significant that
residents might need to be evacuated. As a result, they said that the
agency gathered a large amount of information about site contamination
before listing the site on the NPL. The officials said this data
collection effort helped EPA move forward with site work quickly
because, with a large amount of data to use to gauge its overall
approach to the site, EPA was able to compress the removal evaluation,
listing process, and RI/FS into a relatively short amount of time. In
addition, EPA tried to streamline work by configuring its sampling
efforts to satisfy postexcavation requirements to confirm that
contaminated material no longer remained on-site. Specifically, site
documents show that to meet New Jersey requirements, EPA took samples
on 30-by-30 foot grids to confirm that contamination was no longer
present along the sides and bottom of an excavated area. Rather than
wait until the excavation was completed to take additional samples to
confirm that contamination was not present, EPA incorporated these
requirements into earlier sampling efforts. As a result, if samples
were clean, EPA could immediately backfill an area, which reduced the
overall length of the cleanup effort.[Footnote 47] Finally, in an
effort to expedite the cleanup effort, EPA Region 2 officials said
that more of the region's resources were devoted to the site relative
to other sites that the region needed to address at that time.
As a result of these efforts to prioritize and expedite site cleanup
work, the Federal Creosote site reached key cleanup milestones in less
time than some other site cleanups. Region 2 officials said that they
completed the three RODs for the site in about 3 years, which they
said is a very quick time frame to complete such analyses. They noted
that issuing a ROD is an intensive process that at another site, for
example, took over a decade. Also, the Federal Creosote site reached
EPA's construction complete stage more quickly than other megasites--
that is, sites at which actual or expected total cleanup costs,
including removal and remedial action costs, are expected to amount to
$50 million or more. In July 2009, we reported that, based on EPA data
through fiscal year 2007, the median length of time it took for
megasites to reach construction complete after NPL listing was 14.8
years.[Footnote 48] However, according to EPA data, the Federal
Creosote site reached construction complete in just over 9 years.
[Footnote 49]
Total Site Costs Exceeded Early Construction Cost Estimates Largely
because of the Nature of these Estimates and the Discovery of
Additional Contamination:
Total site costs exceeded construction estimates at the Federal
Creosote site by roughly $233 million, primarily because (1) EPA's
early construction estimates were not designed to include all site-
related expenses and (2) additional quantities of contaminated
material were discovered during the cleanup effort. Other factors,
such as methodological variation for estimating site costs and
contractor fraud, accounted for a smaller portion of the cost
difference.
Total Site Costs Exceeded Construction Estimates by Approximately $233
Million:
According to our analysis, total site-related costs, including
remedial construction and other response costs at the Federal Creosote
site through the spring of 2009, were approximately $338 million,
[Footnote 50] a roughly $233 million difference from the estimated
remedial construction costs of $105 million.[Footnote 51] Total site
costs were higher than construction estimates for several reasons.
[Footnote 52] As shown in figure 3, of the $233 million difference,
39.6 percent (or about $92 million) is due to other response costs
that were not included in EPA's construction estimates;[Footnote 53]
47.5 percent (or about $111 million) is from an increase in remedial
construction costs--mostly directly related to the discovery of
additional contaminated material; and 12.9 percent (or about $30
million) is due to other factors--primarily differences in cost
estimation methodology and, to a smaller extent, contractor fraud.
Figure 3: Difference between Estimated Construction and Total Site
Costs at the Federal Creosote Site:
[Refer to PDF for image: pie-chart]
Remedial construction costs potentially related to greater
contaminated soil quantities (about $111 million): 47.5%;
Other response costs not included in construction estimates (about $92
million): 39.6%;
Other factors (about $30 million): 12.9%.
Total = $233 million.
Source: GAO analysis of data obtained from EPA, the Corps, and court
documents.
Note: Site costs were drawn from several sources, including Corps data
on construction contractor costs updated through February 15, 2009, as
well as Corps and EPA sources updated through various dates from April
to early May, 2009. Due to several reasons, including our methodology
for adjusting costs to fiscal year 2009 dollars, the percentages in
this figure are considered to be approximate.
[End of figure]
EPA's Construction Cost Estimates Intentionally Did Not Include All
Site Costs:
EPA intentionally included only costs related to the construction and
maintenance of the selected remedies rather than total sitewide costs
in its early cost estimates, which follows its guidance, according to
the agency.[Footnote 54] EPA prepares these preliminary estimates
during the remedy selection process to compare projected construction
costs across different remedial action alternatives. Specifically, the
National Contingency Plan directs EPA to consider the capital costs of
construction and any long-term operation and maintenance costs as part
of the remedial alternative screening process.[Footnote 55] According
to EPA guidance, these estimates are not intended to include all site-
related expenses, and certain expenses, such as early site
investigation and EPA enforcement costs, are beyond the scope of these
early estimates because these costs are not linked to a specific
remedial alternative and, therefore, would not affect the relative
comparison of alternatives. For example, while site investigation
studies were conducted for each operable unit, these studies were
completed prior to remedy selection to inform the selection process
and, therefore, were not linked to any particular remedy. Similarly,
the removal cleanup of surface soils in the residential area occurred
prior to remedy selection and, therefore, was not related to the
construction costs of any particular remedial alternative. Table 2
summarizes costs for activities that were not included in EPA's
remedial construction cost estimates--other response costs--at the
Federal Creosote site.
Table 2: Other Response Costs Not Included in Construction Estimates
for the Federal Creosote Site:
Cost description: Indirect support costs related to site construction
work[B]; Total costs[A[(FY 2009 DOLLARS)] rs): $72,679,000.
Cost description: Site investigation and risk assessment study;
Total costs[A](FY 2009 Dollars): $11,038,700.
Cost description: Indirect support costs related to other response
efforts[B];
Total costs[A](FY 2009 Dollars): $4,209,100.
Cost description: EPA payroll and travel;
Total costs[A](FY 2009 Dollars): $2,085,100.
Cost description: Enforcement;
Total costs[A](FY 2009 Dollars): $1,579,800.
Cost description: Analytical and technical support;
Total costs[A](FY 2009 Dollars): $319,300.
Cost description: State cooperative agreement;
Total costs[A](FY 2009 Dollars): $278,500.
Cost description: Emergency removal cleanup;
Total costs[A](FY 2009 Dollars): $32,200.
Cost description: Miscellaneous;
Total costs[A](FY 2009 Dollars): $8,400.
Cost description: Total;
Total costs[A](FY 2009 Dollars): $92,230,100.
Source: GAO analysis of EPA data.
Note: Other response costs were drawn from EPA data through April 30,
2009. As a result of the delay between when a cost is incurred and
when it may be submitted and entered into EPA's cost-tracking systems,
the total costs listed in this table are approximate.
[A] Certain categories in this table include contractor annual
allocation costs. These costs include money spent by government
contractors doing site-related work not traceable to a particular
site, such as hazardous materials training. Government contractors
allocate these costs across the sites on which they have worked during
the course of each year, and EPA treats them as direct costs.
[B] Indirect support costs are overhead costs for activities related
to managing the Superfund program, such as guidance development, that
EPA allocates across all Superfund sites.
[End of table]
The Need to Remediate Greater-than-Expected Quantities of Contaminated
Material Contributed Most to the Gap between Estimated and Actual
Construction Costs:
During excavation, contractors discovered greater-than-expected
amounts of contaminated material requiring remediation across all OUs,
which contributed most to the difference between estimated and actual
construction costs. Based on our analysis of EPA documents, the
initial ROD estimates for the site indicated that approximately
154,100 to 164,400 tons of material would need to be excavated for
treatment or disposal; however, EPA ultimately found that roughly
456,600 tons of material needed to be excavated--an increase of at
least 178 percent. As shown in table 3, according to our analysis,
increased amounts excavated from the OU1 and OU3 areas contributed the
most to the difference between the estimated and actual excavated
amounts across the site as a whole.
Table 3: Difference between Estimated Soil Quantities in the RODs and
Final Soil Quantities at the Federal Creosote Site, by OU:
Hundreds of tons:
OU1:
Estimated soil quantity from RODs: 66,200 to 70,700[A];
Final soil quantity: 210,800;
Soil quantity increase from RODs: 140,100 to 144,600;
Percentage increase: 198% to 218%.
OU2:
Estimated soil quantity from RODs: 31,700 to 33,800;
Final soil quantity: 67,900;
Soil quantity increase from RODs: 34,200 to 36,300;
Percentage increase: 101 to 115.
OU3:
Estimated soil quantity from RODs: 56,300 to 60,000;
Final soil quantity: 177,800;
Soil quantity increase from RODs: 117,800 to 121,600;
Percentage increase: 196 to 216.
Total[B]:
Estimated soil quantity from RODs: 154,100 to 164,400;
Final soil quantity: 456,600;
Soil quantity increase from RODs: 292,200 to 302,500;
Percentage increase: 178% to 196%.
Source: GAO analysis of EPA documents.
Note: Soil quantities are presented in a range because EPA updated its
conversion factor for calculating soil weights from volumes at the
site as additional information regarding the density of the soil
became available. The lower bound in this table generally represents
soil quantities using a conversion factor of 1.5 cubic yards per ton,
whereas the upper bound reflects EPA's later use of 1.6 cubic yards
per ton. We based our analysis on EPA documents and did not
independently verify the soil quantities reported by EPA.
[A] EPA revised its original quantity estimate for OU1 soils as a
result of its investigation of OU2 contamination. Based on our
analysis of site documents, the revised quantity is approximately
152,600 to 162,700 tons.
[B] Totals may not add due to rounding.
[End of table]
According to EPA officials, it is common for EPA to remove more soil
than originally estimated at Superfund sites because of the
uncertainty inherent in using soil samples to estimate the extent of
underground contamination. For example, EPA guidance indicates that
the scope of a remedial action is expected to be continuously refined
as the project progresses into the design stage and as additional site
characterization data and information become available.[Footnote 56]
However, both Corps and EPA officials stated that the Federal Creosote
site posed a particular challenge for estimating soil quantities prior
to excavation because of the way in which the waste moved at the site
and, in some cases, because of access restrictions during sampling.
According to EPA's Remedial Project Manager (RPM) for the site, soil
contaminants generally either stay in place or migrate straight down;
however, while some of the creosote waste at the site stayed in place,
some of the waste migrated both horizontally and vertically. The RPM
said that this migration made it difficult to predict the waste's
location through sampling. For example, during excavation, contractors
found seams of contaminated material, some of which led to additional
pockets of creosote waste, while others did not. Given the diameter of
the sampling boreholes (which were generally 2 to 4 inches wide) and
the width of the seams of creosote waste (which in some cases were
only 6 inches wide), the sampling process could not detect all of the
creosote seams at the site, despite what EPA officials considered to
be the extensive sampling during the early site investigations that
formed the basis for the initial cost estimates. Additionally,
sampling during the site investigations for the residential area as
well as the Rustic Mall was limited by the location of buildings and
access restrictions, according to EPA's RPM. For example, site
documents indicate that no samples could be taken from under the mall
during the OU3 soil investigation because the buildings were being
used. It was not until the mall owners decided to demolish the
existing structures as part of a town revitalization plan that mall
tenants left and EPA was able to take samples in the areas covered by
the buildings. These areas were found to contain additional areas of
creosote waste, as shown in figure 4.[Footnote 57]
Figure 4: Rustic Mall Areas Remediated at the Federal Creosote Site:
[Refer to PDF for image: illustrated map]
The following are indicated on a map of the Rustic Mall and Claremont
Development residential area:
Identified contamination areas in Rustic Mall ROD:
Canal Area;
Southwest Area;
South Area;
North Area 2.
