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Lockheed Quagmire Grows

Contractor wants Pentagon to pay hunk of toxic cleanup tab

September 15, 1996

By CHIP JACOBS
Daily News Staff Writer

The environmental cleanup of Lockheed Martin Corp.’s former Burbank aircraft manufacturing plants will cost $295 million, and the company wants the Pentagon to pay 70 percent of the tab, records and interviews show.

The estimated cleanup expense has jumped 34 percent since 1992, because Lockheed Martin and government officials say contamination of 425 acres at former plant sites has proved more widespread than studies first indicated.

The combined numbers offer the first comprehensive portrait of the size of the job, but also raise questions about the value of at least one of the properties and the accuracy of post-Cold War cleanup estimates.

“It’s significant work on a lot of land,” Burbank City Manager Bud Ovrom said. “I wonder now if (company officials) realized the magnitude of the mess they’d have to face and my guess is they didn’t.”

The company declined to say how widespread the contaminants are. Lockheed Martin officials repeatedly have said operations and cleanup of the facility have posed no health risks to residents.

Federal and state regulators said the costs probably climbed because of a combination of stricter cleanup requirements and the discovery of additional pollution, including places where toxics had unexpectedly seeped through building floors into the ground.

Company officials said they are going ahead with the cleanup, but believe the federal government should share in the payments. They claimed that much of the work over six decades was for the military and was completed within environmental standards in place at the time.

“We are accepting responsibility for the cleanup and believe the federal government has some responsibilities, too,” company spokeswoman Maureen Curow said. “We are not asking for a check into our hand, just to be given some leeway for cost recovery.”

The company is allowed to seek reimbursement for part of its Burbank environmental work by tacking on its cleanup expenses on future government contracts.

But critics said the prospect of a Fortune 500 corporation being bailed out by taxpayers – at up to $206.5 million, if the Pentagon grants the full request – is unfair.

“Just in logic and ethics, it doesn’t make sense that I can perform in what amounts to be a negative or careless manner and then come back to the government and say I wanted to be paid for the problem I created,” said retired Admiral Eugene Carroll, deputy director of the Center for Defense Information, a Pentagon watchdog group based in Washington. “As soon as you invoke the magic words `national security,’ then an awful lot of things become possible.”

So far, the federal government’s reimbursements have been “basically zero,” Curow said.

Officials at the Pentagon’s Defense Contract Management western district said it’s still unclear how much reimbursement Lockheed Martin might get – and when.

The bulk of the cleanup is within one of the nation’s largest Superfund sites located in the east San Fernando Valley. Federal and state officials identified the company as the major source of pollution during a lengthy investigation that also identified more than 50 smaller responsible parties.

In documents filed with the Securities and Exchange Commission last month, the firm predicted it will have to pay an additional $205 million to purge the groundwater and soil of toxics. It’s expended $90 million on the effort so far.

Neither company nor military officials would comment on recent requests by Lockheed Martin seeking the reimbursements.

Company officials, however, said cleaning the water – primarily of perchloroethylene (PCE) and trichloroethylene, solvents used in metal work – has cost the firm $70 million so far. The company expects the cleanup to cost an added $50 million, the SEC documents show.

Lockheed Martin also has spent $20 million removing soil contaminated by PCEs and petroleum-based residues. The company estimates it will cost an added $55 million to finish the job, according to the SEC records.

Lockheed Martin is seeking reimbursement for 50 percent to 70 percent of its groundwater cleanup under an existing federal agreement, and is lobbying the U.S. Department of Defense to reimburse it for a similar amount for soil cleanup.

“We’re awaiting clarification from the Defense Department,” Curow said. “We think it’s an ordinary business cost and therefore eligible for cost recovery.”

The percentages are based on the portion of defense work the company does today, she said.

U.S. Sen. Barbara Boxer’s office said the senator is asking the Pentagon for an explanation of its position.

“Obviously there are a number of very important issues to address here, including a cleanup for the people who are affected by this mess and the impact on the taxpayer,” said David Sandretti, Boxer’s spokesman.

The additional cleanup cost estimates also are being examined by Burbank-Glendale-Pasadena Airport Authority officials who are seeking to purchase a 130-acre piece of the land for a new $250 million terminal.

That deal stalled in the courts last month after a Los Angeles Superior Court commissioner ruled differences over the property’s value were too wide to resolve without more information.

The authority offered $3 million under an attempted eminent domain proceeding, citing contamination of the property as a factor in the price, because they said it needs $36 million in cleanup. Lockheed Martin officials called the offer “insufficient.”

Airport officials said last week that Lockheed’s filing with the SEC suggest the company is playing “hide-the-ball” with the figures to maximize its fiscal leverage with the airport and the Pentagon.

“Lockheed seems to say one thing when it talks to their shareholders about the Burbank environmental cleanup, but another when it comes to communicating with us through court action,” said airport executive director Thomas Greer.

Curow declined to discuss whether the property sought by the airport is involved in the expanded cleanup for which Lockheed Martin is requesting federal reimbursement.

Lockheed is awaiting its own reports on the extent of soil contamination at the airport site, known as “B-6.”

Alex Carlos, the geologist overseeing the company’s soil remediation work for the California Regional Water Quality Control Board, said the Burbank soil contamination is more serious than officials believed when the first estimates were made for regulators in 1991.

“It’s more extensive,” Carlos said. “When they started demolishing buildings for example, they found more areas that were contaminated, some of them with toxins, where they didn’t expect to find it.

“In some areas where there was concrete, people were surprised it got through and into the ground.”

The 103-acre “B-1” plant, he said, has the most polluted soil among Lockheed’s Burbank holdings because it’s tainted with higher concentrations of PCE. The chemical is used as a degreaser, among other things, and may have percolated into the earth from underground tanks or piping, from accidental spills and routine manufacturing work, Carlos said.

Specifically, the fabled “Skunk Works” – the top-secret Lockheed research and development division where the U-2 spy plane, F-117 stealth fighter and other Air Force aircraft were born – contributed to the pollution, he said.

The company is completing a $13 million to $14 million vapor extraction system to vacuum toxics out of the ground nearby. It also has also razed approximately 100 structures there, some containing asbestos.

Curow said it “was too early to speculate” whether the company will seek federal payback for a $60 million settlement with more than 1,300 Burbank residents who claimed their health and property values were damaged by contamination from the B-1 plant.

The out-of-court settlement, disclosed by the Daily News Aug. 4, enraged scores of area homeowners who felt left out of the confidential agreement and who said they were unaware of the plant’s historic toxic emissions.

Historic emissions of a carcinogenic compound called hexavalent chromium from the B-1 plant, where the P-38 and commercial L-1011 were built, drove the settlement with area residents, according to the retired Justice John K. Trotter. The chemical, a byproduct of painting and metal work, has been linked to lung cancer.

Currently Lockheed is operating a $15 million water treatment plant on Hollywood Way to clean up groundwater.

The underground plume of polluted water is more than a mile-and-a-half wide in spots, making it difficult to pull from the ground and purify, said David Seter, the EPA project manager for the groundwater cleanup.

Seter said some of Lockheed Martin’s rising costs may be due to the more stringent standards the agency imposed, including requiring the treatment plant to add a granulated-activated carbon filter.

“We probably ended up being more conservative in our design since people will end up drinking the water,” Seter added. “It added a lot to the capital costs.”

Contaminated municipal drinking water wells in Burbank, Glendale and the city of Los Angeles were closed in 1979 after traces of toxic solvents significantly above the state action level were detected in groundwater supplies.

A nearly identical version of this story appeared in the Daily News. copyright Daily News of Los Angeles