A Cleanup Turns Messy

[Guest guest]

The Washington Post

May 22, 2000

As Corps Widens Reach, A Cleanup Turns Messy; Crime Probe Targets Contractor

at Top Toxic Site

Grunwald, Washington Post Staff Writer

The nation's largest lead and zinc mines were abandoned years ago beneath

this forgotten pocket of the Plains, but their toxic legacy persists on the

surface. The hollowed earth still bleeds acid into Tar Creek, tinting its

lifeless waters rust-orange. There are orange turtles, too, stained by their

poisoned habitat. Gray mountains of gravelly lead waste tower over the

table-flat landscape, adding to the ominous science-fiction aura. Even more

ominous: A third of the area's children have been lead-poisoned, 15 times

the state average.

Today, the shuttered lead mines have become a gold mine of sorts, as the

federal government spends $ 30 million on a long-overdue cleanup. But for

the impoverished residents of the Tar Creek area, that has turned toxic,

too.

The Army Corps of Engineers is managing the effort to get the lead out of

soils around Tar Creek, which the Environmental Protection Agency ranks as

the most polluted site in its Superfund industrial-waste cleanup program.

But the project has been plagued by cost overruns, time delays, complaints

of shoddy work--and a broad criminal investigation.

Federal investigators confirmed that they are probing allegations of

widespread accounting and performance fraud by the Corps-hired contractor on

the job, on Knudsen Corp. Investigators from the Defense Criminal

Investigative Service, FBI and EPA are poring over about 400 boxes of

project documents seized in a February raid and are probing whether company

officials may have falsified records, overbilled the government, cut

environmental corners and covered up safety mishaps, according to sources

close to the investigation.

The owners of a firm that hauled lead-tainted dirt for the project have

already pleaded guilty to obtaining phony safety certificates for their

truckers, and a federal grand jury began hearing more serious allegations

May 2 in Tulsa. Meanwhile, the cleanup's problems continue to mount: A local

Indian tribe just produced soil tests suggesting that parts of its sacred

powwow grounds may have higher lead levels now than before they were

decontaminated.

on Knudsen officials said they are cooperating with investigators and

are unaware of any wrongdoing by the company. " From everything I've been

told, it's been a very successful project, " said , the firm's

director of corporate administration. " Until the investigation is complete,

it really wouldn't be appropriate for us to comment further. "

The documented problems at Tar Creek suggest that the government is having a

terrible time decontaminating the nation's worst-rated industrial waste

site. But they also raise broader questions about the steadily expanding

missions of the Army Corps of Engineers, a Pentagon-based agency with 37,000

employees--a larger work force than that of Microsoft Corp.

On April 28, the Corps announced that it will quit the Tar Creek project

this summer, at the end of its current contract but long before the end of

the job. The agency pronounced its mission complete, citing a dramatic

reduction in children's blood-lead levels over the last five years. " We've

pretty much fulfilled our part and gotten kudos for the cleanup work, " a

spokesman said.

But in interviews here in northeast Oklahoma, EPA regulators, local

officials, homeowners, federal investigators, on Knudsen

whistleblowers and the area's congressman all accused the Corps of lax

oversight. And although the Corps said in a statement that by leaving it was

merely " paving the way for EPA to implement new contracting strategies, " EPA

officials said they were preparing to oust the Corps from the cleanup when

it agreed to leave. They pointed out that they assigned the Corps to make

sure work was done on time, costs were controlled and local residents were

satisfied--none of which appears to have happened.

" This project has been a disaster, start to finish, " said Joe Crawford, a

county official who recently threatened to shut down the cleanup by banning

heavy trucks from local roads. " The Corps and the contractor are making out

like bandits, but we're worse off than ever. "

'Mission Creep'

These days, some of the agency's most reliable supporters in the

construction industry are starting to question " mission creep " at the Corps,

arguing that the agency has stretched itself far too thin. The Corps used to

focus its energy on water projects such as locks, dams and levees, but in

recent years it has found work in a host of other areas, from construction

of schools and wastewater treatment plants to cleanup of nuclear and

industrial waste.