Additional remediated areas:
Central Area;
North Area 1.
Also indicated on the map:
Canal A;
Lagoon A;
Canal B;
Lagoon B.
Source: GAO analysis of EPA site documents.
[End of figure]
Although the mobility of the waste in the subsurface soil and sampling
limitations hindered EPA's ability to determine the total quantity of
material requiring excavation during the pre-ROD site investigation
when the initial cost estimates were prepared, soil sampling during
this stage was generally successful at identifying which residential
properties contained contamination, according to our analysis of site
documents. For example, pre-ROD soil sampling allowed EPA to correctly
identify 83 of the 93 residential properties that would eventually
require remediation, as shown in figure 5.[Footnote 58]
Figure 5: Residential Area Properties Remediated at the Federal
Creosote Site:
[Refer to PDF for image: illustrated map]
The following are indicated on a map of the Claremont Development
residential area:
OU1 properties identified in EPA‘s RODs: 28 properties;
Additional OU1 properties remediated: 2 properties;
OU2 properties identified in EPA‘s RODs: 52 properties;
Additional OU2 properties remediated: 8 properties.
Also indicated on the map:
Lagoon A;
Lagoon B.
Source: GAO analysis of EPA site documents.
Note: In addition to the properties highlighted in this figure, other
areas, such as sections of streets and railroad rights of way, were
also excavated.
[End of figure]
According to EPA guidance, because of the inherent uncertainty in
estimating the extent of site contamination from early investigation
data, cost estimates prepared during the RI/FS stage are based on a
conceptual rather than a detailed idea of the remedial action under
consideration. The guidance states that these estimates, therefore,
are expected to provide sufficient information for EPA to compare
alternatives on an "order of magnitude" basis, rather than to provide
an exact estimate of a particular remedy's costs. For example, the
guidance also states that preliminary cost estimates prepared to
compare remedial alternatives during the detailed analysis phase of
the RI/FS process are expected to range from 30 percent below to 50
percent above actual costs.
However, at the Federal Creosote site, actual construction costs were
more than twice what EPA estimated. Specifically, we found that
sitewide remedial construction costs increased by $141 million over
EPA's estimated amounts. According to site documents, increases in the
quantity of material requiring excavation, transportation, treatment,
or disposal resulted in higher construction costs across all OUs. Our
analysis of site cost data indicated that construction costs
potentially associated with the additional quantity of contaminated
material accounted for most of this increase ($111 million, or about
78.7 percent).[Footnote 59] In particular, soil excavation,
transportation, treatment, and disposal costs constituted
approximately 56.1 percent ($62 million) of the increased construction
costs potentially related to additional quantities of material, and
26.7 percent of the overall $233 million difference between estimated
construction and total site costs, as shown in figure 6.
Figure 6: Actual Remedial Construction Costs as a Portion of the
Difference between Estimated Construction and Total Site Costs at the
Federal Creosote Site:
[Refer to PDF for image: pie-chart]
* Remedial construction costs potentially related to greater
contaminated soil quantities: 47.5%:
- Other sitewide construction costs (20.9%);
- Excavation, transportation, treatment, and disposal costs (26.7%);
* Other response costs not included in construction estimates: 39.6%;
* Other factors: 12.9%.
Source: GAO analysis of data obtained from EPA, the Corps, and court
documents.
Note: Site costs were drawn from several sources, including Corps data
on construction contractor costs updated through February 15, 2009, as
well as Corps and EPA sources updated through various dates from April
to early May, 2009. Due to several reasons, including our methodology
for adjusting costs to fiscal year 2009 dollars, the percentages in
this figure are considered to be approximate.
[End of figure]
According to EPA's RPM, both the need to excavate greater amounts of
material and the reclassification of excavated material from
nonhazardous waste to hazardous waste affected excavation,
transportation, treatment, and disposal costs. For example, the
discovery of additional pockets of creosote waste increased the
overall amount of material requiring excavation and treatment or
disposal because, in addition to removing the waste itself, any soil
overlying the contamination needed to be removed and disposed of to
access the creosote waste. Additionally, if a pocket of creosote waste
was unexpectedly discovered in an area of soil that had already been
designated for excavation and disposal in a landfill without treatment
because prior sampling indicated it was less contaminated, the overall
amount of soil to be excavated would not be affected, but costs would
increase because treatment is more expensive than landfill
disposal.[Footnote 60]
In addition, EPA and Corps officials said that the need to remediate
greater quantities of material contributed to increases in other
sitewide construction costs, such as general construction requirements
and site restoration costs. Our analysis showed that such costs
accounted for another 20.9 percent of the difference between estimated
construction costs and total site costs--although the exact extent to
which additional amounts of material contributed to the difference in
costs is not clear. EPA's RPM stated that the effect of increased
quantities varied, depending on the OU. However, EPA and Corps
officials said that in general, more extensive excavation would
increase design engineering, inspection, and other costs as well as
costs for general construction requirements and for site restoration,
as shown in table 4. For example, the decision to remediate additional
contaminated material under the Rustic Mall buildings led to increased
design engineering costs because the original excavation plans were
created under the assumption that the mall would remain standing, and
further rounds of design sampling were needed to identify the extent
and location of contamination once the buildings were demolished.
Additionally, our analysis of site documents indicated that the
increased time required to excavate additional material could have led
to greater project costs for general construction requirements, such
as temporary facility rental, site security, and health and safety
costs. Similarly, site restoration costs, such as costs for backfill
soil, could have increased because more backfill would be required to
restore the site after excavation.
Table 4: Estimated and Actual Remedial Construction Costs at the
Federal Creosote Site:
Cost description[A]: Excavation, transportation, treatment, and
disposal;
ROD estimates (FY 2009 dollars)[B]: $76,110,500;
Actual cost (FY 2009 dollars)[B,C]: $159,643,400.
Cost description[A]: Design-engineering, inspection, and other
costs[D];
ROD estimates (FY 2009 dollars)[B]: $12,027,400;
Actual cost (FY 2009 dollars)[B,C]: $34,133,500.
Cost description[A]: Resident relocation and home demolition;
ROD estimates (FY 2009 dollars)[B]: $5,874,000;
Actual cost (FY 2009 dollars)[B,C]: $9,405,500.
Cost description[A]: General construction requirements;
ROD estimates (FY 2009 dollars)[B]: $5,495,500;
Actual cost (FY 2009 dollars)[B,C]: $26,613,900.
Cost description[A]: Site restoration;
ROD estimates (FY 2009 dollars)[B]: $4,298,300;
Actual cost (FY 2009 dollars)[B,C]: $15,101,000.
Cost description[A]: Site preparation;
ROD estimates (FY 2009 dollars)[B]: $1,183,700;
Actual cost (FY 2009 dollars)[B,C]: $926,500.
Cost description[A]: Total;
ROD estimates (FY 2009 dollars)[B]: $104,989,400;
Actual cost (FY 2009 dollars)[B,C]: $245,823,800.
Source: GAO analysis of data obtained from EPA and the Corps.
Note: Site costs were drawn from several sources, including Corps data
on construction contractor costs updated through February 15, 2009, as
well as Corps and EPA sources updated through various dates from April
to early May, 2009. Due to several reasons, including our methodology
for adjusting costs to fiscal year 2009 dollars, the amounts in this
table are considered to be approximate.
[A] Some actual costs were not listed as line items in the ROD
estimates. In these cases, we included related actual costs in the
same category. For example, water removal costs for soil excavation
areas below the water table and odor control were not line items in
the estimates, but we included them in the "excavation" category
because they are part of the process.
[B] These amounts do not match EPA-published data as a result of our
methodology for adjusting the data to fiscal year 2009 dollars, among
other reasons.
[C] This amount includes approximately $2.1 million in inflated prices
due to contractor fraud, as we discuss later in this section of the
report.
[D] Some groundwater remediation costs incurred as part of the Corps'
contract for design activities were included under the engineering,
inspection, and other costs category. This total also includes the
Corps' management and support fee, which according to EPA's RPM, was
not charged to individual sites at the time the ROD estimates were
prepared.
[End of table]
According to the RPM, EPA and the Corps instituted certain controls at
the site to minimize costs. In particular, the RPM stated that the
Corps took steps to ensure that material was not unnecessarily
excavated and sent for treatment and disposal. For example, if
contractors found an unexpected pocket of creosote waste during
excavation, they were required to notify the Corps official on-site,
who would decide whether additional excavation was required depending
upon visual inspection and additional testing, as needed. The
contractor was not allowed to excavate beyond the original excavation
limits without Corps approval. According to the RPM, the Corps'
approach of reevaluating the original excavation depth on the basis of
additional sampling results and a visual inspection of the soil led to
cost savings because in some areas less material needed to be
excavated than originally planned. Furthermore, EPA and Corp officials
stated that this process minimized unnecessary treatment and disposal
costs that might be incurred if "clean" soil was sent for treatment or
hazardous waste disposal. Additionally, EPA's decision in November
2002 to allow treated soil to be disposed of in a nonhazardous waste
facility if it met the facility's criteria for contamination levels
helped reduce unit costs for treatment and disposal because disposing
of soil at a hazardous waste facility is more expensive. For example,
in a bid for a contract to treat and dispose of soil following EPA's
decision, the selected subcontractor submitted a unit price for
treatment and disposal at a nonhazardous waste facility that was $80
(or 16 percent) less than its unit price for treatment and disposal at
a hazardous waste facility--which for that particular contract saved
$800,000.[Footnote 61]
Furthermore, on the basis of information gathered from site documents
and from statements made by EPA and Corps officials, EPA and the Corps
took other steps intended to minimize costs. For example, a Corps
official said that reducing the duration of the project could help
minimize certain site costs. Specifically, according to our analysis
of site documents, to reduce the amount of time spent waiting for
sampling results prior to backfilling an excavated area, EPA and the
Corps incorporated state postexcavation sampling requirements into
their design sampling plans for earlier investigations. Accordingly,
unless additional excavation was required to meet the cleanup goals,
these samples could be used to confirm that the boundaries of the
excavation areas had been tested for contamination. Additionally, our
analysis of site documents showed that the Corps tested various odor
control measures before beginning excavation at certain areas of the
site, which allowed it to use less expensive odor control alternatives
than originally planned and saved approximately $1.1 million in
implementation costs. These measures also helped to speed up the
construction work. Finally, according to the RPM, the Corps was able
to minimize costs by managing the work to avoid costly contractor
demobilization and remobilization expenses. For example, the Corps
dissuaded the contractors from removing idle equipment and worked with
the RPM to resolve administrative or funding issues or questions about
the work as they arose to prevent an expensive work stoppage.[Footnote
62]
Contrasting Cost-Estimating Methodologies and Contractor Fraud Explain
a Smaller Portion of the Difference between Estimated Construction and
Total Site Costs:
Other factors, including different cost-estimating methodologies and
contractor fraud, explain a smaller portion of the difference between
estimated construction and total site costs at the Federal Creosote
site. In developing its estimates, EPA followed agency guidance, which
states that as a simplifying assumption, most early cost estimates
assume that all construction costs will be incurred in a single year.
[Footnote 63] According to EPA, since the estimated implementation
periods for EPA's remedial actions were relatively short periods of
time, EPA did not discount future construction costs in its estimates,
and, therefore, these estimates were higher than they would have been
otherwise.[Footnote 64] In accordance with our best practices
regarding the use of discounting, we adjusted the initial cost
estimates to reflect that costs were projected to accrue over several
years and that, therefore, future costs should be discounted.[Footnote
65] However, by discounting future construction costs prior to
adjusting for inflation, our discounted values were lower than EPA's
original estimates in site documents. According to our analysis,
discounting estimated costs accounted for approximately 12 percent of
the $233 million difference between estimated construction and total
site costs (see figure 7).
