2002 CPEO Military List Archive

From: petestrauss1@attbi.com
Date: 31 May 2002 23:37:55 -0000
Reply: cpeo-military
Subject: Re: [CPEO-MEF] Guardian Trust evaluated

At first glance, the Guardian Trust concept is a good concept and can 
fill a must needed niche to make institutional/land-use controls work.  
If it would stick with that limited mission it would be fine.

What I don't like about the idea is that the program includes
engineering controls.  In the out years of remediation, this could 
become very expensive.  Most operating and maintenance cost estimates 
are based on a projection of actual costs escalated into the future, 
off-set by the discount rate.  This means that you make two assumptions: 
one is the rate of inflation, the other is how much a present dollar is 
worth to you now as opposed to a future dollar.   The result of this 
calculation is sometimes called the real-interest rate.  I have dealt 
with enough cost estimates for large projects to tell you that these 
assumptions can be extremely varied.

I assume that Guardian Trust would take over responsibility for
monitoring the engineering controls based on an up-front fee.  They 
would be locked into the assumptions about how much it could earn on 
that fee until it had to spend it, and how much costs would escalate.

What protection would the public have if the assumptions were wrong and 
Guardian Trust ran out of money?  Could it buy insurance?  Would the PRP 
be left off the hook?  Would it promulgate future litigation (say there 
is additional contamination found; PRP claims that it is because GT has 
not operated and maintained system properly)?

These are some questions to be answered before I can say that this is a 
good idea.

Peter Strauss

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