Refuge management activities are already underway. The majority of the cost has been for studying the site and resolving disagreements. These actions may contribute significantly to permanent solutions. EPA’s and the state of Colorado’s initial cleanup proposals were estimated to cost about $2.7 billion; Shell Oil Company’s was $1.6 billion; and the Army’s was in the middle, at about $2.1 billion. As of December 1994, Shell and the Army had spent approximately $354 million on studies, which represents about 37 percent of the total costs incurred by Shell and the Army at the Arsenal. IV for a detailed chronology of major legal actions involving Rocky Mountain Arsenal.) Interim Response Actions Addressed Critical Threats

Although final cleanup has not begun, the Army and Shell have made efforts to mitigate the most critical threats at the Arsenal. The conceptual agreement reached in June 1995 resolved the major disputes and outlined a $2.1-billion cleanup to be completed in 2012. However, the current cost and completion targets may be overly optimistic given remaining uncertainties about the final details. Cleanup Agreement Outlines Final Cleanup Remedy

According to the conceptual agreement, the parties are expected in 1996 to adopt a final cleanup plan or record of decision for a $2.1-billion cleanup effort. Cleanup Estimates May Be Optimistic

The parties agreed in concept on a $2.1-billion cleanup, but until the record of decision is finalized, the cost and time frame estimates remain uncertain. The cleanup estimate reported to Congress just prior to the June settlement called for $2.3 billion in appropriated funds, in addition to Shell’s $500-million share, for a total of $2.8 billion. The Army expects to complete its analysis for the May 1996 record of decision. Army Will Pay the Majority of Costs Under Cost-Sharing Arrangement

Under the cost-sharing agreement between the Army and Shell, Shell’s share of cleanup costs decreases on a sliding scale from 50 percent to 20 percent as total costs increase. Cost-Sharing Formula

Because its operations contributed to the contamination problem, Shell agreed to pay a portion of the cleanup costs. The cost-sharing formula divides cleanup costs equally between the Army and Shell for the first $500 million of allocable or shared costs, but then reduces Shell’s share to 35 percent of the next $200 million of these costs, and 20 percent of all allocable costs exceeding $700 million. Each party agreed to absorb its own program management costs. To determine the status of the cleanup work at the Rocky Mountain Arsenal, we attended public hearings and reviewed applicable documents and records maintained by DOD and EPA.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the cleanup program at the Rocky Mountain Arsenal, focusing on the: (1) status of cleanup efforts; (2) completion plans for the cleanup; and (3) cost-sharing plans between the Army and Shell Oil Company, which leased a portion of the Arsenal.

What GAO Found

GAO found that: (1) permanent cleanup at Rocky Mountain Arsenal has been delayed for years due to lawsuits and numerous other disputes between the parties involved; (2) in June 1995, Colorado and five other key parties signed an agreement for a conceptual remedy to address the lawsuits and disputes; (3) although about $300 million of the nearly $1 billion spent to date has been for interim actions to mitigate the most urgent environmental threats, the majority has been spent on studies and other management activities; (4) the June 1995 conceptual agreement resolves the most significant issues and paves the way for a final settlement, or record of decision, in 1996; (5) based on the agreement, the Army currently estimates the cleanup will cost $2.1 billion and take until 2012; (6) prior to the agreement, the Army had estimated a $2.8-billion to $3.6-billion cleanup effort to be complete in about 2010; (7) although the agreement addresses many of the disputed issues, the final details are yet to be negotiated; (8) until the cleanup plan is detailed and finalized in the record of decision, the cost and completion estimates will be subject to change; (9) under a 1989 settlement, the Army and Shell are sharing cleanup costs, and the costs to correct damages attributable solely to either the Army or to Shell are to be financed by the responsible party; (10) however, most contamination was commingled, and these cleanup costs will be shared under a formula requiring each party to pay 50 percent of the first $500 million in cleanup costs, with Shell's share decreasing as total costs increase; (11) although the agreement does not limit total contributions, Shell estimated its total costs will be about $500 million and so far has contributed $274 million; (12) by the time the final phase of cleanup begins in May 1996, under an expected record of decision, the Army will be responsible for 80 percent of the costs for commingled contamination; and (13) these costs represent most of the remaining cleanup.