Figure 7: Contrasting Methodologies and Contractor Fraud as a Portion
of the Difference between Estimated Construction and Total Site Costs
at the Federal Creosote Site:
[Refer to PDF for image: pie-chart]
* Remedial construction costs potentially related to greater
contaminated soil quantities: 47.5%;
* Other response costs not included in construction estimates: 39.6%;
* Other factors: 12.9%:
- Cost estimate discount adjustment (12.0%);
- Confirmed or proven contractor fraud (0.9%).
Source: GAO analysis of data obtained from EPA, the Corps, and court
documents.
Note: Site costs were drawn from several sources, including Corps data
on construction contractor costs updated through February 15, 2009, as
well as Corps and EPA sources updated through various dates from April
to early May, 2009. Due to several reasons, including our methodology
for adjusting costs to fiscal year 2009 dollars, the percentages in
this figure are considered to be approximate.
[End of figure]
Contractor fraud also contributed to the difference between estimated
construction and total site costs, but to a small degree. However,
while some parties have pled guilty to fraud, the full extent of the
effect of fraud on site costs will not be known until all
investigations are complete. Court documents alleged that employees of
the prime contractor at the site, as well as some subcontractors, were
engaged in various kickback and fraud schemes, which resulted in
inflated prices for certain subcontractor services. For example, a
subcontractor for soil treatment and disposal agreed to pay
approximately $1.7 million in restitution to EPA for fraud in
inflating its bid prices. In addition, court documents alleged that
fraudulent price inflation also affected other site costs, including
certain subcontracts for items such as wastewater treatment, backfill,
landscaping services, and utilities. To date, our analysis of
available court documents indicated that at least approximately $2.1
million in inflated payments may be directly attributable to fraud at
the Federal Creosote site. On the basis of currently available
information, this figure represents less than 1 percent of the
difference between estimated construction and total site costs.
However, since the fraud investigations are ongoing and additional
charges may be filed, the full extent of contractor fraud is not
currently known. See appendix I for more information about site-
related fraud investigations.
EPA Provided Overall Project Management and Communicated with
Residents, while the Corps Oversaw Contractor Implementation of the
Remedy:
EPA managed the overall cleanup and communicated with residents
through a dedicated on-site staff presence, among other actions. The
Corps implemented the cleanup work by hiring and overseeing
contractors; the Corps was less involved in selecting and overseeing
subcontractors at the site.
EPA Managed the Cleanup and Communicated with Residents:
According to a 1984 interagency agreement between EPA and the Corps
for the cleanup of Superfund sites, EPA maintains statutory
responsibility for implementing the Superfund program. In addition to
selecting the remedy at a site, EPA provides overall management of the
cleanup, ensures that adequate funding is available, and manages
relationships with other interested parties, such as residents. If EPA
decides that Corps assistance is needed to conduct cleanup work, EPA
establishes site-specific interagency agreements. These agreements
outline the specific tasks and responsibilities of the Corps at the
site and provide a proposed budget for the activities listed. Once the
site-specific agreements are established, EPA's primary
responsibilities are to make sure that the work continues without
interruption and that adequate funding is available, according to EPA
officials. EPA officials also noted that the agency does not have the
authority to direct Corps contractors at the site; rather, all
instruction and direction to contractors goes through the Corps.
To fulfill its project management and community outreach
responsibilities, EPA dedicated a full-time RPM to the Federal
Creosote site, according to Region 2 officials. Although RPMs
generally have two or more sites for which they are responsible at any
given time, Region 2 officials stated that the size and complexity of
the site required a higher level of EPA involvement. For example, the
officials said that the relatively large size of the site and
stringent cleanup goals meant that a large area was excavated, and the
complexity of the cleanup process led to a greater number of questions
from the Corps and its contractors that required EPA's attention.
According to the officials, the RPM was on-site at least two to three
times per week; however, during some segments of the work, he was on-
site almost every day. They noted that the design phase in particular
required close coordination with the Corps because design activities
for different areas of the site occurred simultaneously and were often
concurrent with construction.[Footnote 66] Consequently, the RPM said
he was on-site working with the Corps and its design contractor to
design new phases of the work; revise existing designs; and answer any
questions regarding ongoing construction activity, such as whether to
excavate additional pockets of waste found during the construction
phase. According to the RPM, although the Corps was required to ask
EPA for approval only to expand excavation to properties that were not
included in the RODs, in practice, Corps officials kept him informed
whenever additional excavation was required, and, in many cases, he
made the decision regarding whether to broaden or deepen the excavated
area.
To monitor project progress and funding, the RPM had weekly on-site
meetings with the Corps and received weekly and monthly reports on
progress and site expenditures, according to EPA officials.[Footnote
67] At the weekly meetings, the RPM would answer Corps questions
regarding the work and be informed of any contracting or
subcontracting issues that might delay or stop work at the site.
Moreover, as part of EPA's oversight of site progress, the RPM said he
reviewed Corps documents regarding any changes in the scope of the
work. Because EPA provided funding to the Corps on an incremental
basis, the RPM also closely monitored the rate of Corps expenditures
to ensure sufficient funding to continue the work, according to EPA
officials. The RPM explained that he also reviewed Corps cost
information for unusual charges and, with the exception of a few
instances of labor charge discrepancies, most of the time the Corps
reports did not contain anything surprising. In the few instances
where the RPM found a discrepancy, he contacted Corps officials, and
they were able to explain the reason for the discrepancy--for example,
a problem with the Corps' billing software. The RPM stated that, under
the interagency agreement with the Corps, he did not review contractor
invoices or expenditures because the Corps had both the responsibility
and the expertise necessary to determine whether the contractor
charges were appropriate, given the assigned work.
Additionally, EPA officials stated that the residential nature of the
site necessitated a substantial investment in community relations to
manage residents' concerns about the contaminated material under their
homes and the Rustic Mall. As part of these efforts, EPA used such
tools as flyers, newsletters, resident meetings, and media interviews
to communicate with concerned citizens.[Footnote 68] According to the
RPM, managing community relations required the second largest
commitment of his time, after designing the work. He said that he
spent a great deal of time working with residents to help them
understand the situation during the early site investigation stage,
when it was not clear who was going to need to move out of their homes
and residents were concerned about their health and property. The RPM
said that he also worked personally with residents during the design
and implementation of the remedy to minimize the impact to the
community and to inform it of any additional actions needed, such as
excavating contamination across a property line or closing roads.
According to site documents and a local official, EPA's community
relations efforts were successful at reducing residents' anxieties.
For example, in a summary of lessons learned from the cleanup effort,
site documents indicate that EPA's policy of promptly responding to
community inquiries and the regular presence of EPA personnel at the
site helped to establish and preserve a high level of public
acceptance and trust with the community. Also, a Borough of Manville
official noted that the continuity provided by having one RPM
dedicated to the site for the duration of the project was particularly
helpful in maintaining good communication because it allowed EPA
officials to know almost all of the residents on a first-name basis
and encouraged their participation in the cleanup process. For
example, the RPM stated that he worked closely with residents to
address their concerns and minimize impacts to the community during
the excavation of contaminated material and the restoration of
affected areas of the neighborhood. Similarly, according to the
Borough of Manville official, EPA and the contractors effectively
coordinated with town officials to ensure that the cleanup effort went
smoothly. For example, to minimize disruption, EPA consulted with town
officials about which roads would be best to use, considering the
routes and weight limitations of trucks leaving the site. In the
official's view, EPA's outreach efforts ensured that residents and the
community as a whole had sufficient information to feel comfortable
about the cleanup. Consequently, despite the size and scope of the
cleanup effort, the official could recall very few complaints from
residents.
The Corps Selected and Oversaw Contractors' Design and Implementation
of the Remedy but Had a Limited Role in the Subcontracting Process:
At the Federal Creosote site, the Corps selected and oversaw private
contractors' design and implementation of the remedial action;
however, the Corps was less involved in the subcontracting process.
Under the 1984 interagency agreement with EPA, the Corps selects and
oversees private contractors for all design, construction, and other
related tasks at Superfund sites, in accordance with Corps procedures
and procurement regulations.[Footnote 69] According to Corps
officials, the Corps selected a contractor to perform the design for
the three OUs at the Federal Creosote site from a list of qualified
vendors and then negotiated a price for the contracts. For
construction, the Corps selected a prime contractor from a pool of
eligible contractors under a cost-reimbursement, indefinite-
delivery/indefinite-quantity (IDIQ) contract.[Footnote 70] According
to EPA and Corps guidance, this system provides more flexible and
responsive contracting capabilities for Superfund sites, which may
require a quick response and often lack a sufficiently defined scope
of work for price negotiation.
The Corps' prime contractor performed some of the work and
subcontracted some tasks to other companies. For example, the prime
contractor excavated contaminated material but awarded subcontracts
for transportation, treatment, and disposal of the excavated material.
Other subcontracted services included providing backfill soil and
landscaping for site restoration, and treating wastewater. To
subcontract, the prime contractor solicited bids from potential
vendors and, for smaller subcontracts, provided the Corps with advance
notification of the award. To award larger subcontracts, the prime
contractor requested Corps approval.
To carry out its oversight responsibilities, the Corps monitored
changes in the scope of the work, contractor progress and costs, and
work quality. For example, Corps officials stated the following:
* The Corps had to approve any changes in project scope, such as
excavating greater quantities of material, or any increases in other
construction services or materials beyond the amounts originally
negotiated between the Corps and the prime contractor. According to
EPA officials, this chain of command helped prevent any unauthorized
expansion of work at the site.[Footnote 71]
* To monitor project progress and contractor costs during
construction, the Corps reviewed prime contractor cost summary reports
for each phase of the work. These reports contained detailed
information on contractor costs and work progress, and, according to
Corps officials, they were updated, reviewed, and corrected if
necessary on a daily, weekly, and monthly basis.[Footnote 72] For
example, Corps officials explained that they reviewed the daily
reports primarily for accuracy and unallowable costs. For weekly and
monthly reports, the Corps also examined whether the contractor was
incurring costs more quickly than expected, which could indicate that
a cost was incorrectly attributed or that a change in project scope
was necessary (i.e., because particular aspects of the work were more
costly than anticipated, and, therefore, a scope revision was needed
to complete planned activities). However, Corps officials commented
that the contractor data were generally accurate, and that errors were
infrequent. The officials also said that, during the most active
periods of the work, they discussed the cost reports and project
progress, including any potential changes in unit costs, during the
weekly meetings with the contractor.
* The Corps also monitored work quality at the site. According to site
documents, the Corps was required to implement a quality assurance
plan as part of its oversight responsibilities and had a quality
assurance representative at the site during construction. For example,
in a July 2002 notice to the prime contractor, the Corps identified
several workmanship deficiencies that the contractor had to address to
retain its contract for that portion of the work.[Footnote 73]
According to Corps guidance and officials, the Corps had a limited
role in the subcontracting process at the Federal Creosote site. For
example, the prime contractor was responsible for selecting and
overseeing subcontractors. In particular, Corps guidance states that
since subcontracts are agreements solely between the prime contractor
and the subcontractor, the Corps does not have the authority to
enforce the subcontract provisions.[Footnote 74] Rather, the guidance
indicates that the Corps oversees the prime contractor's management
systems for awarding and administering subcontracts through periodic
reviews of the contractor's subcontracting processes and ongoing
reviews of subcontract awards. According to Corps officials, the
Corps' main responsibility in the subcontracting process at the
Federal Creosote site was to review subcontract decisions and approve
subcontracts above a certain dollar threshold. As Corps officials
explained, subcontracts between $25,000 and $100,000 did not need to
be approved by the Corps; rather, the prime contractor sent the Corps
an "advance notification" package, which documented that the
contractor had competitively solicited the work and why the contractor
selected a particular subcontractor over others. However, for
subcontracts greater than $100,000, the prime contractor had to submit
a "request for consent" package to the Corps, which contained similar
documentation as an advance notification but required Corps approval
prior to awarding a subcontract.