This bureaucratic reinvention has come under heavy scrutiny, especially

after internal Corps documents revealed a " Project Growth Initiative "

designed to boost its $ 4 billion budget by 50 percent. And the official Web

site of the agency's Tulsa District, which managed the Tar Creek contract,

provides further evidence of an all-out growth campaign: " We will willingly

accept work for the Corps, wherever it may be. . . . We will market our

capabilities and seek growth opportunities. "

The Corps has found Superfund a particularly fruitful growth opportunity. In

1982, the first year of the federal program designed to clean up America's

worst toxic waste sites, the Corps did $ 12 million worth of Superfund work

for EPA. Last year's total was $ 300 million. For its work hiring and

overseeing contractors who hire and oversee subcontractors, the Corps keeps

a cut of the EPA payments; at Tar Creek, it has earned $ 1.7 million.

The Corps says it does not compete with the private sector, but many firms

believe they are perfectly qualified to handle the Superfund work. " The

Corps wants to be the program manager for America, " complained Construction

Management Association of America director Bruce D'Agostino, a leader of a

new industry alliance battling expansionism at the Corps. " They're competing

with the private sector all over the country. "

Corps officials say their growth efforts have been misunderstood: They don't

want new work for its own sake, but to expand their service to the nation.

They say the public-minded oversight they provide for Superfund cannot be

replicated by profit-minded firms. " If we weren't good, EPA wouldn't keep

hiring us, " says Corps spokesman Hewitt. " If we weren't good, Congress

and the administration wouldn't keep adding to our missions. "

At Tar Creek, though, the EPA just hired a private firm to replace the

Corps.

" The Corps is a perfect example of a perpetual bureaucracy; they just want

more and more work for themselves, " said Rep. Tom Coburn (R-Okla.), a

conservative firebrand who represents the Tar Creek area, and calls its

cleanup the worst example of government mismanagement he has ever seen. " We

all end up getting ripped off: you, me, every American taxpayer. "

'Pesthole on the Plains'

In December 1939, a muckraking magazine story on the " Pesthole on the

Plains " chronicled the desperation of the Tri-State Mining District.

" Perhaps nowhere else in America could one find such extreme poverty,

undernourishment and insanitary conditions, " the story concluded.

That was during the good times. In those days, this isolated chunk of

Oklahoma, Kansas and Missouri churned out nearly a million tons of lead and

zinc ore a year, supplying raw material for America's bullets and baby

powders, washtubs and paints.

But the mines closed for good in the 1970s, and the Pesthole on the Plains

began withering away. The population plunged by 90 percent. Entire towns

virtually vanished. The area's only remaining resource was the ugly piles of

lead waste known as chat, which entrepreneurs began selling as fill for

roads, yards, ball fields and playgrounds.

Picher kids had always played on the chat piles; Mickey Mantle (from

neighboring Commerce) used to roll down them as a boy. But much of the chat

turned out to be contaminated, which helped fuel the area's second economic

vestige of the mining era: the government cleanup.

" This area was so desperate for help; we're talking about people who had

nothing, " said Jim, a local environmental activist who has organized

tongue-in-cheek " fishing tournaments " to call attention to the plight of Tar

Creek. " They were at the mercy of the government, and the government

betrayed them. "

EPA has always ranked the Tar Creek site at the top of its Superfund

priority list, even ahead of New York's Love Canal. But the site mostly

languished until the mid-1990s, when tests revealed a lead-poisoning

epidemic among local children, especially Native American children.

EPA then announced a major initiative to remove lead-contaminated soil from

more than 2,000 properties in five Oklahoma towns and hired the Corps to

oversee the work. The Corps, in turn, awarded the contract to on

Knudsen, a Boise-based construction conglomerate that has operations in 35

countries and recent Corps projects in seven states.

This was no ordinary contract. The Clinton administration had designated Tar

Creek as a pilot project for a new kind of " cost-plus " contract; a Corps

newsletter proudly announced that " Tulsa District is once again blazing a

trail--this time through contracting territory. " on Knudsen was

promised reimbursement for all project expenses up to a set ceiling, plus

performance-based bonuses of up to 9 percent of the total costs. The setup

put an especially high premium on strict oversight, since it reduced the

contractor's usual incentive to control costs. But the newsletter predicted

a win-win scenario: " The government should experience fewer cost overruns,

schedule delays and performance problems. "

It didn't quite work that way.

