Sunflower AAP Early Transfer

[Lenny Siegel <lsiegel@cpeo.org>]

SUNFLOWER EARLY TRANSFER PROPOSES
background and analysis 
by Lenny Siegel
May 3, 1999



The proposed transfer of the 9,000-acre Sunflower Army Ammunition Plant,
just west of Kansas City, to the State of Kansas raises many issues.
Many local residents oppose the principal proposed reuse, a theme park.
Many are concerned about the hundreds of millions of dollars in
subsidies that the state plans to provide the developer. A federally
unrecognized Indian tribe wants title to the plant. And further urban
development of the mothballed industrial facility and its buffer zones
could expand unwanted urban sprawl.

I am interested in Sunflower, however, because it would be an unusually
large transfer of incompletely characterized, highly contaminated
property under CERCLA (Comprehensive Environmental Response,
Compensation, and Liability Act, the Superfund law) Section
120(h)(3)(C). Section 120(h)(3)(C), enacted as Section 334 of the
Defense Authorization Act of 1997, permits the early transfer of federal
property to non-federal entities - such as private companies or state,
local, or tribal governments - before environmental cleanup remedies are
in place, as long as the Governor (and U.S. EPA for Superfund sites)
approves and finds that the transfer meets certain conditions written
into the law. 

This is a new, complex provision of cleanup law, so it's not surprising
that few of the people in the community around Sunflower - in fact, the
entire country - know of, let alone understand, the legislation. The
purpose of this memo is to describe what I know at this time about the
environmental aspects of the Sunflower deal, in the hope that it will
aid members of the community judge the pros and cons of the proposed
transfer.

The Early Transfer legislation, which I dubbed "Dirty Transfer" in its
initial proposed form, conditionally overturns the long-standing - since
1986, I believe - requirement that  federal property be cleaned up
before being transferred to private parties or state, local, and tribal
governments. Existing language, incorporated in Section 120(h)(3)(B),
allowed properties where remedies were operating "properly and
successfully" to qualify as remediated. The restriction on transfer was
stricter than laws governing the sale of privately owned contaminated
parties, but many people believed it was necessary because it's
difficult for regulatory agencies to force federal polluters to spend
more money on cleanup than is built into their plans.

By the time Section 334 was enacted, critics - backers of the historic
restriction - had secured language requiring that the transfer not
threaten public health and the environment, and that the public be
notified of an Early Transfer application. At facilities on the
"Superfund" National Priorities List (NPL), Early Transfers would have
to be approved by the U.S. Environmental Protection Agency (EPA)
Administrator and the governor of the state in which the property is
located. At non-NPL facilities,  such as Sunflower, only the governor's
approval is required. Though Section 334 applies to all federal
landholding agencies, it was drawn up with a focus on properties being
excessed by the Department of Defense - that's why it was included in
the Defense bill.

There were several arguments for the early transfer mechanism. Early
transfer would make it easier to redevelop properties, because financial
institutions are more likely to invest in projects with clear title to
the land. The military wouldn't be encumbered by as many multi-decade
cleanup projects. Though federal agencies would retain liability for
cleanup, early transfer would make it easier for private parties to pay
for cleanup up front, perhaps in exchange for major discounts on
transfer, freeing the project from the uncertainties of the annual
federal budget process. Many proponents argued that the private sector
could conduct cleanup more efficiently than the military, while critics
were concerned that the Defense Department's extensive public
participation program, including restoration advisory boards, would be
pushed aside.

Where a non-federal party agrees to assume responsibility for cleanup,
it is supposed to demonstrate - to the governor (and EPA if an NPL site)
- that it is technically and financially capable of carrying out the
project. EPA has developed a guidance that carefully specifies those
obligations, not only to guide EPA professional staff, but as a model
that it hopes the states will follow. 

Some states began work on their own policies. California's Department of
Toxic Substances Control developed and abandoned a draft that would have
required a high level of characterization - and even remedy decisions -
before it would approve an early transfer. The belief was that one can't
determine the capacity of a party to conduct cleanup until the extent of
contamination and the rough cost of the cleanup is known. Colorado has
actually promulgated such as policy. In fact, in June, 1998, Colorado
Governor Romer issued an executive order stating, in part, "where the
nature and extent of potential contamination is unknown, the risks are
not assessed, and/or the proposed reuse has not been identified,
transfer is inappropriate." I doubt Kansas has any written guidance in
place.

