Environmental Cleanup Costs: NASA Is Making Progress in Identifying
Contamination, but More Effort Is Needed (Letter Report, 06/27/97,
GAO/NSIAD-97-98).

Pursuant to a congressional request, GAO reviewed the National
Aeronautics and Space Administration's (NASA) environmental cleanup
costs, focusing on NASA's: (1) determination of the extent of
contamination it may be responsible for cleaning up and progress in its
cleanup program; (2) cost estimates for accomplishing cleanup; and (3)
efforts to determine whether "potentially responsible parties" should
share in cleanup costs.

GAO noted that: (1) although NASA began identifying sites nearly 10
years ago, it did not complete a comprehensive hazardous site inventory
database until 1993; (2) NASA officials said that they now consider
their inventory of 913 potentially contaminated sites to be about
complete; (3) NASA is also in the early stages of determining what it
will cost to clean up those sites that require remediation; (4) however,
NASA needs better data before it can reliably estimate its cleanup cost;
(5) NASA headquarters had estimated its total cleanup costs would be $2
billion to cleanup all its potentially contaminated sites over a 20-year
period; (6) it later lowered the estimate to $1.5 billion by eliminating
sites where it believed no further action was needed; (7) this estimate
assumed that all sites of the same type would cost the same, regardless
of variances in the extent of contamination; (8) at GAO's request, NASA
field facilities developed estimates of remediation costs totalling $636
million based on actual costs, local quotes, and input from other
federal facilities; (9) however, the field facilities' estimates
excluded some of the 383 sites that had not been studied; (10) neither
the headquarters nor the field estimates included long-term operation
and maintenance costs or considered NASA's potential costs for
remediation at its contractor facilities; (11) furthermore, neither
estimate considered the potential effect of infrastructure changes that
could increase remediation cost; (12) although NASA's overall budget is
projected to decline over the next few years, NASA headquarters is
projecting that environment funding will remain about level in fiscal
year 1998, then increase somewhat over the following 4 years; (13) the
Comprehensive Environmental Response, Compensation, and Liability Act
(CERCLA) allows federal agencies and other entities that carry out
cleanup activities to seek cost sharing or cost recovery from the
potentially responsible parties whom the law would hold liable, such as
past owners, operators, and contractors; (14) CERCLA cost recovery can
also be available to a party conducting a cleanup under RCRA corrective
action requirements; (15) despite the availability of a cost recovery
mechanism, NASA headquarters has not had a policy for determining
whether to seek contributions from other parties; (16) NASA is paying
the remediation costs for virtually all of its field facilities; and (1*

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-97-98
     TITLE:  Environmental Cleanup Costs: NASA Is Making Progress in 
             Identifying Contamination, but More Effort Is Needed
      DATE:  06/27/97
   SUBJECT:  Hazardous substances
             Environmental policies
             Environmental law
             Pollution control
             Cost analysis
             Research and development facilities
             Health hazards
             Future budget projections
             Environmental monitoring
             Waste disposal
IDENTIFIER:  NASA Environmental Protection Program
             EPA National Priorities List
             
******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO report.  Delineations within the text indicating chapter **
** titles, headings, and bullets are preserved.  Major          **
** divisions and subdivisions of the text, such as Chapters,    **
** Sections, and Appendixes, are identified by double and       **
** single lines.  The numbers on the right end of these lines   **
** indicate the position of each of the subsections in the      **
** document outline.  These numbers do NOT correspond with the  **
** page numbers of the printed product.                         **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
** A printed copy of this report may be obtained from the GAO   **
** Document Distribution Center.  For further details, please   **
** send an e-mail message to:                                   **
**                                                              **
**                                            **
**                                                              **
** with the message 'info' in the body.                         **
******************************************************************


Cover
================================================================ COVER


Report to Congressional Requesters

June 1997

ENVIRONMENTAL CLEANUP COSTS - NASA
IS MAKING PROGRESS IN IDENTIFYING
CONTAMINATION, BUT MORE EFFORT IS
NEEDED

GAO/NSIAD-97-98

NASA's Cleanup Costs

(709215)


Abbreviations
=============================================================== ABBREV

  CERCLA - Comprehensive Environmental Response, Compensation, and
     Liability Act
  DOD - Department of Defense
  EPA - Environmental Protection Agency
  NASA - National Aeronautics and Space Administration
  RCRA - Resource Conservation and Recovery Act

Letter
=============================================================== LETTER


B-276548

June 27, 1997

The Honorable J.  Dennis Hastert
Chairman
The Honorable Thomas Barrett
Ranking Minority Member
Subcommittee on National Security,
 International Affairs, and Criminal Justice
Committee on Government Reform and Oversight
House of Representatives

This report responds to the request of the former Chairman and
ranking minority member that we review the National Aeronautics and
Space Administration's (NASA) environmental cleanup costs.  The
report expands on information provided in our September 1996
testimony on NASA infrastructure\1 and provides an assessment of
NASA's (1) determination of the extent of contamination it may be
responsible for cleaning up and progress in its cleanup program, (2)
cost estimates for accomplishing cleanup, and (3) efforts to
determine whether "potentially responsible parties" should share in
cleanup costs. 


--------------------
\1 NASA Facilities:  Challenges to Achieving Reductions and
Efficiencies (GAO/T-NSIAD-96-238, Sept.  11, 1996). 


   BACKGROUND
------------------------------------------------------------ Letter :1

Like other entities, including federal agencies, NASA must comply
with federal environmental laws, including the Resource Conservation
and Recovery Act (RCRA) of 1976 and the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA) of 1980, as
amended.  RCRA regulates the generation, transportation, storage,
disposal, and cleanup of hazardous wastes.  CERCLA creates a
framework for carrying out cleanups, particularly for sites that have
been abandoned and sites that pose the most severe environmental
threat.  The Environmental Protection Agency (EPA) administers RCRA
and CERCLA, and it may authorize state agencies to implement all or
part of RCRA responsibility.  To carry out its responsibility,
therefore, NASA needs to work with multiple regulators. 

In our 1991 report,\2 we stated that NASA had not adequately
implemented its policy to prevent, control, and abate environmental
pollution.  As a result of our 1991 report, NASA developed an
environmental strategic plan and established an Environmental
Management Division at the headquarters level.  The environmental
strategic plan includes a goal of remediating contaminated sites to
protect human health and the environment as quickly as funds allow. 
To carry out this plan, NASA uses a decentralized management
approach.  Its field facility directors are responsible for
day-to-day environmental matters, including remedial activities.  The
Environmental Management Division is the focal point for
environmental matters.  In our 1994 follow-up report,\3 we stated
that NASA's environmental program still lacked implementation
schedules and, if funding levels at that time continued, remedial
activities would take longer than the 20 years NASA had predicted. 

On the basis of its March 1996 site inventory, NASA identified 913
potentially contaminated sites at 22 of its field facilities in 10
states (see fig.  1).\4

   Figure 1:  Location of NASA
   Field Facilities Having
   Potentially Contaminated Sites

   (See figure in printed
   edition.)

   Source:  NASA's hazardous site
   inventory database, dated March
   1996.

   (See figure in printed
   edition.)

Appendixes I, II, and III discuss specific data on NASA's cleanup
costs at selected facilities (1) owned and operated by NASA, (2)
owned by NASA and operated by a NASA contractor, and (3) owned and
operated by a NASA contractor. 


--------------------
\2 Environmental Protection:  Solving NASA's Current Problems
Requires Agencywide Emphasis (GAO/NSIAD-91-146, Apr.  5, 1991). 

\3 Environmental Management (GAO/NSIAD-94-264R, Sept.  21, 1994). 

\4 The NASA March 1996 inventory of 913 potentially contaminated
sites was updated in August 1996.  The update shows 919 sites.  We
did not believe that the increase from 913 to 919 significantly
changed the March data; therefore, our analyses are based on the
March 1996 inventory. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

Although NASA began identifying sites nearly 10 years ago, it did not
complete a comprehensive hazardous site inventory database until
1993.  NASA officials said that they now consider their inventory of
913 potentially contaminated sites to be about complete.  However,
the extent of environmental contamination is not yet fully known, and
NASA facilities have a long way to go to effect cleanup of the
contaminated sites.  Figure 2 shows the percentage of potentially
contaminated sites by cleanup status. 

   Figure 2:  Percentage of
   Potentially Contaminated Sites
   by Cleanup Status

   (See figure in printed
   edition.)

Source:  NASA's hazardous site inventory database, dated March 1996. 

NASA is also in the early stages of determining what it will cost to
clean up those sites that require remediation.  However, NASA needs
better data before it can reliably estimate its cleanup cost.  NASA
headquarters had estimated its total cleanup costs would be $2
billion to clean up all its potentially contaminated sites over a
20-year period.  It later lowered the estimate to $1.5 billion by
eliminating sites where it believed no further action was needed. 
This estimate assumed that all sites of the same type would cost the
same, regardless of variances in the extent of contamination.  At our
request, NASA field facilities developed estimates of remediation
costs totaling $636 million based on actual costs, local quotes, and
input from other federal facilities.  However, the field facilities'
estimates excluded some of the 383 sites that had not been studied. 
Neither the headquarters nor the field estimates included long-term
operation and maintenance costs\5 or considered NASA's potential
costs for remediation at its contractor facilities.  Furthermore,
neither estimate considered the potential effect of infrastructure
changes that could increase remediation cost.  For example, depending
on planned future use after facility closure, regulators could
require NASA to clean up to a higher, more costly residential-use
standard rather than the lower, industrial-use standard currently
being applied to NASA facilities.  Although NASA's overall budget is
projected to decline over the next few years, NASA headquarters is
projecting that environmental funding will remain about level in
fiscal year 1998, then increase somewhat over the following 4 years. 
However, some field facilities indicated they were planning to
request major environmental funding increases.  As a result, NASA
will need to consider how it will prioritize the various funding
requests. 