Cost overruns? Last spring, a detailed analysis by Rep. Coburn found the Tar

Creek cleanup was twice as expensive per property as a similar lead-removal

effort by the Corps in nearby Joplin, Mo. Schedule delays? Despite the heavy

spending, Tar Creek was way behind schedule, while Joplin was on time.

Performance problems? Eighteen percent of the affected residents filed

formal complaints about the cleanup work; community leaders believe the

crews caused widespread flood damage by replacing contaminated topsoil with

less absorbent clay.

on Knudsen declined to respond to the detailed charges about its

performance, referring questions to the Corps. The Corps said that Coburn's

cost comparisons are unfair, that Tar Creek and Joplin are different

projects. But EPA officials acknowledge that the experiment did not work the

way they hoped. " Obviously, we would have liked to see more focus on cost

control, " said Bill Honker, who oversees Superfund for the EPA in Oklahoma.

" We would have liked to see more responsiveness to the public. It's been a

learning experience. "

For many families living in the ramshackle houses and rusty trailers

scattered around these flatlands, the experience has included the

inadvertent creation of new ponds in their yards. Don has lived on

Ella Street in Picher for 31 years with his wife and their autistic

daughter, and says they never had drainage problems before the cleanup

began. Now their lawn floods every time it rains. They say on

Knudsen's crews came back to fix their work four times, but to no avail.

Mayor Sam Freeman of Picher, a once-sprawling mining center that has

dwindled to about 1,500 predominantly elderly and overwhelmingly poor

residents, says scores of his constituents have had similar problems. Many

now have mold growing in their homes.

" They know this is a poor town, so they figure they can do whatever they

want and the government will keep paying and nobody will complain, " said

, 67, a retired mechanic. " I don't know. You can tell something's

not happening right. "

Record Rainfall or Fraud?

An extraordinary weather disturbance was documented in Picher last winter:

53 consecutive days of rain. And the documents detailing this torrential

storm suggest an even more amazing phenomenon: The 53-day streak was limited

to a single vacant lot at 203 South Treece St.

Oddly, though, no one in town seems to remember this unprecedented downpour.

And weather records confirm that the area received only average rainfall

during the period in question.

That's why federal investigators say they are suspicious of the documents

that on Knudsen submitted to the Corps to receive its payment for 203

South Treece St. Under its cost-plus contract, the company was entitled to a

$ 959 bonus if it decontaminated the lot within 11 days. In reality, it

spent 63 days at the property. But the firm claimed it lost 53 straight

workdays to rain--just enough to qualify for the bonus. The Corps would not

discuss the case, citing the investigation, but a Corps official did approve

every rain day.

" It didn't rain that much on Noah, " said a disenchanted former on

Knudsen employee who allowed a Post reporter to view the documents.

Investigators say they are working closely with the on Knudsen

whistleblowers, who have accused their former employers of a series of

fraudulent activities. For example:

* The firm's payments depended in part on the volume of dirt it moved, and

it calculated that volume by counting truck runs. But sources say several

truckers told investigators they carried " light loads " and even " ghost

loads. " Investigators also have videos and photos of on Knudsen crews

removing dirt at properties the whistleblowers say were already clean.

In a written statement, the Corps responded that it did reduce some of the

contractor's fees because of various " shortcomings. " But the agency also

said that its quality assurance reviews " found the contractor's data to be

accurate " and that the main problems with the project were caused by forces

beyond the cleanup team's control: lousy drainage, aging infrastructure,

terrible weather and " the extensive nature of the contamination. "

* on Knudsen's flawless safety record also increased its bonuses. But

sources say several workers who were injured on the job--including one who

needed surgery--have told investigators they were kept on the payroll when

they could not work.

" We know of no instances where personnel were unable to perform duties of

their trade, although there may have been light duty assignments as a result

of minor strains, which is common in the industry, " the Corps responded.

* Investigators also suspect the company may have billed the Tar Creek

project for work it did for the Corps at other sites where its costs were

not reimbursed. The whistleblowers flagged several contracts with vendors

they never saw at the site.