According to federal acquisition regulations and policies, when
evaluating request for consent packages, Corps contracting officers
should consider whether there was sufficient price competition,
adequate cost or price comparison, and a sound basis for selecting a
particular subcontractor over others, among other factors. Early in
the project, the Corps identified several issues with the prime
contractor's performance at the site, including the award of
subcontracts. According to a letter the Corps sent to the prime
contractor, the Corps noted that after repeated unsuccessful attempts
to address these issues, the Corps would initiate proceedings to
terminate the contract for site work unless the contractor took
corrective action. However, Corps officials said the contractor
demonstrated sufficient improvement in its documentation practices.
Then, in 2003, the Corps raised the request for consent threshold from
$100,000 to $500,000 because of the high volume of these packages that
the Corps was receiving.[Footnote 75] A Corps official noted that
while the Corps reviews and consents to the subcontracting decisions
of its contractors as appropriate, it avoids becoming too involved in
the subcontracting process because of bid protest rules regarding
agency involvement in that process. According to the official, under
these rules, a subcontract bidder cannot protest a subcontract award
unless it can show that the overseeing agency was overly involved in
the subcontracting process.
Concerning contractors at the Federal Creosote site, the Department of
Justice and EPA's Office of Inspector General have ongoing
investigations, some of which have resulted in allegations of fraud
committed by employees of the prime contractor and several
subcontracting firms. For example, court documents alleged bid-
rigging, kickbacks, and other fraudulent activity related to the award
of several subcontracts for a variety of services and materials.
According to Corps officials, the Corps did not suspect issues of
fraud in the subcontracting process until 2004 when, in one instance,
a subcontract bidder objected to the award of a soil transportation,
treatment, and disposal subcontract to another firm whose bid was
substantially higher. Upon further review of the documents, Corps
officials found that the prime contractor had not conducted a proper
evaluation of the bid proposals, and the Corps withdrew its consent to
the subcontract--ultimately requesting that the prime contractor
solicit bids under a different process.[Footnote 76] In the revised
bidding process, the firm that had won the earlier subcontract reduced
its price from $482.50 to $401.00 per ton of contaminated material--
only 70 cents below the competing bid submitted by the firm that had
protested the original subcontract. On this basis, the prime
contractor again requested consent to subcontract with the firm to
which it had awarded the earlier subcontract. According to a Corps
official, the Corps was suspicious of illegal activity given how close
the two bids were, and Corps officials discussed whether to take
formal action against the prime contractor. However, Corps officials
decided they did not have sufficient evidence of wrongdoing to support
a serious action but did cooperate with others' investigations of
fraud at the site. For more information on site-related fraud, see
appendix I.
Agency Comments and Our Evaluation:
We provided a draft of this report to the Secretary of the Army and
the Administrator of the Environmental Protection Agency for review
and comment. The Secretary, on behalf of the Corps of Engineers, had
no comments on the draft report. EPA generally agreed with our
findings regarding the agency's actions and costs to clean up the
Federal Creosote site, and provided a number of technical comments,
which we incorporated as appropriate. EPA's written comments are
presented in appendix IV.
In its comments, EPA noted that the draft report accurately described
the cleanup of the site and correctly compared the site's estimated
and final remedial construction costs. However, EPA stated that
comparing estimated remedial construction costs to total site costs is
not an "apples to apples" comparison because some costs, such as
amounts spent on removal actions or EPA personnel salaries (referred
to as "other response costs" in this report), are purposely excluded
from EPA's early estimates of remedial construction costs. We agree
that to identify the extent to which site costs increased over agency
estimates, one should only compare estimated and actual remedial
construction costs, as we do in table 4 of this report. However, our
objective was, more broadly, to identify what factors contributed to
the difference between the estimated remedial construction costs ($105
million) and the actual total site costs ($338 million). We found that
the difference between these two amounts was $141 million in remedial
construction cost increases--which were largely due to increases in
the amount of contaminated material requiring remediation--and $92
million in other response costs that were not included in EPA's
original estimates. We believe it was necessary to provide information
on these other response costs to more fully answer our objective and
to provide a more informative accounting of the total costs that EPA
incurred in cleaning up the Federal Creosote site.
As agreed with your offices, unless you publicly announce the contents
of this report earlier, we plan no further distribution of it until 30
days from the date of this report. At that time, we will send copies
of this report to the appropriate congressional committees, the
Secretary of the Army, the Administrator of the Environmental
Protection Agency, and other interested parties. In addition, the
report will be available at no charge on GAO's Web site at [hyperlink,
http://www.gao.gov].
If you or your staffs have any questions about this report, please
contact me at (202) 512-3841 or stephensonj@gao.gov. Contact points
for our Offices of Congressional Relations and Public Affairs may be
found on the last page of this report. Key contributors to this report
are listed in appendix V.
Signed by:
John B. Stephenson:
Director, Natural Resources and Environment:
[End of section]
Appendix I: Summary of Criminal and Civil Litigation Related to the
Federal Creosote Site:
Court records show that several cases have been brought concerning the
Federal Creosote site cleanup. First, the Department of Justice
(Justice) and the state of New Jersey have filed claims to recover
cleanup costs. Second, Justice has brought criminal charges in a
series of cases against one employee of the prime contractor, three
subcontractor companies, and eight associated individuals involved in
the cleanup, alleging fraud, among other things. Third, the prime
contractor has brought a civil suit against a former employee alleged
to have committed fraud and other offenses during his employment as
well as against associated subcontractors. The information in this
appendix provides a brief summary of known actions related to the
Federal Creosote site cleanup.
Cost Recovery and Natural Resources Damages Claims:
United States v. Tronox, LLC: The Comprehensive Environmental
Response, Compensation, and Liability Act of 1980 (CERCLA) provides
that parties incurring costs to respond to a release or threatened
release of a hazardous substance may recover such costs from legally
responsible parties, including persons who owned or operated a site,
among others. In this regard, the Environmental Protection Agency
(EPA) identified Tronox, LLC, the successor to the companies that
owned and operated the Federal Creosote site, and, for 2 years, EPA
and Tronox participated in alternative dispute resolution concerning
EPA's cost recovery claims. In August 2008, Justice, on behalf of EPA,
filed a civil action in the United States District Court for the
District of New Jersey against Tronox, seeking recovery of costs that
the government incurred for the Federal Creosote site cleanup. The
complaint asserted that the government had incurred at least $280
million in response costs and would incur additional costs. In October
2008, the New Jersey Department of Environmental Protection and the
Administrator of the New Jersey Spill Compensation Fund filed suit in
the same court against Tronox, seeking recovery of costs incurred for
the site, as well as damages for injury to natural resources--under
both CERCLA and the New Jersey Spill Compensation Act--and public
nuisance and trespass claims.[Footnote 77] In December 2008, the
federal and state cases were consolidated. Tronox has stated its
intent to vigorously defend against these claims. In early 2009,
Tronox filed for voluntary Chapter 11 bankruptcy in federal bankruptcy
court and initiated an adversary proceeding in that court, seeking a
declaratory judgment on the status of the EPA and New Jersey claims
with respect to the bankruptcy. Subsequently, both courts entered a
stipulation filed by both the government plaintiffs and Tronox to stay
the cost recovery case as well as the adversary proceeding to allow
the parties to resolve the claims. As of the date of this report, the
stays remain in effect.
Criminal Cases Involving Alleged Contractor Fraud at the Site:
United States v. Stoerr: Norman Stoerr, a former employee of the prime
contractor at the Federal Creosote site, pled guilty to three counts
related to his activities as a contracts administrator at the site.
Court documents alleged that over a 1-year period, the employee
conspired with others to rig bids for one subcontractor at the site,
resulting in EPA being charged inflated prices. In addition, the
documents alleged that over several years, the employee solicited and
accepted kickbacks from certain subcontractors at the Federal Creosote
site and another site, and allowed the kickbacks to be fraudulently
included in subcontract prices that were charged to EPA. To date,
Stoerr has not been sentenced.
United States v. McDonald et al: In August 2009, the United States
indicted Gordon McDonald--a former employee of the prime contractor at
the Federal Creosote site--as well as representatives of two
subcontractors who worked at the site, for various counts, including
kickbacks and fraud. The indictment charged that the prime
contractor's employee, a project manager, solicited and accepted
kickbacks from certain subcontractors in exchange for the award of
site work, and that these kickbacks resulted in EPA being charged an
inflated price for the subcontractors' work. The indictment also
charged that the project manager disclosed the bid prices of other
vendors during the subcontracting process, which resulted in the
government paying a higher price for services than it would have
otherwise paid.[Footnote 78] One of the indicted employees (James
Haas)--representing a subcontractor who provided backfill material to
the site--has pled guilty of providing kickbacks and submitting a bid
that was fraudulently inflated by at least $0.50 per ton of material.
Haas agreed to pay more than $53,000 in restitution to EPA as part of
his guilty plea, and has been sentenced to serve 33 months in jail and
to pay a $30,000 criminal fine. McDonald's case is proceeding, and
charges against a third defendant are still pending.
United States v. Bennett Environmental, Inc.: Bennett Environmental,
Inc. (BEI), a subcontractor providing soil treatment and disposal
services to the Federal Creosote site cleanup, entered a plea
agreement admitting to one count of fraud conspiracy. Court documents
alleged that over 2 years, the company paid kickbacks to an employee
or employees of the prime contractor, in return for receiving
favorable treatment in the award of subcontracts, and inflated its
prices charged to EPA. BEI was sentenced to 5 years' probation and
ordered to pay $1.662 million in restitution to EPA, plus a $1 million
fine.[Footnote 79]
United States v. Tejpar: Zul Tejpar, a former employee of BEI, entered
a plea of guilty to one count of fraud conspiracy. Court documents
alleged that Tejpar, along with coconspirators, provided kickbacks to
employees of the prime contractor to influence the award of
subcontracts at the site and fraudulently inflated the company's bid
price after an employee of the prime contractor revealed the other bid
prices. To date, Tejpar is awaiting sentencing.
United States v. Griffiths: Robert P. Griffiths entered a plea of
guilty to three counts related to fraudulent activity at the Federal
Creosote site when he was an officer of BEI. Griffiths, along with
coconspirators, provided kickbacks to employees of the prime
contractor to influence the award of subcontracts at the site,
fraudulently inflated the company's invoices that the prime contractor
charged to EPA, and fraudulently received the bid prices of other
bidders prior to award of a subcontract. To date, Griffiths is
awaiting sentencing.
United States v. JMJ Environmental, Inc.: JMJ Environmental, Inc., a
subcontractor providing wastewater treatment supplies and services,
and John Drimak, Jr., its president, entered guilty pleas related to
fraudulent activity at the Federal Creosote site and another site. At
the Federal Creosote site, JMJ Environmental and Drimak, along with
coconspirators, provided kickbacks to employees of the prime
contractor to influence the award of subcontracts at the site,
fraudulently inflated the company's prices that the prime contractor
charged to EPA, and arranged for intentionally high, noncompetitive
bids from other vendors. To date, JMJ Environmental and Drimak are
awaiting sentencing.