CERCLA allows federal agencies and other entities that carry out
cleanup activities to seek cost sharing or cost recovery from the
potentially responsible parties whom the law would hold liable, such
as past owners, operators, and contractors.  CERCLA cost recovery can
also be available to a party conducting a cleanup under RCRA
corrective action requirements.  Despite the availability of a cost
recovery mechanism, NASA headquarters has not had a policy for
determining whether to seek contributions from other parties.  NASA
is paying the remediation costs for virtually all of its field
facilities.  Except for a few cases involving contractor negligence,
NASA facilities have not identified if there are opportunities for
recovering costs from potentially responsible parties.  After we
discussed the preliminary results of our review with NASA officials,
they reported that they are now developing a policy statement
addressing the issue of identifying and pursuing potentially
responsible parties where appropriate. 


--------------------
\5 Subsequent to our field work, NASA headquarters used a new cost
model that considers site differences, and at least 5 years of
long-term operation and maintenance costs.  Using preliminary data in
the new model, NASA estimated that the future cleanup cost would be
$1.4 billion for an estimated 679 sites potentially requiring
remediation. 


   FURTHER INVESTIGATIONS ARE
   NEEDED TO FULLY DETERMINE THE
   EXTENT OF CONTAMINATION AND
   CLEANUP IS JUST BEGINNING
------------------------------------------------------------ Letter :3

NASA officials said that their inventory of potentially contaminated
sites is now considered complete; however, further investigations are
needed to determine the extent of required cleanup for most sites. 
The actual cleanup of some sites is just beginning. 


      EXTENT OF CONTAMINATION IS
      NOT FULLY KNOWN
---------------------------------------------------------- Letter :3.1

In 1988, NASA headquarters began efforts to identify contaminated
sites at most of its facilities.\6 However, a comprehensive hazardous
site inventory database was not completed until 1993.  NASA officials
said that they have identified practically all of their potentially
contaminated sites.  One exception is the NASA Industrial Plant at
Downey, California.  The Downey facility was not part of NASA's
overall inventory effort because the facility was not disposing of
hazardous waste and was not a large generator of hazardous waste.  A
recently completed study shows that four of the six parcels
comprising the Downey facility require no remediation.  A contract to
study the other two parcels is underway.  These two parcels are more
likely to contain contaminated sites, but pending the completion of
the study, the number of such sites will not be known. 

Figure 3 shows NASA's reported number of sites in the cleanup phase
or potentially requiring remediation (447) as well as the number of
sites that have no planned action (466) for each of the NASA field
facilities. 

   Figure 3:  Breakdown of the
   Number of Sites in the Cleanup
   Phase or Potentially Requiring
   Remediation and of Sites Having
   No Planned Action

   (See figure in printed
   edition.)

Source:  NASA's hazardous site inventory database, dated March 1996. 

NASA's potentially contaminated sites were often identified through
various activities.  For example, at the John F.  Kennedy Space
Center in Florida, one of the contamination problems was discovered
when workers became ill while digging holes for telephone poles
during the late 1980s.  At the Santa Susana Field Laboratory in
California, groundwater contamination problems were discovered during
an investigation of site water supply wells in 1984.  At the Langley
Research Center in Virginia, contamination of a creek bed was
discovered during a 1988 study of marine life in the area. 

Some NASA sites are on the National Priorities List of highly
polluted sites established by EPA under CERCLA.  NASA's Dryden Flight
Research Center in California, the Langley Research Center in
Virginia, and the George C.  Marshall Space Flight Center in Alabama
have been placed on the list and are jointly listed with collocated
Department of Defense (DOD) sites.  The Jet Propulsion Laboratory in
Pasadena, California, is also on the list.  The national priorities
designation requires that these sites follow the CERCLA process
during remediation.  Other NASA facilities had the choice of
following either CERCLA or RCRA processes to clean up contaminated
sites.  NASA states that because the facilities that are being
cleaned up have RCRA permits, RCRA is the cleanup authority it will
use. 


--------------------
\6 NASA field facilities have been identifying potentially
contaminated sites since the 1980s.  For example, the George C. 
Marshall Space Flight Center and the Michoud Assembly Facility
identified some sites in the early 1980s, and the John F.  Kennedy
Space Center identified 21 sites in the mid-1980s. 


      CLEANUP IS IN EARLY STAGES
      AND ESTIMATES FOR COMPLETION
      ARE UNRELIABLE
---------------------------------------------------------- Letter :3.2

The status of NASA's potentially contaminated sites is summarized in
table 1.




                                Table 1
                
                      Status of NASA's Potentially
                           Contaminated Sites

                                                                Percen
Status                                                  Number       t
------------------------------------------------------  ------  ------
No planned action
Closed without need for remediation                         57       6
No further action planned\a                                200      22
Need inspection upon closure                               209      23
======================================================================
Subtotal                                                   466      51
Potential remediation
Remediated or being remediated                              31       3
Classified as "other"                                       33       4
Needing investigation/being investigated                   383      42
======================================================================
Subtotal                                                   447      49
======================================================================
Total                                                      913     100
----------------------------------------------------------------------
\a NASA's August 1996 update shows that 35 of the 200 sites requiring
no further action were placed in categories requiring further action,
therefore reducing the 200 to 165. 

The sites with no planned action (466) were sites where there was
thought to be some contamination; however, preliminary reviews of the
sites showed no contamination or a level of contamination within
EPA's acceptable limits.  For example, one site identified from an
aerial observation at the Langley Research Center proved to be simply
an area where vehicles had been washed and not a site containing
contamination. 

Of the sites NASA classifies as potentially requiring remediation
(447), a large number of sites (383) still require investigating or
are being investigated to evaluate the extent of contamination and
the need for cleanup.  NASA headquarters officials said that these
investigations are not scheduled to be completed until the end of
1997, but some field facilities expect the investigations to be
completed later.  For example, the Marshall Space Flight Center is
slated to complete its investigations in mid-1998, the Michoud
Assembly Facility in Louisiana does not plan to complete its
investigation until 1999, and the Kennedy Space Center does not
expect to complete its investigation until the end of 1999.  Until
these investigations are completed, the type and extent of
contamination and the need for cleanup are uncertain. 

Although NASA headquarters estimates a 20-year period for cleaning up
contaminated sites, it is not well-supported.  For example, neither
it nor its field facilities have a detailed time schedule for
accomplishing the cleanup.  Only 31 contaminated sites, or 3 percent,
have been or are being remediated. 

Field facility officials cited other reasons, in addition to the
relatively slow start, for not being further along in the remediation
process.  For example, there have been difficulties in dealing with
multiple federal and state agencies and getting them to agree on the
level of cleanup necessary.  The Langley Research Center, in its
attempts to get concurrence on the level and method of cleanup
required for one of its sites, has been giving data to a number of
different regulators and has been responding to questions relative to
this cleanup for over 8 years.  A chronology of correspondence shows
that the regulators and Langley have exchanged over 100 documents
during this period. 


   BETTER DATA ARE NEEDED BEFORE
   RELIABLE CLEANUP COST ESTIMATES
   CAN BE MADE
------------------------------------------------------------ Letter :4

NASA field facilities reported spending $117 million through fiscal
year 1995 for remedial activities, not including management costs.\7
Most of these funds were used for precleanup activities.  Making
accurate estimates of NASA's additional cleanup cost is not possible
because the extent of contamination for most sites that may require
remediation has not been determined.  At the time of our field work,
NASA headquarters estimated that remediation would cost $1.5
billion.\8 NASA field facilities provided estimates totaling $636
million.  However, the two estimates are not comparable.  The
headquarters' estimate considers all sites of the same type to cost
the same, regardless of variances in extent of contamination, and the
field facilities' estimates do not include all potential sites such
as those still being studied.  Neither estimate includes all
long-term operations and maintenance costs nor any costs for NASA's
potential remediation liability at its contractor facilities.  The
estimates also do not consider potential effects of infrastructure
changes.  Any of these costs could significantly increase the
potential remediation cost.  Accordingly, it is likely that NASA will
have to make priority decisions on cleanup expenditures. 


--------------------
\7 Management costs include NASA's cost for personnel who manage the
remediation program.  DOD designates such costs as remediation costs,
while NASA cannot accurately break out or identify these costs as
remediation. 

\8 Subsequent to our field work, NASA headquarters, using a new cost
model that considers site differences, estimated that the future
cleanup cost would be $1.4 billion for an estimated 679 sites
potentially requiring remediation. 