The Process

In April, 1998, the Defense Department issued a guidance defining the
procedures for the early transfer of military properties. The Army, as
responsible party at Sunflower, is required to submit a brief Finding of
Suitability for Early Transfer (FOSET), along with supporting documents.
The FOSET should demonstrate that the conditions in the 1997 law are all
met. The Army must ensure that the transferee - the state of Kansas or
private parties to which it in turn passes responsibility - have "the
financial and technical capabilities for performing the required
remedial actions." It should also "require the transferee to provide a
surety bond, insurance, or other financial instrument to ensure that
cleanup will be completed, without cost to the United States, if the
transferee fails to do so."

The private developers have reportedly agreed to put up $40 million to
cover the cost of cleanup, and they have agreed to spend $10 million on
insurance policies to guarantee $200 million more, if necessary. The $50
million is supposed to come from private sources, not the revenue bonds
that will be backed with a portion of sales tax at the site, so the
cleanup funding is not dependent upon theme park revenues. The General
Services Administration, the state, and I assume the Army are
negotiating legal documents confirming the developers' promises, and I
believe those documents are supposed to accompany the FOSET.

The draft FOSET is then submitted to the public for comment. After a
30-day comment period, the Army must respond to each comment, and then
the FOSET and responsiveness summary may be submitted to the governor
for approval.

The General Services Administration is responsible for managing the
Early Transfer of Sunflower, because the plant is not being transferred
under base closure legislation. GSA  officials point out that the
legislation was designed for the governor to balance the economic
advantages of early transfer against the environmental risks. That is,
there is no bright line that forces the governor to approve or
disapprove the  transfer. The decision to concur with Early Transfer is,
within limits, a political decision, and the public comment period is
designed to provide public input on its suitability: Does the entire
FOSET package guarantee the protection of human health and the
environment?

The Contamination

While portions of the Sunflower Army Ammunition Plant are relatively
clean, it is an extremely contaminated piece of property. U.S. EPA gave
it a Hazard Ranking System score of 50.0; since only 28.5 point are
required to put a site on the Superfund NPL, it was proposed for
Superfund listing. However, that listing was never consummated, probably
because of opposition from the state of Kansas. Perhaps legal action
could force listing, which would require U.S. EPA to approve the early
transfer, but that would be too late under the current schedule. EPA
remains involved at the site, but it need not concur on the Early
Transfer.

GSA's Draft Environmental Assessment for the Sunflower transfer contains
a long list of sites with soil and/or groundwater contamination. Most of
the sites require more sampling before cleanup decisions can be made.
That is, officials recognize that the former Ammunition Plant is
extremely contaminated with nitrates, sulfates, heavy metals,
propellants, and other toxic substances, but they don't know the full
extent. They don't know yet which technologies will be required to
protect public health and the environment. They don't know how long
cleanup will take. And they surely don't know how much it will cost. As
far as I can tell, this transfer could not be approved in Colorado, the
only state - to my knowledge - with a formal Early Transfer policy. 

The responsible agencies believe that the insurance policies, to be paid
for by the developer, are sufficient to cover any conceivable cost
overrun, and the insurers are apparently betting that the total cost of
additional characterization and cleanup will not exceed $50 million. Or,
as at many contamination sites across the country, they hope to take
advantage of exclusions or other loopholes in their policies. 

I've heard various numbers, but the Army reportedly estimated the total
cost of cleaning up the base at $63 million. Before the announcement
that the Plant would be permanently closed, it planned to clean the
property to industrial standards. That is, soil contamination
concentrations, after cleanup, were supposed to reach risk levels which
would be acceptable under the assumption that the Plant remain in
industrial use, open primarily to workers.

With the proposed transfer, however, agencies' assume that most of the
Plant's property will become a theme park. That means, a large portion
of the property would be cleaned up to more stringent standards, based
upon unrestricted use. For example, young children might come into
contact with contaminated soil, so it would be treated or removed to
achieve acceptable levels. 

The developer reportedly believes it can remediate the site for less
than half what the Army projects, even with more stringent cleanup
standards. This contention that must be carefully scrutinized. Will the
developer save on cleanup by being more efficient? Or will it be able to
cut corners, now that the state - the principal regulator - has a
financial interest in redevelopment?