United States v. Tranchina: Christopher Tranchina, an employee of
subcontractor Ray Angelini, Inc., which provided electrical services
and supplies, entered a plea of guilty to fraud conspiracy for
activities at the Federal Creosote site. Tranchina, along with
coconspirators, provided kickbacks to employees of the prime
contractor to influence the award of subcontracts at the site and
fraudulently inflated the company's prices that the prime contractor
charged to EPA. Tranchina was sentenced to imprisonment of 20 months
and ordered to pay $154,597 in restitution to EPA.
United States v. Landgraber: Frederick Landgraber, president of
subcontractor Elite Landscaping, Inc., entered a plea of guilty to
fraud conspiracy for activities at the Federal Creosote site.
Landgraber, along with coconspirators, provided kickbacks to employees
of the prime contractor to influence the award of subcontracts at the
site and submitted fraudulent bids from fictitious vendors to give the
appearance of a competitive process, resulting in EPA paying higher
prices than if procurement regulations were followed. Landgraber was
sentenced to imprisonment of 5 months and ordered to pay $35,000 in
restitution to EPA and a $5,000 fine.
United States v. Boski: National Industrial Supply, LLC, a pipe supply
company, and co-owner Victor Boski entered guilty pleas for fraud
conspiracy at the Federal Creosote site and another site. At the
Federal Creosote site, National Industrial Supply and Boski, along
with coconspirators, provided kickbacks to employees of the prime
contractor to influence the award of subcontracts at the site and
fraudulently inflated the company's prices that the prime contractor
charged to EPA. The terms of the plea agreement require National
Industrial Supply and Boski to have available $60,000 to satisfy any
restitution or fine imposed by the court, among other items. To date,
they are awaiting sentencing.
Prime Contractor Civil Suit:
Sevenson Environmental Services, Inc. v. McDonald: In 2008, Sevenson
Environmental Services, Inc., the prime contractor at the Federal
Creosote site, sued former employee Gordon McDonald for fraud, breach
of fiduciary duty, breach of contract, and other claims. The suit also
asserted various claims against other defendants, including McDonald's
relatives and companies allegedly owned by him,[Footnote 80] and six
subcontractors and associated individuals.[Footnote 81] The
allegations related to the Federal Creosote site and another site.
With respect to the Federal Creosote site, the suit alleged that the
subcontractors provided unauthorized kickbacks to McDonald, his
companies, or affiliates. Sevenson also alleged, among other things,
that the company suffered substantial damage from the fraud
perpetrated by McDonald and employees of BEI, for example, in the
company's reliance on fraudulent change orders prepared and
recommended by McDonald and fraudulent invoices submitted by BEI.
Sevenson asserted similar allegations of kickbacks and fraudulent
invoices with respect to other subcontractors. Sevenson sought
judgment against the defendants, including punitive damages. To date,
the parties have stipulated to a stay of the case while criminal
charges against McDonald and others are pending (see the previously
mentioned cases).
[End of section]
Appendix II: Objectives, Scope, and Methodology:
This appendix provides information on the scope of work and
methodology used to examine (1) how EPA assessed the risks and
selected remedies for the Federal Creosote site, and what priority EPA
assigned to site cleanup; (2) what factors contributed to the
difference between the estimated and actual remediation costs of the
site; and (3) how responsibilities for implementing and overseeing the
site work were divided between EPA and the U.S. Army Corps of
Engineers (the Corps). It also discusses our methodology for
summarizing criminal and civil litigation related to the Federal
Creosote site.
To examine how EPA assessed the risks and selected remedies for the
Federal Creosote site, as well as what priority it assigned to the
cleanup, we reviewed EPA's Superfund site investigation and cleanup
processes, including applicable statutes, regulations, and agency
guidance. We also reviewed documentation from the site's
administrative record, which detailed the agency's activities and
decisions at the site.[Footnote 82] As part of this review, we
analyzed public comments that were documented in site records of
decision to identify key issues with the cleanup effort. To obtain
additional information on these and other site cleanup issues, we
interviewed EPA Region 2 officials involved with the site, including
officials from the Emergency and Remedial Response Division, the
Public Affairs Division, and the Office of Regional Counsel.
Furthermore, we interviewed and reviewed documentation obtained from
officials with the Agency for Toxic Substances and Disease Registry
regarding its determination of site risks. We also consulted with New
Jersey and Borough of Manville officials to obtain their views on the
cleanup effort. Finally, we interviewed representatives of the
potentially responsible party for the site to obtain the party's views
on EPA's risk assessment, remedy selection, and site prioritization.
To determine what factors contributed to the differences between the
estimated and actual costs of site cleanup, we obtained and analyzed
data on estimated and actual site costs from several sources.[Footnote
83] For estimated site costs, we combined EPA's estimates for selected
remedies from site records of decision and remedial alternative
evaluations. In developing these estimates, EPA applied a simplifying
assumption that all construction costs would be incurred in a single
year, and, therefore, EPA did not discount future construction costs,
even though work was projected to occur several years into the future
as a result of design activities and resident relocations as well as
EPA's estimated construction time frames.[Footnote 84] However, our
discount rate policy guidance recommends that we apply a discount
factor to future costs.[Footnote 85] Consequently, to convert EPA's
estimated costs into fiscal year 2009 dollars, we (1) conducted a
present value analysis to discount future site costs to the dollar
year of the original estimate (base year) for each remedy, using EPA's
recommended discount rate of 7 percent, and (2) converted the present
value of each estimate into fiscal year 2009 dollars. To calculate the
present value of estimated costs, we identified the projected
construction time frames for each remedy from site documents. Because
the documents did not provide information on how construction costs
would be distributed over the projected time frame, we calculated the
midpoint of a range of values, assuming that all costs for particular
activities comprising EPA's selected remedies would either be incurred
at the beginning of the projected time frame (the maximum value of
these costs) or at the end of the projected time frame (the minimum
value). To adjust the present values from the base year to fiscal year
2009 constant dollars, we divided the present values by the inflation
index for the base year and weighted the calculation to convert the
base year from calendar years to fiscal years.
To identify actual sitewide costs, we compiled data from multiple
sources, including EPA's Superfund Cost Recovery Package Imaging and
On-Line System (SCORPIOS) for data on site costs through April 30,
2009;[Footnote 86] the Corps of Engineers Financial Management System
(CEFMS) for data on Corps and contractor costs through various dates
in April and early May, 2009; and contractor-generated project cost
summary reports for data on contractor costs for each phase of the
cleanup through February 15, 2009.[Footnote 87] We relied on multiple
data sources for our analysis because none of the sources provided a
sufficient level of specificity for us to comprehensively determine
when and for what purpose costs were incurred. In particular, the
SCORPIOS data provided specific dates of when EPA incurred costs but
for some costs, especially those related to site construction work,
the data did not generally provide detailed information on why the
costs were incurred. Therefore, to obtain more detailed information on
the reason for incurring certain costs, we used the data from CEFMS
and the contractor's project cost summary reports. However, the CEFMS
and contractor project cost summary report data did not generally
provide specific information on when costs were incurred.
Consequently, to determine actual site costs in fiscal year 2009
dollars, we used two approaches. For costs taken from the SCORPIOS
data or when detailed information on the date of a particular cost was
available, we applied the inflation index for the particular fiscal
year in which EPA incurred the cost. For costs taken from the other
data sources, we used the midpoint of the range of inflation-adjusted
values for the construction start and end dates for individual work
phases, as recorded in site documents.
We worked with EPA Region 2 officials to categorize site costs,
including those that were part of EPA's original construction
estimates as well as those that were not part of EPA's estimates.
After identifying the costs that were not included in EPA's original
estimates, we took the difference between estimated and actual
construction costs, according to categories that we discussed with
EPA, to identify where actual costs changed the most from EPA's
estimates. Then, to identify the factors that contributed the most to
the difference in these cost categories, we analyzed the types of
costs in each category and interviewed EPA Region 2 and Corps
officials responsible for the cleanup. In addition, we analyzed data
from site documents on the estimated and actual amounts of
contaminated material at various stages of the cleanup process to
obtain further information on the extent to which increased amounts of
contaminated material affected site costs.[Footnote 88] To examine the
impact of alternative methodologies on the disparity between estimated
and actual costs, we reviewed EPA cost-estimating guidance and
calculated the effect of discounting future estimated costs within our
analysis. To determine how fraud impacted site costs, we reviewed
civil and criminal litigation documents describing the monetary values
exchanged in various schemes.[Footnote 89]
To ensure the reliability of the actual cost data we used for this
report, we reviewed the data obtained from the SCORPIOS and CEFMS
databases as well as the contractor-generated cost summary reports
that the Corps provided. For each of these data sources, we reviewed
agency documents and interviewed EPA and Corps officials to obtain
information on their data reliability controls. We also electronically
reviewed the data and compared them across all sources as well as with
other information on site costs as available. For example, we compared
contractor cost data provided by the Corps with similar data from the
contractor-generated cost summary reports. Similarly, we compared
Corps cost data from CEFMS with analogous data from EPA's SCORPIOS
database. Generally, we found that discrepancies among comparable data
from different sources were most likely attributable to the potential
delay between when a cost is incurred by a contractor and when it is
invoiced and processed, first by the Corps and later by EPA. On the
basis of our evaluation of these sources, we concluded that the data
we collected and analyzed were sufficiently reliable for our purposes.
However, because some costs incurred prior to early May 2009 may not
have been processed through the Corps and EPA's cost-tracking systems
at the time of data collection, site cost data in this report are
considered to be approximate. Moreover, because our methodology relied
on calculating the midpoint of a range of costs for both the present
value calculations and adjusting data for inflation, we consider the
data we present in this report on estimated and actual costs and the
difference between these costs also to be approximate.
To describe how responsibilities for implementing and overseeing the
site work were divided between EPA and the Corps, we reviewed the
interagency agreement between EPA and the Corps for Superfund sites in
general as well as site-specific agreements for the design and
implementation of the cleanup at the Federal Creosote site. We also
reviewed agency guidance regarding EPA's responsibilities at Superfund
sites. To obtain information on EPA's oversight actions, we
interviewed EPA and Corps officials responsible for site cleanup and
contracting work. We also reviewed site meeting minutes, monthly
progress reports, EPA correspondence to the Corps, and relevant EPA
Office of Inspector General reports. To further describe the Corps'
responsibilities at the Federal Creosote site, we reviewed Corps
guidance for the cleanup of hazardous waste projects, Corps contract
management best practices, and relevant procurement regulations. To
obtain information on actions that the Corps took to implement its
site responsibilities, we reviewed Corps correspondence to the
contractor and contractor requests for approval of soil treatment and
disposal subcontracts. We also interviewed Corps officials responsible
for site cleanup and contracting work as well as EPA Region 2
officials. However, we did not assess the adequacy of the Corps'
efforts or its compliance with Corps guidance and federal procurement
regulations.
To examine issues regarding civil and criminal litigation related to
the Federal Creosote site, we collected case data from the Public
Access to Court Electronic Records system.[Footnote 90] We then
qualitatively analyzed documents obtained from this system to identify
the issues involved and the status of each case as well as the
outcomes, if any, of the cases. However, because criminal
investigations are ongoing and confidential, we could not determine
whether any additional criminal charges were under consideration, but
relied solely on the publicly available information for charges that
had been filed as of November 2009.:
We conducted our work from May 2008 through February 2010 in
accordance with all sections of GAO's Quality Assurance Framework that
are relevant to our objectives. The framework requires that we plan
and perform the engagement to obtain sufficient and appropriate
evidence to meet our stated objectives and to discuss any limitations
in our work. We believe that the information and data obtained, and
the analyses conducted, provide a reasonable basis for any findings
and conclusions in this product.