      PAST EXPENDITURES WERE
      PREDOMINANTLY FOR PRECLEANUP
      ACTIVITIES RATHER THAN
      CLEANUP
---------------------------------------------------------- Letter :4.1

Most of the $117 million spent to date on remedial activities ($83
million) has been spent on such preliminary activities as
investigations or studies.  For example, information provided by the
Pasadena facility showed that all of its expenditures ($11 million)
had been spent on precleanup activities, and information provided by
the White Sands Test Facility in New Mexico showed that virtually all
of its expenditures ($28 million) had been spent on precleanup
activities.  Only three field facilities--Ames Research Center in
California, Lewis Research Center in Ohio, and Michoud Assembly
Facility in Louisiana--spent more on cleaning up than on conducting
studies and investigations. 


      ACCURATE ESTIMATES OF FUTURE
      COST ARE NOT POSSIBLE
      WITHOUT BETTER DATA
---------------------------------------------------------- Letter :4.2

NASA's site inventory, which is maintained by headquarters and
updated by the field facilities, should list cleanup cost estimates
developed by each facility for each of its sites.  However, NASA's
inventory contained site-specific cost estimates for only 19 percent
of the sites\9 that may require remediation because the process of
developing such data is in the early stages at most facilities. 
Moreover, many of the cost estimates are only for the early stages of
the remediation process and may not include the total cleanup cost. 

Using parts of a DOD cost model, which involved an average cleanup
cost of 17 separate classes of environmental problems, NASA
headquarters developed the remediation estimates used at the time of
our field work.  The average cost of the specific class was
multiplied by the number of sites within the class.  For example, one
contamination class was "contaminated sediment," which had an average
remediation cost of $2.7 million per site.  Therefore, the model
required multiplying the number of NASA's contaminated sediment sites
by the $2.7 million.  NASA said that the model may have overstated
its remediation estimate because most DOD sites were larger and
probably more polluted than NASA sites.  According to NASA officials,
the DOD model was the best available approach in 1993. 

NASA's estimate of $1.5 billion was a reduction of $500 million from
its original estimate of $2 billion.  The reduction resulted from a
NASA headquarters' decision to eliminate all sites that are
classified as requiring no further action from the original cost
estimate.  This reduction appeared appropriate based on available
data. 

NASA recognizes that some classes of sites, such as landfills and
water treatment facilities, may require annual operation and
maintenance expenses; however, such costs were not included in NASA
headquarters' estimate of $1.5 billion.\10 An example is contaminated
groundwater that may be remediated through a process known as "pump
and treat," where contaminated water is extracted from the ground,
treated, and then reinjected.  This process can be continued for
decades, thereby requiring continued operations and maintenance
expenditures.  For these sites, significant post-cleanup costs could
last indefinitely.  DOD has found that annual operation and
maintenance costs can be as high as 25 to 30 percent of cleanup
costs. 

To determine if a more reliable cost estimate could be developed, we
visited a number of NASA field facilities and sent requests for data
to other facilities.  From data that the field facilities provided,
we compiled a total cost estimate of $636 million for past ($117
million) and future ($519 million) remediation costs. 

The field facilities' estimates were significantly lower than the
headquarters' estimate.  For example, for one of the facilities with
the most potentially contaminated sites (Kennedy Space Center), the
headquarters' estimate of $379.6 million significantly exceeds the
facility's estimate of $86.2 million.  According to Kennedy
officials, their estimates are based on actual costs, local quotes,
input from other federal facilities, and information from the
Remedial Action Engineering and Requirements System, which is an
environmental cost estimating system based on site-specific data. 
Although the Kennedy estimate may be more accurate than the
headquarters' estimate for the sites investigated to date, Kennedy
has not yet completed cleaning up any of its sites or investigating
many of its sites and the facility's estimate only includes sites
that are projected for cleanup through 2002, although remediation is
not expected to be completed until 2008. 

Two facilities with fewer sites than Kennedy that are further along
in studying contaminated sites also show a much lower estimate than
the headquarters' estimate.  The Langley Research Center shows a
projected total cleanup cost of $6.2 million compared to the
headquarters' estimate of $29.3 million, while the Ames Research
Center shows a total projected cleanup cost of $19.6 million compared
to the headquarters' estimate of $44.2 million. 

Although NASA field facilities currently estimate future remediation
will cost $519 million, some facilities are negotiating with federal
and/or state regulators on the extent of cleanup needed.  The results
of such negotiations will affect the amount needed for cleanup.  For
example, the Langley Research Center has been negotiating with EPA
for years on the level of cleanup for one of its sites.  Depending on
the level agreed to, Langley's cleanup cost for this one site could
range from $2 million to $100 million. 

Figure 4 shows the amount of money that selected field facilities
spent through fiscal year 1995 compared to the amount they expect to
spend in the future. 

   Figure 4:  Amount of Money
   Spent Through Fiscal Year 1995
   Compared to Projected
   Expenditures

   (See figure in printed
   edition.)

Source:  NASA's hazardous site inventory database, dated March 1996. 


--------------------
\9 Subsequent to our field work, a NASA headquarters' contractor,
using a new cost model, updated the site cost estimates to include
all sites that NASA expects to clean up.  NASA believes that this new
model, when fully implemented, will provide significantly improved
cost estimates for its cleanup costs. 

\10 Included in NASA's new cost model is an estimate for at least 5
years of operation and maintenance for those sites that NASA
currently projects will require such activities. 


      POTENTIAL COSTS FOR CLEANUP
      AT CONTRACTORS' FACILITIES
      COULD BE SIGNIFICANT
---------------------------------------------------------- Letter :4.3

Other costs not captured in NASA's remediation cost estimates need to
be considered.  For example, NASA has not determined how much it is
or could be paying through overhead charges to clean up contaminated
facilities owned and operated by its contractors or what its
potential future cleanup costs are at contractor-owned sites.  To
develop such estimates, we sent a request to 20 of NASA's largest
contractors and asked for (1) NASA payments to them during the past 2
years for their cleanup costs and (2) their estimates of future
cleanup costs at their facilities. 

Of these 20 contractors, 16 responded.  NASA has paid $22 million to
clean up environmental contamination at these contractor plants
during the past 2 years through reimbursing contractors' overhead
charges.  In terms of future cleanup costs, these contractors
expected such costs to be over $1 billion.  This estimate, however,
did not include the costs for NASA's largest contractor because it
did not provide future costs.  That contractor has NASA contracts
worth over $35 billion. 


      COST IMPACT OF POTENTIAL
      INFRASTRUCTURE CHANGES IS
      UNCERTAIN
---------------------------------------------------------- Letter :4.4

An additional uncertainty regarding NASA's future remediation cost is
the potential impact if any field facilities are closed and cleanup
is to a higher land-use standard.  In our September 1996 testimony on
NASA infrastructure,\11 we stated that the impact of environmental
cleanup requirements on NASA's property disposal decisions is not yet
well known. 

CERCLA requires that the government clean up property before selling
or transferring it to others.  Typically, this requires that the
future use of the property be established and cleanup be done in
accordance with the planned use.  Most NASA facilities are currently
used for industrial activity.  As might be expected, the cleanup
standard for industrial use property is lower than what would be
required for residential use.  NASA officials believe that if the
agency chooses to dispose of a property, regulators could require
NASA to clean up to a residential use as opposed to an industrial-use
standard.  Although field facilities had not prepared actual cost
estimates, about half of the facilities contacted believed that if
their facilities were closed, cleanup costs would increase
significantly.  For example, the White Sands Test Facility estimated
costs could nearly double; the Marshall Space Flight Center believed
they could triple; and the Lewis Research Center believed they could
quintuple.  However, ultimately the effect of closures on cleanup
costs would have to be decided on a case-by-case basis. 


--------------------
\11 NASA Facilities:  Challenges to Achieving Reductions and
Efficiencies (GAO/T-NSIAD-96-238,
Sept.  11, 1996). 


      FUTURE FUNDING WILL REQUIRE
      PRIORITY DECISIONS ON
      CLEANUP
---------------------------------------------------------- Letter :4.5

According to the NASA fiscal year 1998 budget estimate to the
Congress, NASA's overall budget is projected to decline by nearly 4
percent over the next 5 years.  This decline is even more dramatic
when the projected available funds are adjusted for inflation.  In
terms of 1997 dollars, the decline is projected to be over 20 percent
over the 5-year period.  NASA's environmental budget line, which is
$33 million for fiscal year 1997, is currently projected to remain at
about the same level in fiscal year 1998, then increase to an average
of about $50 million over the following 4 years.  Considering
inflation, this amount will be worth less in later years. 

NASA does not separately identify remediation in its environmental
budget.  In fiscal years 1993 and 1994, remediation was about 50
percent of the environmental budget.  By 1996, remediation had grown
to about 65 percent, and it is expected to remain at that level in
the future.  Since NASA's two facilities with the greatest number of
contaminated sites--Kennedy Space Center and Marshall Space Flight
Center--are intensifying their remediation efforts, it is likely that
NASA will have to prioritize environmental remediation expenditures
as remediation efforts intensify.  This is further demonstrated by
NASA's change in the projected environmental budget for the year
2000, or a decline from $70 million in its fiscal year 1996 estimate
to $52 million in its fiscal year 1998 estimate. 