The Corps said it has not found any improper contracts. Its auditors are

reviewing the invoices.

Critics of the cleanup also complained about more routine management issues,

citing employees with no technical expertise, excavation errors fixed at

taxpayer expense and a dump built along a stream that empties into Tar

Creek. They were particularly vocal about wasteful spending: Coburn compiled

evidence that last spring, the project had three times as many workers, six

times as much equipment, and eight times as many vehicles as the similar

Joplin operation 30 miles away. One whistleblower said a on Knudsen

manager even urged staff not to use the company's toll-free number, since

the government was reimbursing all long-distance calls. " There was zero

emphasis on cost control, " he recalls.

The Corps said that overall, it is meeting its original goal of $ 20,000 per

clean property: " The Tulsa District is doing a good job of overseeing this

contract. "

The Quapaw tribe, however, recently retested its powwow grounds after

on Knudsen reported that they were clean. Five of the tribe's 15

samples tested hotter than the maximum allowable lead levels, and one of

those samples was more than 500 percent over the limit. EPA and the Corps

questioned the tribe's sampling methods, but they agreed to retest the site.

" The samples speak for themselves, " says Earl Hatley, the tribe's

environmental director. " A child playing in one of those hot spots can get

sick. It's that simple. "

A Creek the Color of Tang

" There's no fish in the orange creek! " shouted 4-year-old Zachary Whitlock,

a bouncy little boy in the Little Angels day-care program. " Only dead fish! "

Zachary was sharing what he learned in Sage's lead education class,

a 15-minute effort to teach the kids the rules of life in the Tri-State

Mining District: Don't go sledding or tumbling or bike-riding on the chat

piles. Don't eat dirt. And never, ever drink out of Tar Creek. It may look

like Tang, but it isn't.

The Tar Creek cleanup was supposed to be about helping kids like Zachary.

And the area's lead-poisoning numbers have dropped 40 percent since 1994.

But it is hard to know whether the major factor was the cleanup or lead

education programs like this one. Sage, for one, credits the programs,

although she admits she's biased: The cleanup ruined her family's drainage.

" You walk on my lawn, you sink to your knees, " she says. " It was a total

botch job. "

The Corps has heard that a lot in recent months. Internal whistleblowers,

taxpayer activists and environmentalists have leveled a series of charges

about wasteful projects, environmental destruction, rigged analyses and

overall mission creep. The EPA is conducting a criminal probe of a Corps

nuclear waste cleanup near Buffalo; the Pentagon is investigating charges

that top Corps officials manipulated the data of a $ 54 million Mississippi

River study to justify huge navigation projects. Even a few of the agency's

traditional allies in Congress have questioned the growth strategy at the

Corps.

Nevertheless, the Corps seems poised for new expansion. Congress is

preparing to put it in charge of a $ 7.8 billion effort to restore the

Florida Everglades. The administration is also pushing several new Corps

initiatives, including one to clean up contaminated urban " brownfields " and

another to renovate aging recreational facilities. And a recent House

resolution said the National Park Service " should immediately take full

advantage of support services offered by the Department of Defense " to

reduce its construction backlog.

" I don't think they were talking about the Special Forces, " one lobbyist

quipped.

The recent controversies have prompted a lot of talk about Corps reforms,

and Army Secretary Louis Caldera recently tried to reassert civilian control

of the agency. But Caldera withdrew his reforms after just a week, under

heavy pressure from Republican senators. And this week, the Senate may take

up a farm bill that includes a rider prohibiting this or any future

administration from making any changes whatsoever at the Corps.

Here in Picher, though, the Corps is winding down its work, and some folks

say they can't wait to see the agency leave. Orval " Hoppy " Ray, an ex-miner

who runs what may be America's only combination mining museum and pool hall,

and whose lawn now gets ankle-deep after light rains, said he wouldn't trust

the Corps again to rake his yard, much less decontaminate it.

" They screwed up everything they touched, and they figured we were too dumb

to notice, " Ray said. " We're not that dumb. "

A special collection of Washington Post reports on the Army Corps of

Engineers can be found at

www.washingtonpost.com/nation/specials/aroundthenation/corpsofengineers.