[End of section]
Appendix III: Timeline of EPA Actions at the Federal Creosote Site:
Figures 8 and 9 provide additional information on the timing of EPA's
actions at the Federal Creosote site. Specifically, figure 8 shows the
timing of key EPA actions related to its risk assessment and remedy
selection at the site, while figure 9 provides additional information
on the timing of key remedial design and action activities. Both
figures demonstrate the extent to which EPA's efforts to assess risks
and select, design, and construct remedies took place concurrently.
Figure 8: Key Events Related to Risk Assessment and Remedy Selection
at the Federal Creosote Site:
[Refer to PDF for image: illustrated graph]
Key Events: New Jersey Department of Environmental Protection (NJDEP)
identifies a black tarry substance in a leaking sump on-site;
Start date: [Empty];
End date: 4/96.
Key Events: Borough of Manville responds to report of sinkhole in
residential area and determines that local drinking water supplies are
not contaminated from the site;
Start date: 1/97;
End date: 2/97.
Key Events: NJDEP and EPA sample for indoor air contamination in
residential homes;
Start date: 4/97;
End date: 5/97.
Key Events: Agency for Toxic Substances and Disease Registry (ATSDR)
develops several health consultations and issues a public health
assessment for the site;
Start date: 5/97;
End date: 9/00.
Key Events: EPA conducts an initial site investigation;
Start date: 10/97;
End date: 11/98.
Key Events: Responsibility for Federal Creosote site transferred from
NJDEP to EPA;
Start date: [Empty];
End date: 1/98.
Key Events: EPA completes a Hazard Ranking System evaluation;
Start date: 1/98;
End date: 5/98.
Key Events: Federal Creosote site proposed for the National Priorities
List (NPL);
Start date: [Empty];
End date: 7/98.
Key Events: EPA takes soil samples in the Claremont Development
Operable Unit 2 (OU2) soils as part of the remedial
investigation/feasibility study (RI/FS);
Start date: 12/98;
End date: 3/99.
Key Events: Federal Creosote site formally listed on the NPL;
Start date: [Empty];
End date: 1/99.
Key Events: EPA completes a human health risk assessment for surface
soil;
Start date: [Empty];
End date: 1/99.
Key Events: EPA completes an evaluation of remedial technologies for
OU1 on the basis of the results of the initial investigation;
Start date: [Empty];
End date: 4/99.
Key Events: EPA takes soil samples in the Rustic Mall (OU3) as part of
the RI/FS;
Start date: 8/99;
End date: 11/99.
Key Events: EPA takes additional groundwater samples as part of the
RI/FS;
Start date: 8/99;
End date: 11/99.
Key Events: OU1 record of decision (ROD) issued;
Start date: [Empty];
End date: 9/99.
Key Events: EPA completes a human health risk assessment and remedial
technology evaluation for OU2 soils;
Start date: [Empty];
End date: 4/00.
Key Events: OU2 ROD issued;
Start date: [Empty];
End date: 9/00.
Key Events: EPA completes a human health risk assessment and remedial
technology evaluation for OU3 soils;
Start date: [Empty];
End date: 6/01.
Key Events: EPA completes a human health risk assessment and remedial
technology evaluation for groundwater[A];
Start date: [Empty];
End date: 7/01.
Key Events: EPA completes an addendum to the groundwater evaluation
determining that treating groundwater at the site would be technically
impracticable;
Start date: [Empty];
End date: 6/02.
Key Events: OU3 ROD issued;
Start date: [Empty];
End date: 9/02.
Source: GAO analysis of EPA documents.
[A] The groundwater human health risk assessment and remedial
technology evaluation was completed in two parts. First, in July 2001,
EPA issued a remedial investigation report for groundwater that
contained the human health risk assessment. Second, in August 2001,
EPA issued a feasibility study report that included the remedial
technology evaluation for groundwater.
[End of figure]
Figure 9: Key Events Related to Remedial Design and Action at the
Federal Creosote Site:
[Refer to PDF for image: illustrated graph]
Activities for the Claremont Development:
Key Events: EPA conducts a removal action at certain residential
properties with unacceptable risks from surface soil contamination;
Start date: 7/98;
End date: 9/998.
Key Events: OU1 Remedial design, Phase 1;
Start date: 9/99;
End date: 10/00.
Key Events: OU1 Remedial design, Phase 2;
Start date: 9/99;
End date: 3/02.
Key Events: OU1 Remedial design, Phase 3;
Start date: 9/99;
End date: 1/03.
Key Events: Relocation efforts begin for residents in residential
properties identified for demolition;
Start date: 10/99;
End date: [Empty].
Key Events: OU1 Remedial action, Phase 1;
Start date: 10/00;
End date: 6/02.
Key Events: OU1 Remedial action, Phase 2[A];
Start date: 6/02;
End date: 1/08.
Key Events: OU1 Remedial action, Phase 3;
Start date: 4/03;
End date: 4/06.
Key Events: OU2 Remedial design, Phase 1;
Start date: 9/00;
End date: 11/01.
Key Events: OU2 Remedial design, Phase 2;
Start date: 9/00;
End date: 2/03.
Key Events: OU2 Remedial action, Phase 1;
Start date: 2/02;
End date: 6/02.
Key Events: OU2 Remedial action, Phase 2[B];
Start date: 8/01;
End date: 5/06.
Activities for the Rustic Mall:
Key Events: OU3 Remedial design;
Start date: 9/02;
End date: 7/07.
Key Events: OU3 Remedial action;
Start date: 6/05;
End date: 2/08.
Key Events: EPA approval for treated waste to be disposed of
at a nonhazardous waste facility;
Start date: [Empty];
End date: 11/02.
Source: GAO analysis of EPA documents.
[A] According to EPA, the OU1 Phase 2 remedial action was completed in
April 2004. However, this area was used as a staging area for waste
from OU1 Phase 3, OU2 Phase 2, and OU3 properties. As a result,
restoration of the OU1 Phase 2 area could not be completed until all
excavation and shipping of OU3 waste was complete (since OU3 was the
last completed area for which the OU1 Phase 2 area was used to stage
waste).
[B] According to EPA, the OU2 Phase 2 remedial action occurred on an
episodic basis. The initial remedial action that was part of OU2 Phase
2 was a remedial action at the day-care center playground that began
and ended in August 2001. Remedial action on OU2 Phase 2 residential
properties was not begun until almost 2 years later and was completed
in June 2005. Also, because the day-care center parking lot was
connected to the Rustic Mall, the remedial action at the parking lot
was completed, together with the OU3 remedial action, between November
2005 and May 2006.
[End of figure]
[End of section]
Appendix IV: Comments from the Environmental Protection Agency:
United States Environmental Protection Agency:
Region 2:
220 Broadway:
New York, NY 10007-1868:
January 29, 2010:
John B. Stephenson:
Director:
Natural Resource & Environment:
United States Government Accountability Office:
441 G Street, NW, Room 2075:
Washington, D.C. 20548:
Dear Mr. Stephenson:
Thank you for the opportunity to review and comment on the draft
report of the Government Accountability Office (GAO) entitled
Information on Cost and Other Issues Related to the Cleanup of the
Federal Creosote Site. Consistent with our comments on the Statement
of Facts, the Environmental Protection Agency (EPA) agrees that the
GAO report accurately reflects the events that describe the cleanup of
the Federal Creosote site, located in Manville, New Jersey, from early
removal activities and placement on the National Priorities List
(NPL), through the selection and implementation of a series of
remedial actions to address the nature and extent of contamination at
the site. In the Federal Creosote cleanup, EPA addressed the remnants
of a long-abandoned industrial complex found beneath a residential
community of 137 single-family homes. Meeting a residential threshold
for cleanup, and doing so while limiting the disruption to the fabric
of the neighborhood, were two of the principal challenges for EPA
while implementing this action, which is now completed and the site is
nearing deletion from the NPL.
EPA is constantly striving to improve the Superfund program, and
welcomed GAO's review as an opportunity for an independent check of
our methods. EPA is pleased to find that, after GAO's thorough
evaluation of this project, it has no major recommendations on how we
might have improved this cleanup effort.
The GAO was asked to look into the difference between the total
construction cost estimates EPA made prior to 2002, $105 million, and
the final total cost of 2009, $338 million, a sum EPA is seeking to
recover from the parties that are responsible for the contamination at
the Federal Creosote site. The vast bulk of the difference between
these figures results from two factors.
First, the amount of highly contaminated soil which was actually found
as EPA worked at the site was nearly three times the amount used when
EPA made its original construction cost estimates. In fact, we found
456,600 tons of contaminated soil that we had to excavate, remove,
treat and/or dispose of, and replace, rather than the 164,400 tons on
which the early estimates were based. This increase in quantity of
contaminated material itself accounts for $112 million in added costs.
When that amount is added to the original construction cost estimate,
one gets a final total construction cost of $217 million. Another $29
million in increased construction costs came from the added time that
was needed to complete the cleanup, increases for commodities like
fuel oil, and additional costs for residential relocation. This total,
$246 million, is the figure which should be used to make an apples-to-
apples comparison of estimated and final costs. The difference is
largely explained by the sheer increase in volume of material we dealt
with and the costs of inflation. We are pleased to note that your
draft report makes exactly this comparison, the correct one, in Table
4 on page 33.
Second, a very large portion of the $338 million final total cost
figure is composed of categories of costs which were not ” and never
are ” included in early cost estimates. Specifically, white early cost
estimates, which are made solely for the purpose of comparing the
costs of different potential remedies, include only projected
construction costs, the final total includes the money EPA spent on a
removal action at the site, on investigative work, on personnel
salaries, on indirect (or overhead) costs, and interest, as provided
by law, on the money the government advanced for the cleanup. These
other nonconstruction costs total $92 million. GAO was asked to add
them to the final total construction costs and to compare the total
with initial construction cost estimates. Unfortunately, that
comparison is not particularly useful as it is a comparison of apples
to oranges, not, as explained above, an apples-to-apples comparison.
Thank you again for the opportunity to comment on this draft report.
EPA reiterates its commitment to improving the implementation of the
Superfund program. If you have any questions relating to this
response, please call Region 2's GAO liaison, John Svec, at (212) 637-
3699.
Sincerely,
Signed by:
Judith A. Enck:
Regional Administrator:
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
John B. Stephenson, (202) 512-3841 or stephensonj@gao.gov:
Staff Acknowledgments:
In addition to the individual named above, Vincent P. Price, Assistant
Director; Carmen Donohue; Maura Hardy; Christopher Murray; Ira Nichols-
Barrer; and Lisa Van Arsdale made key contributions to this report.
Elizabeth Beardsley, Nancy Crothers, Alexandra Dew, Richard Johnson,
and Anne Stevens also made important contributions.
[End of section]
Footnotes:
[1] This figure represents the total of EPA's estimated costs for
remedial construction activities conducted through the spring of 2009
to address contamination at different areas of the site, which we
discounted using a present value analysis and adjusted to fiscal year
2009 constant dollars. As a result of the methodology we used to
adjust these costs, this figure does not match EPA's published
estimates for completed and remaining work at the site, which totaled
about $118 million in nominal dollars. As per GAO internal guidance,
we are reporting all costs in fiscal year 2009 constant dollars,
unless otherwise noted.
[2] We developed these data on actual site costs using data provided
by EPA and the Corps. As a result of the methodology we used to adjust
the data to fiscal year 2009 constant dollars, these figures do not
match other EPA-published information on site costs.
[3] Justice files claims on behalf of the federal government,
including agencies such as EPA.
[4] In addition, a site contractor that was tasked with implementing
the cleanup also filed a civil litigation action against several of
these parties asserting claims related to alleged fraud.
[5] EPA also can take removal actions at any time; these are generally
short-term or emergency actions to mitigate immediate threats.