   POLICY IS NEEDED TO DETERMINE
   WHETHER OTHER PARTIES SHOULD BE
   SHARING CLEANUP COSTS
------------------------------------------------------------ Letter :5

Although CERCLA allows NASA to recover cleanup costs from past and
present owners and operators and from other potentially responsible
parties, NASA headquarters has not yet developed an overall policy
relating to determining the potential for recovery of costs.  To
date, NASA field facilities have only made limited efforts to
determine whether there may be opportunities to recover cleanup
costs.  Except for other federal agencies and a few contractor
negligence situations, NASA generally has not identified whether
potentially responsible parties should be sharing costs.  However,
field facility officials said that opportunities for doing so may
exist. 


      COST RECOVERY POLICY HAS NOT
      BEEN DEVELOPED
---------------------------------------------------------- Letter :5.1

Two federal environmental laws, RCRA and CERCLA, require remedial
action to clean up property contaminated with hazardous substances
that pose a threat to health or the environment.\12 Both RCRA and
CERCLA impose a responsibility for cleanup on the owner and/or
operator of a facility.  Under CERCLA, the party carrying out a
cleanup may seek cost reimbursement from other persons whom the law
would hold liable.  Persons include past owners, operators,
contractors, and a broad range of other potentially responsible
parties.  CERCLA cost recovery can also be available to a party
conducting a cleanup under RCRA.\13

Despite the potential for cost recovery, NASA has not issued a policy
or guidance to field facilities to govern the recovery of cleanup
costs where appropriate.  However, the agency is in the process of
drafting a policy statement requiring the identification of
potentially responsible parties from whom contributions might be
sought. 


--------------------
\12 Which law governs depends on the circumstances, including whether
the site is on the National Priorities List. 

\13 42 U.S.C.  9607(a)(4)(A) allows a federal agency to recover
cleanup costs for removal or remedial actions "not inconsistent with
the National Contingency Plan." EPA regulations on cost recovery are
found in 40 C.F.R.  ï¿½ 300.700(c). 


      COST RECOVERY EFFORTS TO
      DATE
---------------------------------------------------------- Letter :5.2

We noted two situations where NASA identified contractor negligence
resulted in contamination requiring cleanup.  In these cases, NASA
recovered some of the cost from the contractors involved.  One
situation occurred at the Ames Research Center in 1992.  A contractor
left a fueling operation unattended and spilled about 2,500 gallons
of jet fuel.  NASA pursued the contractor for negligence and
negotiated a recovery of $204,000 of the cleanup cost from the
contractor.  In the second situation, a support services contractor
at the Lewis Research Center dumped lead paint on the ground,
resulting in a cleanup bill for Lewis of $100,000.  The entire sum
was withheld from the contractor's payment on its support services
contract. 

Another situation where NASA's cleanup cost is likely to be shared
involves groundwater treatment at NASA's Ames Research Center.  NASA,
as a named party in a record of decision that EPA issued in 1989, is
in the process of finalizing an agreement with other potentially
responsible parties, including private companies operating on
adjacent property, that would require NASA to pay the companies $1.4
million of the estimated $5.5 million cleanup costs.  Thereafter, the
private firms, and not NASA, would pay for and conduct the
groundwater cleanup. 


      NASA IS PAYING COSTS OF
      ONGOING CLEANUPS
---------------------------------------------------------- Letter :5.3

During our review, we found a number of other situations in which
NASA has paid or is paying to clean up contamination that involved
other parties.  In one example, a 1966 spill of 16,000 gallons of
trichloroethylene at the Michoud Assembly Facility seeped into
groundwater and created significant contamination.  NASA has
historical records to identify the contractor that operated the
facility at the time of the spill as well as other contractors on the
property at the time.  However, a 1993 search of contract and
insurance records from the 1960s did not produce any contractual
documentation.  According to Michoud officials, because of the lack
of documentation and because the contamination occurred during the
1960s, NASA will probably not try to recover costs from the past
contractors. 

Another example involves the Kennedy Space Center.  Until our review,
Kennedy had not searched for contractors or other responsible parties
to contribute to costs.  According to Kennedy officials, the
conventional view has been that, as the owner and operator of its
facility, NASA oversees contractor operations and is, therefore,
responsible for any contamination. 

As a result of our inquiries, Kennedy's legal office and
Environmental Management Office officials said that they plan to be
more aggressive in determining whether there are cost recovery
opportunities.  For example, Kennedy officials believe that they may
be able to obtain reimbursement for cleanup costs attributable to the
actions of a former landowner that operated a private business on the
site that contaminated groundwater.  Kennedy has constructed a water
treatment facility ($265,000) that pumps and treats contaminated
groundwater, and it is paying for the operation and maintenance of
the facility ($168,000 a year since 1991).  Kennedy officials said
they plan to continue the present cleanup strategy until
contamination is reduced to acceptable levels and, following
treatment, they will attempt to determine whether to pursue the
former landowner.  In another case, Kennedy plans to clean up fuel
oil contamination that occurred when a storage tank leaked gasoline
or diesel fuel at its visitor's center.  Cleanup involves removing
and aerating soil at the site.  At the time of the contamination, a
private company leased the visitor's center.  Kennedy officials
believe that the lessee had control of the situation and should be
held responsible.  According to Kennedy officials, the lessee paid
for the remedial investigation at the site before Kennedy assumed
control of the cleanup.  Kennedy took over the cleanup because
another lessee now occupies the center.  Kennedy's projected
remediation cost for the visitor's center is $3.5 million.  After the
cleanup is completed, Kennedy will decide whether the former lessee
should be asked to reimburse the government. 

The Santa Susana Field Laboratory is another situation where NASA
officials need to decide whether it should pursue cost sharing.  NASA
owns some of the land at Santa Susana, but most of the facility is a
contractor-owned and -operated plant.  The major problem at the Santa
Susana facility is groundwater contaminated with trichloroethylene. 
The contamination, according to a NASA-funded study, occurred
primarily in the 1950s as a result of contractor rocket testing for
the Air Force.  That testing was carried out by the same contractor
that still owns the facility and most of the land.  NASA has paid for
groundwater treatment on its property, and it has tried over the past
few years to get the Air Force to pay more of the cleanup costs.  To
date, the Air Force has refused, pointing to the contractor as the
party principally responsible for the contamination.  While the
debate continues over who should contribute and how much, NASA is
paying the largest portion of the groundwater treatment costs. 


   RECOMMENDATIONS
------------------------------------------------------------ Letter :6

We recommend that the NASA Administrator

  -- establish facility-based, implementation schedules for
     completing cleanup of contaminated sites;

  -- estimate probable future costs by (1) identifying all
     site-specific costs, including operation and maintenance costs,
     for sites believed to require remediation, (2) requesting
     contractors' remediation cost estimates for cleaning up
     contamination at contractor facilities that could represent
     future costs for NASA and taking any necessary contract action
     to require such estimates in the future, (3) identifying
     infrastructure changes, such as planned property use and
     applicable cleanup standards that are consistent with
     requirements for the Annual Accountability Report, and
     documenting the impact of facility closure decisions on
     environmental cleanup costs;

  -- prioritize the application of environmental funds in its cleanup
     efforts; and

  -- issue a policy statement concerning potentially responsible
     parties and cost recovery. 


   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :7

NASA generally concurred with our recommendations, except for
questions in two areas--(1) requiring contractors to provide
remediation cost estimates for cleaning up contamination at
contractor facilities that could represent future costs for NASA and
(2) identifying infrastructure changes, such as planned property use
and applicable cleanup standards, and documenting the impact of
facility closure decisions on environmental cleanup costs. 

NASA said that estimates of contractor cleanup costs that would be
allowable and allocable under future contracts would be speculative. 
We agree that such estimates would not be firm, but we believe that
even a preliminary estimate of the total amount NASA could be paying
to contractors in the form of indirect costs would help to provide a
more complete picture of its environmental cleanup costs.  As we note
in the report, NASA's remediation cost estimates do not show the
amount that it is paying through overhead charges to clean up
contaminated contractor facilities or its potential future costs at
such facilities.  NASA also stated that it is not clear if it can
require contractors to estimate the costs of future cleanup at
contractor facilities.  To the extent that existing contracts do not
support such a requirement, we believe that, when an opportunity
arises, NASA should include in its contracts the authority to require
estimates of future cleanup costs.  In the meantime, NASA at least
needs to ask contractors for such estimates.  All but one of the
contractors responding to our survey provided that information to us,
and contractors also have provided environmental cost estimates to
DOD.  We have modified our recommendation accordingly. 

NASA agreed that environmental costs need to be identified as soon as
possible but believed our recommendation to identify infrastructure
changes and costs go well beyond requirements to identify costs for
its Annual Accountability Report, using best available data.  Our
recommendation did not intend to recommend identifying cost impacts
where changes are not yet planned, so we modified our recommendation
to clarify our intent. 

NASA comments are reprinted in full in appendix V.  NASA also
provided suggested editorial and technical changes and supplied
updated information.  We have incorporated this additional
information in the report where appropriate. 

We performed our review from October 1996 through May 1997 in
accordance with generally accepted government auditing standards. 
The scope and methodology for our review are discussed in appendix
IV. 