I've read many discussions about "cleaning up the entire property."
That's confusing. In today's regulatory environment, cleanup doesn't
mean treating or removing all contaminated media. Typically, at large
military bases, cleanup includes the consolidation of waste, the removal
of tainted soil from one area and its burial in another contaminated
area. Sometimes, particularly with the kinds of waste found in municipal
or other general mixed landfills - where common trash, organic matter,
and building debris are combined with toxic substances - that's a
sensible solution, but high concentrations of industrial or explosive
chemicals should be treated before land disposal.

Where contamination is left in place - above "safe" levels - the public
is supposed to protected by engineering controls and institutional
controls. Capping, with a multiple layers of membrane and clay, is an
engineering control. It's conceivable that parking lots at Sunflower
will be engineered to cap contaminated soil, blocking exposure pathways.
But most states follow U.S. EPA's lead and insist upon more than simple
cover-up to protect the public.

Institutional controls are legal documents limiting the use of land and
water - restricting excavation, for example. From Love Canal on, there
have been innumerable examples of such controls being forgotten or
ignored. Even today, it's difficult to find institutional controls that
are guaranteed to prevent migration of contaminants or the opening of
exposure pathways as long as contamination is present. It's important
that such controls be drawn carefully, and that mechanisms be
established to monitor and enforce those institutional controls.

The parties to the Sunflower deal are now negotiating institutional
controls covering contaminated portions of the plant. GSA says it is
taking a conservative approach: Even where it's not certain that
contamination poses a risk, it is insisting upon controls. EPA has asked
GSA to include specific institutional controls in the Environmental
Assessment, and GSA has agreed, but I doubt that much thought has been
given to ensuring the long-term viability of those restrictions.

Conclusion

The people responsible for arranging the transfer say they are building
in adequate assurances that human health and the environment will be
protected. Indeed, they point out that private cleanup is likely to
proceed more quickly than continued Army activity.

However, the proposed Early Transfer of the Sunflower Army Ammunition
Plant is an extremely complex, risky business, and there is no
independent body reviewing all the documents. The Army wants to unload
the cleanup obligation to the state and the developer. GSA is in the
business or property disposal, not cleanup. EPA is independent, but
because the site was kept off Superfund, it only plays a supporting
role. The state of Kansas, as both promoter and environmental regulator,
has an apparent conflict of interest. And the developer and its
insurance companies have an incentive to get by with the smallest amount
of cleanup possible.

Many critics of the deal are concerned that Kansas taxpayers could be
left holding the bag if the developer doesn't complete cleanup as
promised. While that's possible, it has a strong interest and the
capacity to negotiate terms that make that possibility remote. I'm
worried, instead, that state regulators will be under immense pressure
to weaken cleanup requirements, not just to protect the state against
the direct  costs of cleanup, but to make sure the project moves forward
expeditiously. If contamination delays reuse - as has happened at many
closing military bases being cleaned up by the military - then the sales
taxes and other revenues designed to pay back state subsidies will be a
long time in coming.

As someone who fought to include public review in the Early Transfer
legislation, I see only one group left, the public. Unfortunately, there
will be only 30 days to read and comment on some extremely complex
documents. And the Army and governor could still almost arbitrarily
reject criticisms. Still, the public comment period is the widest window
of opportunity that concerned members of the neaby community have to
insist that the transfer, "cleanup," and redevelopment of Sunflower do
not put the public at risk.

Even if the Early Transfer is approved - and the snowball is rolling in
that direction - there will still be opportunities to argue for
protective cleanup. Remedies must be selected. Land use controls must be
formalized. The neighbors - as well as potential theme park visitors -
must remain aware of the risks, and they must continue to insist that
they, their families, their friends, and the environment be protected -
no matter who controls the land, no matter who is responsible for
oversight, no matter who is liable for cleanup.


-- 


Lenny Siegel
Director, Center for Public Environmental Oversight
c/o PSC, 222B View St., Mountain View, CA 94041
Voice: 650/961-8918 or 650/969-1545
Fax: 650/968-1126
lsiegel@cpeo.org
(PLEASE NOTE THAT WE ARE PHASING OUT
MY OLD E-MAIL ADDRESS: lsiegel@igc.org)
http://www.cpeo.org