[6] Sites are often divided into OUs by geography, pathways of
contamination (e.g., groundwater), or type of remedy.
[7] As part of the OU3 groundwater investigation, EPA also looked at
off-site groundwater, surface water, and sediment contamination that
may have been related to the site.
[8] EPA Region 2, which covers New Jersey, New York, Puerto Rico, the
U.S. Virgin Islands, and seven federally recognized Indian tribes, was
responsible for the Federal Creosote site.
[9] According to EPA guidance, the RI/FS process is a dynamic,
flexible process that can be tailored to the circumstances of
individual sites. The objective of the RI/FS is not to remove all
uncertainties associated with the site cleanup but, rather, to gather
sufficient information to support informed decision making regarding
which remedy appears to be the most appropriate for a site.
[10] To assess site risks during the remedial investigation, EPA
generally follows a four-step process: (1) contaminant identification-
-narrowing down the list of contaminants for risk analysis on the
basis of which contaminants present the biggest threats to human
health; (2) exposure assessment--identifying current and future
pathways for how individuals could be exposed to contamination on the
basis of how the site is or could be used; (3) toxicity assessment--
examining the potential health effects of contaminants on the basis of
their toxicity; and (4) risk characterization--estimating the
potential risks from exposure to contaminants. EPA's acceptable levels
for carcinogenic human health risks are based on a range of values--
between 1 in 10,000 individuals and 1 in 1 million individuals--that
represent the excess probability a person will develop cancer over a
lifetime as a result of exposure to contamination. If human health
risks are greater than 1 in 10,000, they are considered to be above
EPA's acceptable range. For noncarcinogenic risks, EPA calculates a
hazard index value that sums the values for individual noncarcinogenic
effects from site contaminants. If the hazard index exceeds a value of
1, EPA assumes there is a potential for noncarcinogenic health effects
to occur from exposure to site contamination.
[11] Generally, final remediation goals are determined when a remedy
is selected.
[12] These criteria were developed to incorporate the remedy selection
requirements and preferences of section 121 of CERCLA, which mandates,
among other requirements, that remedial actions be protective of human
health and the environment and be cost-effective. CERCLA also
indicates a preference for actions that reduce the toxicity, mobility,
or volume of contamination through treatment.
[13] EPA referred to the 1984 interagency agreement with the Corps as
an "umbrella" agreement. If EPA chooses to assign work to the Corps,
EPA establishes site-specific interagency agreements that document the
type of work to be performed and an initial budget.
[14] Although these efforts were largely conducted by EPA contractors,
the agency provided direction and oversight to the contractors, and,
therefore, we refer to them as EPA efforts.
[15] We excluded EPA's Hazard Ranking System evaluation results from
our discussion of EPA's risk assessment because EPA officials said
that the risk assessment process is different from the Hazard Ranking
System evaluation that is conducted as part of the NPL listing
process. The officials said that the goal of the listing process is to
determine whether a site requires additional evaluation, and that a
site's Hazard Ranking System evaluation score does not relate to EPA's
human health risk assessment.
[16] EPA found that 19 properties had high levels of surface soil
contamination. To limit potential exposures at certain properties, in
July 1998, EPA took removal actions, such as applying topsoil or other
materials.
[17] At the Federal Creosote site, EPA initially began evaluating
whether to address site contamination under its removal program and,
therefore, started preparing an Engineering Evaluation/Cost Analysis,
which is required under the National Contingency Plan to support
certain types of removal actions. The National Oil and Hazardous
Substances Pollution Contingency Plan, referred to as the National
Contingency Plan, is published in the Federal Register and can be
found in the Code of Federal Regulations at 40 CFR Part 300. This
plan, which was revised pursuant to CERCLA, establishes the procedures
and standards for responding to releases of hazardous substances.
According to EPA guidance (see EPA, Guidance on Conducting Non-Time-
Critical Removal Actions Under CERCLA, EPA 540-R-93-057 (Washington,
D.C.: August 1993)), the goals of an Engineering Evaluation/Cost
Analysis are to identify the objectives of a removal action and to
evaluate various alternatives that may be used to satisfy these
objectives on the basis of their cost, effectiveness, and
implementability. EPA's guidance also states that an Engineering
Evaluation/Cost Analysis, although less comprehensive, is similar to
the RI/FS conducted for a remedial action.
[18] To evaluate OU2 soil contamination, EPA took approximately 2,000
soil samples, among other activities. EPA's investigation of OU3 soil
contamination included taking almost 250 soil samples, while its
groundwater investigation included taking samples from monitoring
wells and collecting data on the movement of groundwater contamination
in the soil and bedrock.
[19] EPA officials said it would have been labor-intensive to assess
the risks for each residential property because of the large number of
properties and the amount of data and calculations involved. Also,
according to EPA, an equally important consideration was the time
involved in assessing the risks for each individual property, since
this would have potentially delayed remediation of the site and
prolonged residents' exposure to contamination.
[20] To calculate risk levels, EPA broke OU3 into six areas, primarily
on the basis of where higher levels of contamination were present
within 10 feet of the ground surface.
[21] According to EPA, these two rivers are a source of drinking water
and the intake for the public water supply was approximately 2,700
feet away from the site.
[22] Pursuant to CERCLA requirements, ATSDR performs health
assessments at all sites proposed for the NPL. ATSDR looks at sites
from a public health and medical needs perspective and provides
individuals with medical assistance to respond to conditions
identified as stemming from exposure to site contamination.
[23] ATSDR officials said the assessment pulled together the various
health consultations that it had developed.
[24] Both ATSDR and EPA officials also noted other differences between
the two agencies' risk assessment processes, such as different
underlying data and assumptions, which could yield different results.
[25] ATSDR found that groundwater contamination posed a future hazard
if public water supplies became affected; however, EPA's groundwater
investigation was still ongoing at the time of ATSDR's assessment.
[26] EPA's remediation goal for OU1 was based on visible levels of
contamination. However, according to site documents and Region 2
officials, the agency did not plan to begin excavation in OU1 areas
until it had developed quantitative remediation goals following its
assessment of the OU2 soil contamination.
[27] However, EPA found that residually contaminated soil could remain
at depths greater than 10 to 14 feet.
[28] A contractor's study of site contamination found that applying
nonresidential rather than residential cleanup standards in the Rustic
Mall area would have reduced the amount of material requiring
remediation by only about 1.4 percent of the estimated total.
[29] The primary guidance that EPA relied on to identify potential
remedial technologies for the soil contamination was the agency's
guidance entitled Presumptive Remedies for Soils, Sediments, and
Sludges at Wood Treater Sites (December 1995). EPA developed this
guidance as part of an initiative to speed up remedy selection and
reduce the cost and time required to clean up similar sites, among
other purposes. Region 2 officials said that a goal of the initiative
was to avoid conducting treatability studies to assess innovative or
emerging technologies--technologies that have been implemented on a
small scale and show promise for being able to remediate similar types
of contamination--if EPA already had proven technologies.
[30] As with efforts to assess the risks of contamination at the site,
EPA contractors did much of the work to identify and evaluate remedial
technologies and alternatives. However, EPA provided direction and
oversight to the contractors, and decided which remedial alternatives
to select for the site. Therefore, we refer to all of these activities
as EPA efforts.
[31] Bioremediation may be performed either in situ (in place in the
ground) or ex situ (after material is excavated).
[32] Region 2 officials said that innovative or emerging technologies
were screened out because EPA found they would not be a good match for
the site, not simply because they required a treatability study to
assess their viability.
[33] EPA noted that all remedial alternatives it considered, with the
exception of a no-action alternative, would have required that the
agency relocate residents.
[34] EPA treated contaminated groundwater in the soil that it
encountered while excavating the soil contamination.
[35] Under the National Contingency Plan, EPA is allowed to select an
alternative that does not comply with requirements applicable to a
site, such as meeting groundwater guidelines, if the agency determines
that certain circumstances exist. One such circumstance is when the
agency determines that compliance with the requirement would be
technically impracticable from an engineering perspective.
[36] EPA, Guidance for Evaluating the Technical Impracticability of
Ground-Water Restoration, Office of Solid Waste and Emergency Response
Directive 9234.2-25 (Washington, D.C.: September 1993).
[37] One area of the mall was used as a staging area to support site
work, including EPA and contractor offices; a soil staging area to
store excavated material; and an area for backfill soil, equipment,
and other required materials. The need to have these facilities at the
site contributed to the lack of open space.
[38] Region 2 officials also stated that EPA considered placing a
treatment facility on a nearby Superfund site. However, they said it
would have been very difficult to get the required state and local
approvals.
[39] According to EPA, agency guidance indicates a preference for
actions that address contamination risks using methods of cleanup that
allow people to remain safely in their homes and businesses. See EPA,
Interim Policy on the Use of Permanent Relocations as Part of
Superfund Remedial Actions, Office of Solid Waste and Emergency
Response Directive 9355.0-71P (Washington, D.C.: June 1999).
[40] Region 2 officials said that EPA attempted to reach out to
identify permitted vendors who could perform off-site LTTD, but none
of the LTTD vendors responded to bid requests for site work.
Similarly, EPA learned of one commercial facility that may have been
able to treat site soils using bioremediation; however, the company
did not respond to bid requests for site work.
[41] EPA had similar concerns about using chemical grouting to
immobilize contaminants.
[42] EPA found that contamination from wood-preserving operations is a
"listed waste" under the Resource Conservation and Recovery Act, which
gives EPA the authority to control hazardous waste from the "cradle-to-
grave," including the generation, transportation, treatment, storage,
and disposal of hazardous waste. As a listed waste under the act, EPA
could not dispose of contaminated material without ensuring that it
had been treated to specified standards.
[43] Region 2 officials said that EPA placed an LTTD unit in a
residential area at another site. However, at this other site, the
officials noted that none of the residents' houses were within 200
feet of the unit, and there was enough space to build a large earthen
berm to lessen the unit's impacts on the community.
[44] According to EPA guidance, remedial alternatives should be
consistent with reasonably anticipated future land use. See EPA, Land
Use in the CERCLA Remedy Selection Process, Office of Solid Waste and
Emergency Response Directive 9355.7-04 (Washington, D.C.: May 1995).
[45] Region 2 officials said the state of New Jersey was also opposed
to on-site treatment and disposal options. The Region 2 officials said
that while EPA occasionally signs a ROD without state concurrence, the
agency generally tries to avoid doing so because, under CERCLA, EPA
cannot carry out a remedial action without the relevant state's
agreement to provide a 10 percent cost share. Also, the officials
noted that community acceptance of EPA's remedial action is one of the
selection criteria, and the agency prefers not to store large amounts
of contamination for treatment near a residential area.
[46] The officials emphasized that the OU1 remedial action was an
early interim action and that EPA did not begin the excavation until
the OU2 ROD was issued, which set quantitative remediation goals for
the cleanup of the Claremont Development. The officials stated that
when EPA's National Remedy Review Board reviewed the OU1 decision and
recommended that Region 2 complete its sitewide RI/FS before beginning
source material excavation, the board meant the investigation of the
residential area and not that Region 2 should complete its RI/FS of
OU3 before beginning excavation of OU1. Region 2 agreed with this
recommendation.
[47] Region 2 officials said that EPA did not have as much data for
the Rustic Mall but maximized resources by coordinating RI/FS efforts
for this area with design activities for other parts of the site.
Additionally, while EPA had signed the ROD and designed the excavation
for OU3 by the time that the owner of the mall decided to demolish it,
EPA revised the design concurrently with the excavation rather than
delay work.