---------------------------------------------------------- Letter :7.1

Unless you publicly announce its contents earlier, we plan no further
distribution of this report until 30 days after its issue date.  At
that time, we will make copies available to interested congressional
committees; the Administrators, National Aeronautics and Space
Administration and the Environmental Protection Agency; and the
Director, Office of Management and Budget.  We will also make copies
available to others on request. 

If you have any questions on this report, please call me on (202)
512-8412.  Major contributors to this report are listed in appendix
VI. 

David R.  Warren, Director
Defense Management Issues


JOHN F.  KENNEDY SPACE CENTER
=========================================================== Appendix I


   BACKGROUND
--------------------------------------------------------- Appendix I:1


      SITE DESCRIPTION AND MISSION
------------------------------------------------------- Appendix I:1.1

The John F.  Kennedy Space Center is a government-owned,
government-operated facility located on the east coast of Florida on
Merritt Island near the Cape Canaveral Air Force Station (see fig. 
I.1).  Kennedy contains the Merritt Island wildlife preserve and the
Cape Canaveral National Seashore. 

   Figure I.1:  Location of the
   Kennedy Space Center

   (See figure in printed
   edition.)

   Source:  NASA Real Property
   Locations by Accountable
   Reporting Installations.

   (See figure in printed
   edition.)

Kennedy is the National Aeronautics and Space Administration's (NASA)
main facility for launching space vehicles, and it also serves as a
landing site.  Kennedy's role in the space program includes the
assembly, checkout, and launch of payloads and space vehicles. 
Currently, it is focused on the space shuttle and on preparing for
the integration and launch of space station elements. 


      REGULATORY PROCESS
------------------------------------------------------- Appendix I:1.2

In the 1980s, Kennedy began its remediation process by determining if
any contamination posed hazards to human health or the environment,
as required by the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA).  Kennedy officials said,
however, at that time there was little or no focus on cleaning up
sites.  In 1986, Kennedy elected to proceed with cleanup under the
Resource Conservation and Recovery Act (RCRA) corrective action
process.  RCRA regulates hazardous waste from its origin through its
ultimate treatment, storage, or disposal. 

The Environmental Protection Agency (EPA) and Florida's Department of
Environmental Protection are responsible for monitoring Kennedy's
compliance with environmental law.  Kennedy works with the concerned
regulatory agency to reach agreements on the types of remediation
activities and on the dates they will be carried out. 


   EXTENT OF CONTAMINATION
--------------------------------------------------------- Appendix I:2

Within NASA, Kennedy has the second largest inventory of potentially
contaminated sites.  According to Kennedy officials, their site
inventory should be about complete, and they expect to complete site
remediation by 2008 and operation of water treatment facilities by
2015. 


      CONTAMINATED SITES
------------------------------------------------------- Appendix I:2.1

In performing its mission, Kennedy has generated waste that includes
petroleum, metals, solvents, adhesives, and sandblast residues.  This
waste is considered to be ignitable, corrosive, and/or toxic.  It has
contaminated the soil and groundwater and may be a danger to human
health.  Contamination usually results from improper disposal, leaks,
or spills. 

Although NASA headquarters' March 1996 inventory of potentially
contaminated sites shows that Kennedy has 109 sites, Kennedy records
show that it has 127 sites.  According to a Kennedy official, the
disparity occurred because Kennedy included all potential release
sites in its inventory.  It will not report some of these sites to
headquarters as potentially contaminated sites until it conducts
further investigations. 

Seven of the sites are on the Cape Canaveral Air Force Station where
Kennedy has operated in the past.  Kennedy's sites were identified
(1) by routine sampling, (2) at areas where spills were not
completely cleaned up, or (3) in response to a concern voiced by an
employee or a regulatory agency.  Kennedy officials believe that all
potential sites have been identified. 


      CLEANUP STATUS AND SCHEDULE
------------------------------------------------------- Appendix I:2.2

The remediation status of Kennedy's 127 potentially contaminated
sites is shown in table I.1. 



                               Table I.1
                
                 Remediation Status of Kennedy's Sites

Status                                                          Number
--------------------------------------------------------------  ------
Cleanup in progress                                                  1
Risk assessment completed                                            6
Being investigated                                                  20
No further action contemplated                                      31
Need to be investigated                                             69
======================================================================
Total                                                              127
----------------------------------------------------------------------
The only contaminated site that Kennedy is currently cleaning up is
the Wilson Corners site.  The Wilson Corners site was where a
previous landowner operated a component cleaning facility from the
late 1950s through 1963.  Kennedy purchased the site in 1963, and
according to Kennedy officials, the prior landowner continued to
operate the cleaning facility until 1965 when all operations ceased. 
According to Kennedy officials, most of the contamination occurred
before Kennedy purchased the site.  The contaminants are
trichloroethylene and its degradation products.  Kennedy started
remediation in 1989 when it constructed a water treatment system. 
Remediation now entails pumping groundwater from 23 recovery wells
and treating it.  Kennedy monitors the influent, treated effluent,
and the recovery wells.  The cleanup completion for this pump and
treat procedure usually takes years and sometimes is not completely
successful.  The site is now vacated and surrounded by a fence. 

According to Kennedy officials, by 1991, hazardous waste releases
causing contamination stopped.  They said that current schedules
project remediation, on an average, of nine projects a year, and they
estimate remedial actions may be completed at all sites by 2008. 
They said, however, water treatment facilities may need to be
operated for about
7 additional years.  Thus, Kennedy's cleanup effort may be completed
by 2015. 


   COST TO CLEAN UP CONTAMINATION
--------------------------------------------------------- Appendix I:3

NASA headquarters estimates that it will cost $379.6 million to clean
up Kennedy's contaminated sites.  This estimate was derived from
selected portions of a Department of Defense (DOD) cost model that
multiplies the average cost for a type of cleanup by the number of
sites estimated to require cleanup of that type.  Kennedy's estimate
of $86.2 million is much less than NASA headquarters' estimate and is
based on site-specific data.  Kennedy's estimate, however, only
includes sites that are projected for cleanup through 2002, while the
headquarters estimate includes all sites potentially requiring
cleanup. 


      HISTORICAL COSTS
------------------------------------------------------- Appendix I:3.1

Kennedy spent a total of $2.7 million through fiscal year 1995 from
NASA's construction of facilities funds and from Kennedy's program
mission support funds on remediation.  According to Kennedy
officials, NASA's construction of facilities funds for environmental
remediation can be held and spent in any year, and local annual
program mission support funds can be used during the budget year, as
needed, for remediation activities such as site investigations and
long-term operations and maintenance. 

For fiscal years 1990 through 1995, NASA headquarters authorized
about $5.5 million from its environmental construction of facilities
funds for remediation at Kennedy.  From these funds, Kennedy has
spent $1.6 million through fiscal year 1995 on remedial
investigations.  It has not spent any construction of facilities
funds on remedial design or remedial action projects.  For the one
site being cleaned up (Wilson Corners), Kennedy is using its local
program mission support funds.  Thus far, the cost of this remedial
action has been about $1.1 million.  It consists of the construction
of a water treatment facility ($265,000) and the facility's
operations and maintenance ($168,000 annually since 1991).  Kennedy
officials said plans to use authorized construction of facilities
funds have been delayed because of slow regulatory reviews. 

In regard to off-site contamination, Kennedy has not been involved in
the cleanup of any contractor-owned or third-party contaminated
sites.  Additionally, officials said that they are not aware of any
overhead charges being added to their contracts because of
environmental cleanups at contractor facilities. 


      FUTURE COSTS
------------------------------------------------------- Appendix I:3.2

Kennedy estimates that it will spend $83.5 million for fiscal years
1996 through 2002 on 42 contaminated sites (see table I.2). 
According to Kennedy officials, the remaining sites (85) have not
been investigated enough to estimate remediation costs or, moreover,
to determine if they require cleanup. 



                                    Table I.2
                     
                      Kennedy's Projected Remediation Costs
                        for Fiscal Years 1996 Through 2002

                              (Dollars in millions)

                                       Fiscal year
                  ------------------------------------------------------
Remediation
phase               1996    1997    1998    1999    2000    2001    2002   Total
----------------  ------  ------  ------  ------  ------  ------  ------  ------
Investigation       $3.8    $4.6    $2.5    $1.0    $0.2       0       0   $12.1
Design               0.1     0.8     1.1     0.7     1.0    $0.2       0     3.9
Action               1.1     5.4    14.1    15.5    12.8    15.9    $2.7    67.5
================================================================================
Total               $5.0   $10.8   $17.7   $17.2   $14.0   $16.1    $2.7   $83.5
--------------------------------------------------------------------------------
Kennedy has not projected remediation costs beyond 2002, although the
cleanup is not expected to be completed until 2015.  Kennedy
officials said they will not have complete and accurate cost
estimates until 1999.  To do this, they will have to obtain data on
the amount and type of contamination at each site and determine the
risks associated with the location, amount, and contaminant types. 


   COST SHARING EFFORTS
--------------------------------------------------------- Appendix I:4

Neither NASA headquarters nor Kennedy has developed any definitive
guidance in terms of pursuing potentially responsible parties to
share cleanup costs.  To date, Kennedy has not pursued any
potentially responsible parties. 


      COST SHARING POLICY
------------------------------------------------------- Appendix I:4.1

CERCLA allows a party conducting a cleanup to recover cost from
potentially responsible parties.  These parties may include present
and past owners, operators, and contractors, among others.\1 NASA
headquarters, however, has not yet provided any written guidance to
Kennedy on sharing remediation costs.  Accordingly, Kennedy has not
issued a written policy on recovering of remediation costs from
potentially responsible parties. 

Kennedy's Chief of the Environmental Management Office said that
potentially responsible parties should be pursued in appropriate
cases and believes that the potentially responsible party issue needs
to be resolved at the NASA headquarters level.  When a potentially
responsible party can be found, Kennedy's stated policy is to conduct
the cleanup and then decide whether to seek reimbursement. 


--------------------
\1 A federal agency conducting a RCRA corrective action can qualify
for CERCLA cost recovery if its cleanup actions are "not inconsistent
with the National Contingency Plan."


      COST SHARING PRACTICES
------------------------------------------------------- Appendix I:4.2

NASA has always considered environmental contamination on Kennedy's
property to be the result of its activities because NASA operates its
facility and oversees its contractors.  According to Kennedy
officials, however, contractors should assume some responsibility for
their actions and should participate in cost sharing agreements for
remediation because contractors perform the vast majority of
industrial operations at Kennedy. 

We discussed cases in which Kennedy will pay cleanup costs, and
Kennedy officials said that they may pursue cost sharing in two. 
These cases involved a former landowner and a former lessee.  In
regard to the former landowner, Kennedy officials said that they will
consider action against the former landowner of the Wilson Corners
site, which involves groundwater contamination.  To date, Kennedy has
spent $1.1 million remediating this site and will spend $168,000 per
year to pump and treat for the foreseeable future.  In the case
involving the former lessee, Kennedy plans to spend about $3.5
million to clean up fuel oil contamination at its visitor's center
(Spaceport USA).  Cleanup involves removing and aerating soil at the
site.  At the time of the contamination, the visitor's center was
operated by a lessee.  A storage tank leaked gas or diesel fuel and
contaminated the soil.  Kennedy officials believe that the lessee had
control of the situation and should be held responsible.  However,
there is currently no cost sharing agreement in place.  According to
Kennedy officials, the former lessee paid for the remedial
investigation at the site before Kennedy assumed control of the
cleanup.  Kennedy officials said that they took over the cleanup of
the site because the lessee, which had operated the visitor's center,
lost the lease to another company now operating the center.  After
the cleanup is completed, Kennedy will decide whether the former
lessee will be asked to reimburse the government. 


MICHOUD ASSEMBLY FACILITY
========================================================== Appendix II


   BACKGROUND
-------------------------------------------------------- Appendix II:1


      SITE DESCRIPTION AND MISSION
------------------------------------------------------ Appendix II:1.1

The Michoud Assembly Facility is a government-owned,
contractor-operated component of the George C.  Marshall Space Flight
Center.  The facility has been owned by NASA and operated by a
contractor since its acquisition by NASA in 1961.  Michoud is located
in New Orleans, Louisiana, on about 830 acres of government-owned
land (see fig.  II.1). 

   Figure II.1:  Location of the
   Michoud Assembly Facility

   (See figure in printed
   edition.)

   Source:  NASA Real Property
   Locations by Accountable
   Reporting Installations.

   (See figure in printed
   edition.)

Michoud's mission is to support the continuing development and
operations of the NASA space shuttle program.  Specifically, Michoud
provides the design and assembly of the external tank for the space
shuttle. 


      REGULATORY PROCESS
------------------------------------------------------ Appendix II:1.2

Contaminated sites at Michoud are being addressed under the RCRA
corrective action process.  On January 23, 1995, the remediation
program, including all decision-making authority, was transferred to
the state of Louisiana because the state received authorization from
EPA to implement the RCRA program.  EPA's current responsibility is
to provide oversight to the state and to monitor the groundwater
program. 


   EXTENT OF CONTAMINATION
-------------------------------------------------------- Appendix II:2


      CONTAMINATED SITES
------------------------------------------------------ Appendix II:2.1

As a manufacturing facility, past waste management disposal practices
and accidents have contaminated Michoud's soil, surface water, and
groundwater with trichloroethylene, volatile organic compounds,
metals, diesel fuel, and other contaminants.  According to Michoud
officials and the operating contractor, it appears the vast majority
of contamination resulted from NASA's Apollo program after the site
was transferred to NASA in 1961.  According to Michoud and the
operating contractor, trichloroethylene in the groundwater presents
the greatest risk, and the likely major cause of the groundwater
contamination was a 16,000-gallon trichloroethylene spill that
occurred in 1966.  The contamination appears to be limited to the
upper 45 feet of groundwater and soil in only a few areas. 

The operating contractor first discovered environmental contamination
at Michoud in November 1982.  The RCRA facility assessment in August
1986 identified 57 potentially contaminated sites.  According to the
operating contractor, more detailed evaluations by the state and EPA
determined 46 of these sites required no further action.  The
remaining 11 sites, plus two additional ones identified and 10
petroleum-related sites added by the regulators, comprise the 23
potential sites being investigated.  NASA headquarters' March 1996
inventory of sites lists 33 sites for Michoud.  Twenty of these are
already closed sites (13); nonleaking, above-ground active petroleum
storage tanks (4); or sites recommended for no further action (3). 
The operating contractor was unable to reconcile individual
differences between the NASA headquarters' inventory of sites and the
23 sites it is currently investigating. 


      CLEANUP STATUS AND SCHEDULE
------------------------------------------------------ Appendix II:2.2

A phase II RCRA facility investigation report was sent to regulators
for review and approval.  A phase III and phase IV RCRA facility
investigation will finish delineating the extent of contamination at
areas not covered by the phase II RCRA.  Phases III and IV may extend
through 1999 and could include actions that range from implementing
corrective measures that result in clean closure to monitoring
contaminants to ensure containment within Michoud's boundaries.  A
corrective measures study will then be performed to identify cleanup
alternatives and could be completed in 2001 or 2002.  According to
Michoud officials, they cannot estimate when remediation will be
completed until they have negotiated cleanup standards with the state
and EPA. 

All of the areas suspected of being contaminated have been evaluated;
therefore, the inventory for Michoud should be complete.  The
operating contractor does not currently plan to completely clean up
about half of Michoud's contaminated areas because of the technical
and/or economic impracticability of cleaning the contaminated
groundwater to pristine condition.  This plan is due to Michoud's
dense nonaqueous phase groundwater contamination.\1 According to the
operating contractor, a significant portion of the released
trichloroethylene will remain in the soil at the end of all
remediation activities.  The operating contractor's cleanup strategy
is subject to state approval. 


--------------------
\1 According to EPA, dense nonaqueous phase liquids often are
difficult to locate and remove from the subsurface.  Their ability to
sink through the water table and penetrate deeper portions of
aquifers is one of the properties that makes them very difficult to
remediate. 


   COST TO CLEAN UP CONTAMINATION
-------------------------------------------------------- Appendix II:3

NASA headquarters estimates that it will cost $54 million to clean up
Michoud's contaminated sites, not including operations and
maintenance.  Michoud's operating contractor estimates it will cost
$16.5 million, not including long-term operations and maintenance or
costs prior to 1988.  Different estimating methodologies were used to
develop the estimates.  If all Michoud sites were required to be
cleaned to the highest standard, the operating contractor noted it
could cost over $800 million. 


      HISTORICAL COSTS
------------------------------------------------------ Appendix II:3.1

For fiscal year 1988 through fiscal year 1995, Michoud received $6.5
million in construction of facilities funds for remediation
activities, of which $1.9 million was used for investigations or
studies and $4.6 million was used for cleanup activities.  All
remediation and related projects since 1988 have been funded out of
NASA's construction of facilities budget and have been directly
charged to Michoud's operations contract.  According to the operating
contractor, NASA's external tank operations budget was used to fund
all remediation activities from 1982 to 1988 and costs associated
with these activities cannot be segregated in accounting records. 


      FUTURE COSTS
------------------------------------------------------ Appendix II:3.2

The operating contractor's total cost estimate of $16.5 million is
about 70 percent lower than NASA headquarters' estimate of $54
million.  According to a Michoud official, NASA headquarters'
estimate could be overstated because it was developed using parts of
a DOD cost model that treats contaminated sites at different
locations the same regardless of their size or extent of
contamination. 

From fiscal year 1996 to fiscal year 2003, the operating contractor
estimates that remediation activities will cost $10 million, but this
amount does not include long-term operations and maintenance costs. 
According to the operating contractor, operation and maintenance of
all remedial systems will continue throughout the external tank
program at Michoud and costs cannot be accurately estimated. 
However, the operating contractor's risk-based assumptions used in
preparing the estimates were all subject to state approval. 

It is unknown whether future funding levels will be a problem,
according to the operating contractor.  Requirements and cleanup
standards are currently unclear and will likely result in increased
funding needs.  According to a Michoud official, the estimated cost
to complete remediation will depend heavily on the results of the
RCRA facility investigation, the corrective measures study, the
corrective measures plan, and the mandated cleanup standards. 

In addition to remediation costs, Michoud reimburses the state of
Louisiana for the cost of regulating its hazardous and solid waste,
as well as its groundwater program.  Michoud paid the state $28,500
in 1995 for a total of approximately $200,000.  EPA is not reimbursed
for its work.  Because off-site contractors have not worked for
Michoud, it will not incur any additional costs for cleanup at
contractor-owned locations. 