[48] GAO, Superfund: Litigation Has Decreased and EPA Needs Better
Information on Site Cleanup and Cost Issues to Estimate Future Program
Funding Requirements, [hyperlink,
http://www.gao.gov/products/GAO-09-656] (Washington, D.C.: July 15,
2009).
[49] In our July 2009 report [hyperlink,
http://www.gao.gov/products/GAO-09-656], we raised concerns about the
usefulness of EPA's "construction complete" measure as an indicator of
the status of site cleanups because, for example, sites with
groundwater contamination (as at the Federal Creosote site) may take
decades to reach selected standards, even though EPA declares the site
construction complete. By presenting statistics in this report that
compare the median length of time from NPL listing to construction
complete for the Federal Creosote site with other megasites, we mean
only to contrast the length of time it took to reach key agency
milestones and not to compare the status of the site cleanup with
EPA's remediation goals.
[50] We developed these data on actual site costs using data provided
by EPA and the Corps. As a result of the methodology we used to adjust
the data to fiscal year 2009 constant dollars, these figures do not
match other EPA-published information on site costs.
[51] This figure represents the total of EPA's estimated costs for
remedial construction activities conducted through the spring of 2009,
to address contamination at different areas of the site, which we
discounted using a present value analysis and adjusted to fiscal year
2009 constant dollars. To identify the estimated costs of activities
that had been completed as of the spring of 2009, we added EPA's
estimates for the construction costs of these activities for each OU
and, following GAO guidance, applied a discount factor to reflect that
EPA's estimates pertained to future costs. In this report, when we
discuss "estimated costs," we refer to GAO's revised estimated cost
figure. As a result of the methodology we used to adjust these
estimates, our calculated total does not match EPA's published
estimates for completed and remaining work at the site, which totaled
$118 million in nominal dollars. Unless otherwise noted, we adjusted
all dollar values presented in this report to fiscal year 2009 dollars
as per GAO guidance. See appendix II for more information on our
methodology for estimating site costs.
[52] We recognize that total site costs, which include other response
costs, will always be different from remedial construction costs.
However, for the purposes of this report, we determined that it was
necessary to report total site costs as a point of departure to
discuss how construction costs, as well as other response costs that
were not included in EPA's original construction cost estimates,
contributed to the total amount EPA spent on the site.
[53] "Other response costs" refer to costs associated with the site
that were not directly related to construction of a particular remedy
(discussed in greater detail in the next section of this report).
[54] EPA, A Guide to Developing and Documenting Cost Estimates During
the Feasibility Study, Office of Solid Waste and Emergency Response
Directive 9355.0-75 (Washington, D.C.: July 2000).
[55] According to EPA guidance, capital costs include all labor,
equipment, and material costs associated with construction activities
as well as costs for professional/technical services, such as
engineering support for the construction of the remedial action.
Operation and maintenance costs are those postconstruction costs
necessary to ensure or verify the continued effectiveness of a
remedial action.
[56] Our analysis of site documents found that additional sampling
during the design stage was generally successful in refining the
estimated quantity of material requiring excavation across all OUs.
Specifically, final excavation amounts increased by only about 28
percent over estimates at the design stage as compared with at least
178 percent over ROD estimates.
[57] According to site documents, EPA suspected there was
contamination underneath the Rustic Mall buildings on the basis of
sampling in the areas surrounding the mall. However, because EPA did
not have access beneath the mall buildings for sampling and EPA's
original quantity estimates presumed the buildings would remain
standing, contamination under the buildings was not included in the
original estimates.
[58] According to EPA, residents at 3 properties refused EPA access to
conduct sampling during the pre-ROD site investigation. EPA later
gained access to the properties and found that 2 of the 3 properties
required soil remediation.
[59] In 2006, EPA issued an Explanation of Significant Differences for
the site, which documented quantity increases and their associated
cost increases to date across all three OUs. According to EPA
officials, they waited to issue this document until after the
completion of the OU3 design phase so that they could understand the
differences across the entire site. Generally, EPA does not revisit
its remedy selection decision unless new information indicates that
the selected remedy is technically infeasible or is not sufficiently
protective to meet cleanup goals, or that an alternative approach
would be equally protective and more cost-effective. According to EPA
officials, they did not find anything to indicate the agency should
change the overall cleanup approach at the site.
[60] Although the quantities of soil and contaminated material
increased above EPA's estimates, our analysis found that the average
unit costs that EPA paid for thermal treatment and disposal of
contaminated material--the most expensive remediation option--were
lower than originally estimated and decreased over time. For example,
the estimated unit cost for these services ranged from $510 for OU1 to
$650 for OU2 and OU3; however, actual average unit costs were $448 per
ton for OU1, $426 per ton for OU2, and $354 per ton for OU3. We did
not adjust these costs to 2009 dollars to more accurately reflect the
actual bid prices at the time of construction.
[61] Additionally, according to site documents, EPA did not excavate
contaminated soil at the site if EPA determined that it did not pose a
direct threat of human exposure. Specifically, although EPA removed
source material that could pose a threat of groundwater contamination,
EPA allowed residually contaminated soil to be left in some areas of
the site at levels deeper than approximately 14 feet below the ground
surface. According to site documents, EPA and NJDEP used deed notices
for properties in these areas to document the remaining contamination
and restrict excavation.
[62] Region 2 officials said it was important to prevent a work
stoppage because it would lead to additional contractor demobilization
and remobilization costs and would negatively impact community
relations.
[63] This assumption can be modified if construction is projected to
last over a longer period of time.
[64] Discounting future costs to their present value accounts for the
time value of money. In particular, having one dollar today is worth
more than having one dollar a year from now because if it were
invested, it could earn a return from interest. EPA's estimated
implementation periods for site construction at the ROD stage ranged
from 21 months to 3.5 years. However, EPA did not expect to begin
implementing remedial actions until at least 1 year after it selected
its remedies because of, for example, design activities or resident
relocations. Therefore, while EPA's estimated construction periods
were relatively short, EPA did not plan to incur construction costs
until further into the future than is indicated simply by its
estimated time frames. Consequently, discounting these future
implementation costs had a relatively greater effect on our analysis
of EPA's estimated site costs than if the costs were projected to
occur immediately after EPA selected its remedies.
[65] GAO, Discount Rate Policy, [hyperlink,
http://www.gao.gov/products/GAO/OCE-17.1.1] (Washington, D.C.: May
1991).
[66] Design specifications provide detailed instructions to the
contractor about how to perform the work. See appendix III for a
timeline of key remedial design and action events at the Federal
Creosote site.
[67] Although concerns were identified by a 2007 EPA Office of
Inspector General report that evaluated EPA's management of Superfund
interagency agreements at the Federal Creosote site and certain other
sites, officials with EPA's Office of Inspector General indicated that
key findings did not necessarily involve EPA's oversight at the
Federal Creosote site. According to these officials, the only issue
related to the Federal Creosote site was a lack of detail in the
monthly progress reports that the Corps submitted to EPA. However, the
officials stated that, because of the RPM's on-site presence and level
of involvement at the Federal Creosote site, they believed that the
RPM had a good understanding of the work that was occurring at the
site.
[68] In addition to the RPM, EPA also assigned a community relations
specialist to the site.
[69] Under the 1984 interagency agreement, the Corps is also
responsible for providing (1) technical assistance to EPA during the
RI/FS phase and (2) site-specific cost documentation to support EPA's
cost recovery efforts.
[70] A cost-reimbursement contract is one in which the contractor
receives payments for the amount of allowable costs incurred to the
extent prescribed in the contract rather than a prenegotiated fixed
amount, while an IDIQ contract is one in which orders for goods or
services are placed against an established contract. The IDIQ
contracts used at the Federal Creosote site were "pre-placed remedial
action contracts" (PRAC). According to Corps officials, the
construction at the site was performed under four PRACs--three for the
prime contractor and one for the demolition contractor.
[71] Although the Corps directed the prime contractor, Corps officials
also noted that the RPM was heavily involved at the beginning of each
work phase and established a precedent for when decisions regarding
additional excavation could be made by the Corps, and for when the RPM
needed to be consulted first.
[72] Corps officials said that EPA specifically requested that the
Corps track contractor charges daily because of the large scale of the
project and of EPA's concern about maintaining forward progress due to
the residential nature of the site.
[73] In addition to overseeing the prime contractor charged with
construction, site documents showed that the Corps was also required
to oversee the design contractor and provide written reports to EPA on
a monthly basis on changes in the scope of work, project progress, and
costs. Additionally, the Corps was responsible for ensuring that the
prime contractor's work was in accordance with EPA guidance and
policies.
[74] Although the Corps is not a party to the contract between the
prime contractor and the subcontractor, the Corps requires that the
prime contractor include certain contract clauses in its subcontracts
to ensure that the subcontract follows the intent of federal
acquisition regulations and policies.
[75] The advance notification threshold was also increased from
$25,000 to $100,000 at this time, according to Corps officials. Corps
officials said that raising the notification and consent thresholds is
not unusual, and it had been done before at other sites.
[76] The prime contractor had solicited bids under a "Request for
Proposals" process, which, according to a site document, allowed it to
select the subcontractor that provided the "best value," even if it
involved paying a higher price. However, the Corps found that the
prime contractor did not adequately justify why a higher price should
be paid for the subcontractor's services and requested that the prime
contractor solicit bids using a sealed bid process, in which only a
price per ton and a determination of a subcontractor's ability to
perform the work were considered in the selection process.
[77] New Jersey's related claims in state court, originally filed in
2007, were dismissed subsequent to the filing in federal court.
[78] The indictment alleged that these acts took place on several
occasions and at more than one Superfund site.
[79] Courts may impose probation on a corporation. This probation may
involve various activities intended to prevent future wrongdoing and
often involves court-appointed oversight.
[80] These defendants include GMEC, Inc.; Patricia McDonald; Flowers
By Sweetens, Inc.; Matthew McDonald; Kevin McDonald; and Thomas
McDonald.
[81] These defendants include BEI; John Bennett; Robert Griffiths; DCP
Technical Services; JMJ Environmental, Inc.; John Drimak, Jr.; Elite
Landscaping, Inc.; Frederick A. Landgraber; Ray Angelini, Inc.; Ray
Angelini; Christopher Tranchina; National Industrial Supply, LLC; and
Victor Boski.
[82] We did not independently verify the accuracy of the information
contained in these documents.
[83] We focused on the estimated and actual costs of activities that
had already been performed as of the spring of 2009, and excluded the
costs of future activities at the site, such as groundwater monitoring.
[84] Because EPA did not discount future construction costs when
calculating its estimates, EPA's estimated costs were actually higher
than they would have been otherwise.
[85] GAO, Discount Rate Policy, GAO/OCE 17.1.1 (Washington, D.C.: May
1991).
[86] The SCORPIOS data collected from EPA included all costs that the
agency identified as specifically related to the Federal Creosote
site. According to an EPA official, some early investigation work was
performed by a contractor that was working at multiple sites, and EPA
was unable to identify how much of the contractor's costs were
attributable to the Federal Creosote site. As a result, costs for this
work were not included in the SCORPIOS data that EPA provided.
[87] According to site documents, remedial construction concluded in
February 2008; however, EPA and Corps officials noted that costs for
some site maintenance and administrative activities continued to
accrue.
[88] We did not independently verify the information on soil
quantities within the site documents.
[89] Because some cases involved fraud at multiple sites and
investigations are ongoing, we could not determine the exact extent to
which fraud affected cleanup costs at the Federal Creosote site.
[90] This system provides access to documents related to cases filed
in federal courts and is operated by the Administrative Office of the
U.S. Courts, which is the central support agency for the Judicial
Branch.
[91] We did not evaluate the accuracy of the information obtained from
court documents.
[End of section]
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