   COST SHARING EFFORTS
-------------------------------------------------------- Appendix II:4

There are no cost sharing agreements in place for cleanup activities
at Michoud.  According to Michoud officials, remediation efforts are
primarily addressing contamination from government activities from
the early 1960s.  To determine the potential of recovering
environmental remediation costs (either from contractors or insurance
companies), Michoud officials searched for copies of contracts and
insurance policies for three contractors that operated at Michoud
during the 1960s.  At the time the 16,000-gallon trichloroethylene
spill occurred, Michoud officials said that the Boeing Corporation
was the operating contractor.  An April 1993 memorandum shows that
Michoud could not find the contracts or insurance policies.  NASA has
not conducted similar searches for the current production contractor
because the majority of the contamination existed before the
contractor came on site. 


SANTA SUSANA FIELD LABORATORY
========================================================= Appendix III


   BACKGROUND
------------------------------------------------------- Appendix III:1


      SITE DESCRIPTION AND MISSION
----------------------------------------------------- Appendix III:1.1

The Santa Susana Field Laboratory occupies about 2,700 acres in the
southeast corner of Ventura County, California, about 29 miles
northwest of Los Angeles near the crest of the Simi Hills (see fig. 
III.1). 

   Figure III.1:  Location of the
   Santa Susana Field Laboratory

   (See figure in printed
   edition.)

   Source:  NASA Real Property
   Locations by Accountable
   Reporting Installations.

   (See figure in printed
   edition.)

Most of the land adjacent to the Santa Susana facility is undeveloped
mountainous land.  The nearest residential developments are located
about a mile from the facility.  There are a few acres of avocado
orchards and one apiary; both are on private property immediately
adjacent to the facility. 

Since 1947, Santa Susana activities have included research,
development, and testing of rocket engines, water jet pumps, lasers,
liquid metal heat exchanger components, nuclear energy, fossil fuel
projects, and related technologies.  The principal activity has been
the testing of large rocket engines.  Six major liquid rocket engine
test areas operated simultaneously in the late 1950s and early 1960s. 


      ORGANIZATION
----------------------------------------------------- Appendix III:1.2

Rockwell International Corporation, Seal Beach, California (formerly
North American Aviation), has been the sole-operating contractor at
Santa Susana since the facility was established.  It currently
operates the facility, primarily for NASA. 

Since 1958, the federal government, first the Air Force and since
1972 NASA, has owned a portion of the facility.  NASA's Marshall
Space Flight Center is responsible for overseeing the environmental
remediation activities on the NASA-owned property at Santa Susana. 
Rockwell, as part of its operating contract with NASA, is responsible
for

  -- preparing environmental work plans;

  -- negotiating with the California Department of Toxic Substances
     Control and EPA regulators;

  -- preparing overall status and groundwater monitoring reports;

  -- awarding subcontracts to perform studies and interim corrective
     measures;

  -- overseeing subcontractor performance; and

  -- maintaining all cleanup-related records, including cost records
     for the NASA-owned property at Santa Susana. 

Rockwell subcontracts studies and investigations, interim corrective
measures, and water sampling and maintenance of monitoring wells. 

Rockwell deals with environmental issues related to the property it
owns as well.  Environmental expenses related to its property are
passed to NASA as well as other customers--primarily DOD and the
Department of Energy--through overhead charges on contracts it has
with them. 


      REGULATORY PROCESS
----------------------------------------------------- Appendix III:1.3

Santa Susana is subject to the RCRA corrective action process.  Under
RCRA, EPA has authorized the California Department of Toxic
Substances Control to manage the hazardous waste and corrective
action programs in California.  Since Santa Susana is an operating
site, the Department of Toxic Substances Control has the lead agency
role in regulating the site, and it reviews and approves the work
plans for the proposed investigation and remediation procedures.  The
Los Angeles Regional Water Quality Control Board is also involved on
an advisory basis. 


   EXTENT OF CONTAMINATION
------------------------------------------------------- Appendix III:2


      CONTAMINATED SITES
----------------------------------------------------- Appendix III:2.1

Environmental contamination was first identified at the Santa Susana
facility when Rockwell found trichloroethylene during an
investigation of site water wells in 1984.  Rockwell notified the
water board about the detected groundwater contamination, and the
board requested that Rockwell further investigate the water quality
and hydrogeologic conditions at Santa Susana.  In response, Rockwell
initiated a phased investigation.  Based on Rockwell's preliminary
characterization efforts, the board recommended implementing interim
remedial measures for the contaminated groundwater. 

EPA conducted a RCRA facility assessment in 1990 of the entire Santa
Susana facility and identified a number of potentially contaminated
sites.  The Department of Toxic Substances Control issued a
stipulated enforcement order to Rockwell on November 12, 1992,
requiring that it prepare a draft RCRA facility investigation work
plan.  Rockwell submitted a work plan to the Department of Toxic
Substances Control for its review in March 1995. 

Santa Susana has a number of specific potentially contaminated sites,
but the overriding contamination problem is the trichloroethylene
contamination of the groundwater that encompasses a large portion of
the facility.  The RCRA facility investigation work plan, dated March
1995, identifies 82 potentially contaminated sites and areas of
concern for all areas of Santa Susana.  NASA headquarters' March 1996
inventory for the NASA-owned property lists 2 petroleum sites and 33
contaminated sites.  The remaining sites (47) are on Rockwell-owned
property. 

Historically, the principal use of trichloroethylene was to
decontaminate the large engines to prevent the risk of explosion
during testing.  About 97 percent of the trichloroethylene was
released from 1954 through 1961.  In 1961, Rockwell began reclaiming
trichloroethylene.  Most trichloroethylene has been reclaimed at all
large test areas.  Except for one test area, the use of
trichloroethylene at the site was discontinued in 1977.  A
reclamation system for used trichloroethylene is currently maintained
at this test area.  DOD was Rockwell's principal customer prior to
1961 with such programs as the Navaho, Atlas, Jupiter, and Thor
rocket engines.  A 1993 records search and trichloroethylene release
assessment report prepared by a contractor for NASA stated that
530,358 gallons of trichloroethylene were released to the ground at
Santa Susana. 


      CLEANUP STATUS AND SCHEDULE
----------------------------------------------------- Appendix III:2.2

The current remediation status of the 35 NASA-owned sites at Santa
Susana is shown in table III.1. 



                              Table III.1
                
                 Remediation Status of NASA-owned Sites

Status                                                          Number
--------------------------------------------------------------  ------
Investigating                                                       14
No further action                                                   11
Monitoring                                                           5
Closed                                                               2
Other                                                                3
======================================================================
Total                                                               35
----------------------------------------------------------------------
The Department of Toxic Substances Control has not yet agreed to the
no further action decision for the 11 sites.  Rockwell officials were
not sure whether additional sites will be identified.  Some of the
groundwater contamination migrated off site to the north and
northeast, and Rockwell is monitoring and will decide what actions
are required. 

While Santa Susana has soil and surface water contamination, the
groundwater contamination is the major concern and, accordingly, is
the focus of Rockwell's efforts.  After detecting trichloroethylene
in water samples from water supply wells in 1984, a phase I
investigation was conducted to develop a plan for field
investigations.  Field investigations, including well construction,
water sampling, photogeologic assessment, and well testing, were
conducted in the phase II groundwater investigation.  Groundwater
conditions at the facility were evaluated based on data compiled from
231 wells that included 202 monitoring wells constructed at or
adjacent to the facility, 13 facility water supply wells, and 16
private off-site wells and springs. 

A groundwater reclamation system began operating at the facility in
1987 to extract degraded groundwater and to minimize the off-site
movement of degraded water by modifying and controlling groundwater
gradients.  A contractor report stated that about 138 gallons of
volatile organic compounds (mostly trichloroethylene) were removed
through groundwater treatment operations for fiscal year 1988 through
the first quarter of 1996. 

After Rockwell completes the RCRA facility investigation, it plans to
perform a corrective measures study to recommend the final corrective
action(s).  A Rockwell official estimates that the corrective
measures study will begin in late 1997 to early 1998. 


   COST TO CLEAN UP CONTAMINATION
------------------------------------------------------- Appendix III:3


      HISTORICAL COSTS
----------------------------------------------------- Appendix III:3.1

Through fiscal year 1995, a total of $21.1 million--$15.6 million by
NASA and $5.5 million by others, including DOD--had been spent or
authorized to clean up Santa Susana through direct and indirect
overhead charges.  NASA pays either directly for cleanup costs on the
property it owns or through overhead charges for the property owned
by Rockwell. 

For direct charges, NASA headquarters authorized $6.2 million in
construction of facilities funds for remediating groundwater in the
NASA-owned portion for fiscal years 1990 through 1995.  In addition,
it authorized $1.5 million of construction of facilities funds that
were designated as RCRA corrective action for (1) soil cleanup and
closure and (2) decontamination of surface impoundments in area II
and the NASA-owned portion of area I. 

For fiscal years 1983 through 1995, Rockwell included $13.4 million
in overhead charges for study and remediation costs primarily for
groundwater in areas I and III.  NASA paid $7.9 million of this
total, DOD paid $1.7 million, and others, including the Department of
Energy, paid the remainder. 

For fiscal year 1996, NASA authorized $1 million in construction of
facilities funds for groundwater remediation and $900,000 for RCRA
corrective action of soil and surface impoundments. 


      FUTURE COSTS
----------------------------------------------------- Appendix III:3.2

Based on the portions of the DOD cost model that NASA used to project
cleanup costs, NASA headquarters estimates that it will cost $93
million to clean up the contaminated sites on the NASA-owned property
at Santa Susana, exclusive of the operations and maintenance cost to
run the pump and treat system for groundwater remediation.  In
contrast, Rockwell estimates cleanup costs at $11.1 million, of which
$9.6 million has already been obligated or spent.  Neither estimate
includes the operation and maintenance costs of the groundwater
reclamation system for fiscal years 1997 through 2037, which NASA
estimates at $58.5 million. 

Rockwell estimates it will pass on $7.2 million through overhead
charges for the portion of Santa Susana that it owns.  Based on
current contracts, NASA expects to pay $4.4 million, or about 60
percent, of this total.  However, Rockwell will not estimate costs
beyond the year 2000, significantly understating the amount NASA will
have to pay through overhead charges. 


   COST SHARING EFFORTS
------------------------------------------------------- Appendix III:4

At this time, no final arrangements have been made for the current
and past owners or operators of Santa Susana to share costs.  The
portion of Santa Susana that NASA currently owns is considered a
"formerly used defense" site.  Therefore, the Corps of Engineers,
Omaha District, tried to determine how the liability for
environmental cleanup should be divided among NASA, Rockwell, and
DOD. 

In April 1989, Rockwell requested authorization for a defense
environmental restoration project that would be funded through the
DOD defense environmental restoration program.  The Corps of
Engineers is representing DOD in evaluating Rockwell's request, and
it used a contractor to investigate the environmental contamination
at the facility.  The study concluded that Rockwell was responsible
for 92 percent of the groundwater contamination, while the Air Force
and NASA were each responsible for 4 percent.  In a January 7, 1990,
memorandum to Rockwell, the Corps concluded that Rockwell activities
at the site failed to comply with the applicable requirements of the
national oil and hazardous substances pollution contingency plan. 
Therefore, the Corps decided any past or future costs incurred by
Rockwell cannot be reimbursed from DOD's defense environmental
restoration program. 

Since the Corps of Engineers' decision, Rockwell, NASA, and the Corps
have been discussing the cleanup situation and potential liability,
and NASA has been paying the cleanup costs on the NASA-owned
property.  A NASA-funded study concluded that most of the groundwater
contamination could be attributed to DOD.  The NASA study showed that
88 percent related to DOD and 12 percent related to NASA.  In a
November 9, 1994, letter, NASA's counsel said that NASA disagreed
with the Corps.  NASA believes it has been paying a much larger
portion than is fair and equitable.  Also, NASA believes DOD should
have a larger share of the liability. 

In a March 3, 1995, memorandum to NASA, the Corps stated that
although NASA and DOD support a three-party agreement, it is not
confident that Rockwell is willing to participate in an agreement. 
Further, the Corps stated that if Rockwell is unwilling to either
enter into such an agreement or provide adequate assurances that it
will not seek cost sharing later, it is appropriate for NASA as a
current landowner to take the legal action to involve Rockwell in the
agreement. 

Corps officials said that they have not recently discussed the cost
sharing issue with NASA.  Marshall Space Flight Center officials, who
are responsible for managing the NASA parcels of the Santa Susana
facility, said that they elevated further negotiations to NASA
headquarters in a March 21, 1995, letter.  NASA headquarters has
reviewed the case and given some input to Marshall relative to the
case.  Marshall requested NASA's Inspector General to review the
case, and the Inspector General is in the process of conducting a
review. 


SCOPE AND METHODOLOGY
========================================================== Appendix IV

We reviewed applicable laws and regulations, but we did not
independently determine compliance with laws or the merits of cost
sharing at individual facilities.  We also reviewed policies,
procedures, and documents, including NASA databases on potentially
contaminated sites.  We used NASA's March 1996 inventory to determine
the extent of contamination and the status of cleanup.  While there
was an update during our field work, we did not believe the update
significantly changed the March 1996 data. 

We also interviewed officials and reviewed supporting documentation
at NASA and EPA headquarters in Washington, D.C., and at selected
NASA field facilities throughout the country to obtain data on
cleanup costs.  The field facilities visited were

  -- Ames Research Center, Moffett Field, California;

  -- George C.  Marshall Space Flight Center, Huntsville, Alabama;

  -- Jet Propulsion Laboratory, Pasadena, California;

  -- John C.  Stennis Space Center, Mississippi;

  -- John F.  Kennedy Space Center, Florida;

  -- Langley Research Center, Hampton, Virginia;

  -- Michoud Assembly Facility, New Orleans, Louisiana;

  -- NASA Industrial Plant, Downey, California; and

  -- Santa Susana Field Laboratory, Ventura County, California. 

To obtain supplemental information, we sent data collection
instruments to the other NASA field facilities and 20 of NASA's
largest contractors.  Table IV.1 lists the NASA facilities and the 16
contractors that responded to our request. 



                               Table IV.1
                
                 Locations and Organizations Responding
                          to Our Data Request

Location                Organization
----------------------  ----------------------------------------------
NASA                    Dryden Flight Research Center, Edwards,
                        California

                        Goddard Space Flight Center, Greenbelt,
                        Maryland

                        Lewis Research Center, Cleveland, Ohio

                        Lyndon B. Johnson Space Center, Houston, Texas

                        Wallops Flight Facility, Wallops Island,
                        Virginia

                        White Sands Test Facility, Las Cruces, New
                        Mexico

Private contractor      Allied Signal, Inc., Morriston, New Jersey

                        BAMSI, Inc., Titusville, Florida

                        Boeing Company, Seattle, Washington

                        CAE Link Corporation, Binghamton, New York

                        Computer Sciences Corporation, El Segundo,
                        California

                        EG&G Florida, Inc., Florida

                        General Electric Company, Inc., Fairfield,
                        Connecticut

                        GM Hughes Electronics Company, Los Angeles,
                        California

                        Lockheed Martin Corporation, Bethesda,
                        Maryland

                        Loral Corporation, New York, New York

                        McDonnell Douglas Corporation, Saint Louis,
                        Missouri

                        Northrop Grumman Corporation, Los Angeles,
                        California

                        Rockwell International Corporation, Seal
                        Beach, California

                        Thiokol Corporation, Odgen, Utah

                        TRW, Inc., Cleveland, Ohio

                        United Technologies Corporation, Hartford,
                        Connecticut
----------------------------------------------------------------------
Starting in fiscal year 1998, federal accounting standards will
require liability estimates for hazardous materials such as mission
equipment rockets, launchers, and space exploration equipment.  We
did not examine NASA's potential liabilities for such mission
equipment in this review. 




(See figure in printed edition.)Appendix V
COMMENTS FROM THE NATIONAL
AERONAUTICS AND SPACE
ADMINISTRATION
========================================================== Appendix IV



(See figure in printed edition.)

See comment 1. 

See comment 2. 

See comment 2. 

See comment 1. 

See comment 3. 

See comment 4. 



(See figure in printed edition.)

See comment 5. 



(See figure in printed edition.)



(See figure in printed edition.)


The following are GAO's comments on NASA's letter dated May 16, 1997. 

GAO COMMENTS

1.  Our report recognizes that NASA has updated the information on
cleanup costs by using a new cost model that includes a cost for each
site believed to require cleaning up.  The cost information developed
using the new model, however, is not complete because 90 additional
sites are to be added.  Also, most sites are still being investigated
by the NASA field facilities.  Because the new model's interim cost
data total only about 10 percent less than the prior cost data and
additional sites will be added, we did not change the cost
information in the report.  Cost information shown in our appendixes
was gathered directly from NASA's field facilities and was not
related to either the new or old model. 

2.  We revised our report to more clearly identify NASA's actions and
status. 

3.  We included footnote 10 in the report text to recognize that the
new cost model will include at least 5 years of long-term operation
and maintenance costs for applicable sites. 

4.  We updated the information in appendix III to reflect the most
current status of the Santa Susana case. 

5.  We modified the recommendation to state that NASA should obtain
the necessary information. 

6.  NASA's stated position is consistent with the intent of our
recommendation.  We do not go beyond the requirement stated by NASA
to identify remediation cleanup liabilities for reporting.  We
recommended identifying infrastructure changes and associated cost
impact, such as for changes planned at the Downey facility.  We did
not intend to recommend identifying changes that are not planned, so
we modified our recommendation to make this distinction clear. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix VI

NATIONAL SECURITY AND
INTERNATIONAL AFFAIRS DIVISION,
WASHINGTON, D.C. 

Brad Hathaway
Charles I.  Patton, Jr.
Uldis Adamsons

DENVER FIELD OFFICE

Patricia Foley Hinnen

NORFOLK FIELD OFFICE

Edwin J.  Soniat
Johnnie Phillips
Raul S.  Cajulis

DALLAS FIELD OFFICE

David P.  Marks
R.E.  Erdman

LOS ANGELES FIELD OFFICE

Gary W.  Kunkle


*** End of document. ***